DEF: Calidi Biotherapeutics Seeks Stockholder Approval for Reverse Split and Expanded Equity Plan Amidst Ongoing Capital Raises

Calidi Biotherapeutics, Inc. is calling its stockholders to a virtual Annual Meeting on July 9, 2025, to vote on key proposals including a discretionary reverse stock split, an increase in its equity incentive plan shares, and the ratification of its new independent auditor.

Summary

• Calidi Biotherapeutics, Inc. will hold its virtual Annual Meeting of Stockholders on Wednesday, July 9, 2025, at 9:30 a.m. Pacific Time.
• Stockholders of record as of May 19, 2025, are entitled to vote on five key proposals.
• Proposal 1 seeks to elect Class II directors, James Schoeneck and George Peoples, to serve until the 2028 annual meeting, following an increase in the Board's size from five to six members with the appointment of Eric Poma as CEO and Class I Director.
• Proposal 2 requests ratification of CBIZ CPAs P.C. as the independent auditor for the fiscal year ending December 31, 2025, succeeding Marcum LLP due to an acquisition.
• Proposal 3 asks stockholders to approve a discretionary amendment to the Certificate of Incorporation to effect a reverse stock split at a ratio between 1-for-2 and 1-for-19, aimed at increasing the per-share trading price to meet NYSE American listing requirements and facilitate future capital raising.
• Proposal 4 proposes an amendment to the 2023 Equity Incentive Plan to increase the aggregate number of shares authorized for grant from 393,780 to 3,393,780, to retain and incentivize employees, consultants, officers, and directors.
• Proposal 5 is for the approval of an adjournment of the meeting, if necessary, to solicit additional proxies for the Reverse Stock Split and 2023 Plan Amendment proposals.
• The company has engaged in multiple financing activities recently, including a $4.3 million Confidentially Marketed Public Offering (CMPO) in January 2025, an increase in its At The Market (ATM) offering capacity to $11.2 million, and a $3.9 million Registered Direct and concurrent private placement in March 2025.
• A previous 1-for-10 reverse stock split was effected on July 15, 2024, which temporarily increased the stock price but did not maintain it above $1.00 per share in the long-term, with the price falling below $1.00 in February and December 2024.

Sentiment

Score: 3

Explanation: The sentiment is moderately negative. While the company is actively addressing listing compliance and seeking to incentivize talent, the repeated need for capital raises at low share prices, the failure of a previous reverse stock split to sustain price, and an ongoing legal dispute indicate significant financial and operational challenges. The proposals are reactive measures to underlying issues rather than indicators of strong performance.

Positives

• The company is actively seeking to maintain its NYSE American listing by proposing a reverse stock split, which could broaden investor interest from institutions that avoid low-priced stocks.
• The proposed increase in the 2023 Equity Incentive Plan shares aims to enhance the company's ability to attract, retain, incentivize, and reward key personnel, which is crucial for long-term success.
• Recent capital raising activities, including a $4.3 million CMPO and a $3.9 million Registered Direct offering, demonstrate the company's ability to secure funding for ongoing operations.
• The appointment of Eric Poma as the new Chief Executive Officer, effective April 22, 2025, brings a seasoned biotechnology executive with prior CEO experience at a clinical-stage company.
• The Board has implemented robust corporate governance practices, including independent directors, separate CEO and Chair roles, and a compensation recovery policy.

Negatives

• The necessity of proposing another reverse stock split, following a 1-for-10 split in July 2024 that failed to maintain the stock price above $1.00, indicates persistent challenges with stock valuation and compliance with listing standards.
• The company explicitly states it needs additional capital to continue operations and that failure to raise such capital would have a material adverse effect on its liquidity and business objectives, highlighting ongoing financial vulnerability.
• The termination of the Standby Equity Purchase Agreement (SEPA) with Yorkville, while stated as mutually agreed, removes a potential source of up to $25.0 million in equity financing.
• The company's current trading price of $0.418 per share as of May 19, 2025, is significantly below the NYSE American's $1.00 minimum price requirement, necessitating the proposed reverse stock split.
• The legal complaint filed by the former Chief Accounting Officer and Interim Chief Financial Officer, Tony Kalajian, alleging constructive discharge and defamation, represents an ongoing legal and reputational risk.

