What changed in this filing

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Item 2. Management’s Discussion and Analysis

2024-08-12 compared with 2024-05-14 · 232 added, 174 removed, 176 unchanged (70% of the section changed)

Management’s Discussion and Analysis of Financial Condition and Results of Operations.

following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial

statements and the related notes included under Part I, Item 1 of this Quarterly Report on Form 10-Q (this “Quarterly Report”)

as well as the Company’s audited financial statements and notes thereto included in its Annual Report on Form 10-K for the year

ended December 31, 2023 that was filed with the SEC on April 16, 2024.

Certain information contained in the discussion and analysis set

forth below includes forward-looking statements that involve risks and uncertainties.

The following

discussion contains forward-looking statements based upon current expectations that involve risks, uncertainties and assumptions.

actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including

those set forth under the section titled “Risk Factors” or in other parts of this Quarterly Report .

Our historical

results are not necessarily indicative of the results that may be expected for any period in the future.

Conduit Pharmaceuticals Limited

entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Murphy Canyon Acquisition Corp.

on November 8, 2022.

The transaction contemplated by the terms of the Merger Agreement was completed on September 22, 2023, in conjunction

with which MURF changed its name to Conduit Pharmaceuticals Inc.

(hereafter referred to, collectively with is subsidiaries as “Conduit”,

the “Company”, “we”, “us” or “our”, unless the context otherwise requires).

amounts are expressed in thousands of United States dollars (“$”), unless otherwise indicated.

following discussion and analysis of our financial condition and results of operations should be read in conjunction with the

financial statements and the related notes included under Part I, Item 1 of this Quarterly Report on Form 10-Q (this

“Quarterly Report”) as well as the Company’s audited financial statements and notes thereto included in its Annual

Report on Form 10-K for the year ended December 31, 2023 that was filed with the SEC on April 16, 2024.

Certain information

contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

following discussion contains forward-looking statements based upon current expectations that involve risks, uncertainties and

Our actual results may differ materially from those anticipated in these forward-looking statements as a result of

various factors, including those set forth under the section titled “Risk Factors” or in other parts of this Quarterly

Our historical results are not necessarily indicative of the results that may be expected for any period in the

Conduit Pharmaceuticals Limited entered into an Agreement and Plan of Merger (the “Merger Agreement”) with

Murphy Canyon Acquisition Corp.

(“MURF”) on November 8, 2022.

The transaction contemplated by the terms of the Merger

Agreement was completed on September 22, 2023 (the “Merger”), in conjunction with which MURF changed its name to Conduit Pharmaceuticals Inc.

(hereafter referred to, collectively with is subsidiaries as “Conduit”, the “Company”, “we”,

“us” or “our”, unless the context otherwise requires).

has developed a unique business model that allows it to act as a “conduit” to bring clinical assets from pharmaceutical companies

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extend or develop proprietary solid-form intellectual property for our existing and future clinical assets.

Our own intellectual property

portfolio comprises a 20-year patent pending solid-form compound, the AZD1656 Cocrystal (a HK-4 Glucokinase Activator), targeting a wide

range of autoimmune diseases.

Our pipeline research includes a number of compounds that serve as promising alternatives to existing clinical

assets currently marketed and sold by large pharmaceutical companies, which we have identified as having an opportunity to develop further

intellectual property positions through solid-form technology.

Our own intellectual

property portfolio comprises a 20-year patent pending (in certain remaining jurisdictions) solid-form compound, the AZD1656

Cocrystal (a HK-4 Glucokinase Activator), targeting a wide range of autoimmune diseases.

Our pipeline research includes a number of

compounds that serve as promising alternatives to existing clinical assets currently marketed and sold by large pharmaceutical

companies, which we have identified as having an opportunity to develop further intellectual property positions through solid-form

connection with the funding and development of clinical assets, we evaluate and select the specific molecules to be developed and collaborate

with external CROs and KOLs to run clinical trials that are managed, funded, and overseen by us.

with external contract research organizations (“CROs”) and Key Opinion Leaders

(“KOLs”) to run clinical trials that are managed, funded, and overseen by us.

