美國

證券交易委員會

華盛頓特區，20549

表格10-Q

☒	根據1934年證券交易法第13或15（d）節提交的季度報告書

截至季度結束的季度報告9月30日， 2024

☐	過渡根據1934年《證券交易法》第13或15（d）條提交的報告

委員會文件號 001-40789

Calidi Biotherapeutics，Inc。

（公司章程中指定的準確公司名稱）

特拉華		86-2967193
（註冊或組織所在地的州或其他司法管轄區）文件號碼）		（IRS 僱主 (主要執行人員之地址)

4475 執行道, 套房200, 聖迭戈, 加利福尼亞州		92121
(主要執行人員之地址)		(郵政編碼)

(858) 794-9600

根據交易所法規（17 CFR 240.14a-12）第14a-12規定的招股材料

根據法案第12(b)節註冊的證券:

每一類別的名稱	交易符號	在每個交易所註冊的名稱
普通股票，0.0001美元每股	CLDI	紐約證券交易所美國交易市場
每個整數認股權證可行使購買一份普通股。	CLDI WS	紐約證券交易所美國交易市場

請勾選標記以指示註冊者是否（1）在過去12個月內（或註冊者需要提交這些報告的更短時間內）已提交證券交易所法案第13或15（d）節要求提交的所有報告，及　（2）是否已被提交要求過去90天的提交要求所制約。Yes根據交易所法規12b-2中「大型加速文件報告人」，「加速文件報告人」，「小型報告公司」和「新興增長公司」的定義，請勾選發行人是否爲大型加速文件報告人。

請勾選以下表格以指示註冊者是否在過去的12個月內（或註冊者被要求提交和發佈此類文件的較短期限）已提交符合規定S-T（本章第232.405條）的每個互動式數據文件。 Yes根據交易所法規12b-2中「大型加速文件報告人」，「加速文件報告人」，「小型報告公司」和「新興增長公司」的定義，請勾選發行人是否爲大型加速文件報告人。

請勾選以下選項以確認該註冊申請人是否爲大型快速提交者、快速提交者、非加速提交者、小型報告公司或新興成長型公司。請參閱交易所法規120億.2中「大型快速提交者」、「快速提交者」、「小型報告公司」和「新興成長型公司」的定義。

大型加速文件提交人	☐	加速文件提交人	☐
非加速文件提交人	☒	小型報告公司	☒
		新興成長公司	☒

如果是新興成長公司，請勾選，如果註冊人已選擇不使用根據交易所法案第13(a)條提供的任何新的或修改的財務會計準則的延長過渡期，請勾選。 ☐

請在方框內打「√」，標明報告人是否爲空殼公司（根據證券交易法規12b-2條規定義）。是 ☐ 沒有 ☒

截至2024年11月7日，註冊人已 13,078,0220.0001美元面值的普通股0.0001 未發行的普通股票爲1800000股（不包括補充按金持有的1800000股非表決權普通股）

Calidi Biotherapeutics，Inc。

☒季度報告，根據1934年證券交易法第13條或第15（d）條

第一部分 - 財務信息

項目 1.	未經審計的精簡合併財務報表	3
	彙編的綜合資產負債表	3
	簡明的彙總操作表	4
	可轉換優先股和股東赤字的壓縮合並陳述	6
	簡明的綜合現金流量表	8
	簡明合併財務報表註釋	9
項目 2.	分銷計劃	47
項目 3.	有關市場風險的定量和定性披露	65
項目 4.	控制和程序	66

第二部分-其他信息

項目 1.	法律訴訟	66
Interest expense, net	風險因素	66
項目 2.	未註冊的股票股權銷售和籌款用途	68
項目 3.	對優先證券的違約	68
項目 4.	礦山安全披露	68
項目5。	其他信息	68
項目 6.	展示資料	69
	簽名	70

第I部分 - 財務信息

項目 1. 基本報表

加利迪生物製品公司

彙編簡明資產負債表

(除面值數據外，數以千計。)

	2024年9月30日			2023年12月31日
	(未經審計)
資產
流動資產
現金	$	1,897		$	1,949
預付費用和其他流動資產		324			2,354
總流動資產		2,221			4,303
非流動資產
機械設備淨額		982			1,270
經營租賃使用權資產，淨值		3,237			4,073
其他非流動資產		217			373
資產總計	$	6,657		$	10,019
負債和股東赤字
流動負債
應付賬款	$	3,574		$	2,796
關聯方應付款		—			81
應計費用及其他流動負債		2,567			4,896
關聯方應計費用及其他流動負債		496			536
有息票據應付款項(按貼現率淨額計算，含應計利息)		242			529
關聯方有息票據應付款項(按貼現率淨額計算，含應計利息)		2,631			278
關聯方應付橋接貸款(含應計利息)		217			—
關聯方其他流動負債		620			—
當前融資租賃負債		69			81
經營租賃義務，流動負債		1,163			1,035
流動負債合計		11,579			10,232
非流動負債
經營租賃義務，非流動負債		2,161			3,037
非流動財務租賃負債		166			216
認股權負債		163			623
關聯方權證負債		13			48
可轉換票據應付款項(含應計利息)		1,773			—
關聯方術語應付票據，折扣後淨額，包括應計利息		—			2,060
本票據		600			—
其他非流動負債		—			1,500
關聯方其他非流動負債		—			538
負債合計		16,455			18,254
承諾和業務準備金（注11）
股東權益虧損
普通股，每股面值爲 $0.0001；0.0001 面值， 330,000 股份已授權； 9,311 and 3,552 股份分別爲2024年9月30日和2023年12月31日的已發行和流通股份		1			1
額外實收資本		107,408			91,383
非控制權益		485			—
歸屬於母公司股東權益的累積其他綜合收益（扣除所得稅後）		(74	)		(47	)
累積赤字		(117,618	)		(99,572	)
股東赤字總額		(9,798	)		(8,235	)
基本報表中的負債和股東權益合計	$	6,657		$	10,019

附註是這些未經審計的簡明合併財務報表不可或缺的部分。

加利迪生物製品公司

濃縮合併運營報表

(以千爲單位，除每股數據外)

	2024			2023			2024			2023
	截至三個月的數據九月三十日，						截至九個月結束九月三十日,
	2024			2023			2024			2023
	(未經審計)
營業費用
研發	$	(2,153	)	$	(3,251	)	$	(7,063	)	$	(9,050	)
總務和行政		(3,073	)		(3,970	)		(10,687	)		(10,122	)
		(5,226	)		(7,221	)		(17,750	)		(19,172	)
營運虧損		(5,226	)		(7,221	)		(17,750	)		(19,172	)
其他收入（費用），淨額
利息支出		(98	)		(101	)		(304	)		(266	)
利息費用 - 關聯方		(134	)		(223	)		(454	)		(581	)
利息支出		(134	)		(223	)		(454	)		(581	)
債務、其他負債和衍生品公允價值變動		352			845			240			(1,255	)
債務、其他負債和衍生品公允價值變動-關聯方		28			4,473			36			1,213
債務、其他負債和衍生工具公允價值變動		28			4,473			36			1,213
B系列優先股融資成本-關聯方		—			—			—			(2,680	)
債務清償		—			(139	)		—			(139	)
償還債務-關聯方		—			(332	)		—			(332	)
償還債務		—			(332	)		—			(332	)
補助收入		—			693			181			2,273
其他收入（費用），淨額		8			(8	)		1			(29	)
其他總收益(費用)，淨額		156			5,208			(300	)		(1,796	)
稅前虧損		(5,070	)		(2,013	)		(18,050	)		(20,968	)
所得稅減免（準備金）		1			(11	)		(11	)		(19	)
淨損失	$	(5,069	)	$	(2,024	)	$	(18,061	)	$	(20,987	)
歸屬於非控股股權持有人的淨損失		(15	)		—			(15	)		—
歸屬於控股股東的淨虧損	$	(5,054	)	$	(2,024	)	$	(18,046	)	$	(20,987	)
認股權證的被視爲股息		—			—			(1,671	)		—
歸屬於普通股股東的淨虧損	$	(5,054	)	$	(2,024	)	$	(19,717	)	$	(20,987	)
每股淨虧損；基本和攤薄	$	(0.65	)	$	(1.41	)	$	(3.54	)	$	(19.80	)
基本和攤薄加權平均普通股數		7,824			1,431			5,577			1,060

附註是這些未經審計的簡明合併財務報表不可或缺的部分。

加利迪生物製品公司

綜合損益簡表

(以千爲單位)

	2024			2023			2024			2023
	截至三個月的數據九月三十日,						截至九個月結束九月三十日,
	2024			2023			2024			2023
	(未經審計)
淨損失	$	(5,069	)	$	(2,024	)	$	(18,061	)	$	(20,987	)
其他全面收益（費用），淨額，稅後：
外幣翻譯調整		(47	)		13			(27	)		10
綜合損失	$	(5,116	)	$	(2,011	)	$	(18,088	)	$	(20,977	)
歸屬於非控制股東的綜合虧損		(15	)		—			(15	)		—
歸屬普通股股東的綜合損失	$	(5,101	)	$	(2,011	)	$	(18,073	)	$	(20,977	)

附註是這些未經審計的簡明合併財務報表不可或缺的部分。

加利迪生物製品公司

可轉換優先股和股東赤字簡明彙編

(未經審計)

(以千爲單位，除股本以外)

	股份		數量		股份		數量		股份		數量		股份		數量		資本			收入（虧損）			赤字			利息			赤字
	方正證券可轉債優先股				A-1系列可轉換優先股				A-2系列基金可轉換優先股				普通股票				額外的實收資本			積累的其他綜合			積累的			非控制權益			總計股東股本
	股份		數量		股份		數量		股份		數量		股份		數量		資本			收入（虧損）			赤字			利息			赤字
2023年12月31日的餘額		—	$	—		—	$	—		—	$	—		3,552,223	$	1	$	91,383		$	(47	)	$	(99,572	)	$	—		$	(8,235	)
餘額		—	$	—		—	$	—		—	$	—		3,552,223	$	1	$	91,383		$	(47	)	$	(99,572	)	$	—		$	(8,235	)
以普通股代替現金支付的服務		—		—		—		—		—		—		5,000		—		29			—			—			—			29
以普通股發行代替現金支付SEPA承諾費		—		—		—		—		—		—		13,875		—		81			—			—			—			81
向Calidi股東發行普通股作爲併購結果		—		—		—		—		—		—		1,581		—		—			—			—			—			—
出具法律和解書的認股權證		—		—		—		—		—		—		—		—		158			—			—			—			158
融資費用		—		—		—		—		—		—		—		—		(327	)		—			—			—			(327	)
股權報酬														—		—		888			—			—			—			888
外幣翻譯調整		—		—		—		—		—		—		—		—		—			58			—			—			58
淨虧損		—		—		—		—		—		—		—		—		—			—			(7,225	)		—			(7,225	)
2024年3月31日結存餘額		—	$	—		—	$	—		—	$	—		3,572,679	$	1	$	92,212		$	11		$	(106,797	)	$	—		$	(14,573	)
餘額		—	$	—		—	$	—		—	$	—		3,572,679	$	1	$	92,212		$	11		$	(106,797	)	$	—		$	(14,573	)
通過公開募股發行普通股和預先融資的認股權證，扣除融資成本		—		—		—		—		—		—		1,323,250		—		4,822			—			—			—			4,822
按轉換票據發行普通股		—		—		—		—		—		—		256,886		—		1,028			—			—			—			1,028
通過5月誘因發行普通股，扣除融資成本		—		—		—		—		—		—		1,069,800		—		1,818			—			—			—			1,818
行使普通股權證		—		—		—		—		—		—		50,000		—		100			—			—			—			100
行使預先擔保的認股權		—		—		—		—		—		—		196,500		—		2			—			—			—			2
因債務清算髮行限制性股票單元														—		—		105			—			—			—			105
股權報酬														—		—		751			—			—			—			751
外幣翻譯調整		—		—		—		—		—		—		—		—		—			(38	)		—			—			(38	)
淨虧損		—		—		—		—		—		—		—		—		—			—			(5,767	)		—			(5,767	)
2024年6月30日餘額		—	$	—		—	$	—		—	$	—		6,469,115	$	1	$	100,838		$	(27	)	$	(112,564	)	$	—		$	(11,752	)
資產負債表		—	$	—		—	$	—		—	$	—		6,469,115	$	1	$	100,838		$	(27	)	$	(112,564	)	$	—		$	(11,752	)
行使普通股權證		—		—		—		—		—		—		1,737,500		—		2,736			—			—			—			2,736
發行普通股以償還債務		—		—		—		—		—		—		120,847		—		282			—			—			—			282
		—		—		—		—		—		—		20,000		—		150			—			—			—			150
發行普通股進行股票拆分並處理碎股		—		—		—		—		—		—		79,438		—		—			—			—			—			—
根據認購協議發行普通股和認股權證		—		—		—		—		—		—		698,812		—		1,000			—			—			—			1,000
按可轉換票據轉換髮行普通股		—		—		—		—		—		—		184,810		—		211			—			—			—			211
投資於nova電芯		—		—		—		—		—		—		—		—		1,500			—			—			500			2,000
股權報酬		—		—		—		—		—		—		—		—		691			—			—			—			691
外幣翻譯調整		—		—		—		—		—		—		—		—		—			(47	)		—			—			(47	)
淨虧損		—		—		—		—		—		—		—		—		—			—			(5,054	)		(15	)		(5,069	)
2024年9月30日的餘額		—	$	—		—	$	—		—	$	—		9,310,522	$	1	$	107,408		$	(74	)	$	(117,618	)	$	485		$	(9,798	)
資產負債表		—	$	—		—	$	—		—	$	—		9,310,522	$	1	$	107,408		$	(74	)	$	(117,618	)	$	485		$	(9,798	)

	創始人可转换優先股序列G-5						A-1 系列可转换優先股序列G-5						A-2 系列可转换優先股序列G-5						普通股票				額外已實收			累計其他綜合			累計			非控制權益		總計股東權益
	股份			金額			股份			金額			股份			金額			股份		金額		資本			收入（損失）			赤字			利息		赤字
2022年12月31日結餘(1)		432,982		$	1,354			179,665		$	3,871			105,928		$	4,376			858,373	$	—	$	19,930		$	(14	)	$	(70,356	)	$	—	$	(50,440	)
Balance		432,982		$	1,354			179,665		$	3,871			105,928		$	4,376			858,373	$	—	$	19,930		$	(14	)	$	(70,356	)	$	—	$	(50,440	)
根據2023年1月3日（1/3/23）日起的短期貸款協議發行普通股		—			—			—			—			—			—			540		—		45			—			—			—		45
根據2023年1月4日（1/4/23）日起的短期貸款協議發行普通股		—			—			—			—			—			—			270		—		23			—			—			—		23
根據各種短期貸款協議發行普通股		—			—			—			—			—			—			2,165		—		119			—			—			—		119
行使普通股期權		—			—			—			—			—			—			15,609		—		181			—			—			—		181
以股票為基礎的薪資		—			—			—			—			—			—			—		—		1,434			—			—			—		1,434
外匯轉換調整		—			—			—			—			—			—			—		—		—			2			—			—		2
淨虧損		—			—			—			—			—			—			—		—		—			—			(6,462	)		—		(6,462	)
2023年3月31日賬戶結餘(1)		432,982		$	1,354			179,665		$	3,871			105,928		$	4,376			876,957	$	—	$	21,732		$	(12	)	$	(76,818	)	$	—	$	(55,098	)
餘額		432,982		$	1,354			179,665		$	3,871			105,928		$	4,376			876,957	$	—	$	21,732		$	(12	)	$	(76,818	)	$	—	$	(55,098	)
根據不同短期貸款協議發行普通股		—			—			—			—			—			—			1,307		—		85			—			—			—		85
行使普通股期權		—			—			—			—			—			—			2,082		—		50			—			—			—		50
B系列融資成本		—			—			—			—			—			—			—		—		2,680			—			—			—		2,680
以股票為基礎的薪資		—			—			—			—			—			—			—		—		1,080			—			—			—		1,080
外匯轉換調整		—			—			—			—			—			—			—		—		—			(5	)		—			—		(5	)
淨虧損																				—		—		—			—			(12,501	)		—		(12,501	)
2023年6月30日結餘(1)		432,982		$	1,354			179,665		$	3,871			105,928		$	4,376			880,346	$	—	$	25,627		$	(17	)	$	(89,319	)	$	—	$	(63,709	)
餘額		432,982		$	1,354			179,665		$	3,871			105,928		$	4,376			880,346	$	—	$	25,627		$	(17	)	$	(89,319	)	$	—	$	(63,709	)
優先股轉換為普通股		(432,982	)		(1,354	)		(179,665	)		(3,871	)		(105,928	)		(4,376	)		718,574		—		9,601			—			—			—		9,601
根據和解協議發行普通股代替現金		—			—			—			—			—			—			155		—		11			—			—			—		11
行使普通股期權		—			—			—			—			—			—			2,082		—		50			—			—			—		50
為合併處理中的Calidi債務和解而發行普通股		—			—			—			—			—			—			38,782		—		2,234			—			—			—		2,234
為合併處理中的透支償還和解而發行普通股		—			—			—			—			—			—			4,683		—		333			—			—			—		333
因合并向Calidi股東發行普通股		—			—			—			—			—			—			1,668,339		—		56,101			—			—			—		56,101
因合并向Non-Redemption和PIPE協議投資者發行普通股		—			—			—			—			—			—			130,682		—		2,763			—			—			—		2,763
因合并向預購協議中發行普通股		—			—			—			—			—			—			100,000		—		4,520			—			—			—		4,520
因合并向遞延補償解決的利潤證發行warrants		—			—			—			—			—			—			—		—		705			—			—			—		705
合并承擔的負債		—			—			—			—			—			—			—		—		(6,808	)		—			—			—		(6,808	)
從合并中承擔的warrants責任		—			—			—			—			—			—			—		—		(3,389	)		—			—			—		(3,389	)
關於合并的遞延融資費用		—			—			—			—			—			—			—		—		(2,604	)		—			—			—		(2,604	)
以股票為基礎的薪資		—			—			—			—			—			—			—		—		1,109			—			—			—		1,109
外匯轉換調整		—			—			—			—			—			—			—		—		—			13			—			—		13
淨虧損		—			—			—			—			—			—			—		—		—			—			(2,024	)		—		(2,024	)
2023年9月30日賬戶餘額		—		$	—			—		$	—			—		$	—			3,543,643	$	—	$	90,253		$	(4	)	$	(91,343	)	$	—	$	(1,094	)
餘額		—		$	—			—		$	—			—		$	—			3,543,643	$	—	$	90,253		$	(4	)	$	(91,343	)	$	—	$	(1,094	)

附帶附註是這些未經審核的簡明合併財務報表中不可或缺的一部分。

(1)	追溯地為逆向資金重整而重新陳述。

CALIDI BIOTHERAPEUTICS，INC。

綜合現金流量表

（以千計）



	截至9月30日九個月結束時，
	2024			2023
	(未經審核)
營業活動之現金流量：
淨虧損	$	(18,061	)	$	(20,987	)
調整為使淨虧損轉化為經營活動所使用現金：
折舊費用		304			293
租賃資產攤提		838			599
債務折扣和融資成本的攤銷		41			711
以股票為基礎的薪資		2,331			3,623
債務、公允價值變動、其他負債及衍生工具的變動		(276	)		43
B系列優先股融資成本		—			2,680
債務清償		—			471
營運資產和負債的變化：
預付費用及其他流動資產		2,050			(1,867	)
應付帳款		537			(7,655	)
應計費用及其他流動負債		(1,285	)		697
營運租賃使用權負債		(750	)		(405	)
經營活動所使用之淨現金流量		(14,271	)		(21,797	)
投資活動產生的現金流量:
機械及設備的採購		(11	)		(515	)
與FLAG合併相關的現金承擔		—			9
保證金		—			63
投資活動中使用的淨現金		(11	)		(443	)
融資活動產生的現金流量:
四月公共發售所得款項		5,406			—
五月誘導性優惠所得款項		2,140			—
普通股warrants行使所得款項		2,835			—
發行nova電芯的非控股權益所得款項		2,000			—
發行可轉換應付款項的所得款項		3,000			—
根據訂閱協議發行普通股份及warrants的所得款項		1,000			—
發行本票的所得款項		600			—
行使預先配售認股權所得款項		2			—
行使股票期權所得		—			281
發行系列b優先股所得		—			9,590
相關方發行系列b優先股所得		—			14,907
非贖回和PIPE協議所得		—			2,763
相關方發行應付貸款所得		200			—
未來股權簡單協議（SAFE）所得		—			2,760
發行定期應付款項所得		—			1,250
相關方發行定期應付款項所得		—			2,000
融資租賃義務的償還		(63	)		(53	)
可轉換票據應付的償還		(1,500	)		—
定期票據應付的償還		(300	)		—
發行債務成本支付		(9	)		—
融资成本支出		(1,052	)		(1,496	)
籌資活動提供的淨現金		14,259			32,002
匯率變動對現金的影響		(29	)		13
現金及受限現金的淨（減少）增加		(52	)		9,775
現金及受限現金餘額：
期初		2,167			590
期末	$	2,115		$	10,365
現金流資訊的補充性披露
支付利息的現金	$	124		$	34
支付所得稅現金	$	10		$	11
非現金融資及投資活動補充日程
以普通股發行替代現金作為服務的對價	$	311		$	344
發行普通股以替代現金作SEPA承諾費用	$	81		$	—
發行warrants以結清與FLAG合併相關的延遲補償	$	158		$	705
發行普通股以進行法律和解		150			—
發行可轉換票據以進行法律和解	$	1,500		$	—
融資費用包括在應付帳款和應計負債中	$	289		$	—
可轉換票據應付款的折扣	$	149		$	—
warrants的視為股息	$	1,671		$	—
根據可轉換票據之轉換發行普通股	$	1,239		$	—
發行RSU以清償負債	$	105		$	—
以定期票據作為利息的普通股發行及其他	$	—		$	272
承擔來自FLAG合併的負債	$	—		$	(6,808	)
承擔來自FLAG合併的warrants負債	$	—		$	(3,389	)
因FLAG合併而發行的普通股	$	—		$	56,090
前購協議衍生資產	$	—		$	4,520
與FLAG合併相關的遞延融資費用	$	—		$	(2,604	)
轉換可轉換優先股時發行的普通股	$	—		$	9,601
以SAFE代替現金進行服務的發行	$	—		$	166
為了與FLAG合併相關的Calidi債務清償而發行普通股	$	—		$	2,234

隨附註釋為這些未經審計的縮短綜合財務報表的一個重要組成部分。

CALIDI BIOTHERAPEUTICS，INC。

註釋簡明合併基本報表附註

（未經審核）

1. 組織和營運性質

2023年9月12日，特信佳收購集團股份有限公司，一家特拉華州公司（「FLAG」），完成了一系列交易，導致FLAG Merger Sub Inc.，一家內華達州公司和FLAG的全資附屬公司與Calidi Biotherapeutics股份有限公司，一家內華達州公司（「Calidi」，並稱為「業務組合」）進行合併。業務組合完成後，FLAG更名為「Calidi Biotherapeutics, Inc.」，Calidi更名為「Calidi Biotherapeutics(Nevada), Inc.」，並成為本公司的全資附屬公司。除非上下文另有指示，「公司」指的是Calidi Biotherapeutics, Inc.，一家特拉華州公司（前稱為特信佳收購集團股份有限公司，一家特拉華州公司）及其合併子公司。

該公司是一家臨床階段的免疫腫瘤治療公司，致力於開發專有的異基因干細胞和包埋平台，以激發和傳遞溶瘤病毒（痘病毒和腺病毒）及可能其他分子到癌症患者體內。該公司正在開發一系列的離架異基因細胞產品候選藥物管道，旨在：(i) 保護溶瘤病毒免受體內免疫系統補體失活和固有免疫細胞失活的影響；(ii) 在異基因細胞中支持溶瘤病毒擴增，以及(iii) 修改腫瘤微環境，促進腫瘤細胞的靶向和溶瘤病毒在腫瘤部位長時間擴增，潛在地帶來改進的癌症治療。該公司最先進的產品候選藥物將在下面進行討論。

CLD-101 （NeuroNova平台）用於新診斷的高級胶质母细胞瘤（“HGG”）（也稱為“NNV1”有關指示），由一條帶有工程化溶瘤腺病毒的免疫化神經幹細胞株組成，用於治療HGG。 NNV1是從西北大學（“西北大學”）獲得授權的計劃，該公司於2021年6月獲得了商業化權利（參見注11）。西北大學於2021年6月完成了關於NNV1在新診斷的高級胶质母细胞瘤患者中的第一期臨床試驗。^™ CLD-101 （NeuroNova平台）用於新診斷的高級胶质母细胞瘤（“HGG”）（也稱為“NNV1”有關指示），由一條帶有工程化溶瘤腺病毒的免疫化神經幹細胞株組成，用於治療HGG。 NNV1是從西北大學（“西北大學”）獲得授權的計劃，該公司於2021年6月獲得了商業化權利（參見注11）。西北大學於2021年6月完成了關於NNV1在新診斷的高級胶质母细胞瘤患者中的第一期臨床試驗。

CLD-101 對於再發性HGG（亦稱為“NNV2”）是一個正在開發中的授權計劃，用於涵蓋使用相同CLD-101（NeuroNova發平台）進行癌症治療的專利^™ 再發性HGG使用相同CLD-101（NeuroNova平台）的癌症治療的專利，該公司於2021年7月根據與City of Hope的協議對這一產品候選人進行了商業開發的許可（參見附註11）。

CLD-201 (超新星^™）用於愛文思控股固態瘤（亦稱"SNV1"），由脂肪源性異基因間充質幹細胞（AD-MSC）裝載名為"CAL1"的腫瘤選擇性溶瘤牛痘病毒組成。 SNV1是公司內部開發的產品候選品，該公司主要適應症是治療包括頭頸癌、三陰性乳腺癌和晚期軟組織肉瘤在內的愛文思控股固態瘤。

該公司還在研發CLD-400（RTNova），這是一種由改造的痘痘病毒包膜的體系抗腫瘤病毒療法，其細胞膜具有更強的存活能力，可能有能力針對肺癌和愛文思控股轉移病情。RTNova目前仍處於探索性開發階段。

迄今，公司的業務重點在於組織和人員配置、商業計劃、籌集資金、授權、收購和開發技術、建立知識產權組合、確認潛在產品候選者，進行臨床前研究、製程開發以及獲得臨床前和臨床試驗的製造。公司的產品候選者需要經歷長期的研發週期，且公司可能在努力研發、獲得監管機構批准或市場推廣其產品候選者的過程中失敗。

在2024财政年度的第二季度，公司擴展了其業務，以推進其成人脂肪異體（AAA）幹細胞創新項目，擴展潛在用途，從腫瘤學擴展到其他需要再生醫療應用的領域，例如化妝品、骨科、自體免疫疾病以及各種其他療法。

本公司受生物技術行業初期公司常見的風險和不確定性影響，包括但不限於臨床前研究或臨床試驗可能失敗、需要為產品候選者取得上市批准、競爭對手開發新科技創新、依賴關鍵人員、保護專有技術、遵守政府法規、成功商業化和獲得市場接受儘管所批准的公司產品、以及獲得資本進行運營。目前開發中的產品候選者將需要大量研發工作，包括廣泛的臨床前和臨床測試，以及在商業化前的監管批准。這些工作需要大量的資本、足夠的人員和製造行業基礎設施，以及廣泛的依從性報告能力。即使公司的藥品開發工作成功，公司何時能從產品銷售中獲得可觀收入，仍是不確定的。

反向股票合併

在2024年7月10日，公司向特拉華州州書記提交了修改後的公司組織章程的第一份修訂證書，以實施每10股公司普通股面值為$ 的倒數股票合併，生效日期為2024年7月15日（“倒數股票合併”）。由於倒數股票合併的結果，每10股已發行和流通的普通股被自動合併為一股已發行和流通的普通股，每股面值均保持不變。因倒數股票合併而未發行任何碎股，並將原本因倒數股票合併而導致的碎股四捨五入為整數。公司修訂後的公司組織章程授權的普通股股份數量保持不變。每10股普通股面值 $ 的公司股票進行1股為10股的股票合併每10股普通股面值 $ 的公司股票進行1股為10股的股票合併0.0001 由於倒數股票合併，每10股已發行和流通的普通股被自動合併為一股已發行和流通的普通股，每股面值均保持不變。因倒數股票合併而未發行任何碎股，並將原本因倒數股票合併而導致的碎股四捨五入為整數。公司修訂後的公司組織章程授權的普通股股份數量保持不變。

