# CDT Equity Inc.: Form 10-Q/A for the period ended Mar 31, 2025

- Company: [CDT Equity Inc.](/companies/cdt.md) (CIK 1896212)
- Form: 10-Q/A
- Filed: 2025-08-14
- Accepted by EDGAR: Aug 14, 2025, 16:55 ET
- Period: 2025-03-31
- Accession: 0001641172-25-024123
- Inline XBRL: yes
- Main document: https://www.sec.gov/Archives/edgar/data/1896212/000164117225024123/form10-qa.htm
- All documents and exhibits: https://www.sec.gov/Archives/edgar/data/1896212/000164117225024123/

## Figures reported in this filing

Standardized XBRL line items for the period ended 2025-03-31.

| Line item | Period | Value | XBRL concept |
| --- | --- | ---: | --- |
| Research and development | 3 months, 2025-01-01 to 2025-03-31 | $916.0k | us-gaap:ResearchAndDevelopmentExpense |
| Operating income | 3 months, 2025-01-01 to 2025-03-31 | −$3.6m | us-gaap:OperatingIncomeLoss |
| Interest expense | 3 months, 2025-01-01 to 2025-03-31 | $100.0k | us-gaap:InterestExpense |
| Net income | 3 months, 2025-01-01 to 2025-03-31 | −$4.8m | us-gaap:NetIncomeLoss |
| Diluted EPS | 3 months, 2025-01-01 to 2025-03-31 | −$1.22 | us-gaap:EarningsPerShareDiluted |
| Basic EPS | 3 months, 2025-01-01 to 2025-03-31 | −$1.22 | us-gaap:EarningsPerShareBasic |
| Diluted shares (weighted) | 3 months, 2025-01-01 to 2025-03-31 | 3,885,758 shares | us-gaap:WeightedAverageNumberOfDilutedSharesOutstanding |
| Operating cash flow | 3 months, 2025-01-01 to 2025-03-31 | −$3.9m | us-gaap:NetCashProvidedByUsedInOperatingActivities |
| Capital expenditure | 3 months, 2025-01-01 to 2025-03-31 | $404.0k | us-gaap:PaymentsToAcquirePropertyPlantAndEquipment |
| Cash and equivalents | at 2025-03-31 | $2.1m | us-gaap:CashAndCashEquivalentsAtCarryingValue |
| Current assets | at 2025-03-31 | $5.9m | us-gaap:AssetsCurrent |
| Total assets | at 2025-03-31 | $7.7m | us-gaap:Assets |
| Current liabilities | at 2025-03-31 | $4.5m | us-gaap:LiabilitiesCurrent |
| Total liabilities | at 2025-03-31 | $4.6m | us-gaap:Liabilities |
| Shareholders' equity | at 2025-03-31 | $3.1m | us-gaap:StockholdersEquity |

## Management's discussion and analysis

As filed, 35,778 characters.

*The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and the related notes included under Part I, Item 1 of this Quarterly Report on Form 10-Q (this “Quarterly Report”) as well as the Company’s audited financial statements and notes thereto included in its Annual Report on Form 10-K for the year ended December 31, 2024 that was filed with the SEC on March 28, 2025. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties. The following discussion contains forward-looking statements based upon current expectations that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under the section titled “Risk Factors” or in other parts of this Quarterly Report. Our historical results are not necessarily indicative of the results that may be expected for any period in the future. All dollar amounts are expressed in thousands of United States dollars (“$”), unless otherwise indicated.*

### Restatement of Previously Issued Financial Statements

As discussed in the Explanatory Note above, the Company has restated its unaudited consolidated financial statements for the quarter ended March 31, 2025 As a result, the previously reported financial information for the quarter ended March 31, 2025 in this Management’s Discussion and Analysis of Financial Condition and Results of Operations has been amended and restated to reflect the restatement. See Note 2, entitled “Restatement of Previously Issued Financial Statements”, to the Unaudited Condensed Consolidated Financial Statements contained in Part I, Item 1. Financial Statements of this Form 10-Q/A for further detail regarding the restatement, including descriptions of the adjustments and the impacts on our unaudited consolidated financial statements.

Other than the effect of the restatement, this section has not been otherwise modified and does not reflect any information or events occurring after May 15, 2025, the filing date of the Original Form 10-Q, or modify or update those disclosures affected by events that occurred at a later date or facts that subsequently became known to the Company, except to the extent they are otherwise required to be included and discussed herein.

