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, 2023, pursuant to Rule 13a-15(b) under the Exchange Act. 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. In connection with the preparation and audit of the financial statements as of and for the fiscal years ended December 31, 2023 and 2022, material weaknesses were identified in our internal control over financial reporting. A material weakness is a deficiency, or a combination of deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of annual or interim financial statements will not be prevented or detected on a timely basis. These material weaknesses primarily relate to the following matters that are relevant to the preparation of our financial statements: ● We have limited segregation of duties. For the periods under audit, Old Conduit did not have any internal personnel in the financial accounting and reporting department, instead relied upon third party consultants to perform these activities. ● We lack a formal process for review and approval of financial statements. For the periods under audit, especially prior to the business combination, numerous, recurring errors in account balances and disclosures were detected in the financial statements that resulted in a reasonable possibility that a material misstatement would not have been detected on a timely basis. ● We did not design adequate and appropriate internal controls under an appropriate internal control over financial reporting framework, including monitoring controls and certain entity level controls. ● We did not appropriately review and evaluate the accounting implications of all material transactions that occurred in the audit period which resulted in a restatement for previous periods. If these material weaknesses are not remediated, it could result in a misstatement of account balances or disclosures that would result in a material misstatement to the annual or interim financial statements that would not be prevented or detected. We are implementing measures designed to improve our internal control over financial reporting to remediate these material weaknesses, although they have not been fully remediated as of the date of this filing. As a part of these measures, we entered into an employment agreement with Mr. Sragovicz, previously MURF’s Chief Financial Officer, which provides that Mr. Sragovicz will serve as the Company’s Chief Financial Officer. In addition, we anticipate hiring additional qualified accounting personnel with experience with complex GAAP and SEC rules while, meanwhile, continuing to engage consultants to assist with our financial statement close process, segregating duties among accounting personnel to enable adequate review controls, further developing and documenting our accounting policies, and designing, implementing, and/or expanding IT systems and application controls in our systems relevant to the preparation of the consolidated financial statements. We also expect to engage an external advisor to assist with evaluating and documenting the design and operating effectiveness of internal controls and assisting with the remediation of deficiencies, as necessary. The primary costs associated with such measures are corresponding recruiting and additional salary and consulting costs, which are difficult to estimate but which may be significant. These additional resources and procedures are intended to enable us to broaden the scope and quality of our internal review of underlying information related to financial reporting and to formalize and enhance our internal control procedures. The material weaknesses will not be considered remediated until our remediation plan has been fully implemented, the applicable controls operate for a sufficient period of time, and we have concluded, through testing, that the newly implemented and enhanced controls are operating effectively. We currently expect to commence the remediation plan by documenting and implementing such plan, followed with testing such controls over time. We cannot predict the success of such efforts or the outcome of its assessment of the remediation efforts. Our efforts may not remediate these material weaknesses in our internal control over financial reporting, or additional material weaknesses may be identified in the future. A failure to implement and maintain effective internal control over financial reporting could result in errors in our financial statements that could result in a restatement of our financial statements and could cause us to fail to meet our reporting obligations, any of which could diminish investor confidence in us and cause a decline in the price of our common stock. Our independent registered public accounting firm will not be required to formally attest to the effectiveness of our internal control over financial reporting until after we are no longer an “emerging growth company,” as defined in the JOBS Act. At such time, our independent registered public accounting firm may issue a report that is adverse in the event it is not satisfied with the level at which our internal control over financial reporting is documented, designed, or operating. Changes in Internal Control over Financial Reporting There have been a number of 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 year that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting. These changes include the addition of a full-time Chief Financial Officer, the implementation of enterprise resource planning accounting systems, and increased accounting and financial reporting consulting resources. Item 9B. Other Information During the year ended December 31, 2023, none of the Company’s directors or officers (as defined in Rule 16a-1(f) of the Exchange Act) adopted or terminated any contract, instruction or written plan for the purchase or sale of Company securities that was intended to satisfy the affirmative defense conditions of Rule 10b5-1(c) or any “non-Rule 10b5-1 trading arrangement”. Item 9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspections Not applicable. 75 PART III Item 10. Directors, Executive Officers and Corporate Governance Executive Officers and Directors The following table sets forth certain information concerning our executive officers and directors as of April 16, 2024: Name Age Position David Tapolczay 64 Chief Executive Officer and Director Adam Sragovicz 54 Chief Financial Officer Freda Lewis-Hall 69 Chairperson of the Board of Directors James Bligh 36 Director Faith L. Charles 62 Director Chele Chiavacci Farley 57 Director Jennifer I. McNealey 50 Director Andrew Regan 58 Director Executive Officers David Tapolczay . Dr. Tapolczay has more than 20 years of experience in research and development management. He has served as our Chief Executive Officer and a member of the board of directors since September 2023. He was a co-founder and served as the Chief Executive Officer a member of the board of directors of Old Conduit from 2019 until the Business Combination in September 2023. He served as Chief Executive Officer of St George Street Capital, a United Kingdom-based medical research charity that is a business partner to Conduit, from July 2018 to September 2023. He also serves as Chief Executive Officer of Medeor Pharma Ltd, a pharmaceutical consultancy company, a position which he has held since 2006. From February 2008 to December 2018, he served as Chief Executive Officer at LifeArc (formerly the Medical Research Counsel Technology Group (MRCT)), a United-Kingdom based charity advancing lab-based scientific discoveries to a point at which they can be developed into the next generation of diagnostics, treatments and cures. He previously served as joint worldwide head of chemistry for Zeneca Agrochemicals, a research and development unit of AstraZeneca, and as senior manager of chemical development for GlaxoSmithKlein plc, a pharmaceutical and biotechnology company. Dr. Tapolczay served as Executive Vice President at Cambridge Discovery Chemistry, where he was responsible for the rapid growth of Cambridge Discovery Chemistry and was a key figure in two successful sales of that company, the first to Oxford Molecular and the second to Millennium Pharmaceuticals. After this last acquisition, Dr. Tapolczay was Senior Vice President of Pharmaceutical Sciences at Millennium Pharmaceuticals, with responsibility for over 230 scientists. On leaving Millennium, Dr. Tapolczay was a founder and Chairman of Pharmorphix Ltd., which was acquired by Sigma Aldrich Fine Chemicals in August 2006. He has also been involved with the start-up of five companies, all of which are still trading and one of which has been AIM listed. He was VP of Technology Development for GSK Pharmaceuticals from December 2005 to April 2007. He was awarded visiting Professorial Chair in Chemistry at Sussex University from August 1999 to May 2007 and has previously held the position of visiting lecturer at Nottingham, Reading and Durham Universities and a member of both the Technical Opportunities Panel and the User Panel of the EPSRC. He holds a BSc Hons and PhD in Chemistry from the University of Southampton. Dr. Tapolczay also completed his Post-Doctoral Experience in Organic Chemistry from the University of Oxford. Dr. Tapolczay was selected to serve on our board of directors following the Business Combination based on his deep knowledge of Conduit, his extensive experience in research and development of clinical assets, and his in-depth knowledge of the pharmaceutical industry. 76 Adam Sragovicz . Mr. Sragovicz has served as our Chief Financial Officer since October 2021. Mr. Sragovicz served as a director of the Company from December 2021 until September 2023. Mr. Sragovicz served as the Chief Financial Officer of Presidio Property Trust, Inc. from January 2018 until September 2023. 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. Directors Freda Lewis-Hall, M.D., DFAPA . Dr. Lewis-Hall has served as a member of our board of directors since September 2023. She served as Senior Medical Advisor to the CEO of Pfizer Inc., or Pfizer, from December 2019 until her retirement in March 2020. Before assuming that responsibility, from January 2019, Dr. Lewis-Hall served as Chief Patient Officer and Executive Vice President of Pfizer, beginning January 2019. Dr. Lewis-Hall began her service with Pfizer as its Chief Medical Officer from 2009 to January 2019. Prior to joining Pfizer in 2009, Dr. Lewis-Hall held various senior leadership positions including Chief Medical Officer and Executive Vice President, Medicines Development at Vertex Pharmaceuticals Incorporated from June 2008 to May 2009; Senior Vice President, U.S. Pharmaceuticals, Medical Affairs for Bristol-Myers Squibb Company from 2003 until May 2008; Vice President Research and Development at Pharmacia Corporation from 2002-2003; Product Team Leader at Pharmacia and Eli Lilly and Company from 1998 to 2002; Director of Lilly Center for Women’s Health from 1996-1999, and Clinical Research Physician at Eli Lilly from 1994 through 1996. In October 2021, Dr. Lewis-Hall became a member of the board of directors for Pyxis Oncology (PYXS), (where she serves as a member of the Nominating and Corporate Governance Committee). She has been a member of the board of directors for Exact Sciences Corporation (EXAS) since April 2020, where she serves as a member of the Human Capital and Innovation, Technology and Pipeline Committees; a member of 1LifeHealthCare, Inc.(ONEM) board since November 2019, serving as a member of the Nominating and Corporate Governance Committee; a member of the board of directors for Milliken & Company since July 2019, as a member of the Audit and HR and Compensation Committees;, and as a member of the board of directors of SpringWorks Therapeutics, Inc. (SWTX) since 2017, serving as the chair of the Nominating and Governance Committee. Dr. Lewis-Hall served as a member of the board of directors for Tenet Healthcare Corporation (THC) from 2014 to 2017. Dr. Lewis-Hall holds an M.D. from Howard University College of Medicine and a B.A. in natural sciences from the Johns Hopkins University. Conduit believes Dr. Lewis-Hall is qualified to serve on the board of directors based on her expertise and experience in the biopharmaceutical industry and her leadership experience as a senior executive at various biopharmaceutical companies. James (“Jamie”) Bligh . Mr. Bligh has served as a member of our board of directors since September 2023, and also currently serves as our Senior Vice President – Strategy. He was a co-founder of Conduit Pharmaceuticals Limited in 2019 and has served as a member of its board of directors since its inception. From 2008 to 2019, Mr. Bligh worked closely with investment vehicle Corvus Capital Limited, including as a Partner, where he led a number of reverse takeover transactions, stock market listings, initial public offerings, secondary fundraisings, and merger transactions. Mr. Bligh’s prior transaction experience includes advising several special purpose acquisition vehicles in listing on the London Stock Exchange, including the listing of Bermele Plc, a special purpose acquisition vehicle, and the subsequent acquisition of Bermele by East Imperial Pte. Ltd., a global purveyor of ultra-premium beverages, in June 2019; the listing of Leverett Plc, which subsequently acquired Nuformix Plc, a pharmaceutical development company targeting unmet medical needs in fibrosis and oncology via drug repurposing; and Cizzle Biotechnology Holdings PLC, a UK-based diagnostics developer. Jamie previously served as a director of Bermele Plc from June 2021 through February 2022; Mertz Plc from January 2021 through March 2022; and East Imperial Pte. Ltd. from September 2017 through April 2018. Jamie graduated from the University of Bristol with a BSc in Economics & Finance. Mr. Bligh was selected to serve on our board of directors following the Business Combination based on his past experience with business development, capital raising, financings, public offerings and other strategic transactions, including mergers and acquisitions. 77 Faith L. Charles . Ms. Faith L. Charles has served as a member of our board of directors since September 2023. She has been a corporate transactions and securities partner at the law firm of Thompson Hine LLP since 2010. She leads Thompson Hine’s Life Sciences practice and co-heads the securities practice, advising public and emerging biotech and pharmaceutical companies in the U.S. and internationally. Ms. Charles negotiates complex private and public financing transactions, mergers and acquisitions, licensing transactions and strategic collaborations. She serves as outside counsel to a myriad of life sciences companies and is known in the industry as an astute business advisor, providing valuable insights into capital markets, corporate governance and strategic development. Ms. Charles has been a member of the board of directors of: CNS Pharmaceuticals, Inc. (Nasdaq: CNSP), a biotechnology company developing novel treatments for cancers of the brain and central nervous system, since December 2022; Avenue Therapeutics, Inc. (Nasdaq: ATXI), a specialty pharmaceutical company specializing in developing and commercializing therapies for the treatment of the central nervous system, since May 2022; and Abeona Therapeutics, Inc. (Nasdaq: ABEO), a fully integrated gene and cell therapy company, since March 2021. Ms. Charles serves as Chair of CNS Pharmaceuticals, on the Audit Committee of Avenue Therapeutics and on the Audit Committee and as the Chair of the Nominating and Governance Committee of Abeona Therapeutics. From 2018 until October 2021, Ms. Charles served on the Board of Directors and as a member of the Audit Committee and Chair of the Compensation Committee of Entera Bio Ltd., a publicly-traded biotechnology company. Ms. Charles founded the Women in Bio Metro New York chapter and chaired the chapter for five years. She also served on the national board of Women in Bio. Ms. Charles is also a member of the board of Red Door Community (formerly Gilda’s Club New York City.) She has been recognized as a Life Sciences Star by Euromoney’s LMG Life Sciences, has been named a BTI Client Service All-Star, and was named by Crain’s New York Business to the list of 2020 Notable Women in the Law. Ms. Charles holds a J.D degree from The George Washington University Law School and a B.A. in Psychology from Barnard College, Columbia University. Ms. Charles is a graduate of Women in Bio’s Boardroom Ready Program, an Executive Education Program taught by The George Washington University School of Business. Ms. Charles’ qualifications to serve on our Board include her leadership skills and her vast legal experience representing companies in the biotech and pharmaceutical field. Chele Chiavacci Farley . Ms. Chele Chiavacci Farley has served on our board of directors since the closing of our initial public offering. She currently serves as a partner and managing director of Mistral Capital International (“Mistral”), a private equity firm, that she has been a part of 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 the President and 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 18th 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 was selected to serve on our board of directors following the Business Combination based on her past experience with business development, capital raising, financings, and banking. 78 Jennifer I. McNealey . Ms. Jennifer I. McNealey has served as a member of our board of directors since September 2023. She has served as the Chief Financial Officer of Abdera Therapeutics Inc., a biotechnology company developing targeted radiotherapeutics since January 2023. Prior to Abdera, Ms. McNealey served as CFO of Codex DNA, Inc. (now Telesis Bio Inc.) from March 2021 until July 2022, and assisted that company through its initial public offering in 2021. From February 2015 to March 2021, Ms. McNealey served as Vice President of Investor Relations and Strategy at Calithera Biosciences, Inc., a development stage biotechnology company. Ms. McNealey guided Calithera through multiple equity raises including its initial public offering and secondary raises. Previously she served on the boards of Enzon Pharmaceuticals, Inc. from November 2013 to November 2021 and of Antibe Therapeutics, Inc. From 2020 to 2024. In 2005, Ms. McNealey founded and launched Laurient, an equity research and competitive intelligence tool for the biotechnology investment community. Prior to founding Laurient, Ms. McNealey served as an equity analyst and portfolio manager at Franklin Templeton and Morgan Stanley, each with a focus in investing in public biotechnology companies. Ms. McNealey earned an MHA from the Sloan Program in healthcare administration and a BA in psychology from Cornell University. Ms. McNealey was selected to serve on our board of directors following the Business Combination based on her service as a member of the management team of another public company, as well as her extensive experience in the biotechnology and pharmaceutical industries. Andrew Regan . Dr. Regan is a British born polar explorer and entrepreneur. He has served as a member of our board of directors since September 2023. He was a co-founder of Conduit Pharmaceuticals Limited and has served as a board member of Old Conduit since 2019. Dr. Regan also founded Corvus Capital Limited and has been its Chief Executive Officer since 2008. Corvus Capital is an investment vehicle that was previously listed on the London Stock Exchange prior to being taken private in 2008. Corvus Capital continues to invest in a number of industries and sectors. Dr. Regan also has experience as an investor in a number of public and private companies, including ASOS.com Ltd, a global online fashion and beauty retailer, Virtual Internet, an IT services company that specializes in hosting infrastructure such as VMWare cloud hosting and Managed and Dedicated Servers, and Imperial Energy Corporation plc, an upstream oil and gas exploration and production company. Prior to that, Dr. Regan was the Chief Executive Officer of Hobson Plc, which was listed on the London Stock Exchange, until its sale in 1996 through a cash takeover. Dr. Regan has a strong interest in the use of bio-inspired science to create solutions for present day problems. In 2014, he was awarded a PhD from Oxford Brookes University for his research in writing and developing a bio-inspired algorithm for forecasting the financial markets. He is passionate about the polar regions and is an accomplished polar explorer having led a number of expeditions to both the Arctic and Antarctica. Dr. Regan was selected to serve on our board of directors following the Business Combination based on his knowledge of Old Conduit and his extensive experience in investing, financing, overseeing and developing companies. Board Composition Our business and affairs are organized under the direction of our board of directors. The board of directors will meet on a regular basis and additionally as required. In accordance with the terms of the amended and restated certificate of incorporation, the board of directors may establish the authorized number of directors from time to time by resolution. Our board of directors currently consists of seven directors. Director Independence Under the Nasdaq listing standards, a majority of the members of our board of directors must qualify as “independent,” as affirmatively determined by the board of directors. The Company’s board of directors affirmatively determined that all of the Company’s directors, except for Messrs. Bligh, Tapolczay, and Regan are independent directors within the meaning of the applicable Nasdaq listing standards. A majority of the members of the board of directors and all members of the Audit Committee, Compensation Committee, and Nominating and Corporate Governance Committee are independent directors under the applicable Nasdaq listing standards. 79 Board Leadership Structure The board of directors is responsible for the control and direction of the Company. We separate the positions of Chairperson of the board of directors and Chief Executive Officer of the Company. Dr. Lewis-Hall serves as the Chairperson of the board of directors and Dr. Tapolczay serves as the Chief Executive Officer of the Company and as a member of the board of directors. The board of directors believe that this structure serves us well by maintaining a link between management, through Dr. Tapolczay’s membership on the board of directors, and the non-executive directors led by Dr. Lewis-Hall in her role as a non-executive Chairperson. Board Oversight of Risk One of the key functions of our board of directors is to conduct informed oversight of our risk management process. The board of directors does not anticipate having a standing risk management committee, but rather administers this oversight function directly through the board of directors as a whole, as well as through various standing committees of the board of directors that address risks inherent in their respective areas of oversight. In particular, the board of directors will be responsible for monitoring and assessing strategic risk exposure and the Audit Committee will have the responsibility to consider and discuss the Company’s major financial risk exposures and the steps our management will take to monitor and control such exposures, including guidelines and policies to govern the process by which risk assessment and management is undertaken. The Audit Committee also monitors compliance with legal and regulatory requirements. The Compensation Committee assesses and monitors whether our compensation plans, policies, and programs comply with applicable legal and regulatory requirements. Committees of the Board of Directors The board of directors has formed the committees described below. Each of the committees operates pursuant to a written charter adopted by the committee or our board of directors. Each charter sets forth the committee’s specific functions and responsibilities. The board of directors of may from time to time establish other committees. Audit Committee The Audit Committee assists the board of directors with its oversight of the integrity of the financial statements; the compliance with legal and regulatory requirements; the qualifications, independence and performance of the independent registered public accounting firm; the design and implementation of the financial risk assessment and risk management. Among other things, the Audit Committee is responsible for reviewing and discussing with management the adequacy and effectiveness of disclosure controls and procedures. The Audit Committee also discusses with management and independent registered public accounting firm the annual audit plan and scope of audit activities, scope, and timing of the annual audit of the financial statements, and the results of the audit, quarterly reviews of the financial statements and, as appropriate, initiates inquiries into certain aspects of the financial affairs. The Audit Committee is responsible for establishing and overseeing procedures for the receipt, retention, and treatment of any complaints regarding accounting, internal accounting controls or auditing matters, as well as for the confidential and anonymous submissions by employees of concerns regarding questionable accounting or auditing matters. In addition, the Audit Committee has direct responsibility for the appointment, compensation, retention, and oversight of the work of the independent registered public accounting firm. The Audit Committee has sole authority to approve the hiring and discharging of the independent registered public accounting firm, all audit engagement terms and fees and all permissible non-audit engagements with the independent auditor. The Audit Committee reviews and oversees all related party transactions in accordance with policies and procedures. The Audit Committee is comprised of three members: Ms. Farley (Chairperson), Dr. Lewis-Hall, and