對所有在未經審核的簡明綜合財務報表中所呈現的每期份額和每股數的引用均已經以追溯性方式重新調整，以反映此逆向股票拆分。所有根據在外的證券（包括但不限於認股權證、期權和受限制的股票單位（“ RSUs”）而擁有普通股份的權利已經調整以實施逆向股票拆分。此外，已對本公司發出的在傑出股票期權行使時購買普通股份的行使價和可購買普通股份數進行比例調整，以及已對公司2023年股權激勵計劃下為未來發行而保留的普通股份數量進行比例調整。

流動性和持續經營能力

未經查核的精簡綜合基本報表是根據持續經營的原則編製的，該原則考慮資產的實現和債務在業務正常運作中的結算，並不包括任何調整以反映可能導致資產回收和分類或金額和債務分類的未來效應的此不確定性結果。

公司從營運中持續承受虧損和來自營運活動的負現金流，積累了顯著的累積赤字，並預計在可預見的未來繼續出現淨虧損。截至2024年9月30日，公司的累計赤字為$117.6 百萬美元。在2024年9月30日結束的九個月中，公司用於營運活動的金額為$14.3 百萬美元。截至2024年9月30日，公司現金為$1.9 百萬美元，受限現金為$0.2 百萬美元。管理層預期營運虧損和負現金流未來將持續。

開啟 2023 年 12 月 10 日，本公司與開曼島亞利亞 II PN 有限公司簽訂備用股權購買協議（「SEPA」）豁免島嶼有限合夥公司（「約克維爾」）。根據 SEPA，本公司將有權利，但沒有義務，出售給約克維爾高達 $25.0 其普通股的百萬股，面值 $0.0001 每股，根據公司要求，任何在執行 SEPA 後的 36 個月內的時間。受 SEPA 規定的某些條件約束，包括付款若要支付額外承諾費用，本公司將有權將 SEPA 下的承諾金額增加額外的 $25.0 百萬。請參閱註 11 及註 12。

於2024年4月18日，本公司根據某特定證券購買協議（日期為2024年4月16日），與本公司和特定購買人之間達成，完成了本公司證券的公開發行（「4月公開發行」）。與4月公開發行相關，本公司共售出」 1,323,250 普通股份單位和 196,500 預購股票證券（“PFW”）單位，以每普通股份單位或PFW單位有效合併購買價格為$4.00 每普通股份單位或PFW單位，合計總發售總額約為610萬美元，不計公司需支付的銷售代理費用和發售費用。本次公開發行的證券根據提交給證券交易委員會（“SEC”）的S-1表格，並於2024年4月15日生效的文件編號333-276741进行注册和出售修訂。

公司於2024年5月31日與公司現有的第b系列授權購買權證持有人（“第b系列Warrants”）及第C系列授權購買權證持有人（“第C Warrants”及與第b系列Warrants合稱為“現有Warrants”）簽署誘因提議書協議（“5月誘因提議”），這些現有Warrants原發行於2024年4月18日，行使價為$6.00 （見注8）。 5月誘因提議完成後，這些授權證持有人立即行使其相應的未到期現有Warrants，最多購買公司普通股合計 1,069,800 股，數量最多為第b-1系列Warrants最多可購買 267,300 股的股份、第C-1系列Warrants最多可購買 802,500 股的股份，行使價為$2.00。作為立即行使部分或全部現有Warrants以現金購買的考慮，公司同意發行未註冊的新Series D普通股購買權證（“Series D Warrants”）以最多購買 1,069,800 股的股份（見注8）。公司從根據5月誘因提議行使現有Warrants的現金收到2.1 百萬美元的毛收益，未扣除配售代理費和發行費用。

2024年7月26日，公司董事會批准了日期為2024年7月28日的認購協議（「認購協議」），該協議是與一名認證投資者（「投資者」）—一名相關方—簽訂的。根據該協議，公司向投資者出售並投資者購買了（i） 698,812 股票價格為$1.431 股票、每股單價為$ 600,000 公司普通股的股份，行使價格為$1.90的認股權證；及（ii）warrants購買1.0 百萬。

2024年7月26日，公司董事會承認接受一位認可投資人（「投資者」）大約$的戰略投資。2.0 該投資者為與公司有關的方，向公司之子公司nova電芯交易所投資，以nova電芯的股份換取nova電芯的普通股股份。7,500,000 代表nova電芯目前全面稀釋資本的%的nova電芯股份。 25

於2024年10月11日，公司與Ladenburg Thalmann & Co. Inc.（「Ladenburg」）簽訂了一份市場售賣協議（「銷售協議」）。根據該協議，公司可以自行決定，在Ladenburg作為代理人或買方的情況下，不時發行及賣出公司的普通股股份，面值為每股$。0.0001 每股股價最初可達$，總計高達$百萬。詳見附註12。5.1 查看附註12。

2024年10月23日，公司與特定機構投資者（“買家”）簽署了證券購買協議，根據該協議，公司同意向買家發行股份，（i）在註冊發行中， 2,050,000 公司普通股每股面值$0.0001 每股$的購買價格，代表公司股票在2024年9月4日納斯達克全球精選市場的最後收盤價。1.00 ，以及（ii）在同時的私募中，發行E系列普通股購買認股權，以購買最多 2,050,000 股普通股（“E系列普通認股權”），以及購買最多 2,050,000 股普通股（“F系列普通認股權”），與E系列普通認股權統稱為“普通認股權”。這些註冊直接發行和同時私募被稱為“交易”。交易的結案日期為2024年10月24日。交易的募集總額約為2.1 百萬美元，扣除公司應付的認購代理費用和其他發行費用，以及來自普通認股權或認購代理認股權（如有）的淨收益。公司根據Form S-3的架構註冊聲明書提供了這些股份，在2024年10月10日獲得了證券交易所的生效。見註12。

管理層估計根據公司的資金流動性資源，對於公司能否在未經審計的簡明綜合基本報表發行之日起的12個月內繼續營運存有重大疑虞。附帶的未經審核的簡明綜合基本報表是基於公司繼續以正常業務方式運作的前提下編製的，並不反映與公司能否繼續作為持續營運公司存在重大疑虞相關的資產和負債方面的任何調整。

管理層能否持續營運將取決於其籌集額外資金的能力。管理層計劃通過公開或私募股權或債務融資來籌集額外資本，以滿足自未經審計的精簡合併財務報表發行之日起至少12個月內的營運和資本需求。然而，該公司可能無法及時或以有利條件取得此類融資。此外，如果該公司發行股權證券以籌集額外資金，其現有股東可能會遭受稀釋，而新的股權證券可能具有優先於該公司現有股東的權利、偏好和特權。

風險和不確定性

經濟條件的變化，包括利率期貨上升、公共衛生問題、消費信心降低、資本市場波動、持續的供應鏈干擾以及地緣政治衝突的影響，可能會影響該公司的運營。

2. 重要會計政策摘要

未經審核的中期財務信息

截至2024年9月30日，以及截至2024年和2023年9月30日的三個月和九個月的附屬未經審核的簡明綜合財務報表已按照SEC的規則和法規，並符合美國通行的會計原則（“U.S. GAAP”）編制。因此，這些未經審核的簡明綜合財務報表未包括U.S. GAAP對完整財務報表所需的所有信息和註腳。在管理層的意見中，這些未經審核的簡明綜合財務報表包含所有必要的調整，所有這些調整均屬於正常且重複性的，以誠實地反映公司的財務狀況，營運成果和現金流。中期結果未必代表整個年度或未來時期的結果。這些未經審核的簡明綜合財務報表應與Calidi截至2023年12月31日的已審計綜合財務報表一起閱讀，在公司的10-k表格中，該表格已在2024年3月15日向委員會提交。

關於這些註釋中提及的相關指南，指的是美國會計準則中的權威部分，如《會計標準法規》（ASC）和《財務會計準則更新》（ASU）之FASB。

合併財務報表的準則

公司未經審核的簡明綜合財務報表包括其全資附屬公司的賬戶，包括總部位於內華達州的公司Calidi Biotherapeutics（內華達）股份有限公司，德國法律下組織的公司StemVac GmbH（“StemVac”），以及其全資澳大利亞附屬公司，Calidi Biotherapeutics Australia Pty Ltd（“Calidi Australia”），內華達州成立的子公司Nova Cell, Inc.（“Nova電芯”）以及成立於內華達州的全資附屬公司Redtail Biopharma, Inc.（“Redtail”）。 StemVac的主要營運活動包括為公司進行的SNV1計劃的工藝開發和其他研究和發展活動，這些活動根據公司資助的成本加跨公司開發協議進行。 Calidi Australia的主要目的是在澳大利亞進行SNV1臨床試驗的一部分。 Nova Cell的主要營運活動將是擴展公司的AAA幹細胞計劃的潛在用途，從性腫瘤學到需要再生醫療應用的其他領域，如化妝品，骨科，自體免疫疾病和各種其他療法。 Nova Cell還將作為技術服務提供商，開發創新的以幹細胞為基礎的產品，如抗衰老霜和乳液。 Redtail的主要營運活動將是擴展公司的全身抗腫瘤病毒療法。 Nova Cell和Redtail均於2024年5月成立。迄今為止，Redtail沒有任何活動。

變量利益實體（VIEs）是法律實體，其擁有的股權風險不足以在沒有額外次位財務支持的情況下融資其活動，或者，作為一個集團，股權風險投資人缺乏指導對最終影響經濟績效的實體活動的權力通過投票或類似權利，或者沒有負擔預期損失或有權接收實體預期剩餘收益的義務。

對於公司參與的所有VIEs，公司會持續評估是否是主要受益人。在情況下，公司既有指導最重要影響VIE績效的活動的權力，又有承擔損失或享受可能重要的VIE利益的義務，公司會斷定自己是VIE的主要受益人，並將VIE納入合併報表。在公司未被視為VIE的主要受益人的情況下，公司不會合併VIE，只會承認公司對VIE的權益。

董事會批准了相關方投資者對nova電芯的戰略投資，公司的擁有權益降至 75%（請參閱附註1和附註8）。根據確定實體是否為可變利益實體的規則，公司具有控制權的財務利益，並被視為nova電芯的主要受益人，因此合併nova電芯的基本報表。由於公司持有nova電芯不到 100%的權益，所以公司在其簡明合併損益表中記錄歸屬於非控股權益的淨損，相當於非控制方在nova電芯中保留的經濟或擁有權益的百分比。

Calidi Cure LLC（“Calidi Cure”）是一家特殊用途車輛實體，成立於2023年6月，是一家德拉瓦有限責任公司，由該公司的執行長兼董事會主席Allan J. Camaisa獨家管理和營運。 Calidi Cure成立的唯一目的是支援Calidi的B轉換優先股融資安排，並沒有其他業務，因此Calidi Cure的歷史權益水平不足以使實體在其他方提供的額外次級財務支持下進行活動。因此，決定Calidi Cure是一個VIE，而該公司是主要受益人。因此，公司將Calidi Cure納入其未經審計的簡明合併基本報表中。 Calidi Cure於2024年7月17日解散，並且自2024年9月30日起不再存在。

隨附的未經審核的簡明綜合基本報表已包含所有調整項目，僅載入正常經常性調整，以充分呈現公司的財務狀況和營運成果。所有重要子公司帳戶及交易均已在合併中被消除。

使用估計值

根據GAAP準則準備基本財務報表需要管理層進行影響基本報表金額及資產、負債、條件性資產和負債報告金額的估計和假設，截至未經審計簡明合併財務報表日期，以及報告期間內的金額。管理層持續評估需要重大判斷的估計，包括但不限於所使用的估值方法、需要判斷以準備財務預測的假設、取得中進程無形資產潛在商業化時機、適用的折現率、可比公司或交易、流動性事件、與保有事業前景有關的假設、直接和間接費用分配、與長期資產相關聯的使用壽命、營運和融資租賃的關鍵假設，包括增裕借款利率，損失條件、與递延所得稅有關的評價撇出、用於估值普通股、債務及債務樣態工具、認股權證、股份與其他權益工具的假設。實際結果可能與這些估計有實質差異。

重新分類

出於與本年度財務報表一致的考慮，某些前年度財務報表金額已重新分類。這些重新分類不會對我們之前報告的運營結果或累積赤字產生影響。

現金和受限現金

公司認爲所有原始到期日在九十天或更短的高流動性投資都算現金及現金等價物。現金及現金等價物包括可隨時取用的支票帳戶、貨幣市場帳戶和券商帳戶。

公司將第三方施加合同或法律限制的現金歸類爲受限現金，該項現金受到限制，除了合同規定的用途外，不得提取或使用。公司將受限現金歸類爲預付款及其他流動資產的一部分，或歸類爲其他非流動資產的一部分，具體取決於金融機構與公司之間的基礎合同的期限和性質，該合同要求公司在受限貨幣市場帳戶內持有一定數量的資金作爲擔保品，用於公司與該金融機構的公司信用卡計劃。

下表提供的是現金和限制性現金賬目報告的對賬數據，包括組成現金流量表不經審計的精簡合併財務報表中同等金額 (以千計)。

現金及現金等價物時間表

	2024 年 9 月 30 日		2023 年 12 月 31 日
現金	$	1,897	$	1,949
預付費用和其他流動資產中包含的限制性現金		100		100
其他非流動資產中包含的限制性現金		118		118
未經審計的簡明合併現金流量表中顯示的現金和限制性現金總額	$	2,115	$	2,167

機械和設備

機械和設備以成本減少累計折舊的形式計入，包括在融資租賃下購買的資產。折舊是使用直線法計算的，通常是在資產的預計使用壽命內進行，這通常是一個（）年的時間。對於在融資租賃下購買的設備，公司將根據設備的有用壽命或租賃期限中較短的那個來計算折舊，不同的融資租賃的自然和分類範圍從年到年不等。維護和修理費在發生時被列爲費用，而重大的更換和改良被資本化。當資產報廢或以其他方式處置時，成本和相關的累計折舊將從相應的帳戶中移除，任何由此產生的收益或損失將反映在公司的未經審計的簡明合併利潤表中。 3 到 5 年。對於在融資租賃下購買的設備，公司將根據設備的有用壽命或租賃期限中較短的那個來計算折舊，不同的融資租賃的自然和分類範圍從年到年不等。 3 到 5 維修和修理費在發生時按照費用計入，而重要的更新和改善則被資本化。當資產被報廢或以其他方式處置時，成本及其相關的累計折舊將從相關帳戶中移除，任何由此產生的收益或損失將反映在公司的未經審計的簡明合併利潤表中。

租賃

公司按照ASC 842會計準則編制租賃的賬目租賃該公司在初期判定協議是否爲租賃協議。租賃分爲融資租賃和經營租賃兩類，其分類影響了財務報表中費用確認的模式。在判斷租賃是否爲融資租賃或經營租賃時，ASC 842沒有明確定義「基礎資產的剩餘經濟壽命的主要部分」和「基礎資產公允價值的實質性全部」。爲了確定租賃的分類，公司繼續使用以下標準：（i）大於或等於75％以確定租賃期限是否爲基礎資產剩餘經濟壽命的主要部分; 和（ii）大於或等於90％以確定租賃支付總和的現值是否實質上全部達到基礎資產的公允價值。公司將租賃和非租賃元素作爲單個租賃元素會計處理。

對於經營租賃，公司在未經審計的合併資產負債表中確認使用權（「ROU」）資產和租賃負債，適用於租期超過12個月的租賃，而租期爲12個月或更短的租賃則不做資本化。ROU資產代表在租賃期間使用基礎資產的權利，租賃負債代表因租賃產生的租賃付款義務。經營租賃的ROU資產和負債在開始日根據租賃期內租賃付款的現值進行確認。由於大多數租賃沒有隱含利率，公司根據開始日可用的信息使用增量借款利率來確定租賃付款的現值。當可以輕易確定隱含利率時，公司會使用隱含利率。經營租賃的ROU資產還包括已支付的任何租賃付款，並排除租賃激勵。租賃條款可能包括在公司合理確定會行使該選擇權的情況下，延長或終止租賃的選項。租賃付款的租賃費用在租賃期內以直線法確認。公司在未經審計的合併現金流量表中以淨額「使用權資產和負債的攤銷」披露ROU資產的攤銷和經營租賃付款。

金融租賃包括在機械設備和金融租賃負債中，分別列示爲未經審計的簡體合併資產負債表中的流動和非流動負債。

請查看註釋11，涉及於2023年3月1日起開始執行的聖地亞哥辦公室租賃，根據ASC 842標準進行了經營租賃處理。

長期資產減值

公司評估長期資產的減值情況，包括經營租賃和機械設備的使用權資產，每當事件或情況的變化表明這樣的資產可能存在減值且賬面價值可能無法收回時。如果事件或情況表明資產的賬面價值可能無法回收，並且該資產所預期的未折現未來現金流小於資產的賬面價值，則將減值損失記爲超過其公允價值的資產賬面價值的總額，記錄在公司的合併利潤表中。

權證

公司根據ASC 480《區分負債和權益的準則》和ASC 815《衍生金融工具與嵌入式衍生金融工具》，根據認股證的具體條款和適用的權威指引將其視爲權益類或負債類工具。符合ASC 815-10-15-74(a)中衍生金融工具與權益例外定義的認股證屬於權益類，並且在公司繼續滿足權益分類標準的情況下不需要再進行重新評估。被歸類爲負債的認股證按公允價值計量，並在每個報告期進行重新計量，直至行權、到期或進行修改並導致重新分類爲權益。認股證公允價值的任何變動將在未經審計的彙總損益表中扣除認股權責任準備金，股權淨虧損中予以認定。每個報告期末都會重新評估認股證的分類，包括是否應將認股證登記爲負債或權益。分類爲負債類的認股證的公允價值使用Black-Scholes期權定價模型（「Black-Scholes模型」），包括第3級輸入確定。 金融工具的衍生工具及避險符合衍生金融工具定義和ASC 815-10-15-74(a)中權益適用例外的認股證屬於權益類，不需要重新計量，只要公司繼續滿足權益分類標準即可；作爲負債分類的認股證則按公允價值計量，並在每個報告期重新計量，直至行權、到期或進行修改並導致重新分類爲權益。每個報告期末都會重新評估分類情況，進行必要的調整，認股證公允價值採用Black-Scholes期權定價模型（「Black-Scholes模型」），其中包括第3級輸入。認股證的公允價值變動的部分會在未經審計的彙總損益表中扣除認股證責任準備金，計入股本權益變動。

公允價值衡量

公司遵循ASC 820，其中定義了公允價值，建立了一個一致的框架來衡量公允價值，並擴大了在重要資產和負債類別上以公允價值進行週期性或非週期性衡量的披露。公允價值是退出價格，代表在市場參與者之間進行的有序交易中將獲得的出售資產的金額或支付轉讓負債的金額。因此，公允價值是基於市場參與者在定價資產或負債時會使用的假設來確定的基於市場的衡量。公允價值層次結構要求實體最大限度地利用可觀察的輸入，並將使用不可觀察的輸入降至最低，以便在衡量公允價值時。 公允價值計量，其中定義了公允價值，建立了一個一致的框架以衡量公允價值，並擴大了披露，以在重要的以公平價值計量的資產和負債類別上，不論是週期性還是非週期性的計量。公允價值是指退出價格，代表在市場參與者之間進行的有序交易中可獲得的出售資產的金額或者支付轉移負債的金額。因此，公平價值是基於市場參與者在定價資產或負債時使用的假設來確定的市場基於的度量。公平價值層次結構要求實體在衡量公平價值時最大限度地利用可觀察的輸入，並最小化使用不可觀察的輸入。

ASC 820 建立了一個公平價值層次結構，基於三個級別的輸入，其中前兩個被認爲是可觀察的，最後一個是不可觀察的，可用於測量公允價值，如下所示：

	一級：	在相同的資產或負債的活躍市場上報價；

	二級：	除了級別1之外，可以直接或間接地觀察到的其他信息，例如類似資產或負債的報價市場價格、非活躍市場的報價價格或其他可觀察到的或可以通過可觀察到的市場數據證實的輸入，對於資產或負債的實質期限；和

	三級：	在缺乏市場數據並且對資產或負債的公允價值具有重大影響的不可觀察到的輸入，需要報告實體進行自身假設的開發。

當活躍市場中有報價市場價格時，資產和負債的公允價值在估價層次結構的一級內進行估算。如果沒有報價價格，則通過使用定價模型、具有類似特徵的資產和負債的報價價格或貼現現金流進行估算，在估價層次結構的二級內進行公允價值的估算。在沒有一級或二級輸入的情況下，使用估價層次結構的三級輸入進行估算公允價值。有關公允價值的測量，請參閱註釋3。

前向採購協議

在2023年8月28日和8月29日，FLAG和本公司各向Meteora Strategic Capital，LLC(msc)，Meteora Capital Partners，LP(mcp)，Meteora Select Trading Opportunities Master，LP(msto)，Great Point Capital LLC(great point)，Funicular Funds，LP(funicular funds)和Marybeth Wootton(wootton)(分別爲「賣方」和「賣方」，合稱爲「賣方」)簽訂了場外交易權益預付前向交易協議。爲了達成前向購買協議，合併業務之前，FLAG被稱爲「相反當事人」，而本公司則被稱爲「相反當事人」。“在此處使用的大寫字母術語，如果沒有定義，則應按照前向購買協議所規定的定義。

根據前置購買協議的規定，每位賣家打算購買最多價值總計爲美元線性條美元的一類普通股，即FLAG（「FLAG一類普通股」）的股票數量, 與本協議收盤同時，與每個賣方的FPAT資金額度PIPE認股協議相應，扣除每位賣家個別從第三方經紀商在公開市場上獨立購買的FLAG一類普通股（「再生股份」）的數量。0.0001 總共高達xx美元的FLAG一類普通股，需在封印與每個賣方的FPAT資金額度PIPE認股協議同時由每個賣家購買，扣除每個賣家爲本身單獨從第三方通過經紀商在公開市場上購買到的FLAG一類普通股（「再生股份」）的數量。 100,000同時收購FLAG一類普通股並計入每個賣家的FPAT資金額度PIPE認購協議，金額總計逾xxx港元。每個賣家單獨從第三方經紀商在公開市場上購買的FLAG一類普通股數量扣除在外。

根據《FLAG公司修正和重新制定公司章程》（經修正的），第9.2(a)節所定義的每股贖回價格乘上定價日期通知書中所確定的股數（「股數」）之積即爲賣方實際收到的總貨款（「預付款金額」），不包括折算爲美元指數的金額（「美元金額」）相加的金額（三者之積）， 0.50賣方支付給交易對手的預付日期（折算爲美元指數的）初次價格乘以賣方再利用的股票數之積（即「再循環股票數」）之積的百分之（一）等於預付款金額（「預付差額」），減去該金額後的餘額作爲付給賣方的金額。

交易對手將從大陸股份轉讓和信託公司維護的交易對手信託帳戶（持有交易對手首次公開發行單位的淨收益和私募認股權的「信託帳戶」）直接支付根據各自遠期購買協議所需的預付款金額給出售方，最遲於（a）終止日後的一個營業日和（b）與業務組合相關聯的信託資產支取日期之前，但如出售方根據其FPA Funding Amount PIPE Subscription Agreement的條款通過購買附加股份支付預付款金額，則該金額將與該收益相淨，該出售方能夠通過預付款金額減少附加股份的購買價格。

Following the Closing, the reset price (the “Reset Price”) will initially be $100.00; provided, however, that the Reset Price may be reduced immediately to any lower price at which the Counterparty sells, issues or grants any FLAG Class A Common Stock or securities convertible or exchangeable into FLAG Class A Common Stock (excluding any secondary transfers) (a “Dilutive Offering”), then the Reset Price shall be modified to equal such reduced price as of such date.

From time to time and on any date following the Trade Date (any such date, an “OET Date”), Seller may, in its discretion, terminate its Forward Purchase Agreement in whole or in part by providing written notice to the Counterparty (the “OET Notice”), by the later of (a) the fifth Local Business Day following the OET Date and (b) no later than the next Payment Date following the OET Date (which shall specify the quantity by which the Number of Shares shall be reduced (such quantity, the “Terminated Shares”)); provided that “Terminated Shares” includes only such quantity of Shares by which the Number of Shares is to be reduced and included in an OET Notice and does not include any other Share sales, Shortfall Sale Shares or sales of Shares that are designated as Shortfall Sales (which designation can be made only up to the amount of Shortfall Sale Proceeds), any Share Consideration sales or any other Shares, whether or not sold, which shares will not be included in any OET Notice when calculating the number of Terminated Shares. The effect of an OET Notice shall be to reduce the Number of Shares by the number of Terminated Shares specified in such OET Notice with effect as of the related OET Date. As of each OET Date, the Counterparty shall be entitled to an amount from the Seller, and the Seller shall pay to the Counterparty an amount, equal to the product of (x) the number of Terminated Shares and (y) the Reset Price in respect of such OET Date, except that no such amount will be due to Counterparty upon any Shortfall Sale. The payment date may be changed within a quarter at the mutual agreement of the parties.

From time to time and on any date following the Trade Date (any such date, a “Shortfall Sale Date”) Seller may, in its absolute discretion, at any sales price, sell Shortfall Sale Shares, and in connection with such sales, Seller shall provide written notice to Counterparty (the “Shortfall Sale Notice”) no later than the later of (a) the fifth Local Business Day following the Shortfall Sales Date and (b) the first Payment Date after the Shortfall Sales Date, specifying the quantity of the Shortfall Sale Shares and the allocation of the Shortfall Sale Proceeds. Seller shall not have any Early Termination Obligation in connection with any Shortfall Sales. The Counterparty covenants and agrees for a period of at least sixty (60) Local Business Days (commencing on the Prepayment Date or if an earlier Registration Request is submitted by Seller on the Registration Statement Effective Date) not to issue, sell or offer or agree to sell any Shares, or securities or debt that is convertible, exercisable or exchangeable into Shares, including under any existing or future equity line of credit, until the Shortfall Sales equal the Prepayment Shortfall.

Unless and until the proceeds from Shortfall Sales equal 100% of the Prepayment Shortfall, in the event that the product of (x) the difference between (i) the number of Shares as specified in the Pricing Date Notice(s), less (ii) any Shortfall Sale Shares as of such measurement time, multiplied by (y) the VWAP Price, is less than (z) the difference between (i) the Prepayment Shortfall, less (ii) the proceeds from Shortfall Sales as of such measurement time (the “Shortfall Variance”), then the Counterparty, as liquidated damages in respect of such Shortfall Variance, at its option shall within five (5) Local Business Days either:

(A) Pay in cash an amount equal to the Shortfall Variance; or

(B) Issue and deliver to Seller such number of additional Shares that are equal to (1) the Shortfall Variance, divided by (2) 90% of the VWAP Price (the “Shortfall Variance Shares”).

The valuation date will be the earliest to occur of (a) 36 months after of the Closing Date, (b) the date specified by a Seller in a written notice to be delivered to the Counterparty at a Seller’s discretion (which Valuation Date shall not be earlier than the day such notice is effective) after the occurrence of any of (v) a Shortfall Variance Registration Failure, (w) a VWAP Trigger Event (x) a Delisting Event, (y) a Registration Failure or (z) unless otherwise specified therein, upon any Additional Termination Event and (c) the date specified by Seller in a written notice to be delivered to Counterparty at Seller’s sole discretion (which Valuation Date shall not be earlier than the day such notice is effective) (the “Valuation Date”).

On the Cash Settlement Payment Date, which is the tenth business day following the last day of the valuation period commencing on the Valuation Date, a Seller shall pay the Counterparty a cash amount equal to either: (1) in the event that the Valuation Date is determined by clause (c) of the Valuation Date definition, a cash amount equal to (A) the Number of Shares as of the Valuation Date, multiplied by (2) the closing price of the Shares on the Exchange Business Day immediately preceding the Valuation Date, or (2) (A) the Number of Shares as of the Valuation Date less the number of Unregistered Shares, multiplied by (B) the volume-weighted daily VWAP Price over the Valuation Period less (3) if the Settlement Amount Adjustment is less than the cash amount to be paid, the Settlement Amount Adjustment. The Settlement Amount Adjustment is equal to (1) the Maximum Number of Shares as of the Valuation Date multiplied by (2) $20.00 per share, and the Settlement Amount Adjustment will be automatically netted from the Settlement Amount. If the Settlement Amount Adjustment exceeds the Settlement Amount, the Counterparty will pay the Seller in FLAG Class A Common Stock or, at the Counterparty’s election, in cash.

