Annual Report for Fiscal Year Ending December 31, 2025 (Form 10-K)

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 our audited consolidated financial statements and related notes thereto included elsewhere in this Annual Report on Form 10-K for the period ended December 31, 2025 (this "Annual Report"). The following discussion and analysis of our financial condition and results of operations contains forward-looking statements that involve a number of risks, uncertainties and assumptions. Actual events or results may differ materially from our expectations. Important factors that could cause actual results to differ materially from those stated or implied by our forward-looking statements include, but are not limited to, those set forth in the "Risk Factors" section of this annual report, many of which are outside of our control. All forward-looking statements included in this annual report are based on information available to us as of the time we file and, except as required by law, we undertake no obligation to update publicly or revise any forward-looking statements.

Company Overview

We are a publicly traded biotechnology company pioneering the development of targeted therapies with the potential to deliver genetic medicines to distal sites of disease. Our proprietary RedTail platform features an engineered enveloped oncolytic virus designed for systemic delivery and targeting of metastatic sites. This advanced enveloped technology is intended to shield the virus from immune clearance, allowing virotherapy to effectively reach tumor sites, induce tumor lysis, and deliver potent genetic medicine(s) to metastatic locations. We expect to file an IND for a Phase I trial by the end of 2026 with CLD-401, the first compound from the RedTail platform, delivering IL-15 superagonist to the tumor microenvironment ("TME").

Our RedTail platform is the culmination of over a decade of work around genetic engineering of viruses and allows for the systemic administration of a proprietarily-modified oncolytic virus that can:

	●	Survive in circulation and home to metastatic tumor sites;
	●	Only replicates in tumor cells;
	●	Induce immuogenic kill in tumor cells and immune priming in the TME; and
	●	Deliver genetic medicine payloads like IL-15 superagonist for expression in the TME.

Our legacy SuperNova and NeuroNova platforms are designed to:

	●	Protect oncolytic viruses from neutralizing antibodies and complement inactivation and innate immune cell inactivation;
	●	Enhance oncolytic viral amplification inside the allogeneic cells; and
	●	Modify the TME to allow improvements in cell targeting and viral amplification at the tumor site.

Oncolytic viruses have been pursued as therapeutic platforms in oncology because of their ability to preferentially infect and replicate within cancer cells, resulting in both direct lysis of the tumor cells as well as activation of an antitumor immune response, while leaving normal, healthy cells unharmed. Despite the promises of oncolytic viruses, a major obstacle against their therapeutic use has been their rapid elimination by the patient's immune system; this has meant that oncolytic viruses have been largely relegated to being used for local delivery to tumors but have not been successful in patients with extensive metastatic disease. The only approved oncolytic virus therapy is T-VEC (Imlygic®), a modified herpes simplex virus (HSV) for the treatment of patients with melanoma given intratumorally.

We have been working on protecting oncolytic viruses from immune clearance for over a decade. Our NeuroNova investigational drug candidate is currently in a Phase 1 trial being run and funded by our partner, City of Hope, in an investigator-initiated trial and we have an open IND for a Phase 1 trial for our SuperNova investigational drug candidate (CLD-201). In July 2025 we were granted Fast Track Designation to CLD-201 by the U.S. Food and Drug Administration (FDA) for the treatment of patients with soft tissue sarcoma. The platforms used in NeuroNova and SuperNova use oncolytic viruses embedded in stem cells to avoid immune clearance and facilitate initial viral amplification and expansion at the tumor sites. This approach has shown substantial benefit over unprotected virus in preclinical studies of intratumoral delivery, but stem cell encapsulation does not allow for systemic delivery of virus to tumor metastases in animal models. The size of the stem cells prohibited efficient dissemination into metastatic sites.

More recently, we used the learnings from NeuroNova and SuperNova to create RedTail, a novel oncolytic viral platform for systemic delivery. The virus used in RedTail has been proprietarily engineered to avoid immune clearance and to specifically replicate in tumor tissue where the virus also has the ability to deliver genetic medicines to the tumor microenvironment. RedTail utilizes a proprietary form of enveloped virus with genetic modifications, including engineered expression of CD55 on the enveloped virus, to avoid immune clearance. Because the virus is not encapsulated in stem cells, it is thousands of times smaller than the NeuroNova or SuperNova products and disseminates efficiently into metastatic sites in syngeneic animal models. In addition, the virus can be engineered to express genetic medicines while replicating in the tumor.