Ms. McNealey. Each member of the Audit Committee meets the requirements for independence under the current Nasdaq and SEC rules and regulations and each member is financially literate. In addition, the board of directors has determined that each of Ms. Farley and Ms. McNealey is an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-K promulgated under the Securities Act. 80 Compensation Committee The Compensation Committee assists the board of directors with its oversight of the forms and amount of compensation for executive officers (including officers reporting under Section 16 of the Exchange Act), the administration of equity and non-equity incentive plans for employees and other service providers and certain other matters related to compensation programs. The Compensation Committee, among other responsibilities, evaluates the performance of our Chief Executive Officer and, in consultation with the Chief Executive Officer, evaluates the performance of other executive officers (including officers reporting under Section 16 of the Exchange Act). The Compensation Committee is comprised of three members: Ms. Charles (Chairperson), Ms. Farley, and Ms. McNealey. The composition of the Compensation Committee meets the requirements for independence under the current Nasdaq and SEC rules and regulations. Each member of the Compensation Committee is a “non-employee” director within the meaning of Rule 16b-3 promulgated under the Exchange Act. Nominating and Governance Committee The Nominating and Corporate Governance Committee assists the board of directors with its oversight of and identification of individuals qualified to become members of the board of directors, consistent with criteria approved by the board of directors, and selects, or recommends that the board of directors selects, director nominees; develops and recommends to the board of directors a set of corporate governance guidelines; oversees the evaluation of the board of directors; and reviews the environmental, safety, sustainability, and corporate social responsibility policies, objectives, and practices on a periodic basis. The Nominating and Corporate Governance Committee is comprised of two members: Dr. Lewis-Hall (Chairperson) and Ms. Charles. The composition of the Nominating and Corporate Governance Committee meets the requirements for independence under the current Nasdaq and SEC rules and regulations. Compensation Committee Interlocks and Insider Participation No member of our Compensation Committee was at any time during fiscal year 2023, or at any other time, one of our officers or employees. None of our executive officers have served as a director or member of a compensation committee (or other committee serving an equivalent function) of any entity, one of whose executive officers served as a director of our board of directors or member of our Compensation Committee. Family Relationships There are no family relationships among our directors and executive officers. Code of Conduct We adopted a written Code of Conduct applicable to all of our directors, officers, and employees, which is available on the Company’s website at http://www.conduitpharma.com. Our Internet website address is provided as an inactive textual reference only. The Code of Conduct covers fundamental ethical and compliance-related principles and practices such as accurate accounting records and financial reporting, avoiding conflicts of interest, the protection and use of property and information, and compliance with legal and regulatory requirements. The Code of Conduct is a “code of ethics,” as defined in Item 406(b) of Regulation S-K. The Company will make any legally required disclosures regarding amendments to, or waivers of, provisions of its Code of Conduct on its corporate website. Director and Officer Liability and Indemnification We have purchased directors’ and officers’ liability insurance and have entered into indemnification agreements with each of directors and executive officers. The indemnification agreements and our amended and restated certificate of incorporation and amended and restated bylaws require us to indemnify our directors and officers to the fullest extent permitted by Delaware law. 81 Insider Trading Policy The use of material non-public information in securities transactions or the communication of such information to others who use it in securities trading (“Tipping”) violates the federal securities laws. Such violations are likely to result in harsh consequences for the individuals involved including exposure to investigations by the SEC, criminal and civil prosecution, disgorgement of any profits realized or losses avoided through use of the non-public information and penalties equal to three times such profits or losses. Further, insider trading violations expose the Company, its management, and other personnel acting in supervisory capacities to potential civil liabilities and penalties for the actions of employees under their control who engage in Insider Trading violations. Our Insider Trading Policy (the “Insider Trading Policy”) prohibits our executive officers, the non-employee members of our board of directors and certain other employees from engaging in the following transactions: ● selling any of our securities that they do not own at the time of the sale (referred to as a “short sale”); ● passing material nonpublic information on to others or recommending that another engage in transactions in any securities that they have information on; ● buying or selling puts, calls, other derivative securities of the Company or any derivative securities that provide the economic equivalent of ownership of any of our securities or an opportunity, direct or indirect, to profit from any change in the value of our securities or engaging in any other hedging transaction with respect to our securities; ● using our securities as collateral in a margin account; and ● pledging our securities as collateral for a loan (or modifying an existing pledge). As of the date of this Form 10-K, none of our executive officers or non-employee directors have previously engaged in any hedging or pledging transaction involving our securities. Section 16(a) Beneficial Ownership Reporting Compliance Section 16(a) of the Exchange Act requires that our directors and executive officers, and persons who own more than ten percent of a registered class of our equity securities, to file with the SEC initial reports of ownership and reports of changes in ownership of common stock and other equity securities of the Company. Officers, directors and greater than ten percent stockholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file. To our knowledge, based solely on a review of the copies of such reports furnished to us and written representations that no other reports were required, during the year ended December 31, 2023, all Section 16(a) filing requirements applicable to our officers, directors and greater than ten percent beneficial owners were complied with, except for the Form 4 filed by Freda Lewis-Hall on December 14, 2023 reporting a stock option issued on December 1, 2023. The delinquent filing was inadvertent. 82 Item 11. Executive Compensation Fiscal 2023 Summary Compensation Table The following table summarizes the compensation earned by or paid to our principal executive officer and our principal financial officer, who constitute all of our executive officers, for fiscal 2023 and fiscal 2022. We have no defined benefit or actuarial pension plan, and no deferred compensation plan. NAME AND PRINCIPAL POSITION FISCAL YEAR SALARY ($) STOCK AWARDS (1) ($) OPTION AWARDS (1) ($) NONEQUITY INCENTIVE PLAN COMPENSATIONS ($) ALL OTHER COMPENSATION TOTAL ($) David Tapolczay Chief Executive Officer and Director 2023 $ 139,933 $ - $ 1,203,239 $ - $ - $ 1,343,172 2022 $ - $ - $ - $ - $ - $ - Adam Sragovicz, Chief Financial Officer 2023 $ 116,667 $ 410,743 $ - $ - $ - $ 527,410 2022 $ - $ - $ - $ - $ - $ - (1) Amounts in these columns represent the aggregate grant date fair value, as determined in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718, Compensation — Stock Compensation (“FASB ASC Topic 718”) for stock awards and option awards granted in 2023. On December 1, 2023, David Tapolczay received a stock option to purchase 298,179 shares of Common Stock ; and Adam Sragovicz received a restricted stock unit award covering 74,545 shares of Common Stock. The closing price of our common stock on the grant date was $5.51 per share. Employment Agreements We entered into employment agreements with our named executive officers on September 22, 2023, which was the closing date of the Business Combination. These agreements are summarized below. Dr. Tapolczay On September 22, 2023, we entered into an employment agreement (the “Tapolczay Employment Agreement”) with Dr. Tapolczay, pursuant to which he serves as our Chief Executive Officer of and a member of our board of directors. Under the Tapolczay Employment Agreement, Dr. Tapolczay is entitled to (i) an annual base salary of $550,000, and (ii) a target annual bonus opportunity equal to 50% of his base salary, payable based on the achievement of performance objectives as determined by our board of directors. In addition, the Tapolczay Employment Agreement provides that Dr. Tapolczay is entitled to receive a sign-on stock option award to purchase 0.40% of the shares of our Common Stock pursuant to the terms of the 2023 Stock Incentive Plan, which shall vest in equal annual installments on the first four anniversaries of the Business Combination. The Tapolczay Employment Agreement provides that if we terminate Dr. Tapolczay’s employment other than for cause or disability, or if he terminates his employment for good reason, in either case other than the change in control protection period (described below), he would be entitled to receive (i) continued payment of his annual base salary for 12 months following the date of termination, (ii) a lump sum payment of his annual cash performance bonus that had been earned by him for a completed fiscal year or other measuring period but that had not yet been paid to him as of the date of termination, (iii) a lump sum payment equal to his then target annual bonus opportunity, pro-rated based on the total number of days elapsed in the calendar year through the date of termination, (iv) payment or reimbursement of the COBRA premiums for him and his eligible dependents, or if COBRA is not available under our group health plan, a cash amount equal to such payments or reimbursements (in either case, less the premiums he was paying for such coverage while employed), until the earliest of (x) the last day of the applicable salary continuation period specified above, or (y) the date he becomes eligible for comparable health insurance coverage under a subsequent employer’s group health plan; and (v) accelerated vesting of such number of his unvested equity awards as would have vested had he remained employed during the 12-month period following his date of termination (provided, however, that, any equity awards that vest in whole or in part based on the attainment of performance-vesting conditions shall be governed by the terms of the applicable award agreement). 83 The Tapolczay Employment Agreement provides that if we terminate Dr. Tapolczay’s employment other than for cause or disability, or if he terminates his employment for good reason, in either case within three months prior to or 12 months after a change in control (such period, the change in control period), he would be entitled to receive (i) continued payment of his annual base salary for 18 months following the date of termination, (ii) a lump sum payment of his annual cash performance bonus that had been earned by him for a completed fiscal year or other measuring period but that had not yet been paid to him as of the date of termination, (iii) a lump sum payment equal to 150% of his then target annual bonus opportunity (without pro-ration), (iv) payment or reimbursement of the COBRA premiums for him and his eligible dependents, or if COBRA is not available under our group health plan, a cash amount equal to such payments or reimbursements (in either case, less the premiums he was paying for such coverage while employed), until the earliest of (x) the last day of the applicable salary continuation period specified above, or (y) the date he becomes eligible for comparable health insurance coverage under a subsequent employer’s group health plan; and (v) accelerated vesting of 100% of his unvested equity awards (provided, however, that, any equity awards that vest in whole or in part based on the attainment of performance-vesting conditions shall be governed by the terms of the applicable award agreement). Additionally, to the extent that any payment or benefit received in connection with a change in control would be subject to an excise tax under Section 4999 of the Code, such payments and/or benefits will be subject to a “best pay cap” reduction if such reduction would result in a greater net after-tax benefit to the executive than receiving the full amount of such payments. In exchange for the severance benefits described above, Dr. Tapolczay must (i) sign and not revoke a release of claims in favor of the Company, (ii) comply with his proprietary information and inventions assignment agreement, (iii) refrain from soliciting employees of the Company for a period of one year after his termination of employment, and (iv) comply with the other provisions of the Tapolczay Employment Agreement. Mr. Sragovicz On September 22, 2023, we entered into an employment agreement (the “Sragovicz Employment Agreement”) with Adam Sragovicz, pursuant to which he serves as our Chief Financial Officer. Under the Sragovicz Employment Agreement, Mr. Sragovicz is entitled to (i) an annual base salary of $400,000, and (ii) a target annual bonus opportunity equal to 40% of his base salary, payable based on the achievement of performance objectives as determined by our board of directors. In addition, the Sragovicz Employment Agreement provides that Mr. Sragovicz is entitled to receive a sign-on restricted stock unit award covering 0.10% of the shares of our Common Stock pursuant to the terms of the 2023 Stock Incentive Plan, which shall vest in equal annual installments on each of the first three anniversaries of the Business Combination. The Sragovicz Employment Agreement provides that if we terminate Mr. Sragovicz’s employment other than for cause or disability, or if he terminates his employment for good reason, in either case other than the change in control protection period (described below), he would be entitled to receive (i) continued payment of his annual base salary for nine months following the date of termination, (ii) a lump sum payment of his annual cash performance bonus that had been earned by him for a completed fiscal year or other measuring period but that had not yet been paid to him as of the date of termination, (iii) a lump sum payment equal to his then target annual bonus opportunity, pro-rated based on the total number of days elapsed in the calendar year through the date of termination, (iv) payment or reimbursement of the COBRA premiums for him and his eligible dependents, or if COBRA is not available under our group health plan, a cash amount equal to such payments or reimbursements (in either case, less the premiums he was paying for such coverage while employed), until the earliest of (x) the last day of the applicable salary continuation period specified above, or (y) the date he becomes eligible for comparable health insurance coverage under a subsequent employer’s group health plan; and (v) accelerated vesting of such number of his unvested equity awards as would have vested had he remained employed during the nine-month period following his date of termination (provided, however, that, any equity awards that vest in whole or in part based on the attainment of performance-vesting conditions shall be governed by the terms of the applicable award agreement). The Sragovicz Employment Agreement provides that if we terminate Mr. Sragovicz’s employment other than for cause or disability, or if he terminates his employment for good reason, in either case within three months prior to or 12 months after a change in control (such period, the change in control period), he would be entitled to receive (i) continued payment of his annual base salary for 12 months following the date of termination, (ii) a lump sum payment of his annual cash performance bonus that had been earned by him for a completed fiscal year or other measuring period but that had not yet been paid to him as of the date of termination, (iii) a lump sum payment equal to 100% of his then target annual bonus opportunity (without pro-ration), (iv) payment or reimbursement of the COBRA premiums for him and his eligible dependents, or if COBRA is not available under our group health plan, a cash amount equal to such payments or reimbursements (in either case, less the premiums he was paying for such coverage while employed), until the earliest of (x) the last day of the applicable salary continuation period specified above, or (y) the date he becomes eligible for comparable health insurance coverage under a subsequent employer’s group health plan; and (v) accelerated vesting of 100% of his unvested equity awards (provided, however, that, any equity awards that vest in whole or in part based on the attainment of performance-vesting conditions shall be governed by the terms of the applicable award agreement). 84 Additionally, to the extent that any payment or benefit received in connection with a change in control would be subject to an excise tax under Section 4999 of the Code, such payments and/or benefits will be subject to a “best pay cap” reduction if such reduction would result in a greater net after-tax benefit to the executive than receiving the full amount of such payments. In exchange for the severance benefits described above, Mr. Sragovicz must (i) sign and not revoke a release of claims in favor of the Company, (ii) comply with his proprietary information and inventions assignment agreement, (iii) refrain from soliciting employees of the Company for a period of one year after his termination of employment, and (iv) comply with the other provisions of the Sragovicz Employment Agreement. Outstanding Equity Awards at 2023 Fiscal Year-End The following table summarizes all of the outstanding equity-based awards held by our named executive officers as of December 31, 2023, the end of our fiscal year. OPTION AWARDS (1) NAME OPTION OR STOCK AWARD GRANT DATE NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS (#) EXERCISABLE NUMBER OF SECURITIES UNDERLYING UNEXERCISED OPTIONS (#) UNEXERCISABLE EQUITY INCENTIVE PLAN AWARD: NUMBER OF SECURITIES UNDERLYING UNEXERCISED UNEARNED OPTIONS (#) OPTION EXERCISE PRICE ($) OPTION EXPIRATION DATE NUMBER OF SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED (2) (#) MARKET VALUE OF SHARES OR UNITS OF STOCK THAT HAVE NOT VESTED ($) (3) David Tapolczay 12/1/2023 - - 298,179 $ 5.51 11/30/2033 298,179 1,356,714 Adam Sragovicz 12/1/2023 - - - $ - N/A 74,545 339,180 (1) The stock option vests as to 1/4 of the underlying shares on each of the first four anniversaries of the vesting commencement date, which is September 22, 2023. (2) The restricted stock unit award vests as to 1/3 of the underlying shares on each of the first three anniversaries of the vesting commencement date, which is September 22, 2023. (3) Calculated by multiplying the number of restricted stock units by $4.55, the closing market price of our common stock on December 29, 2023, the last trading day of our most recently completed fiscal year. 85 2023 Stock Incentive Plan On September 20, 2023, MURF stockholders approved the Conduit Pharmaceuticals Inc. 2023 Stock Incentive Plan (the “2023 Plan”). The 2023 Plan permits our board of directors or compensation committee to grant may grant or issue stock options, stock appreciation rights, restricted stock, restricted stock units, performance stock units, other stock- or cash-based awards and dividend equivalents, or any combination thereof, to officers, employees, directors or consultants of the Company. Subject to adjustment for stock splits or similar events, the 2023 Plan initially reserved 11,497,622 shares of Common Stock for issuance pursuant to awards, plus an annual increase on the first day of each calendar year beginning in 2024 and ending in 2033 equal to the lesser of (i) 5% of the shares of Common Stock outstanding on the last day of the immediately preceding calendar year and (ii) such smaller number of shares of Common Stock as determined by our board of directors. The Company filed with the SEC a registration statement on Form S-8 covering all of the shares of Common Stock issuable under the 2023 Plan. On January 10, 2024, the Company filed a registration statement on Form S-8 that increased the number of shares of Common Stock available for issuance under the 2023 Plan by 3,691,476 shares. Securities Authorized for Issuance under Equity Compensation Plans The following table provides a summary of the securities authorized for issuance under our equity compensation plans as of December 31, 2023. Plan category Number of securities to be issued upon exercise of outstanding options, warrants and rights Weighted-average exercise price of outstanding options, warrants and rights Number of securities remaining available for future issuance under equity compensation plans (excluding securities reflected in column (a)) (a) (1) (b) (2) (c) Equity compensation plans approved by security holders 2023 Plan 1,146,264 $ 5.51 10,351,358 Equity compensation plans not approved by security holders - - - Total 1,146,264 $ 5.51 10,351,358 (1) This column reflects 1,071,719 shares issuable upon the exercise of outstanding stock options and 74,545 shares issuable upon the vesting and payment of time-based restricted stock units (“RSUs”). (2) Excludes the RSUs referred to in note 1 above because they have no exercise price. 86 Director Compensation The following table sets forth the compensation we paid to our non-employee directors during fiscal 2023: Name Fees earned or paid in cash ($) Stock awards ($) Option awards ($) (1) Non-equity incentive plan compensation Change in pension value and nonqualified deferred compensation earnings All Other Compensation TOTAL ($) James Bligh $ 424,739 $ - $ 902,428 $ - $ - $ 108,606 $ 1,435,773 Faith L. Charles $ 12,250 $ - $ 255,180 $ - $ - $ - $ 208,809 Chele Chiavacci Farley $ 13,750 $ - $ 255,180 $ - $ - $ - $ 267,430 Freda Lewis-Hall $ 20,125 $ - $ 255,180 $ - $ - $ - $ 275,305 Jennifer I. McNealey $ 11,875 $ - $ 255,180 $ - $ - $ - $ 267,055 Andrew Regan $ 599,047 $ - $ - $ - $ - $ 243,034 $ 842,081 (1) Amounts in this column represents the aggregate grant date fair value, determined in accordance with FASB ASC Topic 718, of option awards granted to participating non-employee directors on December 1, 2023. For a description of the assumptions we used to calculate these amounts, see Note 10 to the consolidated financial statements included in this Annual Report. As of December 31, 2023, each non-employee director (other than Dr. Regan, who waived his right to receive equity grants) held a stock option to purchase 65,000 shares of our Common Stock, with an exercise price equal to $5.51 per share. Each stock option vests as to 1/3 of the underlying shares on each of the first three anniversaries of the vesting commencement date, which is September 22, 2023. Compensation Program for the Board of Directors We adopted a compensation program for our board of directors, which became effective upon completion of the Business Combination. Under the compensation program, the non-employee directors will receive the following annual cash retainers for their service on the board of directors and its committees: ● $35,000 for each non-employee director; ● $30,000 for the Chairperson of the board of directors; ● $15,000 for the chair of the Audit Committee and $7,500 for each of the other members of that committee; ● $10,000 for the chair of the Compensation Committee and $5,000 for each of the other members of that committee; and ● $8,000 for the chair of the Nominating and Corporate Governance Committee and $4,000 for each of the other members of that committee. In addition, each non-employee director who is initially elected or appointed to the board of directors on or after the completion of the Business Combination will automatically be granted on the day of such first election or appointment a stock option to purchase 65,000 shares of our Common Stock (the “Initial Award”) (provided that the Initial Award with respect to each non-employee director who initially is elected or appointed to the board at the closing of the Business Combination shall be granted upon the effectiveness of the Form S-8 with respect to the our Common Stock issuable under the 2023 Stock Incentive Plan). Each Initial Award will vest and become exercisable in substantially equal installments on each of the first three anniversaries of the date of grant, subject to the non-employee director continuing in service on the board of directors through each such vesting date. 87 A non-employee director who is serving on the board of directors as of the date of any annual meeting after the effective date of the new program, and who will continue to serve as a non-employee director immediately following such meeting, will automatically be granted on the date of such annual meeting a stock option to purchase 32,500 shares of our Common Stock, which amount is pro-rated for new directors to reflect their service since the last annual meeting (the “Annual Award”). Each Annual Award will vest and become exercisable on the earlier of (i) the first anniversary of the date of grant, or (ii) the date immediately prior to the next annual meeting of the Company’s stockholders following the date of grant, subject to the non-employee director continuing in service on the board of directors through such vesting date. Upon a change in control, all outstanding equity awards that are held by a non-employee director shall become fully vested and exercisable. Board members who are also employees of the Company, such as Dr. Tapolczay and Mr. Bligh, are not eligible to participate in the non-employee director compensation program described above and did not receive any compensation for service on the board of directors. Moreover, Dr. Regan waived his right to receive equity awards under the program. The 2023 Plan provides that the sum of the grant date fair value of all equity-based awards and the maximum amount of cash that may become payable to any individual for services as a non-employee director during any calendar year may not exceed $750,000, increased to $1,000,000 in the calendar year of a non-employee director’s initial service as a non-employee director. The plan administrator may make exceptions to this limit for individual non-employee directors in extraordinary circumstances, as the plan administrator may determine in its discretion, provided that the non-employee director receiving such additional compensation may not participate in the decision to award such compensation or in other contemporaneous compensation decisions involving non-employee directors. Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters The following table sets forth beneficial ownership of the Company’s Common Stock as of April 16, 2024 by: ● each person known to be the beneficial owner of more than 5% of the outstanding Common Stock of the Company; ● each of the Company’s executive officers and directors; and ● all of the Company’s current executive officers and directors as a group. Beneficial ownership is determined according to the rules of the SEC, which generally provide that a person has beneficial ownership of a security if he, she or it possesses sole or shared voting or investment power over that security. Under those rules, beneficial ownership includes securities that the individual or entity has the right to acquire, such as through the exercise of warrants or stock options or the vesting of restricted stock units, within 60 days of April 16, 2024. Shares subject to warrants or options that are currently exercisable or exercisable within 60 days of April 16, 2024 or subject to restricted stock units that vest within 60 days of April 16, 2024 are considered outstanding and beneficially owned by the person holding such warrants, options, or restricted stock units for the purpose of computing the percentage ownership of that person but are not treated as outstanding for the purpose of computing the percentage ownership of any other person. Except as noted by footnote, and subject to community property laws where applicable, based on the information provided to the Company, the persons and entities named in the table below have sole voting and investment power with respect to all shares shown as beneficially owned by them. Unless otherwise indicated, the business address of each beneficial owner listed in the table below is c/o Conduit Pharmaceuticals Inc., 4995 Murphy Canyon Road, Suite 300, San Diego, California 92123. 88 The beneficial ownership of our Common Stock is based on 73,829,536 shares of Common Stock issued and outstanding as of April 16, 2024, which number excludes the shares of Common Stock issuable upon exercise of the warrants. Unless otherwise indicated, we believe that all persons named in the table have sole voting and investment power with respect to all of the shares shown to be beneficially owned by them. Name and Address of Beneficial Owner Number of shares of Common Stock % of Common Stock* % of Total Voting Power* Directors and executive officers James Bligh 223,634 * % * % Faith L. Charles 65,000 * % * % Chele Chiavacci Farley 95,000 (1) * % * % Freda Lewis-Hall 2,585,311 (2) 3.5 % 3.4 % Jennifer I. McNealey 65,000 * % * % Andrew Regan 45,593,799 (3) 61.8 % 61.8 % Adam Sragovicz 74,545 * % * % David Tapolczay 2,301,503 (7) 3.1 % 2.7 % All directors and executive officers as a group (8 individuals) 51,003,792 68.3 % 67.9 % Other 5% beneficial owners Corvus Capital Limited 45,593,799 (3) 62.6 % 62.6 % Murphy Canyon Acquisition Sponsor, LLC (4) 4,724,250 6.5 % 6.5 % St George Street Capital (5) 4,749,816 6.5 % 6.5 % Nirland Limited (6) 6,231,753 8.3 % 8.3 % * Indicates beneficial ownership of less than 1%. (1) Consists of (i) 75,000 shares of Common Stock, and (ii) warrants to purchase 15,000 shares of Common Stock. (2) Consists of 2,520,311 shares of Common Stock of which 2,003,324 were issued to Intelmed LLC, of which Dr. Lewis-Hall is the Managing Director and 516,987 shares of Common Stock received by Mr. Emerson Hall, Jr., Dr. Lewis-Hall’s spouse. By virtue of this relationship with both Intelmed LLC and her spouse, Dr. Lewis-Hall may be deemed to share beneficial ownership of the securities held of record by Intelmed LLC and Mr. Emerson Hall, Jr. Dr. Lewis-Hall disclaims any such beneficial ownership except to the extent of her pecuniary interest therein. The business address of Intelmed LLC is 11421 Golden Eagle Court Naples, Florida 34120. (3) Consists of (i) 66,650 shares of Common Stock held directly by Dr. Regan, (ii) 31,148,454 shares of Common Stock held by Corvus Capital Limited, and (iii) 14,378,695 shares of Common Stock held by Algo Holdings, Inc. Dr. Regan is the Chief Executive Officer of Corvus Capital Limited and Algo Holdings, Inc. is a wholly owned subsidiary of Corvus Capital Limited. By virtue of this relationship, Dr. Regan may be deemed to share beneficial ownership of the securities held of record by Corvus Capital Limited and Algo Holdings, Inc. Dr. Regan disclaims any such beneficial ownership except to the extent of his pecuniary interest therein. Certain of the shares identified may, in certain circumstances, be subject to transfer to Nirland Limited. The business address of Corvus Capital Limited is Floor 2, Willow House, Cricket Square PO Box 709 Grand Cayman KY1-1107, Cayman Islands. (4) According to a Schedule 13D/A filing made with the SEC on September 29, 2023, Murphy Canyon Acquisition Sponsor LLC (the “Sponsor”) is controlled by its sole and managing member NetREIT Advisors LLC (“NetREIT”). Jack Heilbron is the President of NetREIT and accordingly may be deemed to have beneficial ownership of securities reported herein. Mr. Heilbron disclaims any ownership of securities reported herein other than to the extent of any pecuniary interest he may have therein, directly or indirectly. The business address of the Sponsor is 4995 Murphy Canyon Road, Suite 300, San Diego, California 92123 (5) According to a Schedule 13G filing made with the SEC on September 29, 2023, St George Street Capital is charitable foundation organized under the laws of England and Wales. Our CEO, Mr. Tapolczay, is a Trustee of St George Street Capital but disclaims any such beneficial ownership except to the extent of his pecuniary interest. The business address of St George Street Capital is Bates Wells Braithwaite, 10 Queen Street Place, London, United Kingdom EC4R 1BE. 89 (6) Number of shares of Common Stock was communicated to the Company by Nirland Limited, and includes the shares of Common Stock and the warrants issued in the PIPE Financing. In addition, according to a Schedule 13G filing made with the SEC on October 2, 2023 (the “Nirland Schedule 13G”), Nirland Limited is wholly owned by Stockton Limited, a company registered in Guernsey (“Stockton Limited”), which is wholly owned by The Rowland Master Trust, a Guernsey trust (“The Rowland Master Trust”). Dovet Limited, a company registered in Guernsey (“Dovet Limited”), is the sole trustee of The Rowland Master Trust. By virtue of these relationships, each of Stockton Limited, The Rowland Master Trust and Dovet Limited may be deemed to share beneficial ownership of the securities held of record by Nirland Limited. According to the Nirland Schedule 13G, the shares of Common Stock then beneficially owned included (i) 2,000,000 shares of Common Stock sold pursuant to that certain Subscription Agreement, dated September 22, 2023, filed as Exhibit 10.1 to the Company’s Current Report on Form 8-K filed with the SEC on September 13, 2023; (ii) 2,000,000 shares of Common Stock issuable upon exercise of that certain Common Stock Warrant, in substantially the form as the form of warrant filed as Exhibit 4.1 to the Company’s Current Report on Form 8-K filed with the SEC on September 13, 2023, issued by the Company in favor of Nirland Limited, a company registered in Guernsey with company number 58804 of The Old Stables Rue a L’Or, St Peter Port, GUERNSEY GY1 1QG, which may be exercised at any time beginning 30 days after the completion of the Business Combination; and (iii) 2,520,311 shares of Common Stock purchased by Nirland Limited from St George Street Capital Limited, a limited liability company incorporated under the laws of the United Kingdom, pursuant to that certain share purchase agreement, dated as of September 22, 2023. Nirland may have a right to receive, in certain circumstances, certain shares of Common Stock beneficially owned by Corvus Capital. The Nirland Schedule 13G reported that the address the business office of each of Nirland Limited, Stockton Limited, The Rowland Master Trust, and Dovet Limited is The Old Stables, Rue a l’Or, St Peter Port, GY1 1QG, Guernsey. (7) Represents 2,003,324 shares received pursuant to the Agreement and Plan of Merger, dated as of November 8, 2022 and as amended on January 27, 2023 and May 11, 2023, by and among the Company, Conduit and the Merger Sub, and 298,179 options to purchase shares of Common Stock that were granted on December 1, 2023. Item 13. Certain Relationships and Related Transactions, and Director Independence In addition to the compensation arrangements with directors and executive officers described under the sections titled “Executive Compensation” and “Management,” the following is a description of each transaction since January 1, 2022, and each currently proposed transaction, in which: ● we have been or are to be a participant; ● the amount involved exceeds or will exceed $120,000; and ● any of our directors, executive officers, or beneficial holders of more than 5% of our capital stock, or any immediate family member of, or person sharing the household with, any of these individuals (other than tenants or employees), had or will have a direct or indirect material interest. Policies and Procedures for Related Party Transactions Our board of directors adopted a policy, at the closing of the Business Combination, with respect to the review, approval, and ratification of related party transactions. Under the policy, the audit committee of the board of directors is responsible for reviewing and approving related party transactions. In the course of its review and approval of related party transactions, the audit committee will consider the relevant facts and circumstances to decide whether to approve such transactions. In particular, the policy requires the audit committee to consider, among other factors it deems appropriate: ● whether the transaction was undertaken in the ordinary course of business of the Company; 90 ● whether the related party transaction was initiated by the Company, a subsidiary, or the related party; ● whether the transaction with the related party is proposed to be, or was, entered into on terms no less favorable to the Company than terms that could have been reached with an unrelated third party; ● the purpose of, and the potential benefits to the Company of, the related party transaction; ● if the approximate dollar value of the amount involved in the related party transaction, particularly as it relates to the related party; ● the related party’s interest in the related party transaction; ● whether the related party transaction would impair the independence of an otherwise independent director; and ● any other information regarding the related party transaction or the related party that would be material to investors in light of the circumstances of the particular transaction The audit committee may approve the related party transaction only if the audit committee determines in good faith that, under all of the circumstances, the transaction is in the best interests of the Company and its stockholders. Founder Shares On November 16, 2021, the Sponsor, Murphy Canyon Acquisition Sponsor LLC, previously an affiliate of MURF, purchased an aggregate of 4,312,500 shares of Common Stock for the aggregate price of $25,000 (the “Founder Shares”). The Founder Shares included an aggregate of up to 750,000 shares subject to forfeiture by the Sponsor to the extent that the underwriters’ over-allotment was not exercised in full or in part, or 1,006,250 shares if the underwriters’ over-allotment was exercised in full, so that the Sponsor would collectively own 20% of the Company’s issued and outstanding shares after the IPO (assuming that, in the IPO, the Sponsor only purchased Class A common stock consisting of (i) the Founder Shares and (ii) the 754,000 shares of Class A common stock included in the units purchased by the Sponsor in connection with the IPO (together, the “Private Shares”). As a result of the underwriters’ election to exercise their over-allotment option, on January 26, 2022, the Sponsor surrendered and forfeited 1,006,250 Founder Shares. Following such forfeiture, the Sponsor held 3,306,250 Founder Shares. The Sponsor agreed, subject to certain limited exceptions, not to transfer, assign or sell any of the Founder Shares until the earlier to occur of: (A) six months after the completion of our initial business combination, and (B) subsequent to the initial business combination if we complete a liquidation, merger, stock exchange or other similar transaction that results in all of our public stockholders having the right to exchange their public shares for cash, securities or other property. Notwithstanding the foregoing, the Sponsor shall have the right to transfer its ownership in the Founder Shares at any time to the extent that it determines, in good faith, that such transfer is necessary to ensure that it and/or any of its parents, subsidiaries or affiliates are in compliance with the Investment Company Act of 1940. Private Units Contemporaneously with the closing of the IPO and the exercise of the overallotment option, the Sponsor purchased an aggregate of 754,000 private units of MURF in a private placement at a price of $10.00 per private unit. Each private unit consists of one Private Share and one Private Warrant (the “Private Warrant”). The private units are identical to the units sold in the IPO except that the (a) the placement units and their component securities will not be transferable, assignable or saleable until October 22, 2023 except to permitted transferees and (b) the warrants and rights included as a component of the placement units, so long as they are held by the Sponsor or its permitted transferees, will be entitled to registration rights, respectively. Additionally, the warrants underlying the placement units contain a cashless exercise provision and shall be non-redeemable while held by the initial purchasers thereof or their permitted assignees. The Sponsor had agreed not to transfer, assign or sell any of the private units and underlying securities (except in connection with the same limited exceptions that the Private Shares may be transferred as described above) until after the Business Combination. In connection with completion of the Business Combination, the Sponsor transferred 45,000 placement units (15,000 each) to each of Messrs. Knuettell and Feinberg, former Directors of MURF, and Ms. Chiavacci Farley, former Director of MURF and current Director of Conduit. 91 Promissory Note to Sponsor On November 4, 2021, the Sponsor issued an unsecured promissory note to the Company pursuant to which the Company could borrow up to an aggregate principal amount of $300,000. The promissory note was non-interest bearing and payable on the earlier of (i) the date on the Company consummates an initial public offering of its securities, or (ii) the date the Company determines not to conduct an initial public offering of its securities. As of December 31, 2021, there was $177,057 outstanding under the promissory note. The balance of the promissory note was paid in full and terminated on February 10, 2022. Administrative Services Agreement The Company entered into an agreement whereby, starting February 2, 2022, through December 2023, the Company paid Murphy Canyon Management Group, Inc., an affiliate of the Sponsor, a total of $10,000 per month for office space, utilities and secretarial and administrative support. For the period from February 2, 2022 through December 31, 2023, the Company incurred and paid $230,000 for these services and continues to contract for these services to the present date. Sponsor Support Agreement Concurrently with the execution of the Merger Agreement, the Company entered into a support agreement with the Sponsor pursuant to which the Sponsor agreed to, among other things, vote all of the shares of MURF common stock legally and beneficially owned by it in favor of the Business Combination. On September 20, 2023, the Sponsor voted all of the shares of MURF common stock then legally and beneficially owned by it in favor of the Business Combination. PIPE Subscription Agreement In September 2023, concurrently with the completion of the Business Combination, pursuant to the PIPE Subscription Agreement (the “PIPE Subscription Agreement “) for an aggregate purchase price of $20.0 million, the Company issued an aggregate of 2,000,000 shares of the Company’s Common Stock and PIPE Warrants (the “PIPE Warrants”) to purchase 2,000,000 shares of Company Common Stock. In conjunction with the execution of the PIPE Subscription Agreement, Corvus Capital and its affiliates entered into a participation and inducement agreement with the Private Placement Investor whereby Corvus agreed to provide certain payments and economic benefits to such investor in the event Corvus Capital sold or pledged in a debt transaction any of the shares it was receiving in the Business Combination. In certain circumstances, such investor may have a right to cause Corvus Capital to transfer certain of its shares to such investor. The PIPE Subscription Agreement contains registration rights, pursuant to which within 15 business days after the closing of the PIPE Financing, the Company was required to use reasonable best efforts to file with the SEC a registration statement registering the resale of shares of the Company’s common stock. On October 17, 2023, the Company filed a registration statement on Form S-1 (SEC File No. 333-275056) to satisfy that contractual requirement, which registration statement was declared effective by the SEC on December 15, 2023. The PIPE Warrants are exercisable until September 22, 2028 (five years after the completion of the Business Combination) and have an exercise price of $11.50 per share, subject to adjustment as set forth in the PIPE Warrants for stock splits, stock dividends, recapitalizations and similar customary adjustments. The Private Placement Investor may exercise each PIPE Warrant on a cashless basis if the shares underlying the PIPE Warrants are not then registered for resale pursuant to an effective registration statement. The Company common stock and PIPE Warrants to purchase Company common stock issued pursuant to the PIPE Subscription Agreement were not registered under the Securities Act, and were issued in reliance upon the exemption provided under Section 4(a)(2) of the Securities Act and/or Regulation D promulgated thereunder. 92 Consulting Agreement with Jack K. Heilbron Jack K. Heilbron, who served as the MURF’s Chief Executive Officer, President, and Chairman of the board of directors until September 22, 2023, has entered into a Consulting Agreement with the Company, which became effective upon the closing of the Business Combination. The Consulting Agreement provides that Mr. Heilbron will provide advisory and consulting services from time to time to the Company until September 22, 2024. Pursuant to the terms of the Consulting Agreement, Mr. Heilbron is entitled to rights as an observer to the Company’s board of directors. Mr. Heilbron is entitled to be paid $25,000 per calendar quarter for his consulting services and is also entitled to a stock option to purchase the number of shares of Common Stock determined by dividing (i) $300,000, by (ii) the per share Black-Scholes valuation as of the grant date, utilizing the same assumptions used in preparation of the financial statements, with the resulting quotient rounded down to the nearest whole share. Pursuant to the Consulting Agreement, as of December 31, 2023, and subsequent agreement between the parties, the Company has paid Mr. Heilbron approximately $27,500 and granted Mr. Heilbron stock options to purchase 30,000 shares of the Company’s common stock. Shareholder Support Agreements Concurrently with the execution of the Merger Agreement, MURF, Old Conduit, and certain shareholders of Old Conduit (the “Old Conduit Shareholders”) entered into a certain shareholder support agreement dated November 8, 2022, pursuant to which the Old Conduit Shareholders agreed to vote all Old Conduit shares beneficially owned by them, including any additional shares of Old Conduit they acquire ownership of or the power to vote, in favor of the Business Combination and related transactions. Under the support agreements, each Old Conduit Shareholder also agreed that, prior to the termination of the applicable support agreement, such Old Conduit Shareholder would not transfer or otherwise enter into any agreement or understanding with respect to a transfer relating to any shares of Old Conduit owned by such shareholder. The support agreements automatically terminated on September 22, 2023. Old Conduit Shareholder Lockup Agreements Under the Merger Agreement, as a condition to receiving Common Stock of the Company after the closing of the Business Combination in respect of their Old Conduit shares, certain shareholders of Old Conduit executed lockup agreements pursuant to which such shareholders agreed not to sell, transfer or take certain other actions with respect to such shares of our Common Stock for a period of 180 days after the closing of the Business Combination, subject to certain customary exceptions. Transactions with Corvus Capital Limited Corvus Capital Limited (“Corvus Capital”) received 31,148,454 shares of our common stock, pursuant to the terms of the Merger Agreement, following the completion of the Business Combination. As of December 31, 2023, Corvus Capital owns 31,148,454 shares of our Common Stock directly and 14,378,695 shares of our Common Stock through its wholly-owned subsidiary Algo Holdings, Inc., or in the aggregate approximately 61.7% of the outstanding shares of our Common Stock. Dr. Andrew Regan, the Chief Executive Officer of Corvus Capital, is also a member of our board of directors and received director fees of $842,081 during the year ended December 31, 2023. 2021 Letter Agreement For the year ended December 31, 2021, Old Conduit incurred $1.6 million (£1.3 million) in advisory fees for funding and review of potential acquisition candidates to Corvus Capital. For the year ended December 31, 2022, Conduit incurred director’s fees payable to Dr. Regan of approximately £120,000. 2022 Convertible Loan Note Instrument On November 1, 2022, Old Conduit approved a master Convertible Loan Note Instrument (the “2022 Convertible Loan Note Instrument”), permitting Old Conduit to issue convertible notes payable for a maximum aggregate principal amount of up to $3.3 million (£3.0 million). Under the terms of the 2022 Convertible Loan Note Instrument, Old Conduit issued convertible notes payable with an aggregate principal amount of $0.2 million (£0.2 million) and $0.3 million (£0.3 million) to Dr. Regan during January 2023, and February 2023, respectively. 