CDT Equity Inc. 10-K

Item 9A. Controls and Procedures Controls and Procedures Disclosure controls are procedures that are designed with the objective of ensuring that information required to be disclosed in our reports filed under the Exchange Act, such as this Report, is recorded, processed, summarized, and reported within the time period specified in the SEC’s rules and forms. Disclosure controls are also designed with the objective of ensuring that such information is accumulated and communicated to our management, including the chief executive officer and chief financial officer, as appropriate to allow timely decisions regarding required disclosure. Our management evaluated, with the participation of our current chief executive officer and chief financial officer (our “Certifying Officers”), the effectiveness of our disclosure controls and procedures as of December 31, 2022, pursuant to Rule 13a-15(b) under the Exchange Act. Based upon that evaluation, our Certifying Officers concluded that, as of December 31, 2022, our disclosure controls and procedures were effective. We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Management’s Report on Internal Controls Over Financial Reporting Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Exchange Act Rules 13a-15(f). Under the supervision and with the participation of our Management, including our Chief Executive Officer and Chief Financial Officer, we conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework in Internal Control — Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 Framework). Based on our evaluation under the framework in Internal Control — Integrated Framework, our Management concluded that our internal control over financial reporting was effective as of December 31, 2022. This annual report on Form 10-K does not include an attestation report of our independent registered public accounting firm regarding our internal control over financial reporting as such report is not required for the Company. Changes in Internal Control over Financial Reporting There were no changes 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 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. Item 9B. Other Information None. 64 PART III Item 10. Directors, Executive Officers and Corporate Governance As of the date of this report, our current directors and executive officers are as follows: Name Age Position Jack K. Heilbron 72 Chief Executive Officer, President, and Chairman Adam Sragovicz 53 Chief Financial Officer, Treasurer, and Director Ed Bentzen 46 Chief Accounting Officer Francis Knuettel II 56 Director Chele Chiavacci Farley 55 Director Richard E. Feinberg 75 Director Jack K. Heilbron Mr. Heilbron has been our Chief Executive Officer since the Company’s inception. Mr. Heilbron has served as a director and Chief Executive Officer and President of Presidio Property Trusty Inc. since its inception in February 2010. Mr. Heilbron also has served as Chairman, CEO and President of NetREIT Dubose since its inception, and has served as CEO and/or President of NetREIT Advisors, LLC, Dubose Advisors, LLC, and NTR Property Management, Inc. since their inceptions, all of which are Company affiliated entities. Mr. Heilbron was a founding officer, director, and stockholder of the former CI Holding Group, Inc. and of its subsidiary corporations (Centurion Counsel, Inc., Bishop Crown Investment Research Inc., PIM Financial Securities Inc., Centurion Institutional Services Inc. and CHG Properties, Inc.) and currently serves as Chairman and CEO of Centurion Counsel, Inc., a licensed investment advisor. He also served as a director of the Centurion Counsel Funds, an investment company registered under the Investment Company Act of 1940, from 2001 until 2005. From 1994 until its dissolution in 1999, Mr. Heilbron served as the Chairman and/or director of Clover Income and Growth REIT. Mr. Heilbron graduated with a B.S. degree in Business Administration from California Polytechnic College, San Luis Obispo, California. Based on his experience as a director and his experience with other REITs, the Nominating and Corporate Governance Committee determined that Mr. Heilbron is qualified to serve on the Board of Directors. Adam Sragovicz Mr. Sragovicz has been our Chief Financial Officer since the Company’s inception. Mr. Sragovicz has been a director of the Company since December 2021. Mr. Sragovicz has been the Chief Financial Officer of Presidio Property Trust, Inc. since January 11, 2018. He previously served as Senior Vice President, Finance of Presidio Property Trust, Inc. since May 2017. Before joining Presidio Property Trust, Inc., Mr. Sragovicz served as Treasurer of Encore Capital Group from 2011 to 2017, where he was responsible for global capital raising, foreign exchange risk management and cash management. Mr. Sragovicz has also held capital markets, finance, and treasury management positions with KPMG, Union Bank of California / MUFG and Bank of America Merrill Lynch. Mr. Sragovicz is the Director of the Yale Alumni Schools Committee in San Diego and previously sat on the board of Congregation Adat Yeshurun. Mr. Sragovicz is a graduate of Yale University with a Bachelor of Arts degree in Soviet and Eastern European Studies, with a concentration in Economics. Ed Bentzen Mr. Bentzen has been our Chief Accounting Officer since the Company’s inception. Mr. Bentzen has been the Chief Accounting Officer of Presidio Property Trust, Inc. March 2021. Prior to that, Mr. Bentzen served as Chief Financial Officer and Chief Operations Officer for Crystal View Capital Management in 2020, as a Chief Financial Officer / Finance consultant for various clients (including real estate development companies) from 2018 to 2020, and as Chief Financial Officer for The Parking REIT (formerly MVP REIT and MVP REIT II) from 2016 to 2018. Prior to these roles, Mr. Bentzen held senior and/or accounting roles at Western Funding, Inc., Vestin Group, Inc., and a local CPA firm in Las Vegas, Nevada. In addition, Mr. Bentzen worked as a Senior Internal Auditor at Ameristar Casinos, Inc. (formerly Nasdaq: ASCA). He holds a Bachelor of Science degree in Hotel Administration, with an emphasis in Gaming, and a Master of Science degree in Accountancy, from University of Nevada, Las Vegas, and is licensed as a Certified Internal Auditor (inactive). 65 Francis Knuettel II Mr. Knuettel II has served on our board of directors since the closing of our initial public offering and currently serves as Managing Member of Camden Capital. From December 2020 through April 2022, he was Chief Executive Officer and on the board of Unrivaled Brands, Inc. (OTCQX: UNRV). Mr. Knuettel was formerly a Restructuring Advisory Consultant at Viridian Capital Advisors from May 2020 to November 2020. Mr. Knuettel joined Viridian while at One Cannabis Group (“OCG”) where Mr. Knuettel was the Chief Financial Officer from June 2019 to January 2021 and was integral to the sale of the company to Item 9 Labs Corp. (OTCQX: INLB). Prior to OCG, Mr. Knuettel was CFO at MJardin, a Denver-based cannabis cultivation and dispensary management company, from August 2018 to June 2019 where he led the company’s IPO on the Canadian Securities Exchange. Prior to MJardin, Mr. Knuettel held numerous CFO and CEO positions at early-stage and NASDAQ-listed companies where he had significant experience both building and restructuring businesses. Mr. Knuettel serves on several corporate boards, including on the Board of Directors of 180 Life Sciences (ATNF), an early-stage therapeutic biotech company, since July 2021, on the Board of Directors of Relativity Acquisition Corp. (RACY), a special purpose acquisition company, since February 2022 and on the Board of Directors of ECOM Medical, Inc., a developer of endotracheal patient monitoring systems, since July 2019 (where he is the Chairman and chair of the company’s audit committee). Mr. Knuettel has advised that he will be named as a director nominee of a special purpose acquisition company Relativity Acquisition Corp. and may be named a director nominee of additional special purpose acquisition companies. Each such appointment will not take effect until the consummation of the initial public offering for the applicable company. If such appointment becomes effective, Mr. Knuettel will have fiduciary duties equivalent to and on the same level of priority as those obligations owed to our Company. We do not believe this gives rise to any theoretical or actual conflict of interest with respect to such other special purpose acquisition companies and our Company, since each of these entities intends to target business combinations in a different industry than those targeted by us. Accordingly, while any such companies, businesses or investments may present additional conflicts of interest in pursuing an initial business combination, we do not believe that any such potential conflicts would materially affect our ability to complete our initial business combination. Mr. Knuettel graduated cum laude from Tufts University with a B.A. degree in Economics and from The Wharton School of Business at the University of Pennsylvania with an MBA in Finance and Entrepreneurial Management. Mr. Knuettel is well-qualified to serve on our board of directors due to Mr. Knuettel’s experience and expertise serving on several boards and his expertise in the implementation and management of the acquisition of several private companies. Chele Chiavacci Farley, Chele Chiavacci Farley has served on our board of directors since the closing of our initial public offering and currently serves as a partner and managing director of Mistral Capital International (“Mistral”), a private equity firm, since 1995. In her role as Partner and Managing Director of Mistral, Ms. Farley originates, evaluates and executes equity investment opportunities, creates and implements deal and financial structures, negotiates with banks for credit facilities, and oversees management. Ms. Farley is a member of the Board of Directors and Management Committee of Palmilla San Jose Inmobiliaria, the Master Developer of the luxury Palmilla resort development in Cabo San Lucas, Mexico. Prior to Mistral, Ms. Farley was Vice President of Tricap International from 1994 to 1995. From 1992 to 1994, Ms. Farley was an Associate at UBS Capital Corporation, and analyzed and evaluated principal investment and financing opportunities for the firm’s internal $1 billion fund. Ms. Farley began her career as a Financial Analyst in the Global Finance department - Energy and Telecom Group of Goldman, Sachs & Co. Ms. Farley has also had an active political career. In 2020, Ms. Farley ran for election to the U.S. House of Representatives to represent New York’s 18 th Congressional district. In 2018, Ms. Farley ran for election to the U.S. Senate to represent New York. Ms. Farley graduated from Stanford University with a B.S. and M.S. in Industrial Engineering. She is a member of YPO - Young Presidents’ Organization. Ms. Farley is well-qualified to serve on our board of directors due to her expansive financial background and connections. 66 Richard E. Feinberg Richard E. Feinberg has served on the MURF Board since the closing of its initial public offering. Mr. Feinberg has been a Professor of International Political Economy at the University of California, San Diego, since 1996 and an Emeritus Professor since 2021. Previously, Mr. Feinberg served as Special Assistant to the President for National Security Affairs and as a Senior Director for the Office of Inter-American Affairs, National Security Council, the White House, from 1993 to 1996. Mr. Feinberg was integral to architecture of the 1994 Miami Summit of the Americas and of the proposed Free Trade Area of the Americas (FTAA). Mr. Feinberg has worked in various other governmental roles including: (i) Member of the Policy Planning Staff of the Department of State (1977-1980); and (ii) international economist for the U.S. Treasury Department (1975-1977). Mr. Feinberg served in executive positions at various public policy institutes including: (i) as president of the Inter-American Dialogue (1992-1993); (ii) as executive vice president and director of studies of the Overseas Development Council (1982-1991). Mr. Feinberg taught a graduate-level course on international financial institutions as an adjunct professor at Georgetown University School of Foreign Service from 1980 to 1985. Mr. Feinberg holds a Ph.D. in international economics from Stanford University and a B.A. in European history from Brown University. Mr. Feinberg is well-qualified to serve on the MURF Board due to his expertise in political relations, public policies, financial and economic management internationally, which enable him to provide accurate and reliable expertise on international economic policies and trends including as they may relate to international acquisitions. In accordance with Nasdaq corporate governance requirements, we are not required to hold an annual meeting until one year after our first fiscal year end following our listing on the Nasdaq. Our officers are appointed by the board of directors and serve at the discretion of the board of directors, rather than for specific terms of office. Our board of directors is authorized to appoint persons to the offices set forth in our bylaws as it deems appropriate. Our bylaws provide that our officers may consist of a Chairman of the board of directors, Chief Executive Officer, Chief Financial Officer, President, Vice Presidents, Secretary, Treasurer, Assistant Secretaries, and such other offices as may be determined by the board of directors. Director Independence Currently, Francis Knuettel II, Chele Farley, and Richard E. Feinberg would each be considered an “independent director” under the Nasdaq listing rules, which is defined generally as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship, which, in the opinion of the company’s board of directors would interfere with the director’s exercise of independent judgment in carrying out the responsibilities of a director. Our independent directors will have regularly scheduled meetings at which only independent directors are present. Any affiliated transactions will be on terms no less favorable to us than could be obtained from independent parties. Our board of directors will review and approve all affiliated transactions with any interested director abstaining from such review and approval. Audit Committee Francis Knuettel II, Chele Farley and Richard E. Feinberg make up our audit committee, and Francis Knuettel II chairs the audit committee. The audit committee’s duties, which are specified in our Audit Committee Charter, include, but are not limited to: ● the appointment, compensation, retention, replacement, and oversight of the work of the independent