We intend to leverage our comprehensive

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portfolio in combination with other potential sources of financing, including debt or equity financing.

of our proprietary owned patented clinical assets, we have an exclusive relationship and partnership with St George Street, a biomedical

charity based in the United Kingdom.

We have the option to fund 100% of the development of clinical assets that were initially licensed

to St George Street by AstraZeneca.

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.

of our proprietary owned patented clinical assets, AstraZeneca AB (PUBL) (“AstraZeneca”) agreed to grant a license to

the Company under certain intellectual property rights controlled by AstraZeneca related to HK-4 Glucokinase activators AZD1656 and

AZD5658 in all indications and myeloperoxidase inhibitor AZD5904 for the treatment, prevention, and prophylaxis of idiopathic male

The Company will be responsible for the development and commercialization of the relevant products licensed under the

related License Agreement (the “Licensed Products”).

The Company is required to use commercially reasonable efforts to

develop and commercialize the Licensed Products.

has conducted initial pre-clinical and, in some instances, clinical trials on these assets, but has decided to license them for further

addition to our patent pending solid-form compound targeting a wide range of autoimmune diseases, two assets which were licensed from

AstraZeneca to St George Street that is expected to be developed by us include AZD5904 (a Myeloperoxidase Inhibitor) targeting idiopathic

male infertility and AZD1656 (a Glucokinase Activator) targeting autoimmune diseases or immunodeficient conditions including uveitis,

premature labor, renal transplant rejection, and Hashimoto’s thyroiditis.

the clinical assets have undergone initial pre-clinical and clinical testing conducted by AstraZeneca, we are able to use the safety

data generated in these clinical trials to assess which clinical assets to further develop and for which indications.

this relationship, there are considerable APIs that were manufactured by AstraZeneca in conducting its clinical trials available.

this relationship, there are considerable active pharmaceutical ingredients (“APIs”) that were manufactured by AstraZeneca in conducting its clinical trials available.

a result, Conduit may not have to develop the APIs, which is often a time consuming and expensive process, and the APIs already produced

were subject to rigorous quality control measures.

Conduit is well positioned, and intends, to pursue additional relationships and/or partnerships with third parties for the licensing

of further assets which are currently deprioritized.

We plan to focus our efforts on developing clinical assets to address diseases that

impact a large population where there is no present treatment or the present treatment, carries significant unwanted side effects.

Conduit is well positioned to pursue, and intends, to pursue additional relationships and/or partnerships with third parties for the

licensing of further assets which are currently deprioritized.

We plan to focus our efforts on developing clinical assets to address

diseases that impact a large population where there is no present treatment or the present treatment, carries significant unwanted

side effects.

Component of Result of Operations

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The prepaid amounts are expensed as the benefits are

incurred approximately $128,000 on research and development activities during the three months ended March 31, 2024.

There was no comparable research and development funding during

the three months ended March 31, 2023.

Our research and development activities have been wholly focused on developing co-crystals of AZD1656

to increase patent life.

Some of this work was completed by third-party CROs but all intellectual property is retained by us.

have one pending international patent application and two pending national patent applications.

The successful completion of clinical

trials increases the value of clinical assets and may lead to the commercialization and/or licensing of such assets to other pharmaceutical

There is no assurance that any clinical trials on the assets owned or licensed by us will be successful.

incurred approximately $25,000 and $153,000 on research and development activities during the three and six months ended June 30, 2024, respectively.

There was no comparable research and development funding during the three and six months ended June 30, 2023.

Our research and development

activities have been wholly focused on developing co-crystals of AZD1656 to increase patent life.

Some of this work was completed by

third-party CROs but all intellectual property is retained by us.

We currently have one pending international patent application and

two pending national patent applications.

The successful completion of clinical trials increases the value of clinical assets and may

lead to the commercialization and/or licensing of such assets to other pharmaceutical companies.

There is no assurance that any clinical

trials on the assets owned or licensed by us will be successful.

and Administrative Expenses

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income (expenses), net

income (expense), net consists of change in the fair value of options, change in fair value of convertible notes, and expense

incurred upon the issuance of warrants during the quarter.