93 The convertible notes payable issuable under the 2022 Convertible Loan Note Instrument were to mature three years after issuance to the respective noteholders and bore 5% interest, only to be paid to the noteholders in the event of a material breach by Old Conduit of the terms of the 2022 Convertible Loan Note Instrument. In the event of a Change of Control (as defined in the 2022 Convertible Loan Note Instrument), the convertible notes payable issued under the 2022 Convertible Loan Note Instrument were to automatically convert into ordinary shares of Old Conduit at a conversion price equal to a 20% discount to the price per share paid for the most senior class of shares in respect of such Change of Control. Old Conduit, with consent from the noteholders, could prepay the convertible notes payable issued under the 2022 Convertible Loan Note Instrument without penalty. The convertible notes payable issued under the 2022 Convertible Loan Note Instrument were general, unsecured obligations of Old Conduit. Upon completion of the Business Combination, the convertible notes payable under the 2022 Convertible Loan Note Instrument were converted into an aggregate of 376,650 shares of Common Stock, which amount includes 66,650 shares of Common Stock issued to Dr. Regan for convertible notes payable to him under the 2022 Convertible Loan Note Instrument. Global Funding Agreement with St George Street Capital St George Street received 4,749,816 shares of our common stock, pursuant to the terms of the Merger Agreement, following the completion of the Business Combination. As of December 31, 2023, St George Street owns 4,749,816 shares of our Common Stock, or approximately 6.4% of the outstanding shares of our Common Stock. Dr. David Tapolczay, the former Chief Executive Officer of St George Street until September 21, 2023, is also our Chief Executive Officer and a member of our board of directors. On March 26, 2021, Old Conduit entered into the Exclusive Funding Agreement (“Global Funding Agreement”) with St George Street. Under the Global Funding Agreement, Old Conduit has the exclusive first right, but not the obligation, to provide or procure funding for the performance drug discovery and/or development project that St George Street wishes to undertake. The Global Funding Agreement entitles Old Conduit to 100% of the net revenue on projects that Conduit funds by itself. For additional information regarding the Global Funding Agreement and related agreements, see the “Item 1. Business — Strategic Alliances and Arrangements — Global Funding Agreement – St George Street” section of this Annual Report. A.G.P./Alliance Global Partners A.G.P./Alliance Global Partners (“A.G.P.”) was a financial advisor to both the Company and Old Conduit in connection with the Business Combination transaction. Upon the completion of the Business Combination, A.G.P.: (i) received a cash fee of $6,500,000, 1,300,000 shares of Common Stock, and warrants to purchase 54,000 shares of Common Stock at an exercise price of $11.00 per share pursuant to its engagement agreement with Old Conduit entered into on August 2, 2022, and (ii) agreed to defer payment, to be paid in the future under certain circumstances by a date no later than March 21, 2025, of $5,737,500 of fees as a result of its engagement for the IPO. There can be no assurance that the fact that A.G.P. acted as the financial advisor to both parties to the Business Combination did not impact the advice that A.G.P. delivered to either or both parties, or that certain terms of the Business Combination were not impacted by the potential conflict of interest. Directors and Officers Certain of the individuals that serve as members of our board of directors since completion of the Business Combination have relationships with MURF, Old Conduit, and/or one of their respective stockholders. Dr. Freda Lewis-Hall, the Chairperson of our board of directors, was an indirect shareholder of Conduit and indirectly received 2,003,324 shares of our Common Stock upon completion of the Business Combination. Dr. David Tapolczay, our Chief Executive Officer and a member of our board of directors, was a shareholder of Old Conduit and received 2,003,324 shares of our Common Stock upon completion of the Business Combination. Dr. Tapolczay is also a director of Old Conduit and he was previously the Chief Executive Officer of St George Street until September 2023. Dr. Andrew Regan, a member of our board of directors, is a director of Old Conduit and received 66,650 shares of our Common Stock upon completion of the Business Combination. James Bligh, a member of our board of directors, was an employee of Old Conduit and currently serves as a member of its board of directors. Faith L. Charles, a member of our board of directors, is a partner at Thompson Hine LLP, a law firm that provides legal services to us. 94 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. for the year ended December 31, 2023 totaled approximately $254,800, and for the year ended December 31, 2022 totaled approximately $133,900. 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.” Audit related fees primarily include review of regulatory documents filed with the SEC and consents. We paid Marcum for audit-related fees for the year ended December 31, 2023 totaling approximately $303,925, and for the year ended December 31, 2022 totaling approximately $66,950. Tax Fees . We did not pay Marcum for tax planning and tax advice for the years ended December 31, 2023 and December 31, 2022. All Other Fees . We did not pay Marcum for other services for the years ended December 31, 2022 or December 31, 2023. 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). 95 PART IV Item 15. Exhibits, Financial Statement Schedules The following documents are filed as part of this report: 1. Financial Statements: (see “Financial Statements and Supplementary Data” at Item 8 and incorporated herein by reference). 2. Financial Statement Schedule: (Schedules to the Financial Statements have been omitted because the information required to be set forth therein is not applicable or is shown in the accompanying Financial Statements or notes thereto). 3. Exhibits: The exhibits listed in the accompanying “Exhibit Index” are filed or incorporated by reference as part of this Annual Report on Form 10-K. EXHIBIT INDEX Exhibit No. Description 2.1 Agreement and Plan of 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 Annex A-1 to the Registrant’s Proxy Statement/Prospectus filed on August 11, 2023, and incorporated herein by reference). 2.2 Amendment to Agreement and Plan of Merger dated as of January 27, 2023, by and among Murphy Canyon Acquisition Corp., Conduit Merger Sub, Inc. and Conduit Pharmaceuticals Limited (filed as Annex A-2 to the Registrant’s Proxy Statement/Prospectus filed on August 11, 2023, and incorporated herein by reference). 2.3 Second Amendment to Agreement and Plan of Merger dated as of May 11, 2023, by and among Murphy Canyon Acquisition Corp., Conduit Merger Sub, Inc. and Conduit Pharmaceuticals Limited (filed as Annex A-3 to the Registrant’s Proxy Statement/Prospectus filed on August 11, 2023, and incorporated herein by reference). 3.1 Second Amended and Restated Certificate of Incorporation of the Registrant (filed as Exhibit 3.1 to the Registrant’s Current Report on Form 8-K filed on September 29, 2023, and incorporated herein by reference). 3.2 Amended and Restated Bylaws of the Registrant (filed as Exhibit 3.2 to the Registrant’s Current Report on Form 8-K filed on September 29, 2023, and incorporated herein by reference). 4.1* Description of Registered Securities 10.1 Letter Agreement, dated February 2, 2022, among Murphy Canyon Acquisition Corp., Murphy Canyon Acquisition Sponsor, LLC, and each of the executive officers and directors of Murphy Canyon Acquisition Corp. (filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on February 8, 2022, and incorporated herein by reference). 10.2 Underwriting Agreement (filed as Exhibit 1.1 to the Registrant’s Current Report on Form 8-K filed February 8, 2022, and incorporated herein by reference). 10.3 Promissory Note, dated November 4, 2021, issued to Murphy Canyon Acquisition Sponsor, LLC, by Murphy Canyon Acquisition Corp. (filed as Exhibit 10.2 to the Registrant’s Registration Statement on Form S-1 (File No. 333-262036) filed on January 6, 2022, and incorporated herein by reference). 10.4 Investment Management Trust Agreement, dated February 2, 2022, between Murphy Canyon Acquisition Corp. and Wilmington Trust Company (filed as Exhibit 10.2 to the Registrant’s Current Report on Form 8-K filed on February 2, 2022, and incorporated herein by reference). 10.5 Registration Rights Agreement, dated February 2, 2022, among Murphy Canyon Acquisition Corp. and certain securityholders (filed as Exhibit 10.3 to the Registrant’s Current Report on Form 8-K filed on February 2, 2022, and incorporated herein by reference) 10.6 Securities Subscription Agreement, dated November 4, 2021, between Murphy Canyon Acquisition Corp. and Murphy Canyon Acquisition Sponsor, LLC (filed as Exhibit 10.5 to the Registrant’s Registration Statement on Form S-1 (File No. 333-262036) filed on January 6, 2022, and incorporated herein by reference). 10.7 Placement Unit Purchase Agreement, dated February 2, 2022, between Murphy Canyon Acquisition Corp. and Murphy Canyon Acquisition Sponsor, LLC (filed as Exhibit 10.4 to the Registrant’s Current Report on Form 8-K filed on February 8, 2022, and incorporated herein by reference). 96 10.8 Form of Conduit Pharmaceuticals Inc. Indemnity Agreement (filed as Exhibit 10.9 to the Registrant’s Current Report on Form 8-K filed on September 29, 2023, and incorporated herein by reference). 10.9 Administrative Support Agreement, dated February 2, 2022, by and between Murphy Canyon Acquisition Corp. and Murphy Canyon Management Group, Inc. (filed as Exhibit 10.6 to the Registrant’s Current Report on Form 8-K filed on February 8, 2022, and incorporated herein by reference). 10.10 Form of Lock-Up Agreement (filed as Exhibit 10.2 to the Registrant’s 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 Registrant’s 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 Registrant’s Current Report on Form 8-K filed November 14, 2022, and incorporated herein by reference). 10.13 Form of Amended and Restated Warrant (filed as Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on January 30, 2023, and incorporated herein by reference). 10.14 Form of Note, issued March 7, 2023, by and between Murphy Canyon Acquisition Corp. and Murphy Canyon Acquisition Sponsor, LLC (filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed March 7, 2023, and incorporated herein by reference). 10.15 Form of Subscription Agreement between Murphy Canyon Acquisition Corp. and the investor named therein (filed as Exhibit 10.1 to the Registrant’s Current Report on Form 8-K filed on September 13, 2023, and incorporated herein by reference). 10.16 Form of PIPE Warrant (filed as Exhibit 4.1 to the Registrant’s Current Report on Form 8-K filed on September 13, 2023, and incorporated herein by reference). 10.17# Conduit Pharmaceuticals Inc. 2023 Stock Incentive Plan (filed as Annex C to the Registrant’s Proxy Statement/Prospectus filed on August 11, 2023, and incorporated herein by reference). 10.18# Form of Stock Option Agreement under Conduit Pharmaceuticals Inc. 2023 Stock Incentive Plan (filed as Exhibit 10.17 to the Registrant’s Registration Statement on Form S-4 (File No. 333-271903) filed on May 12, 2023, and incorporated herein by reference). 10.19# Form of Employment Agreement with David Tapolczay (filed as Exhibit 10.17 to the Registrant’s Amendment No. 2 to Registration Statement on Form S-4 (File No. 333-271903) filed on July 28, 2023, and incorporated herein by reference). 10.20# Form of Employment Agreement with Adam Sragovicz (filed as Exhibit 10.18 to the Registrant’s Amendment No. 1 to Registration Statement on Form S-4 (File No. 333-271903) filed on July 11, 2023, and incorporated herein by reference). 10.21+ Exclusive Funding Agreement between St George Street Capital and SGS Global Limited, dated March 26, 2021 (filed as Exhibit 10.20 to the Registrant’s Registration Statement on Form S-4 (File No. 333-271903) filed on May 12, 2023, and incorporated herein by reference). 97 10.22+ AZD1656 Project Funding Agreement For Use In Renal Transplant between St George Street Capital Limited and Conduit Pharmaceuticals Limited, dated November 2, 2022 (filed as Exhibit 10.21 to the Registrant’s Registration Statement on Form S-4 (File No. 333-271903) filed on May 12, 2023, and incorporated herein by reference). 10.23+ AZD1656 Project Funding Agreement For Use In Preterm Labor between St George Street Capital Limited and Conduit Pharmaceuticals Limited, dated November 2, 2022 (filed as Exhibit 10.22 to the Registrant’s Registration Statement on Form S-4 (File No. 333-271903) filed on May 12, 2023, and incorporated herein by reference). 10.24+ AZD1656 Project Funding Agreement For Use In Hashimoto’s Thyroiditis between St George Street Capital Limited and Conduit Pharmaceuticals Limited, dated November 2, 2022 (filed as Exhibit 10.23 to the Registrant’s Registration Statement on Form S-4 (File No. 333-271903) filed on May 12, 2023, and incorporated herein by reference). 10.25+ AZD1656 Project Funding Agreement For Use In Uveitis between St George Street Capital Limited and Conduit Pharmaceuticals Limited, dated November 2, 2022 (filed as Exhibit 10.24 to the Registrant’s Registration Statement on Form S-4 (File No. 333-271903) filed on May 12, 2023, and incorporated herein by reference). 10.26+ AZD5904 Project Funding Agreement between St George Street Capital Limited and Conduit Pharmaceuticals Limited, dated November 2, 2022 (filed as Exhibit 10.25 to the Registrant’s Registration Statement on Form S-4 (File No. 333-271903) filed on May 12, 2023, and incorporated herein by reference). 10.27# Consulting Agreement between with Jack Heilbron and Murphy Canyon Acquisition Corp. (filed as Exhibit 10.24 to the Registrant’s Amendment No. 1 to Registration Statement on Form S-4 (File No. 333-271903) filed on July 11, 2023, and incorporated herein by reference). 10.28# Form of Non-Employee Director Compensation Program (filed as Exhibit 10.26 to the Registrant’s Amendment No. 2 to Registration Statement on Form S-4 (File No. 333-271903) filed on July 28, 2023, and incorporated herein by reference). 21.1 Subsidiaries of Conduit Pharmaceuticals Limited (filed as Exhibit 21.1 to the Registrant’s Amendment No. 2 to Registration Statement on Form S-4 (File No. 333-271903) filed on July 28, 2023, and incorporated herein by reference). 23.1* Consent of Marcum LLP, independent public accounting firm of Conduit Pharmaceuticals Inc. 24.1^ Power of Attorney (reference is made to the signature page hereto). 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. 97.1* Conduit Pharmaceuticals, Inc. Compensation Recovery Policy 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. ^ Previously filed. # Management contract or compensatory plan or arrangement. + Certain portions of this Exhibit have been omitted in accordance with Item 601(b)(10) of Regulation S-K. The Registrant agrees to furnish supplementally an unredacted copy of this Exhibit to the SEC upon its request. § In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release Nos. 33-8238 and 34-47986, Final Rule: Management’s Reports on Internal Control Over Financial Reporting and Certification of Disclosure in Exchange Act Periodic Reports, the certifications furnished in Exhibits 32.1 and 32.2 hereto is deemed to accompany this Annual Report on Form 10-K and will not be deemed “filed” for purposes of Section 18 of the Exchange Act. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference. Item 16. Form 10–K Summary None. 98 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. CONDUIT PHARMACEUTICALS INC. Date: April 16, 2024 By: /s/ David Tapolczay Name: David Tapolczay Title: Chief Executive Officer POWER OF ATTORNEY KNOW ALL PERSONS BY THESE PRESENTS, that each person whose signature appears below constitutes and appoints David Tapolczay and Adam Sragovicz, and each of them, as his or her attorneys-in-fact, with the power of substitution, for him or her in any and all capacities, to sign any amendments to this report, and to file the same, with exhibits thereto and other documents in connection therewith with the Securities and Exchange Commission, hereby ratifying and confirming all that said attorneys-in-fact, and each of them, or his or her substitute or substitutes may lawfully do or cause to be done by virtue hereof. Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated. Signature Title Date /s/ David Tapolczay Chief Executive Officer and Director April 16, 2024 David Tapolczay (Principal Executive Officer) /s/ Adam Sragovicz Chief Financial Officer April 16, 2024 Adam Sragovicz (Principal Financial Officer and Principal Accounting Officer) /s/ Freda Lewis-Hall Director and Chairperson of the Board of Directors April 16, 2024 Freda Lewis-Hall /s/ James Bligh Director April 16, 2024 James Bligh /s/ Faith L. Charles Director April 16, 2024 Faith L. Charles /s/ Chele Chiavacci Farley Director April 16, 2024 Chele Chiavacci Farley /s/ Jennifer I. McNealey Director April 16, 2024 Jennifer I. McNealey /s/ Andrew Regan Director April 16, 2024 Andrew Regan 99 CONDUIT PHARMACEUTICALS INC. INDEX TO FINANCIAL STATEMENTS Page Audited Financial Statements of Conduit Pharmaceuticals Inc.: Report of Independent Registered Public Accounting Firm (PCAOB No. 688 ) F-2 Consolidated Balance Sheets as of December 31, 2023 and 2022 F-3 Consolidated Statements of Operations and Comprehensive Income (Loss) for the years ended December 31, 2023 and 2022 F-4 Consolidated Statements of Changes in Stockholders’ Deficit for the years ended December 31, 2023 and 2022 F-5 Consolidated Statements of Cash Flows for the years ended December 31, 2023 and 2022 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 Conduit Pharmaceuticals Inc. Opinion on the Financial Statements We have audited the accompanying consolidated balance sheets of Conduit Pharmaceuticals, Inc. (the “Company”) as of December 31, 2023 and 2022, the related consolidated statements of operations and comprehensive income (loss) , stockholders’ deficit and cash flows for each of the two years in the period ended December 31, 2023, 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, 2023 and 2022, and the results of its operations and its cash flows for each of the two years in the period ended December 31, 2023, in conformity with accounting principles generally accepted in the United States of America. Explanatory Paragraph – Going Concern The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 1, the Company has incurred significant losses and needs to raise additional funds to meet its obligations and sustain its operations based on their current business plan. 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 consolidated 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 2022. East Hanover, NJ April 16, 2024 F- 2 CONDUIT PHARMACEUTICALS INC. CONSOLIDATED BALANCE SHEETS (in thousands, except share amounts) December 31, 2023 December 31, 2022 ASSETS Current assets Cash and cash equivalents $ 4,228 $ - Prepaid expenses 1,505 - Total current assets 5,733 - Intangible asset - 5 Prepaid Expenses and other long-term assets 1,491 - Total assets $ 7,224 $ 5 LIABILITIES AND STOCKHOLDERS’ DEFICIT Current liabilities Accounts payable $ 215 $ - Accrued expenses and other current liabilities 200 - Accrued professional fees 361 2,246 Accrued payroll 40 338 Option liability - 1,417 Convertible promissory note payable 800 - Notes payable, current portion 185 175 Total current liabilities 1,801 4,176 Convertible notes payable, carried at fair value - 1,835 Liability related to the sale of future revenue - 4,083 Derivative warrant liability 142 - Deferred commission payable 5,738 - Total liabilities 7,681 10,094 Stockholders’ deficit Common stock * , par value $ 0.0001 ; 250,000,000 shares and 400,000,000 shares authorized at December 31, 2023 and December 31, 2022, respectively, 73,829,536 shares and 64,626,430 shares issued and outstanding at December 31, 2023 and December 31, 2022, respectively 7 6 Preferred stock, par value $ 0.0001 ; 1,000,000 shares and nil shares authorized at December 31, 2023 and December 31, 2022, respectively; nil shares issued and outstanding at December 31, 2023 and December 31, 2022 - - Additional paid-in capital 10,424 - Accumulated deficit ( 11,299 ) ( 10,770 ) Accumulated other comprehensive income 411 675 Total stockholders’ deficit ( 457 ) ( 10,089 ) Total liabilities and stockholders’ deficit $ 7,224 $ 5 * Shares of legacy common stock have been retroactively restated to give effect to the Merger. The accompanying notes are an integral part of these consolidated financial statements. F- 3 CONDUIT PHARMACEUTICALS INC. CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS ) (in thousands, except share amounts and per share data) 2023 2022 Year Ended December 31, 2023 2022 Operating expenses: Research and development expenses $ 90 $ 37 General and administrative expenses 5,172 3,049 Funding expenses - 74 Total operating costs and expenses 5,262 3,160 Operating loss ( 5,262 ) ( 3,160 ) Other income (expenses): Other income (expense), net 4,923 ( 1,727 ) Interest income 15 Interest expense, net ( 211 ) - Total other (expense) income, net 4,727 ( 1,727 ) Net income (loss) $ ( 535 ) $ ( 4,887 ) Less: Change in fair value and income impact of option liabilities ( 5,521 ) - Net income (loss) - diluted ( 6,056 ) ( 4,887 ) Basic earnings/(net loss) per share $ ( 0.01 ) $ ( 0.13 ) Diluted earnings/(net loss) per share $ ( 0.09 ) $ ( 0.13 ) Basic weighted-average common shares outstanding 66,973,906 37,447,918 Diluted weighted-average common shares outstanding 67,893,881 37,447,918 Comprehensive income (loss): Foreign currency translation adjustment ( 264 ) 753 Total comprehensive income (loss) $ ( 799 ) $ ( 4,134 ) The accompanying notes are an integral part of these consolidated financial statements. F- 4 CONDUIT PHARMACEUTICALS INC. CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ DEFICIT (in thousands, except share amounts) Shares Amount capital deficit (loss)/income deficit Common stock Additional paid-in Accumulated Accumulated other comprehensive Total stockholders’ Shares Amount capital deficit (loss)/income deficit Balance at January 1, 2022 2,000 $ - $ - $ ( 5,877 ) $ ( 65 ) $ ( 5,942 ) Retroactive application of Merger 64,624,430 6 ( 6 ) - - - Reclassification of additional paid-in capital ** - - 6 ( 6 ) ( 13 ) ( 13 ) Adjusted Balances, beginning of period * 64,626,430 $ 6 $ - $ ( 5,883 ) $ ( 78 ) $ ( 5,955 ) Foreign currency translation adjustment - - - - 753 753 Net loss - - - ( 4,887 ) - ( 4,887 ) Balance at December 31, 2022 64,626,430 $ 6 $ - $ ( 10,770 ) $ 675 $ ( 10,089 ) Common stock Additional paid-in Accumulated Accumulated other comprehensive Total stockholders’ Shares Amount capital deficit income deficit Balance at January 1, 2023 2,000 $ - $ - $ ( 10,764 ) $ 675 $ ( 10,089 ) Retroactive application of Merger 64,624,430 6 ( 6 ) - - - Reclassification of additional paid-in-capital ** - - 6 ( 6 ) - - Adjusted Balances, beginning of period * 64,626,430 $ 6 $ - $ ( 10,770 ) $ 675 $ ( 10,089 ) Balance 64,626,430 $ 6 $ - $ ( 10,770 ) $ 675 $ ( 10,089 ) Reclassification of additional paid-in-capital *** - - ( 6 ) 6 - - Issuance of Conduit Pharmaceuticals Inc. common stock to holders of Conduit Pharmaceuticals Limited convertible notes on the Closing Date (Note 3) 373,570 - 3,685 - - 3,685 Issuance of common stock upon conversion of MURF Class A & Class B common stock in connection with merger (Note 3) 4,118,316 1 ( 15,219 ) - - ( 15,219 ) Issuance of Conduit Pharmaceuticals Inc. common stock in connection with PIPE Financing (Note 3) 2,000,000 - 19,779 - - 19,779 Issuance of Conduit Pharmaceuticals Inc. common stock to Cizzle Biotechnology Holding PLC 395,460 - 151 - - 151 Issuance of Conduit Pharmaceuticals Inc. common stock to Vela Technologies PLC 1,015,760 - 544 - - 544 Issuance of Conduit Pharmaceuticals Inc. common stock to an advisor for services directly related to the Merger (Note 3) 1,300,000 - - - - - Reduction of excise tax liability associated with the Merger (Note 3) - - 1,141 1,141 Capital contribution - related party - - 150 - - 150 Stock-based compensation - - 199 - - 199 Foreign currency translation adjustment - - - ( 264 ) ( 264 ) Net loss - - - ( 535 ) - ( 535 ) Balance at December 31, 2023 73,829,536 $ 7 $ 10,424 $ ( 11,299 ) $ 411 $ ( 457 ) Balance 73,829,536 $ 7 $ 10,424 $ ( 11,299 ) $ 411 $ ( 457 ) * Shares of legacy common stock have been retroactively restated to give effect to the Merger. ** Reclassification is made as additional paid-in capital cannot be presented as a negative for either its beginning or ending balance. *** Reclassification is made as the impact of the retroactive application of the Merger can be shown as a reduction to additional paid-in capital during the period as presenting the reduction does not result in additional paid-in capital being presented as a negative for its ending balance. The accompanying notes are an integral part of these consolidated financial statements. F- 5 CONDUIT PHARMACEUTICALS INC. CONSOLIDATED STATEMENTS OF CASH FLOWS (in thousands) 2023 2022 Year Ended December 31, 2023 2022 Cash flows from operating activities: Net loss $ ( 535 ) $ ( 4,887 ) Adjustments to reconcile net loss to net cash used in operating activities: Gain on investment in equity securities - 129 Gain on change in fair value of Cizzle option ( 1,280 ) 1,300 Gain on change in fair value of Vela option ( 970 ) - Loss on issuance of Vela option 987 - Unrealized foreign exchange gain ( 39 ) - Change in reserve for related party uncollectible loan ( 240 ) 331 Loss on related party loan forgiveness 12 - Loss on change in fair value of convertible notes payable 426 265 Non-cash reduction of deferred income upon exercise of option liability ( 4,254 ) - Gain on warrant remeasurement ( 81 ) - Stock-based compensation expense 199 - Non-cash interest expense 87 - Amortization of financed Directors and Officers insurance 479 - Changes in operating assets and liabilities: Prepaid expenses and other current assets ( 990 ) - Accounts payable 215 - Accrued expenses and other current liabilities ( 1,746 ) 601 Intangible assets 5 ( 5 ) Net cash flows from operating activities ( 7,725 ) ( 2,266 ) Cash flows from investing activities: Issuance of loan - related party ( 357 ) ( 331 ) Proceeds from issuance of option 497 148 Proceeds from loan repayment - related party 585 - Net cash flows from investing activities 725 ( 183 ) Cash flows from financing activities: Proceeds from Merger and related PIPE Financing, net of transaction costs 8,493 - Proceeds from the issuance of notes payable - 179 Capital contribution - related party 150 - Proceeds from issuance of convertible notes payable, carried at fair value - 928 Proceeds from issuance of convertible promissory note payable, carried at cost 2,286 - Proceeds from sale of equity securities - 1,341 Net cash flows from financing activities 10,929 2,448 Net change in cash and cash equivalents before effect of exchange rate changes 3,929 ( 1 ) Effect of exchange rate changes on cash and cash equivalents 299 1 Net change in cash 4,228 - Cash and cash equivalents at beginning of period - - Cash and cash equivalents at end of period $ 4,228 $ - Non-cash investing and financing activities Issuance of Conduit Pharmaceuticals Inc. common stock to Cizzle Biotechnology Holding PLC upon exercise of option $ 151 $ - Issuance of Conduit Pharmaceuticals Inc. common stock to Vela Technologies PLC upon exercise of option $ 544 $ - Exchange of Conduit Pharmaceuticals Limited