### Overview

On September 22, 2023, a merger transaction (the “Business Combination”) between Conduit Pharmaceuticals Limited (“Old Conduit”), Murphy Canyon Acquisition Corp (“MURF”) and Conduit Merger Sub, Inc., a Cayman Islands exempted company and a wholly owned subsidiary of MURF (“Merger Sub”), was completed pursuant to the Agreement and Plan of Merger, dated November 8, 2022, as amended, (the “Merger Agreement”). Pursuant to the terms of the Merger Agreement, at the closing, (i) Merger Sub merged with and into Old Conduit, with Old Conduit surviving the Business Combination as a wholly-owned subsidiary of MURF, and (ii) MURF changed its name from Murphy Canyon Acquisition Corp. to Conduit Pharmaceuticals Inc.

Conduit has developed a unique business model that allows it to act as a conduit to bring clinical assets from pharmaceutical companies and develop new treatments for patients. Our novel approach addresses unmet medical needs and lengthens the intellectual property for our existing assets through cutting-edge solid-form technology and then commercializing these products with life science companies. We continue to evaluate novel artificial intelligence and cybernetics approaches to drug re-purposing, intellectual property and asset selection to give Conduit a competitive advantage.

We are led by highly experienced executives: Dr. Freda Lewis-Hall, former Chief Medical Officer of Pfizer Inc., the Chair of our Board of Directors, and Dr. Andrew Regan. Our management team includes active senior scientists who have an extensive understanding of the pharmaceuticals market, which supports our strategy of developing clinical assets in a cost-efficient manner while focusing on therapeutic efficacy and patient safety.

Simultaneously, Conduit leverages the capabilities of our Cambridge laboratory facility and highly experienced team of solid-form experts to extend or develop proprietary solid-form intellectual property for our existing and future clinical assets. Our own intellectual property portfolio comprises pending patent applications in several international jurisdictions describing a solid-form compound, including the AZD1656 Cocrystal (a HK-4 Glucokinase Activator), targeting a wide range of autoimmune disorders. Our pipeline research includes a number of compounds that serve as promising alternatives to existing clinical assets currently marketed and sold by large pharmaceutical companies, which we have identified as having an opportunity to develop further intellectual property positions through solid-form technology.

In connection with the funding and development of clinical assets, we expect to evaluate and select the specific molecules to be developed and collaborate with external CROs and Key Opinion Leaders (“KOLs”) to run clinical trials that are managed, funded, and overseen by us. We intend to leverage our comprehensive clinical and scientific expertise in order to facilitate development of clinical assets through Phase II trials in an efficient manner by using CROs and third-party service providers. We will also collaborate closely with disease specific KOLs to collectively assess and determine the most appropriate indications for all our current and forthcoming assets.

We believe that successful Phase II trials of the clinical assets in our pipeline will increase the value of our assets. There is no assurance that any clinical trials on the assets owned or licensed by us will be successful, however, following a successful Phase II clinical trial, we would look to licensing opportunities with large biotech or pharmaceutical companies, typically for up-front milestone payments and royalty income streams for the life of the asset patent. We anticipate using any future royalty income stream to develop our asset portfolio in combination with other potential sources of financing, including debt or equity financing.

Outside of our proprietary owned patented clinical assets, AstraZeneca agreed to grant a license to the Company under certain intellectual property rights controlled by AstraZeneca related to HK-4 Glucokinase activators AZD1656 and AZD5658 in all indications and myeloperoxidase inhibitor AZD5904 for the treatment, prevention, and prophylaxis of idiopathic male infertility. The Company will be responsible for the development and commercialization of the Licensed Products under the related License Agreement. The Company is required to use commercially reasonable efforts to develop and commercialize the Licensed Products.

AstraZeneca has conducted initial pre-clinical and, in some instances, clinical trials on these assets, but has decided to license them for further development. As the clinical assets have undergone initial pre-clinical and clinical testing conducted by AstraZeneca, we are able to use the safety data generated in these clinical trials to assess which clinical assets to further develop and for which indications.

Through this relationship, there are considerable APIs that were manufactured by AstraZeneca (prior to conducting its clinical trials) available to Conduit. As a result, Conduit may not have to develop the APIs, which is often a time consuming and expensive process, and the APIs already produced were subject to rigorous quality control measures.