Other income (expense), net consists of change in the fair value of

options, change in fair value of convertible notes, and expense incurred upon the issuance of warrants during the

income (expense), net consists of change in the fair value of options, change in fair value of convertible notes, and expense incurred

upon the issuance of warrants during the quarter.

Other income (expense), net consists of change in the fair value of options, change

in fair value of convertible notes, and expense incurred upon the issuance of warrants during the quarter.

expense, net consists primarily of interest expense on convertible loan notes and promissory notes and interest expense on deferred commissions

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

Three Months ended March 31,

(In thousands, except share and per share amounts)

Three Months ended June 30,

Six Months ended June 30,

(Dollar amounts in thousands)

Operating expenses:

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Total other (expense) income, net

of the Three Months Ended March 31, 2024 and 2023

of the Three Months Ended June 30, 2024 and 2023

and Development Expenses

Three Months ended March 31,

Three Months ended June 30,

(Dollar amounts in thousands)

Research and development expenses

and development expenses increased by $0.1 million, or 100%, for the three months ended March 31, 2024, as compared to nil for the three

months ended March 31, 2023.

The increase was primarily due to the development of certain co-crystals of AZD1656 (AZD1656 Co-Crystal PCT/IB2022/00075 - Patent Expires 02/09/2042) during the quarter

ended March 31, 2024.

We will seek to develop the AZD1656 Co-Crystal in psoriasis, Crohn’s disease, lupus, sarcoidosis, diabetic

wound healing, idiopathic pulmonary fibrosis, and nonalcoholic steatohepatitis (NASH).

There was no comparative activity during the three months ended March 31, 2023.

and development expenses increased by $25,000, or 100%, for the three months ended June 30, 2024, as compared to $0 for the three

months ended June 30, 2023.

The increase was primarily due to the development of certain co-crystals of AZD1656 (AZD1656 Co-Crystal PCT/IB2022/00075

- Patent Expires 02/09/2042) during the quarter ended June 30, 2024.

We will seek to develop the AZD1656 Co-Crystal in psoriasis, Crohn’s

disease, lupus, sarcoidosis, diabetic wound healing, idiopathic pulmonary fibrosis, and nonalcoholic steatohepatitis (“NASH”).

no comparative activity during the three months ended June 30, 2023.

and Administrative Expenses

Three Months ended March 31,

Three Months ended June 30,

(Dollar amounts in thousands)

General and administrative expenses

and administrative expenses increased by $1.3 million, or 87%, to $2.7 million for the three months ended March 31, 2024, as compared

to $1.5 million for the three months ended March 31, 2023.

The increase was primarily driven by a $0.9 million increase in salaries and

stock compensation expense and $0.5 million increase in insurance related the amortization of D&O insurance, partially offset by

$0.2 million decrease in professional fees.

and administrative expenses increased by $1.8 million, or 137%, to $3.1 million for the three months ended June 30, 2024, as

compared to $1.3 million for the three months ended June 30, 2023.

The increase was primarily driven by a $1.1 million increase in

salaries and stock compensation expense, a $0.4 million increase in insurance related the amortization of D&O insurance, and

$0.3 million in professional fees and other general and administrative expenses.

Income (Expense), Net

Three Months ended March 31,

Three Months ended June 30,

(Dollar amounts in thousands)

Other income (expense), net

income (expense), net changed by $0.3 million, or 210%, to $0.5 million of expense for the three months ended March 31, 2024, as compared

to $0.2 million of net expense for the three months ended March 31, 2023.

The increase was primarily driven by an increase of $0.5 million

related to the issuance of warrants during the three months ended March 31, 2024.

The $0.2 million expense in for the three months ended March 31, 2023 was

primarily driven by a $0.3 million change in fair value on the convertible notes payable, partially offset by a gain of $0.1 million on the change in fair value of the Cizzle option.

further details refer to Note 13, “Other income (expense), net,” in the unaudited financial statements as of March 31, 2024

and March 31, 2023 included elsewhere in this Quarterly Report.

Three Months ended March 31,

income (expense), net changed by $1.3 million, or 169%, to $2.1 million of expense for the three months ended June 30, 2024, as

compared to $0.8 million of net expense for the three months ended June 30, 2023.