Seller has agreed to waive any redemption rights under FLAG’s Amended and Restated Certificate of Incorporation, as amended, with respect to any FLAG Class A Common Stock purchased through the FPA Funding Amount PIPE Subscription Agreement and any Recycled Shares in connection with the Business Combination, that would require redemption by FLAG of the Class A Common Stock. The Forward Purchase Agreement has been structured, and all activity in connection with such agreement has been undertaken, to comply with the requirements of all tender offer regulations applicable to the Business Combination under the Securities Exchange Act of 1934, as amended.

During the 36-month term of the Forward Purchase Agreement, if the Sellers liquidate the 100,000 shares in the market above $100.00 per share, then the Company will be entitled to receive up to $10.0 million in cash from the Sellers pursuant to the Forward Purchase Agreement. If the Sellers liquidate the shares below $100.00 per share, then the Company will be entitled to the price sold less $20.00 per share, from the Sellers. No proceeds will be available to the Company if the Forward Purchase Agreement shares are sold below $20.00 per share. The Forward Purchase Agreement may be terminated earlier by the Sellers if certain default events occur, including the stock price trading below defined thresholds for a defined period. In no event will the Company be obligated to pay cash to the Sellers during the term of the Forward Purchase Agreement or at its expiration.

On March 8, 2024, the Company and one of the sellers mutually terminated and cancelled 34,000 shares per the Forward Purchase Agreement described above.

Convertible Instruments

The Company evaluates and accounts for conversion options embedded in convertible instruments in accordance with ASC 815 – Derivatives and Hedging. Applicable GAAP requires companies to bifurcate conversion options from their host instruments and account for them as freestanding derivative financial instruments according to certain criteria. The criteria include circumstances in which (a) the economic characteristics and risks of the embedded derivative instrument are not clearly and closely related to the economic characteristics and risks of the host contract, (b) the hybrid instrument that embodies both the embedded derivative instrument and the host contract is not re-measured at fair value under other GAAP with changes in fair value reported in earnings as they occur and (c) a separate instrument with the same terms as the embedded derivative instrument would be considered a derivative instrument.

The Company reviews the terms of convertible instruments issued to determine whether there are embedded derivative instruments, including embedded conversion options, which are required to be bifurcated and accounted for separately as derivative financial instruments. In circumstances where the host instrument contains more than one embedded derivative instrument, including the conversion option, that is required to be bifurcated, the bifurcated derivative instruments are accounted for as a single, compound derivative instrument.

Bifurcated embedded derivatives are initially recorded at fair value and are then revalued at each reporting date with changes in the fair value reported as nonoperating income or expense. When the convertible instruments contain embedded derivative instruments that are to be bifurcated and accounted for as liabilities, the total proceeds received are first allocated to the fair value of all the bifurcated derivative instruments. The remaining proceeds, if any, are then allocated to the host instruments themselves, usually resulting in those instruments being recorded at a discount from their face value. The discount from the face value of the convertible debt, together with the stated interest on the instrument, is amortized over the life of the instrument through periodic charges to interest expense.

Derivative Financial Instruments

The Company does not use derivative instruments to hedge exposures to cash flow, market, or foreign currency risks. The Company evaluates all of its financial instruments, including warrants, to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC 815 Derivatives and Hedging. The Company values its derivatives using the Black-Scholes option-pricing model or other acceptable valuation models, as applicable, with the assistance of valuation specialists. Derivative instruments accounted for as liabilities are valued at inception and subsequent valuation dates for each reporting period the derivative instrument remains outstanding. The classification of derivative instruments, including whether such instruments should be recorded as liabilities, is reassessed at each reporting period.

The Company evaluates equity or liability classification for common stock warrants in accordance with ASC 480, Distinguishing Liabilities from Equity, and ASC 815 and accounts for common stock warrants as liabilities if the warrant requires net cash settlement or gives the holder the option of net cash settlement or it otherwise does not meet other equity classification criteria. The Company accounts for common stock warrants as equity if the contract requires physical settlement or net physical settlement or if the Company has the option of physical settlement or net physical settlement and the warrants meet the requirements to be classified as equity. Common stock warrants classified as liabilities are initially recorded at fair value and remeasured at fair value at each subsequent reporting period with the offset adjustments recorded in change in fair value of warrant liability within the unaudited condensed consolidated statements of operations. Common stock warrants classified as equity are initially measured at fair value on the grant date and are not subsequently remeasured.

As of September 30, 2024 and December 31, 2023, the Forward Purchase Agreement discussed above was accounted for as a derivative asset under ASC 815 – Derivatives and Hedging. The fair value of the Forward Purchase Agreement at the closing of the Business Combination was estimated to be a $4.5 million asset with a corresponding amount recorded in equity at the closing of the FLAG Merger. As of September 30, 2024, and December 31, 2023, the asset was revalued and estimated to have a fair value of $11,000 and $0.2 million, respectively, and was recorded as part of other noncurrent assets on the accompanying unaudited condensed consolidated balance sheets. There can be no assurance that any proceeds from the Sellers will be made to the Company under the Forward Purchase Agreement.

Debt Issuance Costs

Debt issuance costs incurred to obtain debt financings are deferred and are amortized over the term of the debt using the effective interest method for all debt financings in which the fair value option has not been elected. Debt issuance costs on debt financings in which the fair value option is not elected are recorded as a reduction to the carrying value of the debt and are amortized to interest expense or interest expense — related party, as applicable, in the unaudited condensed consolidated statements of operations.

For any debt financing in which the Company has elected the fair value option, any debt issuance costs associated with the debt financing are immediately recognized in interest expense in the consolidated statements of operations and are not deferred.

Government Grants

On October 27, 2022, the California Institute for Regenerative Medicine (“CIRM”) approved the Company’s application for a CIRM grant for the Company’s continued development of the SNV1 program. CIRM awarded the Company approximately $3.1 million of CIRM funding conditioned that the Company co-fund approximately $0.8 million under the requirements of the CIRM application. On December 28, 2022, the Company received the Notice of Award from CIRM for this grant and the Company expects to be able to draw the funds over the next 18 months based on the operational milestones defined in the grant.

Proceeds from the CIRM grant are recognized over the period necessary to match the related research and development expenses when it is probable that the Company has complied with the CIRM conditions and will receive the proceeds pursuant to the milestones defined in the grant as reimbursement of those expenditures. The CIRM grant proceeds, if any, received in advance of having incurred the related research and development expenses are recorded in accrued expenses and other current liabilities and recognized as grant income included in other income and expenses, net, on the Company’s consolidated statements of operations when the related research and developments expenses are incurred.

During the three and nine months ended September 30, 2024, the Company recognized approximately $0 and $0.2 million, respectively, in grant income in the accompanying unaudited condensed consolidated statement of operations. During the three and nine months ended September 30, 2023, the Company recognized approximately $0.7 million and $2.3 million, respectively, in grant income in the accompanying unaudited condensed consolidated statement of operations. As of September 30, 2024 and December 31, 2023, there were zero and $1.4 million, receivables, respectively, included in prepaid expenses and other current assets in the unaudited condensed consolidated balance sheets.

Research and Development Expenses

Research and development expenses are expensed as incurred. Research and development expenses consist of costs incurred to discover, research and develop drug candidates, including compensation-related expenses for research and development personnel, including stock-based compensation expense, preclinical and clinical activities, costs of manufacturing, overhead expenses including facilities and laboratory expenses, materials and supplies, amounts paid to consultants and outside service providers, and depreciation and amortization.

Upfront and annual license payments related to acquired technologies or technology licenses which have not yet reached technological feasibility and have no alternative future use are also included in research and development expense in the period in which they are incurred.

General and Administrative Expenses

General and administrative expenses consist primarily of salaries and related costs, including stock-based compensation expense. General and administrative expenses also include fees for legal, patent prosecution, legal settlements, consulting, charge off of deferred financing costs for aborted or terminated financing offerings, accounting and audit services as well as insurance, outside service providers, direct and allocated facility-related costs and depreciation and amortization.

Foreign Currency Translation Adjustments and Other Comprehensive Income or Loss

StemVac, the Company’s wholly owned subsidiary, is located and operates in Germany and its functional currency is the Euro. Calidi Australia, the Company’s wholly owned subsidiary, is located and operates in Australia and its functional currency is the Australian Dollar (“AUD”). Accordingly, StemVac’s and Calidi Australia’s assets and liabilities are translated using respective published exchange rates in effect at the unaudited condensed consolidated balance sheet date. Expenses and cash flows are translated using respective approximate weighted average exchange rates for the reporting period. Resulting foreign currency translation adjustments are recorded as other comprehensive income or loss, net of tax, in the unaudited condensed consolidated statements of comprehensive income or loss and included as a component of accumulated other comprehensive income or loss on the unaudited condensed consolidated balance sheets. For the three and nine months ended September 30, 2024 and 2023, comprehensive loss includes such foreign currency translation adjustments and was insignificant for all periods presented.

Foreign Currency Transaction Gains and Losses

For transactions denominated in currencies other than the U.S. dollar, the Company recognizes foreign currency transaction gains and losses in the unaudited condensed consolidated statements of operations and classifies the gain or loss based on the nature of the item that generated it. The Company’s foreign currency transaction gains and losses are principally generated by intercompany transfers to StemVac denominated in Euros to pay for the research and development activities performed by StemVac under an intercompany development agreement with the Company. Furthermore, the Company’s foreign currency transaction gains and losses include intercompany transfers to Calidi Australia denominated in AUD to pay for the research and development activities performed by Calidi Australia. These foreign currency remeasurement gains and losses are included in other income and expenses, net, and were insignificant for all periods presented.

Stock-Based Compensation

The Company recognizes compensation expense related to employee option grants and restricted stock grants, if any.

The Company measures all stock options and other stock-based awards granted based on the fair value of the award on the date of the grant and recognizes compensation expense for those awards over the requisite service period, which is generally the vesting period of the respective award. The Company has elected to recognize forfeitures as they occur. The reversal of compensation cost previously recognized for an award that is forfeited because of a failure to satisfy a service condition is recognized in the period of the forfeiture. Generally, and unless otherwise specified, the Company’s grants stock options with service-based only vesting conditions and records the expense for these awards using the straight-line method over the requisite service period.

The Company classifies stock-based compensation expense in its consolidated statements of operations in the same manner in which the award recipient’s payroll costs are classified or in which the award recipients’ service payments are classified.

The Company estimated the fair value of common stock through the date of the FLAG Merger using an appropriate valuation methodology, in accordance with the framework of the American Institute of Certified Public Accountants’ Technical Practice Aid, Valuation of Privately-Held Company Equity Securities Issued as Compensation. Each valuation methodology includes estimates and assumptions that require the Company’s judgment. These estimates and assumptions include a number of objective and subjective factors, including external market conditions, guideline public company information, the prices at which the Company sold convertible preferred stock and common stock to third parties in arms’ length transactions, the rights and preferences of securities senior to the Company’s common stock at the time, and the likelihood of achieving a liquidity event such as an initial public offering or sale. Significant changes to the assumptions used in the valuations could result in materially different fair values of stock options at each valuation date, as applicable. Following the FLAG Merger, the Company used the public price of its common stock.

The fair value of each stock option grant is estimated using the Black-Scholes option-pricing model. The Company estimates its expected stock volatility based on the historical volatility of a publicly traded set of peer companies within the biotechnology industry with characteristics similar to the Company. The expected term of the Company’s stock options has been determined utilizing the “simplified” method for awards that qualify as “plain-vanilla” options provided under Staff Accounting Bulletin, Topic 14, or SAB Topic 14, as necessary. The risk-free interest rate is determined by reference to the U.S. Treasury yield curve in effect at the time of grant of the award for time periods approximately equal to the expected term of the award. Expected dividend yield is zero, based on the fact that the Company has never paid cash dividends and does not expect to pay any cash dividends in the foreseeable future.

Net Loss per Common Share

Earnings per share attributable to common stockholders is calculated using the two-class method, which is an earnings allocation formula that determines earnings per share for the holders of the Company’s common shares and participating securities. Net loss attributable to common stockholders and participating securities is allocated to each share on an if-converted basis as if all of the earnings for the period had been distributed. However, the participating securities do not include a contractual obligation to share in the losses of the Company and are not included in the calculation of net loss per share in the periods that have a net loss. In addition, common stock equivalent shares (whether or not participating) are excluded from the computation of diluted earnings per share in periods in which they have an anti-dilutive effect on net loss per common share.

Diluted net loss per share is computed using the more dilutive of (a) the two-class method or (b) the if-converted method and treasury stock method, as applicable. In periods in which Calidi reports a net loss attributable to common stockholders, diluted net loss per share attributable to common stockholders is the same as basic net loss per share attributable to common stockholders since dilutive common shares are not assumed to have been issued if their effect is anti-dilutive. Diluted net loss per share is equivalent to basic net loss per share for the periods presented herein because common stock equivalent shares from the outstanding warrants, earnout shares, convertible notes, stock option awards, restricted stock units, and contingently issuable warrants were antidilutive.

For purposes of calculating basic and diluted net loss per share for the three and nine months ended September 30, 2024, the reported net loss was increased by approximately zero and $1.7 million, respectively, related to a deemed dividend resulting from the May Inducement Offer (see Note 1 and Note 8).

As a result of the Company reported net loss attributable to common stockholders for all periods presented herein, the following common stock equivalents were excluded from the computation of diluted net loss per common share for the three and nine months ended September 30, 2024 and 2023 because including them would have been antidilutive (in thousands):

	2024		2023 (1)
	September 30,
	2024		2023 ⁽¹⁾
Warrants for common stock		7,349		1,341
Earnout shares		1,800		1,800
Convertible notes payable		1,664		—
Employee stock options		906		966
Restricted stock units		38		—
Contingently issuable warrant⁽²⁾		—		—
Total common stock equivalents		11,757		4,107

(1)	Retroactively restated for reverse recapitalization.

(2)	The contingently issuable warrants were not included for purposes of calculating the number of diluted shares outstanding as of September 30, 2024, as the number of dilutive shares is based on a contingency not yet resolved as of period end and the contingently resulting number of dilutive shares is not determinable until the contingency is resolved.

Segments

The Company’s executive management team, as a group, represents the entity’s chief operating decision makers. To date, the Company’s executive management team has viewed the Company’s operations as one segment that includes the research, development and commercialization efforts of cell-based platforms to potentiate oncolytic virus therapies. As a result, the financial information disclosed materially represents all of the financial information related to the Company’s sole operating segment. Substantially all of the Company’s consolidated operating activities, including its long-lived assets, are located within the U.S. and considering the Company’s limited revenue operating stage, the Company currently has no concentration exposure to products or customers.

Recently Adopted Accounting Pronouncements

In June 2022, the FASB issued ASU No. 2022-03, Fair Value Measurement of Equity Securities Subject to Contractual Sale Restrictions (“ASU 2022-03”) which clarifies that a contractual restriction on the sale of an equity security is not considered part of the unit of account of the equity security and, therefore, is not considered in measuring fair value. ASU 2022-03 is effective for public business entities for fiscal years, including interim periods within those fiscal years, beginning after December 15, 2023. On January 1, 2024, the Company adopted ASU 2022-03 and the standard did not have any impact on its unaudited condensed consolidated financial statements and related disclosures as the Company carries no such financial instruments.

Recently Issued Accounting Pronouncements Not Yet Adopted

In November 2023, the Financial Accounting Standards Board (“FASB”) issued Accounting Standards Update (“ASU”) 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires public entities to disclose information about their reportable segments’ significant expenses and other segment items on an interim and annual basis. Public entities with a single reportable segment are required to apply the disclosure requirements in ASU 2023-07, as well as all existing segment disclosures and reconciliation requirements in ASC 280 on an interim and annual basis. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2023-07.

In December 2023, the FASB issued ASU No. 2023-09, Improvements to Income Tax Disclosures (Topic 740). The ASU requires disaggregated information about a reporting entity’s effective tax rate reconciliation as well as additional information on income taxes paid. The ASU is effective on a prospective basis for annual periods beginning after December 15, 2024. Early adoption is also permitted for annual financial statements that have not yet been issued or made available for issuance. The Company is currently evaluating the impact of adopting ASU 2023-09.

3. Fair Value Measurements

The following table presents the Company’s assets and liabilities that are measured at fair value on a recurring basis, inclusive of related party components, as of September 30, 2024 and December 31, 2023 (in thousands):

	Level 1		Level 2		Level 3		Total
	September 30, 2024 (unaudited)
	Level 1		Level 2		Level 3		Total
Assets:
Restricted cash held in a money market account	$	218	$	—	$	—	$	218
Forward Purchase Agreement Derivative Asset included in other noncurrent assets		—		—		11		11
Total assets, at fair value	$	218	$	—	$	11	$	229
Liabilities:
Public Warrants	$	151	$	—	$	—	$	151
Private warrants		—		25		—		25
Total warrant liabilities, at fair value	$	151	$	25	$	—	$	176

	Level 1		Level 2		Level 3		Total
	December 31, 2023
	Level 1		Level 2		Level 3		Total
Assets:
Restricted cash held in a money market account	$	218	$	—	$	—	$	218
Forward Purchase Agreement Derivative Asset included in other noncurrent assets		—		—		230		230
Total assets, at fair value	$	218	$	—	$	230	$	448
Liabilities:
Public Warrants	$	575	$	—	$	—	$	575
Private warrants		—		96		—		96
Total warrant liabilities, at fair value	$	575	$	96	$	—	$	671

The Company’s financial instruments consist of cash, prepaid expenses and other current assets, accounts payable, accrued expenses, and other current liabilities. The carrying value of these financial instruments is generally considered to approximate their fair values because of the short-term nature of those instruments.

The following table presents the changes in fair value of valued instruments for the three and nine months ended September 30, 2024 (in thousands):

	Forward Purchase Agreement Derivative Asset, at fair value			Public Warrants, at fair value			Private warrants, at fair value
	Three Months Ended September 30, 2024
	Forward Purchase Agreement Derivative Asset, at fair value			Public Warrants, at fair value			Private warrants, at fair value
Balance at July 1, 2024	$	(20	)	$	484		$	81
Change in fair value		9			(333	)		(56	)
Balance at September 30, 2024	$	(11	)	$	151		$	25

	Forward Purchase Agreement Derivative Asset, at fair value			Public Warrants, at fair value			Private warrants, at fair value
	Nine Months Ended September 30, 2024
	Forward Purchase Agreement Derivative Asset, at fair value			Public Warrants, at fair value			Private warrants, at fair value
Balance at January 1, 2024	$	(230	)	$	575		$	96
Proceeds from issuance
Recognition of Forward Purchase Agreement Derivative Asset
Warrants liability assumed at the close of the FLAG Merger as of September 12, 2023
Change in fair value		219			(424	)		(71	)
Conversion into Common Stock
Balance at September 30, 2024	$	(11	)	$	151		$	25

The following table presents the changes in fair value of valued instruments for the three and nine months ended September 30, 2023 (in thousands):

	Contingently convertible notes payable, including accrued interest, at fair value			SAFEs, at fair value			Series B convertible preferred stock, at fair value ⁽¹⁾			Forward Purchase Agreement Derivative Asset, at fair value			Public Warrants, at fair value			Private Placement Warrants, at fair value
	Three Months Ended September 30, 2023
	Contingently convertible notes payable, including accrued interest, at fair value			SAFEs, at fair value			Series B convertible preferred stock, at fair value⁽¹⁾			Forward Purchase Agreement Derivative Asset, at fair value			Public Warrants, at fair value			Private Placement Warrants, at fair value
Balance at July 1, 2023	$	1,629		$	34,517			7,632			—			—			—
Proceeds from issuance		—			—			19,347			—			—			—
Recognition of Forward Purchase Agreement Derivative Asset		—			—			—			(4,520	)		—			—
Warrants liability assumed at the close of the FLAG Merger as of September 12, 2023		—			—			—			—			2,990			497
Change in fair value		397			(5,654	)		(2,754	)		3,230			(460	)		(76	)
Conversion into Common Stock		(2,026	)		(28,863	)		(24,225	)		—			—			—
Balance at September 30, 2023	$	—		$	—			—			(1,290	)		2,530			421

	Contingently convertible notes payable, including accrued interest, at fair value			SAFEs, at fair value			Series B convertible preferred stock, at fair value⁽¹⁾			Forward Purchase Agreement Derivative Asset, at fair value			Public Warrants, at fair value			Private Placement Warrants, at fair value
	Nine Months Ended September 30, 2023
	Contingently convertible notes payable, including accrued interest, at fair value			SAFEs, at fair value			Series B convertible preferred stock, at fair value⁽¹⁾			Forward Purchase Agreement Derivative Asset, at fair value			Public Warrants, at fair value			Private Placement Warrants, at fair value
Balance at January 1, 2023	$	1,152		$	29,190			—			—			—			—
Balance	$	1,152		$	29,190			—			—			—			—
Proceeds from issuance		—			2,760			24,497			—			—			—
Recognition of Forward Purchase Agreement Derivative Asset		—			—			—			(4,520	)		—			—
Warrants liability assumed at the close of the FLAG Merger as of September 12, 2023		—			—			—			—			2,990			497
Issuance of SAFE in lieu of cash for advisory services		—			166			—			—			—			—
Loss at inception		—			—			2,412			—			—			—
Change in fair value		874			(3,253	)		(2,684	)		3,230			(460	)		(76	)
Conversion into Common Stock		(2,026	)		(28,863	)		(24,225	)		—			—			—
Balance at September 30, 2023	$	—		$	—			—			(1,290	)		2,530			421
Balance	$	—		$	—			—			(1,290	)		2,530			421

(1)	The loss at inception and the change in fair value of approximately $2.7 million from the issuance date to September 30, 2023, was recorded in Calidi’s unaudited condensed consolidated statements of operations within the change in fair value of debt and other liabilities - related party.

4. Selected Balance Sheet Components

Deferred Financing Costs

As of September 30, 2024 and December 31, 2023, there were approximately $0.1 million and $0, respectively, of deferred financing costs. These deferred financing costs consist primarily of fees related to the SEPA financing (see Note 1 and Note 11) and are included in other noncurrent assets on the accompanying unaudited condensed consolidated balance sheet.

Accrued Expenses and Other Current Liabilities

As of September 30, 2024 and December 31, 2023, accrued expenses and other current liabilities were comprised of the following (in thousands):

	September 30, 2024		December 31, 2023
Accrued compensation⁽¹⁾	$	1,681	$	1,720
Accrued vendor and other expenses		1,382		3,712
Accrued expenses and other current liabilities	$	3,063	$	5,432

(1)	Includes deferred compensation for certain executives and deferred board and advisory fees for one director (see Note 11).

See Note 11 for additional commitments.

Prepaid Expenses and Other Current Assets

As of September 30, 2024 and December 31, 2023, prepaid expenses and other current assets were comprised of the following (in thousands):

	September 30, 2024		December 31, 2023
Prepaid expenses	$	101	$	485
Prepaid insurance		7		284
CIRM receivable		—		1,360
Other		216		225
Prepaid expenses and other current assets	$	324	$	2,354

5. Machinery and Equipment, net

As of September 30, 2024 and December 31, 2023, machinery and equipment, net, was comprised of the following (in thousands):

	September 30, 2024			December 31, 2023
Machinery and equipment	$	2,282		$	2,263
Accumulated depreciation		(1,300	)		(993	)
Machinery and equipment, net	$	982		$	1,270

Depreciation expense was approximately $0.1 million and $0.3 million for the three and nine months ended September 30, 2024, respectively. Depreciation expense was approximately $0.1 million and $0.3 million for the three and nine months ended September 30, 2023, respectively.

6. Related Party Transactions

The Company has funded its operations to date primarily through private sales of convertible preferred stock, contingently convertible and convertible promissory notes, and common stock. These investments have included various related parties, including from AJC Capital and certain directors as further discussed below.

The following table presents the various significant related party transactions and investments in the Company for the periods presented (in thousands):

Schedule of Related Party Transactions

Related Party	Description of investment or transaction	September 30, 2024		December 31, 2023
Director A and Director E	Current term notes payable, net of discount, including accrued interest⁽¹⁾		2,631		278
AJC Capital and relative of Officer A	Accounts payable and accrued expenses⁽²⁾		29		104
Relative of Officer A	Loan Payable⁽⁶⁾		217		—
Director D	Former President and Chief Operating Officer⁽³⁾		449		495
Director A	Advisory services included in accrued expenses⁽⁴⁾		18		18
AJC Capital	Lease guaranty⁽⁵⁾		181		167
Director A	Noncurrent term notes payable including accrued interest⁽¹⁾		—		2,060
Director A	Other liabilities⁽⁸⁾		620		538
AJC Capital and Director A	Warrant Liability⁽⁷⁾		13		48

(1)

As of September 30, 2024, related party term notes payable amounts due to Directors A and E totaling $2.6 million, inclusive of principal amounts totaling $2.0 million and accrued interest amounts totaling $0.6 million, have been classified as a short term liability on the accompanying unaudited condensed consolidated balance sheets. See Note 7 for further details.

(2)	Amounts owed to AJC Capital as of September 30, 2024, for reimbursable expenses; in addition, amounts owed to a relative of Officer A for certain legal fees, included in accounts payable and accrued expenses as of September 30, 2024.

(3)

On February 1, 2022, the Company appointed a current board member (Director D referenced above), George K. Ng, as President and Chief Operating Officer of the Company under an Employment Agreement (the “Ng Agreement”). Under the Ng Agreement, Mr. Ng is entitled to a base annual salary of $0.5 million, a signing bonus of $0.3 million, payable in three equal monthly installments. Mr. Ng was eligible for standard change in control and severance benefits. On June 23, 2023, the Company entered into a Separation and Release Agreement with Mr. Ng which includes a severance accrual as of September 30, 2024 (see Note 11).

(4)

On April 1, 2022, the Company entered into an Advisory Agreement with Scott Leftwich (Director A referenced above), for providing certain strategic and advisory services. Director A will receive an advisory fee of $9,166 per month not to exceed $0.1 million per annum, accrued and payable upon the Company raising $10 million or more in equity proceeds, as defined in the Advisory Agreement. The Advisory Agreement terminated on August 31, 2023.

(5)

In October 2022, in order for the Company to secure and execute the San Diego Lease discussed in Note 11, Mr. Allan Camaisa provided a personal Guaranty of Lease of (the “Guaranty”) up to $0.9 million to the lessor for the Company’s future performance under the San Diego Lease agreement. As consideration for the Guaranty, the Company agreed to pay Mr. Camaisa 10% of the Guaranty amount for the first year of the San Diego Lease, and 5% per annum of the Guaranty amount thereafter through the life of the lease, with all amounts accrued and payable at the termination of the San Diego Lease or release of Mr. Camaisa from the Guaranty by the lessor, whichever occurs first. The amount shown in the table above, represents the present value, including accrued interest as of the period shown, of the aggregate $0.2 million payment due to Mr. Camaisa upon the release or termination of the Guaranty, which is included in noncurrent operating lease right-of-use liability.

(6)	In January 2024, the Company entered into a loan agreement with a relative of Officer A for a loan payable for $0.2 million, payable on January 19, 2025. The $0.2 million loan bears interest at 12%.

(7)	See Note 8 for disclosures around Warrants.

(8)

In August 2023, the Company entered into an agreement with Director A for deferred compensation including advisory fees for $0.5 million, payable on January 1, 2025. The $0.5 million note bore interest at 24% through August 12, 2024, at which time the note was amended and replaced with an interest rate of 14% per annum.

