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 Annual Meeting of Stockholders to Be Held on September 10, 2024
The
Notice of Annual Meeting, Proxy Statement
and
Annual Report on Form 10-K are available at:
www.proxyvote.com
NOTICE
OF ANNUAL MEETING OF STOCKHOLDERS
TO BE HELD ON SEPTEMBER 10, 2024
To
the Stockholders of Lipella Pharmaceuticals Inc.:
NOTICE
IS HEREBY GIVEN that the 2024 Annual Meeting of Stockholders (the “Annual Meeting”) of Lipella Pharmaceuticals
Inc. (the “Company”) will be held online on September 10, 2024 at 2:00 p.m. Eastern Time. The Annual Meeting will
be a virtual stockholder meeting, conducted via live audio webcast, through which you can submit questions and vote online. The
Annual Meeting can be accessed by visiting www.virtualshareholdermeeting.com/LIPO2024 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 August 1, 2024).
The
Annual Meeting is being held for the purposes of considering and voting on the following proposals:
| |
1. |
To elect seven (7)
members of the Company’s board of directors (the “Board”), each to serve until the next annual meeting of
the Company’s stockholders and until each of their respective successors are elected and qualified or until each of
their earlier resignation or removal (“Proposal No. 1”); |
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2. |
To authorize the
Board to amend the Company’s second amended and restated certificate of incorporation, as amended (the “Certificate
of Incorporation”), to effect a reverse stock split (the “Reverse Stock Split”) of all outstanding shares
of the Company’s common stock, par value $0.0001 per share (the “Common Stock”), by a ratio in the range
of one-for-five to one-for-one hundred and fifty, to be determined in the Board’s sole discretion at any time after
approval of such amendment and no later than the one year anniversary of such approval (“Proposal No. 2”); |
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3. |
To ratify the Board’s
selection of Urish Popeck & Co., LLC as the Company’s independent registered public accountants for the fiscal year
ending December 31, 2024 (“Proposal No. 3”); and |
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4. |
To transact such
other business as may properly come before the Annual 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 Annual Meeting. Only stockholders of record of the Common Stock at the close of business on
August 1, 2024 (the “Record Date”) will be entitled to notice of, and to vote at, the Annual 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” each director nominee and “FOR” each of Proposals No.
2 and No. 3.
Only
stockholders of record at the close of business (5:00 p.m. Eastern Time) on August 1, 2024 are entitled to notice of, and to vote
at, the Annual Meeting and at any adjournments or postponements thereof. Whether or not you expect to attend the virtual Annual
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 Annual Meeting if you would check the
box on the form of proxy if you plan on attending the virtual Annual 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 August
12, 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 Annual 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 Annual Meeting.
| Pittsburgh, Pennsylvania |
By Order of the Board of
Directors, |
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|
| August 12, 2024 |
/s/ Jonathan
Kaufman |
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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 Annual Meeting to be held on September 10, 2024: This notice
of Annual Meeting and the Proxy Statement are available at www.proxyvote.com.
TABLE
OF CONTENTS
PROXY
STATEMENT FOR ANNUAL 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 Annual Meeting
Proxies
in the form enclosed with this Proxy Statement are being solicited by our board of directors (the “Board”) for use
at our Annual Meeting of Stockholders (the “Annual Meeting”) to be held online on September 10, 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 Annual 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 Annual 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 August
12, 2024. Voting materials, which include this Proxy Statement and the enclosed proxy card, and
our Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Annual Report”), filed with the U.S.
Securities and Exchange Commission (the “SEC”) on February 27, 2024, are available at www.proxyvote.com.
Only
stockholders of record of our shares of Common Stock as of the close of business on August 1, 2024 (the “Record Date”)
will be entitled to notice of, and to vote at, the Annual Meeting. As of the Record Date, 8,004,636 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 Annual 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 Annual 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 Annual 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 Annual 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 Annual Meeting.
The
stockholders will consider and vote upon (i) a proposal to elect seven (7) members of the Board, each to serve until the Company’s
2025 Annual Meeting of Stockholders and until each of their respective successors are elected and qualified or until each of their
earlier resignation or removal (“Proposal No. 1”); (ii) a proposal to authorize the Board to amend the Company’s
second amended and restated certificate of incorporation, as amended (the “Certificate of Incorporation”) to effect
a reverse stock split (the “Reverse Stock Split”) of all outstanding shares of the Common Stock by a ratio in the
range of one-for-five to one-for-one hundred and fifty, to be determined in the Board’s sole discretion, at any time after
approval of such amendment and no later than the one year anniversary of such approval (“Proposal No. 2”); and (iii)
a proposal to ratify the Board’s selection of Urish Popeck & Co., LLC as the Company’s independent registered
public accountants for the fiscal year ending December 31, 2024 (“Proposal No. 3”). Stockholders also will consider
and act upon such other business as may properly come before the Annual 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 Annual 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 Annual 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 Annual Meeting.
All
properly executed proxies delivered pursuant to this solicitation and not revoked will be voted at the Annual Meeting as specified
in such proxies.
Vote
Required for Election of Directors (Proposal No. 1). Our Certificate of Incorporation does not authorize cumulative voting.
Delaware law and our second amended and restated by-laws (our “Bylaws”) provide that our directors are to be elected
by a plurality of the votes cast by holders of the shares of Common Stock present and entitled to vote generally on the election
of directors. This means that the seven (7) candidates receiving the highest number of affirmative votes at the Annual Meeting
will be elected as directors. Only shares that are voted in favor of a particular nominee will be counted toward that nominee’s
achievement of a plurality. Shares present at the Annual Meeting that are not voted for a particular nominee or shares present
by proxy where the stockholder properly withheld authority to vote for such nominee will not be counted toward that nominee’s
achievement of a plurality.
Vote
Required for Authorization of the Board to Amend the Certificate of Incorporation to Effect the Reverse Stock Split (Proposal
No. 2). Our Bylaws provide that, on all matters (other than the election of directors and except to the extent
otherwise required by our 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 amend the Certificate of Incorporation to effect the Reverse
Stock Split. Abstentions and broker non-votes, if any, will have no effect on the outcome of this Proposal No. 2.
Vote
Required for Ratification of Independent Registered Public Accountants (Proposal No. 3). Our Bylaws provide that, on all
matters (other than the election of directors and except to the extent otherwise required by our 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 ratify the
Board’s selection of Urish Popeck & Co., LLC as our independent registered public accountants for the fiscal year ending
December 31, 2024. Abstentions and broker non-votes, if any, will have no effect on the outcome of this Proposal No. 3.
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
plurality of the votes cast” and such shares that constitute broker non-votes are not considered entitled to vote; broker
non-votes are also 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 Annual Meeting for purposes
of determining the presence of a quorum.
The
votes on Proposal No. 1 and Proposal No. 2 are considered “non-routine,” and the vote on Proposal No. 3 is considered
“routine.”
Abstentions
are counted as “shares present” at the Annual 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. 2 and Proposal
No. 3.
Votes
at the Annual 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 Annual Meeting.
Delivery
of Documents to Stockholders Sharing an Address
The
Company is required to provide an annual report and proxy statement or notice of availability of these materials 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 the annual report or notice of availability of these materials 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 annual reports
or notices of availability, or if you are receiving multiple statements and reports 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 August 9, 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 August 9,
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 August 9, 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) |
|
|
1,671,682 |
|
|
|
19.29 |
% |
| Michael Chancellor
(5) |
|
|
1,650,470 |
|
|
|
19.05 |
% |
| Douglas Johnston
(6) |
|
|
100,000 |
|
|
|
1.23 |
% |
| 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) |
|
|
3,681,152 |
|
|
|
36.95 |
% |
| |
|
|
|
|
|
|
|
|
| 5% or greater
stockholders: |
|
|
|
|
|
|
|
|
| Leaf Huang (12) |
|
|
555,556 |
|
|
|
6.94 |
% |
| Richa
Mishra (13) |
|
|
508,939 |
|
|
|
6.36 |
% |
*
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 8,004,636
shares of Common Stock issued and outstanding as of August 9, 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 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 August 9, 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. |
ELECTION
OF DIRECTORS
(Proposal
No. 1)
The
following individuals have been nominated as members of the Board, each to serve until the Company’s 2025 Annual Meeting
of Stockholders, until each of their respective successors are elected and qualified, or until each of their earlier resignation
or removal. Pursuant to Delaware law and our Bylaws, directors are to be elected by a plurality of the votes of the shares cast
by holders present in person or represented by proxy at the Annual Meeting and entitled to vote on the election of directors.
This means that the seven (7) candidates receiving the highest number of affirmative votes at the Annual Meeting will be elected
as directors. Only shares that are voted in favor of a particular nominee will be counted toward that nominee’s achievement
of a plurality. Proxies cannot be voted for a greater number of persons than the number of nominees named or for persons other
than the named nominees.
Following
is information about each nominee, including biographical data for at least the last five (5) years, presented as of August 9,
2024. Should one or more of these nominees become unavailable to accept nomination or election as a director, the individuals
named as proxies on the enclosed proxy card will vote the shares that they represent for the election of such other persons as
the Board may recommend, unless the Board reduces the number of directors. We have no reason to believe that any nominee will
be unable or unwilling to serve if elected as a director.
| Name
of Director |
|
Age |
|
Director
Since |
| Jonathan Kaufman |
|
58 |
|
2005 |
| Michael Chancellor |
|
66 |
|
2008 |
| Lori Birder |
|
64 |
|
2023 |
| Daniel Cohen |
|
60 |
|
2023 |
| Byong (Christopher) Kim |
|
53 |
|
2022 |
| Ryan Pruchnic |
|
51 |
|
2021 |
| Naoki Yoshimura |
|
67 |
|
2021 |
Jonathan
Kaufman, PhD, MBA, President, Chief Executive Officer, Secretary, Treasurer and Chairman of the Board of Directors
Jonathan
Kaufman, PhD, MBA, has served as a director and as our Chief Executive Officer, President, Secretary and Treasurer since the Company’s
inception in 2005. From 2016 to 2019, Dr. Kaufman was a managing director and registered representative of Pickwick Capital Partners,
LLC, a growth equity firm, and from 2015 to 2018 he consulted for multiple biotechnology companies, including Menogenix Inc.,
and Frequency Therapeutics Inc. (Nasdaq: FREQ). Previously, Dr. Kaufman served as chief financial officer of Semprus Biosciences
Corp. (acquired by Teleflex Incorporated (NYSE: TFX)), chief science officer at LaunchCyte LLC, a company that creates, seeds
and harvests life science innovations from top U.S. academic institutions (“LaunchCyte”), fellow in the department
of radiation at the Hospital of the University of Pennsylvania, consultant to GlaxoSmithKline plc. (NYSE: GSK). Also, Dr. Kaufman
served on the new technology committee during his employment at Merck & Co., Inc. (NYSE: MRK). Dr. Kaufman is the co-founder
of Knopp Biosciences LLC, a privately held drug discovery and development company, and until March 2022 had served on the board
of directors of Reaction Biology Corporation, a pre-clinical contract research organization that provides a full suite of preclinical
drug discovery services. Dr. Kaufman received an MBA from the Wharton School, a PhD from the University of Pennsylvania School
of Medicine, an MS from Brown University, and a BS from Carnegie Mellon University. We believe that Dr. Kaufman is qualified to
serve on the Board due to his extensive business experience and knowledge in the life science industry.
Michael
Chancellor, MD, Chief Medical Officer and Director
Michael
Chancellor, MD, has served as a director and as our Chief Medical Officer since 2008 and has been a consultant to the Company
since 2005. Since 2008, Dr. Chancellor has served as a professor and research director at the William Beaumont School of Medicine.
He is co-founder of Cook Myosite Incorporated, company that develops and commercializes technology related to the collection,
selection, and expansion of human skeletal muscle cells for the treatment of various disorders and a wholly owned subsidiary of
Cook Medical Incorporated, a medical device company. Dr. Chancellor has been principal investigator in more than 75 clinical trials
has authored hundreds of publications regarding the treatment of urinary bladder dysfunction, has received more than 90 awards
in connection with his work with urinary bladder dysfunction, and is generally considered an international key opinion leader
in the industry. Dr. Chancellor is a board-certified urologist, previously holding the positions of instructor at the College
of Physicians and Surgeons Columbia University, associate professor at Jefferson Medical College, and professor at University
of Pittsburgh School of Medicine. He received an MD from the Medical College of Wisconsin and completed his urology residency
at the University of Michigan and his neurourology and female urology fellowship at Columbia University. We believe that Dr. Chancellor
is qualified to serve on the Board due to his extensive business experience as an executive in the pharmaceutical industry, and
his depth of knowledge and substantial experience as a research scientist.