The increase was primarily driven by an increase

of $2.2 million related to the issuance of warrants in exchange for stockholders’ entering into lock-up agreements during the

three months ended June 30, 2024.

The $0.8 million expense for the three months ended June 30, 2023 was primarily driven by a

$1.0 million loss on the Vela option in the prior period offset by a, $0.2 million gain on the change in fair value of the Cizzle

further details refer to Note 14, “Other income (expense), net,” in the unaudited financial statements as of June 30, 2024

and June 30, 2023 included elsewhere in this document.

Three Months ended June 30,

(Dollar amounts in thousands)

Interest expense, net

expense was $0.1 million for the three months ended March 31, 2024 compared to nil for the three months ended March 31, 2023.

was driven by $79 thousand of interest expense on the deferred commission payable to an advisor for fees related to the Merger and $40

thousand of interest expense for interest on convertible notes for the three months ended March 31, 2024.

expense was $0.1 million for the three months ended June 30, 2024 compared to $0 for the three months ended June 30, 2023.

was driven by $79,000 of interest expense on the deferred commission payable to an advisor for fees related to the Merger and $40,000 of interest expense for interest on convertible notes for the three months ended June 30, 2024.

of the Six Months Ended June 30, 2024 and 2023

and Development Expenses

Six Months ended June 30,

(Dollar amounts in thousands)

Research and development expenses

and development expenses increased by $0.2 million, or 100%, for the six months ended June 30, 2024, as compared to $0 for the six months

ended June 30, 2023.

The increase was primarily due to the development of certain co-crystals of AZD1656 (AZD1656 Co-Crystal PCT/IB2022/00075

- Patent Expires 02/09/2042) during the quarter ended June 30, 2024.

We will seek to develop the AZD1656 Co-Crystal in psoriasis, Crohn’s

disease, lupus, sarcoidosis, diabetic wound healing, idiopathic pulmonary fibrosis, and NASH.

no comparative activity during the six months ended June 30, 2023.

and Administrative Expenses

Six Months ended June 30,

(Dollar amounts in thousands)

General and administrative expenses

and administrative expenses increased by $3.1 million, or 115%, to $5.9 million for the six months ended June 30, 2024, as compared to

$2.8 million for the six months ended June 30, 2023.

The increase was primarily driven by a $2.0 million increase in salaries and stock

compensation expense, $0.9 million increase in insurance related the amortization of D&O insurance, and a $0.2 million in professional

fees and other general and administrative expenses.

Income (Expense), Net

Six Months ended June 30,

(Dollar amounts in thousands)

Other income (expense), net

income (expense), net changed by $1.7 million, or 176%, to $2.6 million of expense for the six months ended June 30, 2024, as

compared to $0.9 million of net expense for the six months ended June 30, 2023.

The increase was primarily driven by an increase of

$2.7 million related to the issuance of warrants in exchange for stockholders’ entering into lock-up agreements during the

six months ended June 30, 2024.

The $0.9 million expense for the six months ended June 30, 2023 was primarily driven by a $0.3

million change in fair value on the convertible notes payable, a loss on the Vela option of $0.9 million, offset by a gain on the

change in fair value of the Cizzle option of $0.3 million.

further details refer to Note 14, “Other income (expense), net,” in the unaudited financial statements as of June 30, 2024

and June 30, 2023 included elsewhere in this document.

Six Months ended June 30,

(Dollar amounts in thousands)

Interest expense, net

expense was $0.2 million for the six months ended June 30, 2024 compared to $0 for the six months ended June 30, 2023.

The change was

driven by $0.2 million of interest expense on the deferred commission payable to an advisor for fees related to the Merger and $80,000 of interest expense for interest on convertible notes for the six months ended June 30, 2024.

and Capital Resources

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been through private placements of equity securities and convertible debt as well as PIPE financing as a result of the Merger.

the three months ended March 31, 2024 and 2023, we had net losses of $3.6 million and $1.7 million, respectively.

the six months ended June 30, 2024 and 2023, we had net losses of $8.9 million and $3.8 million, respectively.

expect to incur additional losses and higher operating expenses for the foreseeable future as we continue to invest in research and development

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and Uses of Liquidity

primary uses of cash are to fund our operations as we continue to grow our business.

primary uses of cash are to fund our operations as we continue to develop our product candidates.