7. Debt

The Company’s outstanding debt obligations as of September 30, 2024 and December 31, 2023, including related party components, are as follows (in thousands):

	September 30, 2024
	Unpaid Balance		Fair Value Measurements		Discount			Accrued Interest		Net Carrying Value
Convertible notes payable	$	1,800	$	—	$	(128	)	$	101	$	1,773
Term notes payable		2,200		—		—			673		2,873
Promissory note		600		—		—			22		622
Bridge loan payable		200		—		—			17		217
Total debt	$	4,800	$	—	$	(128	)	$	813	$	5,485
Less: current portion of long-term debt											(3,112	)
Long-term debt, net of current portion										$	2,373

	December 31, 2023
	Unpaid Balance		Fair Value Measurements		Discount			Accrued Interest		Net Carrying Value
Term notes payable	$	2,500	$	—	$	(21	)	$	388	$	2,867
Total debt	$	2,500	$	—	$	(21	)	$	388	$	2,867
Less: current portion of long-term debt											(807	)
Long-term debt, net of current portion										$	2,060

Scheduled maturities of outstanding debt, net of discounts as of September 30, 2024 are as follows (in thousands):

Year Ending December 31:
2024 (October — December)	$	—
2025		2,400
2026		—
2027		600
2028 and thereafter		1,800
Plus: accrued interest		813
Less: Discount		(128	)
Total debt	$	5,485

The following discussion includes a description of the Company’s outstanding debt as of September 30, 2024 and December 31, 2023. The weighted average interest rate related to the Company’s outstanding debt was approximately 12.8% and 15.1% as of September 30, 2024 and December 31, 2023, respectively. Interest expense related to the Company’s outstanding debt totaled approximately $0.2 million and $0.3 million for the three months ended September 30, 2024 and 2023, respectively, and approximately $0.6 million and $0.8 million for the nine months ended September 30, 2024 and 2023, respectively, which is reported within other income and expense, net, in the unaudited condensed consolidated statements of operations. Interest expense includes interest on outstanding borrowings and the amortization of discounts associated with debt issuance costs or from the allocation of proceeds to freestanding common stock or warrants as part of the relevant financing transactions.

Term Notes Payable

2021 Term Notes Payable

In January 2021, Calidi entered into a note agreement with a related party investor and director to borrow up to $0.5 million (“2021 Term Note”).

In connection with the closing of the FLAG Merger on September 12, 2023, the 2021 Term Note plus accrued interest was amended, with an extended maturity date of January 1, 2025. For this holder, a related party, Calidi agreed to accrue an interest rate of 24% per annum payable with principal at maturity, and offered certain incentives, including 500,000 warrants to purchase common stock, fair valued at approximately $0.1 million at the time of the amendment.

The interest rate on the 2021 Term Notes was amended on August 12, 2024, to 14% per annum.

As of September 30, 2024 and December 31, 2023, the interest rate of the 2021 Term Notes was 14% and 24% per annum, respectively, and the total carrying value, including accrued interest was approximately $0.7 million and $0.6 million, respectively.

2022 Term Notes Payable

In November and December 2022, the Company issued $1.5 million of secured term notes payable (the “2022 Term Notes”) to investors, including to related parties (see Note 6).

On September 12, 2023, with regard to the 2022 Term Notes, approximately $0.5 million of principal plus accrued interest was amended, extending maturity of the notes to dates ranging from November 2023 to January 2025. Further, approximately $1.0 million of principal, excluding accrued interest, was settled with shares of common stock issued to the noteholders. For the term notes that were amended, all to related parties, $0.2 million of principal was extended to mature on November 1, 2023, $0.2 million of principal was extended to mature on March 1, 2024, and in February 2024 further extended to mature on May 1, 2024, and $0.2 million of principal was extended to mature on January 1, 2025. The debt amendments occurred close to or upon the stated maturity date and resulted in the application of extinguishment accounting. For the term loans that were settled with shares of common stock, the debt settlement occurred near or at the stated maturity and resulted in the application of extinguishment accounting.

On October 3 and November 8, 2023, the Company settled in cash $0.1 million and $0.2 million, respectively, of the principal of 2022 Term Notes plus accrued interest. Said term notes payable were no longer outstanding as of the settlement dates.

On March 1, 2024, the maturity date of $0.2 million of the 2022 Term Note was extended to May 1, 2024. The amended 2022 Term Note will accrue interest at 16% per annum commencing on March 1, 2024. All other terms and conditions remained substantially unchanged. The debt amendment occurred close to or upon the stated maturity date and resulted in the application of extinguishment accounting. The carrying value of the original notes equals the fair value at extinguishment date, which resulted in no gain or loss recorded in the unaudited condensed consolidated statement of operations.

On April 12, 2024, the maturity date of $0.2 million of the 2022 Term Note was extended to January 1, 2025. All other terms and conditions remained substantially unchanged. The debt amendment occurred close to or upon the stated maturity date and resulted in the application of extinguishment accounting. The carrying value of the original notes equals the fair value at extinguishment date, which resulted in no gain or loss recorded in the unaudited condensed consolidated statement of operations.

The interest rate of 24% per annum on the 2022 Term Notes for a total principal of $0.2 million was amended on August 12, 2024, to 14% per annum.

As of September 30, 2024 and December 31, 2023, the interest rate of the 2022 Term Notes was 14% and 24% per annum for a total principal of $0.2 million, and 16% and 15% per annum for a total principal of $0.2 million, respectively. As of September 30, 2024 and December 31, 2023, the total carrying value, including accrued interest, was $0.4 million.

2023 Term Notes Payable

From January through September 2023, the Company issued $3.3 million of secured term notes payable (the “2023 Term Notes”) to investors, including to related parties (see Note 6).

On September 12, 2023, approximately $1.2 million of principal plus accrued interest was amended, extending maturity of the notes to January 1, 2025. Further, approximately $1.0 million of principal, excluding accrued interest, was settled with shares of common stock issued to the noteholders. For the term notes that were amended, all which were extended to January 1, 2025 by the holder, a related party, the Company agreed to accrue an interest rate of 24% per annum payable with principal at maturity. The debt amendment occurred close to or upon the stated maturity date and resulted in the application of extinguishment accounting. For the term loans that were settled with shares of common stock, the settlement resulted in the issuance of 19,735 shares of common stock with a fair value of $1.1 million. The debt settlement occurred near or at the stated maturity and resulted in the application of extinguishment accounting.

On October 3, 2023, the Company settled in cash $0.6 million of principal of 2023 Term Notes plus accrued interest and said term notes payable were no longer outstanding as of that date.

On April 12, 2024, the maturity date of $0.3 million of the 2023 Term Note was extended to January 1, 2025. Approximately $0.2 million of the amended 2023 Term Note will accrue interest at 18% per annum commencing on April 12, 2024, while the interest rate of the other $0.1 million of the amended 2023 Term Note will remain unchanged. All other terms and conditions remained substantially unchanged. The debt amendment occurred close to or upon the stated maturity date and resulted in the application of extinguishment accounting. The carrying value of the original notes equals the fair value at extinguishment date, which resulted in no gain or loss recorded in the unaudited condensed consolidated statement of operations.

On May 16, 2024, the Company settled in cash $0.2 million of principal of 2023 Term Notes plus accrued interest and said term notes payable were no longer outstanding as of that date.

On June 20, 2024, the Company settled in cash $0.1 million of principal of 2023 Term Notes plus accrued interest and said term notes payable were no longer outstanding as of that date.

The interest rate of 24% on the 2023 Term Notes for a total principal of $1.1 million was amended on August 12, 2024, to 14% per annum.

As of September 30, 2024 and December 31, 2023, the interest rate of the 2023 Term Notes was 14% and 24% per annum for a total principal of $1.1 million, 18% and 14% per annum for a total principal of $0.2 million, and 14% per annum for a total principal of $0.1 million. As of September 30, 2024 and December 31, 2023, the total carrying value, including accrued interest and net of debt discount, was $1.8 million and $1.9 million, respectively.

2024 Bridge Loan

On January 19, 2024, the Company received approximately $0.2 million in aggregate proceeds from the issuance of certain bridge loans (the “2024 Bridge Loan”), which mature one year from the issuance date and bear simple interest of 12% per annum. As consideration for the 2024 Term Loans, the Company issued an aggregate of 893 shares of restricted common stock to the Lender.

As of September 30, 2024, the total carrying value of the 2024 Bridge Loan, including accrued interest and net of debt discount, was $0.2 million.

Convertible Promissory Notes

On January 26, 2024, the Company entered into a convertible promissory note purchase agreement (the “2024 Purchase Agreement”) with an Accredited Investor (the “Investor”) for a loan in the principal amount of $1.0 million (the “2024 Convertible Note Loan”). In connection with the Convertible Note Loan, the Company issued a one-year convertible promissory note evidencing the aggregate principal amount of $1.0 million under the Loan, which accrues at a 12.0% simple interest rate per annum (the “2024 Convertible Note”).

The 2024 Convertible Note also provides the Investor a voluntary right to convert all, but not less than all, the Principal Amount and accrued interest into shares of the Company’s common stock at a conversion rate equal to a 10% discount to the 10-day VWAP as determined immediately before January 26, 2024. In addition, upon such voluntary conversion by the Investor, the Investor will be entitled to a warrant for 50% of the number of shares of the Company’s common stock issued upon the Note conversion at an exercise equal to 120% of the Conversion Price (the “2024 Note Warrant”). In the event the Company consummates a public offering prior to the maturity date of the 2024 Convertible Note, the 2024 Convertible Note and accrued interest will be subject to a mandatory conversion into the equity securities of the Company issued and sold to investors in such public offering, equal to the price per share of the equity security sold to other purchasers and subject to similar terms and conditions of such public offering, except that such equity securities received under a mandatory conversion will be restricted securities.

On April 18, 2024, pursuant to the April Public Offering (see Note 1), the Company’s $1.0 million convertible note, inclusive of outstanding principal and accrued interest, was automatically converted into shares of Common Stock Unit shares, with terms identical to those sold in the April Public Offering. As of that date, the convertible note was no longer outstanding.

Convertible Promissory Notes and Unasserted Claim Settlement

On March 8, 2024, the Company entered into settlement agreement (“Settlement Agreement”) with an investor who previously enter into a series of related agreements including (i) an agreement with Calidi Cure to fund the purchase of Calidi Series B Preferred Stock; (ii) a Non-Redemption Agreement with the Company; (iii) an OTC Equity Prepaid Forward Purchase Agreement with the Company; and (iv) a Subscription Agreement with the Company (items (i) through (iv) collectively “the Supplemental Funding Agreements”) for the purpose of satisfying the “Minimum Cash Condition” required under the Business Combination agreement between First Light Acquisition Group, Inc., and Calidi Biotherapeutics, Inc., a Nevada corporation among others. Pursuant to the Settlement Agreement, (i) the investor purchased a $2.0 million convertible note from the Company for cash and (ii) the Company issued to the investor a $1.5 million convertible note in consideration for the settlement of all claims related to the Supplemental Funding Agreements. The $2.0 million convertible note and $1.5 million convertible note are collectively herein referred to as the “Convertible Notes”. The Convertible Notes bear semiannual interest at 10.0% per annum and each mature on March 8, 2028, unless due earlier due to an event of a default. After the earlier of 180 days or the effective date of a registration statement registering the Company’s common stock underlying the Convertible Notes, the Company may prepay the Convertible Notes, including any interest earned thereon, without penalty. The Convertible Notes provide the Investor a right to convert in whole or in part , the Principal Amount (as defined in the Convertible Notes) and accrued interest earned thereon into shares of the Company’s common stock at an initial note conversion price equal to 94.0% of the 10-day VWAP ending the business day preceding execution of the Convertible Notes, subject to a reset note conversion price equal to 94.0% of 10-day VWAP ending on the one hundred and eightieth (180th) day from the issuance of the Convertible Notes. On September 4, 2024, the exercise price was reset to $1.14. In the event the Company completes a financing (i) of at least $8.0 million in an offering registered with the SEC; or (ii) of at least $2.0 million with a non-affiliated purchaser at an effective price of at least 150.0% of the initial note conversion price, then the Convertible Notes will be subject to mandatory conversion at the lower of the initial note conversion price and reset note conversion price.

On April 14, 2024, the $1.5 million convertible note agreement was amended to include a mandatory prepayment of the entire convertible note upon the closing of a public offering of the Company’s securities registered with the Securities and Exchange Commission in which Holder participates in an amount equal to the principal amount of the convertible note. All other terms and conditions remained substantially unchanged. As no concession was granted as part of the amendment and the present value of the cash flows under the new debt instrument did not differ from the present value of the remaining cash flows under the terms of the original debt instrument, it was determined that the debt was not substantially different which resulted in modification accounting. The carrying value of the original notes equaled the fair value at modification date, which resulted in no adjustment to the debt’s carrying value.

On September 27, 2024, principal of $0.2 million and accrued interest of $11,000 of the $2.0 million convertible note was converted into 184,810 shares of common stock. As of September 30, 2024, $1.8 million of the convertible note remained outstanding.

From October 21, 2024 through November 6, 2024, principal of $1.8 million and accrued interest of approximately $118,000 of the Company’s existing $2.0 million convertible note was converted into 1,679,045 shares of common stock. Upon completion of the conversions, the convertible note was no longer outstanding.

Promissory Note Loan Agreement

On July 1, 2024, the Company entered into a Loan Agreement with a third party lender (the “Lender”). Under the Loan Agreement, the Lender agreed to loan the Company the principal amount of $0.6 million pursuant to the terms of the promissory note dated July 1, 2024 which was issued to the Lender by the Company (the “Promissory Note”).

The Promissory Note bears a simple interest rate at 15.0% per annum and matures on the third calendar year from the Payment Date (the “Maturity Date”) unless due earlier due to an event of a default under the terms of the Promissory Note. The Company agreed to pay annual payments of accrued interest after each calendar year from the Payment Date until any remaining interest is paid in full on the Maturity Date. As of September 30, 2024, the total carrying value of the promissory note, including accrued interest, was $0.6 million.

8. Convertible Preferred Stock, Common Stock and Stockholders’ Deficit

Preferred Stock

Pursuant to the Second Amended and Restated Certificate of Incorporation filed on September 19, 2023, as amended (“the Amended Articles”), the Company is authorized to issue a total of 1,000,000 shares of preferred stock, par value $0.0001 per share. As of September 30, 2024 and December 31, 2023, there were no shares of preferred stock outstanding.

Convertible Preferred Stock

In connection with the closing of the FLAG Merger on September 12, 2023, all Convertible Preferred Stock, including the Series B Convertible Preferred stock classified as a liability which were completed as to the Series B financing, were converted to common stock pursuant to the conversion provisions and were no longer outstanding as of September 30, 2024 and December 31, 2023.

Common Stock

Pursuant to the First Certificate of Amendment to Second Amended and Restated Certificate of Incorporation, the Company is authorized to issue 330,000,000 shares of common stock, par value $0.0001 per share, of which 312,000,000 shares are designated as Voting Common Stock (“Common Stock”) and 18,000,000 are designated as Non-Voting Common Stock (the “Non-Voting Common Stock”). As of September 30, 2024 and December 31, 2023, there were 9,310,522 and 3,552,223 shares of common stock issued and outstanding, respectively, and 1,800,000 shares of non-voting common stock outstanding. Since inception to date, no dividends have been declared or paid to common stockholders. Issuance costs related to common stock issuances during all periods presented were immaterial.

During the nine months ended September 30, 2024, the Company issued 125,847 shares of common stock in lieu of cash for certain services (see Note 11), 13,875 shares of common stock in lieu of cash for payment of a commitment fee related to the Company’s SEPA agreement (see Note 11), 1,581 shares of common stock issued to a stockholder as a result of the FLAG Merger (see Note 1), 1,323,250 shares of common stock shares issued in connection with the Company’s April Offering (see Note 1), 441,696 shares of common stock pursuant to Convertible Notes conversion (see Note 7), 1,069,800 shares of common stock issued in connection with the Company’s May Inducement Offer (see Note 1), 1,787,500 shares of common stock from exercises of warrants (see Note 8), 196,500 shares of common stock from exercises of pre-funded warrants (see Note 8), 20,000 shares of common stock issued for a legal settlement (see Note 11), 79,438 shares of common stock for reverse stock split fractional shares (see Note 1), and 698,812 shares of common stock issued pursuant to a subscription agreement entered into with a related-party (see Note 11).

During the nine months ended September 30, 2023, Calidi issued 718,574 shares of common stock in connection with the conversion of convertible preferred stock (see above), 4,282 shares of common stock with term notes as interest paid in kind and other, 155 shares of common stock in lieu of cash per legal settlement agreement, 19,773 shares of common stock from exercises of stock options, 38,782 shares of common stock for Calidi debt settlement in connection with the FLAG Merger, 4,683 shares of common stock for Calidi deferred compensation settlement in connection with the FLAG Merger, 130,682 shares of common stock issued to Non-Redemption and PIPE Agreement Investor in connection with FLAG Merger, 100,000 shares of common stock under the Forward Purchase Agreement in connection with FLAG Merger, and 1,668,339 shares of common stock issued to Calidi stockholders as result of FLAG Merger.

As of September 30, 2024 and December 31, 2023, common stock reserved for future issuance consisted of the following:

Schedule of Common Stock Reserved


	September 30, 2024		December 31, 2023
Common stock warrants outstanding		7,348,765		1,341,216
Common stock options issued and outstanding		906,122		787,087
Restricted stock units vested and unreleased		38,455		4,022
Shares available for future issuance under the 2023 Equity Incentive Plan		121,305		360,459
Shares reserved under the 2023 Employee Stock Purchase Plan		393,781		393,781
		8,808,428		2,886,565

April Public Offering

On April 18, 2024, in connection with the April Public Offering (see Note 1), the Company sold an aggregate of 1,323,250 Common Stock Units and 196,500 Pre-Funded Warrant (“PFW”) Units at an effective combined purchase price of $4.00 per Common Stock Unit or PFW Unit.

Each Common Stock Unit consists of: (i) one share of the Company’s voting common, (ii) a Series A warrant to purchase one share common stock, (iii) a Series B warrant to purchase one Series B Unit, with each Series B Unit consisting of (a) one share of common stock and (b) a Series B-1 Warrant to purchase one share of common stock, and (iv) a Series C warrant to purchase one Series C Unit, with each Series C Unit consisting of (a) one share of common stock and (b) a Series C-1 Warrant to purchase one share of common stock. See further warrant details per each issued series below.

Each PFW Unit consists of: (i) a pre-funded warrant to purchase one share of common stock, (ii) a Series A warrant to purchase one share common stock, (iii) a Series B warrant to purchase one Series B Unit, with each Series B Unit consisting of (a) one share of common stock and (b) a Series B-1 Warrant to purchase one share of common stock, and (iv) a Series C warrant to purchase one Series C Unit, with each Series C Unit consisting of (a) one share of common stock and (b) a Series C-1 Warrant to purchase one share of common stock. See further warrant details per each issued series below.

The Company issued to the Placement Agent common stock warrants to purchase up to 75,988 shares of Common Stock. See further warrant details below.

May Inducement Offer

On May 31, 2024, following the closing of the May Inducement Offer (see Note 1), warrant holders immediately exercised some or all of their respective outstanding Series B Warrants and C Warrants to purchase up to an aggregate of 1,069,800 shares of the Company’s Common Stock, Series B-1 Warrants to purchase up to 267,300 shares of Common Stock and Series C-1 Warrants to purchase up to 802,500 shares of Common Stock, at a reduced exercise price of $2.00. In consideration for the immediate exercise of some or all of the Existing Warrants for cash, the Company agreed to issue unregistered new Series D Warrants to purchase up to 1,069,800 shares of Common Stock.

The Company accounted for the exercise price decrease of the Existing Warrants as a modification. Based on the nature of the modification (i.e., reduction in exercise price to induce exercise and raise additional capital), the modification was accounted for as an equity issuance cost on the date the offer was accepted by the Holders, calculated as the excess fair value of the modified warrants post modification.

The Company issued to the Placement Agent common stock warrants to purchase up to 53,490 shares of common stock. See further warrant details below.

Subscription Agreement

On July 26, 2024, the Board of Directors of the Company approved a Subscription Agreement dated July 28, 2024 entered with an accredited investor, a related-party (see Note 1). Pursuant to the Agreement, the Company sold to the Investor and the Investor purchased, (i) 698,812 shares of Common Stock at a purchase price of $1.431 per share; and (ii) warrants to purchase 600,000 shares of the Company’s common stock at an exercise price of $1.90, for an aggregate purchase price of $1.0 million.

Nova Cell Investment

On July 26, 2024, the Board of Directors of the Company acknowledged a strategic investment of approximately $2.0 million by an accredited investor, a related-party, into Nova Cell, a subsidiary of the Company, in exchange for the issuance of 7,500,000 shares of Nova Cell’s shares of common stock to the Investor, representing 25% of Nova Cell’s current fully-diluted capitalization.

Warrants

As of September 30, 2024 and December 31, 2023, the Company had outstanding warrants to purchase 7,348,765 shares of Common Stock, consisting of the following:

Schedule of Outstanding Warrants

	September 30, 2024		December 31, 2023
Private Warrants to purchase Common Stock		791,217		191,217
Public Warrants to purchase Common Stock		1,150,000		1,150,000
Warrants to purchase Restricted Shares		40,000		—
Placement Agent Warrants to purchase Common Stock		129,478		—
Series A Warrants to purchase Common Stock		1,401,635		—
Series B Warrants to purchase Common Stock		1,134,335		—
Series B-1 Warrants to purchase Common Stock		567,300		—
Series C-1 Warrants to purchase Common Stock		1,065,000		—
Series D Warrants to purchase Common Stock		1,069,800		—
Total		7,348,765		1,341,217

Private Warrants

In connection with the closing of the FLAG Merger on September 12, 2023, the Company assumed private warrants to purchase 191,217 shares of common stock with an exercise price of $115.00 per share (the “Private Warrants”). The Private Warrants (and shares of common stock issued or issuable upon exercise of the Private Warrants) in general, will not be transferable, assignable or salable until 30 days after the Closing (excluding permitted transferees) and they will not be redeemable under certain redemption scenarios by us so long as they are held by the Sponsor, Metric or their respective permitted transferees. Otherwise, the Private Warrants have terms and provisions that are identical to those of the Public Warrants, including as to exercise price, exercisability and exercise period. If the Private Warrants are held by holders other than the Company’s sponsor, Metric or their respective permitted transferees, the Private Warrants will be redeemable by the Company under all redemption scenarios and exercisable by the holders on the same basis as the Public Warrants.

On July 26, 2024, pursuant to a subscription agreement entered into with an accredited investor, a related-party (see Note 11), the Company sold to the investor warrants to purchase 600,000 shares of the Company’s common stock, which (i) have an exercise price equal to $1.90 per share; and (ii) are exercisable for 3 years after the date of issuance of the warrants, subject to the terms set forth in such warrant.

As of September 30, 2024 and December 31, 2023, Private Warrants to purchase 791,217 and 191,217 shares of Common Stock, respectively, remained outstanding.

Public Warrants

In connection with the closing of the FLAG Merger on September 12, 2023, the Company assumed public warrants to purchase 1,150,000 shares of common stock with an exercise price of $115.00 per share (the “Public Warrants”). The Public Warrants became exercisable 30 days after the closing of the FLAG Merger. Each whole share of the warrant is exercisable for one share of the Company’s common stock.

The Company may redeem the outstanding Public Warrants for $0.01 per warrant upon at least 30 days’ prior written notice of redemption given after the warrants become exercisable, if the reported last sale price of the common stock equals or exceeds $180.00 per share (as adjusted for stock dividends, sub-divisions, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period commencing after the warrants become exercisable and ending on the third trading day before the Company sends the notice of redemption to the warrant holders. Upon issuance of a redemption notice by the Company, the warrant holders may, at any time after the redemption notice, exercise the public warrants on a cashless basis.

The Company accounts for the Public Warrants in accordance with the guidance contained in ASC 815-40. Such guidance provides that because the warrants do not meet the criteria for equity treatment thereunder, each warrant must be recorded as a liability.

The accounting treatment of derivative financial instruments in accordance with ASC 815, Derivatives and Hedging, requires that the Company record a derivative liability upon the closing of the FLAG Merger. Accordingly, the Company classifies each warrant as a liability at its fair value and the warrants were allocated a portion of the proceeds from the issuance of the Units equal to its fair value. This liability is subject to re-measurement at each balance sheet date. With each such re-measurement, the warrant liability will be adjusted to fair value, with the change in fair value recognized in the Company’s statement of operations. The Company will reassess the classification at each balance sheet date. If the classification changes as a result of events during the period, the warrants will be reclassified as of the date of the event that causes the reclassification.

As of September 30, 2024 and December 31, 2023, Public Warrants to purchase 1,150,000 shares of Common Stock remained outstanding.

Warrants to Purchase Restricted Shares

On February 21, 2024, in connection with a settlement agreement (see Note 11), the Company issued additional warrants to purchase 40,000 Restricted Shares which (i) have an exercise price equal to $13.20 per share; and (ii) are exercisable for 5 years after the date of issuance of the warrants, subject to the terms set forth in such warrant.

As of September 30, 2024, warrants to purchase 40,000 Restricted Shares remained outstanding. There were no such warrants as of December 31, 2023.

Placement Agent Warrants

On April 18, 2024, in connection with the closing of the April Public Offering (see Note 1), the Company issued to the placement agent warrants to purchase up to 75,988 shares of Common Stock, which (i) have an exercise price equal to $6.60 per share; and ( ii) are exercisable for 5 years after the date of issuance of the warrants, subject to the terms set forth in such warrant.

On June 3, 2024, in connection with the closing of the May Inducement Offer (see Note 1), the Company issued to the placement agent warrants to purchase up to 53,490 shares of Common Stock, which (i) have an exercise price equal to $3.75 per share; and (ii) are exercisable for 5 years after the date of issuance of the warrants, subject to the terms set forth in such warrant.

As of September 30, 2024, all placement agent warrants to purchase a total of 129,478 shares of common stock remained outstanding. There were no such warrants as of December 31, 2023.

Series A Warrants

On April 18, 2024, in connection with the closing of the April Public Offering (see Note 1), the Company issued Series A warrants to purchase 1,519,750 shares of Common Stock. Furthermore, on April 18, 2024, in connection with the mandatory conversion of a $1.0 million Convertible Note (see Note 7), the Company issued additional Series A warrants to purchase 256,885 shares of Common Stock. The Series A Warrants have (i) an exercise price equal to $6.00 per share; and (ii) are exercisable for 5 years after the date of issuance of the warrants, subject to the terms set forth in such warrant.

Pursuant to the Reverse Stock Split effected July 15, 2024 (See Note 1), the exercise price of the Series A warrants was reset to $1.52 per share, effective July 22, 2024.

During the three months ended September 30, 2024, Series A warrants to purchase 375,000 shares of common stock were exercised at $1.52 per share and the Company received gross proceeds of approximately $0.6 million.

As of September 30, 2024, Series A warrants to purchase 1,401,635 shares of common stock remained outstanding. There were no such warrants as of December 31, 2023.

Series B Warrants

On April 18, 2024, in connection with the closing of the April Public Offering (see Note 1), the Company issued Series B warrants to purchase 1,519,750 shares of common stock. Furthermore, on April 18, 2024, in connection with the mandatory conversion of a $1.0 million Convertible Note (see Note 7), the Company issued additional Series B warrants to purchase 256,885 shares of common stock. The Series B Warrants have (i) an exercise price equal to $6.00 per share; and (ii) are exercisable for 1 year after the date of issuance of the warrants, subject to the terms set forth in such warrant.

Series B warrants to purchase 267,300 shares of common stock were exercised at a reduced exercise price of $2.00 in connection with the May Inducement Offer. Pursuant to the issuance of common stock per the Series B warrant exercises, the Company received gross proceeds of approximately $0.5 million.

Pursuant to the Reverse Stock Split effected July 15, 2024 (See Note 1), the exercise price of the Series B warrants was reset to $1.52 per share, effective July 22, 2024.

During the three months ended September 30, 2024, Series B warrants to purchase 375,000 shares of common stock were exercised at $1.52 per share and the Company received gross proceeds of approximately $0.6 million.

As of September 30, 2024, Series B warrants to purchase 1,134,335 shares of common stock remained outstanding. There were no such warrants as of December 31, 2023.

Series C Warrants

On April 18, 2024, in connection with the closing of the April Public Offering (see Note 1), the Company issued Series C warrants to purchase 1,519,750 shares of common stock. Furthermore, on April 18, 2024, in connection with the mandatory conversion of a $1.0 million Convertible Note (see Note 7), the Company issued additional Series C warrants to purchase 256,885 shares of common stock. The Series C Warrants have (i) an exercise price equal to $6.00 per share; and (ii) are exercisable for 4 months after the date of issuance of the warrants, subject to the terms set forth in such warrant.