In collaboration with SARBORG Limited (“Sarborg”), a related party, Conduit intends to leverage an advanced AI and cybernetics platform to evaluate key deliverables across multiple areas of the Company’s operations, including drug repurposing, drug discovery, solid-form identification, and clinical trial monitoring.

The Sarborg Agreement entered into between the Company and Sarborg on December 12, 2024 (the “Sarborg Agreement”) is designed to address longstanding challenges in the pharmaceutical sector, in particular by reducing human error in critical decision-making processes in both clinical development and asset identification. By integrating Sarborg’s algorithmic AI/cybernetics technology, Conduit aims to enhance efficiency, lower costs, and accelerate timelines by minimizing human intervention, ultimately optimizing the drug development cycle and giving Conduit a competitive advantage in the sector.

Through this relationship, Conduit will gain access to cutting-edge predictive models and dashboards, enabling the Company to evaluate drug candidates, streamline clinical trials, and optimize asset management with real-time data. These tools will drive faster, more accurate decisions, improving efficiency and reducing costs. By leveraging these insights, Conduit can differentiate itself in a competitive sector and gain unique data-driven insights that position the Company for success across both its current and future asset portfolio.

In addition, Conduit will retain a perpetual, non-exclusive, royalty-free, and assignable right to use any platform or technology developed by Sarborg in association with the deliverables. Ongoing support from Sarborg will ensure these systems evolve with Conduit’s needs, driving long-term innovation in areas like IP creation, regulatory strategy, and clinical trial monitoring. This partnership reinforces Conduit’s commitment to leveraging AI-driven solutions to accelerate growth, deliver value to shareholders, and maintain a competitive edge in the pharmaceutical sector.

This strategic move reaffirms Conduit’s commitment to adopting forward-thinking solutions to stay at the forefront of innovation in the pharmaceutical industry. By reducing reliance on traditional, labor-intensive methods and harnessing the power of AI-driven technology, Conduit is well-positioned to lead in areas such as drug repurposing, clinical trial monitoring, and IP creation, ensuring the Company’s long-term growth and market leadership.

Furthermore, Conduit is well positioned to pursue, and intends to pursue, additional relationships and/or partnerships with third parties for the licensing of further assets which are currently deprioritized. We plan to focus our efforts on developing clinical assets to address disorders that impact a large population where there is no present treatment or the present treatment, carries significant unwanted side effects.

### Key Component of Result of Operations

### Operating Expenses

#### Research and Development Expenses

Research and development expenses consist primarily of costs incurred in connection with the research and development of our candidates and programs. We expense research and development costs and intangible assets acquired that have no alternative future use as incurred. These expenses include:

- personnel-related expenses, including salaries, bonuses, benefits and stock-based compensation for employees engaged in research and development functions;
- expenses incurred in connection with the clinical development and regulatory approval of our clinical assets, including under agreements with third parties, such as consultants, contractors and CROs;
- license fees with no alternative use; and
- other expenses related to research and development.

We expense research and development costs as incurred. Advance payments that we make for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses. The prepaid amounts are expensed as the benefits are consumed.

We incurred approximately $0.9 million and $0.1 million on research and development activities during the three months ended March 31, 2025, and March 31, 2024, respectively. Our research and development activities have been wholly focused on developing co-crystals of AZD1656 to increase patent life. Some of this work was completed by third-party CROs but all intellectual property is retained by us. We currently have one pending international patent application and two pending national patent applications. The successful completion of clinical trials increases the value of clinical assets and may lead to the commercialization and/or licensing of such assets to other pharmaceutical companies. There is no assurance that any clinical trials on the assets owned or licensed by us will be successful.

#### General and Administrative Expenses

General and administrative expenses consist of salaries and other related costs, legal fees relating to intellectual property and corporate matters, professional fees for accounting, auditing, tax and consulting services, insurance costs, travel, and other operating costs.

We anticipate that our general and administrative expenses will increase substantially for the foreseeable future as we increase our administrative headcount to operate as a public company and as we advance clinical assets through clinical development. We also will incur additional expenses as a result of operating as a public company, including expenses related to compliance with the rules and regulations of the SEC and the Nasdaq listing rules, additional insurance expenses, investor relations activities and other administrative and professional services. In addition, if regulatory approval is obtained for clinical assets, we expect to incur expenses associated with building a sales and marketing team.