CLD-401, the first lead derived from the RedTail platform. CLD-401 is enveloped and overexpressed CD55 on its outer membrane. It is tropic for tumor cells and, when replicating, expresses IL-15 superagonist at high concentrations in the tumor microenvironment. In animal models, CLD-401 can be given systemically and clear metastatic sites in syngeneic tumor mouse models with demonstrated enhanced biological efficacy. The combination of the RedTail virus with its genetic payload drives complete tumor eradication in the tumor models compared to the RedTail virus alone. We believe that RedTail, given its systemic administration and targeting to metastatic sites and its delivery of genetic medicines, represents a major advancement in the space of oncolytic virus in oncology. The company is developing additional leads from the RedTail platform including compounds that simultaneously express a bispecific T-cell engager (TCE) and a T-cell activator as well as compounds for use outside of oncology.

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, warrants, convertible promissory notes, term debt, and the issuance of publicly traded securities. These investments have included and have been made by various related parties, including our former chief executive officer and former chairman of the Board of Directors.

Since inception, we have incurred significant operating losses. Our net loss was $20.1 million for the year ended December 31, 2025. As of December 31, 2025, we had an accumulated deficit of $141.6 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, lower consumer confidence, volatile equity capital markets, tariffs, 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 consolidated financial statements as of and for the year ended December 31, 2025. We have concluded that this circumstance raises substantial doubt about our ability to continue as a going concern. See Note 1 to our audited 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, 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, see the section below and further disclosures in the section titled "Liquidity and Capital Resources" included herein.

Recent Developments

On July 9, 2025, we entered into an inducement offer letter agreement (the "Warrant Inducement Offer") with seven holders of our existing Series A warrants, Series B-1 warrants, Series C-1 warrants, Series D warrants, Series E warrants, and Series F warrants (together the "Existing Warrants"). Pursuant to the Warrant Inducement Offer, such warrant holders immediately exercised some or all of their respective outstanding Existing Warrants at a reduced exercise price, to purchase an aggregate of 549,596 shares of our common stock. The gross proceeds from the exercise of the induced warrants were $4.6 million, prior to deducting placement agent fees and offering expenses. In consideration for the immediate exercise of some or all of the Existing Warrants for cash, we issued unregistered new Series H common stock warrants ("Series H Warrants") to purchase up to 549,587 shares of common stock. We filed a resale registration statement on Form S-3 (File No. 333-288784), to register the shares underlying the Series H Warrants, which registration statement was declared effective by the Securities and Exchange Commission (the "SEC") on July 25, 2025. The Warrant Inducement Offer closed on July 10, 2025. For additional discussion of this Warrant Inducement Offer, see the section below and further disclosures in the section titled "Liquidity and Capital Resources - Financing Activities" included herein.

On July 24, 2025, the Compensation Committee of Calidi approved the elimination of the position of President, Medical and Scientific Affairs, held by Dr. Boris Minev. As a result, Dr. Minev ceased to serve as an executive officer and a Section 16 officer of Calidi, effective July 29, 2025. On August 8, 2025, we executed a General Release of Claims and Separation Agreement with Dr. Minev effective on August 15, 2025. Pursuant to the terms of the Agreement, we are obligated to pay Dr. Minev, (i) $0.1 million in relation to a negotiated bonus for the NNV1 and SNV1 IND approvals within 10 days following the Revocation Period (which is seven business days from August 8, 2025, and excluding such date), and (ii) $0.2 million separation pay in the form of compensation continuation over six months pursuant to our regular and customary payroll schedule, less all regular and customary payroll withholdings and shall pay Dr. Minev's COBRA premiums for six months, commencing August 2025, upon timely election.

On August 20, 2025, we entered into an underwriting agreement with Ladenburg Thalmann & Co. Inc., as representative of the various underwriters, in connection with the issuance and public sale offering of various securities (the "August Public Offering"), including: (i) 1,922,764 common stock units ("Common Stock Unit"), which includes the 450,000 Common Stock Units purchased pursuant to the exercise, in full, of the Over-Allotment Option and (ii) 1,528,000 pre-funded warrant units, resulting in gross proceeds of approximately $6.9 million, before deducting underwriting discounts and commissions and other estimated offering expenses. The August Public Offering closed on August 21, 2025. For additional discussion of this Warrant Inducement Offer, see the section below and further disclosures in the section titled "Liquidity and Capital Resources - Financing Activities" included herein.