Series C warrants to purchase 802,500 shares of common stock were exercised at a reduced exercise price of $2.00 in connection with the May Inducement Offer. Pursuant to the issuance of common stock per the Series C warrant exercises, the Company received gross proceeds of approximately $1.6 million.

Pursuant to the Reverse Stock Split effected July 15, 2024 (See Note 1), the exercise price of the Series C warrants was reset to $1.52 per share, effective July 22, 2024.

During the three months ended September 30, 2024, Series C warrants to purchase 637,500 shares of common stock were exercised at $1.52 per share and the Company received gross proceeds of approximately $1.0 million. 336,635 Series C warrants expired on August 18, 2024.

As of September 30, 2024 no Series C warrants remained outstanding. There were no such warrants as of December 31, 2023.

Series B-1 Warrants

On June 3, 2024, in connection with the closing of the May Inducement Offer (see Note 1), the Company issued Series B-1 warrants to purchase 267,300 shares of common stock, which (i) have an exercise price equal to $2.00 per share; and (ii) are exercisable for 5 years after the date of issuance of the warrants, subject to the terms set forth in such warrant.

Pursuant to the Reverse Stock Split effected July 15, 2024 (See Note 1), the exercise price of the Series B-1 warrants was reset to $1.52 per share, effective July 22, 2024.

During the three months ended September 30, 2024, pursuant to the terms of the Series B Warrants, the Company issued Series B-1 warrants to purchase 375,000 shares of common stock which (i) have an exercise price equal to $1.52 per share; and (ii) are exercisable for 5 years after the date of issuance of the warrants, subject to the terms set forth in such warrant.

During the three months ended September 30, 2024, Series B-1 warrants to purchase 75,000 shares of common stock were exercised at $1.52 per share and the Company received gross proceeds of approximately $0.1 million.

As of September 30, 2024, Series B-1 warrants to purchase 567,300 shares of common stock remained outstanding. There were no such warrants as of December 31, 2023.

Series C-1 Warrants

On June 3, 2024, in connection with the closing of the May Inducement Offer (see Note 1), the Company issued Series C-1 warrants to purchase 802,500 shares of common stock, which (i) have an exercise price equal to $2.00 per share; and (ii) are exercisable for 5 years after the date of issuance of the warrants, subject to the terms set forth in such warrant. Series C-1 warrants to purchase 50,000 shares of common stock were subsequently exercised at an exercise price of $2.00 per share. Pursuant to the issuance of common stock per the Series C-1warrant exercises, the Company received gross proceeds of approximately $0.1 million.

Pursuant to the Reverse Stock Split effected July 15, 2024 (See Note 1), the exercise price of the Series C-1 warrants was reset to $1.52 per share, effective July 22, 2024.

During the three months ended September 30, 2024, pursuant to the terms of the Series C Warrants, the Company issued Series C-1 warrants to purchase 637,500 shares of common stock which (i) have an exercise price equal to $1.52 per share; and (ii) are exercisable for 5 years after the date of issuance of the warrants, subject to the terms set forth in such warrant.

During the three months ended September 30, 2024, Series C-1 warrants to purchase 325,000 shares of common stock were exercised at $1.52 per share and the Company received gross proceeds of approximately $0.5 million.

As of September 30, 2024, Series C-1 warrants to purchase 1,065,000 shares of common stock remained outstanding. There were no such warrants as of December 31, 2023.

Series D Warrants

On June 3, 2024, in connection with the closing of the May Inducement Offer (see Note 1), the Company issued Series D warrants to purchase 1,069,800 shares of common stock, which (i) have an exercise price equal to $3.00 per share; and (ii) are exercisable for 5.5 years after the date of issuance of the warrants, subject to the terms set forth in such warrant. The Series D Warrants were issued as additional consideration to the Holders as part of the May Inducement Offer (see Note 1). The fair value of the Series D Warrants totaling $1.7 million was recorded as a deemed dividend to the warrant holders, and accordingly was treated as a reduction from total loss attributable to common stockholders in the calculations of net loss per share in the unaudited condensed consolidated statements of operations.

Pursuant to the Reverse Stock Split effected July 15, 2024 (See Note 1), the exercise price of the Series D warrants was reset to $1.52 per share, effective July 22, 2024.

As of September 30, 2024, Series D warrants to purchase 1,069,800 shares of common stock remained outstanding. There were no such warrants as of December 31, 2023.

The following table summarizes the Company’s aggregate warrant activity for the nine months ended September 30, 2024.

Schedule of Warrant Activity

	Number of Warrants			Weighted Average Exercise Price		Weighted Average Remaining Contractual Life (Years)
Outstanding at January 1, 2024		1,341,217		$	115.00		4.72
Issued		40,000
Exercised		—
Cancelled		—
Outstanding at March 31, 2024		1,381,217		$	112.10		4.47
Issued		7,598,983
Exercised		(1,119,800	)
Cancelled		—
Outstanding at June 30, 2024		7,860,400		$	23.70		3.46
Issued		1,612,500
Exercised		(1,787,500	)
Cancelled		(336,635	)
Outstanding at September 30, 2024		7,348,765		$	22.39		3.81

9. Stock-Based Compensation

Equity Incentive Plans

Prior to January 1, 2019, the Company adopted the 2016 Stock Plan (the “2016 Plan”) under which the Company was authorized to grant stock options, restricted stock, a stock appreciation right, or a restricted stock unit award. In June 2019, the Company adopted the 2019 Equity Incentive Plan (the “2019 Plan”) to replace the 2016 Plan. Other than the change of plan name and incorporation state, all the terms of the 2016 Plan were carried over into the 2019 Plan. In adopting the 2019 Plan, the Company terminated the 2016 Plan and may no longer grant any additional stock options or sell any stock under restricted stock purchase agreements under the 2016 Plan; however, stock options issued under the 2016 Plan will continue to be in effect in accordance with their terms and the terms of the 2019 Plan, which are substantially the same terms as the 2016 Plan, until the exercise or expiration of the individual options awards. In connection with the Business Combination, the Company assumed the options granted under the 2019 Plan. Upon completion of the Business Combination on September 12, 2023, the Company adopted the 2023 Equity Incentive Plan (the “2023 Plan”). Since the 2019 Plan was not assumed by the Company, the Company may no longer grant any additional stock options or sell any stock under restricted stock purchase agreements under the 2019 Plan; however, stock options granted under the 2019 Plan will continue to be in effect in accordance with their terms and the terms of the 2023 Plan until the exercise or expiration of the individual options awards.

The 2019 Plan reserved the right for the Board of Directors as the administrator of the plan (the “Administrator”) to issue up to shares pursuant to 2,000,000 (pre-Business Combination) equity awards, which was increased to up to 2,550,000 (pre-Business Combination) in May 2022, including stock options (“Options”), restricted stock awards (“Restricted Stock”), dividend equivalents awards, stock payment awards, restricted stock units (“RSUs”) and/or stock appreciation rights (“SARs”, together with Options, Restricted Stock and RSUs, “Awards”), according to its discretion. Awards may be granted under the 2019 Plan to our employees, directors, and consultants. As of September 30, 2024, the Administrator has not issued any Restricted Stock, RSUs, dividend equivalents awards, stock payment awards or SARs. Stock options remain as the sole outstanding type of award under the 2019 Plans.

Under the 2019 Plan, awards may vest and thereby become exercisable or have restrictions on forfeiture lapse on the date of grant or in periodic installments or upon the attainment of performance goals, or upon the occurrence of specified events depending on the Administrator’s discretion. The Administrator has broad authority to determine the terms and conditions of any Award granted pursuant to the 2019 Plan including, but not limited to, the exercise price, grant price, or purchase price, any reload provision, any restrictions or limitations on the Award, any schedule for lapse of forfeiture restrictions or restrictions on the exercisability of an Award, and accelerations or waivers thereof as the Administrator, in its sole discretion may determine.

No Awards may be granted under the 2019 Plan with a term of more than ten years and no Awards granted may be exercised after the expiration of ten years from the date of grant.

The 2023 Plan reserved the right for the Compensation Committee or by the Board of Directors acting as the Compensation Committee, as the administrator of the plan (the “Administrator”) to issue up to 393,781 equity awards, including stock options (“Options”), restricted stock awards (“Restricted Stock”), dividend equivalents awards, stock payment awards, restricted stock units (“RSUs”) and/or stock appreciation rights (“SARs”, together with Options, Restricted Stock and RSUs, “Awards”), according to its discretion. Awards may be granted under the 2023 Plan to our employees, directors, and consultants.

Under the 2023 Plan, Awards may vest and thereby become exercisable or have restrictions on forfeiture lapse on the date of grant or in periodic installments or upon the attainment of performance goals, or upon the occurrence of specified events depending on the Administrator’s discretion. The Administrator has broad authority to determine the terms and conditions of any Award granted pursuant to the 2023 Plan including, but not limited to, the exercise price, grant price, or purchase price, any reload provision, any restrictions or limitations on the Award, any schedule for lapse of forfeiture restrictions or restrictions on the exercisability of an Award, and accelerations or waivers thereof as the Administrator, in its sole discretion may determine.

No Awards may be granted under the 2023 Plan with a term of more than ten years and no Awards granted may be exercised after the expiration of ten years from the date of grant.

On September 12, 2023, upon closing of the FLAG Merger, the number of equity awards issued and available for grant were retrospectively adjusted pursuant to the conversion ratio of approximately 0.04. The mechanism of conversion resulted in the fair value of each option prior to the Closing equal to the fair value of each option after. All stock option activity presented in these statements has been retrospectively adjusted to reflect the conversion.

On July 15, 2024, the Company effected a 1-for-10 Reverse Stock Split. As a result, proportionate adjustments were made to the per share exercise price and the number of shares of Common Stock that may be purchased upon exercise of outstanding stock options granted by the Company, and the number of shares of Common Stock reserved for future issuance under the Company’s 2023 Equity Incentive Plan. All stock option activity presented in these statements has been retrospectively adjusted to reflect the Reverse Stock Split.

2023 Employee Stock Purchase Plan (“ESPP”)

On August 28, 2023, the Company approved the 2023 Employee Stock Purchase Plan, hereinafter the 2023 ESPP, which became effective on the consummation of the FLAG Merger. Under the 2023 ESPP, eligible employees may purchase a limited number of shares of common stock at a discount of up to 15% of the market value of such stock at pre-determined and plan-defined dates. There were no shares issued under the 2023 ESPP during the three and nine months ended September 30, 2024.

Stock Options

Options granted under the 2019 Plan and 2023 Plan may be either “incentive stock options” within the meaning of Section 422(b) of the Internal Revenue Code of 1986, as amended (the “Code”), or “non-qualified” stock options that do not qualify incentive stock options. Incentive stock options may be granted only to the Company’s employees and employees of domestic subsidiaries, as applicable. The exercise price of stock options shall be equal to or greater than the fair market value of common stock on the date the option is granted. In the case of an optionee who, at the time of grant, owns more than 10% of the combined voting power of all classes of stock, the exercise price of any incentive stock option must be at least 110% of the fair market value of the common stock on the grant date, and the term of the option may be no longer than five years. The aggregate fair market value of common stock (determined as of the grant date of the option) with respect to which incentive stock options become exercisable for the first time by an optionee in any calendar year may not exceed $0.1 million, otherwise it will be classified as a Non-Qualified Stock Option.

The exercise price of an option may be payable in cash or in common stock, or in a combination of cash and common stock, or other legal consideration for the issuance of stock as the Board or Administrator may approve.

Generally, options vest over four years and will be exercisable only while the optionee remains an employee, director or consultant, or during the three months thereafter, but in the case of the termination of an employee, director, or consultant’s services due to death or disability, the period for exercising a vested option shall be extended to the earlier of twelve months after termination or the expiration date of the option.

Option awards activity

A summary of the option activity and related information follows (in thousands except weighted average exercise price):

Summary of Stock Option Activity

	Number of Options Outstanding			Weighted Average Exercise Price		Weighted- Average Remaining Contractual Life (Years)		Aggregate Intrinsic Value
Outstanding at January 1, 2024		787		$	25.80		5.82	$	3
Options granted		209			1.90
Options exercised		—			—
Options forfeited or cancelled		(90	)		42.03
Outstanding at September 30, 2024		906		$	18.90		5.99	$	4
Exercisable at September 30, 2024		659		$	19.94		4.79	$	—

Restricted stock units

A summary of the restricted stock unit (RSU) activity and related information follows (in thousands except weighted average grant date fair value):

	Number of Units Outstanding		Weighted Average Grant-Date Fair Value
Balance at January 1, 2024		4	$	18.00
Granted		34	$	3.04
Vested and released		—	$	—
Balance at September 30, 2024		38	$	4.61
Vested and unreleased		38	$	4.61
Outstanding at September 30, 2024		38	$	4.61

The Company recorded stock-based compensation expense in the following categories on the accompanying unaudited condensed consolidated statements of operations for the periods presented (in thousands):

	2024		2023		2024		2023
	Three Months Ended September 30,				Nine Months Ended September 30,
	2024		2023		2024		2023
Research and development	$	182	$	242	$	588	$	838
General and administrative		509		867		1,743		2,785
Total stock-based compensation expense	$	691	$	1,109	$	2,331	$	3,623

On January 18, 2023, the Board approved a repricing of approximately 0.2 million stock options previously granted at an exercise price of $92.70 per share to the then current fair value of $71.10 per share pursuant to an updated valuation report. The three and nine months ended September 30, 2024 include a noncash compensation charge of approximately $17,000 and $56,000, respectively, in connection with this repricing. The three and nine months ended September 30, 2023 include a noncash compensation charge of approximately $31,000 and $0.2 million, respectively, in connection with this repricing. The stock option repricing and the acceleration of vesting were accounted for as a modification.

As of September 30, 2024, the total unamortized stock-based compensation expense related to stock options was approximately $3.3 million expected to be amortized over an estimated weighted average life of 0.9 years. The weighted-average estimated fair value of stock options with service-conditions granted during the three months ended September 30, 2024 and 2023 was $0.80 and $6.63 per share, respectively, and during the nine months ended September 30, 2024 and 2023 was $1.46 and $5.36 per share, respectively, using the Black-Scholes option pricing model with the following weighted-average assumptions:

	Three Months Ended September 30,						Nine Months Ended September 30,
	2024			2023			2024			2023
Expected volatility		86.26	%		84.97	%		85.62	%		89.23	%
Risk-free interest rate		3.68	%		3.92	%		4.23	%		3.74	%
Expected option life (in years)		5.37			5.50			5.69			5.92
Expected dividend yield		0.0	%		0.0	%		0.0	%		0.0	%

The Company does not recognize deferred income taxes for incentive stock option compensation expense and records a tax deduction only when a disqualified disposition has occurred.

In connection with the closing of the FLAG Merger on September 12, 2023, all stock options underlying of the 2019 Plan were assumed by New Calidi at the appropriate conversion ratio and the legacy Calidi 2019 Plan was terminated.

10. Income Taxes

The provision for income taxes for interim periods is determined using an estimated annual effective tax rate. The effective tax rate may be subject to fluctuations during the year as new information is obtained, which may affect the assumptions used to estimate the annual effective tax rate, including factors such as valuation allowances against deferred tax assets, the recognition or de-recognition of tax benefits related to uncertain tax positions, if any, and changes in or the interpretation of tax laws in jurisdictions where the Company conducts business.

For the three and nine months ended September 30, 2024 and 2023, the Company did not record any federal or state income tax provision or benefit due to net losses incurred for all periods presented. The Company’s net deferred tax assets generated mainly from net operating losses are fully offset by a valuation allowance as the Company believes it is not more likely than not that the benefit will be realized. StemVac’s income tax provision in Germany for all periods presented was insignificant.

11. Commitments and Contingencies

Operating and financing leases

On October 10, 2022, the Company entered into an Office Lease Agreement (the “San Diego Lease”) of a building containing 15,197 square feet of rentable space located in San Diego, California (the “Premises”) that will serve as the Company’s new principal executive and administrative offices and laboratory facility. The Company completed constructing tenant improvements at the Premises on February 27, 2023, and moved into the Premises by end of March 2023.

To secure and execute the San Diego Lease, Mr. Allan Camaisa provided a personal Guaranty of Lease of up to $0.9 million (the “Guaranty”) to the lessor for the Company’s future performance under the San Diego Lease agreement. As consideration for the Guaranty, the Company agreed to pay Mr. Camaisa 10% of the Guaranty amount for the first year of the San Diego Lease, and 5% per annum of the Guaranty amount thereafter through the life of the lease, with all amounts accrued and payable at the termination of the San Diego Lease or release of Mr. Camaisa from the Guaranty by the lessor, whichever occurs first.

The San Diego Lease has an initial term of 48 calendar months, from the first day of the first full month following which the “Commencement Date” occurs (the “Term”), which was March 1, 2023.

Beginning on the Commencement Date, the Company pays base monthly rent in the amount of $0.1 million during the first 12 months of the Term, plus a management fee equal to 3.0% of base rent. Base monthly rent will increase annually, over the base monthly rent then in effect, by 3.0%.

In addition to base monthly rent and management fees, the Company will pay in monthly installments its share of (a) all costs and expenses, other than certain excluded expenses, incurred by the lessor in each calendar year in connection with operating, maintaining, repairing (including replacements if repairs are not feasible or would not be effective) and managing the Premises and the building in which the Premises are located (“Expenses”), and (b) all real estate taxes and assessments on the Premises and the building in which the Premises are located, all personal property taxes for property that is owned by Landlord and used in connection with the operation, maintenance and repair of the Premises (“Taxes”).

Upon execution of the San Diego Lease, the Company provided the lessor a payment of $0.1 million as first month base rent and prepaid operating expenses, and a letter of credit in the amount of $0.1 million issued by a bank in the name of the lessor. To obtain the letter of credit, the Company has provided the issuing bank with a restricted cash deposit that the bank will hold to cover its obligation to pay any draws on the letter of credit by the lessor. The restricted cash may not be used for any other purpose (see Note 2). The prepaid rent was included in the initial accounting of the San Diego Lease in accordance with operating leases under ASC 842, as presented in the tables below.

On April 1, 2022, StemVac entered into an office lease which includes laboratory space which expires on March 31, 2027, with monthly payments of 4,047 Euros per month.

Operating lease expense recognized during the three months ended September 30, 2024 and 2023 was approximately $0.3 million and $0.4 million, respectively, and during the nine months ended September 30, 2024 and 2023 was approximately $1.1 million and $1.3 million, respectively.

The Company is also party to certain financing leases for machinery and equipment (see Note 5).

The following table presents supplemental cash flow information related to operating and financing leases for the periods presented (in thousands):


	Nine months Ended September 30,
Cash paid for amounts included in the measurement of lease liabilities:	2024		2023
Operating cash flows from operating leases	$	1,068	$	1,325
Operating cash flows from financing leases		23		13
Financing cash flows from financing leases		63		53
Right-of-use assets obtained in exchange for new lease liabilities:
Operating lease	$	—	$	4,735

The following table presents supplemental balance sheet information related to operating and financing leases for the periods presented (in thousands, except lease term and discount rate):


	September 30,
	2024			2023
Operating leases
Right-of-use assets, net	$	3,237		$	4,331
Right-of-use lease liabilities, current	$	1,163		$	994
Right-of-use lease liabilities, noncurrent		2,161			3,229
Total operating lease liabilities	$	3,324		$	4,293
Financing Leases
Machinery and equipment, gross	$	610		$	414
Accumulated depreciation		(326	)		(223	)
Machinery and equipment, net	$	284		$	191
Current liabilities	$	69		$	62
Noncurrent liabilities		166			96
Total financing lease liabilities	$	235		$	158
Weighted average remaining lease term
Operating leases		2.4 years			3.4 years
Financing leases		3.4 years			2.9 years
Weighted average discount rate
Operating leases		11.73	%		11.78	%
Financing leases		11.98	%		8.44	%

The following table presents future minimum lease commitments as of September 30, 2024 (in thousands):

	Operating Leases			Financing Leases
Year Ending December 31,
2024 (October – December)	$	345		$	25
2025		1,426			91
2026		1,509			88
2027		526			51
2028		16			34
2029 and thereafter		—			—
Total minimum lease payments		3,822			289
Less: amounts representing interest		(498	)		(54	)
Present value of net minimum lease payments	$	3,324		$	235

Litigation — General

The Company is subject to various claims and contingencies in the ordinary course of its business, including those related to litigation, business transactions, employee-related matters, and other matters. At each reporting date, The Company evaluates whether or not a potential loss amount or a potential range of loss is probable and reasonably estimable under the provisions of the authoritative guidance that addresses accounting for contingencies. If it is probable that a loss will result and the amount of the loss can be reasonably estimated, The Company will record a liability for the loss. If the loss is not probable or the amount of the loss cannot be reasonably estimated, The Company discloses the claim if the likelihood of a potential loss is reasonably possible, and the amount involved could be material. The Company expenses the costs related to legal proceedings as incurred. See other legal matters discussed below. Other than the matters discussed below, The Company is not currently party to any material legal proceedings.

Legal proceedings

Terminated Physician Agreement Matter

On July 19, 2016, the Company entered into a Partnership Agreement between certain physicians (the “Physicians”, as one of the “partners”) and Calidi for the Physicians to provide certain services to Calidi. In connection with the Partnership Agreement, Calidi granted the Physicians stock options as consideration for those services pursuant to Calidi’s Equity Incentive Plan (the “Plan”). The Partnership Agreement was deemed terminated on March 21, 2018. Pursuant to the terms of the stock option agreements and the Plan, the Physicians had three months from the termination date to exercise their vested stock options before those options would automatically expire and cancel unexercised, while all unvested stock options are forfeited immediately on the termination date. The Physicians did not elect to exercise any of their vested options thereby resulting in full cancellation of those options in accordance with the Plan.

On March 14, 2022, the Physicians filed a lawsuit against Calidi in San Diego Superior Court, seeking, among other claims, declaratory relief and claiming that the stock options granted to them pursuant to the Partnership Agreement, have not expired and remain exercisable by the Physicians. The Physicians are claiming 300,000 in vested stock options to be valid and exercisable, even though the Physicians have not provided any services to Calidi since the March 2018 termination date.

On December 6, 2022, Calidi and the Physicians participated in mediation in San Diego, California. In order to attempt to settle all claims and avoid a costly trial, Calidi offered the Physicians 5,000 shares of Calidi common stock valued at $38.60 per share and 10,000 options to purchase common stock at an exercise price of $38.60 per share in full settlement of the claims. As of December 31, 2022, the Company estimated this offer of settlement to be valued at approximately $0.2 million and all settleable in noncash consideration, which was rejected. At the mediation, the Physicians were demanding 0.1 million options to purchase common stock at $2.50 per share, 0.1 million options to purchase common stock at $38.60 per share, plus 25,000 shares of common stock, which amounts to an aggregate claims value of approximately $5.0 million as of December 31, 2022. The mediation was terminated without settlement and the Company went to trial with a preliminary trial date set for March 8, 2024 in San Diego Superior Court. On March 24, 2023, the Company initiated an arbitration proceeding with the American Health Lawyers Association seeking declaratory relief under Delaware law, specifically to determine that the Partnership Agreement was terminated in 2018, which is not a matter before the San Diego Superior Court. The arbitration was stayed by the Superior Court, pending the related civil action. Based on the stay, the Company has moved for a judgment on the pleadings to be heard in January 2024.

On February 5, 2024, the Company entered into a settlement agreement and mutual release (the “Settlement Agreement”) with Dr. Elliot Lander, Saralee Berman, as Trustee of the Mark Howard Berman and Saralee Turrell Berman Living Trust, successor in interest to the Estate of Dr. Mark Berman, and Cell Surgical Network, Inc. (the “physicians”) in connection with the dispute outlined above.

Pursuant to the Settlement Agreement, as consideration for a full release and discharge of claims, and dismissal of claims by the parties, the Company agreed to provide to the physicians the following: (a) the issuance of 20,000 restricted shares of common stock (the “Restricted Shares”) and (b) the issuance of 40,000 warrants to purchase Restricted Shares, which (i) has an exercise price equal to $13.20; and (ii) are exercisable for 5 years after the date of issuance of the warrants, subject to the terms set forth in such warrant (the “Warrant”). In addition, the physicians were granted piggy-back rights with respect to the Restricted Shares and any shares issued pursuant to any Warrants (“Warrant Shares”) that were granted by the Settlement Agreement. However, the Company has the right to refuse to register the Restricted Shares and Warrant Shares if it determines, in their sole discretion based on commercially reasonable grounds, that the inclusion of the Restricted Shares and Warrant Shares pursuant to piggy-back rights will adversely affect our ability to raise capital from such registration statement. As of September 30, 2024, the Company had settled all outstanding amounts of the settlement.

Former Chief Accounting Officer and Interim Chief Financial Officer

On November 15, 2023, Tony Kalajian, the Company’s 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, the Company’s Chief Executive Officer, and Ms. Pizarro, the Company’s Chief Administrative Office and Chief Legal Officer, alleging constructive discharge of Mr. Kalajian’s position of interim Chief Financial Officer and defamation by the Company, Mr. Camaisa and Ms. Pizarro in connection with Mr. Kalajian’s alleged discharge. Mr. Kalajian is seeking $0.6 million in damages under his employment contract, damages to be proven at trial, punitive damages, and attorney’s fees. The Company intends to vigorously defend itself and will seek recovery of a $0.2 million bonus Mr. Kalajian approved to be paid to himself without first obtaining proper authorization by the Company’s board of directors.

On May 1, 2024, Mr. Kalajian filed a complaint in the Superior Court of the State of California, County of San Diego against the Company alleging intentional conversion and violation of Section 158 of the Delaware General Corporations Code due to the Company’s failure to remove a restrictive legend from 13,943 shares of the Company’s Common Stock. Mr. Kalajian is seeking compensatory damages to be proven at trial, punitive damages and attorney’s fees, and an order requiring removal of the restrictive legend from his share certificates. The Company intends to vigorously defend itself.

Unasserted Claim Settlement

On March 8, 2024, the Company entered into a convertible promissory note purchase agreement with an accredited investor (the “Investor”) for a loan in the principal amount of $2.0 million (the “2024 Loan”), and settlement of $1.5 million of an unasserted claim. In connection with the 2024 Loan, the Company issued convertible notes due in 2028 evidencing the aggregate principal amount of $3.5 million (the “2024 Notes”). The 2024 Notes also provides the Investor a right to convert all, but not less than all, the Principal Amount (as defined in the 2024 Notes) and accrued interest into shares of the Company’s common stock at a conversion rate equal to a 6% discount to the 10-day VWAP preceding execution of the 2024 Notes, convertible after the earlier of 180 days or the effective registration date with mandatory conversion for Investor in the event that the Company completes a registered financing of at least $8 million or of at least $2 million to a non-affiliated purchaser with an effective price of 150% of the Note conversion price with a conversion price reset to be completed 30 (thirty) days after the effective registration date.

On April 19, 2024, the $1.5 million convertible note was paid in full upon the closing of a public offering by the Company, in which the Holder participated in an amount equal to the principal amount of the convertible note (See Note 7). On September 27, 2024, $0.2 million and accrued interest of $11,000 of the $2.0 million convertible note was converted into 184,810 shares of common stock (See Note 7). As of September 30, 2024, $1.8 million of the convertible note remained outstanding.

Employment Contracts

The Company has entered into employment and severance benefit contracts with certain executive officers and other employees. Under the provisions of the contracts, the Company may be required to incur severance obligations for matters relating to changes in control, as defined, and certain terminations of those executives and employees. As of September 30, 2024 and December 31, 2023, the Company had not accrued any such benefits except for the severance accrual for Mr. Ng discussed below.

Manufacturing and other supplier contracts

The Company has entered into certain manufacturing and other supplier agreements with vendors principally for manufacturing drug product for clinical trials and continued development of the CLD-101 and CLD-201 programs, amounting to approximately $7.1 million in aggregate commitments, of which 2.4 million are denominated in Australian dollars (approximately $1.7 million) and 0.8 million are denominated in Euros (approximately $0.8 million) as of September 30, 2024, and approximately $7.3 million in aggregate commitments, of which 2.9 million are denominated in Australian dollars (approximately $2.0 million) and 0.8 million are denominated in Euros (approximately $0.9 million) as of December 31, 2023. As of September 30, 2024 and December 31, 2023, the Company had incurred approximately $6.8 million and $6.1 million, respectively, under these various agreements.