### Other Income (Expenses)

#### Other income (expenses), net

Other income (expense), net consists of change in the fair value of options, change in fair value of convertible notes, and expense incurred upon the issuance of warrants during the year.

#### Interest expense, net

Interest expense, net consists primarily of interest expense on convertible loan notes and promissory notes and interest expense on deferred commissions payable to an advisor for fees related to the merger, as well as a small amount of interest income on cash and cash equivalents held by the Company.

### Results of Operations – as Restated

The following table set forth our results of operations for the periods indicated:

*(In thousands, except share and per share amounts)*

| Operating expenses: | Three Months ended March 31, 2025 (As Restated) | 2024 |
| --- | ---: | ---: |
| Research and development expenses | $916 | $128 |
| General and administrative expenses | 2,700 | 2,827 |
| **Total operating costs and expenses** | 3,616 | 2,955 |
| **Operating loss** | (3,616) | (2,955) |
| **Other income (expenses):** |  |  |
| Other income (expense), net | (969) | (487) |
| Interest Income | 8 | 9 |
| Interest expense, net | (176) | (119) |
| **Total other (expense) income, net** | (1,137) | (597) |
| **Net loss** | $(4,753) | $(3,552) |

### Comparison of the Three Months Ended March 31, 2025 and 2024

#### Research and Development Expenses

*(Dollar amounts in thousands)*

|  | Three Months ended March 31, 2025 (As Restated) | 2024 | Change Amount% |  |
| --- | ---: | ---: | ---: | ---: |
| Research and development expenses | $916 | $128 | $788 | 616% |

Research and development expenses increased by $0.8 million, or 616%, to approximately $0.9 million for the three months ended March 31, 2025, as compared to $0.1 million for the three months ended March 31, 2024. The increase was primarily due to $0.7 million of expense recorded under the Sarborg Service Agreement and $0.1 million of expense incurred under the Charles River MSA.

#### General and Administrative Expenses

*(Dollar amounts in thousands)*

|  | Three Months ended March 31, 2025 | 2024 | Change Amount% |  |
| --- | ---: | ---: | ---: | ---: |
| General and administrative expenses | $2,700 | $2,827 | $(127) | (4)% |

General and administrative expenses decreased by $0.1 million, or 4%, to $2.7 million for the three months ended March 31, 2025, as compared to $2.8 million for the three months ended March 31, 2024. The decrease was primarily driven by a $0.3 million decrease in salaries and stock compensation expense, a $0.1 million decrease in travel and other general and administrative expenses, a $0.1 million decrease in accounting and audit expenses, and a $0.1 million decrease in insurance expense related to the amortization of prepaid directors and officers insurance, partially offset by a $0.5 million increase in legal expenses.

#### Other Income (Expense), Net

*(Dollar amounts in thousands)*

|  | Three Months ended March 31, 2025 | 2024 | Change Amount% |  |
| --- | ---: | ---: | ---: | ---: |
| Other income (expense), net | $(969) | $(487) | $(482) | 99% |

Other income (expense), net changed by $0.5 million, or 99%, to $1.0 million of expense for the three months ended March 31, 2025, as compared to $0.5 million of net expense for the three months ended March 31, 2024. The $1.0 million in other income (expense) for the three months ended March 31, 2025 is primarily related to a $1.8 million loss on the change in fair value of convertible notes, partially offset by a $0.1 million gain on the change in fair value of the warrant liability, $0.3 million gain on debt extinguishment, and $0.4 million gain on the waiver of accrued interest. The $0.5 million in other income (expense) for the three months ended March 31, 2024 was primarily related to a $0.5 million loss on the issuance of warrants.

For further details refer to Note 14, “Other income (expense), net,” in the unaudited financial statements as of March 31, 2025 and March 31, 2024 included elsewhere in this Quarterly Report.

#### Interest Expense, Net

*(Dollar amounts in thousands)*

|  | Three Months ended March 31, 2025 | 2024 | Change Amount% |  |
| --- | ---: | ---: | ---: | ---: |
| Interest expense, net | $(176) | $(119) | $(57) | 48% |

Interest expense was $0.2 million for the three months ended March 31, 2025 compared to $0.1 million for the three months ended March 31, 2024. The change was driven by $77,000 of interest expense on the A.G.P. Convertible Note, $24,000 of interest expense on the August 2024 Nirland Note, $8,000 of interest expense on the October 2025 Nirland Note, and $65,000 of debt issuance cost amortization related to the Convertible Promissory Note Payable, partially offset by a $79,000 decrease of interest expense related to the Deferred Commission Payable balance and a $40,000 of decrease of interest expense on the Convertible Promissory Note Payable.