We will require a significant amount of cash for

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Until such time as we can generate significant

revenue from commercialization of our product, we expect to finance our cash needs for ongoing research and development and business

revenue from commercialization or licensing, we expect to finance our cash needs for ongoing research and development and business

operations through public or private equity or debt financings or other capital sources, including strategic partnerships.

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can be no assurances to that effect.

These matters raise substantial doubt about the Company’s ability to continue as a going concern

for a period of twelve months from the date the financial statements are issued.

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.

material cash requirements include the following contractual and other obligations.

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promissory convertible note matures and is payable in full, 18 months from the date of the note.

The note carries 20% interest and is

payable every six months from the date of the note until the maturity date.

The note is subject to conversion of Conduit’s common stock following

the consummation of the Merger taking place prior to the maturity date of the promissory convertible note.

The note carries 20% interest and

is payable every six months from the date of the note until the maturity date.

The notes became convertible into shares

Conduit’s common stock following the consummation of the Merger.

May 2022, we entered into two loan agreements, with an aggregate principal amount of $0.2 million, with two lenders.

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additional information regarding our convertible promissory note, see Note 7 of the note to the unaudited financial statements.

currently anticipate that cash required for working capital for the next 12 months is approximately $14.4 million, which includes

deferred financing fees payable of $5.7 million, accrued expenses and other current liabilities of $0.9 million, a convertible

promissory note, if not converted prior to maturity, of $0.8 million, income taxes payable of $0.1 million and a note payable of

$0.2 million that matures within the next 12 months.

We do not anticipate being able to fund required capital expenditures for the

next 12 months with cash and cash equivalents on hand as we have a history of limited cash on hand.

We have historically been able

to access funds through the issuance of our convertible notes and believe we can continue to obtain funding through debt and equity financing agreements as needed to meet cash requirements for the next 12 months.

currently anticipate that cash required for working capital for the next 12 months is approximately $17.1 million, which includes deferred

financing fees payable of $5.7 million, accrued expenses and other current liabilities of $1.7 million, a convertible promissory note,

if not converted prior to maturity, of $0.8 million, and a note payable of $0.2 million that matures

within the next 12 months.

We do not anticipate being able to fund required capital expenditures for the next 12 months with cash and

cash equivalents on hand as we have a history of limited cash on hand.

We have historically been able to access funds through the issuance

of our convertible notes and believe we can continue to obtain funding through debt and equity financing agreements as needed to meet

cash requirements for the next 12 months.

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

Three Months ended March 31,

Six Months ended June 30,

Net cash (used in) provided by:

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Flows Used in Operating Activities

cash used in operating activities for the three months ended March 31, 2024, was $2.4 million, resulting primarily from a net loss of

$3.6 million, adjusted for non-cash items including a $0.4 million of stock-based compensation, a $0.4 million of amortization expense,

a $0.5 million expense on the issuance of warrants and a $0.1 million interest expense of the deferred commission payable.

cash used in operating activities for the six months ended June 30, 2024, was $3.9 million, resulting primarily from a net loss of

$8.9 million and a change in the fair value of warrants of $0.1 million, adjusted for non-cash items including $0.9 million of

stock-based compensation, $0.9 million of amortization expense, $2.7 million expense on the issuance of warrants, $0.2 million

interest expense of the deferred commission payable, $0.2 million non-cash share issuance and a $0.4 million cash inflow from

operating assets and liabilities.

The $0.4 million cash inflow from operating assets and liabilities is primarily due to a $0.8

million cash inflow from accounts payable, partially offset by a $0.1 million cash outflow from accrued expenses and other current

liabilities and a $0.3 million cash outflow from prepaid expenses.

cash used in operating activities for the six months ended June 30, 2023, was $2.4 million, resulting primarily from a net loss of $3.8

million, adjusted for non-cash charges of $0.3 million for a loss on the change in fair value of convertible notes payable, a $0.3 million

loss change in reserve on a related party loan, and a $0.6 million loss on the change in fair value of the Cizzle option.