Lori
Birder, PhD, Director
Lori
A. Birder, PhD, has served as a director of the Company since June 2023. Since 2001, Dr. Birder has been a tenured Professor of
Medicine and Pharmacology and Chemical Biology at the University of Pittsburgh School of Medicine. Dr. Birder’s research
has been durably funded by the NIH, including an NIH MERIT award, and focusses on understanding mechanisms underlying lower urinary
tract dysfunction with chronic stress, pain and aging. Dr. Birder has published more than 200 peer-reviewed articles, book chapters
and reviews. She has organized and chaired a number of symposia and workshops involving chronic visceral pain and aging, is a
member of several scientific and editorial boards and scientific societies (e.g., International Continence Society-ICS,
International Neurourology Society-INUS, International Society for the Study of Bladder Pain Syndrome-ESSIC and the Society of
Urodynamics, Female Pelvic Medicine & Urogenital Reconstruction-SUFU) and serves as an ICS Board of Trustee member and the
Founding Editor-in-Chief for the open access International Continence Society (ICS) journal ‘Continence’. We believe
that Dr. Birder is qualified to serve on our board of directors due to her experience in the field of genitourinary research and
her deep knowledge of the pharmaceutical industry.
Daniel
Cohen, MBA, Director
Daniel
Cohen, MBA, has served as a director of the Company since March 21, 2023. Since 2018, Mr. Cohen has served as managing member
and founder at Brightdrum LLC, a management consulting firm that works to accelerate growth of technology ventures. From 2021
to 2023, Mr. Cohen also served as an executive at Mojo Vision, a technology company, where he led healthcare product strategy
and medical device product management. As a serial entrepreneur, Mr. Cohen founded and served as CEO of five startups with exits,
including Personity, a mobile infrastructure software company, acquired by Openwave Systems (now Enea, STO: ENEA), and USConnect,
an enterprise software company, acquired by IKON (now Canon, NYSE: CAJ). Mr. Cohen has also held executive leadership roles in
product management, strategic partnerships, and business operations in companies including Google (now Alphabet, Nasdaq: GOOG)
and Yahoo. Mr. Cohen has worked across multiple technology sectors including health tech, IoT, consumer web, and enterprise SaaS.
Mr. Cohen is co-author of eight patents including innovations in ophthalmic medical devices, mobile communications, user interfaces,
security, presence, messaging, and peer-to-peer networks. Mr. Cohen holds a dual BS degree in electrical engineering and computer
engineering from Carnegie Mellon University, and an MBA from the Wharton School of the University of Pennsylvania. We believe
that Mr. Cohen is qualified to serve on the Board because of his extensive experience in operating and advising diverse technology
companies and commercializing innovation.
Byong
(Christopher) Kim, PhD, Director
Byong
(Christopher) Kim, PhD, has served as a director of the Company since March 2022 and is a venture capitalist with a focus on drug
discovery. Since 2015, Dr. Kim has served as managing director at Novatio Ventures, which invests in seed- to early-stage life
sciences companies originating from the U.S., Canada and Korea. He has also served as a member of the selection committee for
BaseLaunch since July 2020, an accelerator firm located in Basel, Switzerland which has supported ventures that have since raised
over $390M since its founding in 2018. Additionally, since 2016, Dr. Kim has served as an executive vice president and board member
of Bridge Biotherapeutics, Inc., a clinical stage biotech company that went public on the Korean stock exchange KOSDAQ in December
2019. Mr. Kim holds a B.S. in Biology from the University of California at Irvine, a PhD in Developmental Biology from the University
of Texas at MD Anderson, and an MBA from Carnegie Mellon University. We believe that Dr. Kim is qualified to serve on the Board
because of his experience evaluating and financing early-stage biotechnology companies.
Ryan
Pruchnic, MBA, Director
Ryan
Pruchnic, MBA, has served as a director of the Company since September 2021. Mr. Pruchnic has been employed by Cook Myosite since
2001, and currently serves as managing vice president at Cook MyoSite. Mr. Pruchnic received a bachelor’s degree in biology
and a master’s degree in exercise physiology from the University of Pittsburgh and an MBA from the Joseph M. Katz Graduate
School of Business at the University of Pittsburgh. While working as a research scientist investigating the experimental uses
of skeletal muscle-derived cells for urinary tract tissue augmentation, Mr. Pruchnic was part of the original team that custom-built
the cell isolation and manufacturing technology for use in human clinical trials. Mr. Pruchnic has authored and coauthored numerous
peer-reviewed scientific journal articles and book chapters relating to gene and cell therapy research for musculoskeletal disorders.
Currently, Mr. Pruchnic oversees the day-to-day operations and the manufacturing, quality testing and releasing of the cellular
product for human use in clinical investigations at Cook MyoSite, including leading the regulatory and clinical initiatives. We
believe that Mr. Pruchnic is qualified to serve on the Board due to his experience building a substantial global research initiative
in applied regenerative medicine.
Naoki
Yoshimura, MD, PhD, Director
Naoki
Yoshimura, MD, PhD, has served as a director of the Company since September 2021. Dr. Yoshimura is a professor and the endowed
chair of neurological research in the department of urology at the University of Pittsburgh School of Medicine, where he has been
employed since 1996. Dr. Yoshimura also serves on the appeals committee of the University of Pittsburgh School of Medicine. Dr.
Yoshimura’s research interests include understanding the mechanism inducing hyperexcitability of visceral afferent pathways
innervating the lower urinary tract in relation with pathophysiological conditions such as spinal cord injury, peripheral nerve
injury, inflammation, and diabetes mellitus, and identifying the role of neurotrophic factors in controlling the activity of visceral
afferent neurons. Since 2006, Dr. Yoshimura has served on the board of directors of the Comfortable Urology Network, a non-profit
organization. In addition, Dr. Yoshimura has served as a research officer for and on the board of directors of the International
Neuro-Urology Society since its establishment in 2016. Dr. Yoshimura is a published author of more than 300 articles, abstracts,
and book chapters, teaches several courses at the University of Pittsburgh School of Medicine, and mentors a number of students,
residents, and research fellows each year. Dr. Yoshimura is also principal investigator on several sponsored research projects
and holds a number of patents in his field. Dr. Yoshimura serves as a member of the editorial board for the Journal of the Japanese
Continence Society and the International Journal of Urology. We believe that Dr. Yoshimura is qualified to serve on the Board
due to his extensive experience in urinary bladder research and related consulting experience with the pharmaceutical industry.
Vote
Required and Recommendation
Our
Certificate of Incorporation does not authorize cumulative voting. Delaware law and our Bylaws provide that directors are to be
elected by a plurality of the votes of the shares of Common Stock cast on the election of directors. This means that the seven
(7) candidates receiving the highest number of affirmative votes at the Annual Meeting will be elected as directors. Only shares
that are voted in favor of a particular nominee will be counted toward that nominee’s achievement of a plurality. Shares
present at the Annual Meeting that are not voted for a particular nominee or shares present by proxy where the stockholder properly
withheld authority to vote for such nominee will not be counted toward that nominee’s achievement of a plurality.
Votes
withheld will be counted for purposes of determining the presence or absence of a quorum but will not be counted as votes cast
for any particular nominee. Broker non-votes are not entitled to vote on Proposal No. 1, and 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 votes
cash for any particular nominee.
At
the Annual Meeting a vote will be taken on a proposal to approve the election of the seven (7) director nominees.
THE
BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE FOR THE ELECTION OF THE SEVEN (7) DIRECTOR NOMINEES.
CORPORATE
GOVERNANCE
Board
of Directors
The
Board oversees our business affairs and monitors the performance of our management. In accordance with our corporate governance
principles, the Board does not involve itself in day-to-day operations. The directors keep themselves informed through discussions
with the Chief Executive Officer, other key executives, and by reading the reports and other materials sent to them and by participating
in Board and committee meetings. Our directors hold office until our next Annual Meeting and until each of their respective successors
are elected and qualified or until each of their earlier resignation or removal, or if for some other reason they are unable to
serve in the capacity of director.
Director
Independence
The
Board consists of seven members. The number of directors is fixed from time to time by the Board, subject to the terms of our
Certificate of Incorporation and our Bylaws. Each of our current directors will continue to serve as a director until the election
and qualification of his or her successor, or until his or her earlier death, disqualification, resignation, or removal.
As
our Common Stock is listed on Nasdaq Capital Market (“Nasdaq”), our determination of the independence of directors
is made using the definition of “independent director” contained in Nasdaq Rule 5605(a)(2). As of August 9, 2024,
the Board has affirmatively determined that Drs. Birder, Kim and Yoshimura and Messrs. Cohen and Pruchnic are “independent
directors,” as that term is defined in the rules and regulations of The Nasdaq Stock Market LLC (“Nasdaq Rules”).
Under the Nasdaq Rules, the Board must be composed of a majority of “independent directors.” Additionally, subject
to certain limited exceptions, the Board’s audit, compensation, and nominating and corporate governance committees also
must be composed of all independent directors.
Audit
committee members must also satisfy the independence criteria set forth in Rule 10A-3 under the Securities Exchange Act of 1934
(the “Exchange Act”). Under the Nasdaq Rules, a director will only qualify as an “independent director”
if, in the opinion of that company’s board of directors, that person does not have a relationship that would interfere with
the exercise of independent judgment in carrying out the responsibilities of a director.
To
be considered to be independent for purposes of Rule 10A-3 of the Exchange Act, a member of an audit committee of a listed company
may not, other than in his capacity as a member of our audit committee, the Board, or any other committee of the Board: (1) accept,
directly or indirectly, any consulting, advisory, or other compensatory fee from the listed company or any of its subsidiaries;
or (2) be an affiliated person of the listed company or any of its subsidiaries.
The
Board has undertaken a review of its composition, the composition of its committees and the independence of each director. Based
upon information requested from and provided by each director concerning his or her background, employment and affiliations, including
family relationships, the Board has determined that the following members of our Board have a relationship that would interfere
with the exercise of independent judgment in carrying out the responsibilities of a director: Dr. Kaufman and Dr. Chancellor,
and that, other than such directors, each of our directors is “independent” as that term is defined under the listing
requirements and the Nasdaq Rules. In making this determination, the Board considered the current and prior relationships that
each non-employee director has with the Company and all other facts and circumstances the Board deemed relevant in determining
their independence, including the beneficial ownership of our Common Stock by each non-employee director.
Board
Composition and Diversity
The
following table sets forth certain diversity statistics as self-reported by the current members of the Board. Each of the categories
listed in the below table has the meaning as it is used in the Nasdaq Rules.
To
view our board diversity matrix as of September 30, 2023, please see our definitive proxy statement on Schedule 14A for our 2023
annual meeting of stockholders, filed with the SEC on October 10, 2023.
| Board
Diversity Matrix for Lipella Pharmaceuticals Inc. (As of August 9, 2024) |
| Total Number of Directors |
|
7 |
|
| |
|
Female |
|
|
Male |
|
|
Non-Binary |
|
|
Did
Not
Disclosure
Gender |
|
| Part I: Gender Identity |
|
|
|
|
|
|
|
|
|
|
|
|
| Directors |
|
1 |
|
|
6 |
|
|
— |
|
|
— |
|
| Part II: Demographic Background |
|
|
|
|
|
|
|
|
|
|
|
|
| African American or Black |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
| Alaskan Native or Native American |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
| Asian |
|
— |
|
|
2 |
|
|
— |
|
|
— |
|
| Hispanic or Latinx |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
| Native Hawaiian or Pacific Islander |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
| White |
|
1 |
|
|
4 |
|
|
— |
|
|
— |
|
| Two or More Races or Ethnicities |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
| LGBTQ+ |
|
— |
|
| Did Not Disclose
Demographic Background |
|
|
|
|
|
|
|
|
|
|
|
|
Board
Meetings and Attendance
During
the 2023 fiscal year, the Board conducted its annual meeting at the Company’s headquarters in November 2023. Ongoing and
ad-hoc business throughout 2023 was conducted remotely on an as needed basis, and by means of unanimous written consent.
Annual
Meeting Attendance
Although
we do not have a formal policy regarding attendance by members of the Board at our annual meeting of shareholders, the Board encourages
all of its members to attend the annual meeting of shareholders. In November 2023, all director nominees and all then directors
attended our 2023 annual meeting of shareholders virtually.
Stockholder
Communications with the Board
Stockholders
wishing to communicate with the Board, the non-management directors, or with an individual Board member may do so by writing to
the Board, to the non-management directors, or to the particular Board member, and mailing the correspondence to: info@lipella.com.
The envelope should indicate that it contains a stockholder communication. All such stockholder communications will be forwarded
to the director or directors to whom the communications are addressed.
Board
Committees
The
Board has established an audit committee, a compensation committee and a nominating and corporate governance committee, each of
which has the composition and the responsibilities described below. Members serve on these committees until their resignation
or until otherwise determined by the Board. Each committee operates under a charter approved by the Board. Copies of each committee’s
charter are posted on the investor relations section of our website at www.lipella.com.