License Agreements with Northwestern University

On June 7, 2021, the Company entered into a License Agreement with Northwestern University (“Northwestern”) (the “Northwestern Agreement”) for the exclusive commercialization rights to the investigational new drug (“IND”) and data generated from Northwestern’s phase 1 clinical trial treating brain tumor patients with an engineered oncolytic adenovirus delivered by neural stem cells (“NSC-CRAd-S-pk7”). Under the Northwestern Agreement, among other rights, Northwestern granted to the Company a worldwide, twelve-year exclusivity for the commercial development of NSC-CRAd-S-pk7 or other oncolytic viruses for therapeutic and preventive uses in oncology and a right of reference to Northwestern’s IND application which relates to the treatment of newly diagnosed HGG.

Pursuant to the Northwestern Agreement, the Company agreed to a best-efforts commitment to fund up to $10 million towards a phase 2 clinical trial of NSC-CRAd-S-pk7 or other oncolytic viruses. Subject to the terms and conditions of the Northwestern Agreement, Northwestern may become entitled to receive contingent payments from the Company based on, if any (i) sublicense royalty payments of double-digit percentage for any sublicensing revenue that the Company earns and, (ii) in the event of an assignment or transfer of licensed data, with the consent of Northwestern, a small percentage of the fair market value of any consideration received.

On October 14, 2021, the Company entered into a Material License Agreement with Northwestern to license the NSC-CRAd-S-pk7 oncolytic virus materials which the Company intends to use to continue advancing its research, development and commercialization efforts of the NNV1 and NNV2 programs.

As of the date of issuance of these unaudited condensed consolidated financial statements, it is not probable that the Company will make these payments, if any at all. The Company will record the contingent payments if and when they become payable, in accordance with the applicable guidance.

License Agreement with City of Hope and the University of Chicago

On July 22, 2021, the Company entered into an Exclusive License Agreement with City of Hope (“COH”) and the University of Chicago (the “City of Hope Agreement”) for patents covering cancer therapies using an oncolytic adenovirus loaded into allogeneic neural stem cells for treatment of HGG. Pursuant to the City of Hope Agreement, COH transferred its IND to the Company for the commercial development of a licensed product, as defined in the City of Hope Agreement. This agreement grants to the Company commercial exclusivity in using neural stem cells with the adenovirus known as CRAd-S-pk7 for oncolytic virotherapy.

The City of Hope Agreement provides for the Company to pay royalties in low single digit percentage of net sales generated for any product of the licensed patents for specific periods, and to pay up to $18.7 million if certain milestones are achieved during the clinical trials and post commercialization of the licensed product.

As of the date of the issuance of these unaudited condensed consolidated financial statements, it is not probable that the Company will make these payments. The Company will record the contingent payments if and when they become payable, in accordance with the applicable guidance.

Indemnification

In the normal course of business, the Company may provide indemnification of varying scope under the Company’s agreements with other companies or consultants, typically the Company’s clinical research organizations, investigators, clinical sites, suppliers and others. Pursuant to these agreements, the Company will generally agree to indemnify, hold harmless, and reimburse the indemnified parties for losses and expenses suffered or incurred by the indemnified parties arising from claims of third parties. Indemnification provisions could also cover third party infringement claims with respect to patent rights, copyrights, or other intellectual property pertaining to the Company. The Company’s office and laboratory facility leases also will generally contain indemnification obligations, including obligations for indemnification of the lessor for environmental law matters and injuries to persons or property of others, arising from the Company’s use or occupancy of the leased property. The term of these indemnification agreements will generally continue in effect after the termination or expiration of the particular research, development, services, lease, or other agreement to which they relate. The potential future payments the Company could be required to make under these indemnification agreements will generally not be subject to any specified maximum amounts. Historically, the Company has not been subject to any claims or demands for indemnification. The Company also maintains various liability insurance policies that limit the Company’s financial exposure. As a result, the Company’s management believes that the fair value of these indemnification agreements is minimal. Accordingly, the Company has not recorded any liabilities for these agreements as of September 30, 2024 and December 31, 2023.

Separation Agreement with Chief Operating Officer and President

On June 23, 2023, the Company entered into a Separation and Release Agreement (“Separation Agreement”) with George Ng, Chief Operating Officer and President, effective on that date. In accordance with the provisions of the Separation Agreement, the Company will pay Mr. Ng in the amount of $0.5 million payable in a lump sum due one year after the effective date, and in the event that this amount is not paid when due, the unpaid amount will accrue interest at the rate of 8.0% per annum to be paid no later than the two year anniversary of the effective date. The Company also paid for certain benefits, including healthcare for six months following the effective date. In June 2024, the Company made a payment of $50,000 and executed an Amendment to extend the due date to January 2025. As of September 30, 2024, the lump sum payment and accrued interest of $0.4 million is included in related party accrued expenses and other current liabilities on the unaudited condensed consolidated balance sheets.

Settlement, deferral or payment of deferred compensation of certain executives and a director

On August 31, 2023, Mr. Camaisa and Mr. Leftwich entered into certain amendments with respect to their deferred compensation arrangements in connection with the FLAG Merger. Mr. Camaisa agreed to settle approximately $0.7 million of deferred compensation with 46,972 FLAG warrants which were issued at the closing of the FLAG Merger in September 2023, and Mr. Leftwich agreed to defer approximately $0.5 million of deferred compensation, combined with the deferral of certain term notes discussed above, to January 1, 2025, which will include accrued interest at 24% per annum payable at maturity. All notes and deferred compensation of Mr. Leftwich were amended on August 12, 2024, to reduce the interest rate to 14% per annum. This deferred compensation is included in other long-term liabilities in the unaudited condensed consolidated balance sheets.

On September 12, 2023, Mr. Kalajian was issued 4,683 shares of common stock in exchange for settlement of $0.3 million in deferred compensation.

Standby Equity Purchase Agreement

On December 10, 2023, the Company entered into a Standby Equity Purchase Agreement (the “SEPA”) with YA II PN, Ltd., a Cayman Island exempt limited partnership (“Yorkville”). Pursuant to the SEPA, the Company will have the right, but not the obligation, to sell to Yorkville up to $25.0 million of its shares of Common Stock, par value $0.0001 per share, at the Company’s request any time during the 36 months following the execution of the SEPA. The maximum advance under the SEPA is the lower of (i) an amount equal to 100% of the average of the daily traded amount during the five consecutive trading days immediately preceding an advance notice, or (ii) 500,000 shares. For the SEPA to be utilized, the shares underlying the agreement need to be registered pursuant to a registration statement filed with the SEC. As of September 30, 2024, the Company had not registered the shares underlying the SEPA and had not issued any shares under the SEPA.

As consideration for Yorkville’s commitment to purchase the Common Stock at the Company’s direction upon the terms and subject to the conditions set forth in the SEPA, upon execution of the SEPA, the Company paid a structuring fee of $25,000 to an affiliate of Yorkville and issued 13,875 shares of Common Stock to Yorkville (the “Commitment Fee Shares”). The Commitment Fee Shares were determined by dividing $0.3 million by the lowest daily VWAP of the Common Stock during the 10 Trading Days immediately prior to December 10, 2023.

Consulting Agreement

In February 2024, the Company entered into a consulting agreement whereby the consultant agreed to provide the Company with marketing and distribution services to communicate information. As compensation, the Company issued 5,000 shares of common stock to the consultant on March 25, 2024 (see Note 8).

Subscription Agreement

In recognition of a Subscription Agreement entered into with a related party investor on July 26, 2024 (see Note 1), the Board has approved the appointment of the Investor, a distinguished physician and expert in stem cell therapy, to the Company’s Scientific and Medical Advisory Board (“SMAB”). This appointment was made in accordance with the SMAB Consulting Agreement dated July 28, 2024 (“Consulting Agreement”). As part of the Consulting Agreement, the Investor will be awarded 5,000 stock options, with a standard four-year vesting period.

Assignment of Intellectual Property to Nova Cell

In conjunction with a strategic investment by a related party investor on July 26, 2024 (see Note 1), the Board has approved the assignment of certain intellectual property rights to Nova Cell, pursuant to an Intellectual Property Assignment Agreement dated July 28, 2024.

12. Subsequent Events

Employee Benefit Plans Securities Registration Statement

On October 1, 2024, the Company filed a Registration Statement on Form S-8, which includes a Reoffer Prospectus which may be used for reoffers and resales of shares of the Company. The Reoffer Prospectus covers the shares issuable to the holders pursuant to awards granted by the Company under the Calidi Equity Plans (see Note 9). The Company will not receive any proceeds from the sale of the shares offered by the Reoffer Prospectus.

Shelf Registration Statement

On October 1, 2024, as amended on October 7, 2024, the Company filed a Form S-3 shelf registration statement under the Securities Act of 1933, which was declared effective by the SEC on October 10, 2024, providing for the public offer and sale of up to $25.0 million of the Company’s shares of Common Stock.

At the Market Offering Agreement

On October 11, 2024, the Company entered into an At The Market Offering Agreement (the “Sales Agreement”) with Ladenburg Thalmann & Co. Inc. (the “Ladenburg”), under which the Company may, from time to time, in its sole discretion, issue and sell through Ladenburg, acting as agent or principal, shares of the Company’s common stock, par value $0.0001 per share, initially having an aggregate offering price of up to $5.1 million. Pursuant to the Sales Agreement, Ladenburg may sell the Shares by any method permitted by law deemed to be an “at the market” offering as defined in Rule 415 under the Securities Act of 1933, as amended. Ladenburg will use commercially reasonable efforts consistent with its normal trading and sales practices to sell the Shares from time to time, based upon instructions from the Company (including any price or size limits or other customary parameters or conditions the Company may impose).

The Company will pay Ladenburg a cash commission of 3.0% of the aggregate gross sales proceeds of shares sold through Ladenburg under the Sales Agreement. The Company also agreed to reimburse Ladenburg for certain specified expenses, including the fees and disbursements of its counsel, in an amount not to exceed $50,000, in addition to certain ongoing disbursements of its legal counsel up to $7,500 in connection with diligence bring downs.

Under the terms of the Sales Agreement, the Company may also sell shares to Ladenburg as principal for its own account at prices agreed upon at the time of sale. If the Company sells shares to Ladenburg as principal, it will enter into a separate terms agreement with Ladenburg in substantially the form attached to the Sales Agreement.

The Company is not obligated to sell any shares under the Sales Agreement. The offering of the shares pursuant to the Sales Agreement may be terminated by either the Company or Ladenburg, as permitted therein.

Delisting of Public Warrants

On October 17, 2024, the Company received notice from the NYSE that the Company’s public warrants to purchase common stock are no longer suitable for listing pursuant to Section 1001 of the NYSE American Company Guide due to the low trading price of such public warrants, and that the NYSE Regulation has determined to commence proceedings to delist the public warrants.

The public warrants may be traded on the OTC Pink Marketplace under the symbol CLDWW.

Convertible Promissory Note

From October 21, 2024 through November 6, 2024, principal of $1.8 million and accrued interest of approximately $118,000 of the Company’s existing $2.0 million convertible note (see Note 7) was converted into 1,679,045 shares of common stock. Upon completion of the conversions, the convertible note was no longer outstanding.

Securities Purchase Agreement

On October 23, 2024, the Company entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain institutional investors (the “Purchasers”), pursuant to which the Company agreed to issue to the Purchasers, (i) in a registered offering, 2,050,000 shares of the Company’s common stock, par value $0.0001 per share, at a purchase price of $1.00 per share, and (ii) in a concurrent private placement, Series E common stock purchase warrants to purchase up to 2,050,000 shares of Common Stock (the “Series E Common Warrants”) and Series F common stock purchase warrants to purchase up to 2,050,000 shares of Common Stock (the “Series F Common Warrants” and together with the Series E Common Warrants, the “Common Warrants”). Such registered direct offering and concurrent private placement are referred to herein as the “Transactions.”

The Series E Common Warrants are exercisable on the date that is six (6) months from the date of issuance for a term of one (1) year from the initial exercise date and have an exercise price of $1.13 per share of Common Stock, and the Series F Common Warrants are exercisable on the date that is six (6) months from the date of issuance for a term of five (5) years from the initial exercise date and have an exercise price of $1.13 per share of Common Stock. The Common Warrants may be exercisable via “cashless exercise” in certain circumstances.

The closing of the Transactions took place on October 24, 2024. The gross proceeds from the Transactions were approximately $2.1 million, before deducting placement agent fees and other offering expenses payable by the Company and excluding the net proceeds, if any, from the exercise of the Common Warrants or Placement Agent Warrants (as defined below).

The shares were offered by the Company pursuant to a shelf registration statement on Form S-3 (File No. 333-282456), which was declared effective by the Securities Exchange Commission on October 10, 2024.

The Common Warrants and the Common Warrant Shares were issued in a concurrent private placement and without registration under the Securities Act of 1933, as amended (the “Securities Act”), and in reliance on the exemption provided in Section 4(a)(2) under the Securities Act and Regulation D promulgated thereunder.

Pursuant to the terms of the Purchase Agreement, and subject to certain exceptions as set forth therein, until thirty (30) days following the closing of the Transactions, the Company has agreed not to issue (or enter into any agreement to issue) any shares of Common Stock or Common Stock equivalents. The Company has further agreed not to enter into an agreement involving a variable rate transaction until six (6) months following the closing of the Transactions, provided however that the prohibition on “at-the-market offerings” and the issuance of common stock pursuant to an equity line of credit shall expire on the six-month anniversary of the closing date of this offering. In addition, each of the Company and the Company’s directors and executive officers have entered into lock-up agreements pursuant to which each of them has agreed not to, for a period of thirty (30) days and ninety (90) days, respectively, from the closing of the Transactions, offer, sell, transfer or otherwise dispose of the Company’s securities, subject to certain exceptions.

On October 23, 2024, the Company entered into a placement agency agreement (the “Placement Agency Agreement”) with Ladenburg Thalmann & Co. Inc., as the placement agent (the “Placement Agent”), pursuant to which the Placement Agent agreed to act on a reasonable “best efforts” basis, in connection with the Transactions. The Company agreed to pay the Placement Agent an aggregate cash fee of 8.0% of the gross proceeds from the sale of securities in the Transactions, a 1% management fee of the gross proceeds and reimburse certain out-of-pocket expenses. As additional compensation to the Placement Agent, in connection with the Transactions, the Company issued to the Placement Agent (or its designees) a warrant (the “Placement Agent Warrant”) to purchase an aggregate of 102,500 shares of Common Stock (the “Placement Agent Warrant Shares”), equal to 5% of the aggregate number of shares of Common Stock sold in the registered direct offering, at an exercise price per share equal to $1.25, which is equal to 125% of the offering price of the Shares. The Placement Agent Warrants are exercisable six (6) months from the date of issuance and expire on the five-year anniversary of Initial Exercise Date (as defined in the Placement Agent Warrant). The Placement Agent Warrant may be exercisable via “cashless exercise” in certain circumstances. The Placement Agent Warrants have substantially the same terms as the Common Warrants described above.

ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

The following discussion and analysis of our financial condition and results of operations should be read in conjunction with (i) our unaudited condensed consolidated financial statements and related notes thereto included elsewhere in this Quarterly Report on Form 10-Q for the period ended September 30, 2024 (this “Quarterly Report”). This information should also be read in conjunction with our audited consolidated financial statements and related notes included in our Form 10-K for the fiscal year ended December 31, 2023 (“Form 10-K”) filed with the Securities and Exchange Commission, or SEC. References to “Note” or “Notes” are to the notes included in our unaudited condensed consolidated financial statements appearing elsewhere in this Quarterly Report.

Company Overview

We are a clinical-stage immuno-oncology company that is developing innovative stem cell-based and enveloped platforms for the delivery and potentiation of oncolytic virotherapies to treat cancer. Our pipeline includes off-the-shelf product candidates designed to protect oncolytic viruses from being quickly inactivated by the patient’s immune system and target tumor sites. Once approved by the FDA, this improved delivery, both localized and systemic, and increased potency will enable us to develop treatments that target various types of cancer at different stages of progression. Our goal is to create therapies that work on any tumor, regardless of its genetic profile (universal treatments). In addition to direct targeting and killing cancer cells, our oncolytic virotherapies have shown signs of changing the tumor immune environment to induce strong anti-tumor immunity that could lead to better cancer treatment and prevent tumor recurrence.

CLD-101 (NeuroNova™ Platform) for Newly Diagnosed High Grade Glioma (“HGG”) (also referred to as “NNV1” as to the indication). CLD-101 is our product candidate utilizing our NeuroNova™ Platform targeting HGG. Prior to our licensing agreement with Northwestern University, an open-label, investigator sponsored, Phase 1, dose- escalation clinical trial for NNV1 in patients with newly diagnosed high-grade gliomas was completed. This clinical trial demonstrated that single administration of CLD-101 was well tolerated in patients with newly diagnosed HGG. Subject to funding, Northwestern University anticipates to commence a Phase 1b clinical trial during the first quarter of 2025. This trial will explore the final dosing regimen for NNV1, including the feasibility of repeated dosing in newly diagnosed HGG. Extensive biomarker analysis will be performed on tumor biopsies and blood samples to determine viral distribution, specific tumor targeting and induction of anti-tumor immunity.

CLD-101 for Recurrent HGG (also referred to as “NNV2” as to the recurrent HGG indication). A phase 1 study evaluating the safety and feasibility of administering repeated doses of CLD-101 intracerebrally to patients with recurrent high-grade gliomas began treatment in May 2023. The study is being run by our partner, City of Hope, and started enrolling cohort 4 in January 2024. Clinical data from patients with recurrent HGG treated with repeated doses of CLD-101 is planned to support the start of a trial of repeated doses in newly diagnosed HGG.

CLD-201 (SuperNova™) for Advanced Solid Tumors (triple-negative breast cancer (“TNBC”), head & neck squamous cell carcinoma (HNSCC), and advanced soft tissue sarcoma (also referred to as “SNV1”). SNV1 is our first internally developed pre-clinical product candidate utilizing our SuperNova™ Delivery Platform. Based on our pre-clinical studies, we believe SNV1 has therapeutic potential for the treatment of multiple solid tumors such as head and neck cancer, triple-negative breast cancer and melanoma. We have held a pre-IND meeting with FDA to discuss the filing of our IND application for the clinical development of CLD-201. We anticipate commencing a Phase 1 clinical trial for SNV1 during the first half of 2025.

CLD-301 (AAA) for Multiple Indications. We are also currently engaged in early discovery research involving Adult Allogeneic Adipose-derived (“AAA”) stem cells for various indications and therapies. These AAA stem cells are theoretically multipotent, differentiating along the adipocyte, chondrocyte, myocyte, neuronal, and osteoblast lineages, and may have the ability to serve in other capacities, such as providing hematopoietic support and gene transfer with potential applications for repair and regeneration of acute and chronically damaged tissues. Pre-clinical studies involving toxicity and efficacy will be needed before an IND application may be filed with the FDA.

Our subsidiary Nova Cell, Inc. (“Nova Cell”) was formed to be a technology service provider that develops innovative stem cell-based products using our cellular manufacturing process. Through Nova Cell we anticipate expanding potential uses from oncology to other fields that require regenerative medical applications, such as cosmetics, orthopedics, auto-immune diseases, and various other therapies.

CLD-400 (RTNova) for Lung cancer and Metastatic Solid Tumors, our pre-clinical program involving enveloped oncolytic viruses (discovery phase), builds upon our experience of using cells to protect, potentiate and deliver virotherapies. CLD-400 program is derived from research from prior pre-clinical CLD-202 program. RTNova consists of an engineered vaccinia virus enveloped by a cell membrane, that is potentially capable of targeting lung cancer and advanced metastatic disease due to its increased ability to survive in the bloodstream. Metastatic solid tumors involve cancer cells that break away from where they first formed (primary cancer) and travel through the blood or lymph system to form new tumors, known as metastatic tumors, in other parts of the body. In preclinical studies, RTNova has shown early signs of its resistance to human humoral immunity and capability to target multiple distant and diverse tumors and transform their microenvironments leading to their elimination. In addition, the program has shown potential synergistic effects with other immunotherapies, including cell therapies, to attack and eliminate disseminated solid tumors.

Since inception, our operations have focused on organizing and staffing our company, business planning, raising capital, acquiring and developing our technology, establishing our intellectual property portfolio, identifying potential product candidates and undertaking preclinical studies and manufacturing. We do not have any products approved for sale and have not generated any revenue from product sales. We have funded our operations primarily through private sales of common stock, convertible preferred stock, contingently convertible and convertible promissory notes, term loans, lines of credit, and Simple Agreements for Future Equity (“SAFE”). These investments have included and have been made by various related parties, including our largest investor and Chief Executive Officer and Chairman of the Board of Directors.

Since inception, we have incurred significant operating losses. Our net loss was $5.1 million and $18.1 million for the three and nine months ended September 30, 2024, respectively. As of September 30, 2024, we had an accumulated deficit of $117.6 million. We expect to continue to incur significant and increasing expenses and operating losses for the foreseeable future, as we advance our current and future product candidates through preclinical and clinical development, manufacture drug product and drug supply, seek regulatory approval for our current and future product candidates, maintain and expand our intellectual property portfolio, hire additional research and development and business personnel and operate as a public company.

Changes in economic conditions, including rising interest rates, public health issues, including the COVID-19 pandemic and its aftereffects, lower consumer confidence, volatile equity capital markets and ongoing supply chain disruptions and the impacts of geopolitical conflicts, may also affect our business.

We will not generate revenue from product sales unless and until we successfully complete clinical development and obtain regulatory approval for our product candidates. In addition, if we obtain regulatory approval for our product candidates and do not enter into a third-party commercialization partnership, we expect to incur significant expenses related to developing our commercialization capability to support product sales, marketing, manufacturing and distribution activities.

As a result, we will need substantial additional funding to support our continuing operations and pursue our growth strategy. Until we can generate significant revenue from product sales, if ever, we expect to finance our operations through a combination of public or private equity offerings and debt financings or other sources, such as potential collaboration agreements, strategic alliances and licensing arrangements. We may be unable to raise additional funds or enter into such other agreements or arrangements when needed on acceptable terms, or at all. Our inability to raise capital or enter into such agreements as, and when needed, could have a material adverse effect on our business, results of operations and financial condition.

Based on our operating plan, we believe we do not have sufficient cash on hand to support current operations for at least one year from the date of issuance of our unaudited condensed consolidated financial statements as of, and for the three and nine months ended September 30, 2024. We have concluded that this circumstance raises substantial doubt about our ability to continue as a going concern. See Note 1 to our unaudited condensed consolidated financial statements. In addition, we will be required to raise additional capital through the issuance of our equity securities to support our operations which will have an ownership and economic dilutive effect to our current shareholders who purchased their shares of common stock at prices above our current trading price, and such capital raising may adversely affect the price of our common stock. Further, the sale of or the perception of a sale of a substantial number of our common stock by certain selling securityholders pursuant to another registration statement filed with the SEC will adversely affect the price of our common stock due to our limited trading volume and adversely affect the share price that we may obtain in future financings and may adversely affect our ability to conduct and complete future financings.

For additional discussion on our liquidity and the Closing of the FLAG Merger, see the section below and further disclosures in the section titled “Liquidity and Capital Resources” included herein.

The FLAG Merger and Related Transactions

On September 12, 2023, FLAG consummated a series of transactions that resulted in the merger of FLAG Merger Sub Inc., a Nevada corporation and a wholly-owned subsidiary of FLAG (“Merger Sub”) and Calidi pursuant to the Agreement and Plan of Merger, as amended, dated as of January 9, 2023. Pursuant to the terms of the Merger Agreement, the business combination was effected through the merger of Merger Sub with and into Calidi, with Calidi surviving such merger as a wholly-owned subsidiary of FLAG. Historical common share amounts of Calidi have been retroactively restated based on the conversion ratio of approximately 0.04 (the “Conversion Ratio”). Following the consummation of the business combination, FLAG was renamed “Calidi Biotherapeutics, Inc.”

As a result of the Business Combination, all outstanding stock of Calidi were cancelled in exchange for the right to receive newly issued shares of Common Stock (also referred to as “New Calidi Common Stock”), par value $0.0001 per share, and all outstanding options to purchase Calidi stock were assumed by Calidi. The total consideration received by Calidi Security Holders at the Closing of the transactions contemplated by the Merger Agreement is the newly issued shares of Common Stock and securities convertible or exchangeable for newly issued shares of Common Stock with an aggregate value equal $250.0 million, plus an adjustment of $23.8 million pursuant to the net debt adjustment provisions of the Merger Agreement by reason of the Series B Financing. As a result, the Calidi Security Holders received an aggregate of 2,737,560 shares of Common Stock as Merger Consideration.

As additional consideration, each Calidi stockholder was entitled to earn, on a pro rata basis, up to 1,800,000 Escalation Shares. During the Escalation Period, Calidi Stockholders may be entitled to receive up to 1,800,000 Escalation Shares with incremental releases of 450,000 shares upon the achievement of each share price hurdle if the trading price of Common Stock is $120.00, $140.00, $160.00, and $180.00, respectively, for a period of any 20 days within any 30-consecutive-day trading period. The Escalation Shares have been placed in escrow and are outstanding from and after the Closing, subject to cancellation if the applicable price targets are not achieved. While in escrow, the shares will be non-voting.

Holders of FLAG Class A Common Stock who did not redeem their shares obtained their pro rata portion of an additional 8,585 Non-Redeeming Continuation Shares issued at Closing. At the Closing, Calidi Security Holders own approximately 76% of the outstanding shares of New Calidi Common Stock.

See the section below titled “Liquidity and Capital Resources” included herein for additional disclosures.

Components of Operating Results

Research and Development Expenses

Research and development expenses consist primarily of costs incurred for our research and development activities, including our product candidate discovery efforts, preclinical studies and clinical trials under our research programs, which include:

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

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

	●	costs of manufacturing drug product and drug supply related to our current or future product candidates;

	●	costs of conducting preclinical studies and clinical trials of our product candidates;

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

	●	costs of maintaining our laboratory, including purchasing laboratory supplies and non-capital equipment used in our preclinical studies;

	●	costs related to compliance with clinical regulatory requirements;

	●	facility costs and other allocated expenses, which include expenses for rent and maintenance of facilities, insurance, depreciation and other supplies; and

	●	fees for maintaining licenses and other amounts due under our third-party licensing agreements.

Research and development costs are expensed as incurred. Costs for certain activities are recognized based on an evaluation of the progress to completion of specific tasks using data such as information provided to us by our vendors and analyzing the progress of our preclinical and clinical studies or other services performed. Significant judgment and estimates are made in determining the accrued expense balances at the end of any reporting period.

We track external research and development costs on a program-by-program basis beginning, with respect to each program, upon our internal nomination of a candidate in that program for further preclinical and clinical development. External costs include fees paid to consultants, contractors and vendors, including contract manufacturing organizations (“CMOs”), and clinical research organizations (“CROs”), in connection with our preclinical, clinical and manufacturing activities and license milestone payments related to candidate development.

The successful development of our product candidates is highly uncertain. We cannot reasonably estimate or know the nature, timing, and estimated costs of the efforts that will be necessary to complete development of our current or future product candidates. We are also unable to predict when, if ever, material net cash inflows will commence from the sale of our product candidates, if they are approved. This is due to the numerous risks and uncertainties associated with developing product candidates, including the uncertainty of:

	●	the scope, rate of progress, and expenses of our ongoing research activities as well as any preclinical studies and clinical trials and other research and development activities;

	●	establishing an appropriate safety profile;

	●	successful enrollment in and completion of clinical trials;

	●	whether our product candidates show safety and efficacy in our clinical trials;

	●	receipt of marketing approvals from applicable regulatory authorities;

	●	establishing commercial manufacturing capabilities or making arrangements with third-party manufacturers;

	●	obtaining and maintaining patent and trade secret protection and regulatory exclusivity for our product candidates;

	●	commercializing product candidates, if and when approved, whether alone or in collaboration with others; and

	●	continued acceptable safety profile of the products following any regulatory approval.