Risks

• There is no assurance that the proposed reverse stock split will result in a sustained increase in the per-share price or improve trading liquidity, as evidenced by the failure of the previous reverse stock split to achieve long-term price stability.
• A reverse stock split could lead to a greater percentage decline in the market price if the stock continues to fall, and the total market capitalization may be lower after the split.
• The increase in authorized but unissued shares resulting from the reverse stock split could dilute current stockholders' ownership interests if additional shares are issued in the future without further stockholder approval.
• The company's ability to raise additional equity or debt financing is uncertain and depends on market conditions and execution of its business plan, with no assurance of acceptable terms or availability.
• The ongoing legal proceeding with the former Chief Accounting Officer and Interim Chief Financial Officer could result in significant financial damages and legal costs for the company.
• The Forward Purchase Agreements carry risks of reduced or no settlement amounts for the company if a Dilutive Offering occurs or if the stock price remains low, potentially impacting expected capital inflows.

Future Outlook

The company intends to raise additional capital through equity or debt financing to fund its current operations and achieve its business objectives. The Board believes the proposed reverse stock split will facilitate this by potentially increasing the per-share market price, making the stock more attractive to institutional investors and improving liquidity. The company also plans to continue evaluating the cost savings and stockholder participation impact of its 'notice and access' proxy material distribution approach.

Management Comments

• "You are cordially invited to attend the virtual Annual Meeting of Stockholders of Calidi Biotherapeutics, Inc. (the Annual Meeting)."
• "As we believe that a virtual meeting format expands stockholder access and participation and improves communications, the Annual Meeting will be held in a virtual meeting format only."
• "The Board recommends that you vote FOR each of the proposals, as outlined in the accompanying Proxy Statement."
• "Your vote is very important, regardless of the number of shares of our voting Common Stock that you own."
• "The Board of Directors and management of Calidi Biotherapeutics, Inc. look forward to your attendance at the Annual Meeting."
• "The Board does not have a policy regarding the separation of the roles of the Chief Executive Officer and Chair of the Board, as the Board believes it is in the best interest of the Company and its stockholders to make that determination based on the position and direction of the Company and the membership of the Board, from time to time."
• "We believe at this time that our stockholders are best served by separate Chair and CEO roles."
• "The Company needs additional capital to continue operations."
• "The Board believes it is critically important for the Company to maintain its flexibility in accessing the equity capital markets."
• "The Company can provide no assurance that if this Proposal 3 is approved, and if the Company completes another reverse stock split, that the primary objective of the stock split, which is to comply with the $1.00 per share minimum price requirements of the NYSE American, will be achieved for a longer period of time than has occurred historically."

Industry Context

The document primarily focuses on corporate governance and financing activities specific to Calidi Biotherapeutics, Inc. rather than broad industry trends. However, the repeated need for capital raises and the struggle to maintain a minimum stock price suggest challenges common in the biotechnology sector, particularly for clinical-stage companies that require significant funding for research, development, and clinical trials without immediate revenue streams. The company's focus on immuno-oncology and oncolytic viruses places it within a highly competitive and capital-intensive segment of the biopharmaceutical industry.

Comparison to Industry Standards

• The company's need for a reverse stock split to maintain NYSE American listing, particularly after a recent 1-for-10 split failed to sustain the price above $1.00, indicates a struggle to meet basic exchange listing standards, which is below typical expectations for established public companies in the biotechnology sector.
• The frequent and varied capital raising activities (CMPO, ATM, Registered Direct, convertible notes, warrants) suggest a continuous need for funding, which is common for clinical-stage biotech companies but the frequency and terms (e.g., low share price offerings, warrant inducements) might indicate a more challenging financing environment compared to more mature or successful industry peers.
• The compensation structure for executive officers, including base salaries and performance bonuses, appears to be within general industry norms for a company of its stage, but the deferred salary payments and severance packages for departing executives (e.g., Allan Camaisa, George Ng) reflect specific company circumstances rather than broad industry benchmarks.
• The company's corporate governance structure, with independent directors and separate CEO/Chair roles, aligns with best practices for public companies, including those in the biotech industry, aiming for transparency and accountability.