Nominating
and Corporate Governance Committee
The
members of our nominating and corporate governance committee are Drs. Yoshimura and Kim and Mr. Pruchnic. Dr. Yoshimura serves
as the chairperson of our nominating and corporate governance committee. The composition of our nominating and corporate governance
committee meets the requirements for independence under the current Nasdaq listing standards and SEC rules and regulations. Our
nominating and corporate governance committee oversees and assists the Board in reviewing and recommending nominees for election
as directors and is responsible for, among other things:
| |
● |
identifying, considering
and recommending candidates for membership on the Board; |
| |
● |
developing and maintaining
corporate governance policies applicable to us; |
| |
● |
overseeing the process
of evaluating the performance of the Board; and |
| |
● |
advising the Board
on other corporate governance matters. |
Our
nominating and corporate governance committee operates under a written charter which satisfies the applicable rules of the SEC
and the listing standards of Nasdaq.
Audit
Committee
The
members of our audit committee are Messrs. Cohen and Pruchnic and Dr. Birder. Mr. Pruchnic serves as the chairperson of our audit
committee. Dr. Birder and Messrs. Cohen and Pruchnic each meet the requirements for independence under the current Nasdaq listing
standards and SEC rules and regulations. Each member of our audit committee is financially literate. In addition, the Board has
determined that Mr. Pruchnic is an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation
S-K promulgated under the Securities Act. This designation does not impose any duties, obligations or liabilities that are greater
than are generally imposed on members of our audit committee and the Board. Our audit committee oversees our corporate accounting
and financial reporting process, assists the Board in monitoring our financial systems and is responsible for, among other things:
| |
● |
our accounting and
financial reporting processes and internal controls, including our financial statement audits and the integrity of our financial
statements; |
| |
● |
our compliance with
applicable laws (including U.S. federal securities laws and other legal and regulatory requirements); |
| |
● |
our design, implementation
and performance of the Company’s internal control function; |
| |
● |
our policies with
respect to risk assessment and risk management pertaining to the financial, accounting and tax matters of the Company; |
| |
● |
reviewing and approving
related person transactions; |
| |
● |
selecting and hiring
our registered independent public accounting firm; |
| |
● |
the qualifications,
independence and performance of our independent auditors; and |
| |
● |
the preparation
of the audit committee report to be included in our annual proxy statements. |
Our
audit committee operates under a written charter that satisfies the applicable rules of the SEC and the listing standards of Nasdaq.
Compensation
Committee
The
members of our compensation committee are Drs. Yoshimura, Birder and Kim. Dr. Kim serves as the chairperson of our compensation
committee. The composition of our compensation committee meets the requirements for independence under the current Nasdaq listing
standards and SEC rules and regulations. Each member of such committee is: (i) an outside director, as defined pursuant to Section
162(m) of the Internal Revenue Code of 1986, as amended (the “Code”); and (ii) a non-employee director, as defined
in Rule 16b-3 promulgated under the Exchange Act. Our compensation committee oversees our compensation policies, plans and benefits
programs and is responsible for, among other things:
| |
● |
evaluating, recommending,
approving and reviewing executive officer and director compensation arrangements, plans, policies and programs; |
| |
● |
overseeing the Company’s
compensation policies, plans and benefit programs, and being responsible for the Company’s overall compensation philosophy; |
| |
● |
administering our
cash-based and equity-based compensation plans; and |
| |
● |
making recommendations
to the Board regarding any other board of director responsibilities relating to executive compensation. |
Our
compensation committee operates under a written charter which satisfies the applicable rules of the SEC and the listing standards
of Nasdaq.
Family
Relationships
There
are no family relationships between any of the officers or directors of the Company.
Involvement
in Certain Legal Proceedings
None.
Leadership
Structure of the Board
The
Board does not currently have a policy on whether the same person should serve as both the Chief Executive Officer and Chairman
of the Board or, if the roles are separate, whether the Chairman should be selected from the non-employee directors or should
be an employee. The Board believes that it should have the flexibility to make these determinations at any given point in time
in the way that it believes best to provide appropriate leadership for the Company at that time. Jonathan Kaufman serves as Chief
Executive Officer of the Company and as Chairman of the Board. The Company does not have a lead independent director.
Risk
Oversight
One
of the key functions of the Board is informed oversight of our risk management process. The Board does not anticipate having a
standing risk management committee, but rather anticipates administering this oversight function directly through the Board as
a whole, as well as through various standing committees of the Board that address risks inherent in their respective areas of
oversight. In particular, the Board is responsible for monitoring and assessing strategic risk exposure and our audit committee
has the responsibility to consider and discuss our major financial risk exposures and the steps our management has to take to
monitor and control such exposures, including guidelines and policies to govern the process by which risk assessment and management
is undertaken. The audit committee also monitors compliance with legal and regulatory requirements. Our compensation committee
also assesses and monitors whether our compensation plans, policies and programs comply with applicable legal and regulatory requirements.
Director
Nomination Procedures
There
have been no material changes to the procedures by which security holders may recommend nominees to our Board.
Insider
Trading Arrangements and Policies
We
have a written insider trading policy that applies to our directors, officers, employees and contractors, including our principal
executive officer, principal financial officer, principal accounting officer or controller, and persons performing similar functions.
We intend to disclose future amendments to such policy, or any waivers of its requirements, applicable to any principal executive
officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions or our
directors on our website identified above or in a current report on Form 8-K that we would file with the SEC.
Our
directors and executive officers may adopt written plans, known as Rule 10b5-1 plans, in which they will contract with a broker
to buy or sell shares of our Common Stock on a periodic basis. Under a Rule 10b5-1 plan, a broker executes trades pursuant to
parameters established by the director or officer when entering into the plan, without further direction from them. The director
or officer may amend a Rule 10b5-1 plan in some circumstances and may terminate a plan at any time. Our directors and executive
officers also may buy or sell additional shares outside of a Rule 10b5-1 plan when they are not in possession of material non-public
information subject to compliance with the terms of our insider trading policy. Prior to 180 days after the date of the pricing
of our initial public offering of the Company, subject to early termination, the sale of any shares under such plans would be
prohibited by the lock-up agreement that the director or officer has entered into with the underwriters.
Hedging
Policy
Our
insider trading policy prohibits our directors, officers and associates from engaging in hedging or monetization transactions,
including through the use of financial instruments such as prepaid variable forwards, equity swaps, collars, and exchange funds.
Information
About Our Executive Officers
Our
executive officers are:
| Name |
|
Age |
|
Position |
| Jonathan Kaufman |
|
58 |
|
President, Chief Executive Officer, Secretary
and Treasurer and Chairman of the Board of Directors |
| Michael Chancellor |
|
66 |
|
Chief Medical Officer and Director |
| Douglas Johnston |
|
40 |
|
Chief Financial Officer |
Biographical
information about Jonathan Kaufman and Michael Chancellor appears above on page 11.
Douglas
Johnston, CPA, Chief Financial Officer
Douglas
Johnston, CPA, has served as the Company’s Chief Financial Officer since November 9, 2022, and previously served in a similar
capacity as the Company’s Vice President of Finance since October 2021. Mr. Johnston has more than 15 years of experience,
including working with global pharmaceutical companies and early-stage pharmaceutical and technology companies. Most recently,
Mr. Johnston served as the chief financial officer of Apogee IT Services (“Apogee”) from 2017 to 2021. Prior to Apogee,
Mr. Johnston served from 2015 to 2017 as senior manager of finance for Mylan N.V. (specialty division), a global generic and specialty
pharmaceuticals company, director of finance from 2013 to 2015 at Forever, Inc., a digital archive and internet storage company,
assistant controller from 2011 to 2013 at Kadmon Corporation, a biopharmaceutical company that discovers, develops and markets
transformative therapies for unmet medical needs and is a subsidiary of Sanofi S.A. (Nasdaq: SNY), and prior to that, he served
as an audit manager at Deloitte Touche Tohmatsu Limited. Also, Mr. Johnston is the co-founder of Stonewall Finance, LLC. Mr. Johnston
received a bachelor’s degree in accounting from Washington and Jefferson College, is a certified public accountant licensed
in Pennsylvania, and is an active member of the American Institute of Certified Public Accountants.
Significant
Employees
Michele
Gruber has served in various roles for the Company since 2009 and currently serves as the Company’s Director of
Operations, a position she has held since March 2010. She has participated in the development of multiple Company product candidates
for the treatment of urologic diseases, as well as the design and conduct of urologic clinical trials. Mrs. Gruber’s early
work in the chemistry field included development of calibration standards for a Macromizer MALDI-TOF mass spectrometry as well
as analytical work in the biofuels industry. Mrs. Gruber was responsible for the development of GMP manufacturing and validation
and stability testing of LP-10 and has been similarly responsible for LP-310 in this regard, including preparation of the related
IND package. Mrs. Gruber holds a Bachelor’s degree in Chemistry from Carnegie Mellon University.
Janet
Okonski has served as the Company’s Director of Clinical Operations since August 2021, where she is responsible
for the Company’s clinical trial data management as well as communications with the Company’s clinical trial sites
and clinical research vendors, including medical monitoring, clinical laboratories for body-fluid analysis, safety monitoring
and overall data management. For more than twenty years prior, she was employed as a clinical research director at the University
of Pittsburgh’s Department of Urology. Mrs. Okonski has experience managing over 40 clinical trials in all phases of research,
including translational clinical research, and her experience also includes participating in clinical trial design and budgeting,
preparing FDA regulatory submissions (including IND applications) and clinical trial subject recruitment, retention and data collection.
Mrs. Okonski holds a Bachelor’s degree from Indiana University of Pennsylvania.
Delinquent
Section 16(a) Reports
Under
the securities laws of the United States, our directors, executive (and certain other) officers, and any persons holding ten percent
or more of our outstanding shares of Common Stock must report on their ownership of the Common Stock and any changes in such ownership
to the SEC. Specific due dates for these reports have been established. During the fiscal year ended December 31, 2023, all reports
required to be filed by such persons pursuant to Section 16(a) were filed on a timely basis.
DIRECTOR COMPENSATION
We have not implemented a formal policy
with respect to compensation payable to our non-employee directors. From time to time, we have granted equity awards to attract
individuals to join the Board and for their continued service thereon. In 2023, independent directors received $25,000 in cash
compensation, or $12,500 if they served less than a full year in 2023. A former independent director who departed our board of
directors in 2023 also received $12,500 for his services. In addition, in 2023 directors were granted options to purchase 25,000
shares of Common Stock at fair market value as of the date of issuance, expiring ten years from issuance. In addition, we reimburse
our directors for expenses associated with attending meetings of the Board and its committees. The Board is still in the process
of considering the non-employee director compensation policy.
The following table reflects all compensation
awarded to and earned by the Company’s directors for the fiscal year ended December 31, 2023.
| Name |
|
Fees Earned
or Paid in
Cash
($) |
|
|
Stock
Awards
($) |
|
|
Stock
Option
Awards
($)(1) |
|
|
Non-Equity
Incentive
Plan
Compensation
($) |
|
|
Nonqualified
Deferred
Compensation
Earnings
($) |
|
|
All Other
Compensation
($)(2) |
|
|
Total
($) |
|
| Byong (Christopher) Kim |
|
|
25,000 |
|
|
|
— |
|
|
|
37,500 |
|
|
|
— |
|
|
|
— |
|
|
|
797 |
|
|
|
63,297 |
|
| Ryan Pruchnic |
|
|
25,000 |
|
|
|
— |
|
|
|
37,500 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
62,500 |
|
| Naoki Yoshimura |
|
|
25,000 |
|
|
|
— |
|
|
|
37,500 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
62,500 |
|
| Lori Birder |
|
|
12,500 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
12,500 |
|
| Daniel Cohen |
|
|
25,000 |
|
|
|
— |
|
|
|
37,500 |
|
|
|
— |
|
|
|
— |
|
|
|
1,131 |
|
|
|
63,631 |
|
| David Battleman |
|
|
12,500 |
|
|
|
— |
|
|
|
37,500 |
|
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
50,000 |
|
| (1) |
Such board member received stock options to purchase up to 25,000 shares of Common Stock, at an aggregate grant date fair value of $1.50 per share. Options were fully vested and exercisable upon grant date, at an exercise price of $2.19 per share. |
| (2) |
The Company reimbursed board directors for travel-related expenses. |
EXECUTIVE OFFICER COMPENSATION
Our named executive
officers for the fiscal year ended December 31, 2023, which consist of our principal executive officer and the next two most highly
compensated executive officers, are:
| |
● |
Jonathan Kaufman, our Chief Executive Officer; |
| |
● |
Michael Chancellor, our Chief Medical Officer; and |
| |
● |
Douglas Johnston, our Chief Financial Officer. |
Summary Compensation Table for Fiscal
Years 2023 and 2022
The following table sets forth all plan
and non-plan compensation for the last two fiscal years paid to individuals who served as the Company’s principal executive
officer and the Company’s two other most highly compensated executive officers other than the principal executive officer
at the end of the last completed fiscal year, as required by Item 402(m)(2) of Regulation S-K of the Securities Act of 1933, as
amended (the “Securities Act”). We refer to these individuals collectively as our “Named Executive Officers.”