On September 16, 2025, the Board approved the elimination of the position of Chief Legal Officer and, as a result, the termination of the employment agreement with Ms. Wendy Pizarro Campbell (the "Employment Agreement"), effective as of October 17, 2025 ("Effective Date"). Per the terms of the Employment Agreement, Ms. Campbell was given a 30-day written notice of termination. On the Effective Date, and as a result of the termination of the Employment Agreement, Ms. Campbell ceased to serve as an executive officer and Section 16 officer of Calidi. On September 17, 2025, we executed a General Release of Claims and Separation Agreement ("Agreement") with Ms. Campbell effective on September 24, 2025 (the "Effective Date"). Pursuant to the terms of the Agreement, on the Effective Date, we are obligated to pay i) a bonus in the amount of $0.1 million, upon the successful and effective corporate spin-off, out-licensing, or similar transaction relating to Nova Cell, Inc. ("Nova Cell") prior to October 31, 2025, and (ii) $0.2 million severance pay in the form of compensation continuation over six months pursuant to our regular and customary payroll schedule, less all regular and customary payroll withholdings and shall pay Ms. Campbell's COBRA premiums for six months, commencing October 2025, upon timely election. As of December 31, 2025, we paid the bonus of $0.1 million in connection with the sale of the investment in Nova Cell.

On October 27, 2025, we entered into a Stock Repurchase Agreement (the "SRA") and Material Purchase Agreement (the "MPA" and together with the SRA the "Agreements"), with, a then majority owned subsidiary, Nova Cell. In accordance with the Agreements, we sold and transferred all 22,500,000 of our shares of common stock in Nova Cell (the "Repurchased Shares"), representing an ownership interest of 75%, back to Nova Cell, for a purchase price of $6.0 million (the "Purchase Price"). The Purchase Price for the Repurchased Shares was or shall be satisfied (A) in part by cancellation of indebtedness under the September 17, 2024, promissory note, net of specified offsets (including a $50 thousand cash offset), resulting in an Indebtedness Cancellation Amount of $1.2 million, and (B) the balance, by Deferred Consideration of $4.8 million payable after closing, as more fully described in the SRA. As of December 31, 2025, no Deferred Consideration has been recognized, and the full amount remains constrained until underlying uncertainties are resolved. After the Deferred Consideration is fully satisfied, the SRA also provides for an ongoing royalty at a fixed percentage of Covered Gross Revenue attributable to or derivative of the materials listed on Schedule A to the MPA ending on the tenth anniversary of Nova Cell's first product sale. Furthermore, as part of the Agreements, we sold and transferred certain materials to Nova Cell as listed on Schedule 1 to the MPA. Following the closing of the Agreements, Nova Cell is no longer our subsidiary.

On November 7, 2025, we presented new data on our first therapeutic candidate from our RedTail platform, CLD-401, at the Society of Immunotherapy for Cancer ("SITC") Annual Meeting.

On March 5, 2026, the Company entered into an Amendment to Common Stock Purchase Warrants Agreement (the "Warrant Amendment") with certain investors that participated in the March Offering described below, in connection with the terms of certain of the Company's outstanding common warrants to purchase shares of Common Stock (the "Existing Warrants"). As originally issued, the Existing Warrants provided for the purchase of:

	-	504,417 shares of common stock, on exercise of the series G common stock warrants at an exercise price of $8.3448 per share;
	-	279,168 shares of common stock, on exercise of the series H common stock warrants at an exercise price of $8.40 per share; and
	-	2,190,000 shares of common stock, on exercise of the series I common stock warrants at an exercise price of $2.00 per share.

Per the Warrant Amendment, the exercise price for each of such Existing Warrants was reduced to $0.50 per share, subject to further adjustment as set forth in the Existing Warrants and any other document governing the terms thereunder. All other terms and conditions of the Existing Warrants remain unchanged and in full force and effect.