A change in the outcome of any of these variables with respect to the development of our current and future product candidates would significantly change the costs and timing associated with the development of those product candidates.

Research and development activities are central to our business model. Product candidates in later stages of clinical development generally have higher development costs than those in earlier stages of clinical development, primarily due to the increased size and duration of later-stage clinical trials. We expect research and development costs to increase significantly for the foreseeable future as we commence clinical trials and continue the development of our current and future product candidates. However, we do not believe that it is possible at this time to accurately project expenses through commercialization. There are numerous factors associated with the successful commercialization of any of our product candidates, including future trial design and various regulatory requirements, many of which cannot be determined with accuracy at this time based on our stage of development. Additionally, future commercial and regulatory factors beyond our control will impact our clinical development programs and plans.

General and Administrative Expenses

General and administrative expenses include salaries and other compensation-related costs, including stock-based compensation. Other significant costs include professional service and consulting fees including legal fees relating to intellectual property and corporate matters, accounting fees, recruiting costs and costs for consultants utilized to supplement our personnel, insurance costs, travel costs, facility and office-related costs not included in research and development expenses and depreciation and amortization.

We anticipate that our general and administrative expenses will increase in the future as our business expands to support expected growth in research and development activities, including our future clinical programs. These increases will likely include increased costs related to the hiring of additional personnel and fees to outside service providers, among other expenses. We also anticipate continued expenses associated with being a public company, including costs for audit, legal, regulatory and tax-related services related to compliance with the rules and regulations of the SEC, and listing standards applicable to companies listed on a national securities exchange, director and officer insurance premiums, and investor relations costs. In addition, if we obtain regulatory approval for any of our product candidates and do not enter into a third-party commercialization collaboration, we expect to incur significant expenses related to building a sales and marketing team to support product sales, marketing and distribution activities.

Other Income or Expenses, Net

Other income or expenses, net, primarily includes the changes in fair value of debt instruments, warrants, and derivatives. The changes in the fair value of these instruments are recorded in change in fair value of debt, other liabilities, and derivatives, and change in fair value of debt, other liabilities, and derivatives – related party, included as a component of other income or expenses, net, in the unaudited condensed consolidated statements of operations.

At the closing of the FLAG Merger, all convertible instruments outstanding were converted into Calidi Common Stock immediately prior the closing of the FLAG Merger and are no longer outstanding as of the Closing date.

Interest expense primarily consists of amortization of discounts on convertible and term notes, including from related parties, and other interest expense incurred from financing leases and other obligations.

Other income also includes grant income generated from a grant awarded to us by the California Institute for Regenerative Medicine (“CIRM”) in December 2022. Proceeds from the CIRM grant are recognized over the period necessary to match the related research and development expenses when it is probable that we have complied with the CIRM conditions and will receive the proceeds pursuant to the milestones defined in the grant as reimbursement of those expenditures. Any CIRM grant proceeds received in advance of having incurred the related research and development expenses are recorded in accrued expenses and other current liabilities and recognized as other income on our unaudited condensed consolidated statements of operations when the related research and developments expenses are incurred.

Income Taxes

Since inception, we have incurred net operating losses primarily for U.S. federal and state income tax purposes and have not reflected any benefit of such net operating loss carryforwards for any periods presented in this Form 10-Q. The income tax provision in the periods presented is entirely attributable to amounts recorded from StemVac operations, our wholly-owned German subsidiary that provides research and development services to us under a cost-plus development agreement.

Results of Operations

Comparison of Three Months Ended September 30, 2024 and 2023

The following table summarizes our results of operations for the three months ended September 30, 2024 and 2023 (in thousands):

	Three Months Ended September 30,						Change
	2024			2023			$			%
Operating expenses:
Research and development	$	(2,153	)	$	(3,251	)	$	1,098			(34	)%
General and administrative		(3,073	)		(3,970	)		897			(23	)%
Total operating expenses		(5,226	)		(7,221	)		1,995			(28	)%
Loss from operations		(5,226	)		(7,221	)		1,995			(28	)%
Other income (expense), net
Total other income (expenses), net		156			5,208			(5,052	)		(97	)%
Loss before income taxes		(5,070	)		(2,013	)		(3,057	)		152	)%
Income tax provision		1			(11	)		12			(109	)%
Net loss	$	(5,069	)	$	(2,024	)	$	(3,045	)		150	%

Research and Development Expenses

Research and development expenses for the three months ended September 30, 2024 and 2023 were $2.2 million and $3.3 million, respectively. The decrease of $1.1 million was primarily attributable to a decrease in drug manufacturing of $0.9 million, lab supplies of $0.1 million, and salaries and benefits of $0.1 million.

General and Administrative Expenses

General and administrative expenses for the three months ended September 30, 2024 and 2023 were $3.1 million and $4.0 million, respectively. The decrease of $0.9 million was primarily due to decreases in salaries and benefits of $1.0 million, outside services and consulting costs of $0.3 million, and travel and entertainment expenses of $0.1 million, partially offset by increases in insurance costs of $0.4 million, and office expenses of $0.1 million.

Other Income (Expense), Net

Other income (expense), net for the three months ended September 30, 2024 and 2023 were $0.2 million and $5.2 million of net other income, respectively. The decrease of $5.0 million primarily relates to the net change in fair value in Simple Agreement for Future Equity (SAFEs), Forward Purchase Agreement derivative asset, private warrants, and Contingently Convertible and Convertible Notes Payable of $4.9 million, and a decrease in CIRM grant income of $0.7 million, partially offset by a decrease in debt extinguishment losses of $0.5 million and interest expenses to related parties of $0.1 million.

Comparison of Nine Months Ended September 30, 2024 and 2023

The following table summarizes our results of operations for the nine months ended September 30, 2024 and 2023 (in thousands):

	Nine Months Ended September 30,						Change
	2024			2023			$			%
Operating expenses:
Research and development	$	(7,063	)	$	(9,050	)	$	1,987			(22	)%
General and administrative		(10,687	)		(10,122	)		(565	)		6	%
Total operating expenses		(17,750	)		(19,172	)		1,422			(7	)%
Loss from operations		(17,750	)		(19,172	)		1,422			(7	)%
Other income (expense), net
Total other income (expenses), net		(300	)		(1,796	)		1,496			(83	)%
Loss before income taxes		(18,050	)		(20,968	)		2,918			(14	)%
Income tax provision		(11	)		(19	)		8			(42	)%
Net loss	$	(18,061	)	$	(20,987	)	$	2,926			(14	)%

Research and Development Expenses

Research and development expenses for the nine months ended September 30, 2024 and 2023 were $7.1 million and $9.1 million, respectively. The decrease of $2.0 million was primarily attributable to a decrease in drug manufacturing of $1.1 million, pre-clinical studies of $0.7 million, and lab supplies of $0.2 million.

General and Administrative Expenses

General and administrative expenses for the nine months ended September 30, 2024 and 2023 were $10.7 million and $10.1 million, respectively. The increase of $0.6 million was primarily due to increases in insurance costs for directors and officers of $1.1 million, legal fees of $1.0 million, accounting, marketing and advertising of $0.3 million, office expenses of $0.2 million, and consulting, audit, and tax fees of $0.2 million, partially offset by a decrease in salaries and benefits of $2.0 million and travel expenses of $0.2 million.

Other Income (Expense), Net

Other income (expense), net for the nine months ended September 30, 2024 and 2023 were $0.3 million and $1.8 million of net other expenses, respectively. The decrease of $1.5 million primarily relates to the decrease in other expenses related to Series B Convertible Preferred Stock financing costs of $2.7 million, debt extinguishment losses of $0.5 million, the net change in fair value in Simple Agreement for Future Equity (SAFEs), Forward Purchase Agreement derivative asset, private warrants, and Contingently Convertible and Convertible Notes Payable of $0.3 million, and interest expenses to related parties of $0.1 million, partially offset by a decrease in grant income from the CIRM of $2.1 million.

Liquidity and Capital Resources

Sources of Liquidity

Since inception, we have funded our operations primarily through sales of common stock, convertible preferred stock, contingently convertible and convertible promissory notes, term loans, lines of credit, and SAFEs. These investments have also been made by and included various related parties, including our largest investor and Chief Executive Officer and Chairman of the Board of Directors.

As of September 30, 2024, we had a cash balance of $1.9 million and restricted cash of $0.2 million. Our debt and liability obligations as of September 30, 2024 include $7.3 million in accounts payable and accrued expenses and other current liabilities, including related party amounts, $3.3 million in operating lease liabilities, $2.9 million in term notes payable, including related party amounts, $1.8 million in convertible notes payable, $0.6 million in promissory notes, $0.2 million in related party bridge loans payable, $0.2 million in finance lease liabilities, and $0.2 million in warrant liabilities, including related party amounts.

Reverse Stock Split

On July 10, 2024, we filed a First Certificate of Amendment to Second Amended and Restated Certificate of Incorporation with the Secretary of State of Delaware to effect a 1-for-10 reverse stock split of the shares of Calidi’s common stock, par value $0.0001 per share, effective on July 15, 2024 (the “Reverse Stock Split”). As a result of the Reverse Stock Split, every ten shares of issued and outstanding our Common Stock was automatically combined into one issued and outstanding share of our Common Stock, without any change in the par value per share. No fractional shares were issued as a result of the Reverse Stock Split, and any fractional shares that would otherwise have resulted from the Reverse Stock Split were rounded up to the next whole number. The number of authorized shares of Common Stock under our Second Amended and Restated Certificate of Incorporation, as amended, remained unchanged.

All references to share and per share amounts for all periods presented in the unaudited condensed consolidated financial statements have been retrospectively restated to reflect this Reverse Stock Split.

On April 18, 2024, we closed on a public offering of securities pursuant to that certain securities purchase agreement dated April 16, 2024 entered into by and among Calidi and certain purchasers (the “April Public Offering”). In connection with the April public offering, Calidi sold an aggregate of 1,323,250 Common Stock Units and 196,500 Pre-Funded Warrant (“PFW”) Units at an effective combined purchase price of $4.00 per Common Stock Unit or PFW Unit for aggregate gross proceeds of approximately $6.1 million before deducting placement agent fees and offering expenses payable by Calidi. The securities offered and sold in the public offering were registered pursuant to registration statement on Form S-1, as amended, filed with the SEC and declared effective on April 15, 2024.

Warrant Inducement

On May 31, 2024, we entered into an inducement offer letter agreement (the “May Inducement Offer”) with nine (9) holders of the Calidi’s existing Series B unit purchase warrants (“Series B Warrants”) and Series C unit purchase warrants (“Series C Warrants” and together with the Series B Warrants, the “Existing Warrants”), which Existing Warrants were originally issued on April 18, 2024 and had an exercise price of $6.00 (see Note 8). Following the closing of the May Inducement Offer, such warrant holders immediately exercised some or all of their respective outstanding Existing Warrants to purchase up to an aggregate of 1,069,800 shares of Calidi’s common stock, Series B-1 Warrants to purchase up to 267,300 shares of common stock and Series C-1 Warrants to purchase up to 802,500 shares of Common Stock, at a reduced exercise price of $2.00. In consideration for the immediate exercise of some or all of the Existing Warrants for cash, we agreed to issue unregistered new Series D common stock purchase warrants (“Series D Warrants”) to purchase up to 1,069,800 shares of Common Stock (see Note 8). We received gross proceeds of $2.1 million in cash from the exercise of the Existing Warrants pursuant to the May Inducement Offer, prior to deducting placement agent fees and offering expenses.

Subscription Agreements

On July 26, 2024, the Board of Calidi approved the Subscription Agreement dated July 28, 2024 entered with an accredited investor, a related-party. Pursuant to the Agreement, we sold to the Investor and the investor purchased, (i) 698,812 shares of Common Stock at a purchase price of $1.431 per share; and (ii) warrants to purchase 600,000 shares of the Calidi’s common stock at an exercise price of $1.90, for an aggregate purchase price of $1.0 million.

Strategic Investment into Nova Cell

On July 26, 2024, the Board and the Audit Committee of Calidi’s Board approved a strategic investment of approximately $2.0 million by the investor, a related-party, into Nova Cell, in exchange for the issuance of 7,500,000 shares of Nova Cell’s shares of common stock to the investor, representing 25% of Nova Cell’s current fully-diluted capitalization.

2024 Bridge Loan

On January 19, 2024, Calidi received approximately $0.2 million in aggregate proceeds from the issuance of certain bridge loans (the “2024 Bridge Loan”), which mature one year from the issuance date and bear simple interest of 12% per annum. As consideration for the 2024 Term Loans, Calidi issued an aggregate of 893 shares of restricted common stock to the Lender.

As of September 30, 2024, the total carrying value of the 2024 Bridge Loan, including accrued interest and net of debt discount, was $0.2 million.

Convertible Promissory Notes

On January 26, 2024, Calidi entered into a convertible promissory note purchase agreement (the “2024 Purchase Agreement”) with an accredited investor for a loan in the principal amount of $1.0 million (the “2024 Convertible Note Loan”). In connection with the Convertible Note Loan, Calidi issued a one-year convertible promissory note evidencing the aggregate principal amount of $1.0 million under the Loan, which accrues at a 12.0% simple interest rate per annum (the “2024 Convertible Note”).

The 2024 Convertible Note also provides the investor a voluntary right to convert all, but not less than all, the Principal Amount and accrued interest into shares of the Calidi’s common stock at a conversion rate equal to a 10% discount to the 10-day VWAP as determined immediately before January 26, 2024. In addition, upon such voluntary conversion by the investor, the investor will be entitled to a warrant for 50% of the number of shares of Calidi’s common stock issued upon the Note conversion at an exercise equal to 120% of the Conversion Price (the “2024 Note Warrant”). In the event Calidi consummates a public offering prior to the maturity date of the 2024 Convertible Note, the 2024 Convertible Note and accrued interest will be subject to a mandatory conversion into the equity securities of Calidi issued and sold to investors in such public offering, equal to the price per share of the equity security sold to other purchasers and subject to similar terms and conditions of such public offering, except that such equity securities received under a mandatory conversion will be restricted securities.

On April 18, 2024, pursuant to the April Public Offering, Calidi’s $1.0 million convertible note, inclusive of outstanding principal and accrued interest, was automatically converted into shares of Common Stock Unit shares, with terms identical to those sold in the April Public Offering. As of that date, the convertible note was no longer outstanding.

Convertible Promissory Notes and Unasserted Claim Settlement

On March 8, 2024, Calidi entered into settlement agreement (“Settlement Agreement”) with an investor who previously enter into a series of related agreements including (i) an agreement with Calidi Cure to fund the purchase of Calidi Series B Preferred Stock; (ii) a Non-Redemption Agreement with Calidi; (iii) an OTC Equity Prepaid Forward Purchase Agreement with Calidi; and (iv) a Subscription Agreement with Calidi (items (i) through (iv) collectively “the Supplemental Funding Agreements”) for the purpose of satisfying the “Minimum Cash Condition” required under the Business Combination agreement between First Light Acquisition Group, Inc., and Calidi Biotherapeutics, Inc., a Nevada corporation among others. Pursuant to the Settlement Agreement, (i) the investor purchased a $2.0 million convertible note from Calidi for cash and (ii) Calidi issued to the investor a $1.5 million convertible note in consideration for the settlement of all claims related to the Supplemental Funding Agreements. The $2.0 million convertible note and $1.5 million convertible note are collectively herein referred to as the “Convertible Notes”. The Convertible Notes bear semiannual interest at 10.0% per annum and each mature on March 8, 2028, unless due earlier due to an event of a default. After the earlier of 180 days or the effective date of a registration statement registering Calidi’s common stock underlying the Convertible Notes, Calidi may prepay the Convertible Notes, including any interest earned thereon, without penalty. The Convertible Notes provide the investor a right to convert in whole or in part , the Principal Amount (as defined in the Convertible Notes) and accrued interest earned thereon into shares of Calidi’s common stock at an initial note conversion price equal to 94.0% of the 10-day VWAP ending the business day preceding execution of the Convertible Notes, subject to a reset note conversion price equal to 94.0% of 10-day VWAP ending on the thirtieth (30th) day after the effective date of the registration statement registering the common stock underlying the Convertible Notes. In the event Calidi completes a financing (i) of at least $8 million in an offering registered with the SEC; or (ii) of at least $2 million with a non-affiliated purchaser at an effective price of at least 150.0% of the initial note conversion price, then the Convertible Notes will be subject to mandatory conversion at the lower of the initial note conversion price and reset note conversion price.

On April 19, 2024, the $1.5 million convertible note was paid in full upon the closing of a public offering by Calidi, in which the Holder participated in an amount equal to the principal amount of the convertible note. As of that date, the convertible note was no longer outstanding.

From October 21, 2024 through November 6, 2024, principal of $1.8 million and accrued interest of approximately $118,000 of the Company’s existing $2.0 million convertible note (see Note 7) was converted into 1,679,045 shares of common stock. Upon completion of the conversions, the convertible note was no longer outstanding.

2021 Term Notes Payable

As of September 30, 2024 and December 31, 2023, the interest rate of the 2021 Term Notes was 14% and 24%, respectively and the total carrying value, including accrued interest was approximately $0.7 million and $0.6 million, respectively.

2022 Term Notes Payable

As of September 30, 2024 and December 31, 2023, the interest rate of the 2022 Term Notes was 14% and 24% per annum, respectively, for a total principal of $0.2 million, and 16% and 15% per annum for a total principal of $0.2 million, respectively. As of September 30, 2024 and December 31, 2023, the total carrying value, including accrued interest, was $0.4 million.

2023 Term Notes Payable

As of September 30, 2024 and December 31, 2023, the interest rate of the 2023 Term Notes was 14% and 24% per annum, respectively, for a total principal of $1.1 million, 18% and 14% per annum for a total principal of $0.2 million, and 14% per annum for a total principal of $0.1 million. As of September 30, 2024 and December 31, 2023, the total carrying value, including accrued interest and net of debt discount, was $1.8 million and $1.9 million, respectively.

Standby Equity Purchase Agreement

On December 10, 2023, we entered into a Standby Equity Purchase Agreement (the “SEPA”) with YA II PN, Ltd., a Cayman Island exempt limited partnership (“Yorkville”). Pursuant to the SEPA, we will have the right, but not the obligation, to sell to Yorkville up to $25.0 million of its shares of Common Stock, par value $0.0001 per share, at our request any time during the 36 months following the execution of the SEPA. Subject to certain conditions set forth in the SEPA, including payment of an additional commitment fee, we will have the right to increase the commitment amount under the SEPA by an additional $25.0 million.

Financing Transactions Subsequent to September 30, 2024

At the Market Offering Agreement

On October 11, 2024, we entered into an At The Market Offering Agreement (the “Sales Agreement”) with Ladenburg Thalmann & Co. Inc. (the “Ladenburg”), under which we may, from time to time, in our sole discretion, issue and sell through Ladenburg, acting as agent or principal, shares of Calidi’s common stock, par value $0.0001 per share, initially having an aggregate offering price of up to $5.1 million. Pursuant to the Sales Agreement, Ladenburg may sell the Shares by any method permitted by law deemed to be an “at the market” offering as defined in Rule 415 under the Securities Act of 1933, as amended. Ladenburg will use commercially reasonable efforts consistent with its normal trading and sales practices to sell the Shares from time to time, based upon instructions from Calidi (including any price or size limits or other customary parameters or conditions Calidi may impose).

Under the terms of the Sales Agreement, we may also sell shares to Ladenburg as principal for our own account at prices agreed upon at the time of sale. If we sell shares to Ladenburg as principal, we will enter into a separate terms agreement with Ladenburg in substantially the form attached to the Sales Agreement.

We are not obligated to sell any shares under the Sales Agreement. The offering of the shares pursuant to the Sales Agreement may be terminated by either Calidi or Ladenburg, as permitted therein.

Securities Purchase Agreement

On October 23, 2024, we entered into a Securities Purchase Agreement (the “Purchase Agreement”) with certain institutional investors (the “Purchasers”), pursuant to which we agreed to issue to the Purchasers, (i) in a registered offering, 2,050,000 shares of Calidi’s common stock, par value $0.0001 per share, at a purchase price of $1.00 per share, and (ii) in a concurrent private placement, Series E common stock purchase warrants to purchase up to 2,050,000 shares of Common Stock (the “Series E Common Warrants”) and Series F common stock purchase warrants to purchase up to 2,050,000 shares of Common Stock (the “Series F Common Warrants” and together with the Series E Common Warrants, the “Common Warrants”). Such registered direct offering and concurrent private placement are referred to herein as the “Transactions.”

The closing of the Transactions took place on October 24, 2024. The gross proceeds from the Transactions were approximately $2.1 million, before deducting placement agent fees and other offering expenses payable by Calidi and excluding the net proceeds, if any, from the exercise of the Common Warrants or Placement Agent Warrants (as defined below).

The shares were offered by Calidi pursuant to a shelf registration statement on Form S-3 (File No. 333-282456), which was declared effective by the Securities Exchange Commission on October 10, 2024.

Pursuant to the terms of the Purchase Agreement, and subject to certain exceptions as set forth therein, until thirty (30) days following the closing of the Transactions, we have agreed not to issue (or enter into any agreement to issue) any shares of Common Stock or Common Stock equivalents. We further agreed not to enter into an agreement involving a variable rate transaction until six (6) months following the closing of the Transactions, provided however that the prohibition on “at-the-market offerings” and the issuance of common stock pursuant to an equity line of credit shall expire on the six-month anniversary of the closing date of this offering. In addition, each of Calidi’s directors and executive officers have entered into lock-up agreements pursuant to which each of them has agreed not to, for a period of thirty (30) days and ninety (90) days, respectively, from the closing of the Transactions, offer, sell, transfer or otherwise dispose of Calidi’s securities, subject to certain exceptions.

On October 23, 2024, we entered into a placement agency agreement (the “Placement Agency Agreement”) with Ladenburg Thalmann & Co. Inc., as the placement agent (the “Placement Agent”), pursuant to which the Placement Agent agreed to act on a reasonable “best efforts” basis, in connection with the Transactions. We agreed to pay the Placement Agent an aggregate cash fee of 8.0% of the gross proceeds from the sale of securities in the Transactions, a 1% management fee of the gross proceeds and reimburse certain out-of-pocket expenses. As additional compensation to the Placement Agent, in connection with the Transactions, we issued to the Placement Agent (or its designees) a warrant (the “Placement Agent Warrant”) to purchase an aggregate of 102,500 shares of Common Stock (the “Placement Agent Warrant Shares”), equal to 5% of the aggregate number of shares of Common Stock sold in the registered direct offering, at an exercise price per share equal to $1.25, which is equal to 125% of the offering price of the Shares. The Placement Agent Warrants are exercisable six (6) months from the date of issuance and expire on the five-year anniversary of Initial Exercise Date (as defined in the Placement Agent Warrant). The Placement Agent Warrant may be exercisable via “cashless exercise” in certain circumstances. The Placement Agent Warrants have substantially the same terms as the Common Warrants described above.

Please see Note 12 to our unaudited condensed consolidated financial statements for financing activities and changes in our debt and liability obligations that affected our liquidity subsequent to September 30, 2024.

Public and Private warrants

In connection with the closing of the FLAG Merger on September 12, 2023, Calidi assumed 1,150,000 public warrants (“Public Warrants”) to purchase common stock with an exercise price of $115.00 per share. The Public Warrants became exercisable 30 days after the Closing. Each whole share of the warrant is exercisable for one share of Calidi ‘s common stock. Calidi may redeem the outstanding Public Warrants for $0.01 per warrant, if the reported last sale price of the common stock equals or exceeds $180.00 per share (as adjusted for stock dividends, sub-divisions, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period commencing after the warrants become exercisable and ending on the third trading day before Calidi sends the notice of redemption to the warrant holders. Upon issuance of a redemption notice by Calidi, the warrant holders may, at any time after the redemption notice, exercise the Public Warrants on a cashless basis.

Calidi further assumed 191,217 private warrants to purchase common stock with an exercise price of $115.00 per share. The private warrants in general, will not be transferable, assignable or salable until 30 days after the Closing (excluding permitted transferees) and they will not be redeemable under certain redemption scenarios. Otherwise, the private warrants have terms and provisions that are identical to those of the Public Warrants, including the exercise price, exercisability and exercise period.

On February 21, 2024, in connection with a settlement agreement, Calidi issued an additional 40,000 private warrants to purchase Restricted Shares which (i) has an exercise price equal to $13.20; and (ii) are exercisable for 5 years after the date of issuance of the warrants, subject to the terms set forth in such warrant.

On July 26, 2024, the Board of Directors of Calidi approved the Subscription Agreement dated July 28, 2024 entered into with an accredited investor. Pursuant to the agreement, Calidi sold to the investor and the investor purchased warrants to purchase 600,000 shares of the Calidi’s common stock, which (i) have an exercise price equal to $1.90 per share; and (ii) are exercisable for 3 years after the date of issuance of the warrants, subject to the terms set forth in such warrant.

As of September 30, 2024, 1,150,000 Public Warrants, 791,217 private warrants, and 40,000 warrants to purchase Restricted Shares were outstanding, respectively. As of December 31, 2023, 1,150,000 Public Warrants, 191,217 private warrants, and 40,000 warrants to purchase Restricted Shares were outstanding, respectively.

Placement Agent Warrants

On April 18, 2024, in connection with the closing of the April Public Offering, Calidi issued Placement agent warrants to purchase up to 75,988 shares of common stock, which (i) have an exercise price equal to $6.60 per share; and (ii) are exercisable for 5 years after the date of issuance of the warrants, subject to the terms set forth in such warrant.

On June 3, 2024, in connection with the closing of the May Inducement Offer, Calidi issued Placement agent warrants to purchase up to 53,490 shares of common stock, which (i) have an exercise price equal to $3.75 per share; and (ii) are exercisable for 5 years after the date of issuance of the warrants, subject to the terms set forth in such warrant.

As of September 30, 2024, all placement agent warrants to purchase a total of 129,478 shares of common stock remained outstanding. There were no such warrants outstanding as of December 31, 2023.

Series A Warrants

On April 18, 2024, in connection with the closing of the April Public Offering, Calidi issued Series A warrants to purchase 1,519,750 shares of common stock. Furthermore, on April 18, 2024, in connection with the mandatory conversion of a $1.0 million Convertible Note, Calidi issued additional Series A warrants to purchase 256,885 shares of common stock. The Series A Warrants have (i) an exercise price equal to $6.00 per share; and (ii) are exercisable for 5 years after the date of issuance of the warrants, subject to the terms set forth in such warrant.

Pursuant to the Reverse Stock Split effected July 15, 2024, the exercise price of the Series A warrants was reset to $1.52 per share, effective July 22, 2024.

As of September 30, 2024, Series A warrants to purchase 1,401,635 shares of common stock remained outstanding. There were no such warrants outstanding as of December 31, 2023.

Series B Warrants

On April 18, 2024, in connection with the closing of the April Public Offering, Calidi issued Series B warrants to purchase 1,519,750 shares of common stock. Furthermore, on April 18, 2024, in connection with the mandatory conversion of a $1.0 million Convertible Note, Calidi issued additional Series B warrants to purchase 256,885 shares of common stock. The Series B Warrants have (i) an exercise price equal to $6.00 per share; and (ii) are exercisable for 1 year after the date of issuance of the warrants, subject to the terms set forth in such warrant.

Series B warrants to purchase 267,300 shares of common stock were exercised at a reduced exercise price of $2.00 in connection with the May Inducement Offer. Pursuant to the issuance of common stock per the Series B warrant exercises, Calidi received gross proceeds of approximately $0.5 million.

Pursuant to the Reverse Stock Split effected July 15, 2024, the exercise price of the Series B warrants was reset to $1.52 per share, effective July 22, 2024.

As of September 30, 2024, Series B warrants to purchase 1,134,335 shares of common stock remained outstanding. There were no such warrants outstanding as of December 31, 2023.

Series C Warrants

On April 18, 2024, in connection with the closing of the April Public Offering, Calidi issued Series C warrants to purchase 1,519,750 shares of common stock. Furthermore, on April 18, 2024, in connection with the mandatory conversion of a $1.0 million Convertible Note, Calidi issued additional Series C warrants to purchase 256,885 shares of common stock. The Series B Warrants have (i) an exercise price equal to $6.00 per share; and (ii) are exercisable for 4 months after the date of issuance of the warrants, subject to the terms set forth in such warrant.