| Name and Principal Position |
|
Year |
|
|
Salary |
|
|
Bonus |
|
|
Stock
Awards |
|
|
Option
Awards
(1) |
|
|
Non-Equity
Incentive
Plan
Compensation |
|
|
Nonqualified
deferred
compensation
earnings |
|
|
All Other
Compensation |
|
|
Total |
|
| Jonathan Kaufman, |
|
2023 |
|
|
$ |
204,133 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
119,250 |
(2) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
323,383 |
|
| Chief Executive Officer |
|
2022 |
|
|
$ |
183,300 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
730,500 |
(2) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
913,800 |
|
| Michael Chancellor, |
|
2023 |
|
|
$ |
195,833 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
119,250 |
(3) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
315,083 |
|
| Chief Medical Officer |
|
2022 |
|
|
$ |
175,000 |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
730,500 |
(3) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
905,500 |
|
| Douglas Johnston, |
|
2023 |
|
|
$ |
165,000 |
|
|
$ |
20,000 |
|
|
$ |
— |
|
|
$ |
75,000 |
(4) |
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
260,000 |
|
| Chief Financial Officer |
|
2022 |
|
|
$ |
67,500 |
|
|
$ |
— |
|
|
$ |
— |
|
|
|
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
— |
|
|
$ |
67,500 |
|
| (1) |
Amounts reflect the aggregate grant date fair value of the stock options granted to each Named Executive Officer during the fiscal year ended December 31, 2022 and 2023, as computed in accordance with Financial Accounting Standards Board ASC 718. |
| (2) |
During the fiscal year ended December 31, 2023, the Company granted Dr. Kaufman stock options exercisable for up to an aggregate of 79,500 shares of Common Stock, which had a grant date fair value of $1.50 per share. During the fiscal year ended December 31, 2022, the Company granted Dr. Kaufman Stock options exercisable for 260,000 shares of Common Stock, of which (i) stock options exercisable for up to 100,000 shares of Common Stock have a grant date fair value of $2.825 per share (which stock options were granted in order to replace expired stock options previously held by Dr. Kaufman) and (ii) stock options exercisable for up to 160,000 shares of Common Stock have a grant date fair value of $2.80 per share. |
| (3) |
During the fiscal year ended December 31, 2023, the Company granted Dr. Chancellor stock options exercisable for up to an aggregate of 79,500 shares of Common Stock, which had a grant date fair value of $1.50 per share. During the fiscal year ended December 31, 2021, the Company granted Dr. Chancellor stock options exercisable for up to an aggregate of 260,000 shares of Common Stock, of which (i) stock options exercisable for up to 100,000 shares of Common Stock have a grant date fair value of $2.825 per share (which stock options were granted in order to replace expired stock options previously held by Dr. Chancellor) and (ii) stock options exercisable for up to 160,000 shares of Common Stock have a grant date fair value of $2.80 per share. |
| (4) |
During the fiscal year ended December 31, 2023, the Company granted Mr. Johnston stock options exercisable for up to an aggregate of 50,000 shares of Common Stock, which had a grant date fair value of $1.50 per share. |
Employment Agreements
Jonathan Kaufman
On July 17, 2020, Dr. Kaufman and the Company
entered into an employment agreement appointing Dr. Kaufman as Chief Executive Officer of the Company (the “Kaufman Agreement”).
The Kaufman Agreement establishes an employment term of two years beginning on July 17, 2020, which term will be automatically
extended for successive one-year periods unless either party notifies the other party of its intention not to renew upon at least
90 days’ written notice prior to the applicable renewal date. The Kaufman Agreement provides Dr. Kaufman with an annual base
salary of $183,300. In addition, Dr. Kaufman may be entitled to receive equity awards under the Company’s stock incentive
plans, as well as reimbursement of business expenses and bonus compensation, at the discretion of the Board, depending upon relevant
factors, including but not limited to fundraising success, continued ongoing grant revenue, successful progress in the clinic and
the Company’s financial position. The Kaufman Agreement also provides that Dr. Kaufman will participate in employee benefits
plans, practices and programs maintained by the Company. On August 4, 2023, the Company and Dr. Kaufman entered into an amendment
agreement, dated August 4, 2023 (the “Kaufman Amendment”), to the Kaufman Agreement. The Kaufman Amendment amended
the Kaufman Agreement solely to increase Dr. Kaufman’s annual base salary by $50,000, to $233,300.
Pursuant to the Kaufman Agreement, either
party may terminate such agreement for any reason upon 90 days’ advance written notice. In the event that Dr. Kaufman is
terminated by the Company for Cause or by Dr. Kaufman Without Good Reason (as such terms are defined in the Kaufman Agreement),
Dr. Kaufman is entitled to any accrued but unpaid base salary, employee benefits and reimbursement of unreimbursed expenses incurred
until the date of termination. In the event that Dr. Kaufman is terminated by the Company for Without Cause or by Dr. Kaufman for
Good Reason (as such terms are defined in the Kaufman Agreement), Dr. Kaufman is entitled to his base salary for six months following
such date of termination and all unvested stock options held by Dr. Kaufman under the Company’s stock incentive plans will
immediately vest. Additionally, in the event of termination without Cause by the Company or for Good Reason by Dr. Kaufman within
12 months of a Change in Control (as defined in the Kaufman Agreement), Dr. Kaufman is entitled to a receive a lump sum payment
of two times the annual base salary within 60 days following such termination and reimbursement for certain health insurance premium
payments.
Michael Chancellor
On July 17, 2020, Dr. Chancellor and the
Company entered into an employment agreement appointing Dr. Chancellor as Chief Medical Officer of the Company (the “Chancellor
Agreement”). The Chancellor Agreement establishes an employment term of two years beginning on July 17, 2020, which term
will be automatically extended for successive one-year periods unless either party notifies the other party of its intention not
to renew upon at least 90 days’ written notice prior to the applicable renewal date. The Chancellor Agreement provides that
Dr. Chancellor was initially to be paid an annual base salary of $45,650, provided that if the Company achieves adequate financial
liquidity and net working capital in connection with a subsequent private offering, such salary may be increased up to a maximum
of $175,000. This amount is currently covered by federal grant revenue. In addition, Dr. Chancellor may be entitled to receive
equity awards under the Company’s stock incentive plans, as well as reimbursement of business expenses and bonus compensation
at the discretion of the Board. The Chancellor Agreement also provides that Dr. Chancellor will participate in employee benefits
plans, practices and programs maintained by the Company. On August 4, 2023, the Company and Dr. Chancellor entered into an amendment
agreement, dated August 4, 2023 (the “Chancellor Amendment”), to Chancellor Agreement. The Chancellor Amendment amended
the Chancellor Agreement solely to increase Dr. Chancellor’s annual base salary by $50,000, to $225,000.
Pursuant to the Chancellor Agreement, either
party may terminate such agreement for any reason upon 90 days’ advance written notice. In the event that Dr. Chancellor
is terminated by the Company for Cause or by Dr. Chancellor Without Good Reason (as such terms are defined in the Chancellor Agreement),
Dr. Chancellor is entitled to any accrued but unpaid base salary, employee benefits and reimbursement of unreimbursed expenses
incurred until the date of termination. In the event that Dr. Chancellor is terminated by the Company for Without Cause or by Dr.
Chancellor for Good Reason (as such terms are defined in the Chancellor Agreement), Dr. Chancellor is entitled to his base salary
for six months following such date of termination and all unvested stock options held by Dr. Chancellor under the Company’s
stock incentive plans will immediately vest. Additionally, in the event of termination without Cause by the Company or for Good
Reason by Dr. Chancellor within 12 months of a Change in Control (as defined in the Chancellor Agreement), Dr. Chancellor is entitled
to a receive a lump sum payment of two times the annual base salary within 60 days following such termination and reimbursement
for certain health insurance premium payments.
Douglas Johnston
Effective November 1, 2022, Mr. Johnston
and the Company entered into an employment agreement appointing Mr. Johnston as Chief Financial Officer of the Company (the “Johnston
Agreement”). The Johnston Agreement establishes an employment term of two years beginning on November 1, 2022, which term
will be automatically extended for successive one-year periods unless either party notifies the other party of its intention not
to renew upon at least 90 days’ written notice prior to the applicable renewal date. The Johnston Agreement provides that
Mr. Johnston will be paid an annual base salary of $165,000. In addition, Mr. Johnston may be entitled to receive equity awards
under the Company’s stock incentive plans, as well as reimbursement of business expenses and bonus compensation at the discretion
of the Board. The Johnston Agreement also provides that Mr. Johnston will participate in employee benefits plans, practices and
programs maintained by the Company.
Pursuant to the Johnston Agreement, either
party may terminate such agreement for any reason upon 90 days’ advance written notice. In the event that Mr. Johnston is
terminated by the Company for Cause or by Mr. Johnston Without Good Reason (as such terms are defined in the Johnston Agreement),
Mr. Johnston is entitled to any accrued but unpaid base salary, employee benefits and reimbursement of unreimbursed expenses incurred
until the date of termination. In the event that Mr. Johnston is terminated by the Company for Without Cause or by Mr. Johnston
for Good Reason (as such terms are defined in the Johnston Agreement), Mr. Johnston is entitled to his base salary for six months
following such date of termination and all unvested stock options held by Mr. Johnston under the Company’s stock incentive
plans will immediately vest. Additionally, in the event of termination without Cause by the Company or for Good Reason by Mr. Johnston
within 12 months of a Change in Control (as defined in the Johnston Agreement), Mr. Johnston is entitled to a receive a lump sum
payment of two times the annual base salary within 60 days following such termination and reimbursement for certain health insurance
premium payments.
Stonewall Finance, LLC, of which Mr. Johnston
is a partner and co-founder, and the Company previously were party to an agreement, dated October 14, 2021 and which terminated
on October 22, 2022, pursuant to which Mr. Johnston had served and performed financial and accounting services for the Company
and pursuant to which Mr. Johnston received cash payments from the Company of $4,000 per month.
Other Compensation
We provide standard health insurance benefits
to our executive officers, on the same terms and conditions as provided to all other eligible employees. We believe these benefits
are consistent with the broad-based employee benefits provided at the companies with whom we compete for talent and therefore are
important to attracting and retaining qualified employees. Other than as described above, there were no post-employment compensation,
pension or nonqualified deferred compensation benefits earned by our Named Executive Officers during the years ended December 31,
2023 and 2022. Beginning in 2023, the Company began offering a 401(k) retirement savings plan to all employees, which is managed
by a third-party plan manager and administrator. This is offered to our executive officers on the same terms and conditions as
provided to all other eligible employees. We do not have any pension or profit-sharing programs for the benefit of our directors,
officers or other employees. The Board may recommend adoption of one or more such programs in the future.
Outstanding Equity Awards at 2023 Fiscal
Year End
The following table provides information
relating to the vested and unvested option and stock awards held by our Named Executive Officers as of December 31, 2023. Each
award to each Named Executive Officer is shown separately, with a footnote describing the award’s vesting schedule if not
fully vested at December 31, 2023.
| |
|
Option Awards |
|
Stock Awards |
|
Name and
Principal
Position |
|
Number of
Securities
Underlying
Unexercised
Options
Exercisable |
|
|
Number of
Securities
Underlying
Unexercised
Options
Unexercisable |
|
|
Equity
Incentive
Plan
Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options |
|
|
Option
Exercise
Price |
|
|
Option
Expiration
Date |
|
Number
of
Shares
or Units
of Stock
Unvested |
|
|
Market
Value
of
Shares
of Units
of Stock
Unvested |
|
|
Equity
Incentive
Plan
Awards:
Number
of
Unearned
Unvested
Shares |
|
|
Equity
Incentive
Plan
Awards:
Market
or
Payout
Value of
Unearned
Unvested Shares |
|
| Jonathan Kaufman, |
|
80,000 |
|
|
— |
|
|
— |
|
|
1.25 |
|
|
10/14/2015 |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
| Chief Executive Officer |
|
200,000 |
|
|
— |
|
|
— |
|
|
1.25 |
|
|
10/15/2025 |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
| |
|
100,000 |
|
|
— |
|
|
— |
|
|
1.25 |
|
|
10/12/2027 |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
| |
|
66,666 |
(1) |
|
33,334 |
(1) |
|
— |
|
|
5.00 |
|
|
03/31/2031 |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
| |
|
106,666 |
(2) |
|
53,334 |
(2) |
|
— |
|
|
5.00 |
|
|
09/03/2031 |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
| |
|
79,500 |
|
|
— |
|
|
— |
|
|
2.19 |
|
|
06/16/2033 |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
| Michael Chancellor, |
|
80,000 |
|
|
— |
|
|
— |
|
|
1.25 |
|
|
10/14/2015 |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
| Chief Medical Officer |
|
200,000 |
|
|
— |
|
|
— |
|
|
1.25 |
|
|
10/15/2025 |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
| |
|
100,000 |
|
|
— |
|
|
— |
|
|
1.25 |
|
|
10/12/2027 |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
| |
|
66,666 |
(3) |
|
33,334 |
(3) |
|
— |
|
|
5.00 |
|
|
3/31/2031 |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
| |
|
106,666 |
(4) |
|
53,334 |
(4) |
|
— |
|
|
5.00 |
|
|
9/3/2031 |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
| |
|
79,500 |
|
|
— |
|
|
— |
|
|
2.19 |
|
|
06/16/2033 |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
Douglas Johnston,
Chief Financial Officer |
|
50,000 |
|
|
— |
|
|
— |
|
|
2.19 |
|
|
06/16/2033 |
|
— |
|
|
— |
|
|
— |
|
|
— |
|
(1) Such stock options exercisable for
up to an aggregate of 100,000 shares of Common Stock were granted under the 2020 Plan and vest annually in equal installments over
three years, commencing on the
first anniversary of the date of grant. There were 33,334 unvested options related to this grant
as of December 31, 2023.