On March 6, 2026, we entered into an Underwriting Agreement with the Underwriter, in connection with the Offering of: (i) 2,278,731 Common Stock Units, which includes 1,575,000 Common Stock Units purchased pursuant to the exercise, in full, of the Over-Allotment Option, sold to the public at a price of $0.50 per Common Stock Unit, and (ii) 9,815,900 pre-funded warrant units Pre-Funded Units, sold to the public at a price of $0.499 per Pre-Funded Unit, resulting in gross proceeds of approximately $6.0 million, before deducting underwriting discounts and commissions and other estimated offering expenses. For more details in relation to the Offering, see "Financing and Financing-Related Transactions Subsequent to December 31, 2025" below.

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 development and manufacturing organizations ("CDMOs"), 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, for personnel in executive, finance and accounting, operations, and administrative roles. Other significant costs include professional service and consulting fees including legal fees relating to intellectual property and corporate matters, accounting fees, 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 (Expenses), Net

Other income (expenses), net, primarily includes the changes in fair value of warrants and derivatives. The changes in the fair value of these instruments are recorded in change in fair value of other liabilities and derivatives, and change in fair value of other liabilities, and derivatives - related party, included as a component of other income (expense), net, in the consolidated statements of operations.

Interest expense primarily consists of amortization of discounts on 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 grant income in our consolidated statements of operations when the related research and developments expenses are incurred.

Income Tax Provision

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-K. The income tax provision in the periods presented is entirely attributable to amounts recorded from StemVac, GmbH 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 Year Ended December 31, 2025 and 2024

The following table summarizes our results of operations for the year ended December 31, 2025 and 2024 (in thousands):

		Year Ended December 31,								Change
		2025				2024				$				%
Operating expenses:
Research and development		$	(9,737	)		$	(8,878	)		$	(859	)			10	%
General and administrative			(10,503	)			(12,898	)			2,395				(19	)%
Total operating expenses			(20,240	)			(21,776	)			1,536				(7	)%
Loss from operations			(20,240	)			(21,776	)			1,536				(7	)%
Other income (expense), net:
Total other income (expenses), net			192				(419	)			611				(146	)%
Loss before income taxes			(20,048	)			(22,195	)			2,147				(10	)%
Income tax provision			(15	)			(14	)			(1	)			7	%
Net loss		$	(20,063	)		$	(22,209	)		$	2,146				(10	)%

Research and Development Expenses

Research and development expenses for the year ended December 31, 2025, and 2024 were $9.7 million and $8.9 million, respectively. The $0.8 million increase was primarily attributable to increases in consulting costs of $0.5 million, rent expenses of $0.3 million, drug manufacturing and preclinical expenses of $0.2 million, and office expenses of $0.2 million, partially offset by decrease in salaries and benefits of $0.4 million.

General and Administrative Expenses

General and administrative expenses for the year ended December 31, 2025 and 2024 were $10.5 million and $12.9 million, respectively. The $2.4 million decrease was primarily due to decreases in insurance costs of $0.7 million, legal expenses of $0.6 million, salaries and benefits of $0.3 million, accounting expenses of $0.3 million, public company expenses of $0.2 million, investor relations expenses of $0.2 million, and rent expenses of $0.1 million.

Other Income (Expense), Net

Other income (expense), net for the year ended December 31, 2025 and 2024 were $0.2 million other income and $0.4 million other expense, respectively. The $0.6 million decrease in net expenses primarily relates to a decrease in interest expense of $0.7 million, increase in other income of $0.2 million, primarily related to the gain on sale of our investment in Nova Cell, partially offset by a net change in fair value of other liabilities and derivatives of $0.3 million.

Liquidity and Capital Resources

Sources of Liquidity

Since inception, we have funded our operations primarily through private sales of common stock, warrants, promissory notes, term debt, and the issuance of publicly traded securities. Certain of these investments were with various related parties.

As of December 31, 2025, we had a cash balance of $5.6 million and restricted cash of $0.2 million. Our debt and liability obligations as of December 31, 2025 include $2.4 million in accounts payable and accrued expenses and other current liabilities, including related party amounts, $1.7 million in operating lease liabilities, $0.6 million in promissory notes, $0.3 million in finance lease liabilities, and $0.1 million in warrant liabilities, including related party amounts.