convertible notes for shares of Conduit Pharmaceuticals Inc. common stock in connection with the Merger $ 3,685 $ - Deferred Underwriting Costs $ 5,738 $ - Prepaid expense of directors and officers insurance paid out of PIPE financings proceeds in connection with the Merger $ 2,253 $ - Accumulated deficit assumed to APIC as a result of the business combination $ 6,124 $ - Initial value of warrant liabilities issued in connection with PIPE Financing $ 223 $ - Non-Cash Assets Assumed in the Merger Financing $ 91 Non-Cash Liabilities Assumed in the Merger Financing $ 124 Fair value of shares received and receivable related to the sale of future revenue $ - $ 1,471 Supplemental Cash Disclosures Cash paid for interest $ 124 - The accompanying notes are an integral part of these consolidated financial statements. F- 6 CONDUIT PHARMACEUTICALS INC. NOTES TO CONSOLIDATED FINANCIAL STATEMENTS 1. Nature of the Business, Basis of Presentation and Summary of Significant Accounting Policies Conduit Pharmaceuticals Inc., a Delaware corporation, (“Conduit” or the “Company”) is a clinical-stage specialty biopharmaceutical company that was formed to facilitate the development and commercialization of clinical assets that have not been, or are not being, prioritized by leading biopharmaceutical companies in order to develop pharmaceutical products that meet the unmet medical needs of patients. The Company’s current development pipeline through a relationship with St George Steet Capital (“St George Street”), a related party (see note 15), includes a glucokinase activator, which is Phase II ready in autoimmune diseases including uveitis, Hashimoto’s Thyroiditis, preterm labor and renal transplant rejection as well as the Company’s proprietary, patent pending, solid-form compound targeting a wide range of autoimmune diseases. The Company’s development pipeline also includes a potent, irreversible inhibitor of human Myeloperoxidase (MPO) that has the potential to treat idiopathic male infertility. Merger Agreement On September 22, 2023 (the “Closing Date”), a merger transaction between Conduit Pharmaceuticals Limited (“Old Conduit”), Murphy Canyon Acquisition Corp (“MURF”) and Conduit Merger Sub, Inc., a Cayman Islands exempted company and a wholly owned subsidiary of MURF (“Merger Sub”), was completed (the “Merger”, see Note 3) pursuant to the initial merger agreement dated November 8, 2022 and subsequent amendments to the merger agreement dated January 27, 2023 and May 11, 2023 (the “Merger Agreement”). Pursuant to the terms of the Merger Agreement, on the Closing Date, (i) Merger Sub merged with and into Old Conduit, with Old Conduit surviving the merger as a wholly-owned subsidiary of MURF, and (ii) MURF changed its name from Murphy Canyon Acquisition Corp. to Conduit Pharmaceuticals Inc. The common stock of the Company commenced trading on The Nasdaq Global Market under the symbol “CDT” on September 25, 2023, and the Company’s warrants commenced trading on The Nasdaq Capital Market under the symbol “CDTTW” on September 25, 2023. The Merger was accounted for as a reverse recapitalization in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”). Under the reverse recapitalization method, MURF was treated as the acquired company for financial reporting purposes, and the accounting acquirer was assumed to have issued shares of stock for the net assets of MURF, with no goodwill or other intangible assets recorded. This determination is primarily based on the following predominant factors: (i) post-closing, the Old Conduit stockholders have a majority of the voting power of the combined company and ability to elect the members of the combined company’s Board of Directors (“Board”); (ii) the on-going operations post-merger will comprise those of Old Conduit; and (iii) all of the senior management of the combined company, except for the Chief Financial Officer, will be members of the management of Old Conduit. As a result of the Merger, MURF was renamed “Conduit Pharmaceuticals Inc.” The board of directors of MURF and Conduit each approved the Merger. Basis of Presentation The accompanying consolidated financial statements have been prepared by the Company in accordance with U.S. GAAP as set forth by the Financial Accounting Standards Board (“FASB”) and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). References to U.S. GAAP issued by the FASB in these notes to the accompanying consolidated financial statements are to the FASB Accounting Standards Codifications (“ASC”) and Accounting Standards Update (“ASUs”). Principles of Consolidation The accompanying consolidated financial statements include the accounts of Conduit Pharmaceuticals, Inc. and its wholly owned subsidiaries Conduit UK Management Ltd. (United Kingdom) and Conduit Pharmaceuticals, Ltd. (Cayman Islands). As used herein, references to the “Company” include references to Conduit Pharmaceuticals, Inc, and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation. Liquidity and Going Concern In accordance with Accounting Standards Codification (“ASC”) 205-40, Going Concern, the Company has evaluated whether there are conditions and events, considered in the aggregate, that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date the financial statements are issued. Since its inception, the Company has generated significant losses and as of December 31, 2023 had an accumulated deficit of $ 11.3 million. For the years ended December 31, 2023 and 2022, the Company had net losses of $ 0.5 million and $ 4.9 million, respectively, and cash used in operating activities of $ 7.7 million and $ 2.3 million, respectively. As further discussed in Note 3, on September 22, 2023, the Company completed the Merger, that included a private placement of an aggregate amount of $ 20.0 million of the Company’s shares of common stock (referred to as the “PIPE”). The proceeds received from the Merger and PIPE, net of transaction costs, totaled $ 8.5 million. Despite the closing of the Merger and an additional $ 5.0 million commitment from a major shareholder (See Note 18), the Company has determined that it does not have sufficient cash and other sources of liquidity to fund its current business plans. Management believes these factors raise substantial doubt regarding the Company’s ability to continue as a going concern for at least the next twelve months from the financial statement filing date. F- 7 The Company’s expectation is to generate operating losses and negative operating cash flows in the future and will need additional funding to support its current business plan. Management’s plans to alleviate the conditions that raise substantial doubt include the pursuit of additional cash resources through public or private equity or debt financings. Management has concluded the likelihood that its plan to successfully obtain sufficient funding from one or more of these sources, or adequately reduce expenditures is reasonably possible, however there is no assurance that such funding will be available when needed or on acceptable terms. If additional funding is not available when required, the Company would need to delay or curtail its operations and its research and development activities until such funding is received, all of which could have a material adverse effect on the Company and its financial condition. These financial statements have been prepared assuming the Company will continue as a going concern and do not include adjustments to reflect the possible effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty. Other Risks and Uncertainties The Company is subject to risks common to companies in the pharmaceutical industry including, but not limited to, uncertainties related to commercialization of competitor products, regulatory approvals, dependence on key products, dependence on key customers and suppliers, and protection of intellectual property rights. Clinical assets currently under development will require significant additional research and development efforts, including extensive preclinical and clinical testing and regulatory approval prior to commercialization. These efforts will require significant amounts of additional capital, adequate personnel, infrastructure, and extensive compliance and reporting capabilities. Even if the Company’s efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue from royalties or product sales. The Company relies on agreements with related parties and third parties for the purpose of developing and licensing clinical assets from St George Street and, in turn, St George Street licenses such assets from AstraZeneca. See Note 15, “St George Street Capital” . If there is a breach or other termination of such agreements, there could be a material adverse effect on the Company’s business, financial condition, operating results, and prospects. In addition, the Company is not a party to the license agreements between St George Street and AstraZeneca. The termination of such third-party agreements could have a material impact on or materially disrupt operations. While the Company holds its own intellectual property outside of the scope of these agreements, termination of such agreements could adversely affect the business and ability to commercialize our clinical assets. Summary of Significant Accounting Policies Cash and Cash Equivalents Cash and cash equivalents are primarily maintained with major financial institutions in the United Kingdom and Switzerland. The Company considers cash equivalents to be short-term, highly liquid investments that (a) are readily convertible into known amounts of cash, (b) are traded and held for cash management purposes, and (c) have original maturities of three months or less at the time of purchase. The Switzerland bank accounts holding cash balances are uninsured, and the UK bank account, with a year-end balance of approximately £ 254,000 (or approximately $ 323,000 ) exceeds the country’s deposit limit of £ 85,000 (approximately $ 108,000 ). The Company’s US depository bank participates in the Demand Deposit Marketplace program, insuring deposits up to $ 10 million by sweeping amounts in excess of the $ 250,000 deposit insurance limit among participating banks. The Company has not experienced any losses on any accounts through the year ended December 31, 2023. The Company had $ 4.2 million in cash and cash equivalents on hand as of December 31, 2023. The Company did no t have any cash and cash equivalents on hand as of December 31, 2022. F- 8 Use of Estimates The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and related disclosures of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. Estimates are based on several factors including the facts and circumstances available at the time the estimates are made, historical experience, risk of loss, general economic conditions and trends, and the assessment of the probable future outcome. Actual results could differ materially from such estimates. Estimates and assumptions are reviewed periodically by management and changes in estimates are made as management becomes aware of changes in circumstances surrounding the estimates. The effects of changes are reflected in the financial statements in the period that they are determined. Fair Value Measurements ASC Topic 820, Fair Value Measurements and Disclosures , defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. Fair value is to be determined based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. In determining fair value, the Company used various valuation approaches. A fair value hierarchy has been established for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are those that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company. Unobservable inputs reflect the Company’s assumption about the inputs that market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The fair value hierarchy is categorized into three levels, based on the inputs, as follows: ● Level 1—Valuations based on quoted prices for identical instruments in active markets. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these instruments does not entail a significant degree of judgment. ● Level 2— Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for either similar instruments in active markets, identical or similar instruments in markets that are not active, or model-derived valuations whose inputs or significant value drivers are observable or can be corroborated by observable market data. ● Level 3—Valuations based on inputs that are unobservable. These valuations require significant judgment. The Company’s Level 1 assets consist of cash and cash equivalents in the accompanying balance sheets and the value of accrued expenses and other current liabilities approximate fair value due to the short-term nature of these assets and liabilities. As of December 31, 2023, the Company has one financial liability, a warrant liability for which the fair value is determined based on Level 2 inputs as such inputs are valued based on observable inputs other than quoted prices included in Level 1, such as quoted prices for either similar instruments in active markets. See Note 4 for further information on the Company’s financial liability carried at fair value. F- 9 Research and Development and Funding Research and development expenses consist primarily of costs incurred in connection with the research and development of our clinical assets and programs. Funding expenses consist primarily of costs incurred in connection with the Company providing funding to St George Street to carry out its research and development activities (See Note 15). St George Street holds all licenses to conduct clinical research through third party pharmaceutical companies. The Company expenses research and development costs and intangible assets acquired that have no alternative future use as incurred. These expenses include: ● expenses incurred under agreements with organizations that support the Company’s drug discovery and development activities; ● expenses incurred in connection with the preclinical and clinical development of the Company’s clinical assets and programs, including under agreements with contract research organizations, or CROs; ● costs related to contract manufacturing organizations, or CMOs, that are primarily engaged to provide drug substance and product for our clinical trials, research and development programs, as well as investigative sites and consultants that conduct the Company’s clinical trials, nonclinical studies and other scientific development services; ● the costs of acquiring and manufacturing nonclinical and clinical trial materials, including manufacturing registration and validation batches; ● employee-related expenses, including salaries, related benefits and equity-based compensation expense, for employees engaged in research and development functions; ● costs related to compliance with quality and regulatory requirements; ● payments made under third-party licensing agreements; and ● direct and allocated costs related to facilities, information technology, personnel and other overhead. Advance payments that we make for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses. Such amounts are recognized as an expense as the goods are delivered or consumed or the related services are performed, or until it is no longer expected that the goods will be delivered, or the services rendered. General and Administrative Expenses General and administrative expenses consist primarily of salaries and related costs for personnel in executive management, finance, corporate and business development, and administrative functions. General and administrative expenses also include legal fees relating to patent and corporate matters; professional fees for accounting, auditing, tax, and administrative consulting services; insurance costs; administrative travel expenses and other operating costs. Income Taxes ASC Topic 740, Income Taxes , sets forth standards for financial presentation and disclosure of income tax liabilities and expense. Interest and penalties recognized have been classified in the consolidated statements of operations and comprehensive income (loss) as income taxes. Deferred tax assets and liabilities are recognized for future tax consequences attributable to temporary differences between the financial statement carrying amount of existing assets and liabilities and their respective tax bases and operating losses carried forward. 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 the consolidated statements of operations and comprehensive income (loss) in the period that includes the enactment date. The measurement of deferred tax assets is reduced, if necessary, by a valuation allowance for any tax benefits of which future realization is uncertain. In December 2023, the FASB issued ASU 2023-09, which introduces new income tax disclosure requirements. After reviewing the provisions of the new standard, the Company has determined that these changes will not materially affect our financial condition, results of operations, or cash flows as presented in our financial statements. F- 10 Earnings/(Net Loss) per Share The Company calculates basic and diluted earnings/(net loss) per share under ASC Topic 260, Earnings Per Share . Basic earnings/(net loss) per share is computed by dividing the net income/(loss) by the number of weighted-average common shares outstanding for the period. Diluted earnings/(net loss) is computed by adjusting net income/(loss) based on the impact of any dilutive instruments. Diluted earnings/(net loss) per share is computed by dividing the diluted net income/(loss) by the number of weighted-average common shares outstanding for the period including the effect, if dilutive, of any instruments that can be settled in common shares. When computing diluted net income/(loss) per share, the numerator is adjusted to eliminate the effects that have been recorded in net income/(loss) (net of tax, if any) attributable to any liability-classified dilutive instruments. Warrants Upon the closing of the Merger, the Company assumed (i) the warrants initially included in the MURF units issued in MURF’s initial public offering (the “Publicly Traded Warrants”), and (ii) the warrants that were included in the private placement units issued to the Sponsor simultaneously with the closing of MURFS’s initial public offering (the “Private Placement Warrants,” and together with the Publicly Traded Warrants, the “Equity Classified Warrants”). In connection with the Merger, the Company issued warrants to the PIPE Investors (the “PIPE Warrants”) pursuant to the Subscription Agreements and to an advisor (the “A.G.P. Warrants,” and together with the PIPE Warrants, the “Liability Classified Warrants”) pursuant to the Company’s engagement agreement with the advisor. The Company determines the accounting classification of Warrants as either liability or equity by first assessing whether the Warrants meet liability classification in accordance with ASC 480, Distinguishing Liabilities from Equity (“ASC 480”). Under ASC 480, a financial instrument that embodies an unconditional obligation, or a financial instrument other than an outstanding share that embodies a conditional obligation, that the issuer must or may settle by issuing a variable number of its equity shares must be classified as a liability (or an asset in some circumstances) if, at inception, the monetary value of the obligation is based solely or predominantly on any one of the following: (a) a fixed monetary amount known at inception; (b) variations in something other than the fair value of the issuer’s equity shares; or (c) variations inversely related to changes in the fair value of the issuer’s equity shares. The Company determined that the warrants should not be classified as liabilities under ASC 480. If financial instruments, such as the Warrants, are not required to be classified as liabilities under ASC 480, the Company assesses whether such instruments are indexed to the Company’s own stock under ASC 815-40. In order for an instrument to be considered indexed to an entity’s own stock, its settlement amount must always equal the difference between the following: (a) the fair value of a fixed number of the Company’s equity shares, and (b) a fixed monetary amount or a fixed amount of a debt instrument issued by the Company. The Company determined that the settlement amount of the Equity Classified Warrants would equal the difference between the fair value of a fixed number of shares and a fixed monetary amount (or a fixed amount of a debt instrument) and must be classified as equity, while the settlement amount of the Liability Classified Warrants would not equal the difference between the fair value of a fixed number of shares and a fixed monetary amount (or a fixed amount of a debt instrument) and must be classified as a liability. The Equity Classified Warrants are recorded in stockholders’ deficit and the Liability Classified Warrants are recorded as liabilities with the Consolidated Balance Sheets. The Liability Classified Warrants are remeasured each period with changes recorded in the Consolidated Statements of Operations and Comprehensive Income (Loss). Foreign Currency Translation The Company translated the assets and liabilities of foreign subsidiaries from their respective functional currency, the British pound, to United States dollars at the appropriate spot rates as of the balance sheet date. Income and expenses of operations are translated to United States dollars using weighted average exchange rates during the year. The foreign subsidiaries use the local currency as their functional currency. The effects of foreign currency translation adjustments are included as a component of accumulated other comprehensive income in the accompanying consolidated statements of changes in stockholders’ deficit. Non-monetary items in the subsidiaries’ functional currency are re-measured into the reporting currency at the historical exchange rate (i.e., the rate of exchange at the date of the transaction). F- 11 Emerging Growth Company Status The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that: (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates. Following the Merger, the Company will remain an emerging growth company, as defined by the Jumpstart Our Business Startups act of 2012, until the earliest of (i) the last day of the combined entity’s first fiscal year following the fifth anniversary of the completion of MURF’s initial public offering (the “MURF IPO”), (ii) the last day of the fiscal year in which the combined entity has total annual gross revenue of at least $1.235 billion, (iii) the last day of the fiscal year in which the combined entity is deemed to be a large accelerated filer, which means the market value of the combined entity’s common stock that is held by non-affiliates exceeds $700.0 million as of the prior December 31st or (iv) the date on which the combined entity has issued more than $1.0 billion in non-convertible debt securities during the prior three year period . Recently Adopted Accounting Pronouncements In February 2016, the FASB issued ASU 2016-02, “Leases (Topic 842).” Topic 842 was subsequently amended by ASU 2018-10, “Codification Improvements to Topic 842, Leases” and ASU 2018-11, “Leases (Topic 842)”. The amendments in this update increase transparency and comparability among organizations by recognizing lease assets and lease liabilities on the balance sheet and disclosing key information about leasing arrangements. For leases with a term of 12 months or less, the amendments permit lessees to make an accounting policy election by class of underlying assets not to recognize lease assets and lease liabilities. For finance leases, the amendments in this update require a lessee to (1) recognize a right-of-use asset and lease liability, initially measured at the present value of the lease payments, on the balance sheet; (2) recognize interest on the lease liability separately from amortization of the right-of-use asset in the statement of operations; (3) classify repayments of the principal portion of the lease liability within financing activities and payments of interest on the lease liability and variable lease payments within operating activities in the statement of cash flows. For operating leases, the amendments in this update require a lessee to (1) recognize a right-of-use asset and a lease liability, initially measured at the present value of the lease payments, on the balance sheet; (2) recognize a single lease cost, calculated so that the cost of the lease is allocated over the lease term on a generally straight-line basis; (3) classify all cash payments within operating activities in the statement of cash flows. The Company adopted the standard on January 1, 2022. The adoption of ASU No. 2016-02 did not have a material impact on the Company’s consolidated financial statements, as the Company had no lease agreements upon adoption. In June 2016, the Financial Accounting Standards Board (“FASB”) issued ASU 2016-13, Financial Instruments – Credit Losses (Topic 326) (“ASU 2016-13”), which requires entities to measure all expected credit losses for financial assets held at the reporting date based on historical experience, current conditions, and reasonable and supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost. ASU 2016-13 became effective for the Company for annual and interim reporting periods beginning after December 15, 2022. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements. Recently Issued Accounting Standards Not Yet Adopted In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280) (“ASU 2023-07”), which enhances the segment disclosure requirements for public entities on an annual and interim basis. Under this proposal, public entities will be required to disclose significant segment expenses that are regularly provided to the chief operating decision maker (the “CODM”) and included within each reported measure of segment profit or loss. Additionally, current annual disclosures about a reportable segment’s profit or loss and assets will be required on an interim basis. Entities will also be required to disclose information about the CODM’s title and position at the Company along with an explanation of how the CODM uses the reported measures of segment profit or loss in their assessment of segment performance and deciding whether how to allocate resources. Finally, ASU 2023-07 requires all segment disclosures for public entities, even those with a single reportable segment. The amendments in ASU 2023-07 will become effective on a retrospective basis for annual disclosures for fiscal years beginning after December 15, 2023, with interim period disclosures required effective for fiscal years beginning after December 15, 2024. Early adoption of ASU 2023-07 is permitted. The Company is currently evaluating the impact ASU 2023-07 will have on its consolidated financial statements. F- 12 In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 modifies the reporting requirements for income tax disclosures related to effective tax rates and cash income taxes paid. Pursuant to ASU 2023-09, public business entities are required to disclose certain categories in the income tax rate reconciliation, as well as additional information for reconciling items that meet a specific quantitative threshold. Additionally, ASU 2023-09 requires annual disclosures of income taxes paid for all entities, including the amount of income taxes paid, net of refunds received, disaggregated by federal, state, and foreign jurisdictions. The standard is effective for fiscal years beginning after December 15, 2024, with early adoption permitted. The Company is currently evaluating the impact of ASU 2023-09 on its consolidated financial statements. 2. Restatement of Previously Issued Financials In connection with the preparation of the Company’s financial statements as of and for the year ended December 31, 2023, the Company’s management identified errors in its previously issued unaudited financial statements as of and for the three months ended March 31, 2023, the six months ended June 30, 2023, and three and nine months ended September 30, 2023 with respect to how certain expenses relating to the Merger were previously expensed and that as part of the Company’s annual audit it was determined that such expenses should have been capitalized and subsequently recorded against equity. The accounting for legal costs was deemed to be specific incremental costs directly attributable to the Merger and concurrent PIPE financing (See Note 3). Management has evaluated this change in accounting, which understated (overstated) net income (loss), prepaid expenses and overstated additional paid in capital and concluded it was material to the prior periods, individually or in the aggregate. Therefore, the Company is restating the previously issued unaudited financial statements, and related notes thereto, as of and for the three months ended March 31, 2023, the six months ended June 30, 2023, and three and nine months ended September 30, 2023. The financial statements for the three months ended March 31, 2023, were included in the Company amended registration statements filed with the Securities and Exchange Commission (“SEC”) on July 11, 2023, July 28, 2023, and August 8, 2023, as well as the Company’s prospectus/proxy statement filed with the SEC on August 10, 2023. The financial statements for the six-month period ended June 30, 2023, were included as an exhibit to the Company’s Form 8-K filed with the SEC on September 29, 2023. The financial statements for the three and nine months ended September 30, 2023, were included the Company’s Form 10-Q filed with the SEC on November 20, 2023, and again in the Company’s Form 10-Q/A filed with the SEC on November 21, 2023. The impact of the errors described above on the balance sheets as of March 31, 2023, is as follows (in thousands): Schedule of Impact of the Errors on Financial Statement As of March 31, 2023 (Unaudited) As Previously Reported Adjustment As Restated Balance Sheets (in thousands) Assets Current assets Prepaid expenses and other current assets $ - $ 493 $ 493 Total current assets 8 493 501 Total assets 13 493 506 Stockholders’ deficit Additional paid-in capital Accumulated deficit ( 12,929 ) 493 ( 12,436 ) Total shareholders’ deficit ( 12,517 ) 493 ( 12,024 ) Total liabilities and shareholders’ deficit $ 13 $ 493 $ 506 F- 13 The impact of the errors described above on the statements of operations and comprehensive loss for the three months ended March 31, 2023, is as follows (in thousands): For the three months ended March 31, 2023 (Unaudited) As Previously Reported Adjustment As Restated Statements of Operations and Comprehensive Loss (in thousands) Operating expenses: General and administrative expenses $ 2,008 $ ( 493 ) $ 1,515 Total operating costs and expenses 2,008 ( 493 ) 1,515 Operating loss ( 2,008 ) 493 ( 1,515 ) Net income (loss) $ ( 2,165 ) $ 493 $ ( 1,672 ) Net loss per share attributable to ordinary shareholders – basic and diluted* $ ( 1,082 ) $ 247 $ ( 835 ) Total comprehensive income (loss) $ ( 2,428 ) $ 493 $ ( 1,935 ) * Does not reflect the impact of the Merger on the Company’s capital structure The impact of the errors described above on the statements of changes in shareholders’ deficit as of March 31, 2023, is as follows (in thousands): As of March 31, 2023 (Unaudited) As Previously Reported Adjustment As Restated Statements of Changes in Shareholders’ Deficit (in thousands) Accumulated deficit $ ( 12,929 ) $ 493 $ ( 12,436 ) Total shareholders’ deficit $ ( 12,517 ) $ 493 $ ( 12,024 ) The impact of the errors described above on the statements of cash flows for the three months ended March 31, 2023, is as follows (in thousands): For the three months ended March 31, 2023 (Unaudited) As Previously Reported Adjustment As Restated Statements of Cash Flows (in thousands) Cash flows from operating activities: Net loss $ ( 2,165 ) 493 ( 1,672 ) Changes in operating assets and liabilities: Prepaid expenses and other current assets $ - ( 493 ) ( 493 ) F- 14 The impact of the errors described above on the balance sheets as of June 30, 2023, is as follows (in thousands): As of June 30, 2023 (Unaudited) As Previously Reported Adjustment As Restated Balance Sheets (in thousands) Assets Current assets Prepaid expenses and other current assets $ - $ 895 $ 895 Total current assets - 895 895 Total assets 5 895 900 Stockholders’ deficit Accumulated deficit ( 15,437 ) 895 ( 14,542 ) Total shareholders’ deficit ( 15,408 ) 895 ( 14,513 ) Total liabilities and shareholders’ deficit $ 5 $ 895 $ 900 The impact of the errors described above on the statements of operations and comprehensive loss for the three and six months ended June 30, 2023, is as follows (in thousands): For the three months ended June 30, 2023 (Unaudited) As Previously Reported Adjustment As Restated Statements of Operations and Comprehensive Loss (in thousands) Operating expenses: $ $ $ General and administrative expenses 1,717 ( 402 ) 1,315 Total operating costs and expenses 1,717 ( 402 ) 1,315 Operating loss ( 1,717 ) 402 ( 1,315 ) Net income (loss) $ ( 2,508 ) $ 402 $ ( 2,106 ) Net loss per share attributable to ordinary shareholders – basic and diluted* $ ( 1,254 ) $ 201 $ ( 1,053 ) Total comprehensive income (loss) $ ( 2,891 ) $ 402 $ ( 2,489 ) * Does not reflect the impact of the Merger on the Company’s capital structure For the six months ended June 30, 2023 (Unaudited) As Previously Reported Adjustment As Restated Statements of Operations and Comprehensive Loss (in thousands) Operating expenses: $ $ $ General and administrative expenses 3,725 ( 895 ) 2,830 Total operating costs and expenses 3,725 ( 895 ) 2,830 Operating loss ( 3,725 ) 895 ( 2,830 ) Net income (loss) $ ( 4,673 ) $ 895 $ ( 3,778 ) Net loss per share attributable to ordinary shareholders – basic and diluted* $ ( 2,337 ) $ 448 $ ( 1,889 ) Total comprehensive income (loss) $ ( 5,319 ) $ 895 $ ( 4,424 ) * Does not reflect the impact of the Merger on the Company’s capital structure The impact of the errors described above on the statements of changes in shareholders’ deficit as of June 30, 2023, is as follows (in thousands): As of June 30, 2023 (Unaudited) As Previously Reported Adjustment As Restated Statements of Changes in Shareholders’ Deficit (in thousands) Accumulated deficit $ ( 15,437 ) $ 895 $ ( 14,542 ) Total shareholders’ deficit $ ( 15,408 ) $ 895 $ ( 14,513 ) The impact of the errors described above on the statements of cash flows for the six months ended June 30, 2023, is as follows (in thousands): For the six months ended June 30, 2023 (Unaudited) As Previously Reported Adjustment As Restated Statements of Cash Flows (in thousands) Cash flows from operating activities: Net loss $ ( 4,673 ) $ 895 $ ( 3,778 ) Changes in operating assets and liabilities: Prepaid expenses and other current assets $ - $ ( 895 ) $ ( 895 ) F- 15 The impact of the errors described above on the condensed consolidated balance sheets as of September 30, 2023, is as follows (in thousands): As of September 30, 2023 (Unaudited) As Previously Reported Adjustment As Restated Condensed Consolidated Balance Sheets (in thousands) Stockholders’ deficit Additional paid-in capital $ 11,351 $ ( 1,534 ) $ 9,817 Accumulated deficit ( 13,078 ) 1,534 ( 11,544 ) The impact of the errors described above on the condensed consolidated statements of operations and comprehensive income (loss) for the three months ended September 30, 2023, is as follows (in thousands): For the three months ended September 30, 2023 (Unaudited) As Previously Reported Adjustment As Restated Statements of Operations and Comprehensive Loss (in thousands) Operating expenses: General and administrative expenses $ 1,069 $ ( 639 ) $ 430 Total operating costs and expenses 1,069 ( 639 ) 430 Operating loss ( 1,069 ) 639 ( 430 ) Net income (loss) $ 1,986 $ 639 $ 2,625 Basic earnings/(net loss) per share $ 0.03 $ 0.01 $ 0.04 Diluted earnings/(net loss) per share $ - $ 0.01 $ 0.01 Total comprehensive income (loss) $ 2,596 $ 639 $ 3,235 The impact of the errors described above on the condensed consolidated statements of operations and comprehensive income (loss) for the nine months ended September 30, 2023, is as follows (in thousands): For the nine months ended September 30, 2023 (Unaudited) As Previously Reported Adjustment As Restated Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (in thousands) Operating expenses: General and administrative expenses $ 4,367 $ ( 1,534 ) $ 2,833 Total operating costs and expenses 4,367 ( 1,534 ) 2,833 Operating loss ( 4,367 ) 1,534 ( 2,833 ) Net income (loss) $ ( 2,314 ) $ 1,534 $ ( 780 ) Basic earnings/(net loss) per share $ ( 0.04 ) $ 0.03 $ ( 0.01 ) Diluted earnings/(net loss) per share $ ( 0.08 ) $ 0.02 $ ( 0.06 ) Total comprehensive income (loss) $ ( 2,278 ) $ 1,534 $ ( 744 ) F- 16 The impact of the errors described above on the condensed consolidated statements of changes in stockholders’ deficit as of September 30, 2023, is as follows (in thousands): As of September 30, 2023 (Unaudited) As Previously Reported Adjustment As Restated Condensed Consolidated Statements of Operations and Comprehensive Income (Loss) (in thousands) Stockholders’ deficit Additional paid-in capital $ 11,351 ( 1,534 ) $ 9,817 Accumulated deficit $ ( 13,078 ) 1,534 ( 11,544 ) The impact of the errors described above on the condensed consolidated statement of cash flows for the nine months ended September 30, 2023, is as follows (in thousands): For the nine months ended September 30, 2023 (Unaudited) As Previously Reported Adjustment As Restated Condensed Consolidated Statements of Cash Flows (in thousands) Cash flows from operating activities: Net loss $ ( 2,314 ) 1,534 ( 780 ) Changes in operating assets and liabilities: Prepaid expenses and other current assets $ 93 ( 1,534 ) ( 1,441 ) Non-cash investing and financing activities Reclassification of deferred offering costs to reduction of additional paid-in capital - 1,534 1,534 3. Merger and Financing As discussed in Note 1 - Summary of Significant Accounting Policies , on September 22, 2023, the Company and MURF completed the Merger. Upon the closing of the Merger, the following occurred: ● Each share of Old Conduit common stock issued and outstanding immediately prior to the closing of the Merger, which totaled 2,000 shares, was exchanged for the right to receive 32,313.215 shares of the Company’s Common Stock (“Common Stock”) resulting in the issuance of 64,626,430 shares of Conduit Pharmaceuticals, Inc. Common Stock. ● In addition to the shares issued to legacy Conduit shareholders noted above, an additional 373,570 shares of Common Stock was issued to Conduit convertible note holders, resulting in a total of 65,000,000 shares of Common Stock being issued to Conduit shareholders and holders of Conduit convertible notes payable. ● In connection with the Merger, 45,000 share of MURF Class A common stock held by the MURF Sponsor was transferred to MURF Directors. Each share was exchanged on a one-for-one basis for shares of Common Stock. ● Each share of MURF Class A common stock held by the MURF Sponsor prior to the closing of the Merger, which totaled 709,000 shares, was exchanged for, on a one-for-one basis for shares of Common Stock. ● Each share of MURF common stock subject to possible redemption that was not redeemed prior to the closing of the Merger, which totaled 58,066 shares, was exchanged for, on a one-for-one basis for shares of Common Stock. ● In connection with the Merger, 3,306,250 shares of MURF Class B common stock held by the Sponsor was automatically converted into shares of MURF Class A common stock and then subsequently converted into shares of Common Stock on a one-for-one basis. F- 17 ● In connection with the Merger, A.G.P./Alliance Global Partners (“A.G.P.”), whom acted as a financial advisor to both MURF and Conduit, was due to receive (i) a cash fee of $ 6.5 million, 1,300,000 shares of Common Stock and warrants to purchase 54,000 shares of Common Stock at an exercise price of $ 11.00 per share pursuant to its engagement agreement with Conduit entered into on August 2, 2022 and (ii) $ 4.6 million of deferred underwriting fees as a result of its engagement for MURF’s initial public offering. Upon closing of the Merger, A.G.P. received a cash payment of $ 5.6 million, 1,300,000 shares of Common Stock, and 54,000 warrants to purchase 54,000 shares of Common Stock. The remaining $ 5.7 million of cash payments due to A.G.P upon closing of the Merger was deferred and to be paid on or before March 21, 2025, with annual interest of 5.5 %. The remaining cash payments due, which were directly attributable to the Merger, were accounted for as a liability with an offset to additional paid-in capital in accordance with SAB Topic 5.A on the Company’s consolidated balance sheet. ● In connection with the Merger, MURF entered into subscription agreements (the “Subscription Agreements”) with certain accredited investors (the “PIPE Investors”) for an aggregate of 2,000,000 units, with each unit consisting of one share of Company common stock (the “PIPE Shares”), together with one warrant exercisable into one share of Company common stock (the “PIPE Warrants”), at a purchase price of $ 10.00 per unit, for an aggregate purchase price of $ 20,000,000 (the “PIPE Financing”) . Upon the closing of the PIPE Financing (which closed in connection with the closing of the Merger), the Company received $ 20.0 million in cash from the PIPE Financing, which was used to settle related party promissory notes issued by MURF to the MURF Sponsor and an affiliate of the MURF Sponsor as well as transaction costs. ● The proceeds received by the Company from the Merger and PIPE Financing, net of transaction costs, and other payments for existing liabilities and prepayments, totaled $ 8.5 million. ● The Merger was accounted for as a reverse recapitalization in accordance with U.S. GAAP. Under this method of accounting, MURF was treated as the acquired company for financial reporting purposes (see Note 1 for further details). Accordingly, for accounting purposes, the Merger was treated as the equivalent of the Company issuing shares for the net assets of MURF, accompanied by a recapitalization. The net assets of MURF were stated at historical cost with no goodwill or other intangible assets recorded. The following table presents the total Common Stock outstanding immediately after the closing of the Merger: Schedule of Common Stock Outstanding Number of Shares Exchange of MURF common stock subject to possible redemption for Conduit Pharmaceuticals Inc. common stock 58,066 Exchange of MURF Class A common stock held by MURF Directors for Conduit Pharmaceuticals Inc. common stock 45,000 Exchange of MURF Class A common stock held by MURF Sponsor for Conduit Pharmaceuticals Inc. common stock 4,015,250 Subtotal - Merger, net of redemptions 4,118,316 Issuance of Conduit Pharmaceuticals Inc. common stock in connection with PIPE Financing 2,000,000 Exchange of Conduit Pharmaceuticals Limited ordinary shares for Conduit Pharmaceuticals Inc. common stock on the Closing Date 64,626,430 Issuance of Conduit Pharmaceuticals Inc. common stock to holders of Conduit Pharmaceuticals Limited convertible notes on the Closing Date 373,570 Issuance of Conduit Pharmaceuticals Inc. common stock to an advisor for services directly related to the Merger 1,300,000 Total - Conduit Pharmaceuticals Inc. common stock outstanding as a result of the Merger, PIPE Financing, exchange of Conduit Pharmaceuticals Limited shares for shares of Conduit Pharmaceuticals Inc., issuance of Conduit Pharmaceuticals Inc. common stock to holders of Conduit Pharmaceuticals Limited convertible notes, and advisors. 72,418,316 F- 18 4. Fair Value During the period ended December 31, 2023, there were no transfers between Level 1 and Level 2, nor into or out of Level 3. The following table presents as of December 31, 2023 the Company’s liabilities subject to measurement at fair value on a recurring basis (in thousands): Schedule of Liabilities Subject to Measurement at Fair Value on Recurring Basis Fair Value Measurements as of December 31, 2023 Level 1 Level 2 Level 3 Total Liabilities: Liability Classified Warrants - 142 - 142 Total Liabilities $ - $ 142 $ - $ 142 The following table presents as of December 31, 2022 the Company’s liabilities subject to measurement at fair value on a recurring basis (in thousands): Fair Value Measurements as of December 31, 2022 Level 1 Level 2 Level 3 Total Liabilities: Convertible notes payable $ - $ - $ 1,835 $ 1,835 Option liability $ - $ - $ 1,417 $ 1,417 Total Liabilities $ - $ - $ 3,252 $ 3,252 The following table presents additional information about the convertible notes payable subject to measurement at fair value on a recurring basis for which the Company used significant unobservable inputs (Level 3) (in thousands): Schedule of Additional Information About the Financial Liabilities Subject To Measurement at Fair Value Amount Balance as of December 31, 2022 $ 1,835 Issuance of debt 1,468 Change in fair value 423 Foreign currency exchange impact ( 41 ) Conversion to 373,570 shares of common stock in connection with the Merger ( 3,685 ) Balance as of December 31, 2023 $ - The convertible notes payable were valued using the fair value option and are considered Level 3 measured instruments. See Note 7 for additional information. Due to the embedded derivatives included in the convertible notes payable, the Company elected to use the fair value option. The fair value was determined based upon a probability-weighted present value approach under three scenarios that consider the provisions of the convertible notes payable. The following table outlines the range of significant unobservable inputs as of September 22, 2023, the closing date of the Merger, and December 31, 2022, respectively: Schedule of Fair Value Significant Unobservable Inputs Assumption Unobservable input - Change of control 2023 2022 Probabilities of conversion provisions 100 % 10 - 90 % Estimated timing of conversion* N/A 0.25 - 1.41 years Time period to maturity* N/A 1.41 years Risk-adjusted discount rate 7.3 % 6.1 % * The Merger occurred on September 22, 2023, at which point the convertible notes converted into Common Stock. As such, the timing of the conversion was September 22, 2023 and the time period to maturity was no longer relevant as the notes converted. Cizzle Option Liability The option liability related to Cizzle (See Note 6) was valued using public market research to determine the probability of success that similar studies in the respiratory and cardiovascular disease areas and a Black-Scholes pricing model. In reviewing the public market research, the Company determined the phase transition success rates for trials similar to AZD 1656 from Phase I to Phase II was 52.7 %. In applying this rate to the sale of future revenue consideration realized, the Company determined the total underlying asset value to be $ 2.9 million. In accordance with ASC 815, the fair value of the option was remeasured at the end of each reporting period, with changes in fair value recorded to the statement of operations and comprehensive income (loss). The Company used this underlying asset value within a Black-Scholes model to remeasure the fair value which was determined to be $ 1.4 million December 31, 2022. On September 26, 2023, Cizzle exercised the option and exchanged its right to future revenue for 395,460 shares of Common Stock. This option liability was re-measured up through the date of exercise resulting in a gain of $ 1.3 million. F- 19 Vela Option Liability This option liability (See Note 6) was valued using public market research to determine the probability of successful clinical trials for AZD 1656. The probability was determined based on studies of clinical trials for assets similar to AZD 1656. After this probability was estimated it was then utilized as an input into a Monte Carlo Simulation model in order to value the option liability. In reviewing the public market research, the Company determined the phase transition success rates for trials similar to AZD 1656 from Phase I to Phase II was 52.7 %. In applying this rate to the sale of future revenue consideration realized, the Company determined the total underlying AZD 1656 value to be $ 4.6 million. The option was issued in the second quarter of 2023, and as such, did not have a fair value at December 31, 2022. In accordance with ASC 815, the fair value of the option will be remeasured at the end of each reporting period, with changes in fair value recorded to the consolidated statements of operations and comprehensive income (loss). On November 30, 2023, Vela exercised the option and exchanged its right to future revenue for 1,015,760 shares of Common Stock. This option liability was re-measured up through the date of exercise resulting in a gain of $ 1.0 million. Schedule of Additional Information About the Option Liability Subject to Measurement at Fair Value Amount Balance as of December 31, 2022 $ 1,417 Option issued 1,486 Change in fair value ( 2,250 ) Option exercise ( 697 ) Foreign currency exchange impact 44 Balance as of December 31, 2023 $ - Liability Classified Warrants The warrants issued to the PIPE Investor and an advisor in connection with the Merger are accounted for as liabilities in accordance with ASC 815-40 and are presented within Warrant liabilities in the consolidated balance sheets. Warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within change in fair value of warrant liabilities in the consolidated statements of operations and comprehensive income (loss). The measurements of the liability classified warrants are classified as Level 2 fair value measurements due to the use of an observable market quote for the Company’s publicly traded warrants, which are considered to be a similar asset in an active market. The warrant liabilities are calculated by multiplying the quoted market price of the Company’s publicly traded warrants by the number of liability classified warrants. 