(2) Such stock options exercisable for
up to an aggregate of 160,000 shares of Common Stock were granted under the 2020 Plan and vest annually in equal installments over
three years commencing on the first anniversary of the date of grant. Of these options, 53,334 remain unvested related to this
grant as of December 31, 2023.
(3) Such stock options exercisable for
up to an aggregate of 100,000 shares of Common Stock were granted under the 2020 Plan and vest annually in equal installments over
three years, commencing on the first anniversary of the date of grant. There were 33,334 unvested options related to this grant
as of December 31, 2023.
(4) Such stock options exercisable for
up to an aggregate of 160,000 shares of Common Stock were granted under the 2020 Plan and vest annually in equal installments over
three years commencing on the first anniversary of the date of grant. Of these options, 53,334 remain unvested related to this
grant as of December 31, 2023.
CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
Other than as described below, except compensation
arrangements, since the past two fiscal years, there have been no transactions, whether directly or indirectly, between us and
any of the Company’s officers, directors, beneficial owners of more than 5% of outstanding shares of Common Stock or outstanding
shares of a class of voting preferred stock, or their family members, that exceeded the lesser of (i) $120,000 or (ii) one percent
(1%) of the average of the Company’s total assets at year-end for the last two fiscal years, and in which any of our directors,
executive officers or beneficial holders of more than 5% of any class of our capital stock, or any immediate family member of,
or person sharing the household with, any of these individuals, had or will have a direct or indirect material interest.
In August 2009 and January 2015, we issued
an aggregate of $100,000 in promissory notes to our co-founder, Dr. Chancellor, of which an aggregate face value of approximately
$75,000 had been outstanding immediately prior to our initial public offering (the “Chancellor Notes”). In connection
with such initial public offering, the Company and Dr. Chancellor entered into a note cancellation and stock purchase agreement,
pursuant to which the Chancellor Notes were cancelled and in connection therewith, Dr. Chancellor was issued an aggregate of 22,950
shares of Common Stock.
As of December
31, 2022, Jonathan Kaufman, the Company’s Chief Executive Officer, had contributed an aggregate of $250,000 in cash to the
Company to support its continued operations, in the form of a note payable. This note was paid in full at maturity and had a balance
of $0 at December 31, 2023.
Review, Approval or Ratification
of Transactions with Related Parties
We have adopted
a written related-person transactions policy that provides that our executive officers, directors, nominees for election as a director,
beneficial owners of more than 5% of our Common Stock and any members of the immediate family of the foregoing persons, are not
permitted to enter into a material related-person transaction with us without the review and approval of our audit committee, or
a committee composed solely of independent directors in the event it is inappropriate for our audit committee to review such transaction
due to a conflict of interest. Such policy provides that any request for us to enter into a transaction with an executive officer,
director, nominee for election as a director, beneficial owner of more than 5% of our Common Stock or with any of their immediate
family members or affiliates, in which the amount involved exceeds the lesser of (i) $120,000 or (ii) one percent of the average
of the Company’s total assets at year-end for the last two fiscal years, will be presented to our audit committee for review,
consideration and approval. In approving or rejecting any such proposal, we expect that our audit committee will consider the relevant
facts and circumstances available and deemed relevant to the audit committee, including, but not limited to, whether the transaction
is on terms no less favorable than terms generally available to an unaffiliated third party under the same or similar circumstances
and the extent of the related person’s interest in the transaction.
AUDIT COMMITTEE REPORT
The following report (the “Audit
Report”) of the Board’s audit committee (the “Audit Committee”) does not constitute soliciting material
and should not be deemed filed or incorporated by reference into any other Company filing under the Securities Act or the Exchange
Act except to the extent the Company specifically incorporates this Audit Report by reference therein.
Role of the Audit Committee
The Audit Committee’s primary responsibilities
fall into three (3) broad categories:
First, the Audit Committee is charged with
monitoring the preparation of quarterly and annual financial reports by the Company’s management, including discussions with
management and the Company’s outside auditors about draft annual financial statements and key accounting and reporting matters.
Second, the Audit Committee is responsible
for matters concerning the relationship between the Company and its outside auditors, including recommending their appointment
or removal, reviewing the scope of their audit services and related fees, as well as any other services being provided to the Company,
and determining whether the outside auditors are independent.
Third, the Audit Committee reviews financial
reporting, policies, procedures, and internal controls of the Company.
The Audit Committee has implemented procedures
to ensure that during the course of each fiscal year it devotes the attention that it deems necessary or appropriate to each of
the matters assigned to it under the Audit Committee’s charter. In overseeing the preparation of the Company’s financial
statements, the Audit Committee met with management and the Company’s outside auditors, including meetings with the Company’s
outside auditors without management present, to review and discuss all financial statements prior to their issuance and to discuss
significant accounting issues. Management advised the Audit Committee that all financial statements were prepared in accordance
with generally accepted accounting principles, and the Audit Committee discussed the statements with both management and the outside
auditors. The Audit Committee’s review included discussion with the outside auditors of matters required to be discussed
pursuant to Statement on Auditing Standards No. 61 (Communication with Audit Committees).
With respect to the Company’s outside
auditors, the Audit Committee, among other things, discussed with Urish Popeck & Co., LLC, the Company’s independent
registered public accounting firm for the fiscal year ended December 31, 2023, matters relating to its independence, including
the disclosures made to the Audit Committee as required by the Independence Standards Board Standard No. 1 (Independence Discussions
with Audit Committees).
Recommendations of the Audit Committee.
In reliance on the reviews and discussions referred to above, the Audit Committee recommended to the Board that the Board approve
the inclusion of the Company’s audited financial statements in the Company’s Annual Report on Form 10-K for the fiscal
year ended December 31, 2023 for filing with the U.S. Securities and Exchange Commission.
This Audit Report has been furnished by the Audit Committee
of the Board.
Ryan Pruchnic, Chairman
Lori Birder
Daniel Cohen
AUTHORIZATION OF THE BOARD TO AMEND
THE CERTIFICATE OF INCORPORATION TO
EFFECT A REVERSE STOCK SPLIT OF ALL
OUTSTANDING SHARES OF COMMON STOCK
(Proposal No. 2)
Summary
We are seeking stockholder approval of
a proposal to authorize the Board to amend the Certificate of Incorporation to effect a reverse stock split of all outstanding
shares of Common Stock by a ratio in the range of one-for-five to one-for-one hundred and fifty, to be determined in the Board’s
sole discretion, at any time after approval of such amendment and no later than the one year anniversary of such approval. The
Board has unanimously approved this Proposal No. 2.
As previously
disclosed in a Current Report on Form 8-K filed with the SEC on April 19, 2024, the Company received a letter (the “Nasdaq
Letter”) from the Listing Qualifications staff (the “Staff”) of The Nasdaq Stock Market LLC stating 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 Rule 5550(a)(2)
(the “Minimum Bid Price Requirement”).
Pursuant to Nasdaq
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 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 Nasdaq, 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 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 hearings panel of The Nasdaq
Stock Market LLC.
The exact ratio of the Reverse Stock Split
will be set at a whole number within the range of one-for-five and one-for-one hundred and fifty as determined by the Board in
its sole discretion. The Board believes that the availability of alternative reverse stock split ratios will provide it with the
flexibility to implement the Reverse Stock Split in a manner designed to maximize the anticipated benefits for the Company and
its stockholders. In determining how to implement the Reverse Stock Split following the receipt of stockholder approval, the Board
may consider, among other things, factors such as:
| |
● |
the historical trading price and trading volume of shares of Common Stock; |
| |
● |
the then prevailing trading price and trading volume of shares of Common Stock and the anticipated impact of the Reverse Stock Split on the trading market for shares of Common Stock; |
| |
● |
our ability to have shares of Common Stock remain listed on Nasdaq; |
| |
● |
the number of shares of Common Stock needed to reserve for issuance upon exercise and conversion of all outstanding warrants and other convertible securities; |
| |
● |
the anticipated impact of the Reverse Stock Split on our ability to raise additional financing; and |
| |
● |
prevailing general market and economic conditions. |
The Reverse Stock Split will become effective
upon filing of an amendment to the Certificate of Incorporation with the Secretary of State of the State of Delaware. The amendment
filed thereby will set forth the number of shares of Common Stock immediately prior to the Reverse Stock Split to be combined into
one share of Common Stock, within the limits set forth in this proposal. Except for adjustments that may result from the treatment
of fractional shares as described below, each holder of our shares of Common Stock will hold the same percentage of outstanding
shares of Common Stock immediately following the Reverse Stock Split as such stockholder holds immediately prior to the Reverse
Stock Split.
The form of the certificate of amendment
to the Certificate of Incorporation, pursuant to which the Reverse Stock Split would be effected, in the event this Proposal No.
2 is approved by stockholders, will be in substantially the form attached to this Proxy Statement as Appendix A. The
text of the form of amendment accompanying this Proxy Statement is subject to amendment to reflect the exact ratio for the Reverse
Stock Split and any changes that may be required by the office of the Secretary of State of the State of Delaware or that the Board
may determine to be necessary or advisable ultimately to comply with applicable law and to effect the Reverse Stock Split.
The Board believes that approval of the
amendment to the Certificate of Incorporation to effect the Reverse Stock Split is in the best interests of the Company and our
stockholders and has unanimously recommended that the proposed amendment be presented to our stockholders for approval.
Board Requirement to Implement the Reverse
Stock Split
If this Proposal No. 2 is approved,
the Reverse Stock Split will be implemented, if at all, at the Board’s sole discretion and with an exchange ratio determined
by the Board as described above. Such determination shall be based upon certain factors, including, but not limited to, the need
to comply with the Minimum Bid Price Requirement, the historical trading price and trading volume of shares of Common Stock, the
then prevailing trading price and trading volume of shares of Common Stock and the anticipated impact of the Reverse Stock Split
on the trading market for shares of Common Stock, our ability to have shares of Common Stock remain listed on Nasdaq, the number
of authorized and unissued shares of Common Stock available, the anticipated impact of the Reverse Stock Split on our ability to
raise additional financing, and prevailing general market and economic conditions. No further action on the part of stockholders
would be required to either implement or not implement the Reverse Stock Split. If our stockholders approve this Proposal No. 2,
we will communicate to the public, prior to the Effective Date (as defined below), additional details regarding the Reverse Stock
Split, including the specific ratio selected by the Board.
Effective Date
If
this Proposal No. 2 is approved by our stockholders, the Board will have sole and absolute discretion to determine whether or not
to implement the Reverse Stock Split, and if so, the ratio of the Reverse Stock Split to be implemented and the time and date of
the filing of the amendment to the Certificate of Incorporation to effect the Reverse Stock Split. If the Board determines to implement
the Reverse Stock Split after receipt of stockholder approval, we will file the certificate of amendment to the Certificate
of Incorporation with the Secretary of State of the State of Delaware on such date as the Board
determines to be the appropriate effective date for the Reverse Stock Split. Unless the Board determines otherwise, the
Reverse Stock Split will become effective, as of 5:00 p.m. Eastern Time on the date of filing of such certificate of amendment
(the “Effective Date”). Except as explained below with respect to fractional shares, the issued and outstanding shares
of Common Stock immediately prior to the Effective Date will automatically be converted, as of the Effective Date, into a
lesser number of shares of Common Stock calculated in accordance with a split ratio of between one-for-five and one-for-one hundred
and fifty, as selected by the Board and set forth in the certificate of amendment.
Purposes of the Reverse Stock Split
The primary purpose for the Reverse Stock
Split is based on the Board’s belief that the Reverse Stock Split will be necessary to maintain the listing of shares of
Common Stock on Nasdaq. The Board believes that the Reverse Stock Split could also improve the marketability and liquidity of the
Common Stock.