Our ability to continue as a going concern is dependent upon our ability to raise additional funding. We plan to raise additional capital through public or private equity or debt financings to fulfill our operating and capital requirements for at least 12 months from the date of the issuance of the financial statements. However, we may not be able to secure such financing in a timely manner or on favorable terms, if at all. Thus, we estimate that based on our current liquidity resources, there is substantial doubt about our ability to continue as a going concern within 12 months from the date of issuance of these financial statements.

Financing and Financing-Related Transactions Subsequent to December 31, 2025

March 2026 Confidentially Marketed Public Offering (CMPO)

On March 6, 2026, we entered into an underwriting agreement (the "Underwriting Agreement") with Ladenburg Thalmann & Co. Inc., as sole underwriter ("Underwriter"), in connection with the issuance and sale (the "Offering") of: (i) 2,278,731 common stock units ("Common Stock Units"), which includes 1,575,000 Common Stock Units purchased pursuant to the exercise, in full, of the Over-Allotment Option, sold to the public at a price of $0.50 per Common Stock Unit, and (ii) 9,815,900 pre-funded warrant units ("Pre-Funded Units"), sold to the public at a price of $0.499 per Pre-Funded Unit, resulting in gross proceeds of approximately $6.0 million, before deducting underwriting discounts and commissions and other estimated offering expenses. In connection with the Offering, we also issued to the Underwriter (or its designees) a warrant (the "Underwriter's Warrant") to purchase up to 604,732 shares of Common Stock of Calidi, par value $0.0001. The Underwriter's Warrant has an exercise price of $0.625, is exercisable on or after the date of issuance, and will expire on March 9, 2031.

Each Common Stock Unit consisted of (i) one share of Common Stock, (ii) one Series J common stock warrant ("Series J Warrants") to purchase one share of Common Stock (or pre-funded warrants to purchase one share of Common Stock in lieu thereof), (iii) one Series K common stock warrant ("Series K Warrants") to purchase one share of Common Stock (or pre-funded warrants to purchase one share of Common Stock in lieu thereof), and (iv) one Series L common stock warrant ("Series L Warrants" and together with the Series J Warrants and the Series K Warrants, the "Common Warrants") to purchase one share of Common Stock (or pre-funded warrants to purchase one share of Common Stock in lieu thereof). Each Pre-Funded Unit consisted of (i) one pre-funded warrant (the "Pre-Funded Warrants"), (ii) one Series J Warrant, (iii) one Series K Warrant, and (iv) one Series L Warrant. The Common Warrants included in the Pre-Funded Units are identical to the Common Warrants included in the Common Stock Units.

The Series J Warrants have an initial exercise price of $0.50 per share. The Series J Warrants are exercisable immediately, subject to certain limitations described herein. The Series J Warrants expire five (5) years from the date of issuance. The Series K Warrants have an initial exercise price of $0.50 per share. The Series K Warrants are exercisable immediately, subject to certain limitations described herein. The Series K Warrants will expire one (1) year from the date of issuance. The Series L Warrants have an initial exercise price of $0.50 per share. The Series L Warrants are exercisable immediately, subject to certain limitations described herein. The Series L Warrants expire six (6) months from the date of issuance.

The Common Stock Units, the Pre-Funded Units, the shares of Common Stock comprising the Common Stock Units, the Common Warrants, the Pre-Funded Warrants, the shares of Common Stock issuable upon exercise of the Common Warrants, and the Pre-Funded Warrants were offered by Calidi pursuant to a shelf registration statement on Form S-3 (File No. 333-284229), that was filed with the Securities Exchange Commission ("SEC") on January 10, 2025 and declared effective on February 7, 2025, including the prospectus forming a part of the registration statement, a final prospectus supplement thereto, which was filed with the SEC on March 9, 2026, pursuant to Rule 424(b) under the Securities Act of 1933, as amended (the "Securities Act"), and the related registration statement filed with the SEC on March 5, 2026 under Rule 462(b) of the Securities Act, which became automatically effective upon filing. The Offering closed on March 9, 2026 (the "Closing Date").

On March 6, 2026, we also entered into a warrant agency agreement (the "Warrant Agency Agreement") with Equiniti Trust Company, LLC, as warrant agent (the "Warrant Agent").