5. Balance Sheet Details – Current Assets Current assets consisted of the following as of December 31, 2023 and December 31, 2022 (in thousands): Schedule of Balance Sheet Details As of As of December 31, 2023 December 31, 2022 Prepaid directors and officers insurance $ 1,365 $ - Other prepaid expenses 140 - Total prepaid expenses and other current assets $ 1,505 $ - F- 20 6. Liability Related to the Sale of Future Revenue Vela Technologies PLC The Company entered into an Agreement with SGSC to approve an Indirect Investment from Vela Technologies PLC (“Vela”) on October 20, 2020, whereby Vela agreed to provide funding to the Company for an indirect investment in AZD 1656 for use in the field in exchange for 8 % of future revenue earned if AZD 1656 is commercialized (the “Vela Agreement”). Total consideration under the Vela Agreement was $ 2.9 million (£ 2.35 million), consisting of $ 1.6 million (£ 1.25 million) cash and the issuance of 1.1 billion common shares in Vela, which based on the Vela’s fair value per share and was $ 1.3 million. During the year ended December 31, 2021, the Company sold all 1.1 billion of its Vela shares for $ 1.2 million and recorded a loss of $ 0.1 million on the sale. The Company received the $ 1.6 million (£ 1.25 ) million cash consideration during the year ended December 31, 2020. This consideration was recorded as a liability related to the future sale of revenue on the balance sheet in accordance with ASC 470-10. In April 2023, the Company entered into an agreement with Vela which granted Vela the right, but not the obligation, to sell its 8 % royalty interest in AZD 1656 back to Conduit. Vela paid a one-time, non-refundable option fee to Conduit of $ 0.5 million (£ 0.4 million). Total consideration payable to Vela upon exercise of the option was £ 4.0 million ($ 5.08 million on the exercise date) worth of new common shares in the combined entity after the Merger between Conduit Pharmaceuticals Limited and MURF, following the consummation of the Merger, at a price per share equal to the volume-weighted average price per share over the ten (10) business days prior to the date of the notice of exercise. The option contained a provision stating that in no event would the price per share for the consideration shares be lower than $ 5 or higher than $ 15 . The option was exercisable in whole at any time from the close of the Merger (the “Effective Time”) until the earlier of (i) the date that was six (6) months from the Effective Time, and (ii) February 7, 2024, the expiration date of the term . On November 30, 2023, Vela exercised its option to sell back its indirect investment in AZD 1656 in exchange for 1,015,760 shares of the Common Stock. The Company recognized the $ 2.8 million of deferred revenue and recorded $ 2.8 million to other income (expense), net, on the consolidated statements of operations and comprehensive income (loss) for the year ended December 31, 2023. As of December 31, 2023, there was no liability for the sale of future revenue related to Vela. F- 21 Cizzle Biotechnology Holdings PLC On February 11, 2022, the Company entered into an agreement with Cizzle PLC (“Cizzle”) whereby Cizzle agreed to purchase a percentage of future revenue earned in AZD 1656, should it reach the commercialization stage. Total consideration under the agreement is specified as $ 1.6 million (£ 1.2 million), consisting of the issuance of the fair value of 25.0 million new common shares in Cizzle on the date of the agreement and the fair value of 22.0 million shares to be issued at the earlier of Cizzle’s shareholder approval or one year from the date of the agreement. The 22.0 million shares were received by the Company in the fourth quarter of 2022 and were subsequently sold within the fourth quarter of 2022. The Company recorded a liability related to deferred revenue of $ 1.4 million for the consideration received from Cizzle as of December 31, 2022. The payments received for the sale of future revenue will be classified as a liability related to the future sale of revenue. Under ASC 470-10-25, a seller of future revenue should evaluate whether the proceeds received should be accounted for as debt or deferred income. In assessing the factors that created a rebuttable presumption of debt within the guidance, the Company determined that there were factors present to overcome the debt presumption and deferred income classification to be appropriate. The main factors the Company considered were that the transactions in form were sales, and not debt transactions. Each agreement does not guarantee a return to each purchaser, the return is based solely on future performance of AZD 1656 should it reach commercialization, with neither purchaser having an involvement in generating future cash flows from AZD 1656. On December 15, 2022, the Company entered into an agreement with Cizzle whereby the Company granted Cizzle the option, but not the obligation, to sell its economic interest in AZD 1656 back to the Company. The agreement contained an option period of nine months from the date of the agreement for Cizzle to notify the Company of its intent to exercise the option to sell its economic interest in AZD 1656. Upon closing of the agreement, Cizzle agreed to pay the Company an option fee of $ 0.1 million (£ 0.1 million). On September 26, 2023, Cizzle exercised its option to sell back its indirect investment in AZD 1656 in exchange for 395,460 shares of the Common Stock. The Company recognized the $ 1.5 million of deferred revenue and recorded $ 1.5 million to other income (expense), net, on the consolidated statements of operations and comprehensive income (loss) for the year ended December 31, 2023. As of December 31, 2023, there was no liability for the sale of future revenue related to Cizzle. The following table presents as of December 31, 2023 the Company’s liability for the sale of future revenue (in thousands): Schedule of Liability for the Sale of Future Revenue Liability related to the sale of future royalties December 31, 2022 $ 4,083 Sale of future royalties - Recognition of deferred revenue upon options exercise ( 4,254 ) Foreign currency exchange impact 171 December 31, 2023 $ - F- 22 7. Convertible Notes Payable On May 27, 2021, the Company approved a Master Convertible Loan Note Instrument (the “2021 Convertible Loan Note Instrument”), permitting the Company to issue convertible notes in a maximum aggregate principal amount of up to $ 1.4 million (£ 1.0 million). The convertible notes issuable under the 2021 Convertible Loan Note Instrument mature three years after issuance to the respective noteholders and bear 5 % interest, only to be paid to the noteholders in the event of a material breach by the Company of the terms of the 2021 Convertible Loan Note Instrument. In the event of a Change of Control (as defined in the 2021 Convertible Loan Note Instrument), the convertible notes issued under the 2021 Convertible Loan Note Instrument automatically convert into common shares of the Company at a conversion price equal to a 20 % discount to the price per share paid for the most senior class of shares in respect of such Change of Control. The Company, with consent from the noteholders, may prepay the convertible notes payable issued under the 2021 Convertible Loan Note Instrument without penalty. The convertible notes payable issued under the 2021 Convertible Loan Note Instrument are general, unsecured obligations of the Company. On August 26, 2022, under the terms of the 2021 Convertible Loan Note Instrument, the Company issued a $ 0.5 million (£ 0.4 million) convertible note payable to an investor. On October 6, 2022, under the terms of the 2021 Convertible Loan Note Instrument, the Company issued a $ 67 thousand (£ 50 thousand) convertible note payable to an investor. As of October 6, 2022, $ 1.3 million (£ 950,000 ) 2021 Convertible Loan Notes were issued and outstanding. On November 1, 2022, the Company approved a master Convertible Loan Note Instrument (the “2022 Convertible Loan Note Instrument”), permitting the Company to issue convertible notes payable for a maximum aggregate principal amount of up to $ 3.3 million (£ 3.0 million). The convertible notes payable issuable under the 2022 Convertible Loan Note Instrument mature three years after issuance to the respective noteholders and bear 5 % interest, only to be paid to the noteholders in the event of a material breach by the Company of the terms of the 2022 Convertible Loan Note Instrument. In the event of a Change of Control (as defined in the 2022 Convertible Loan Note Instrument), the convertible notes payable issued under the 2022 Convertible Loan Note Instrument automatically convert into common shares of the Company at a conversion price equal to a 20 % discount to the price per share paid for the most senior class of shares in respect of such Change of Control. The Company, with consent from the noteholders, may prepay the convertible notes payable issued under the 2022 Convertible Loan Note Instrument without penalty. The convertible notes payable issued under the 2022 Convertible Loan Note Instrument are general, unsecured obligations of the Company. On November 16, 2022, under the terms of the 2022 Convertible Loan Note Instrument, the Company issued convertible notes payable with an aggregate principal amount of $ 0.4 million (£ 0.3 million) to an investor. During January and February 2023, under the terms of the 2022 Convertible Loan Note Instrument, the Company issued convertible notes payable with an aggregate principal amount of $ 0.9 million (£ 0.8 million) to non a -related third party. As discussed in Note 15 – Related Party Transactions, during January and February 2023, under the terms of the 2022 Convertible Loan Note Instrument, the Company issued convertible notes payable with an aggregate principal amount of $ 0.4 million (£ 0.3 million) to the CEO of Corvus Capital Limited, the majority shareholder of the Company. The Company elected to fair value the convertible notes payable issued under the 2021 and 2022 Convertible Loan Note Instruments. At the end of each reporting period, the Company calculates the fair value of the convertible notes payable, and any changes in fair value are reported in other income (expense), net, in the current period’s consolidated statements of operations and comprehensive income (loss). There has been no change in fair value from a change in credit quality. On September 22, 2023, as discussed in Note 2 - Merger, the Company and MURF completed the Merger, at which point all outstanding convertible notes issued under the 2021 and 2022 Convertible Loan Instruments converted into 373,570 shares of Common Stock. For the period from July 1, 2023 through September 22, 2023, the closing date of the Merger, the Company recorded a loss from the change in fair value of convertible notes payable of $ 0.1 million in other income (expense), net, in its consolidated statements of operations and comprehensive income (loss). On September 22, 2023, in connection with the Merger, the Company record an immaterial loss on extinguishment of convertible notes payable in other income (expense), net, in its consolidated statements of operations and comprehensive income (loss). For the year ended December 31, 2022, the Company recorded a $ 0.3 million loss from the change in fair value of convertible notes payable in other income (expense), net, in its consolidated statements of operations and comprehensive income (loss). See Note 4 for additional information regarding the fair value measurement of convertible notes payable. F- 23 Convertible Promissory Notes Payable During March 2023, the Company issued a convertible promissory note payable with an aggregate principal amount of $ 0.8 million to a non-related third party. The note matures and is payable in full 18 months from the date of issuance . The note carries interest at a rate of 20 % annually, which is payable every six (6) months from the date of the note until the maturity date. The note contained the option of conversion to MURF common stock (Conduit common stock following the merger) at $ 10 per share, at the option of the noteholder, prior to the merger. The promissory convertible note payable was not converted at the closing of the Merger and was also not converted as of December 31, 2023. Issuance costs associated with the note were immaterial and expensed as incurred on the Company’s consolidated statements of operations and comprehensive income (loss). The Company has not elected the fair value option and will account for the promissory convertible note payable as a liability in accordance with ASC 470 on the Company’s balance sheet. As of December 31, 2023, interest incurred on the convertible promissory note was $ 0.2 million and was recorded to Interest expense, net, on the consolidated statements of operations and comprehensive income (loss). As of December 31, 2023 interest payments to the lender totaled $ 0.2 million and were recorded as a reduction of accrued interest on the consolidated balance sheet. The Company notes that this issuance was outside of the terms of the 2022 Convertible Loan Note Instrument. 8. Loans Payable On May 1, 2022, the Company entered into Loan Agreements (the “Loans”) with two lenders, totaling $ 0.2 million. The Loans mature two years from the date of the agreement and bear no interest . Each loan was made available to the Company by the lenders in three tranches of (i) $ 33 thousand (£ 30 thousand); (ii) $ 33 thousand (£ 30 thousand) and (iii) $ 28 thousand (£ 25 thousand), totaling $ 0.2 million. The Loans provided for events of default, including, among others, failure to make payment, bankruptcy and non-compliance with the terms of the Loans. As of December 31, 2023, the Company utilized all three tranches of the first loan and two out of three tranches of the second loan, with total loans payable at December 31, 2023 and December 31, 2022 of $ 0.2 million and $ 0.2 million, respectively. 9. Deferred Commission Payable As discussed in Note 4, A.G.P was a financial advisor to both MURF and Old Conduit in connection with the Merger transaction. Upon the completion of the Merger, A.G.P.: (i) received a cash fee of $ 6.5 million, 1,300,000 shares of Common Stock, and warrants to purchase 54,000 shares of Common Stock at an exercise price of $ 11.00 per share pursuant to its engagement agreement with Old Conduit entered into on August 2, 2022, and (ii) agreed to defer payment, to be paid in the future under certain circumstances by a date no later than March 21, 2025, of $ 5.7 million of fees plus annual interest of 5.5 % as a result of its engagement for MURF’s IPO. The $ 5.7 million deferred commissions payable was recorded as a non-current liability on the Company’s consolidated balance sheet as of December 31, 2023. Accrued interest was recorded as a liability on the Company’s consolidated balance sheet under accrued expenses and other current liabilities and totaled $ 85 thousand as of December 31, 2023. 10. Share Based Compensation On September 22, 2023, in connection with the Merger, the Company adopted the Conduit Pharmaceuticals Inc. 2023 Stock Incentive Plan (the “2023 Plan”). The 2023 Plan became effective upon the closing of the Merger. The 2023 Plan initially provides for the issuance of up to 11,497,622 shares of Common Stock. The number of authorized shares will automatically increase on January 1, 2024 and continuing annually on each anniversary thereof through (and including) January 1, 2033, equal to the lesser of (i) 5 % of the Shares outstanding on the last day of the immediately preceding fiscal year and (ii) such smaller number of Shares as determined by the Board or the Committee. The 2023 Plan allows for awards to be issued to employees and non-employee directors in the form of options, stock appreciation rights, restricted stock, restricted stock units, performance stock units, dividend equivalents, other stock-based, or other cash-based awards. As of December 31, 2023, there were 10,351,358 shares of Common Stock available for issuance under the 2023 Plan. F- 24 During the year ended December 31, 2023 and 2022, there was $ 0.2 million and nil in stock-based compensation expense recognized within General and administrative expenses on the consolidated statements of operations and comprehensive income (loss), respectively, related to the RSUs and Stock Options granted since the Merger. Restricted Stock In connection with the Merger, as discussed in Notes 1 and 3, and by Unanimous Written Consent of the Board of Directors, the Chief Financial Officer of Conduit Pharmaceuticals, Inc. was granted 74,545 restricted stock units (“RSUs”) on December 1, 2023. The RSUs vest in equal annual installments on the first three anniversaries of the closing of the Merger . No RSUs were vested as of December 31, 2023. The following table summarizes restricted stock award activity: Schedule of Restricted Stock Award Activity Number of Awards Weighted Average Grant Date Fair Value Per Unit Outstanding at December 31, 2022 - $ - Granted 74,545 $ 5.51 Cancelled/forfeited - $ - Vested - $ - Outstanding at December 31, 2023 74,545 $ 5.51 As of December 31, 2023 there was $ 0.4 million of total unrecognized compensation expense related to unvested restricted stock awards, which is expected to be recognized over a weighted average vesting period of 3 years. Stock Options The Company estimates the fair value of each option award on the date of grant using the Black-Scholes option-pricing model. The Company then recognizes the grant date fair value of each option as compensation expense ratably using the straight-line attribution method over the service period (generally the vesting period). The Black-Scholes model incorporates the following assumptions: ● Expected volatility – the Company estimates the volatility of the share price of their peer companies at the date of grant using a “look-back” period which coincides with the expected term, defined below. The Company believes using a “look-back” period which coincides with the expected term is the most appropriate measure for determining expected volatility. ● Expected term – the Company estimates the expected term using the “simplified” method outlined in SEC Staff Accounting Bulletin No. 107, “Share-Based Payment.” ● Risk-free interest rate – the Company estimates the risk- free interest rate using the U.S. Treasury Yield curve for periods equal to the expected term of the options in effect at the time of grant. ● Dividends – the Company uses an expected dividend yield of zero because the Company has not declared nor paid a cash dividend, nor are there any plans to declare a dividend. The Company estimated the fair value of stock options granted in the periods presented using a Black-Scholes option-pricing model utilizing the following assumptions: Schedule of Fair Value of Stock Option Granted For the year ended December 31, 2023 2022 Expected volatility (%) 79.0 % - 80.0 % n/a Expected term (years) 3.5 - 6.5 n/a Risk-free interest rate (%) 4.16 % - 4.35 % n/a Expected dividend yield (%) 0 % n/a The Company accounts for forfeitures as they occur, which may result in the reversal of compensation costs in subsequent periods as the forfeitures arise. The following table summarizes stock option activity for the 2023 Plan: Schedule of Stock Option Activity Number of Options Weighted Average Exercise Price Weighted Average Remaining Contractual Term (years) Aggregate Intrinsic Value (in thousands) Outstanding at December 31, 2022 - $ - - $ - Granted 1,071,719 $ 5.51 8.85 $ - Cancelled/forfeited - $ - - $ - Exercised - $ - - $ - Outstanding at December 31, 2023 1,071,719 $ 5.51 8.85 $ - Exercisable 17,500 $ 5.51 5.72 $ - Unvested 1,054,219 $ 5.51 $ 9.52 $ - F- 25 The aggregate intrinsic value of options is calculated as the difference between the exercise price of the underlying options and the fair value of the Company’s common stock for those options that had exercise prices lower than the fair value of the Company’s common stock. As of December 31, 2023, the total compensation cost related to non-vested option awards not yet recognized was $ 4.1 million with a weighted average remaining vesting period of 3.3 years . 11. Income Taxes There was no provision (benefit) for income taxes the year ended December 31, 2023: Schedule of Provision for Income Tax 2023  2022 For The Years Ended 2023 2022 Current Federal - - State - - Foreign - - Current income tax - - Deferred Federal ( 843,309 ) - State ( 354,993 ) - Foreign ( 250,981 ) - Deferred income tax ( 1,449,283 ) - Change in Valuation Allowance 1,449,283 - Net Income Tax Expense - - Income tax provision differed from the amount computed by applying the U.S. federal income tax rate of 21 % to income (loss) before taxes, as follows: Schedule of Federal Income Tax Rate US Foreign Consolidated For The Years Ended 2023 US Foreign Consolidated Taxes at federal statutory rate $ ( 417,879 ) $ 305,304 $ ( 112,575 ) State Taxes ( 174,581 ) - ( 174,581 ) Foreign Rate Differential - 490,112 490,112 Meals & Entertainment 24 1,880 1,904 Eq Comp Perm 3,126 - 3,126 Convertible Debt Adjustment - ( 1,048,277 ) ( 1,048,277 ) Purchase Accounting Adjustment ( 608,992 ) - ( 608,992 ) Change In Valuation Allowance 1,198,302 250,981 1,449,283 Total provision (benefit) for income taxes $ - $ - $ - The tax effects of temporary differences which give rise to significant portions of deferred tax assets are as follows as of December 31: Schedule of Deferred Tax Assets And Liabilities US Foreign Consolidated For The Years Ended 2023 US Foreign Consolidated Deferred Tax Assets Stock options $ 37,671 $ - $ 37,671 Transaction Costs 598,843 598,843 Net operating loss 561,788 250,981 812,769 Total deferred tax asset 1,198,302 250,981 1,449,283 Deferred Tax Liabilities Net deferred tax assets 1,198,302 250,981 1,449,283 Valuation allowance ( 1,198,302 ) ( 250,981 ) ( 1,449,283 ) Net deferred tax assets (liability) $ - $ - $ - F- 26 As of December 31, 2023, the Company had net operating loss (“NOL”) carryforwards for U.S. federal” purposes of approximately $ 1,882,667 which carryforward indefinitely and can offset 80 % of taxable income in future years. As of December 31, 2023, the Company had state NOL carryforwards of: $ 1,882,667 which will begin to expire in 2044. As of December 31, 2023, the Company had net operating loss (“NOL”) carryforwards for foreign purposes of approximately $ 1,003,925 which carryforward indefinitely. Net operating loss (NOL) carryforwards are subject to limitations in the event of a change in control under Section 382 of the Internal Revenue Code. This section limits the amount of taxable income that can be offset by NOLs after an ownership change. The limitation is calculated as the value of the old loss corporation multiplied by the long-term tax-exempt rate. If the new loss corporation does not continue the business enterprise of the old loss corporation for a specified period, the NOL carryforwards may be disallowed. The Company has not yet conducted a Section 382 study to determine whether any ownership changes have occurred that would impose annual limitations on its ability to utilize its NOL carryforwards. Until such a study is completed, there is substantial uncertainty regarding the amount of NOL carryforwards that could be utilized annually to offset future taxable income. The Company establishes a valuation allowance when it is more likely than not that the Company’s recorded net deferred tax asset will not be realized. In determining whether a valuation allowance is required, the Company must take into account all positive and negative evidence with regard to the utilization of a deferred tax asset. As of December 31, 2023, the valuation allowance for deferred tax assets totaled approximately $ 1,449,283 . 12. Common Stock and Preferred Stock As of December 31, 2023, and December 31, 2022, the Company has authorized the issuance of up to 250,000,000 and 400,000,000 , shares of common stock, at a par value $ 0.0001 per share, respectively. As of December 31, 2023, there were 73,829,536 shares of Common Stock issued and outstanding. As of December 31, 2022, there were 64,626,430 shares of Common Stock issued and outstanding as a result of the retrospective application of the Merger, as discussed in Note 2. No cash dividends have been declared or paid as of December 31, 2023. On November 4, 2022, Conduit Pharmaceuticals Limited issued 1,000 common shares to Corvus Capital Limited. Corvus Capital Limited subsequently transferred 775 Ordinary Shares to other investors. The 1,000 common shares converted into 32,313,215 shares of Conduit Pharmaceuticals, Inc. Common Stock upon the closing of the Merger. As of December 31, 2023, the Company has authorized the issuance of up to 1,000,000 shares of Conduit Pharmaceuticals, Inc. preferred stock (the “Preferred Stock”). As of December 31, 2022, no preferred shares were authorized for issuance. As of December 31, 2023 and December 31,2022, no shares of Preferred Stock were issued and outstanding. Holders of the Common Stock are entitled to one vote per share, and to receive dividends, on and if declared by the board of directors and, upon liquidation or dissolution, are entitled to receive all assets available for distribution, subordinate to the rights, preferences, and privileges of any outstanding preferred shares (if any) with respect to dividends and in connection with liquidation, winding up and dissolution of the Company. The holders have no preemptive or other subscription rights. F- 27 13. Earnings/(Net Loss) Per Share The following table presents the calculation of basic and diluted earnings/(net loss) per share (in thousands, except share amounts and per share data): Schedule of Basic and Diluted Net Loss Per Share 2023 2022 For the years ended December 31, 2023 2022 Numerator: Net income (loss) - basic $ ( 535 ) $ ( 4,887 ) Less: Change in fair value and income impact of option liabilities ( 5,521 ) - Net income (loss) - diluted $ ( 6,056 ) $ ( 4,887 ) Denominator: Weighted average common stock outstanding, basic 66,973,906 37,447,918 Add: Option liability conversion shares 919,975 - Weighted average shares used in computing net loss per share - diluted 67,893,881 37,447,918 Net income (loss) per share, basic $ ( 0.01 ) $ ( 0.13 ) Net income (loss) per share, diluted $ ( 0.09 ) $ ( 0.13 ) The Company notes that the adjustment to the numerator for the change in fair value and income impact of Vela and Cizzle accounts for changes in fair value of each option, gains (losses) at the time of issuance of each option and the statement of operations impact of the derecognition of deferred revenue that originated upon the initial sale of royalties to both Vela and Cizzle. Potentially dilutive securities (upon conversion) that were not included in the diluted per share calculations because they would have been anti-dilutive were as follows: Schedule of Potentially Dilutive Securities As of As of December 31, 2023 December 31, 2022 Equity classified warrants 13,979,000 - Liability classified warrants 20,054,000 - Convertible notes payable - 1,250,000 Convertible promissory notes payable 80,500 - Stock options 1,071,719 - Restricted stock units 146,963 - Antidilutive Securities 35,332,182 1,250,000 14. Commitments and Contingencies Legal Proceedings The Company is subject to certain claims and contingent liabilities that arise in the normal course of business. While we do not expect that the ultimate resolution of any of these pending actions will have a material effect on our consolidated results of operations, financial position or cash flows, litigation is subject to inherent uncertainties. As such, there can be no assurance that any pending legal action, does not become material in the future. In August 2023, prior to the Business Combination, our now wholly-owned subsidiary, Conduit Pharmaceuticals Limited, received a letter from Strand Hanson