### Liquidity and Capital Resources

Management assesses liquidity in terms of our ability to generate cash to fund operating, investing and financing activities. Since our inception, and in line with our growth strategy, we have prepared our financial statements assuming we will continue as a going concern. Since our inception, we have incurred net losses and experienced negative cash flows from operations. To date, our primary sources of capital have been through private placements of equity securities and convertible debt and the Sales Agreement with A.G.P. During the three months ended March 31, 2025 and 2024, we incurred operating losses of $4.8 million and $3.6 million, respectively.

### Sources and Uses of Liquidity

Our primary uses of cash are to fund our operations as we continue to grow our business. We will require a significant amount of cash for expenditures as we invest in ongoing research and development and business operations. Until such time we can generate significant revenue from the successful approval and commercialization of a product candidate, we expect to finance our cash needs for ongoing research and development and business operations through public or private equity or debt financings or other capital sources, including strategic partnerships. However, we may be unable to raise additional funds or enter into such other arrangements, when needed, on favorable terms or at all. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be, or could be, diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing and equity financing, if available, may involve agreements that include covenants limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. If we are unable to raise additional funds through equity or debt financings when needed, we may be required to delay, limit, or substantially reduce research and development efforts all of which could have a material adverse effect on the Company and its financial results.

While the Company believes in the viability of its ability to raise additional funds, there can be no assurances to that effect. We have based our estimates on assumptions of operating costs that may prove to be wrong. As a result, we could deplete our capital resources sooner than we currently expect. If, for any reason, our expenses differ materially from our assumptions or we utilize our cash more quickly than anticipated, or if we are unable to obtain funding on a timely basis we may be required to revise our business plan and strategy, which may result in significantly curtailing, delaying or discontinuing one or more of our research or development programs or the commercialization of any product candidates or may result in our being unable to expand our operations or otherwise capitalize on our business opportunities. As a result, our business, financial condition, and results of operations could be materially affected.

Management has concluded that there is substantial doubt regarding our ability to continue as a going concern for a period of at least 12 months from the date of the filing of this Quarterly Report. This is based on our analysis under applicable accounting principles. These financial statements have been prepared assuming the Company will continue as a going concern and do not include adjustments to reflect the possible effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.

### Cash Requirements

Our material cash requirements include the following contractual and other obligations.

#### A.G.P Convertible Note

On November 25, 2024, the Company issued to A.G.P. a convertible promissory note (the “A.G.P. Convertible Note”) in the principal amount of $5.7 million to evidence A.G.P.’s currently owed deferred commission payable. Unless earlier converted as specified in the A.G.P. Convertible Note, the principal amount plus all accrued but unpaid interest is due on November 25, 2025 (the “Maturity Date”). The A.G.P. Convertible Note accrues interest at 5.5% per annum.

At any time prior to the full payment of the A.G.P. Convertible Note, provided that A.G.P. has given at least three business days written notice to the Company, A.G.P., in its sole discretion, may elect to have all or any portion of the outstanding principal amount and all interest accrued converted into shares of the Company’s common stock, at the lower of the Reverse Split price and the market price per share at the time of the conversion date, but in no event less than $1.00, subject to adjustment as provided therein and to take into account any future share splits or reverse splits. However, the conversion of the A.G.P. Convertible Note may not occur prior to the Company having sufficiently authorized shares of common stock to permit the entire conversion of the convertible promissory note. Refer to Note 5 to our financial statements included elsewhere in this Quarterly Report on Form 10-Q.

On March 31, 2025, A.G.P exercised their conversion option and converted $0.4 million of principal and interest for 430,000 shares of common stock. As of March 31, 2025, $5.5 million of principal and interest remained outstanding.

#### Working Capital

We currently anticipate that cash required for working capital for the next 12 months is approximately $12.7 million, which includes forecasted research and development costs of $1.3 million, forecasted general and administrative costs of $7.2 million, and a convertible promissory note payable, if not converted prior to maturity of $4.2 million. We do anticipate being able to fund required working capital for the next 12 months with cash and cash equivalents on hand and current borrowings. Management believes that we will be able to fund cash required for the next 12 months through borrowings and equity raises. We have historically been able to access funds through the issuance of debt, and more recently the at the market offering program agreement, and believe we can continue to obtain funding through such debt financing agreements and Sales agreement as needed to meet cash requirements for the next 12 months.