Management Changes

Corporate Governance

Legal Proceedings

• On November 15, 2023, Tony Kalajian, the prior chief accounting officer and interim chief financial officer, filed a complaint in the Superior Court of the State of California County of San Diego against the company, Mr. Camaisa, and Ms. Campbell. The complaint alleges constructive discharge and defamation, seeking $575,000 in damages under his employment contract, additional damages to be proven at trial, punitive damages, and attorneys' fees. The company intends to vigorously defend itself and will seek recovery of a $150,000 bonus Mr. Kalajian approved to be paid to himself without proper authorization.

Related Party Transactions

• As of December 31, 2024, $2.7 million in current term notes payable, including accrued interest, were due to Directors A and E (Scott Leftwich and George Peoples).
• Amounts owed to AJC Capital (an entity of Allan Camaisa) and a relative of Officer A for reimbursable expenses totaled $30,000 as of December 31, 2024.
• A severance accrual and accrued interest of $434,000 was due to George Ng, former President and Chief Operating Officer, as of December 31, 2024.
• Advisory fees of $18,000 were accrued for Scott Leftwich (Director A) as of December 31, 2024, for strategic and advisory services, which were paid in January 2025.
• Allan Camaisa provided a personal Guaranty of Lease up to $0.9 million for the San Diego Lease, receiving 10% of the guaranteed amount for the first year and 5% per annum thereafter, with $186,000 representing the present value of this payment as of December 31, 2024.
• An agreement with Director A (Scott Leftwich) for deferred compensation, including advisory fees, amounted to $638,000 as of December 31, 2024, which was paid in January 2025.
• A loan payable of $223,000 from a relative of Officer A was outstanding as of December 31, 2024, and was paid in January 2025.
• A related-party investor made a strategic investment of approximately $2.0 million into Nova Cell in July 2024, in exchange for 25% of Nova Cell's common stock.
• The company entered into a Subscription Agreement with an accredited investor, a related-party, in July 2024, selling shares and warrants for $1.0 million.

Stakeholder Impact

• **Shareholders:** Will be directly impacted by the proposed reverse stock split, which aims to increase the per-share price but also carries risks of further price decline and potential dilution from increased authorized shares. The ongoing capital raises will also lead to dilution. Voting rights and other rights remain unchanged, except for fractional share treatment.
• **Employees, Consultants, Officers, and Directors:** Will benefit from the proposed increase in the 2023 Equity Incentive Plan shares, which is intended to enhance retention, incentive, and reward mechanisms. Executive compensation details are provided, showing significant compensation packages.
• **Creditors:** The company's frequent capital raising activities and outstanding term notes and loans indicate reliance on debt and equity financing, which impacts creditors' risk assessment. The settlement of some notes in January 2025 is positive for those creditors.
• **Customers/Suppliers:** Not directly addressed in this proxy statement, but the company's financial stability and ability to raise capital indirectly impact its capacity to continue operations, which would affect its relationships with customers and suppliers.

Next Steps

• Hold the virtual Annual Meeting of Stockholders on July 9, 2025, to vote on the proposed resolutions.
• If approved, the Board will determine the exact ratio and timing for the reverse stock split and publicly announce it.
• Continue to raise capital through equity or debt financing to fund current operations and achieve business objectives.
• File a current report on Form 8-K with the SEC within four business days after the Annual Meeting to publish preliminary or final voting results.

Key Dates

Keywords

Proxy Statement, Reverse Stock Split, Equity Incentive Plan, Capital Raise, SEC Filing, Corporate Governance, Biotherapeutics, Stockholder Meeting, NYSE American Listing, Executive Compensation, Auditor Ratification, Oncolytic Viruses, Cell Therapy