Maintain our listing on Nasdaq. Our
Common Stock is traded on Nasdaq. The Board has considered the potential harm to the Company and its stockholders should our Common
Stock be delisted from Nasdaq based on any failure to comply with the Minimum Bid Price Requirement. Delisting our Common Stock
could adversely affect the liquidity of our Common Stock because alternatives, such as the Pink Market and the other over-the-counter
markets operated by OTC Markets Group Inc., 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, in the
event the Minimum Bid Price Requirement is not met, the Reverse Stock Split is an effective means for us to comply with such requirement
and to avoid, or at least mitigate, the likely adverse consequences of our Common Stock being delisted from Nasdaq by producing
the immediate effect of increasing the bid price of our Common Stock.
Improve the marketability and liquidity
of the Common Stock. If this Proposal No. 2 is approved by stockholders at the Annual Meeting and the Reverse Stock Split
is implemented, we also believe that the increased market price of our Common Stock expected as a result of implementing the Reverse
Stock Split will improve the marketability and liquidity of our Common Stock and will encourage interest and trading in our Common
Stock. The Reverse Stock Split could allow a broader range of institutions to invest in our Common Stock (namely, funds that are
prohibited from buying stocks whose price is below a certain threshold), potentially increasing the liquidity of our Common Stock.
The Reverse Stock Split could also help increase analyst and broker interest in our Common Stock, as their policies can discourage
them from following or recommending companies with low stock prices. Because of the trading volatility often associated with low-priced
stocks, many brokerage houses and institutional investors have internal policies and practices that either prohibit them from investing
in low-priced stocks or tend to discourage individual brokers from recommending low-priced stocks to their customers. Some of those
policies and practices may function to make the processing of trades in low-priced stocks economically unattractive to brokers.
Additionally, because brokers’ commissions on low-priced stocks generally represent a higher percentage of the stock price
than commissions on higher-priced stocks, the current average price per share of our Common Stock can result in individual stockholders
paying transaction costs representing a higher percentage of their total share value than would be the case if the share price
were substantially higher. It should be noted, however, that the liquidity of our Common Stock may in fact be adversely affected
by the proposed Reverse Stock Split given the reduced number of shares of Common Stock that would be outstanding after the Reverse
Stock Split.
For the above reasons, we believe that
the Reverse Stock Split will help us comply with the Minimum Bid Price Requirement and, as a result, could also improve the marketability
and liquidity of our Common Stock, which is in the best interests of the Company and our stockholders.
Risks of the Reverse Stock Split
We cannot assure you that the proposed
Reverse Stock Split will increase our stock price and have the desired effect of compliance with the Minimum Bid Price Requirement. The
Board expects that the Reverse Stock Split, if approved and implemented, if the Board deems it necessary, will increase the market
price of our Common Stock so that we are able to comply with the Minimum Bid Price Requirement. However, the effect of the Reverse
Stock Split upon the market price of our Common Stock cannot be predicted with any certainty, and the history of similar reverse
stock splits for companies in like circumstances is varied.
It is possible that the per share price
of our Common Stock after the Reverse Stock Split will not rise in proportion to the reduction in the number of shares of our Common
Stock outstanding resulting from the Reverse Stock Split, and the market price per post-Reverse Stock Split share may not exceed
or remain in excess of the $1.00 minimum bid price for a sustained period of time, and the Reverse Stock Split may not result in
a per share price that would attract brokers and investors who do not trade in lower priced stocks. Even if we effect the Reverse
Stock Split, the market price of our Common Stock may decrease due to factors unrelated to the Reverse Stock Split. In any case,
the market price of our Common Stock may also be based on other factors which may be unrelated to the number of shares outstanding,
including our future performance. If the Reverse Stock Split is consummated and the trading price of the Common Stock declines,
the percentage decline as an absolute number and as a percentage of our overall market capitalization may be greater than would
occur in the absence of the Reverse Stock Split. Even if the market price per post-Reverse Stock Split share of our Common Stock
remains in excess of $1.00 per share, we may be delisted due to a failure to meet other continued listing requirements, including
Nasdaq listing requirements related to minimum stockholders’ equity, the minimum number of shares that must be in the public
float, the minimum market value of the public float and the minimum number of round lot holders.
The Reverse Stock Split may decrease
the liquidity of our Common Stock. The liquidity of our Common Stock may be harmed by the Reverse Stock Split given the
reduced number of shares of Common Stock that would be outstanding after the Reverse Stock Split, particularly if the stock price
does not increase as a result of the Reverse Stock Split. In addition, investors might consider the increased proportion of unissued
authorized shares of Common Stock to issued shares to have an anti-takeover effect under certain circumstances, because the proportion
allows for dilutive issuances which could prevent certain stockholders from changing the composition of the Board or render tender
offers for a combination with another entity more difficult to successfully complete. The Board does not intend for the Reverse
Stock Split to have any anti-takeover effects.
Principal Effects of the Reverse Stock
Split
Common Stock. If this Proposal No.
2 is approved by the stockholders at the Annual Meeting and the Reverse Stock Split is implemented, subject to the conditions set
out in this Proposal No. 2, and thus amend the Certificate of Incorporation, the Company will file a certificate of amendment to
the Certificate of Incorporation with the Secretary of State of the State of Delaware. Except for adjustments that may result from
the treatment of fractional shares as described below, the issued and outstanding shares of Common Stock immediately prior to the
Effective Date will automatically be converted, as of the Effective Date, into a lesser
number of shares of Common Stock based on the exchange ratio within the approved range determined by the Board. In
addition, proportional adjustments will be made to the maximum number of shares of Common Stock issuable under, and other terms
of, (i) our equity incentive plans, and (ii) the number of shares of Common Stock issuable under, and the exercise prices of, our
outstanding exercisable securities.
Except for adjustments that may result
from the treatment of fractional shares of Common Stock as described below, because the Reverse Stock Split would apply to all
issued shares of our Common Stock, the Reverse Stock Split would not alter the relative rights and preferences of our existing
stockholders nor affect any stockholder’s proportionate equity interest in the Company. For example, a holder of two percent
(2%) of the voting power of our outstanding Common Stock immediately prior to the effectiveness of the Reverse Stock Split will
generally continue to hold two percent (2%) of the voting power of our outstanding Common Stock immediately after the Reverse Stock
Split. Moreover, the number of stockholders of record of shares of Common Stock will not be affected by the Reverse Stock Split.
The amendment to the Certificate of Incorporation itself to solely effect the Reverse Stock Split would not change the number of
authorized shares of Common Stock or the par value of the Common Stock. The Reverse Stock Split will have the effect of creating
additional unreserved shares of our authorized Common Stock. Although at present we have no current arrangements or understandings
providing for the issuance of the additional shares of Common Stock that would be made available for issuance upon effectiveness
of the Reverse Stock Split (other than pursuant to the terms of anti-dilution features in outstanding securities), these additional
shares of Common Stock may be used by us for various purposes in the future without further stockholder approval, including, among
other things:
| |
● |
raising capital to fund our operations and to continue as a going concern; |
| |
● |
establishing strategic relationships with other companies; |
| |
● |
providing equity incentives to our employees, officers or directors; and |
| |
● |
expanding our business or product lines through the acquisition of other businesses or products. |
While the Reverse Stock Split will make
additional shares of Common Stock available for the Company to use in connection with the foregoing, the primary purpose of the
Reverse Stock Split is to increase our stock price in order to comply with the Minimum Bid Price Requirement in the event such
requirement is not satisfied.
Effect on Employee Plans and Exercisable
Securities. Our equity incentive plans consist of (a) the 2008 Stock Incentive Plan (the “2008 Plan”) and
(b) the 2020 Stock Incentive Plan (the “2020 Plan”).
Pursuant to the terms of the 2008 Plan,
the number and kind of shares subject to outstanding Awards (as defined in the 2008 Plan), the Purchase Price (as defined in the
2008 Plan) for such shares, the number and kind of shares available for Awards subsequently granted under the 2008 Plan and the
maximum number of shares in respect of which Awards can be made to any Participant (as defined in the 2008 Plan) in any calendar
year will be appropriately adjusted to reflect the effect of the Reverse Stock Split. This would result in approximately the same
aggregate price being required to be paid under such outstanding securities upon exercise and approximately the same value of shares
of Common Stock being delivered upon such exercise immediately following the Reverse Stock Split as was the case immediately preceding
the Reverse Stock Split. Under the 2008 Plan, the Board has the power and sole discretion to determine the amount of the adjustment
to be made in each case.
Pursuant to the terms of the 2020 Plan,
the number and class of securities available under the 2020 Plan, (ii) the share counting rules set forth in Section 3 of the 2020
Plan, (iii) the number and class of securities and exercise price per share of each outstanding Option (as defined in the 2020
Plan), (iv) the share and per-share provisions and the measurement price of each outstanding SAR (as defined in the 2020 Plan),
(v) the number of shares subject to and the repurchase price per share (if any) subject to each outstanding Stock Award (as defined
in the 2020 Plan), and (vi) the share and per-share-related provisions and the purchase price, if any, of each outstanding Other
Award (as defined in the 2020 Plan), shall be equitably adjusted (or substituted Awards (as defined in the 2020 Plan) may be made,
if applicable) to reflect the effect of the Reverse Stock Split as the Board or, in the discretion of the Board, a committee or
subcommittee of the Board appointed by the Board, in its sole discretion, deems appropriate. This would result in approximately
the same aggregate price being required to be paid under such outstanding securities upon exercise, settlement or exchange, as
applicable, and approximately the same value of shares of Common Stock being delivered upon such exercise, settlement or exchange
immediately following the Reverse Stock Split as was the case immediately preceding the Reverse Stock Split.
Listing. Our shares of Common
Stock currently trade on Nasdaq. The Reverse Stock Split will directly affect the listing of our Common Stock on Nasdaq, and we
believe that the Reverse Stock Split could potentially increase our stock price, facilitating compliance with the Minimum Bid Price
Requirement. Following the Reverse Stock Split, we intend for our Common Stock to continue to be listed on Nasdaq under the symbol
“LIPO,” subject to our ability to continue to comply with the Nasdaq Rules, although our Common Stock will have a new
committee on uniform securities identification procedures (CUSIP) number, a number used to identify our Common Stock.
“Public Company” Status. Our
Common Stock is currently registered under Section 12(b) of the Exchange Act, and we are subject to the “public company”
periodic reporting and other requirements of the Exchange Act. The proposed Reverse Stock Split will not affect our status as a
public company or this registration under the Exchange Act. The Reverse Stock Split is not intended as, and will not have the effect
of, a “going private transaction” covered by Rule 13e-3 under the Exchange Act.
Odd Lot Transactions. It is
likely that some of our stockholders will own “odd-lots” of less than 100 shares of Common Stock following the Reverse
Stock Split. A purchase or sale of less than 100 shares of Common Stock (an “odd lot” transaction) may result in incrementally
higher trading costs through certain brokers, particularly “full service” brokers, and generally may be more difficult
than a “round lot” sale. Therefore, those stockholders who own less than 100 shares of Common Stock following the Reverse
Stock Split may be required to pay somewhat higher transaction costs and may experience some difficulties or delays should they
then determine to sell their shares of Common Stock.
Authorized but Unissued Shares; Potential
Anti-Takeover Effects. The Certificate of Incorporation presently authorizes 200,000,000 shares of Common Stock and 20,000,000
shares of preferred stock, par value $0.0001 per share. The Reverse Stock Split
would not change the number of authorized shares of Common Stock or the par value per share of the Common Stock, although the Reverse
Stock Split would decrease the number of issued and outstanding shares of Common Stock. Therefore, because the number of issued
and outstanding shares of Common Stock would decrease, the number of shares of Common Stock remaining available for issuance by
us in the future would increase.
Such additional shares of Common Stock
would be available for issuance from time to time for corporate purposes such as issuances of Common Stock in connection with capital-raising
transactions and acquisitions of companies or other assets, as well as for issuance upon conversion or exercise of securities such
as convertible preferred stock, convertible debt, warrants or options convertible into or exercisable for Common Stock. We believe
that the availability of the additional shares of Common Stock will provide us with the flexibility to meet business needs as they
arise, to take advantage of favorable opportunities and to respond effectively in a changing corporate environment. For example,
we may elect to issue shares of Common Stock to raise equity capital, to make acquisitions through the use of stock, to establish
strategic relationships with other companies, to adopt additional employee benefit plans or reserve additional shares of Common
Stock for issuance under such plans, where the Board determines it advisable to do so, without the necessity of soliciting further
stockholder approval, subject to applicable stockholder vote requirements under Delaware law and Nasdaq Rules. If we issue additional
shares of Common Stock for any of these purposes, the aggregate ownership interest of our current stockholders, and the interest
of each such existing stockholder, would be diluted, possibly substantially.
The additional shares of our Common Stock
that would become available for issuance upon an effective Reverse Stock Split could also be used by us to oppose a hostile takeover
attempt or delay or prevent a change of control or changes in or removal of our management, including any transaction that may
be favored by a majority of our stockholders or in which our stockholders might otherwise receive a premium for their shares of
Common Stock over then-current market prices or benefit in some other manner. Although the increased proportion of authorized but
unissued shares of Common Stock to issued shares of Common Stock could, under certain circumstances, have an anti-takeover effect,
the Reverse Stock Split is not being proposed in order to respond to a hostile takeover attempt or to an attempt to obtain control
of the Company.