Since the closing of the Offering, 2,291,000 Pre-Funded Warrants have been exercised.

Warrant Amendments

On March 5, 2026, we entered into an Amendment to Common Stock Purchase Warrants Agreement (the "Warrant Amendment") with certain investors, that participated in the March 2026 CMPO described above, in connection with the terms of certain of our outstanding common warrants to purchase shares of Common Stock (the "Existing Warrants"). As originally issued, the Existing Warrants provided for the purchase of:

	●	504,417 shares of common stock, on exercise of the series G common stock warrants at an exercise price of $8.3448 per share;
	●	279,168 shares of common stock, on exercise of the series H common stock warrants at an exercise price of $8.40 per share; and
	●	2,190,000 shares of common stock, on exercise of the series I common stock warrants at an exercise price of $2.00 per share.

Per the Warrant Amendment, the exercise price for each of such Existing Warrants was reduced to $0.50 per share, subject to further adjustment as set forth in the Existing Warrants and any other document governing the terms thereunder. All other terms and conditions of the Existing Warrants remain unchanged and in full force and effect.

Debt Obligations

Calidi's outstanding debt obligations as of December 31, 2025, are as follows (in thousands):

		December 31, 2025
		Unpaid Balance				Accrued Interest				Net Carrying Value
Promissory note		$	600			$	90			$	690
Total debt		$	600			$	90			$	690
Less: current portion of long-term debt											(90	)
Long-term debt, net of current portion										$	600

Warrants

As of December 31, 2025, Calidi had outstanding warrants to purchase up to 5,026,613 shares of Common Stock, consisting of the following:

		December 31, 2025
Private Warrants to purchase Common Stock			15,938
Public Warrants to purchase Common Stock			95,834
Warrants to purchase Restricted Shares			53,334
Placement Agent Warrants to purchase Common Stock			256,418
Series A Warrants to purchase Common Stock			54,308
Series B-1 Warrants to purchase Common Stock			1,442
Series C-1 Warrants to purchase Common Stock			26,253
Series D Warrants to purchase Common Stock			18,318
Series G Warrants to purchase Common Stock			504,417
Series H Warrants to purchase Common Stock			549,587
Series I Warrants to purchase Common Stock			3,450,764
			5,026,613

Commitments and Contingencies

On October 10, 2022, Calidi entered into an Office Lease Agreement (the "San Diego Lease") that serves as Calidi's principal executive and administrative offices and laboratory facility. To secure and execute the San Diego Lease, Mr. Allan J. Camaisa, former Chief Executive Officer, 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 amount due was partially settled in April 2025. The San Diego Lease has an initial term of 4 years.

On July 1, 2025, StemVac, GmbH entered into a finance lease agreement for laboratory equipment with an initial term that expires on May 31, 2029, with total payments of approximately €0.1 million.

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, under certain conditions that are in our control, pursuant to the terms and conditions of the license agreements. As of December 31, 2025, we do not believe it probable that we will incur these payments.

Other commitments and contingencies include various operating and financing leases for equipment, office facilities, and other property containing future minimum lease payments totaling $2.1 million and certain manufacturing and other supplier agreements with vendors principally for manufacturing drug products for clinical trials and continuing the development of the CLD-101, CLD-201, and CLD-401 programs totaling $0.5 million.

Related Party Transactions

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

Cash Flow Summary for the Year Ended December 31, 2025 and 2024

The following table shows a summary of our cash flows for the year ended December 31, 2025 and 2024 (in thousands):

		Year Ended December 31,								Change
		2025				2024				$				%
Net cash (used in) provided by:
Operating activities		$	(21,293	)		$	(19,694	)		$	(1,599	)			8	%
Investing activities			(170	)			(16	)			(154	)			963
Financing activities			17,459				27,365				(9,906	)			(36	)
Effect of exchange rate on cash			14				(13	)			27				(208	)
Net (decrease) increase in cash and restricted cash		$	(3,990	)		$	7,642			$	(11,632	)			(152	)%

Operating activities

Net cash used in operating activities was $21.3 million for the year ended December 31, 2025, primarily resulting from our net loss of $20.1 million. Our net loss was reduced by certain non-cash items that included $2.1 million in stock-based compensation, $1.7 million in depreciation and amortization expense, partially increased by $4.8 million from the change in our operating assets and liabilities, and $0.2 million from the gain on the sale of our investment in Nova Cell.