The $0.1 million

cash outflow from operating assets and liabilities is primarily due to a $0.1 cash inflow from accrued expense and other current liabilities

due to differences in the timing of disbursements and a $0.2 million cash outflow from prepaid expenses.

cash used in operating activities for the three months ended March 31, 2023, was $1.9 million, resulting primarily from a net loss of

$1.7 million, adjusted for non-cash charges of $0.3 million for a loss on the change in fair value of convertible notes payable, a $0.2

million loss change in reserve on a related party loan, and a $0.1 million loss on the change in fair value of the Cizzle option.

$0.7 million cash outflow from operating assets and liabilities is primarily due to a $0.2 cash outflow from accrued expense and other

current liabilities due to differences in the timing of disbursements and a $0.4 million cash outflow from prepaid expenses due to capitalized

costs incurred in connection with the Company’s Merger.

cash inflow from operating assets and liabilities is primarily due to a $1.0 million cash inflow from accrued expense and other current

liabilities due to differences in the timing of disbursements and a $0.9 million cash outflow from prepaid expenses.

Flows (Used) Provided by Investing Activities

cash flow from investing activities for the three months ended March 31, 2024.

cash used in investing activities for the three months ended March 31, 2023, was $0.3 million, resulting from the issuance

of a loan to a related party.

Net cash used in investing activities for the six months ended June 30, 2024, resulted from net purchases of short

term investments of $0.2 million and purchases of PP&E during the year.

cash used in investing activities for the six months ended June 30, 2023, was $0.3 million, resulting from the issuance of a loan to

a related party of $0.03 million and proceeds on issuance of an option of $0.5 million.

Flows Provided by Financing Activities

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

cash provided by financing activities for the three months ended March 31, 2023, was $2.2 million, resulting from the issuance of a convertible

note payable of $1.4 million, and $0.7 million from the issuance of a convertible promissory note payable.

cash provided by financing activities for the six months ended June 30, 2024, was $0.1 million, resulting from the proceeds on the issuance

of the April 2024 warrants.

cash provided by financing activities for the six months ended June 30, 2023, was $2.7 million, resulting from the issuance of a convertible

note payable of $1.4 million and $0.7 million from the issuance of a convertible promissory note

Obligations and Other Commitments

of March 31, 2024, we had no non-cancellable commitments for the purchase of clinical materials, contract manufacturing, maintenance

and committed funding which we expect to pay within one year.

of June 30, 2024, we had no non-cancellable commitments for the purchase of clinical materials, contract manufacturing, maintenance and

committed funding which we expect to pay within one year.

Accounting Estimates

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financial results include the following:

accompanying Consolidated Financial Statements have been prepared on a going concern basis of accounting, which contemplates continuity

of operations, realization of assets and liabilities and commitments in the normal course of business.

The accompanying Consolidated

Financial Statements do not reflect any adjustments that might result if we are unable to continue as a going concern.

In connection

with the preparation of the Consolidated Financial Statements for the three months ended March 31, 2024 and year ended December 31, 2023,

we conducted an evaluation as to whether there were conditions and events, considered in the aggregate, which raised substantial doubt

as to our ability to continue as a going concern within one year after the date of the issuance of such financial statements, and concluded

that substantial doubt existed as to our ability to continue as a going concern as further discussed in Note 1 in the notes to the Consolidated

Financial Statements of this Quarterly Report.

ASC 205-40, the receipt of potential funding from future partnerships, equity or debt issuances, potential achievement of milestones

from customer agreements and reductions in workforce cannot be considered probable at this time because these plans are not entirely

within our control and/or have not been approved by our board of directors as of the date of issuance of the Consolidated Financial Statements.

expectation to generate operating losses and negative operating cash flows in the future and the need for additional funding to support

our planned operations, raise substantial doubt regarding our ability to continue as a going concern.

Our plans to alleviate the conditions

that raise substantial doubt include reduced spending, and the pursuit of additional capital.

We have concluded the likelihood that our

plan to successfully obtain sufficient funding from one or more of these sources, or adequately reduce expenditures, while possible,

is less than probable.

We believe that the accounting estimates described below involve a significant degree of judgment and complexity.

Accordingly, we believe these are the most critical to aid in fully understanding and evaluating our financial condition and results

of operations.