registered public accounting firm engaged by us; ● pre-approving all audit and permitted non-audit services to be provided by the independent registered public accounting firm engaged by us, and establishing pre-approval policies and procedures; ● setting clear hiring policies for employees or former employees of the independent registered public accounting firm, including but not limited to, as required by applicable laws and regulations; ● setting clear policies for audit partner rotation in compliance with applicable laws and regulations; 67 ● obtaining and reviewing a report, at least annually, from the independent registered public accounting firm describing (i) the independent registered public accounting firm’s internal quality-control procedures, (ii) any material issues raised by the most recent internal quality-control review, or peer review, of the audit firm, or by any inquiry or investigation by governmental or professional authorities within the preceding five years respecting one or more independent audits carried out by the firm and any steps taken to deal with such issues and (iii) all relationships between the independent registered public accounting firm and us to assess the independent registered public accounting firm’s independence; ● reviewing and approving any related party transaction required to be disclosed pursuant to Item 404 of Regulation S-K promulgated by the SEC prior to us entering into such transaction; and ● reviewing with management, the independent registered public accounting firm, and our legal advisors, as appropriate, any legal, regulatory or compliance matters, including any correspondence with regulators or government agencies and any employee complaints or published reports that raise material issues regarding our financial statements or accounting policies and any significant changes in accounting standards or rules promulgated by the Financial Accounting Standards Board, the SEC or other regulatory authorities. Financial Experts on Audit Committee The audit committee will at all times be composed exclusively of “independent directors” who are “financially literate” as defined under Nasdaq’s listing standards. Nasdaq’s standards define “financially literate” as being able to read and understand fundamental financial statements, including a company’s balance sheet, income statement and cash flow statement. In addition, we must certify to Nasdaq that the committee has, and will continue to have, at least one member who has past employment experience in finance or accounting, requisite professional certification in accounting, or other comparable experience or background that results in the individual’s financial sophistication. The board of directors has determined that Francis Knuettel II qualifies as an “audit committee financial expert,” as defined under rules and regulations of the SEC. Nominating and Corporate Governance Committee The initial members of our nominating and corporate governance are Francis Knuettel II, Chele Farley and Richard E. Feinberg. Richard E. Feinberg serves as chair of the nominating and corporate governance committee. We have adopted a nominating and corporate governance committee charter, which details the purpose and responsibilities of the nominating and corporate governance committee, including: ● identifying and screening individuals qualified to serve as directors, consistent with criteria approved by the board, and recommending to the board of directors candidates for nomination for election at the annual meeting of stockholders or to fill vacancies on the board of directors; ● developing and recommending to the board of directors and overseeing implementation of our corporate governance guidelines; ● overseeing our policies and procedures with respect to the consideration of director candidates recommended by stockholders, including the submission of any proxy access nominees by stockholders; ● coordinating and overseeing the annual self-evaluation of the board of directors, its committees, individual directors and management in the governance of the company; and ● reviewing on a regular basis our overall corporate governance and recommending improvements as and when necessary. The charter also provides that the nominating and corporate governance committee may, in its sole discretion, retain or obtain the advice of, and terminate, any search firm to be used to identify director candidates, and will be directly responsible for approving the search firm’s fees and other retention terms. We have not formally established any specific, minimum qualifications that must be met or skills that are necessary for directors to possess. In general, in identifying and evaluating nominees for director, the board of directors considers educational background, diversity of professional experience, knowledge of our business, integrity, professional reputation, independence, wisdom, and the ability to represent the best interests of our stockholders. Prior to our initial business combination, holders of our public shares will not have the right to recommend director candidates for nomination to our board of directors. 68 Compensation Committee Francis Knuettel II, Chele Farley and Richard E. Feinberg serve as members of our compensation committee. Under the Nasdaq listing standards and applicable SEC rules, we are required to have at least two members of the compensation committee, all of whom must be independent. Each Francis Knuettel II, Chele Farley and Richard E. Feinberg are independent. Chele Farley serves as chair of the compensation committee. Our compensation committee charter details the principal functions of the compensation committee, including: ● reviewing and approving on an annual basis the corporate goals and objectives relevant to our Chief Executive Officer’s compensation, if any is paid by us, evaluating our Chief Executive Officer’s performance in light of such goals and objectives and determining and approving the remuneration (if any) of our Chief Executive Officer based on such evaluation; ● reviewing and approving on an annual basis the compensation, if any is paid by us, of all of our other officers; ● reviewing on an annual basis our executive compensation policies and plans; ● implementing and administering our incentive compensation equity-based remuneration plans; ● assisting management in complying with our proxy statement and annual report disclosure requirements; ● approving all special perquisites, special cash payments and other special compensation and benefit arrangements for our officers and employees; ● if required, producing a report on executive compensation to be included in our annual proxy statement; and ● reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors. Notwithstanding the foregoing, as indicated above, other than the payment to Murphy Canyon Management Group, Inc., and affiliate of our sponsor, of $10,000 per month, through February 7, 2024 at the latest, for office space, utilities and secretarial and administrative support, no compensation of any kind, including finders, consulting or other similar fees, will be paid to any of our existing stockholders, officers, directors or any of their respective affiliates, prior to, or for any services they render in order to effectuate the consummation of an initial business combination. Accordingly, it is likely that prior to the consummation of an initial business combination, the compensation committee will only be responsible for the review and recommendation of any compensation arrangements to be entered into in connection with such initial business combination. The charter also provides that the compensation committee may, in its sole discretion, retain or obtain the advice of a compensation consultant, legal counsel or other adviser and will be directly responsible for the appointment, compensation and oversight of the work of any such adviser. However, before engaging or receiving advice from a compensation consultant, external legal counsel or any other adviser, the compensation committee will consider the independence of each such adviser, including the factors required by Nasdaq and the SEC. Code of Ethics We have adopted a Code of Ethics applicable to our directors, officers and employees. We have filed a copy of our Code of Ethics and our audit, nominating and corporate governance and compensation committee charters as exhibits to the registration statement in connection with our initial public offering. You can review these documents by accessing our public filings at the SEC’s web site at www.sec.gov . In addition, a copy of the Code of Ethics will be provided without charge upon request from us. We intend to disclose any amendments to or waivers of certain provisions of our Code of Ethics in a Current Report on Form 8-K. Availability of Documents We have filed a copy of our form of Code of Ethics, our audit committee charter, nominating and corporate governance committee charter and compensation committee charter as exhibits to the registration statement filed in connection with our initial public offering. You will be able to review these documents by accessing our public filings at the SEC’s web site at www.sec.gov. In addition, a copy of the Code of Ethics will be provided without charge upon request from us. We intend to disclose any amendments to or waivers of certain provisions of our Code of Ethics in a Current Report on Form 8-K. 69 Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Exchange Act requires our officers, directors and persons who own more than ten percent of a registered class of our equity securities to file reports of ownership and changes in ownership with the SEC. Officers, directors and ten percent stockholders are required by regulation to furnish us with copies of all Section 16(a) forms they file. Based solely on copies of such forms received, we believe that, during the period from October 19, 2021 (inception) through December 31, 2022, all filing requirements applicable to our officers, directors and greater than ten percent beneficial owners were complied with. Item 11. Executive Compensation No executive officer has received any cash compensation for services rendered to us. Starting February 2022, we pay Murphy Canyon Management Group, Inc., an affiliate of our sponsor, $10,000 per month for providing us with office space and certain office and secretarial services. However, this arrangement is solely for our benefit and is not intended to provide our officers or directors compensation in lieu of a salary. Other than the $10,000 per month administrative fee, the payment of consulting, success or finder fees to our sponsor, officers, directors, initial stockholders or their affiliates in connection with the consummation of our initial business combination, and the pending transfer of 15,000 placement units to each of our three independent directors, no compensation or fees of any kind will be paid to our sponsor, initial stockholders, members of our management team or their respective affiliates, for services rendered prior to or in connection with the consummation of our initial business combination (regardless of the type of transaction that it is). However, they will receive reimbursement for any out-of-pocket expenses incurred by them in connection with activities on our behalf, such as identifying potential target businesses, performing business due diligence on suitable target businesses and business combinations as well as traveling to and from the offices, plants or similar locations of prospective target businesses to examine their operations. There is no limit on the amount of consulting, success or finder fees payable by us upon consummation of an initial business combination. Additionally, there is no limit on the amount of out-of-pocket expenses reimbursable by us; provided, however, that to the extent such expenses exceed the available proceeds not deposited in the Trust Account, such expenses would not be reimbursed by us unless we consummate an initial business combination. After our initial business combination, members of our management team who remain with us may be paid consulting, management or other fees from the combined company with any and all amounts being fully disclosed to stockholders, to the extent then known, in the proxy solicitation materials furnished to our stockholders. However, the amount of such compensation may not be known at the time of the stockholder meeting held to consider an initial business combination, as it will be up to the directors of the post-combination business to determine executive and director compensation. In this event, such compensation will be publicly disclosed at the time of its determination in a Current Report on Form 8-K or a periodic report, as required by the SEC. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The following table sets forth information regarding the beneficial ownership of our common stock as of March 27, 2023, based on information obtained from the persons named below, with respect to the beneficial ownership of shares, by: ● each person known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock; ● each of our executive officers and directors that beneficially owns shares of our common stock; and ● all our executive officers and directors as a group. 