Fractional Shares
We will not issue fractional shares as
a result of the Reverse Stock Split. Instead, in the event that a holder of pre-Reverse Stock Split shares of Common Stock would
have been entitled to receive fractional shares of Common Stock as a result of the Reverse Stock Split, the Company will issue
an additional share in lieu thereof to such holder.
No Dissenters’ Rights
Under Delaware law, our stockholders would
not be entitled to dissenters’ rights or rights of appraisal in connection with the implementation of the Reverse Stock Split,
and we will not independently provide our stockholders with any such rights.
Certain United States Federal Income
Tax Consequences
The following is a summary of certain United
States federal income tax consequences of the Reverse Stock Split. It does not address any state, local or foreign income or other
tax consequences, which, depending upon the jurisdiction and the status of the stockholder/taxpayer, may vary from the United States
federal income tax consequences. It applies to you only if you held pre-Reverse Stock Split shares of Common Stock as capital assets
for United States federal income tax purposes. This discussion does not apply to you if you are a member of a class of our stockholders
subject to special rules, such as (a) a dealer in securities or currencies, (b) a trader in securities that elects to use a mark-to-market
method of accounting for your securities holdings, (c) a bank, (d) a life insurance company, (e) a tax-exempt organization, (f)
a person that owns shares of Common Stock that are a hedge, or that are hedged, against interest rate risks, (g) a person who owns
shares of Common Stock as part of a straddle or conversion transaction for tax purposes, or (h) a person whose functional currency
for tax purposes is not the U.S. dollar. The discussion is based on the Internal Revenue Code of 1986, as amended (the “Internal
Revenue Code”), its legislative history, existing, temporary and proposed regulations under the Internal Revenue Code, published
rulings and court decisions, all as of the date hereof. These laws, regulations and other guidance are subject to change, possibly
on a retroactive basis. We have not sought and will not seek an opinion of counsel or a ruling from the Internal Revenue Service
regarding the United States federal income tax consequences of the Reverse Stock Split.
PLEASE CONSULT YOUR OWN TAX ADVISOR CONCERNING
THE CONSEQUENCES OF THE REVERSE STOCK SPLIT IN YOUR PARTICULAR CIRCUMSTANCES UNDER THE INTERNAL REVENUE CODE AND THE LAWS OF ANY
OTHER TAXING JURISDICTION.
Tax Consequences to United States Holders
of Common Stock. A United States holder, as used herein, is a stockholder who or that is, for United States federal income
tax purposes: (a) a citizen or individual resident of the United States, (b) a domestic corporation, (c) an estate whose income
is subject to United States federal income tax regardless of its source, or (d) a trust, if a United States court can exercise
primary supervision over the trust’s administration and one or more United States persons are authorized to control all substantial
decisions of the trust. This discussion applies only to United States holders.
If a partnership (or other entity or arrangement
treated as a partnership for U.S. federal income tax purposes) is a beneficial owner of our Common Stock, the tax treatment of
a partner in the partnership will depend upon the status of the partner and the activities of the partnership. Partnerships and
partners of a partnership holding our Common Stock are urged to consult their tax advisors regarding the U.S. tax consequences
of the Reverse Stock Split.
The Company intends for the transaction
to qualify as a “reorganization” within the meaning of Section 368(a) of the Code for U.S. federal income tax purposes,
and the remainder of the disclosure assumes it will so qualify. However, the Company has not sought and will not seek any ruling
from the IRS regarding any matters relating to the transaction, and as a result, there can be no assurance that the IRS will not
assert, or that a court would not sustain, a contrary position, in which case the consequences of the transaction could be materially
different from those described herein.
Provided that the Reverse Stock Split qualifies
as a “reorganization,” and except for adjustments that may result from the treatment of fractional shares of Common
Stock as described above, no gain or loss should be recognized by a stockholder upon such stockholder’s exchange of pre-Reverse
Stock Split shares of Common Stock for post-Reverse Stock Split shares of Common Stock pursuant to the Reverse Stock Split. The
aggregate adjusted basis of the post-Reverse Stock Split shares of Common Stock received will be the same as the aggregate adjusted
basis of the Common Stock exchanged for such new shares. The stockholder’s holding period for the post-Reverse Stock Split
shares of Common Stock will include the period during which the stockholder held the pre-Reverse Stock Split shares of Common Stock
surrendered.
Accounting Consequences
Following the Effective Date, if any, the
net income or loss and net book value per share of Common Stock will be increased because there will be fewer shares of Common
Stock outstanding. We do not anticipate that any other accounting consequences would arise as a result of the Reverse Stock Split.
Exchange of Stock Certificates
As of the Effective Date, each certificate
representing shares of Common Stock outstanding before the Reverse Stock Split will be deemed, for all corporate purposes, to evidence
ownership of the reduced number of shares of Common Stock resulting from the Reverse Stock Split. All shares of Common Stock underlying
options, warrants, preferred stock and other securities exchangeable or exercisable for or convertible into Common Stock also automatically
will be adjusted on the Effective Date.
Our transfer agent, Nevada Agency and Transfer
Company, will act as the exchange agent for purposes of exchanging stock certificates subsequent to the Reverse Stock Split. Shortly
after the Effective Date, stockholders of record will receive written instructions requesting them to complete and return a letter
of transmittal and surrender their old stock certificates for new stock certificates reflecting the adjusted number of shares as
a result of the Reverse Stock Split. Certificates representing shares of Common Stock issued in connection with the Reverse Stock
Split will continue to bear the same restrictive legends, if any, that were borne by the surrendered certificates representing
the shares of Common Stock outstanding prior to the Reverse Stock Split. No new certificates will be issued until such stockholder
has surrendered any outstanding certificates, together with the properly completed and executed letter of transmittal, to the exchange
agent. Until surrendered, each certificate representing shares of Common Stock outstanding before the Reverse Stock Split would
continue to be valid and would represent the adjusted number of shares of Common Stock, based on the ratio of the Reverse Stock
Split.
Any stockholder whose stock certificates
are lost, destroyed or stolen will be entitled to a new certificate or certificates representing post-Reverse Stock Split shares
of Common Stock upon compliance with the requirements that we and our transfer agent customarily apply in connection with lost,
destroyed or stolen certificates. Instructions as to lost, destroyed or stolen certificates will be included in the letter of instructions
from the exchange agent.
Upon the Reverse Stock Split, we intend
to treat stockholders holding our Common Stock in “street name,” through a bank, broker or other nominee, in the same
manner as registered stockholders whose shares of Common Stock are registered in their names. Banks, brokers and other nominees
will be instructed to effect the Reverse Stock Split for their beneficial holders holding our Common Stock in “street name.”
However, such banks, brokers and other nominees may have different procedures than registered stockholders for processing the Reverse
Stock Split. If you hold your shares in “street name” with a bank, broker or other nominee, and if you have any questions
in this regard, we encourage you to contact your bank, broker or nominee.
YOU SHOULD NOT DESTROY YOUR STOCK CERTIFICATES
AND YOU SHOULD NOT SEND THEM NOW. YOU SHOULD SEND YOUR STOCK CERTIFICATES ONLY AFTER YOU HAVE RECEIVED INSTRUCTIONS FROM THE EXCHANGE
AGENT AND IN ACCORDANCE WITH THOSE INSTRUCTIONS.
If any certificates for shares of Common
Stock are to be issued in a name other than that in which the certificates for shares of Common Stock surrendered are registered,
the stockholder requesting the reissuance will be required to pay to us any transfer taxes or establish to our satisfaction that
such taxes have been paid or are not payable and, in addition, (a) the transfer must comply with all applicable federal and state
securities laws, and (b) the surrendered certificate must be properly endorsed and otherwise be in proper form for transfer.
Book-Entry
The Company’s registered stockholders may hold some or all of their shares of Common Stock electronically in book-entry form
with our transfer agent. These stockholders do not have stock certificates evidencing their ownership of Common Stock. They are,
however, provided with a statement reflecting the number of shares of Common Stock registered in their accounts.
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If you hold registered shares of Common Stock in book-entry form, you do not need to take any action to receive your post-Reverse Stock Split shares of Common Stock in registered book-entry form. |
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● |
If you are entitled to post-Reverse Stock Split shares of Common Stock, a transaction statement will automatically be sent to your address of record by our transfer agent as soon as practicable after the Effective Date indicating the number of shares of Common Stock that you hold. |
Interests of Directors and Executive
Officers
Our directors and executive officers have
no substantial interests, directly or indirectly, in the matters set forth in this proposal except to the extent of their ownership
of shares of our Common Stock and equity awards granted to them under our equity incentive plans.
Vote Required and Recommendation
Our Bylaws provide that, on all matters
(other than the election of directors and except to the extent otherwise required by our 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 amend the Certificate of Incorporation to effect a Reverse Stock Split of all outstanding shares of Common Stock.
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. 2 has been approved. Since broker non-votes are not entitled to vote on Proposal No.
2, 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. 2 has been approved.
At the Annual Meeting a vote will be
taken on a proposal to authorize the Board to amend the Certificate of Incorporation to effect a Reverse Stock Split of all outstanding
shares of Common Stock.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE FOR THE REVERSE
STOCK SPLIT PROPOSAL.
RATIFICATION OF APPOINTMENT OF INDEPENDENT
REGISTERED PUBLIC ACCOUNTANTS
(Proposal No. 3)
Urish Popeck & Co., LLC (“Urish”)
has served as our independent registered public accounting firm since 2020 and has been appointed by the Audit Committee to continue
as our independent registered public accounting firm for the fiscal year ending December 31, 2024.
At the Annual Meeting, the stockholders
will vote on a proposal to ratify this selection of Urish as our independent registered public accounting firm. If this ratification
is not approved by the affirmative vote of a majority of the shares of Common Stock present at the Annual Meeting, in person or
by proxy, and voting on the matter, the Board will reconsider its selection of Urish as our independent registered public accounting
firm.
Urish has no interest, financial or otherwise,
in our Company. We do not currently expect a representative of Urish to physically attend the Annual Meeting, however, it is anticipated
that an Urish representative will be available to participate in the Annual Meeting via telephone in the event he or she wishes
to make a statement, or in order to respond to appropriate questions.
Fees Paid to Independent Registered
Public Accounting Firm
The following table presents aggregate
fees for professional services rendered by Urish for the audit of our annual financial statements for the fiscal years ended December
31, 2023 and 2022.
| |
|
2023 |
|
|
2022 |
|
| Audit fees(1) |
|
$ |
76,617 |
|
|
$ |
92,397 |
|
| Audit-related fees(2) |
|
|
— |
|
|
|
— |
|
| Tax fees(3) |
|
|
14,108 |
|
|
|
9,554 |
|
| All other fees |
|
|
— |
|
|
|
— |
|
| Total |
|
$ |
90,725 |
|
|
$ |
101,951 |
|
(1) “Audit
fees” include fees for professional services rendered in connection with the audit of our annual financial statements, review
of our quarterly condensed financial statements and advisory services on accounting matters that were addressed during the annual
audit and quarterly review. This category also includes fees for services that were incurred in connection with statutory and regulatory
filings or engagements, such as consents and review of documents filed with the SEC.
(2) “Audit-related
fees” include fees billed for professional services rendered that are reasonably related to the performance of the audit
or review of our financial statements, including subscription for the online library of accounting research literature and are
not reported under “Audit Fees”.
(3) “Tax
fees” include fees for tax compliance. Tax compliance fees encompass a variety of permissible services, including technical
tax advice related to federal and state income tax matters, and assistance with tax audits.
Policy on Audit Committee Pre-Approval
of Audit and Permissible Non-Audit Services of Independent Registered Public Accountant
Our Audit Committee pre-approves all audit
and non-audit services provided by our independent auditors prior to the engagement of such independent auditors with respect to
such services. The chairman of our Audit Committee has been delegated the authority by the Audit Committee to pre-approve interim
services by our independent auditors other than the annual audit. The chairman of our Audit Committee must report all such pre-approvals
to the entire Audit Committee at the next committee meeting.
Vote Required and Recommendation
Our Bylaws provide that, on all matters
(other than the election of directors and except to the extent otherwise required by our 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 holders of the shares of Common Stock present and entitled to vote on the matter will be required to ratify the Board’s
selection of Urish as our independent registered public accountants for the fiscal year ending December 31, 2024. If this ratification
is not approved by the requisite vote of the stockholders, in person or by proxy, and voting on the matter, the Board will reconsider
its selection of Urish as our independent registered public accounting firm.
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. 3 has been approved. Since broker non-votes are not entitled to vote on Proposal No.
3, 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. 3 has been approved.
At the Annual Meeting a vote will be
taken on a proposal to ratify the selection of Urish Popeck & Co., LLC as our independent registered public accountants for
the fiscal year ending December 31, 2024.