Series C warrants to purchase 802,500 shares of common stock were exercised at a reduced exercise price of $2.00 in connection with the May Inducement Offer. Pursuant to the issuance of common stock per the Series C warrant exercises, Calidi received gross proceeds of approximately $1.6 million.

Pursuant to the Reverse Stock Split effected July 15, 2024, the exercise price of the Series C warrants was reset to $1.52 per share, effective July 22, 2024. During July and August 2024, Series C warrants to purchase 637,500 shares of common stock were exercised at an exercise price of $1.52 per share. Pursuant to the issuance of common stock per such warrant exercises, Calidi received gross proceeds of approximately $1.0 million.

As of September 30, 2024, no Series C warrants remained outstanding.

Series B-1 Warrants

On June 3, 2024, in connection with the closing of the May Inducement Offer, Calidi issued Series B-1 warrants to purchase 267,300 shares of common stock, which (i) have an exercise price equal to $2.00 per share; and (ii) are exercisable for 5 years after the date of issuance of the warrants, subject to the terms set forth in such warrant.

Pursuant to the Reverse Stock Split effected July 15, 2024, the exercise price of the Series B-1 warrants was reset to $1.52 per share, effective July 22, 2024.

As of September 30, 2024, Series B-1 warrants to purchase 567,300 shares of common stock remained outstanding.

Series C-1 Warrants

On June 3, 2024, in connection with the closing of the May Inducement Offer, Calidi issued Series C-1 warrants to purchase 802,500 shares of common stock, which (i) have an exercise price equal to $2.00 per share; and (ii) are exercisable for 5 years after the date of issuance of the warrants, subject to the terms set forth in such warrant. Series C-1 warrants to purchase 50,000 shares of common stock were subsequently exercised at an exercise price of $2.00 per share. Pursuant to the issuance of common stock per the Series C-1warrant exercises, Calidi received gross proceeds of approximately $0.1 million.

Pursuant to the Reverse Stock Split effected July 15, 2024, the exercise price of the Series C-1 warrants was reset to $1.52 per share, effective July 22, 2024.

As of September 30, 2024, Series C-1 warrants to purchase 1,065,500 shares of common stock remained outstanding. There were no such warrants outstanding as of December 31, 2023.

Series D Warrants

On June 3, 2024, in connection with the closing of the May Inducement Offer, Calidi issued Series D warrants to purchase 1,069,800 shares of common stock, which (i) have an exercise price equal to $3.00 per share; and (ii) are exercisable for 5.5 years after the date of issuance of the warrants, subject to the terms set forth in such warrant.

Pursuant to the Reverse Stock Split effected July 15, 2024 (See Note 1), the exercise price of the Series D warrants was reset to $1.52 per share, effective July 22, 2024.

As of September 30, 2024, Series D warrants to purchase 1,069,800 shares of common stock remain outstanding. There were no such warrants outstanding as of December 31, 2023.

Commitments and Contingencies

On October 10, 2022, Calidi entered into an Office Lease Agreement (the “San Diego Lease”) that serves as Calidi’s new principal executive and administrative offices and laboratory facility. To secure and execute the San Diego Lease, Mr. Allan Camaisa provided a personal Guaranty of Lease of up to $0.9 million (the “Guaranty”) to the lessor for Calidi’s future performance under the San Diego Lease agreement. As consideration for the Guaranty, Calidi agreed to pay Mr. Camaisa 10% of the Guaranty amount for the first year of the San Diego Lease, and 5% per annum of the Guaranty amount thereafter through the life of the lease, with all amounts accrued and payable at the termination of the San Diego Lease or release of Mr. Camaisa from the Guaranty by the lessor, whichever occurs first. The San Diego Lease has an initial term of 4 years.

We further entered into separate license agreements with Northwestern University and City of Hope and the University of Chicago, wherein Calidi may be liable to make certain contingent payments pursuant to the terms and conditions of the license agreements. As of September 30, 2024, we do not believe it probable that we will make these payments.

Other commitments and contingencies include (i) various operating and financing leases for equipment, office facilities, and other property containing future minimum lease payments totaling $4.1 million, (ii) certain manufacturing and other supplier agreements with vendors principally for manufacturing drug products for clinical trials and continuing the development of the CLD-101 and CLD-201 programs totaling $0.3 million, and (iii) severance costs due on January 1, 2025 totaling $0.4 million. In accordance with the provisions of the separation agreement, the severance costs of $0.4 million accrue interest at the rate of 8.0% per annum.

Forward Purchase Agreement

In August 2023, FLAG and Calidi entered into forward purchase agreements (each a “Forward Purchase Agreement”, and together, the “Forward Purchase Agreement”) with each of Meteora Strategic Capital, LLC, Meteora Capital Partners, LP, Meteora Select Trading Opportunities Master, LP, Great Point Capital LLC, Funicular Funds, LP and Marybeth Wootton (with each individually a “Seller”, and together, the “Sellers”) for an OTC Equity Prepaid Forward Transaction.

On March 8, 2024, Calidi and one of the sellers mutually terminated and cancelled 34,000 shares per the Forward Purchase Agreement described above.

Please see Note 2 to our unaudited condensed consolidated financial statements for additional details.

Related Party Transactions

Please see Note 6 to our unaudited condensed consolidated financial statements for more information on our related party transactions.

Cash Flow Summary for the nine months ended September 30, 2024 and 2023

The following table shows a summary of our cash flows for the nine months ended September 30, 2024 and 2023 (in thousands):

	Nine Months Ended September 30,						Change
	2024			2023			$			%
Net cash (used in) provided by:
Operating activities	$	(14,271	)	$	(21,797	)	$	7,526			(35	)%
Investing activities		(11	)		(443	)		432			(98	)%
Financing activities		14,259			32,002			(17,743	)		(55	)%
Effect of exchange rate on cash		(29	)		13			(42	)		(323	)%
Net increase (decrease) in cash and restricted cash	$	(52	)	$	9,775		$	(9,827	)		(101	)%

Operating activities

Net cash used in operating activities was $14.3 million for the nine months ended September 30, 2024, primarily resulting from our net loss of $18.1 million. Our net loss was reduced by certain non-cash items that included $2.3 million in stock-based compensation, $0.9 million in amortization of right of use assets and amortization of debt discount and financing costs, $0.6 million from the change in our operating assets and liabilities, and $0.3 million in depreciation expense, partially offset by $0.3 million of change in fair value of debt, other liabilities and derivatives.

Net cash used in operating activities was $21.8 million for the nine months ended September 30, 2023, primarily resulting from our net loss of $21.0 million. Our net loss was increased by $9.8 million from the change in our operating assets and liabilities and partially reduced by certain non-cash items that included $3.6 million in stock-based compensation, $2.7 million in Series B Preferred Stock financing costs, $0.7 million in amortization of debt discount and financing costs, $0.6 million in amortization of right of use assets and $0.3 million in depreciation expense.

Investing activities

Net cash used in investing activities was $11,000 for the nine months ended September 30, 2024, which primarily related to the purchase of certain machinery and equipment.

Net cash used in investing activities was $0.4 million for the nine months ended September 30, 2023, which primarily related to the purchase of machinery and equipment.

Financing activities

Net cash provided by financing activities was $14.3 million for the nine months ended September 30, 2024, which primarily related to proceeds from the April Public Offering of $5.4 million, proceeds from issuance of convertible notes payable of $3.0 million, proceeds from the exercise of common stock warrants of $2.8 million, proceeds from the May Inducement Offer of $2.1 million, proceeds from issuance of noncontrolling interest of $2.0 million, proceeds from the issuance of common shares and warrants per subscription agreement of $1.0 million, proceeds from issuance of promissory note of $0.6 million, and related party proceeds from issuance of a bridge loan payable of $0.2 million, partially offset by repayment of convertible notes payable of $1.5 million, payment of financing costs of $1.0 million, and repayment of term notes payable of $0.3 million.

Net cash provided by financing activities was $32.0 million for the nine months ended September 30, 2023, which primarily related to related party proceeds from issuance of Series B Preferred Stock of $24.5 million, proceeds from non-redemption and PIPE subscription agreements of $2.8 million, proceeds from Simple Agreement for Future Equity (SAFEs) of $2.8 million, related party proceeds from issuance of term notes payable of $2.0 million, and proceeds from issuance of term notes payable of $1.3 million, partially offset by payment of deferred financing costs of $1.5 million.

Funding Requirements

We expect our expenses to increase in connection with our ongoing activities, particularly as we continue our research and development, initiate clinical trials, and seek marketing approval for our current and any of our future product candidates. In addition, if we obtain marketing approval for any of our current or our future product candidates, we expect to incur significant commercialization expenses related to product sales, marketing, manufacturing and distribution, which costs we may seek to offset through entry into collaboration agreements with third parties. Furthermore, we expect to continue to incur additional costs associated with operating as a public company. Accordingly, we will need to obtain substantial additional funding in connection with our continuing operations. If we are unable to raise capital when needed or on acceptable terms, we would be forced to delay, reduce or eliminate our research and development programs or future commercialization efforts.

Based on our current operating plan, available cash and additional access to capital discussed above under the “Liquidity and Capital Resources” section, we believe we do not have sufficient cash on hand to support current operations for at least one year from the date of issuance of the unaudited condensed consolidated financial statements as of and for the three and nine months ended September 30, 2024 appearing elsewhere in this Form 10-Q. Based on our existing cash and cash equivalents as of November 8, 2024, we will need to raise substantial additional capital to finance our operations, which cannot be assured. We have concluded that this circumstance raises substantial doubt about our ability to continue as a going concern for at least one year from the date that our aforementioned unaudited condensed consolidated financial statements were issued. See Note 1 to our unaudited condensed consolidated financial statements appearing elsewhere in this Form 10-Q for additional information on our assessment.

Our future capital requirements will depend on a number of factors, including:

	●	the costs of conducting preclinical studies and clinical trials;

	●	the costs of manufacturing;

	●	the scope, progress, results and costs of discovery, preclinical and clinical development, laboratory testing, and clinical trials for product candidates we may develop, if any;

	●	the costs, timing, and outcome of regulatory review of our product candidates;

	●	our ability to establish and maintain collaborations on favorable terms, if at all;

	●	the achievement of milestones or occurrence of other developments that trigger payments under any license or collaboration agreements we might have at such time;

	●	the costs and timing of future commercialization activities, including product sales, marketing, manufacturing and distribution, for any of our product candidates for which we receive marketing approval;

	●	the amount of revenue, if any, received from commercial sales of our product candidates, should any of our product candidates receive marketing approval;

	●	the costs of preparing, filing and prosecuting patent applications, obtaining, maintaining and enforcing our intellectual property rights, and defending intellectual property-related claims;

	●	our headcount growth and associated costs as we expand our business operations and research and development activities;

	●	the continuing impacts of the recent COVID-19 pandemic and geopolitical conflicts; and

	●	the costs of operating as a public company.

Our existing cash will not be sufficient to complete development of CLD-101 and CLD-201. Accordingly, we will be required to obtain further funding to achieve our business objectives.

Until such time, if ever, as we can generate substantial product revenues, we expect to finance our cash needs through a combination of public or private equity offerings and debt financings or other sources, such as potential collaboration agreements, strategic alliances and licensing arrangements. To the extent that we raise additional capital through the sale of equity or convertible debt securities, ownership interests may be diluted, and the terms of these securities may include liquidation or other preferences that could adversely affect the rights as a common stockholder. Additional debt financing, if available, may involve agreements that include restrictive covenants that limit our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends, that could adversely impact our ability to conduct our business. If we raise funds through potential collaborations, strategic alliances or licensing arrangements with third parties, we may have to relinquish valuable rights to our technologies, future revenue streams, research programs or product candidates, or to grant licenses on terms that may not be favorable to us. If we are unable to raise additional funds when needed, we may be required to delay, limit, reduce or terminate our product development or future commercialization efforts or grant rights to develop and market product candidates that we would otherwise prefer to develop and market ourselves.

Critical Accounting Estimates

The discussion and analysis of our financial condition and results of operations are based on our unaudited condensed consolidated financial statements, which have been prepared in accordance with U.S. generally accepted accounting principles, or U.S. GAAP. The preparation of our unaudited condensed consolidated financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities and expenses and related disclosure of contingent assets and liabilities. We review our estimates on an ongoing basis. We base our estimates on historical experience and on various other assumptions that we believe to be reasonable under the circumstances, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results may differ from these estimates under different assumptions or conditions.

Our significant accounting policies and estimates are described in Note 2 to the consolidated financial statements included in our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. The accounting estimates that are most critical to a full understanding and evaluation of our reported financial results are described in Management’s Discussion and Analysis of Financial Condition and Results of Operations in Item 7 of our Annual Report on Form 10-K for the fiscal year ended December 31, 2023. There were no material changes to our critical accounting estimates during the three and nine months ended September 30, 2024.

Off-Balance Sheet Arrangements

We did not have during the periods presented, and we do not currently have, any off-balance sheet arrangements, as defined under SEC rules.

We enter into agreements in the normal course of business with vendors for preclinical and clinical studies, preclinical and clinical supply and manufacturing services, professional consultants for expert advice, and other vendors for other services for operating purposes. These contracts do not contain any minimum purchase commitments and are cancelable at any time by us, generally upon 30 days prior written notice, and therefore we believe that our non-cancelable obligations under these agreements are not material.

In addition, we have entered into license and royalty agreements for intellectual property with certain parties. Such arrangements require ongoing payments, including payments upon achieving certain development, regulatory and commercial milestones, receipt of sublicense income, as well as royalties on commercial sales. Payments under these arrangements are expensed as incurred and are recorded as research and development expenses. We paid amounts under such agreements at the time of execution and pay annual fees. We have not paid any royalties under these agreements to date. We have not included the annual license fee payments contractual obligations because the license agreements are cancelable by us and therefore, we believe that our non-cancelable obligations under these agreements are not material. We have not included potential royalties or milestone obligations because they are contingent upon the occurrence of future events and the timing and likelihood of such potential obligations are not known with certainty. For further information regarding these agreements and amounts that could become payable in the future under these agreements, please see the section entitled “Business — License Agreements” within our prospectus, dated October 6, 2023, filed with the SEC.

Quantitative and Qualitative Disclosures about Market Risk

We are not currently exposed to significant market risk related to changes in interest rates because we do not have any cash equivalents or interest-bearing investments at this time. Our debt typically contains a fixed interest rate or is issued to certain lenders, including related party lenders, with other equity instruments, such as warrants, in lieu of a stated cash interest rate. However, for debt that we have issued that is variable and fluctuates with changes in interest rates, an immediate one percentage point change in market interest rates would not have a material impact on our financial position or results of operations.

We are not currently exposed to significant market risk related to changes in foreign currency exchange rates; however, we have employees and are contracted with and may continue to contract with foreign vendors that are located in Europe, particularly in Germany, where we operate through our wholly-owned subsidiary, StemVac GmbH. In October 2022, we also formed Calidi Biotherapeutics Australia Pty Ltd, a wholly-owned subsidiary in Australia, for purposes of operating in that country for a portion of our planned clinical trial activities for our SNV1 program. Our operations may be subject to fluctuations in foreign currency exchange rates in the future.

Inflation generally affects us by increasing our cost of labor. We do not believe that inflation had a material effect on our business, financial condition or results of operations during the three and nine months ended September 30, 2024 and 2023.

Emerging Growth Company and Smaller Reporting Company Status

We are an “emerging growth company,” (“EGC”), under the Jumpstart Our Business Startups Act of 2012, (the “JOBS Act”). Section 107 of the JOBS Act provides that an EGC can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. Thus, an EGC can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We have elected to avail ourselves of the delayed adoption of new or revised accounting standards and, therefore, we will be subject to the same requirements to adopt new or revised accounting standards as private entities.

As an EGC, we may also take advantage of certain exemptions and reduced reporting requirements under the JOBS Act. Subject to certain conditions, as an EGC:

	●	we are presenting only two years of audited financial statements and only two years of related Management’s Discussion and Analysis of Financial Condition and Results of Operations;

	●	we will avail ourselves of the exemption from providing an auditor’s attestation report on our internal control over financial reporting pursuant to Section 404(b) of the Sarbanes-Oxley Act;

	●	we will avail ourselves of the exemption from complying with any requirement that may be adopted by the Public Company Accounting Oversight Board (“PCAOB”), regarding mandatory audit firm rotation or a supplement to the auditor’s report providing additional information about the audit and the financial statements, known as the auditor discussion and analysis;

	●	we are providing reduced disclosure about our executive compensation arrangements; and

	●	we will not require nonbinding advisory votes on executive compensation or stockholder approval of any golden parachute payments.

We will remain an EGC until the earliest of (i) December 31, 2026, (ii) the last day of the fiscal year in which we have total annual gross revenues of $1.235 billion or more, (iii) the date on which we have issued more than $1 billion in non-convertible debt during the previous rolling three-year period, or (iv) the date on which we are deemed to be a large accelerated filer under the Securities Exchange Act of 1934, as amended, (the “Exchange Act”).

We are also a “smaller reporting company,” and may continue to be a smaller reporting company after this offering if either (i) the market value of our stock held by non-affiliates is less than $250 million or (ii) our annual revenue is less than $100 million during the most recently completed fiscal year and the market value of our stock held by non-affiliates is less than $700 million.

If we are a smaller reporting company at the time we cease to be an EGC, we may continue to rely on exemptions from certain disclosure requirements that are available to smaller reporting companies. Specifically, as a smaller reporting company we may choose to present only the two most recent fiscal years of audited financial statements in our Annual Report on Form 10-K and, similar to EGCs, smaller reporting companies have reduced disclosure obligations regarding executive compensation.

Recent Accounting Pronouncements

Other than as disclosed in Note 2 to our unaudited condensed consolidated financial statements appearing elsewhere in this Form 10-Q, we do not expect that any recently issued accounting standards will have a material impact on our financial statements or will otherwise apply to our operations.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISKS

We are a smaller reporting company as defined by Rule 12b-2 of the Exchange Act and are not required to provide the information required under this item.

ITEM 4. Controls and Procedures.

Evaluation of Disclosure Controls and Procedures

Our management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of the end of the period covered by this report. The term “disclosure controls and procedures,” as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act, means controls and other procedures of a company that are designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by a company in the reports that it files or submits under the Exchange Act is accumulated and communicated to Calidi’s management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Management recognizes that any disclosure controls and procedures, no matter how well designed and operated, can provide only reasonable assurance of achieving their objectives. Our disclosure controls and procedures have been designed to provide reasonable assurance of achieving their objectives.

Based on such evaluation, our Chief Executive Officer and Chief Financial Officer concluded that our disclosure controls and procedures were effective at a reasonable assurance level as of September 30, 2024.

Changes in Internal Control over Financial Reporting

There were no changes in the Company’s internal control over financial reporting identified in connection with the evaluation required by paragraph (d) of Exchange Act Rules 13a-15 or 15d-15 that occurred during the quarter ended September 30, 2024 that materially affected, or were reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings.

Legal proceedings

We are subject to litigation and contingencies in the ordinary course of its business, including those related to its business, business transactions, employee-related matters, and other matters. See Item 3-Legal Proceedings to our Form 10-K for the year ended December 31, 2023. Other than the matters discussed below, we are not currently party to any other material legal proceedings that occurred during the quarter ended September 30, 2024.

Former Chief Accounting Officer and Interim Chief Financial Officer

On May 1, 2024, Tony Kalajian, the Company’s 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 alleging intentional conversion and violation of Section 158 of the Delaware General Corporations Code due to the Company’s failure to remove a restrictive legend from 13,943 shares of the Company’s Common Stock. Mr. Kalajian is seeking compensatory damages to be proven at trial, punitive damages and attorney’s fees, and an order requiring removal of the restrictive legend from his share certificates. The Company intends to vigorously defend itself.

Item 1A. Risk Factors

Investing in our common stock is highly speculative and involves risks. You should carefully consider the additional risk factors below as well as the risk factors described in Part I, Item 1A, “Risk Factors” in our Form 10-K and any updates to those risk factors or new risk factors contained in any registration statements that we filed or file with the SEC. Certain factors may have a material adverse effect on our business, financial condition, and results of operations. You should carefully consider the following risks, together with all of the other information contained in this report and Form 10-K, in the sections titled “Cautionary Note Regarding Forward-Looking Statements” and “Management’s Discussion and Analysis of Financial Condition and Results of Operations” and our financial statements and the related notes included elsewhere in this Quarterly Report on Form 10-Q. Any of the following risks could have an adverse effect on our business, financial condition, operating results, or prospects and could cause the trading price of our common stock to decline, which would cause you to lose all or part of your investment. Our business, financial condition, operating results, or prospects could also be harmed by risks and uncertainties not currently known to us or that we currently do not believe are material.

We have insufficient cash to continue our operations for the next 12 months and our continued operations are dependent on us raising capital and these conditions give rise to substantial doubt over the Company’s ability to continue as a going concern.

As of September 30, 2024, we had approximately $1.9 million in cash and restricted cash of $0.2 million, an accumulated deficit of approximately $117.6 million, and a working capital deficit of approximately $9.4 million. We believe that our existing cash and cash equivalents as of September 30, 2024, and our anticipated expenditures and commitments for the next twelve months, will not enable us to fund our operating expenses and capital expenditure requirements for the twelve months from September 30, 2024. Based on our existing cash and cash equivalents as of November 8, 2024, we believe we have insufficient cash to continue operations through November 2024, unless we raise additional short-term capital. These conditions give rise to substantial doubt over the Company’s ability to continue as a going concern. We will need to raise additional capital to support our operations and execute our business plan. We will be required to pursue sources of additional capital through various means, including debt or equity financings. Newly issued securities may include preferences, superior voting rights, and the issuance of warrants or other convertible securities that will have additional dilutive effects. Further, the sale of or the perception of the sale of a substantial number of our common stock by selling securityholders pursuant to a registration statement filed with the SEC will adversely affect the price of our common stock due to our limited trading volume. In addition, the sale of a substantial number of our common stock by such selling securityholders will adversely affect the share price that we may obtain in future financings and may adversely affect our ability to conduct and complete future financings. We cannot assure that additional funds will be available when needed from any source or, if available, will be available on terms that are acceptable to us and may cause existing shareholders both book value and ownership dilution. Further, we may incur substantial costs in pursuing future capital and/or financing, including investment banking fees, legal fees, accounting fees, printing and distribution expenses and other costs. We may also be required to recognize non-cash expenses in connection with certain securities we may issue, such as convertible notes and warrants, which will adversely impact our financial condition and results of operations. Our ability to obtain needed financing may be impaired by such factors as the weakness of capital markets, and the fact that we have not been profitable, which could impact the availability and cost of future financings. If the amount of capital we are able to raise from financing activities is not sufficient to satisfy our capital needs, we may have to reduce our operations accordingly.

Sales and issuances of our common stock or other securities would result in dilution of the percentage ownership of our stockholder and could cause our share price to fall.

If we sell additional shares of our common stock, convertible securities or other equity securities, existing stockholders may be materially diluted by subsequent sales and new investors could gain rights, preferences, and privileges senior to existing holders of our common stock. In addition, the resale, or perceived potential resale, of a substantial number of shares of our common stock in the public market could adversely affect the market price for our common stock We will need to raise capital in order to fund our business objectives. In addition, pursuant to our obligations under certain registration rights agreements, we have registered on other registration statement filed with the SEC (1) 2,039,382 shares of common stock, 191,217 warrants to purchase our common stock, and 191,217 shares of common stock issuable upon exercise of the private warrants; (2) agreed to register 20,000 shares of our common stock and 40,000 shares of common stock underlying warrants in connection with a settlement agreement with certain physicians related to stock options; and (3) registered a number of common stock underlying certain Series A, B and C warrants issued in connection with our public offering that closed on April 18, 2024.

Until such time that it is no longer effective, the registration statement registering such securities will permit the resale of these shares. In addition, securityholders may also sell their shares pursuant to an exemption available under the securities laws. The sale of new securities or the resale, or perceived potential resale, of a substantial number of shares of our common stock in the public market could adversely affect the market price for our common stock and make it more difficult for other shareholders to sell their holdings at times and prices that they determine are appropriate.

Our stockholders are subject to significant dilution upon the occurrence of certain events which could result in a decrease in our stock price.

As of November 7, 2024, we had approximately 12.5 million shares of our common stock reserved or designated for future issuance upon the exercise of outstanding options or warrants, or upon conversion of our existing convertible note. Future sales of substantial amounts of our common stock into the public and the issuance of the shares reserved for future issuance, in payment of our term debt, and/or in exchange for outstanding warrants will be dilutive to our existing stockholders and could result in a decrease in our stock price.

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

Unregistered Sales of Equity Securities

Subscription Agreement

Effective July 28, 2024, we entered into a subscription agreement with an accredited investor and issued 698,812 shares of Common Stock to the investor on September 26, 2024.

Settlement of Liabilities

On September 26, 2024, the Company settled a legal settlement by issuing 20,000 shares of Common Stock and settled certain liabilities by issuing 120,847 shares of Common Stock.

The securities described above were issued in reliance upon an exemption from registration pursuant to Section 4(a)(2) of the Securities Act or Rule 506 of Regulation D promulgated under the Securities Act. Each investor acquired such securities for investment purposes without a view to distribution and had access to information concerning us and our business prospects, as required by the Securities Act. In addition, there was no general solicitation or advertising for the purchase of our securities. Our securities were sold only to accredited investors, as defined in the Securities Act with whom we had a direct personal preexisting relationship, and after a thorough discussion. Each certificate contained a restrictive legend as required by the Securities Act. Finally, our stock transfer agent has been instructed not to transfer any of such securities, unless such securities are registered for resale or there is an exemption with respect to their transfer.

Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

Not applicable.

Item 5. Other Information.

During the three and nine months ended September 30, 2024, no director or officer of the Company adopted or terminated a “Rule 10b5-1 trading arrangement” or “non-Rule 10b5-1 trading arrangement,” as each term is defined in Item 408(a) of Regulation S-K.

Item 6. Exhibits.

EXHIBIT INDEX

Exhibit No.		Description
4.1		Form of Series E Common Warrant (incorporated by reference to Exhibit 4.1 to Form 8-K filed on October 24, 2024).

4.2		Form of Series F Common Warrant (incorporated by reference to Exhibit 4.2 to Form 8-K filed on October 24, 2024).

4.3		Form of Placement Agent Warrant (incorporated by reference to Exhibit 4.3 to Form 8-K filed on October 24, 2024).

10.1		At the Market Offering Agreement dated October 11, 2024, by and between the Company and Ladenburg Thalmann & Co. Inc. (incorporated by reference to Exhibit 10.1 to Form 8-K filed on October 11, 2024).

10.2		Form of the Securities Purchase Agreement (incorporated by reference to Exhibit 10.1 to Form 8-K filed on October 24, 2024).

10.3		Form of Placement Agency Agreement (incorporated by reference to Exhibit 10.2 to Form 8-K filed on October 24, 2024).

31.1*		Certification of Chief Executive Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

31.2*		Certification of Chief Financial Officer Pursuant to Rules 13a-14(a) and 15d-14(a) under the Securities Exchange Act of 1934, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1**		Certificate of Chief Executive Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

32.2**		Certificate of Chief Financial Officer Pursuant to 18 U.S.C. Section 1350, as Adopted Pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

101.INS		Inline XBRL Instance Document

101. SCH		Inline XBRL Taxonomy Extension Schema Document

101.CAL		Inline XBRL Taxonomy Extension Calculation Linkbase Document.

101.DEF		Inline XBRL Taxonomy Extension Definition Linkbase Document.

101.LAB		Inline XBRL Taxonomy Extension Labels Linkbase Document.

101.PRE		Inline XBRL Taxonomy Extension Presentation Linkbase Document.

104		Cover Page Interactive Data File (embedded within the Inline XBRL document)

*	Filed herewith
**	Furnished herewith.

SIGNATURES

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

	Calidi Biotherapeutics, Inc.

Date: November 12, 2024	By:	/s/ Allan Camaisa
	Name:	Allan Camaisa
	Title:	Chairman and Chief Executive Officer (Principal Executive Officer)

Date: November 12, 2024	By:	/s/ Andrew Jackson
	Name:	Andrew Jackson
	Title:	Chief Financial Officer (Principal Financial and Accounting Officer)