70 Unless otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all shares of common stock beneficially owned by them. The following table does not reflect record or beneficial ownership of the placement units as the warrants included within the placement units are not exercisable and are not convertible within 60 days of the date of this annual report. On November 16, 2021, Murphy Canyon Acquisition Sponsor, LLC, our sponsor, purchased 4,312,500 founder shares for an aggregate purchase price of $25,000, or approximately $0.006 per share. On January 26, 2022, the sponsor surrendered and forfeited 1,006,250 founder shares for no consideration, following which the sponsor holds 3,306,250 founder shares, or approximately $0.008 per share. Our Sponsor has agreed to transfer, but has not yet transferred, an aggregate of 45,000 placement units (15,000 each) to each of our three independent directors. The following table presents the number of shares and percentage of our common stock beneficially owned as of March 27, 2023, by each person, or group of persons, known to us who beneficially owns more than 5% of our capital stock, each named executive officer, each of our directors and all directors and executive officers as a group. Class A Common Stock Class B Common Stock (2) Name and Address of Beneficial Owner (1) Number of Shares Beneficially Owned % of Class Number of Shares Beneficially Owned % of Class Jack K. Heilbron (2) 754,000 25.63 % 3,306,250 100 % Adam Sragovicz - - - - Ed Bentzen - - - - Francis Knuettel II (3) - - - - Chele Chiavacci Farley (3) - - - - Richard Feinberg (3) - - - - All directors and executive officers as a group (six individuals) 754,000 25.63 % 3,306,250 100 % Murphy Canyon Acquisition Sponsor, LLC 754,000 25.63 % 3,306,250 100 % Shaolin Capital Management, LLC (4) 609,750 20.73 % - - MMCAP International Inc. SPC (5) 350,000 11.89 % - - Hudson Bay Capital Management LP (6) 934,112 31.75 % - - Polar Asset Management Partners Inc. (7) 700,000 23.80 % - - * Represents less than 1%. (1) Unless otherwise noted, the business address of each of the entities or individuals listed above is c/o Murphy Canyon Acquisitions Corp., 4995 Murphy Canyon Road, Suite 300, San Diego, CA 92123 (2) Represents securities held by Murphy Canyon Acquisition Sponsor, LLC, our sponsor, of which Jack K. Heilbron is the managing member. Accordingly, all securities held by our sponsor may ultimately be deemed to be beneficially held by Mr. Heilbron. Mr. Heilbron disclaims beneficial ownership of the reported shares other than to the extent of his ultimate pecuniary interest. (3) We have agreed to transfer 15,000 placement units, consisting of one share of common stock and one warrant, to each of our independent directors. As of March 27, 2023 these units have not been transferred. (4) Based on a Schedule 13D filed on February 16, 2023. The securities owned by this shareholder are held directly by (i) Shaolin Capital Partners Master Fund, LTD, a Cayman Islands exempted company, to which Shaolin Capital Management LLC, a Delaware limited liability company, (the “Investment Manager”) serves as the investment manager and (ii) an sub-accounts (the “Managed Accounts”) to which the Investment Manager serves as sub-advisor. The business address of this shareholder is 230 NW 24th Street Suite 603 Miami, Florida 33133. (5) Based on a Schedule 13G/A filed on February 14, 2023. The business address of this shareholder is c/o Mourant Governance Services (Cayman) Limited. 71 (6) Based on a Schedule 13G filed on February 10, 2023. The business address of this shareholder is 28 Havemeyer Place, 2nd Floor, Greenwich, Connecticut 06830. (7) Based on a Schedule 13G filed on February 10, 2023. The securities owned by this shareholder are held directly by Polar Multi-Strategy Master Fund. The business address of this shareholder is 16 York Street, Suite 2900, Toronto, Ontario, Canada M5J 0E6. Item 13. Certain Relationships and Related Transactions, and Director Independence On November 16, 2021, Murphy Canyon Acquisition Sponsor, LLC, our sponsor, purchased 4,312,500 founder shares for an aggregate purchase price of $25,000, or approximately $0.006 per share. On January 26, 2022, the sponsor surrendered and forfeited 1,006,250 Founder Shares for no consideration, following which the sponsor holds 3,306,250 founder shares at approximately $0.008 per share. The founder shares (including the Class A common stock issuable upon exercise thereof) may not, subject to certain limited exceptions, be transferred, assigned or sold by the holder. On February 7, 2022, our sponsor was issued an aggregate of 754,000 placement units at a price of $10.00 per unit for an aggregate purchase price of $7,540,000. Our Sponsor has agreed to transfer, but has not yet transferred, an aggregate of 45,000 placement units (15,000 each) to each of our three independent directors following our initial public offering. There will be no redemption rights or liquidating distributions from the Trust Account with respect to the founder shares or placement units, which will expire worthless if we do not consummate a business combination within 12 months from the consummation of our initial public offering (or up to February 7, 2024 at the election of the Company subject to satisfaction of certain conditions). Commencing February 2, 2022, we have agreed to pay Murphy Canyon Management Group, Inc., an affiliate of our sponsor, a total of $10,000 per month for office space, utilities and secretarial and administrative support. Upon completion of our initial business combination or our liquidation, we will cease paying these monthly fees. No compensation of any kind, including any finder’s fee, reimbursement, consulting fee or monies in respect of any payment of a loan, will be paid by us to our sponsor, officers or directors or any affiliate of our sponsor, officers or directors prior to, or in connection with any services rendered in order to effectuate, the consummation of an initial business combination (regardless of the type of transaction that it is). However, these individuals will be reimbursed for any out-of-pocket expenses incurred in connection with activities on our behalf such as identifying potential target businesses and performing due diligence on suitable business combinations. Our audit committee will review on a quarterly basis all payments that were made to our sponsor, officers, directors or our or their affiliates and will determine which expenses and the amount of expenses that will be reimbursed. There is no cap or ceiling on the reimbursement of out-of-pocket expenses incurred by such persons in connection with activities on our behalf. Prior to the closing of our initial public offering, our sponsor agreed to loan us up to $300,000 to be used for a portion of the expenses of the offering. These loans were non-interest bearing, unsecured and were repaid upon the closing of the initial public offering. This loan was paid in full upon our initial public officer and had a zero balance as of December 31, 2022. On March 7, 2023 our sponsor loaned us $300,000 to be used to fund the trust account and for our operating expenses, and may lend up to $1,500,000 in total. These loans are non-interest bearing, unsecured and will be repayable in full upon the earlier of (i) the date on which we consummate our initial business combination and (ii) the date that our winding up is effective. In addition, in order to finance transaction costs in connection with an intended initial business combination, our sponsor or an affiliate of our sponsor or certain of our officers and directors may, but are not obligated to, loan us funds on a non-interest bearing basis as may be required. If we complete an initial business combination, we would repay such loaned amounts. In the event that the initial business combination does not close, we may use a portion of the working capital held outside the Trust Account to repay such loaned amounts but no proceeds from our Trust Account would be used for such repayment. Up to $1,500,000 of such loans may be convertible into units, at a price of $10.00 per unit at the option of the lender, upon consummation of our initial business combination. The units would be identical to the placement units. Other than as described above, the terms of such loans by our officers and directors, if any, have not been determined and no written agreements exist with respect to such loans. 72 We have not and do not expect to seek loans from parties other than our sponsor or an affiliate of our sponsor as we do not believe third parties will be willing to loan such funds and provide a waiver against any and all rights to seek access to funds in our Trust Account. After our initial business combination, members of our management team who remain with us may be paid consulting, management or other fees from the combined company with any and all amounts being fully disclosed to our stockholders, to the extent then known, in the tender offer or proxy solicitation materials, as applicable, furnished to our stockholders. It is unlikely the amount of such compensation will be known at the time of distribution of such tender offer materials or at the time of a stockholder meeting held to consider our initial business combination, as applicable, as it will be up to the directors of the post-combination business to determine executive and director compensation. The holders of the founder shares, placement units, and warrants that may be issued upon conversion of working capital loans (and in each case holders of the underlying shares of common stock) have registration rights to require us to register a sale of any of our securities held by them pursuant to a registration rights agreement. These holders will be entitled to make up to three demands, excluding short form registration demands, that we register such securities for sale under the Securities Act. In addition, these holders will have “piggy-back” registration rights to include their securities in other registration statements filed by us. We have entered into agreements with our officers and directors to provide contractual indemnification in addition to the indemnification provided for in our amended and restated certificate of incorporation. We have purchased a policy of directors’ and officers’ liability insurance that insures our officers and directors against the cost of defense, settlement or payment of a judgment in some circumstances and insures us against our obligations to indemnify our officers and directors. Related Party Policy We have not yet adopted a formal policy for the review, approval or ratification of related party transactions. Accordingly, the transactions discussed above were not reviewed, approved or ratified in accordance with any such policy. Our Code of Ethics us to avoid, wherever possible, all conflicts of interests, except under guidelines or resolutions approved by our board of directors (or the appropriate committee of our board) or as disclosed in our public filings with the SEC. Under our code of ethics, conflict of interest situations will include any financial transaction, arrangement or relationship (including any indebtedness or guarantee of indebtedness) involving the company. Our conflict of interest policy provides that a committee of independent members of the board of directors may, among other things, cause any officer or director who has a direct or indirect interest in a transaction to recuse him or herself from the consideration of such transaction and, to the extent necessary, the committee may retain appropriately qualified, non-conflicted personnel to advise the company in connection with such transaction. A form of the code of ethics is filed as an exhibit to our registration statement for the initial public offering, which was declared effective on February 2, 2022. In addition, our audit committee is responsible for reviewing and approving related party transactions to the extent that we enter into such transactions. An affirmative vote of a majority of the members of the audit committee present at a meeting at which a quorum is present will be required in order to approve a related party transaction. A majority of the members of the entire audit committee will constitute a quorum. Without a meeting, the unanimous written consent of all of the members of the audit committee will be required to approve a related party transaction. A form of the audit committee charter is filed as an exhibit to the final prospectus included in the registration statement for our initial public offering declared effective on February 2, 2022. We also require each of our directors and executive officers to complete a directors’ and officers’ questionnaire that elicits information about related party transactions. 73 These procedures are intended to determine whether any such related party transaction impairs the independence of a director or presents a conflict of interest on the part of a director, employee or officer. To further minimize conflicts of interest, we have agreed not to consummate an initial business combination with an entity that is affiliated with any of our sponsor, officers or directors unless we, or a committee of independent directors, have obtained an opinion from an independent investment banking firm or another independent entity that commonly renders valuation opinions that our initial business combination is fair to our company from a financial point of view. Furthermore, no finder’s fees, reimbursements, consulting fee, monies in respect of any payment of a loan or other compensation will be paid by us to our sponsor, officers or directors or any affiliate of our sponsor, officers or directors prior to, for services rendered to us prior to, or in connection with any services rendered in order to effectuate, the consummation of our initial business combination (regardless of the type of transaction that it is). However, the following payments will be made to our sponsor, officers or directors, or our or their affiliates, none of which will be made from the proceeds of our initial public offering held in the Trust Account prior to the completion of our initial business combination: ● Repayment of up to an aggregate of $1,500,000 in loans made to us by our sponsor to cover funding the Trust Account in connection with extending our business combination termination date and to cover our operating expenses; ● Payment to Murphy Canyon Management Group, Inc., an affiliate of our sponsor, of $10,000 per month, potentially through February 7, 2024, for office space, utilities and secretarial and administrative support; ● Reimbursement for any out-of-pocket expenses related to identifying, investigating and completing an initial business combination; and ● Repayment of non-interest bearing loans which may be made by our sponsor or an affiliate of our sponsor or certain of our officers and directors to finance transaction costs in connection with an intended initial business combination, the terms of which (other than as described above) have not been determined nor have any written agreements been executed with respect thereto. Up to $1,500,000 of such loans may be convertible into units, at a price of $10.00 per unit at the option of the lender, upon consummation of our initial business combination. The units would be identical to the placement units. Our audit committee has reviewed on a quarterly basis all payments that were made to our sponsor, officers, directors or our or their affiliates during the year ended December 31, 2022. Director Independence Nasdaq listing standards require that a majority of our board of directors be independent. An “independent director” is defined generally as a person other than an officer or employee of the company or its subsidiaries or any other individual having a relationship which in the opinion of the company’s board of directors, would interfere with the director’s exercise of independent judgment in carrying out the responsibilities of a director. Our board of directors has determined that Francis Knuettel II, Chele Farley, and Richard E. Feinberg are “independent directors” as defined in the Nasdaq listing standards and applicable SEC rules. Our independent directors have regularly scheduled meetings