Limited (“Strand”) claiming it was owed advisory fees pursuant to a previously executed letter. Conduit rejected and disputes the substance of the letter in full. Following such rejection, on September 7, 2023, Strand filed a claim in the Business and Property Courts of England and Wales claiming it is entitled to be paid the sum of $ 2 million and, as a result of the completion of the Business Combination, to be issued 6.5 million shares of common stock. The potential contingency is not considered probable or reasonable estimable as of the financial statement issuance date and no loss contingency accruals have been incurred in the accompanying financial statements. We intend to vigorously defend against these claims. Regardless of its outcome, the litigation may impact our business due to, among other things, defense legal cost and the diversion of the attention of our management. F- 28 15. Related Party Transactions Corvus Capital Limited Corvus Capital Limited (“Corvus”) is a significant investor in the Company through subscribing to 1,000 common shares prior to the closing of the Merger on September 22, 2023. As discussed in Note 3, the shares held by Corvus on the closing date of the Merger were exchanged for shares of Conduit Pharmaceuticals Inc. common stock. The Chief Executive Officer of Corvus is a member of Conduit’s board of directors. In conjunction with the execution of the PIPE Subscription Agreement, Corvus Capital and its affiliates entered into a participation and inducement agreement with the Private Placement Investor whereby Corvus agreed to provide certain payments and economic benefits to such investor in the event Corvus Capital sold or pledged in a debt transaction any of the shares it was receiving in the Business Combination. In certain circumstances, such investor may have a right to cause Corvus Capital to transfer certain of its shares to such investor. For the years ended December 31, 2023 and 2022, the Company incurred director’s fees and travel expenses payable to the CEO of Corvus of approximately $ 1.0 million and $ 0.2 million, respectively. As of December 31, 2023, the Company did not owe the CEO of Corvus any director’s fees as the CEO of Corvus and the Company agreed to cease director’s fees to the CEO of Corvus effective at the closing of the Merger. As of December 31, 2022, the Company owed approximately $ 0.6 million of advisory fees to Corvus, which were recorded to accrued expenses on the balance sheet. The $ 0.6 million of accrued advisory fees were paid during the fourth quarter of 2023 and no remaining advisory fees were due to Corvus as of December 31, 2023. As of December 31, 2023, the Company paid fees to an employee of Corvus of approximately $ 65 thousand. Total fees payable to the employee of Corvus for work performed on behalf of the Company through the closing of the Merger totaled $ 0.2 million, but a reduction was negotiated as the employee of Corvus became an employee of the Company, effective at the closing of the Merger. Amounts owed to the CEO and employee of Corvus are included in accrued expenses and other current liabilities in the balance sheet. For the year ended December 31, 2023, and December 31, 2022, the Company paid a family member of the CEO of Corvus nil and $ 33 thousand, respectively. During the year ended December 31, 2023, Corvus provided a $ 0.2 million cash contribution to the Company to maintain liquidity through the closing of the Merger. There was no intention of repayment by both Corvus and the Company, and as such, the Company recorded the contribution to the consolidated statement of changes in stockholders’ deficit. During January and February 2023, under the terms of the 2022 Convertible Loan Note Instrument, the Company issued convertible notes payable with an aggregate principal amount of $ 0.4 million (£ 0.3 million) to the CEO of Corvus. The convertible notes payable mature three years after issuance and bear 5 % interest, only to be paid in the event of a material breach by the Company of the terms of the 2022 Convertible Loan Note Instrument. In the event of a Change of Control, the convertible notes payable automatically convert into common shares of the Company at a conversion price equal to a 20 % discount to the price per share paid for the most senior class of shares in respect of such Change of Control. All of the convertible notes payable converted into Common Stock upon the closing of the Merger at a 20 % discount as specified under the terms of the 2021 Convertible Note Loan Instrument and the 2022 Convertible Note Loan Instrument. Related Party Loan The loans made to a related party were stated at a total principal amount of $ 0.8 million, with $ 0 and $ 0.3 million outstanding at December 31, 2023 and December 31, 2022, respectively. The loan carried no interest, and as such, no interest receivable was recorded. The Company recorded a full reserve against the loan as the related party did not have the ability to repay the loans as of December 31, 2022. On September 22, 2023, the related party paid back a significant portion of its outstanding loan and the Company forgave the remaining portion of the loan and the Company recorded the $ 0.3 million payoff as a gain within general and administrative expense on the consolidated statement of operations and comprehensive income (loss), as it had previously been fully reserved. St George Street Capital St George Street Capital is a significant investor in the Company through subscribing to 147 common shares of Old Conduit, which were exchanged for shares of Common Stock upon the closing of the Merger. The Chief Executive Officer of St George Street Capital is also the Chief Executive Officer of Conduit. Further, the Company has an Exclusive Funding Agreement (as defined below) with St George Street Capital. For the year ended December 31, 2023 and 2022, the Company incurred no expenses to St George Street Capital in 2023 and $ 0.1 million in 2022 respectively. As of December 31, 2023 and December 31, 2022, the Company did not owe any amounts to St George Street Capital. On March 26, 2021, the Company entered into the Exclusive Funding Agreement (“Global Funding Agreement”) with St George Street Capital. Under the agreement, the Company has the first exclusive right, but not the obligation, to provide or procure funding for the performance of a drug discovery and/or development project that St George Street wishes to undertake (each a “Project”) in consideration for a share of the Net Revenue, as defined in respect to each Project (each a “Project Option”). St George Street must notify the Company in writing of each Project St George Street wishes to undertake (each a “Project Notice”). Within 90 days of a Project Notice, the Company must notify St George Street in writing whether it wishes to exercise its exclusive right to provide all or some of the funding. Such notice exercising the Project Option will specify the source and amount of the required funding the Company will provide. In the event the Company exercises its Project Option, the parties shall come to agreement for the provision of funding for the Project (each a “Project Funding Agreement”). Within 30 days of the entry into any Project Funding Agreement, a joint commercialization committee will be established to oversee the Project. Upon the receipt of any Net Revenue, as defined, St George Street will first pay the expenses it has incurred, and the remaining Net Revenue will be shared between the parties according to the agreed percentage. As of December 31, 2023, the Company has not recognized any net revenue from the Global Funding Agreement and related Projects. We and St George Street have entered into five project funding agreements, which are subject to the terms of the Global Funding Agreement, to develop certain clinical assets that have been licensed to St George Street by AstraZeneca. The project funding agreements relate to: ● AZD1656 for use in renal transplant, ● AZD1656 for use in pre-term labor, ● AZD1656 for use in Hashimoto’s thyroiditis, ● AZD1656 for use in uveitis, and ● AZD5904 for use in idiopathic male infertility. At present, the Company has not determined whether to fund any of these projects, although its ability to choose to remains at the present time. Subject to the terms of the Global Funding Agreement, and project funding agreements, either we or St George Street may seek funding for projects from third parties. There may be additional opportunities for us to partner with St George Street to fund the development of additional clinical assets in the future, licensed from Astra Zeneca. Pursuant to its terms, the Global Funding Agreement remains effective in respect of each project until the expiration of the right of a party to receive a share of the Net Revenue (as defined in the Global Funding Agreement) pursuant to the Global Funding Agreement. Under certain circumstances, St George Street may terminate a project (i) in the event of a material or persistent breach of the Global Funding Agreement by us, subject to a cure period if the breach is capable of remedy, or (ii) in the event St George Street decides to cease development of a project. If an event of force majeure occurs and continues for a designated period of time, the innocent party may terminate the Global Funding Agreement after a notice period. Either party may terminate a project if a voluntary arrangement is proposed or approved or an administration order is made, or a receiver or administrative receiver is appointed of any of the other party’s assets or undertakings or a winding-up resolution or petition is passed (otherwise than for the purpose of solvent reconstruction or amalgamation, in particular with respect to any reorganization of the structure of that party) or if any circumstances arise which entitle a court or a creditor to appoint a receiver, administrative receiver or administrator or make a winding-up order or similar or equivalent action is taken against or by that other party by reason of its insolvency or in consequence of debt. Generally, each project funding agreement may be terminated by us if at any time St George Street ceases the conduct of development or commercialization of the relevant products in accordance with the relevant development plan for a designated period of time, provided that the termination is only effective with respect to the specified project and the Global Funding Agreement continues in effect for all other projects. They may also be terminated by either party upon written notice to other party if the other party materially breaches the project funding agreement and does not fully cure the breach to the non-breaching party’s satisfaction within 90 days. The Global Funding Agreement also contains customary representations and warranties. Each party also agreed to keep secret and confidential certain confidential information of the other party. The foregoing summary does not purport to be a complete description of all of the provisions of the Global Funding Agreement and related project funding agreements and is qualified by reference to the full text of the Global Funding Agreement and such project funding agreements. F- 29 16. Other Income (expense), net The following table presents other income (expense), net, for the years ended December 31, 2023 and 2022 (in thousands): Schedule of Other Expense, Net 2023 2022 For the years ended December 31, 2023 2022 Other income: Recognition of Cizzle deferred revenue upon option exercise $ 1,480 $ - Recognition of Vela deferred revenue upon option exercise 2,774 - Change in fair value of Cizzle option 1,280 - Change in fair value of Vela option 970 - Change in fair value of warrant liability 81 - Interest Income 15 - Other 115 - Unrealized foreign currency transaction gain 39 - Total other income: 6,754 - Other expense: Loss on issuance of Cizzle option - 1,300 Loss on issuance of Vela option 987 Change in fair value of convertible notes payable 426 265 Loss on the sale of equity securities - 129 Placement fees on sale of investment in equity securities - 33 Interest expense 211 - Realized foreign currency transaction loss 403 - Total other expense 2,027 1,727 Total other (expense) income, net $ 4,727 $ ( 1,727 ) 17. Warrants Equity Classified Warrants Pursuant to MURF’s initial public offering, the Company sold 13,225,000 units at a price of $ 10.00 per unit. Each unit consisted of one share of MURF Class A common stock and one redeemable Publicly Traded Warrant. Each whole Publicly Traded Warrant entitled the holder to purchase one share of Class A common stock at a price of $ 11.50 per share, subject to adjustment. The warrants are publicly traded on The Nasdaq Capital Market under the trading symbol CDTTW. Simultaneously with the closing of its initial public offering, MURF consummated the private sale to the Sponsor of 754,000 private placement units at a price of $ 10.00 per private placement unit. Each private placement unit was comprised of one share of MURF Class A common stock and one Private Placement Warrant. Each Private Placement Warrant was exercisable to purchase one share of MURF Class A common stock at a price of $ 11.50 per share, subject to adjustment. The private placement units (including the Class A common stock issuable upon exercise of the warrants included in the private placement units) were not transferable, assignable, or saleable until 30 days after the completion of a Merger, subject to certain exceptions. In connection with the closing of the Merger on September 22, 2023, the Equity Classified Warrants were amended to entitle each holder to purchase one share of the Company’s Common Stock. The Equity Classified Warrants became exercisable 30 days after the Closing Date of the Merger. The Equity Classified Warrants will expire five years after the Closing Date of the Merger or earlier upon redemption or liquidation. The Company will not be obligated to deliver any shares of Common Stock pursuant to the exercise of a Equity Classified Warrant and will have no obligation to settle such exercise unless a registration statement under the Securities Act with respect to the shares of Common Stock underlying the warrants is then effective and a prospectus relating thereto is current, subject to our satisfying our obligations described below with respect to registration. No Equity Classified Warrant will be exercisable and we will not be obligated to issue shares of Common Stock upon exercise unless the Common Stock issuable upon such exercise has been registered, qualified or deemed to be exempt under the securities laws of the state of residence of the registered holder of the Equity Classified Warrant. In the event that the conditions in the two immediately preceding sentences are not satisfied with respect to an Equity Classified Warrant, the holder of such warrant will not be entitled to exercise such warrant and such warrant may have no value and expire worthless. In no event will we be required to net cash settle any Equity Classified Warrant. In the event that a registration statement is not effective for the exercised Equity Classified Warrant, the purchaser of a unit containing such Equity Classified Warrant will have paid the full purchase price for the unit solely for the share of Common Stock underlying such unit. F- 30 Conduit may call the Publicly Traded Warrants in whole and not in part, at a price of $ 0.01 per warrant, ● upon not less than 30 days’ prior written notice of redemption to each Publicly Traded Warrant holder; and ● if, and only if, the reported last sale price of the Common Stock equals or exceeds $ 18.00 per share (as adjusted for stock splits, stock dividends, reorganizations, recapitalizations and the like) for any 20 trading days within a 30-trading day period commencing once the Publicly Traded Warrants become exercisable and ending three business days before we send the notice of redemption to the warrant holders. If and when the Publicly Traded Warrants become redeemable by Conduit, Conduit may not exercise its redemption right if the issuance of shares of Common Stock upon exercise of the Publicly Traded Warrants is not exempt from registration or qualification under applicable state blue sky laws or Conduit are unable to effect such registration or qualification. Conduit will use its best efforts to register or qualify such shares of Common Stock under the blue sky laws of the state of residence in those states in which the Publicly Traded Warrants were offered by Conduit in the offering. If Conduit calls the Publicly Traded Warrants for redemption as described above, Conduit’s management will have the option to require any holder that wishes to exercise its Publicly Traded Warrant to do so on a “cashless basis.” In determining whether to require all holders to exercise their Publicly Traded Warrants on a “cashless basis,” Conduit’s management will consider, among other factors, Conduit’s cash position, the number of Publicly Traded Warrants that are outstanding and the dilutive effect on Conduit stockholders of issuing the maximum number of shares of Common Stock issuable upon the exercise of our Publicly Traded Warrants. If Conduit’s management takes advantage of this option, all holders of Publicly Traded Warrants would pay the exercise price by surrendering their Publicly Traded Warrants for that number of shares of Common Stock equal to the quotient obtained by dividing (x) the product of the number of shares of Common Stock underlying the Publicly Traded Warrants, multiplied by the difference between the exercise price of the Publicly Traded Warrants and the “fair market value” (defined below) by (y) the fair market value. The “fair market value” for this purpose shall mean the average reported last sale price of the Common Stock for the 10 trading days ending on the third trading day prior to the date on which the notice of redemption is sent to the holders of Publicly Traded Warrants. If Conduit’s management takes advantage of this option, the notice of redemption will contain the information necessary to calculate the number of shares of Common Stock to be received upon exercise of the Publicly Traded Warrants, including the “fair market value” in such case. Requiring a cashless exercise in this manner will reduce the number of shares to be issued and thereby lessen the dilutive effect of a Publicly Traded Warrant redemption. The Private Placement Warrants are identical to the Publicly Traded Warrants, except that such warrants will be exercisable for cash or on a cashless basis, at the holder’s option, and will not be redeemable by Conduit, in each case so long as they are still held by the Sponsor or its permitted transferees. As summarized above, the Company has the option to redeem all of the Publicly Traded Warrants at a cash price of $ 0.01 per warrant during the exercisability period if the Company’s common stock has closed at a trading price above $ 18.00 for 20 days during a 30 day trading window. Management notes that this option is within the Company’s control, therefore it does not represent an “obligation” and does not create a liability under ASC 480. Management considered the guidance within ASC 815-40-15-7A, noting that an exercise contingency would not preclude permanent equity classification if all of the other equity criteria are met. As all other criteria to be classified as permanent equity are met, the Publicly Traded Warrants are classified as permanent equity on the Consolidated Balance Sheets. Management assessed the Private Placement Warrants and determined that the warrants are considered to be indexed to the entity’s own stock and met all the criteria for permanent equity classification. As such, the Publicly Traded Warrants are classified as permanent equity on the Consolidated Balance Sheets. Liability Classified Warrants As discussed in Note 2, 2,000,000 PIPE Warrants were issued to the PIPE Investors as of the closing of the Merger pursuant to subscription agreements. The warrants provide the PIPE Investors the right to purchase up to 2,000,000 shares of Common Stock at an exercise price of $ 11.50 . Additionally, on the Closing Date of the Merger, the Company issued 54,000 A.G.P. Warrants to an advisor for services provided directly related to the Merger. The warrants provide the advisor the right to purchase up to 54,000 shares of Common Stock at an exercise price of $ 11.00 per share. The warrants issued to the PIPE Investors and the advisor (collectively the “Liability Classified Warrants”) contain materially the same terms and are exercisable for a period of five years, beginning on October 22, 2023. The PIPE Warrants are exercisable for cash or on a cashless basis, at the holder’s option. The PIPE Warrants are not redeemable by the Company. The A.G.P. Warrants are exercisable for cash or on a cashless basis, at the holder’s option. The Company may call the A.G.P. Warrants for redemption, in whole and not in part, at any time after the A.G.P. Warrants become exercisable and prior to their expiration, at a price of $ 0.01 per A.G.P. Warrant, ● upon not less than 30 days’ prior written notice of redemption to each warrant holder; ● if, and only if, the reported last sale price of the Common Stock equals or exceeds $ 18.00 per share (as adjusted for stock splits, stock dividends, recapitalizations and other similar events) for any 20 trading days within a 30 trading day period commencing once the A.G.P. Warrants become exercisable and ending three business days before we send the notice of redemption to the warrant holders; and ● provided there is a current registration statement in effect with respect to the shares of Common Stock underlying the A.G.P. Warrants for each day in the 30 trading day period and continuing each thereafter until the redemption date. If the Company calls the A.G.P. Warrants for redemption as described above, our management will have the option to require any holder that wishes to exercise its A.G.P. Warrant to do so on a “cashless basis.” If our management takes advantage of this option, holders of A.G.P. Warrants would pay the exercise price by surrendering their A.G.P. Warrants for that number of shares of Common Stock as calculated pursuant to the A.G.P. Warrant. Requiring a cashless exercise in this manner will reduce the number of shares to be issued and thereby lessen the dilutive effect of an A.G.P. Warrant redemption. The Liability Classified Warrants are classified as derivative liabilities because they do not meet the criteria in ASC 815-40 to be considered indexed to the entity’s own stock as the warrants could be settled for an amount that is not equal to the difference between the fair value of a fixed number of the entity’s shares and a fixed monetary amount. The Liability Classified Warrants are initially measured at fair value based on the price of the Publicly Traded Warrants and are remeasured at fair value at subsequent financial reporting period end dates and upon exercise (see Note 6 for additional information regarding fair value). On September 22, 2023 (the Closing Date of the Merger), the date of issuance of the Liability Classified Warrants, the Company recorded an initial Warrant liability of $ 0.2 million based on the fair value as of that date. For the year ended December 31, 2023, the Company remeasured the fair value of the Liability Classified Warrants and recorded a gain on the change in the fair value of $ 0.1 million. The gain was recorded to Other income (expense), net, on the consolidated statements of operations and comprehensive income (loss) for the year ended December 31, 2023. As of December 31, 2023 and December 31, 2022, the balance sheets contained warrant liabilities of $ 0.1 million and nil , respectively. 18. Subsequent Events On March 4, 2024, the Company received a Commitment Letter in the amount of $ 5 million, subject to agreement and definition documentation, from Corvus Capital, a major shareholder and related party. The facility allows for single draws of up to $ 500,000 , and limits draw requests to $ 1,000,000 in any 30-day period. An interest rate of 9.5 % annually will apply from the date of the advance request, and repayment is to begin in 12 equal monthly installments, commencing on April 30, 2025. On March 7, 2024, the Company and VanEquity LTD (“VanEquity” or the “Lessor”) entered into a lease agreement for a laboratory space. Under the lease agreement, Rent of approximately $ 0.1 million is due per annum. The lease term ends in January of 2027, and the laboratory space is intended to provide Conduit with the ability to extend or develop proprietary solid-form intellectual property for existing and future clinical assets. On March 20, 2024, the Company issued in a private placement common stock purchase warrants (the “Warrants”) to an unrelated third party to purchase up to an aggregate 260,000 shares of the Company’s common stock, in exchange for entering into a lock-up with respect to the shares of common stock held by such holder (the “Lock-Up Agreement”). The Warrants are not exercisable until one year after their date of issuance. Each Warrant is exercisable into one share of the Company’s common stock at a price per share of $[ 3.18 ] (as adjusted from time to time in accordance with the terms thereof) for a two-year period after the date of exercisability. There is no established public trading market for the Warrants. Notwithstanding the foregoing, the Warrants shall vest, and not be subject to forfeiture, with respect to 25% of such Warrants commencing on the 90th day after the date of the Lock-Up Agreement and 25% on each subsequent 90-day anniversary, in each case vesting only if the holder agrees to continue to have its shares of common stock remain locked up pursuant to the Lock-Up Agreement on such date . The issuance of the Warrants was made in reliance on the exemption from registration provided by Section 4(a)(2) of the Securities Act of 1933, as amended, and/or Regulation D promulgated thereunder. F- 31