Value Measurements

Standards Codification (“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.

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.

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.

inputs reflect the Company’s assumption about the inputs that market participants would use in pricing the asset or liability developed

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and other current liabilities approximate fair value due to the short-term nature of these assets and liabilities.

of March 31, 2024, 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 based on observable inputs other than quoted prices.

The warrant liability is valued using a Black-Scholes model, with the most judgmental non-observable input being

the volatility measure.

Changes in the assumptions around the volatility can cause significant changes in the estimated fair value of

the warrant liability.

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.

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.

Equity classified warrants are

recorded in stockholders’ deficit and liability classified warrants are recorded as liabilities within the Consolidated Balance

The liability classified warrants are remeasured each period with changes recorded in the Consolidated Statements of Operations

and Comprehensive Loss.

As of June 30, 2024, the Company

had outstanding warrants that are classified as a liability within the condensed consolidated balance sheets.

The fair value of the warrant

liability is determined each balance sheet date based on Level 2 inputs as such inputs are based on observable inputs other than quoted

The warrant liability is valued using a Black-Scholes model, with the most judgmental non-observable input being the volatility

Changes in the assumptions around the volatility can cause significant changes in the estimated fair value of the warrant liability.

See Note 4 for further information on the Company’s financial liabilities carried at fair value.

During the sixth months ended June 30, 2024, the Company issued warrants that met the criteria to be classified within

stockholders’ deficit within the condensed consolidated balance sheets.

The fair value of the warrants was determined by using a

Black-Scholes model, with the most judgmental non-observable input being the volatility measure.

Changes in the assumptions around the

volatility could have caused significant changes in the estimated fair value of the warrants.

See Note 14 for further information on the

warrants classified within stockholders’ deficit.

Share Based Compensation

The Company accounts for share based compensation arrangements granted

to employees in accordance with ASC 718, Compensation:

Stock Compensation, by measuring the grant date fair value

of the award and recognizing the resulting expense over the period during which the employee is required to perform service in exchange

for the award.

The grant date fair value of stock options is determined using a Black-Scholes model, with the most judgmental non-observable

input being the volatility measure.

Changes in the assumptions around the volatility can cause significant changes in the grant date fair

value of stock options.

The Company accounts for forfeitures when they occur.

Growth Company Status and Smaller Reporting Company Status

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the new or revised accounting pronouncements as of public company effective dates.

closing of the Merger, the surviving company remained an emerging growth company, as defined by the Jumpstart Our Business Startups act

of 2012, until the earliest of (i) the last day of the combined entity’s first fiscal year following the fifth anniversary of the

completion of MURF’s initial public offering, (ii) the last day of the fiscal year in which the combined entity has total annual

gross revenue of at least $1.235 billion, (iii) the last day of the fiscal year in which the combined entity is deemed to be a large

accelerated filer, which means the market value of the combined entity’s common stock that is held by non-affiliates exceeds $700.0

million as of the prior December 31st or (iv) the date on which the combined entity has issued more than $1.0 billion in non-convertible

debt securities during the prior three year period.

closing of the Merger, the surviving company remained an emerging growth company, as defined by the JOBS Act until the earliest of

(i) the last day of the combined entity’s first fiscal year following the fifth anniversary of the completion of MURF’s

initial public offering, (ii) the last day of the fiscal year in which the combined entity has total annual gross revenue of at

least $1.235 billion, (iii) the last day of the fiscal year in which the combined entity is deemed to be a large accelerated filer,

which means the market value of the combined entity’s common stock that is held by non-affiliates exceeds $700.0 million as of

the prior December 31st or (iv) the date on which the combined entity has issued more than $1.0 billion in non-convertible debt

securities during the prior three year period.

addition, Conduit is a smaller reporting company as defined in the Exchange Act.

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Quantitative and Qualitative Disclosures About Market Risk.

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

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

Compared sentence by sentence after normalising whitespace, quotation marks, case and digits, so re-formatting and restated figures do not read as changed language. Wording changes appear as one removal and one addition. The current filing and the prior one are authoritative.

What changed 10-Q

Item 2. Management’s Discussion and Analysis