at which only independent directors are present. Item 14. Principal Accountant Fees and Services The following is a summary of fees paid or to be paid to Marcum LLP, or Marcum, for services rendered. Audit Fees . Audit fees consist of fees billed for professional services rendered for the audit of our year-end financial statements and services that are normally provided by Marcum in connection with regulatory filings. The aggregate fees billed by Marcum for professional services rendered for the audit of our annual financial statements, initial public offering balance sheet audit, and other required filings with the SEC for the year ended December 31, 2022 totaled approximately $77,250. For the period from October 19, 2021 (inception) through December 31, 2021, we paid Marcum audit fees totaling approximately $45,000. The above amounts include interim procedures and audit fees, as well as attendance at audit committee meetings. Audit-Related Fees . Audit-related services consist of fees billed for assurance and related services that are reasonably related to performance of the audit or review of our financial statements and are not reported under “Audit Fees.” These services include attest services that are not required by statute or regulation. We paid Marcum for audit-related fees for the year ended December 31, 2022 totaling approximately $62,387. We did not pay Marcum for audit-related fees for the period from October 19, 2021 (inception) through December 31, 2021. Tax Fees . We paid Marcum for tax planning and tax advice for the year ended December 31, 2022 totaling $8,755. We did not pay Marcum for tax planning and tax advice for the period from October 19, 2021 (inception) through December 31, 2021. All Other Fees . We did not pay Marcum for other services for year ended December 31, 2022. We did not pay Marcum for other services for the period from October 19, 2021 (inception) through December 31, 2021. Pre-Approval Policy Our audit committee was formed upon the consummation of our initial public offering. As a result, the audit committee did not pre-approve all of the foregoing services, although any services rendered prior to the formation of our audit committee were approved by our board of directors. Since the formation of our audit committee, and on a going-forward basis, the audit committee has and will pre-approve all auditing services and permitted non-audit services to be performed for us by our auditors, including the fees and terms thereof (subject to the de minimis exceptions for non-audit services described in the Exchange Act which are approved by the audit committee prior to the completion of the audit). 74 PART IV Item 15. Exhibits, Financial Statement Schedules The following documents are filed as part of this report: 1. Financial Statements: See “Index to Financial Statements” in Part II, Item 8 of this annual report on Form 10-K. 2. Financial Statement Schedule: Not applicable. 3. Exhibits: The exhibits listed in the accompanying “Exhibit Index” are filed or incorporated by reference as part of this Form 10-K. EXHIBIT INDEX Exhibit Description 1.1 Underwriting Agreement (filed as Exhibit 1.1 to the Current Report on Form 8-K filed February 8, 2022) and incorporated herein by reference) 2.1 Merger Agreement dated as of November 8, 2022, by and among Murphy Canyon Acquisition Corp., Conduit Merger Sub, Inc. and Conduit Pharmaceuticals Limited (filed as Exhibit 2.1 to the Current Report on Form 8-K filed on November 14, 2022, and incorporated herein by reference) 2.2 Amendment to Merger Agreement dated as of January 18, 2023, by and among Murphy Canyon Acquisition Corp., Conduit Merger Sub, Inc. and Conduit Pharmaceuticals Limited (filed as Exhibit 2.1 to the Current Report on Form 8-K filed on January 30, 2023, and incorporated herein by reference) 3.1 Certificate of Incorporation (filed as Exhibit 3.1 to the Registration Statement on Form S-1 (333-262036) and incorporated herein by reference) 3.2 Amended and Restated Certificate of Incorporation (filed as Exhibit 3.1 to the Current Report on Form 8-K filed on February 2, 2022 and incorporated herein by reference) 3.3 Amendment to the Amended and Restated Certificate of Incorporation of Murphy Canyon Acquisition Corp. (filed as Exhibit 3.1 to the Current Report on Form 8-K filed on February 3, 2023, and incorporated herein by reference) 3.4 By Laws (filed as Exhibit 3.3 to the Registration Statement on Form S-1 (333-262036) and incorporated herein by reference) 4.1 Specimen Unit Certificate (filed as Exhibit 4.1 to the Registration Statement on Form S-1 (333-262036) and incorporated herein by reference) 4.2 Specimen Common Stock Certificate (filed as Exhibit 4.2 to the Registration Statement on Form S-1 (333-262036) and incorporated herein by reference) 4.3 Specimen Warrant Certificate (filed as Exhibit 4.3 to the Registration Statement on Form S-1 (333-262036) and incorporated herein by reference) 4.4 Warrant Agreement between Vstock Transfer, LLC and the Company (filed as Exhibit 4.1 to the Current Report on Form 8-K filed on February 2, 2022 and incorporated herein by reference) 4.5 Form of Warrant (filed as Exhibit 4.1 to the Current Report on Form 8-K filed on November 14, 2022, and incorporated herein by reference) 4.6 Amended Form of Warrant (filed as Exhibit 4.1 to the Current Report on Form 8-K filed on January 30, 2023, and incorporated herein by reference) 4.7* Description of Registered Securities 10.1 Letter Agreement, dated February 2, 2022, among the Company, Murphy Canyon Acquisition Sponsor, LLC and each of the executive officers and directors of the Company (filed as Exhibit 10.1 to the Current Report on Form 8-K filed on February 2, 2022 and incorporated herein by reference) 10.2 Promissory Note, dated November 4, 2021, issued to Murphy Canyon Acquisition Sponsor, LLC (filed as Exhibit 10.2 to the Registration Statement on Form S-1 (333-262036) and incorporated herein by reference) 75 10.3 Investment Management Trust Agreement, dated December 2, 2022, between the Company and Wilmington Trust Company (filed as Exhibit 10.2 to the Current Report on Form 8-K filed on February 2, 2022 and incorporated herein by reference) 10.4 Registration Rights Agreement, dated December 2, 2022, among the Company and certain securityholders (filed as Exhibit 10.3 to the Current Report on Form 8-K filed on February 2, 2022 and incorporated herein by reference) 10.5 Securities Subscription Agreement, dated November 4, 2021, between the Company and Murphy Canyon Acquisition Sponsor, LLC. (filed as Exhibit 10.5 to the Registration Statement on Form S-1 (333-262036) and incorporated herein by reference) 10.6 Placement Unit Purchase Agreement, dated December 2, 2022, between the Company and Murphy Canyon Acquisition Sponsor, LLC (filed as Exhibit 10.4 to the Current Report on Form 8-K filed on February 2, 2022 and incorporated herein by reference) 10.7 Form of Indemnity Agreement (filed as Exhibit 10.7 to the Registration Statement on Form S-1 (333-262036) and incorporated herein by reference) 10.8 Administrative Support Agreement, dated January 31, 2022, by and between the Company and Murphy Canyon Management Group, Inc. (filed as Exhibit 10.6 to the Current Report on Form 8-K filed on February 2, 2022 and incorporated herein by reference) 10.9 Form of Subscription Agreement (filed as Exhibit 10.1 to the Current Report on Form 8-K filed on November 14, 2022, and incorporated herein by reference) 10.10 Form of Lock-Up Agreement (filed as Exhibit 10.2 to the Current Report on Form 8-K filed on November 14, 2022, and incorporated herein by reference) 10.11 Sponsor Support Agreement dated as of November 8, 2022, by and among Murphy Canyon Acquisition Corp. and each of the Persons set forth on Schedule I attached thereto (filed as Exhibit 10.3 to the Current Report on Form 8-K filed on November 14, 2022, and incorporated herein by reference) 10.12 Shareholder Support Agreement dated as of November 8, 2022, by and among Murphy Canyon Acquisition Corp., Conduit Pharmaceuticals Limited and each of the Persons set forth on Schedule I attached thereto. (filed as Exhibit 10.4 to the Current Report on Form 8-K filed on November 14, 2022, and incorporated herein by reference) 10.13 Amendment to Subscription Agreement (filed as Exhibit 10.1 to the Current Report on Form 8-K filed on January 30, 2023, and incorporated herein by reference) 10.14* Amendment No. 1 to Investment Management Trust Agreement 14.1 Form of Code of Ethics (filed as Exhibit 14.1 to the Registration Statement on Form S-1 (333-262036) and incorporated herein by reference) 31.1* Certification of Principal Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 31.2* Certification of Principal Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 32.1* Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 32.2* Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 101.INS Inline XBRL Instance Document* 101.CAL Inline XBRL Taxonomy Extension Calculation Linkbase Document* 101.SCH Inline XBRL Taxonomy Extension Schema Document* 101.DEF Inline XBRL Taxonomy Extension Definition Linkbase Document* 101.LAB Inline XBRL Taxonomy Extension Labels Linkbase Document* 101.PRE Inline XBRL Taxonomy Extension Presentation Linkbase Document* 104 Cover Page Interactive Data File (embedded within the Inline XBRL document) * Filed herewith. ITEM 16. FORM 10-K SUMMARY Not applicable. 76 SIGNATURES Pursuant to the requirements of Section 13 or 15(d) of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized, on March 28, 2023. MURPHY CANYON ACQUISITION CORP. By: /s/ Jack K. Heilbron Name: Jack Heilbron Title: Chief Executive Officer POWER OF ATTORNEY The undersigned directors and officers of Murphy Canyon Acquisition Corp. constitute and appoint Jack K. Heilbron as his true and lawful attorney-in-fact, with full power of substitution, for him in any and all capacities, to sign any amendments to this Form 10-K, and to file the same, with all exhibits thereto and other documents in connection therewith, with the Securities and Exchange Commission, hereby ratifying and confirming all that each attorney-in-fact, or his substitute, may do or case to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, the report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Name Position Date /s/ Jack K. Heilbron Chief Executive Officer and Chairman March 28, 2023 Jack Heilbron (Principal Executive Officer) /s/ Adam Sragovicz Chief Financial Officer, Treasurer, and Director March 28, 2023 Adam Sragovicz (Principal Financial Officer and Principal Accounting Officer) /s/ Francis Knuettel II Director March 28, 2023 Francis Knuettel II /s/ Chele Farley Director March 28, 2023 Chele Farley /s/ Richard E. Feinberg Director March 28, 2023 Richard E. Feinberg 77 MURPHY CANYON ACQUISITION CORP. INDEX TO FINANCIAL STATEMENTS Page Audited Financial Statements of Murphy Canyon Acquisition Corp.: Report of Independent Registered Public Accounting Firm (PCAOB No. 688 ) F-2 Balance Sheets as of December 31, 2022 and 2021 F-3 Statements of Operations for the year ended December 31, 2022 and for the period from October 19, 2021 (inception) through December 31, 2021 F-4 Statements of Changes in Stockholders’ Equity (Deficit) for the year ended December 31, 2022 and for the period from October 19, 2021 (inception) through December 31, 2021 F-5 Statements of Cash Flows for the year ended December 31, 2022 and for the period from October 19, 2021 (inception) through December 31, 2021 F-6 Notes to Financial Statements F-7 F- 1 REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM To the Shareholders and Board of Directors of Murphy Canyon Acquisition Corp. Opinion on the Financial Statements We have audited the accompanying balance sheets of Murphy Canyon Acquisition Corp. (the “Company”) as of December 31, 2022 and 2021, the related statements of operations , stockholders’ equity (deficit) and cash flows for the year ended December 31, 2022 and for the period from October 19, 2021 (inception) through December 31, 2021, and the related notes (collectively referred to as the “financial statements”). In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of December 31, 2022 and 2021, and the results of its operations and its cash flows for the year ended December 31, 2022 and for the period from October 19, 2021 (inception) through December 31, 2021, in conformity with accounting principles generally accepted in the United States of America. Explanatory Paragraph – Going Concern The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 1 to the financial statements, the Company’s business plan is dependent on the completion of a business combination which is less than one year form the date of the issuance of the financial statements. Additionally, the Company has incurred and expects to continue to incur significant costs in pursuit of its acquisition plans. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. Basis for Opinion These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audits. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB. We conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audits we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. Our audits included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audits also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audits provide a reasonable basis for our opinion. /s/ Marcum LLP Marcum llp We have served as the Company’s auditor since 2021. New York, NY March 28, 2023 F- 2 MURPHY CANYON ACQUISITION CORP. BALANCE SHEETS December 31, 2022 December 31, 2021 ASSETS Current assets: Cash $ 345,777 $ 48,555 Prepaid expenses 300,862 55,608 Total current assets 646,639 104,163 Investments held in Trust Account 136,871,183 - Deferred offering costs - 108,962 Total Assets $ 137,517,822 $ 213,125 LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) Current liabilities: Accrued expenses $ 43,113 $ 15,449 Income taxes payable 374,862 - Note payable – Sponsor - 177,057 Total current liabilities 417,975 192,506 Deferred commission payable 4,628,750 - Total Liabilities 5,046,725 192,506 Commitments and Contingencies (Note 6) - Common stock subject to possible redemption at redemption value ( 13,225,000 shares at $ 10.34 per share) 136,771,183 - Stockholders’ Equity (Deficit) Preferred stock, $ 0.0001 par value; 1,000,000 shares authorized; none issued and outstanding - - Class A common stock, $ 0.0001 par value; 100,000,000 shares authorized; 754,000 (excluding 13,225,000 subject to possible redemption) and none issued and outstanding at December 31, 2022 and December 31, 2021, respectively 75 - Class B common stock, $ 0.0001 par value; 10,000,000 shares authorized; 3,306,250 shares issued and outstanding 331 331 Common stock value Additional paid-in capital - 24,669 Accumulated deficit ( 4,300,492 ) ( 4,381 ) Total Stockholders’ Equity (Deficit) ( 4,300,086 ) 20,619 T otal Liabilities and Stockholders’ Equity (Deficit) $ 137,517,822 $ 213,125 The accompanying notes are an integral part of these financial statements. F- 3 MURPHY CANYON ACQUISITION CORP. STATEMENTS OF OPERATIONS For the Year December 31, 2022 FOR THE PERIOD FROM OCTOBER 19, 2021 (INCEPTION) THROUGH DECEMBER 31, 2021 General and administrative expenses $ 1,092,682 $ 4,381 Administration fee – related party 110,000 - Total expenses 1,202,682 4,381 Other Income Interest income – Investments held in Trust Account 1,976,183 - Total other income 1,976,183 - Net income (loss) before income taxes 773,501 ( 4,381 ) Income tax expense ( 374,862 ) - Net income (loss) $ 398,639 $ ( 4,381 ) Class A common stock – weighted average shares outstanding, basic and diluted 12,558,058 - Class A common stock – Basic and diluted net income (loss) per share $ 0.03 $ - Class B common stock – weighted average shares outstanding, basic and diluted 3,306,250 2,875,000 (1)(2) Class B common stock – Basic and diluted net income (loss) per share $ 0.03 $ ( 0.00 ) (1) Excludes an aggregate of up to 431,250 shares of Class B common stock subject to forfeiture if the over-allotment option is not exercised in full or in part by the underwriters. The underwriters exercised the over-allotment option in full on February 7, 2022. As such, the Class B common stock is no longer subject to forfeiture (see Notes 5 and 6). (2) On January 26, 2022, the Sponsor surrendered and forfeited 1,006,250 founder shares for no consideration following which the Sponsor holds 3,306,250 founder shares. All share amounts have been retroactively restated to reflect this surrender (see Note 5). The accompanying notes are an integral part of these financial statements. F- 4 MURPHY CANYON ACQUISITION CORP. STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT) FOR THE YEAR ENDED DECEMBER 31, 2022 AND FOR THE PERIOD FROM OCTOBER 19, 2021 (INCEPTION) TO DECEMBER 31, 2021 Shares Amount Shares Amount Capital Deficit (Deficit) Class A Class B Additional Paid-in Accumulated Total Stockholders’ Equity Shares Amount Shares Amount Capital Deficit (Deficit) Balance, October 19, 2021 (inception) - - - - Issuance of Class B common stock to Sponsor (1) (2) - - 3,306,250 331 24,669 - 25,000 Net loss - - - ( 4,381 ) ( 4,381 Balance, December 31, 2022 - $ - 3,306,250 $ 331 $ 24,669 $ ( 4,381 ) $ 20,619 Proceeds allocated to Public Warrants, net of offering costs - - - - 21,917,543 - 21,917,543 Sale of Private Placement Units, net of offering costs 754,000 75 - - 7,520,275 - 7,520,350 Remeasurement of Class A common stock subject to possible redemption upon IPO - - - - ( 29,462,487 ) ( 2,818,567 ) ( 32,281,054 ) Remeasurement of Class A shares to redemption value ( 1,876,183 ) ( 1,876,183 ) Net income - - - - - 398,639 398,639 Net income (loss) - - - - - 398,639 398,639 Balance, December 31, 2022 754,000 $ 75 3,306,250 $ 331 $ - $ ( 4,300,492 ) $ ( 4,300,086 ) (1) Includes an aggregate of up to 431,250 shares of Common stock subject to forfeiture if the over-allotment option is not exercised in full or in part by the underwriters. The underwriters exercised the over-allotment option in full on February 7, 2022. As such, the Class B common stock is no longer subject to forfeiture (see Notes 5 and 6). (2) On January 26, 2022, the Sponsor surrendered and forfeited 1,006,250 founder shares for no consideration following which the Sponsor holds 3,306,250 founder shares. All share amounts have been retroactively restated to reflect this surrender (see Note 5). The accompanying notes are an integral part of these financial statements. F- 5 MURPHY CANYON ACQUISITION CORP. STATEMENTS OF CASH FLOWS For the Year Ended December 31, 2022 FOR THE PERIOD FROM OCTOBER 19, 2021 (INCEPTION) THROUGH DECEMBER 31, 2021 Cash flows from operating activities: Net income (loss) $ 398,639 $ ( 4,381 ) Adjustments to reconcile net income (loss) to net cash used in operating activities Formation costs paid by note payable – Sponsor 3,994 Interest earned on investments held in Trust Account ( 1,976,183 ) - Changes in operating assets and liabilities: Deferred offering costs 108,962 - Prepaid expenses ( 245,254 ) ( 5,608 ) Accrued expenses 27,664 - Accrued income taxes payable 374,862 - Net cash used in operating activities ( 1,311,310 ) ( 5,995 ) Cash flows from investing activities: Cash deposited into Trust Account ( 134,895,000 ) - Net cash used in investing activities ( 134,895,000 ) - Cash flows from financing activities: Deferred offering costs - ( 45,450 ) Proceeds from note payable - Sponsor - 75,000 Proceeds from issuance of Class B common stock to Sponsor - 25,000 Sale of units in public offering 132,250,000 - Sale of private placement units 7,540,000 - Payment of offering costs ( 3,109,411 ) - Repayment of note payable - Sponsor ( 177,057 ) - Net cash provided by financing activities 136,503,532 54,550 Net change in cash 297,222 48,555 Cash at beginning of period 48,555 - Cash at end of period $ 345,777 $ 48,555 Non-cash financing activities: Deferred offering costs included in accrued offering costs $ - $ 15,449 Prepaid expenses paid by note payable - Sponsor $ - $ 50,000 Deferred offering costs paid by note payable - Sponsor $ - $ 47,875 Deferred commission payable $ 4,628,750 $ - Class A shares subject to redemption $ 136,771,183 $ - The accompanying notes are an integral part of these financial statements. F- 6 MURPHY CANYON ACQUISITION CORP. FOR THE YEAR ENDED DECEMBER 31, 2022 AND FOR THE PERIOD FROM OCTOBER 19, 2021 (INCEPTION) THROUGH DECEMBER 31, 2021 Notes to financial statements NOTE 1 — DESCRIPTION OF ORGANIZATION, BUSINESS OPERATIONS AND GOING CONCERN Murphy Canyon Acquisition Corp. (the “Company”) was incorporated in Delaware on October 19, 2021. The Company was formed for the purpose of effecting a merger, capital stock exchange, asset acquisition, stock purchase, reorganization or similar business combination with one or more businesses (the “Business Combination”). The Company is not limited to a particular industry or sector for purposes of consummating a Business Combination. The Company is an early stage and emerging growth company and, as such, the Company is subject to all of the risks associated with early stage and emerging growth companies. As of December 31, 2022, the Company had not commenced any operations. All activity for the period from October 19, 2021 (inception) through December 31, 2022 relates to the Company’s formation, the proposed initial public offering (“Initial Public Offering”), which is described below, and searching for an initial Business Combination, as defined below. The Company will not generate any operating revenues until after the completion of its initial Business Combination, at the earliest. The Company will generate non-operating income in the form of interest income from the proceeds derived from the Initial Public Offering. The Company has selected December 31 as its fiscal year end. The registration statement for the Company’s Initial Public Offering (the “Registration Statement”) was declared effective on February 2, 2022. On February 7, 2022, the Company consummated the Initial Public Offering of 13,225,000 units (“Units”), generating gross proceeds of $ 132,250,000 , which is described in Note 3. Simultaneously with the closing of the Initial Public Offering, the Company consummated the sale of 754,000 units (the “Private Placement Units”) at a price of $ 10.00 per Private Placement Unit in private placements to Murphy Canyon Acquisition Sponsor LLC (the “Sponsor”), with gross proceeds of $ 7,540,000 . Following the closing of the Initial Public Offering on February 7, 2022, an amount of $ 139,790,000 from the net proceeds of the sale of the Units in the Initial Public Offering and the Private Placement Units was placed in the Trust Account, as defined below. This resulted in an overfunding of the Trust Account of $ 4,895,000 . As such, subsequent to the initial funding of the Trust Account, $ 2,000,000 was transferred to the Company’s operating cash account and $ 2,895,000 was used to pay offering costs. The funds held in the Trust Account may be invested in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act of 1940, as amended (the “Investment Company Act”), with a maturity of 185 days or less or in any open-ended investment company that holds itself out as a money market fund selected by the Company meeting the conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the completion of a Business Combination or (ii) the distribution of the Trust Account, as described below. On November 8, 2022, the Company entered into a definitive Business Combination Agreement (the “BCA”) with Conduit Pharmaceuticals Limited, a Cayman Islands exempted company (“Conduit”), and Conduit Merger Sub, Inc., a Cayman Islands exempted company (“Merger Sub”). Merger Sub is a wholly owned subsidiary of the Company. Conduit is a pharmaceutical company led by experienced pharma executives, established to fund the development of successful deprioritized clinical assets licensed from large pharmaceutical companies through its exclusive relationships. The BCA was amended in January 2023, see Note 10 for additional information. Upon the consummation of the transactions contemplated by the BCA, Merger Sub will merge with and into Conduit, with Conduit surviving as a wholly owned subsidiary of the Company (the “Business Combination”). The Company is expected to be renamed Conduit Pharmaceuticals Inc. at the closing of the Business Combination. Pursuant to the BCA, at the closing, the Company shall issue and deliver to the shareholders of Conduit an aggregate number of shares of the Company’s common stock with an aggregate value equal to $ 650,000,000 , with each share valued at $ 10.00 per share. A private placement transaction shall be conducted by the Company contemporaneously with the Business Combination (the “PIPE Financing”), pursuant to which the Company has entered into subscription agreements providing for aggregate investments in the Company’s securities of $ 27,000,000 . F- 7 There can be no assurance that the Business Combination or PIPE Financing will occur as planned or at all. The Company’s management has broad discretion with respect to the specific application of the net proceeds of the Initial Public Offering and the sale of Private Placement Warrants, although substantially all of the net proceeds are intended to be applied generally toward consummating a Business Combination. There is no assurance that the Company will be able to complete a Business Combination successfully. The Company must complete one or more initial Business Combinations with one or more operating businesses or assets with a fair market value equal to at least 80% of the net assets held in the Trust Account (as defined below) (excluding the deferred underwriting commissions and taxes payable on the interest earned on the Trust Account). The Company will only complete a Business Combination if the post-transaction company owns or acquires 50% or more of the outstanding voting securities of the target or otherwise acquires a controlling interest in the target business sufficient for it not to be required to register as an investment company under the Investment Company Act of 1940, as amended (the “Investment Company Act”). Upon the closing of the Initial Public Offering, management has agreed that an amount equal to at least $10.00 per Unit sold in the Initial Public Offering, including proceeds of the Private Placement Warrants, will be held in a trust account (“Trust Account”), located in the United States and invested only in U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less or in any open-ended investment company that holds itself out as a money market fund selected by the Company meeting certain conditions of Rule 2a-7 of the Investment Company Act, as determined by the Company, until the earlier of: (i) the completion of a Business Combination and (ii) the distribution of the funds held in the Trust Account, as described below. The Company will provide the holders of the outstanding Public Shares (the “Public Stockholders”) with the opportunity to redeem all or a portion of their Public Shares either (i) in connection with a stockholder meeting called to approve the Business Combination or (ii) by means of a tender offer in connection with the Business Combination. The decision as to whether the Company will seek stockholder approval of a Business Combination or conduct a tender offer will be made by the Company. The Public Stockholders will be entitled to redeem their Public Shares for a pro rata portion of the amount then in the Trust Account (net of taxes payable). There will be no redemption rights upon the completion of a Business Combination with respect to the Company’s warrants. All of the Public Shares contain a redemption feature which allows for the redemption of such Public Shares in connection with our liquidation, if there is a stockholder vote or tender offer in connection with our initial business combination and in connection with certain amendments to our amended and restated certificate of incorporation. In accordance with U.S. Securities and Exchange Commission (“SEC”) and its guidance on redeemable equity instruments, which has been codified in ASC 480-10-S99, redemption provisions not solely within the control of a company require common stock subject to redemption to be classified outside of permanent equity. Given that the Public Shares will be issued with other freestanding instruments (i.e., public warrants), the initial carrying value of Class A common stock classified as temporary equity will be the allocated proceeds determined in accordance with ASC 470-20. The Class A common stock is subject to ASC 480-10-S99. If it is probable that the equity instrument will become redeemable, we have the option to either (i) accrete changes in the redemption value over the period from the date of issuance (or from the date that it becomes probable that the instrument will become redeemable, if later) to the earliest redemption date of the instrument or (ii) recognize changes in the redemption value immediately as they occur and adjust the carrying amount of the instrument to equal the redemption value at the end of each reporting period. We have elected to recognize the changes immediately. The accretion or remeasurement will be treated as a deemed dividend (i.e., a reduction to retained earnings, or in absence of retained earnings, additional paid-in capital). The Public Shares are redeemable and will be classified as such on the balance sheet until such date that a redemption event takes place. If the Company seeks stockholder approval of the Business Combination, the Company will proceed