Net cash used in operating activities was $19.7 million for the year ended December 31, 2024, primarily resulting from our net loss of $22.2 million. Our net loss was reduced by certain non-cash items that included $3.0 million in stock-based compensation, $1.5 million in depreciation and amortization expense, partially increased by $1.7 million from the change in our operating assets and liabilities, and $0.3 million from the change in fair value of debt and other liabilities.

Investing activities

Net cash used in investing activities was $0.2 million for the year ended December 31, 2025, which primarily related to the purchase of certain machinery and equipment and cash disposed of in the sale of our investment in Nova Cell.

Net cash used in investing activities was $16,000 for the year ended December 31, 2024, which primarily related to the purchase of certain machinery and equipment.

Financing activities

Net cash provided by financing activities was $17.5 million for the year ended December 31, 2025, which primarily related to proceeds from public offerings of our securities of $9.9 million, proceeds from July Inducement Offer of $4.1 million, proceeds from the March Registered Direct Offering and Concurrent Private Placement of $3.5 million , and proceeds of $3.3 million from sales under our At The Market facility, partially offset by repayment of term notes payable of $2.2 million, including related party amounts, payment of financing costs of $0.8 million, repayment of bridge loan payable of $0.2 million and repayment of finance lease obligations of $0.1 million.

Net cash provided by financing activities was $27.4 million for the year ended December 31, 2024, which primarily related to proceeds from the November Public Offering of $6.8 million, proceeds from the April Public Offering of $5.4 million, proceeds from the exercise of common stock and pre-funded warrants of $4.8 million, proceeds from the At the Market Offering of $3.1 million, proceeds from issuance of convertible notes payable of $3.0 million, proceeds from the May Inducement Offer of $2.1 million, proceeds from issuance of noncontrolling interest of $2.0 million, proceeds from the October Public Offering of $1.8 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 payment of financing costs of $1.5 million, repayment of convertible notes payable of $1.5 million, repayment of term notes payable of $0.3 million, and repayment of finance lease obligations of $0.1 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 consolidated financial statements as of and for the year ended December 31, 2025 appearing elsewhere in this Form 10-K. To finance our operations, we will need to raise substantial additional capital, 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 consolidated financial statements were issued. See Note 1 to our consolidated financial statements appearing elsewhere in this Form 10-K 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; and
	●	the costs of operating as a public company.

Our existing cash will not be sufficient to complete development of our current product candidates. 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

Our discussion and analysis of our financial condition and results of operations is based on our consolidated financial statements, which have been prepared in accordance with United States generally accepted accounting principles ("U.S. GAAP"). The preparation of these consolidated financial statements requires us to make estimates, judgments and assumptions that affect the reported amounts of assets and liabilities, disclosure of contingent assets and liabilities as of the date of the balance sheet and the reported amounts of expenses during the reporting period. Our estimates are based on historical trends and other factors that we believe are reasonable under the circumstances, the results of which form the basis for making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results may differ from these estimates under different assumptions or conditions.

Our significant accounting policies and estimates are described in more detail in Note 2 to the consolidated financial statements as of and for the year ended December 31, 2025 and 2024 appearing elsewhere in this Annual Report on Form 10-K. We determined that none of our significant accounting policies and estimates are deemed to be critical accounting estimates.

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. We have certain manufacturing and other supplier agreements with vendors principally for manufacturing drug products for clinical trials and continuing the development of our product candidates totaling $0.5 million in future purchase commitments. However, these contracts do not contain any minimum purchase commitments and are cancellable 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 may pay amounts under such agreements at the time of execution or 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 sub-section entitled "License Agreements" within the "Item 1. Business" section herein.

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. We currently do not have debt with an interest rate that is variable and fluctuates with changes in interest rates.

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 year ended December 31, 2025 and 2024.

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," meaning that the market value of our stock held by non-affiliates plus the proposed aggregate amount of gross proceeds to us as a result of this offering is less than $700 million and our annual revenue was less than $100 million during the most recently completed fiscal year. We 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 consolidated financial statements appearing elsewhere in this Form 10-K, 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.