THE BOARD OF DIRECTORS UNANIMOUSLY RECOMMENDS
A VOTE FOR THE RATIFICATION
OF THE SELECTION OF URISH POPECK & CO., LLC AS THE COMPANY’S INDEPENDENT
REGISTERED PUBLIC ACCOUNTANTS FOR THE
FISCAL YEAR ENDING DECEMBER 31, 2024.
FUTURE
STOCKHOLDER PROPOSALS
Any stockholder
who desires to submit nominations for the election to the Board for the 2025 Annual Meeting of Stockholders (the “2025 Annual
Meeting”), or any stockholder who desires to include proposals in the Company’s 2025 Annual Meeting proxy materials
pursuant to Rule 14(a)-8 under the Exchange Act, for business other than nominations for the election to the Board of Directors,
must deliver written notice to the secretary of the Company at the principal executive offices of the Company no later than June
12, 2025, which is 90 calendar days prior to the anniversary of the date of the Annual Meeting, and no earlier than May 13, 2025,
which is 120 calendar days prior to the anniversary of the date of the Annual Meeting, provided that in the event that the date
of the 2025 Annual Meeting is advanced more than 30 days prior to or delayed by more than 60 days after the anniversary of the
Annual Meeting, or if no annual meeting was held in the preceding year, such notice must be received no earlier than 120 calendar
days prior to the date of the 2025 Annual Meeting and no later than the close of business on the later of (i) the 90th
day prior to the 2025 Annual Meeting and (ii) the 10th day following the day on which notice of the date of the 2025
Annual Meeting was mailed or public announcement of the date of such meeting is first made, whichever first occurs.
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 Annual Meeting except those that are set forth in the Notice of the Annual Meeting. If any
other matters properly come before the Annual 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 Annual Meeting. As of 5:00 p.m. Eastern Time on the Record Date, 8,004,636 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 Annual Meeting live via the Internet at www.virtualshareholdermeeting.com/LIPO2024,
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 Annual 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 Annual Meeting or by voting at the virtual
Annual Meeting while connected to the virtual Annual 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 Annual 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 Annual Meeting, the chairman of the Annual Meeting or the holders of a majority of the voting power of the shares of Common
Stock present at the Annual Meeting or represented by proxy, and cast at the Annual Meeting, may adjourn the Annual Meeting (without
notice other than announcement of adjournment at the Annual Meeting) to another time or to another time and place.
Whether or not you plan to attend the virtual
Annual 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 Annual Meeting
on the internet, the vote you cast at the virtual Annual 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 Annual 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 Annual 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 August 12, 2024.
INCORPORATION
OF DOCUMENTS BY REFERENCE
The
SEC permits us to “incorporate by reference” into this Proxy Statement the information that we file with the SEC under
the Exchange Act, which means that we can disclose important information to you by referring you to such information. Information
that is incorporated by reference is considered to be part of this Proxy Statement. Information that we file later with the SEC
will automatically update and supersede the information that is either contained, or incorporated by reference, in this Proxy Statement,
and will be considered to be a part of this Proxy Statement from the date such information is filed. We have filed with the SEC
and incorporate by reference in this Proxy Statement, except as superseded, supplemented or modified by this Proxy Statement,
the documents listed below (excluding those portions of any Current Report on Form 8-K that are not deemed “filed”
pursuant to the General Instructions of Form 8-K):
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our Annual Report on Form 10-K for the fiscal year ended December 31, 2023, filed with the SEC on February 27, 2024; |
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our Quarterly Report on Form 10-Q for the quarterly period ended March 31, 2024, filed with the SEC on May 9, 2024; |
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our Current Reports on Form 8-K filed with the SEC on March 15, 2023, April 12, 2023, April 19, 2023, August 1, 2024 and August 6, 2024; and |
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the description of our Common Stock contained in (i) our Registration Statement on Form 8-A, filed with the SEC on December 19, 2022, pursuant to Section 12(b) of the Exchange Act and (ii) Exhibit 4.2—Description of Securities Registered Pursuant to Section 12 of the Securities Exchange Act of 1934, to our Annual Report on Form 10-K for the fiscal year ended December 31, 2022, filed with the SEC on March 31, 2023. |
We
also incorporate by reference into this Proxy Statement additional documents that we may file with the SEC under Sections 13(a),
13(c), 14 or 15(d) of the Exchange Act after the date hereof but before the Annual Meeting (excluding any information not deemed
“filed” with the SEC). Any statement contained in a previously filed document is deemed to be modified or superseded
for purposes of this Proxy Statement to the extent that a statement contained in this Proxy Statement or in a subsequently filed
document incorporated by reference herein modifies or supersedes the statement, and any statement contained in this Proxy Statement
is deemed to be modified or superseded for purposes of this Proxy Statement to the extent that a statement contained in a subsequently
filed document incorporated by reference herein modifies or supersedes the statement.
You
may obtain a copy of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023,
including exhibits, and of other documents incorporated by reference herein, without charge, upon the written or oral request of
such documents. Requests should be directed to:
Lipella
Pharmaceuticals Inc.
7800
Susquehanna St., Suite 505
Pittsburgh,
PA 15208
(412)
901-0315
info@lipella.com
Copies
of these filings are also available on our website at www.lipella.com.
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 Annual 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.
| August 12, 2024 |
By Order of the Board of Directors, |
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/s/ Jonathan Kaufman |
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Jonathan Kaufman |
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President, Chief Executive Officer and Chairman of the Board |
Appendix
A
Proposed
Amendment to the Certificate of Incorporation for the Reverse Stock Split
FORM OF CERTIFICATE OF AMENDMENT OF
CERTIFICATE OF INCORPORATION OF
LIPELLA PHARMACEUTICALS INC.
Lipella Pharmaceuticals Inc., a corporation
organized and existing under and by virtue of the General Corporation Law of the State of Delaware (the “Corporation”),
does hereby certify that:
FIRST: The name of the Corporation is Lipella
Pharmaceuticals Inc.
SECOND: This Certificate of Amendment (this
“Certificate of Amendment”) amends the provisions of the Corporation’s Second Amended and Restated Certificate
of Incorporation, as amended as of the date hereof (the “Certificate of Incorporation”), last amended by a certificate
of amendment to the Certificate of Incorporation filed with the Secretary of State on December 19, 2022.
THIRD: Article IV(A) of the Certificate
of Incorporation is hereby amended by inserting the following paragraphs immediately below the last paragraph in Article IV(A)
of the Certificate of Incorporation as follows:
“(A)
Upon the filing of this Certificate
of Amendment with the Secretary of State of the State of Delaware on ______, 2024 (the “2024 Effective Time”),
each ________ outstanding shares of Common Stock outstanding immediately prior to the 2024 Effective Time (the “2024
Old Common Stock”) shall be combined and converted into one (1) share of Common Stock (the “2024 New Common
Stock”) based on a ratio of one share of 2024 New Common Stock for each _____ shares of 2024 Old Common Stock
(the “2024 Reverse Split Ratio”). This reverse stock split (the “2024 Reverse Split”) of
the outstanding shares of Common Stock shall not affect the total number of shares of capital stock, including the Common Stock,
that the Corporation is authorized to issue, which shall remain as set forth under this Article IV.
The 2024 Reverse Split shall
occur without any further action on the part of the Corporation or the holders of shares of 2024 New Common Stock and whether or
not certificates representing such holders’ shares prior to the 2024 Reverse Split are surrendered for cancellation. No fractional
interest in a share of 2024 New Common Stock shall be deliverable upon the 2024 Reverse Split, all of which shares of 2024 New
Common Stock shall be rounded up to the nearest whole number of such shares. Upon the 2024 Effective Time, all references to “Common
Stock” in this Certificate of Incorporation shall be to the 2024 New Common Stock.
The 2024 Reverse Split will
be effectuated on a stockholder-by-stockholder (as opposed to certificate-by-certificate) basis, except that the 2024 Reverse Split
will be effectuated on a certificate-by-certificate basis for shares held by registered holders, as applicable. For shares held
in certificated form, certificates dated as of a date prior to the 2024 Effective Time representing outstanding shares of 2024
Old Common Stock shall, after the 2024 Effective Time, represent a number of shares of 2024 New Common Stock as is reflected on
the face of such certificates for the 2024 Old Common Stock, divided by the 2024 Reverse Split Ratio and rounded up to the nearest
whole number. The Corporation shall not be obligated to issue new certificates evidencing the shares of 2024 New Common Stock outstanding
as a result of the 2024 Reverse Split unless and until the certificates evidencing the shares held by a holder prior to the 2024
Reverse Split are either delivered to the Corporation or its current transfer agent, or the holder notifies the Corporation or
such transfer agent that such certificates have been lost, stolen or destroyed and executes an agreement satisfactory to the Corporation
to indemnify the Corporation from any loss incurred by it in connection with such certificates.”
FOURTH: This amendment was duly adopted
in accordance with the provisions of Sections 212 and 242 of the General Corporation Law of the State of Delaware.
FIFTH: This Certificate of Amendment shall
be effective as of [__:__] [a.m.][p.m.], New York Time on the date written below.
SIXTH: All other provisions of the Certificate
of Incorporation shall remain in full force and effect.
IN WITNESS WHEREOF, the Corporation has
caused this Certificate of Amendment to be signed by its officer thereunto duly authorized this day
of ,
2024.
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LIPELLA PHARMACEUTICALS INC. |
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By: |
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Name: Jonathan Kaufman
Title: Chief Executive Officer |
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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/LIPO2024
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.
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| TO VOTE, MARK BLOCKS BELOW IN BLUE OR BLACK INK AS FOLLOWS: |
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V55054- P17104 |
KEEP THIS PORTION FOR YOUR RECORDS |
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DETACH AND RETURN THIS PORTION ONLY |
| THIS PROXY CARD IS VALID ONLY WHEN SIGNED AND DATED. |
LIPELLA PHARMACEUTICALS INC.
| The Board of Directors recommends that you vote as follows: “FOR” the election of each of the seven nominees to
the Board of Directors; “FOR” Proposals 2, and 3. |
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| 1. |
Election of Directors of the Company |
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Nominees: |
For |
Withhold |
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1a. Jonathan Kaufman |
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1b. Michael Chancellor |
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1c. Lori Birder |
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1d. Daniel Cohen |
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1e. Byong (Christopher) Kim |
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1f. Ryan Pruchnic |
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1g. Naoki Yoshimura |
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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.
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| Signature [PLEASE SIGN WITHIN BOX] |
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The approval of an amendment to the Company’s second amended and restated certificate of incorporation, as amended,
to effect a reverse stock split of all outstanding shares of the Company’s common stock, par value $0.0001 per share,
by a ratio in the range of one-for-five to one-for-one hundred and fifty, to be determined in the Board of Director’s
sole discretion at any time after approval of such amendment and no later than the one year anniversary of such approval. |
For
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Against
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Abstain
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Ratification of the appointment of Urish Popeck & Co., LLC as the Company’s independent registered public accountants
for the fiscal year ending December 31, 2024. |
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| NOTE:
Such other business as may properly come before the meeting or any adjournment thereof. |
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Signature (Joint Owners)
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Date |
Important Notice Regarding the Availability of Proxy Materials for the Annual Meeting of
Stockholders to be held on September 10, 2024, at 2:00 p.m. ET:
The Notice of Annual Meeting, Proxy Statement and Annual Report on Form 10-K are available at:
www.proxyvote.com
V55055-P17104
PROXY
LIPELLA PHARMACEUTICALS INC.
Lipella Pharmaceuticals Inc.
7800 Susquehanna St., Suite 505
Pittsburgh, PA 15208
(412) 894-1853
Your vote is important
THIS PROXY IS SOLICITED ON BEHALF OF THE BOARD OF DIRECTORS FOR THE 2024 ANNUAL
MEETING OF STOCKHOLDERS TO BE HELD LIVE VIA THE INTERNET – PLEASE VISIT
www.virtualshareholdermeeting.com/LIPO2024
The undersigned hereby appoints Dr. Jonathan Kaufman as the true and lawful attorney, agent and proxy of the undersigned,
with full power of substitution, to represent and to vote all shares of common stock of Lipella Pharmaceuticals Inc.
held of record by the undersigned on August 1, 2024, at the 2024 Annual Meeting of Stockholders
to
be held on September 10, 2024, at 2:00 p.m. ET to be held live via the internet at
www.virtualshareholdermeeting.com/LIPO2024, and at any adjournments thereof.
Any and all proxies heretofore given are hereby revoked.
When properly executed, this proxy will be voted as designated by the undersigned.
In his discretion, the proxy is authorized to vote upon such other business that may properly come before the Annual Meeting
of Stockholders.
Continued and to be signed on reverse side
Grafico Azioni Lipella Pharmaceuticals (NASDAQ:LIPO)
Storico
Da Feb 2025 a Mar 2025
Grafico Azioni Lipella Pharmaceuticals (NASDAQ:LIPO)
Storico
Da Mar 2024 a Mar 2025