with a Business Combination if a majority of the outstanding shares voted are voted in favor of the Business Combination, or such other vote as required by law or stock exchange rule. If a stockholder vote is not required by applicable law or stock exchange listing requirements and the Company does not decide to hold a stockholder vote for business or other reasons, the Company will, pursuant to its amended and restated certificate of incorporation (the “Certificate of Incorporation”), conduct the redemptions pursuant to the tender offer rules of the (“SEC”) and file tender offer documents with the SEC prior to completing a Business Combination. If, however, stockholder approval of the transaction is required by applicable law or stock exchange listing requirements, or the Company decides to obtain stockholder approval for business or other reasons, the Company will offer to redeem shares in conjunction with a proxy solicitation pursuant to the proxy rules and not pursuant to the tender offer rules. If the Company seeks stockholder approval in connection with a Business Combination, the Sponsor has agreed to vote its Founder Shares (as defined in Note 5) and any Public Shares purchased during or after the Initial Public Offering in favor of approving a Business Combination. Additionally, each Public Stockholder may elect to redeem their Public Shares without voting, and if they do vote, irrespective of whether they vote for or against the proposed transaction. F- 8 Notwithstanding the foregoing, if the Company seeks stockholder approval of a Business Combination and it does not conduct redemptions pursuant to the tender offer rules, the Certificate of Incorporation provides that a Public Stockholder, together with any affiliate of such stockholder or any other person with whom such stockholder is acting in concert or as a “group” (as defined under Section 13 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”)), will be restricted from redeeming its shares with respect to more than an aggregate of 15% of the Public Shares, without the prior consent of the Company. The holders of the Founder Shares have agreed (a) to waive their redemption rights with respect to the Founder Shares and Public Shares held by them in connection with the completion of a Business Combination and (b) not to propose an amendment to the Certificate of Incorporation (i) to modify the substance or timing of the Company’s obligation to allow redemptions in connection with a Business Combination or to redeem 100 % of its Public Shares if the Company does not complete a Business Combination within the Combination Period (as defined below) or (ii) with respect to any other provision relating to stockholders’ rights or pre-business combination activity, unless the Company provides the Public Stockholders with the opportunity to redeem their Public Shares in conjunction with any such amendment. If the Company has not completed a Business Combination within 12 months from the consummation of our initial public offering (or up to February 7, 2024 at the election of the Company subject to satisfaction of certain conditions, as amended at the January 2023 Special Meeting, see Note 10) (“Business Combination Period”), the Company will (i) cease all operations except for the purpose of winding up, (ii) as promptly as reasonably possible but not more than ten business days thereafter, redeem the Public Shares, at a per-share price, payable in cash, equal to the aggregate amount then on deposit in the Trust Account, including interest earned on the funds held in the Trust Account and not previously released to pay taxes (less up to $ 100,000 of interest to pay dissolution expenses), divided by the number of then outstanding Public Shares, which redemption will completely extinguish Public Stockholders’ rights as stockholders (including the right to receive further liquidating distributions, if any), and (iii) as promptly as reasonably possible following such redemption, subject to the approval of the Company’s remaining stockholders and the Company’s board of directors, dissolve and liquidate, subject in each case to the Company’s obligations under Delaware law to provide for claims of creditors and the requirements of other applicable law. Our Sponsor has committed to provide additional funds if needed to make such a deposit for the extensions. There will be no redemption rights or liquidating distributions with respect to the Company’s warrants, which will expire worthless if the Company fails to complete a Business Combination within the Combination Period. The holders of the Founders Shares have agreed to waive their liquidation rights with respect to the Founder Shares if the Company fails to complete a Business Combination within the Combination Period. However, if the holders of Founder Shares acquire Public Shares in or after the Initial Public Offering, such Public Shares will be entitled to liquidating distributions from the Trust Account if the Company fails to complete a Business Combination within the Combination Period. The underwriters have agreed to waive their rights to their deferred underwriting commission (see Note 6) held in the Trust Account in the event the Company does not complete a Business Combination within the Combination Period and, in such event, such amounts will be included with the other funds held in the Trust Account that will be available to fund the redemption of the Public Shares. In the event of such distribution, it is possible that the per share value of the assets remaining available for distribution will be less than the Initial Public Offering price per Unit ($ 10.00 ). In order to protect the amounts held in the Trust Account, the Sponsor has agreed to be liable to the Company if and to the extent any claims by a third party for services rendered or products sold to the Company, or a prospective target business with which the Company has discussed entering into a transaction agreement, reduce the amount of funds in the Trust Account to below (i) $10.00 per Public Share or (ii) such lesser amount per Public Share held in the Trust Account as of the date of the liquidation of the Trust Account, if less than $10.00 per public Share due to reductions in the value of the trust assets, in each case net of the amount of interest which may be withdrawn to pay taxes, except as to any claims by a third party who executed a waiver of any and all rights to seek access to the Trust Account and except as to any claims under the Company’s indemnity of the underwriters of the Initial Public Offering against certain liabilities, including liabilities under the Securities Act of 1933, as amended (the “Securities Act”). Moreover, in the event that an executed waiver is deemed to be unenforceable against a third party, the Sponsor will not be responsible to the extent of any liability for such third-party claims. The Company will seek to reduce the possibility that the Sponsor will have to indemnify the Trust Account due to claims of creditors by endeavoring to have all vendors, service providers (except for the Company’s independent registered accounting firm), prospective target businesses and other entities with which the Company does business, execute agreements with the Company waiving any right, title, interest or claim of any kind in or to monies held in the Trust Account. F- 9 Management’s Plan and Going Concern In connection with the Company’s assessment of going concern considerations in accordance with Accounting Standards Update (“ASU”) 2014-15, “Disclosures of Uncertainties about an Entity’s Ability to Continue as a Going Concern,” management has determined that the Combination Period is less than one year from the date of the issuance of the financial statements. There is no assurance that the Company’s plans to consummate a Business Combination will be successful within the Combination Period. Additionally, the Company has incurred and expects to continue to incur significant costs in pursuit of its acquisition plans. As a result, these factors raise substantial doubt about the Company’s ability to continue as a going concern for the next twelve months from the issuance of these financial statements. The financial statements do not include any adjustments that might result from the outcome of the uncertainty. Risks and Uncertainties Management is currently evaluating the impact of the COVID-19 pandemic and has concluded that while it is reasonably possible that the virus could have a negative effect on the Company’s financial position, results of its operations, and search for a target company, the specific impact is not readily determinable as of the date of these financial statements. The financial statements do not include any adjustments that might result from the outcome of this uncertainty. NOTE 2 — SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of Presentation The accompanying financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) as contained within the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”). Emerging Growth Company The Company is an “emerging growth company,” as defined in Section 2(a) of the Securities Act, as modified by the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”), and it may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not emerging growth companies including, but not limited to, not being required to comply with the independent registered public accounting firm attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in its periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used. F- 10 Use of Estimates The preparation of financial statements in conformity with US GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of expenses during the reporting period. Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which management considered in formulating its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ significantly from those estimates. Cash and Cash Equivalents The Company considers all short-term investments with an original maturity of three months or less when purchased to be cash equivalents. The Company had $ 345,777 and $ 48,555 in cash as of December 31, 2022 and 2021. The Company did not have any cash equivalents as of December 31, 2022 or December 31, 2021. Investments Held in Trust Account At December 31, 2022 and 2021, the Company had $ 136,871,183 and zero, respectively, in investments held in the Trust Account. Offering Costs Associated With a Public Offering The Company complies with the requirements of FASB ASC 340-10-S99-1 and SEC Staff Accounting Bulletin (“SAB”) Topic 5A — “ Expenses of Offering.” Offering costs of $ 7,738,161 consisting of $ 2,645,000 of underwriting fees, $ 4,628,750 of deferred underwriting fee (which are held in the Trust Account with Wilmington Trust Company acting as trustee), and $ 464,411 of Initial Public Offering costs. Of these costs, $ 1,358,457 and $ 19,656 were allocated to Public Warrants (as defined in Note 3) and Private Placement Warrants (as defined in Note 4), respectively. Class A Common Stock Subject to Possible Redemption The Company accounts for its shares of Class A common stock subject to possible redemption in accordance with the guidance enumerated in ASC 480 “ Distinguishing Liabilities from Equity ”. Common stock subject to mandatory redemption is classified as a liability instrument and is measured at fair value. Conditionally redeemable common stock (including common stock that feature redemption rights that are either within the control of the holder or subject to redemption upon the occurrence of uncertain events not solely within the Company’s control) are classified as temporary equity. At all other times, common stock is classified as stockholders’ equity. The shares of the Company’s Class A common stock feature certain redemption rights that are considered by the Company to be outside of the Company’s control and subject to the occurrence of uncertain future events. Accordingly, as of December 31, 2022, the shares of Class A common stock subject to possible redemption in the amount of $ 136,771,183 are presented as temporary equity, outside of the stockholders’ equity (deficit) section of the Company’s balance sheet. As of December 31, 2022, the Class A common stock subject to possible redemption reflected on the balance sheet are reconciled in the following table: SCHEDULE OF COMMON STOCK SUBJECT TO POSSIBLE REDEMPTION Gross proceeds from IPO $ 132,250,000 Less: Proceeds allocated to Public Warrants ( 23,276,000 ) Class A common stock issuance costs ( 6,360,054 ) Plus: Remeasurement adjustment of carrying value to redemption value 32,281,054 Class A common stock subject to possible redemption, as of March 31, 2022 134,895,000 Plus: Remeasurement adjustment of carrying value to redemption value 101,767 Class A common stock subject to possible redemption as of June 30, 2022 134,996,767 Plus: Remeasurement adjustment of carrying value to redemption value 609,920 Class A common stock subject to possible redemption as of September 30, 2022 135,606,687 Plus: Remeasurement adjustment of carrying value to redemption value 1,164,496 Class A common stock subject to possible redemption as of December 31, 2022 $ 136,771,183 F- 11 Net Income (Loss) per Common Share The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share”. Net income (loss) per share of common stock is computed by dividing net income (loss) by the weighted average number of shares of common stock outstanding for the period. Accretion associated with the redeemable shares of Class A common stock is excluded from income (loss) per common share as the redemption value approximates fair value. The calculation of diluted income (loss) per share of common stock does not consider the effect of the warrants issued in connection with the (i) Initial Public Offering, and (ii) the private placement since the exercise of the warrants is contingent upon the occurrence of future events. As of December 31, 2022, the Company’s outstanding warrants ( 13,979,000 ) have been excluded from diluted net loss as their inclusion would be anti-dilutive. As a result, diluted net income (loss) per common share is the same as basic net income (loss) per common share for the periods presented. The following table reflects the calculation of basic and diluted net income (loss) per common share (in dollars, except per share amounts): SCHEDULE OF BASIC AND DILUTED NET INCOME LOSS PER COMMON SHARE For the Period Since Inception to December 31, 2021 Class A common stock Class B common stock Basic and diluted net income per common share Numerator: Allocation of net loss $ - $ ( 4,381 ) Denominator: Basic and diluted weighted average shares outstanding - 2,875,000 Basic and diluted net income per common share $ - $ ( 0.00 ) For the Year Ended December 31, 2022 Class A common stock Class B common stock Basic and diluted net loss per common share Numerator: Allocation of net income $ 315,560 $ 83,079 Denominator: Basic and diluted weighted average shares outstanding 12,558,058 3,306,250 Basic and diluted net loss per common share $ 0.03 $ 0.03 F- 12 Income Taxes The Company follows the asset and liability method of accounting for income taxes under ASC 740, “ Income Taxes .” Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized. ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing authorities. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized tax benefits and no amounts accrued for interest and penalties as of December 31, 2022 or December 31, 2021. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception. The Company has identified the United States and California as its only tax jurisdictions. The Company is subject to income taxation by major taxing authorities since inception. All tax periods are open to examination by tax authorities. These examinations may include questioning the timing and amount of deductions, the nexus of income among various tax jurisdictions and compliance with federal and state tax laws. The Company’s management does not expect that the total amount of unrecognized tax benefits will materially change over the next twelve months. The Company actual tax expense differs from the expected tax expense due to the change in the valuation allowance. Concentration of Credit Risk Financial instruments that potentially subject the Company to credit risk consist principally of cash and investments held in the Trust Account. Cash is maintained in accounts with financial institutions, which, at times may exceed the Federal Depository Insurance Corporation coverage limit of $ 250,000 , and investments held in the Trust Account. As of December 31, 2022 and 2021, the Company had not experienced losses on these accounts and management believes the Company is not exposed to significant risks on such accounts. Investments Held in Trust Account The Company’s Investments held in the Trust Account were $ 136,871,183 at December 31, 2022 and zero as of December 31, 2021. The Company’s portfolio of investments is comprised of U.S. government securities, within the meaning set forth in Section 2(a)(16) of the Investment Company Act, with a maturity of 185 days or less, or investments in money market funds that invest in U.S. government securities and generally have a readily determinable fair value, or a combination thereof. When the Company’s investments held in the Trust Account are comprised of U.S. government securities, the investments are classified as trading securities. When the Company’s investments held in the Trust Account are comprised of money market funds, the investments are recognized at fair value. Trading securities and investments in money market funds are presented on the balance sheets at fair value at the end of each reporting period. Gains and losses resulting from the change in fair value of these securities is included in income on investments held in the Trust Account in the accompanying statements of operations. The estimated fair values of investments held in the Trust Account are determined using available market information. F- 13 Fair Value of Financial Instruments The fair value of the Company’s assets and liabilities, which qualify as financial instruments under ASC 820, “Fair Value Measurements” approximates the carrying amounts represented in the balance sheet, partially due to their short-term nature. Fair value is defined as the price that would be received for sale of an asset or paid to transfer of a liability, in an orderly transaction between market participants at the measurement date. US GAAP establishes a three-tier fair value hierarchy, which prioritizes the inputs used in measuring fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements). These tiers include: ● Level 1, defined as observable inputs such as quoted prices (unadjusted) for identical instruments in active markets; ● Level 2, defined as inputs other than quoted prices in active markets that are either directly or indirectly observable such as quoted prices for similar instruments in active markets or quoted prices for identical or similar instruments in markets that are not active; and ● Level 3, defined as unobservable inputs in which little or no market data exists, therefore requiring an entity to develop its own assumptions, such as valuations derived from valuation techniques in which one or more significant inputs or significant value drivers are unobservable. Derivative Financial Instruments The Company evaluates its financial instruments to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815, “Derivatives and Hedging”. For derivative financial instruments that are accounted for as liabilities, the derivative instrument is initially recorded at its fair value on the grant date and is then re-valued at each reporting date, with changes in the fair value reported in the statements of operations. The classification of derivative instruments, including whether such instruments should be recorded as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the balance sheet as current or non-current based on whether or not net-cash settlement or conversion of the instrument could be required within 12 months of the balance sheet date. Warrant Instruments The Company accounts for warrants in accordance with the guidance contained in FASB ASC 815, “Derivatives and Hedging”. Under ASC 815-40 warrants that meet the criteria for equity treatment are recorded in stockholders’ equity (deficit). The warrants are subject to re-evaluation of the proper classification and accounting treatment at each reporting period. If the warrants no longer meet the criteria for equity treatment, they will be recorded as a liability and remeasured each period with changes recorded in the statement of operations. Recent Accounting Standards Management does not believe that any recently issued, but not yet effective, accounting standards, if currently adopted, would have a material effect on the Company’s financial statements. NOTE 3 — INITIAL PUBLIC OFFERING Pursuant to the Initial Public Offering, the Company sold 13,225,000 Units at a price of $ 10.00 per Unit. Each Unit consists of one share of Class A common stock (“Public Shares”) and one redeemable warrant (“Public Warrant”). Each whole Public Warrant entitles the holder to purchase one share of Class A common stock at a price of $ 11.50 per share, subject to adjustment (see Note 7). F- 14 NOTE 4 — PRIVATE PLACEMENTS Simultaneously with the closing of the Initial Public Offering, the Company consummated the private sale to the Sponsor of 754,000 Private Placement Units at a price of $ 10.00 per Private Placement Unit ($ 7,540,000 ). Each Private Placement Unit is comprised of one Class A share and one warrant (“Private Placement Warrant”). Each Private Placement Warrant is exercisable to purchase one share of Class A common stock at a price of $ 11.50 per share, subject to adjustment (see Note 7). The Company’s Sponsor has agreed to transfer, but has not yet transferred, 15,000 Private Placement Units to each of our director nominees. The proceeds from the sale of the Private Placement Units were added to the net proceeds from the Initial Public Offering held in the Trust Account. If the Company does not complete a Business Combination within the Combination Period, the proceeds from the sale of the Private Placement Units held in the Trust Account will be used to fund the redemption of the Public Shares (subject to the requirements of applicable law) and the securities comprising the Private Placement Units will expire worthless. The Private Placement Units (including the Class A common stock issuable upon exercise of the warrants included in the Private Placement Units) will not be transferable, assignable or saleable until 30 days after the completion of an Initial Business Combination, subject to certain exceptions. NOTE 5 — RELATED PARTY TRANSACTIONS Founder Shares On November 16, 2021, the Sponsor received 4,312,500 shares of the Company’s Class B common stock (the “Founder Shares”) for $ 25,000 . On January 26, 2022, the Sponsor surrendered and forfeited 1,006,250 Founder Shares for no consideration, following which the Sponsor holds 3,306,250 Founder Shares. The holders of the Founder Shares have agreed, subject to limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier to occur of: (A) one year after the completion of a Business Combination and (B) subsequent to a Business Combination, (x) if the last reported sale price of the Class A common stock equals or exceeds $ 12.00 per share (as adjusted for stock splits, stock capitalizations, reorganizations, recapitalizations and the like) for any 20 trading days within any 30-trading day period commencing at least 150 days after a Business Combination, or (y) the date on which the Company completes a liquidation, merger, capital stock exchange or other similar transaction that results in all of the Public Stockholders having the right to exchange their shares of common stock for cash, securities or other property. Promissory Note — Related Party On November 4, 2021, the Sponsor issued an unsecured promissory note to the Company (the “Promissory Note”), pursuant to which the Company may borrow up to an aggregate principal amount of $ 300,000 . The Promissory Note is non-interest bearing and payable on the earlier of (i) the consummation of the Initial Public Offering or (ii) the decision not to execute the Initial Public Offering. As of December 31, 2021, there was $ 177,057 outstanding under the Promissory Note. The balance was paid in full on February 10, 2022. See Note 10, regarding a new promissory note issued by the Sponsor to the Company for $ 1.5 million, subsequent to December 31, 2022. General and Administrative Services Commencing on the date the Units are first listed on the Nasdaq, the Company has agreed to pay the Sponsor a total of $ 10,000 per month for office space, utilities and secretarial and administrative support. Upon completion of the Initial Business Combination or the Company’s liquidation, the Company will cease paying these monthly fees. During the year ended December 31, 2022, the Company incurred $ 110,000 , of such expenses. Related Party Loans In order to finance transaction costs in connection with a Business Combination, the Sponsor or an affiliate of the Sponsor, or certain of the Company’s officers and directors may, but are not obligated to, loan the Company funds as may be required (“Working Capital Loans”). Such Working Capital Loans would be evidenced by promissory notes. The notes may be repaid upon completion of a Business Combination, without interest, or, at the lender’s discretion, up to $ 1,500,000 of the notes may be converted upon completion of a Business Combination into units at a price of $ 10.00 per unit. Such units would be identical to the Private Placement Units. In the event that a Business Combination does not close, the Company may use a portion of proceeds held outside the Trust Account to repay the Working Capital Loans but no proceeds held in the Trust Account would be used to repay the Working Capital Loans. As of December 31, 2022 and 2021, there were no amounts outstanding under the Working Capital Loans. F- 15 NOTE 6 — COMMITMENTS AND CONTINGENCIES Registration Rights The holders of the Founder Shares, Private Placement Warrants and warrants that may be issued upon conversion of Working Capital Loans (and any shares of common stock issuable upon the exercise of the Private Placement Warrants or warrants issued upon conversion of the Working Capital Loans and upon conversion of the Founder Shares) will be entitled to registration rights pursuant to a registration rights agreement to be signed prior to or on the effective date of Initial Public Offering requiring the Company to register such securities for resale. The holders of these securities will be entitled to make up to three demands, excluding short form registration demands, that the Company register such securities. In addition, the holders have certain “piggy-back” registration rights with respect to registration statements filed subsequent to completion of a Business Combination and rights to require the Company to register for resale such securities pursuant to Rule 415 under the Securities Act. However, the registration rights agreement provides that the Company will not be required to effect or permit any registration or cause any registration statement to become effective until the securities covered thereby are released from their lock-up restrictions. The Company will bear the expenses incurred in connection with the filing of any such registration statements. Underwriting Agreement The Company granted the underwriters a 45-day option from the date of Initial Public Offering to purchase up to 1,725,000 additional Units to cover over-allotments, if any, at the Initial Public Offering price less the underwriting discounts and commissions. The option was fully exercised on February 7, 2022 . The underwriters were paid a cash underwriting discount of $ 0.20 per Unit, or $ 2,645,000 , payable upon the closing of the Initial Public Offering. In addition, the underwriters are entitled to a deferred fee of $ 0.35 per Unit, or $ 4,628,750 . The deferred fee will become payable to the underwriters from the amounts held in the Trust Account solely in the event that the Company completes a Business Combination, subject to the terms of the underwriting agreement. In addition to the underwriting discount, the Company paid the underwriters $ 50,000 as an advance against out-of-pocket accountable expenses actually anticipated to be incurred by the underwriters, which advance will be returned to the Company to the extent not actually incurred. The Company agreed to pay or reimburse the underwriters for travel, lodging and other “road show” expenses, expenses of the underwriters’ legal counsel and certain diligence and other fees, which such fees and expenses are capped at an aggregate of $ 150,000 (less the $ 50,000 advance previously paid). NOTE 7 — STOCKHOLDERS’ EQUITY (DEFICIT) Preferred Stock — The Company is authorized to issue 1,000,000 shares of preferred stock with a par value of $ 0.0001 per share. As of December 31, 2022 and December 31, 2021, there were no shares of preferred stock issued or outstanding. Class A Common Stock — The Company is authorized to issue 100,000,000 shares of Class A common stock with a par value of $ 0.0001 per share. Holders of Class A common stock are entitled to one vote for each share. As of December 31, 2022 and 2021, there were 754,000 and zero , respectively, shares of Class A common stock issued and outstanding (excluding the 13,225,000 shares subject to possible redemption). Class B Common Stock — The Company is authorized to issue 10,000,000 shares of Class B common stock with a par value of $ 0.0001 per share. Holders of Class B common stock are entitled to one vote for each share. As of each December 31, 2022 and 2021, there were 3,306,250 shares of Class B common stock issued and outstanding. F- 16 Only holders of the Class B common stock will have the right to vote on the election of directors prior to the Business Combination. Holders of Class A common stock and holders of Class B common stock will vote together as a single class on all matters submitted to a vote of our shareholders except as otherwise required by law. In connection with our initial business combination, we may enter into a stockholders agreement or other arrangements with the stockholders of the target or other investors to provide for voting or other corporate governance arrangements that differ from those in effect upon completion of this offering. The shares of Class B common stock will automatically convert into Class A common stock at the time of a Business Combination, or earlier at the option of the holder, on a one-for-one basis, subject to adjustment. In the case that additional shares of Class A common stock, or equity-linked securities, are issued or deemed issued in excess of the amounts issued in the Initial Public Offering and related to the closing of a Business Combination, the ratio at which shares of Class B common stock shall convert into shares of Class A common stock will be adjusted (unless the holders of a majority of the then-outstanding shares of Class B common stock agree to waive such adjustment with respect to any such issuance or deemed issuance) so that the number of shares of Class A common stock issuable upon conversion of all shares of Class B common stock will equal, in the aggregate, on an as-converted basis, 20% of the sum of the total number of all shares of common stock outstanding upon the completion of Initial Public Offering plus all shares of Class A common stock and equity-linked securities issued or deemed issued in connection with a Business Combination (net of the number of shares of Class A common stock redeemed in connection with a Business Combination), excluding any shares or equity-linked securities issued or issuable to any seller of an interest in the target to us in a Business Combination. Only holders of the Class B common stock will have the right to vote on the election of directors prior to the Business Combination. Holders of Class B common stock will vote together as a single class on all matters submitted to a vote of our shareholders except as otherwise required by law. In connection with our initial business combination, we may enter into a stockholders agreement or other arrangements with the stockholders of the target or other investors to provide for voting or other corporate governance arrangements that differ from those in effect upon completion of this offering. Warrants — Public Warrants may only be exercised for a whole number of shares. No fractional warrants will be issued upon separation of the Units and only whole warrants will trade. The Public Warrants will become exercisable on the later of (a) 30 days after the completion of a Business Combination and (b) 12 months from the closing of the Initial Public Offering. The Public Warrants will expire five years after the completion of a Business Combination or earlier upon redemption or liquidation. The Company will not be obligated to deliver any shares of Class A common stock pursuant to the exercise of a warrant and will have no obligation to settle such warrant exercise unless a registration statement under the Securities Act covering the issuance of the shares of Class A common stock issuable upon exercise of the warrants is then effective and a current prospectus relating to those shares of Class A common stock is available, subject to the Company satisfying its obligations with respect to registration, or a valid exemption from registration is available. No warrant will be exercisable for cash or on a cashless basis, and the Company will not be obligated to issue any shares to holders seeking to exercise their warrants, unless the issuance of the shares upon such exercise is registered or qualified under the securities laws of the state of residence of the exercising holder, or an exemption from registration is available. The Company has agreed that as soon as practicable, but in no event later than 15 business days after the closing of a Business Combination, the Company will use its commercially reasonable efforts to file, and within 60 business days following a Business Combination to have declared effective, a registration statement covering the issuance of the shares of Class A common stock issuable upon exercise of the warrants and to maintain a current prospectus relating to those shares of Class A common stock until the warrants expire or are redeemed. Notwithstanding the above, if the Class A common stock is at the time of any exercise of a warrant not listed on a national securities exchange such that it satisfies the definition of a “covered security” under Section 18(b)(1) of the Securities Act, the Company may, at its option, require holders of Public Warrants who exercise their warrants to do so on a “cashless basis” in accordance with Section 3(a)(9) of the Securities Act and, in the event the Company so elects, the Company will not be required to file or maintain in effect a registration statement, but will use its commercially reasonable efforts to register or qualify the shares under applicable blue sky laws to the extent an exemption is not available. F- 17 Redemption of Warrants When the Price per Share of Class A Common Stock Equals or Exceeds $18.00 — Once the warrants become exercisable, the Company may redeem the outstanding Public Warrants: ● in whole and not in part; ● at a price of $ 0.01 per Public Warrant; ● upon a minimum of 30 days’ prior written notice of redemption, or the 30-day redemption period to each warrant holder; and ● if, and only if, the last reported sale price of the Class A common stock equals or exceeds $ 18.00 per share (as adjusted for stock splits, stock dividends, reorganization, recapitalizations and the like) for any 20 trading days within a 30-trading day period ending on the third trading day prior to the date on which the Company sends the notice of redemption to warrant holders. If and when the warrants become redeemable by the Company, the Company may exercise its redemption right even if it is unable to register or qualify the underlying securities for sale under all applicable state securities laws. If the Company calls the Public Warrants for redemption, as described above, its management will have the option to require any holder that wishes to exercise the Public Warrants to do so on a “cashless basis,” as described in the warrant agreement. The exercise price and number of common stock issuable upon exercise of the Public Warrants may be adjusted in certain circumstances including in the event of a stock dividend, extraordinary dividend or recapitalization, reorganization, merger or consolidation. However, except as described below, the Public Warrants will not be adjusted for issuances of common stock at a price below its exercise price. Additionally, in no event will the Company be required to net cash settle the Public Warrants. If the Company is unable to complete a Business Combination within the Combination Period and the Company liquidates the funds held in the Trust Account, holders of Public Warrants will not receive any of such funds with respect to their Public Warrants, nor will they receive any distribution from the Company’s assets held outside of the Trust Account with respect to such Public Warrants. Accordingly, the Public Warrants may expire worthless. The Private Placement Warrants are identical to the Public Warrants underlying the Units sold in the Initial Public Offering. The Private Placement Warrants and Public Warrants are recorded in stockholders’ equity (deficit) as they qualify for equity treatment under ASC 815. The key assumptions used to value the Public Warrants, which was determined to be $ 23,276,000 , were as follows: ● Term – 5 years ● Volatility – 22 % ● Dividends – 0 % ● Discount rate – 1.76 % F- 18 NOTE 8 — FAIR VALUE MEASUREMENTS The following table presents information about the Company’s assets and liabilities that are measured at fair value at December 31, 2022, and indicates the fair value hierarchy of the valuation inputs the Company utilized to determine such fair value: SCHEDULE OF FAIR VALUE OF ASSETS AND LIABILITIES Description Level December 31, 2022 Assets: Investments held in Trust Account 1 $ 136,871,183 As of December 31, 2021, there were no assets requiring fair value measurement. NOTE 9 — TAXES The expected tax expense based on the statutory rate is reconciled with actual tax expense as follows: SCHEDULE OF EFFECTIVE INCOME TAX RATE RECONCILIATION For the Year Ended December 31, 2022 U.S. federal statutory rate 21.0 % State taxes, net of federal benefit 0.1 % Change in valuation allowance 27.36 % Income tax provision 48.46 % The effective tax rate differs from the statutory tax rate of 21 % for the year ended December 31, 2021, due to the valuation allowance recorded on the Company’s net operating losses. The Company files income tax returns in the U.S. federal jurisdiction and is subject to examination by the various taxing authorities. The Company’s tax returns since inception remain open to examination by the taxing authorities. The Company considers California to be a significant state tax jurisdiction. Deferred income taxes reflect the net tax effects of temporary differences between the carrying amounts of assets and liabilities for financial reporting purposes and the amounts used for income tax purposes. Significant components of the Company’s deferred tax assets and liabilities and the change in valuation are as follows at December 31: SCHEDULE OF DEFERRED TAX ASSETS AND LIABILITIES 2022 Deferred tax assets: Startup costs 211,627 Total deferred tax assets 211,627 Valuation Allowance ( 211,627 ) Net deferred tax asset $ — SCHEDULE OF CHANGE IN VALUATION 2022 Federal Current $ 374,862 Deferred ( 211,627 ) State and Local Current - Deferred - Change in valuation 211,627 Income Tax Provision $ 374,862 In assessing the realization of the deferred tax assets, management considers whether it is more likely than not that some portion of all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is independent upon the generation of future taxable income during the periods in which temporary differences representing net future deductible amounts become deductible. Management considers the scheduled reversal of deferred tax liabilities, projected future taxable income and tax planning strategies in making this assessment. After consideration of all of the information available, management believes that significant uncertainty exists with respect to future realization of the deferred tax assets and has therefore established a full valuation allowance. For the year ended December 31,2021, the change in the valuation allowance was zero. NOTE 10 — SUBSEQUENT EVENTS The Company evaluated subsequent events and transactions that occurred after the balance sheet date through the date the financial statements were issued. Based upon this review, except as disclosed below, the Company did not identify any subsequent events that would have required adjustment or disclosure in the financial statements. Initially, the Company was required to complete an initial business combination transaction by 12 months from the consummation of initial public offering or up to 18 months if the Company extended the period of time to consummate a business combination in accordance with the Company’s Certificate of Incorporation. On January 26, 2023, at a special meeting of the Company’s stockholders (the “Special Meeting”), the Company’s stockholders approved a proposal to amend the Company’s certificate of incorporation to allow the Company to extend, at the Company’s election, the date by which the Company has to consummate a business combination up to 12 times, each such extension for an additional one month period, from February 7, 2023, to February 7, 2024. The Company’s stockholders also approved a related proposal to amend the trust agreement allowing the Company to deposit into the Trust Account, for each one-month extension, one-third of 1 % of the funds remaining in the Trust Account following the redemptions made in connection with the approval of the extension proposal at the Special Meeting. At the Special Meeting the Company’s stockholders also approved a proposal to amend the Company’s certificate of incorporation to expand the methods that the Company may employ to not become subject to the “penny stock” rules of the SEC. In connection with such proposals, the Company’s public stockholders had the right to redeem their shares for cash equal to their pro rata share of the aggregate amount on deposit in the Trust Account as of two days prior to such stockholder vote. The Company’s public stockholders holding 11,037,272 shares of Class A common stock (out of a total of 13,979,000 shares of Class A common stock) exercised their right to redeem such shares at a redemption price of approximately $ 10.33 per share. Approximately $ 114 million in cash was removed from the Trust Account to pay such stockholders and, accordingly, after giving effect to such redemptions, the balance in the Trust Account was approximately $ 23 million. As a result of the approval of such proposals, the Company agreed to deposit into the Trust Account one-third of 1 % of the funds then on deposit in the Trust Account for each month of the extension period, resulting in a monthly contribution of approximately $ 0.035 per share that was not redeemed in connection with the Special Meeting, or an aggregate of approximately $ 77,000 per month, and an aggregate of $ 924,000 if the date the Company has to consummate a business combination is extended 12 times, each assuming no interest is earned on the funds in the Trust Account. On March 7, 2023, the Company entered into a $ 1.5 million promissory note with the Company’s Sponsor to fund the Trust Account and for the Company’s operating expenses. On March 7, 2023 the Company’s Sponsor advanced $ 300,000 and will provide additional funds as necessary under the promissory note. These loans are non-interest bearing, unsecured and will be repayable in full upon the earlier of (i) the date on which the Company consummates an initial business combination and (ii) the date that the Company’s winding up is effective. F- 19