As of March 31, 2025, we had raised $11.9 million (net of fees) out of the $23.9 million available to us through the Sales agreement and expect to raise the additional $11.6 million (net of fees) over the next 12 months.

### Cash Flows

The following table set forth our cash flows for the period indicated (in thousands):

| Net cash provided by (used in): | Three Months ended March 31, 2025 (As Restated) | 2024 |
| --- | ---: | ---: |
| Operating Activities | $(3,929) | $(2,357) |
| Investing Activities | (404) | - |
| Financing Activities | 5,927 | - |
| Effect of exchange rate changes on cash and cash equivalents | (18) | (27) |
| Net increase (decrease) in cash and cash equivalents | $1,576 | $(2,384) |

### Cash Flows Used in Operating Activities

Net cash used in operating activities for the three months ended March 31, 2025, was $3.9 million, resulting primarily from a net loss of $4.8 million, adjusted for non-cash items including a $1.8 million loss on the change in fair value of convertible notes payable, a $0.3 million gain on debt extinguishment, $0.3 million gain on waiver of accrued interest, a $0.1 million gain on change in fair value of warrant liability, $0.2 million of stock-based compensation expense, $0.2 million of non-cash interest expense, $0.2 million of amortization expense, $0.4 million of prepaid directors and officers insurance amortization and a $1.6 million cash outflow from operating assets and liabilities. The $1.6 million cash outflow from operating assets and liabilities is primarily due to a $0.7 million cash outflow from accounts payable, a $0.2 million cash outflow from accrued expenses and other current liabilities, and a $0.3 million cash outflow from prepaid expenses and other current assets.

Net cash used in operating activities for the three months ended March 31, 2024, was $2.4 million, resulting primarily from a net loss of $3.6 million, adjusted for non-cash items including $0.4 million of stock-based compensation, a $0.4 million of amortization expense, a $0.5 million expense on the issuance of warrants and a $0.1 million interest expense of the deferred commission payable. The $0.2 million cash outflow from operating assets and liabilities is primarily due to a $0.1 million cash inflow from accrued expense and other current liabilities due to differences in the timing of disbursements and a $0.2 million cash outflow from prepaid expenses.

### Cash Flows (Used) Provided by Investing Activities

Net cash used in investing activities for the three months ended March 31, 2025 was $0.4 million, resulting from purchases of intangible assets and property, plant and equipment totaling $0.4 million.

There was no cash flow from investing activities for the three months ended March 31, 2024.

### Cash Flows Provided by Financing Activities

Net cash provided by financing activities for the three months ended March 31, 2025 was $5.9 million, resulting from proceeds from the issuance of common shares related to the ATM program of $8.1 million. This was offset by repayments of notes payable of $0.6 million, repayments of convertible notes payable – related parties of $0.9 million and repayment of convertible notes payable of $0.6 million.

There was no cash flow from financing activities for the three months ended March 31, 2024.

### Contractual Obligations and Other Commitments

#### Laboratory Lease

We are the lessee under a laboratory space lease. The annual rent payments are $0.1 million for the years ending December 31, 2025 and December 31, 2026. The laboratory space lease has a remaining lease term of approximately two years.

### Critical Accounting Estimates

The preparation of financial statements in conformity with U.S. GAAP requires us to make estimates, judgments and assumptions that affect the amounts reported in the Consolidated Financial Statements. These estimates, judgments and assumptions are evaluated on an ongoing basis. We base our estimates on historical experience and on various other assumptions that we believe are reasonable at that time, the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other sources. Actual results may differ materially from those estimates. The accounting policies that reflect our more significant estimates, judgments and assumptions and which we believe are the most critical to aid in fully understanding and evaluating our reported financial results include the following:

### Fair Value of Convertible Notes

The Company has elected the fair value measurement option for convertible debt with embedded derivatives that would otherwise require bifurcation, and has recorded the entire hybrid financial instrument at fair value under the guidance in ASC 825, Financial Instruments. To value the convertible debt, the Company utilizes Binomial Lattice Pricing Models. The Binomial Lattice Pricing Models involve the construction of various intermediate lattices: stock price tree, conversion value tree, conversion probability tree, and discount rate tree. In doing so, we assume the holders act rationally to maximize return and minimize cost at each decision point. We computed the notes payoff at maturity and at intermediate decision nodes based upon the better of (i) conversion or (ii) repayment of principal and interest.

The significant inputs and assumptions used to estimate the fair value include: (i) the Company’s stock price; (ii) the term of the convertible debt; (iii) the sum of the notes’ principal and unpaid accrued interest; (iv) expected volatility; (v) risk-free interest rate; (vi) the corporate bond yield; (vii) the credit spread; (viii) probability of default; and (ix) the estimated recovery upon default. Any change to the unobservable inputs to estimate fair value could produce significantly higher or lower fair value measurements and result in a material change within the financial statements.

The convertible debt will subsequently be remeasured at fair value each reporting date until settled or converted.

### Fair Value of Warrants

The Company has issued warrants to investors in our debt and equity offerings. The Company has also issued warrants to service providers in relation to our financing offerings. We evaluate all warrants issued to determine the appropriate classification under ASC 480 and ASC 815.

For warrants that are determined to be equity-classified, we estimate the fair value at issuance and record the amounts to additional paid in capital. For warrants that are determined to be liability-classified, we estimate the fair value at issuance and each subsequent reporting date.

For the Company’s liability classified warrants, we estimate fair value using the Black-Scholes model. The significant inputs and assumptions used to estimate the fair value include: (i) the Company’s stock price; (ii) the risk-free rate; (iii) the expected volatility; and (iv) the dividend yield. The use of these valuation models requires the input of highly subjective assumptions. Any change to these inputs could produce significantly higher or lower fair value measurements and result in a material change within the financial statements.

### Contingencies

In the ordinary course of business, we are involved in various legal proceedings that are complex in nature and have outcomes that are difficult to predict. We describe our legal proceedings and other matters that are significant or that we believe could become significant in Note 16 to the consolidated financial statements. We record accruals for loss contingencies to the extent that we conclude it is probable that a liability has been incurred and the amount of the related loss can be reasonably estimated. We evaluate, on a quarterly basis, developments in legal proceedings and other matters that could cause an increase or decrease in the amount of the liability that has been accrued previously or modifications to contingency disclosures that are considered material.

### Emerging Growth Company Status and Smaller Reporting Company Status

The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that: (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.

Upon closing of the Merger, the surviving company remained an emerging growth company, as defined by the Jumpstart Our Business Startups act of 2012, until the earliest of (i) the last day of the combined entity’s first fiscal year following the fifth anniversary of the completion of MURF’s initial public offering; (ii) the last day of the fiscal year in which the combined entity has total annual gross revenue of at least $1.235 billion; (iii) the last day of the fiscal year in which the combined entity is deemed to be a large accelerated filer, which means the market value of the combined entity’s common stock that is held by non-affiliates exceeds $700.0 million as of the prior December 31st or (iv) the date on which the combined entity has issued more than $1.0 billion in non-convertible debt securities during the prior three year period.

In addition, Conduit is a smaller reporting company as defined in the Exchange Act. The Company may continue to be a smaller reporting company even after we are no longer an emerging growth company. We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as (i) Conduit’s voting and non-voting common stock held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter or (ii) Conduit’s annual revenue is less than $100.0 million during the most recently completed fiscal year and its voting and non-voting common stock held by non-affiliates is less than $700.0 million measured on the last business day of its second fiscal quarter.

## Market risk

As filed, 125 characters.

As a smaller reporting company, we are not required to provide disclosure regarding quantitative and qualitative market risk.

## Controls and procedures

As filed, 1,598 characters.

### Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.

Under the supervision and with the participation of our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter ended March 31, 2025 and for the comparison fiscal quarter ended March 31, 2024, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our principal executive officer and principal financial officer concluded that during the periods covered by this Quarterly Report, our disclosure controls and procedures were not effective, due to material weaknesses previously identified and included in the Company’s most recent Form 10-K as not yet remediated as of the end of both such periods.

### Changes in Internal Control over Financial Reporting

There have been no changes to in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter.

Filed Aug 14, 2025.
Source: SEC EDGAR, the filing index for accession 0001641172-25-024123. Last ingested by Listed: Oct 27, 2026, 17:31 ET. No prices; not investment advice.