UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

(Amendment No. 1)

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2025

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number 001-41245

CDT EQUITY INC.

(Exact name of registrant as specified in its charter)

Delaware		87-3272543
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

4581 Tamiami Trail North, Suite 200 Naples, Florida		34103
(Address of Principal Executive Offices)		(Zip Code)

(646) 491-9132

(Registrant’s telephone number, including area code)

Conduit Pharmaceuticals, Inc.

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered

Common Stock, par value $0.0001 per share	CDT	The Nasdaq Stock Market LLC
Redeemable Warrants, each whole warrant exercisable for one share of Common Stock at an exercise price of $1,150.00	CDTTW	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company, or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

☐ Large accelerated filer	☐ Accelerated filer
☒ Non-accelerated filer	☒ Smaller reporting company
	☒ Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act): Yes ☐ No ☒

As of May 14, 2025, there were 11,961,460 shares of common stock, $0.0001 par value of the registrant issued and outstanding.

CDT EQUITY INC.

Form 10-Q/A

Table of Contents

		Page
Part I-Financial Information.

Item 1.	Financial Statements.
	Condensed Consolidated Balance Sheets as of March 31, 2025 (unaudited) and December 31, 2024 (audited).	1
	Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the three months ended March 31, 2025 and 2024.	2
	Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Equity (Deficit) for the three months ended March 31, 2025 and 2024.	3
	Unaudited Condensed Consolidated Statements of Cash Flows for the three months ended March 31, 2025 and 2024.	4
	Notes to Unaudited Condensed Consolidated Financial Statements.	5
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations.	30
Item 3.	Quantitative and Qualitative Disclosures About Market Risk.	38
Item 4.	Controls and Procedures.	38

Part II-Other Information.

Item 1.	Legal Proceedings.	39
Item 1A.	Risk Factors.	39
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds.	39
Item 3.	Defaults Upon Senior Securities.	39
Item 4.	Mine Safety Disclosures.	39
Item 5.	Other Information.	39
Item 6.	Exhibits.	40

Part III-Signatures.		41

EXPLANATORY NOTE

As described in Item 4.02 of the Company’s Form 8-K filed with the SEC on August 11, 2025, we determined that certain milestone payments to Sarborg Limited (“Sarborg”) in connection with a Services Agreement (the “Sarborg Service Agreement”) for the acquisition of diagnostic tool used to monitor clinical trials, aggregate data on an ongoing basis and tracking intellectual property patent status, which was previously classified as research and development expense, should have been classified as an acquired diagnostic asset in the Company’s March 31, 2025 condensed consolidated balance sheet in accordance with ASC 730.

Restatement Background

On August 8, 2025, the Audit Committee of the Board of Directors of the Company, after discussions with the Company’s management and independent registered public accounting firm, determined that the Company’s unaudited financial statements included in the Company’s Quarterly Report on Form 10-Q for the period ending March 31, 2025 (the “Q1 2025 Form 10-Q”) also known as (the “Financial Statements” or “Affected Period), filed with the SEC on May 14, 2025, as well as the relevant portions of any communication which describe or are based on the Financial Statements, should no longer be relied upon.

In connection with the preparation of the Company’s financial statements for the three and six months ended June 30, 2025, the Company’s management determined that an adjustment was necessary in its previously issued unaudited financial statements, relating to the balance sheet as of March 31, 2025, condensed consolidated statement of operations and comprehensive loss for the three months ended March 31, 2025, the condensed consolidated statement of changes in stockholders’ deficit as of March 31, 2025 and the condensed consolidated statement of cash flows for the three months ended March 31, 2025. See Note 2 for further discussion of the impact of the adjustment.

Items Amended in this Filing

This Form 10-Q/A amends and restates the following items included in the original form 10-Q as appropriate to reflect the Restatement and revision of the relevant periods:

● Part I, Item 1-Financial Statements (Unaudited)

The Company is including with this Form 10-Q/A currently dated certifications of the Company’s Chief Executive Officer and Chief Financial Officer (Exhibits 31.1, 31.2, 32.1, and 32.2).

Except as discussed above and as further described in Note 2, Note 8, Note 13 and Note 17 to the Condensed Consolidated Financial Statements in this Form 10-Q/A, the Company has not modified or updated the disclosures presented in the original Form 10-Q, other than the previously mentioned name change of the Company, to reflect events that occurred at a later date or facts that subsequently became known to the Company. Accordingly, forward-looking statements included in this Amendment No.1 may represent management’s views as of the original Form 10-Q and should not be assumed to be accurate as of any date thereafter. Disclosures not affected by the Restatement are unchanged and reflect the disclosures made at the time of the original filing. Accordingly, this amended form 10-Q/A should be read in conjunction with our filings with the SEC subsequent to the date on which we filed the original filing with the SEC.

CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS

This Quarterly Report on Form 10-Q (this “Quarterly Report”) for the quarterly period ended March 31, 2025 contains forward-looking statements. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations, and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy, and other future conditions. This includes, without limitation, statements regarding the financial position and the plans and objectives of management for our future operations. Such statements can be identified by the fact that they do not relate strictly to historical or current facts. When used in this Quarterly Report, words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “strive,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Factors that could materially affect our business operations and financial performance and condition include, but are not limited to, those risks and uncertainties described herein under “Item 1A. Risk Factors,” those described in our Annual Report on Form 10-K for the year ended December 31, 2024, under “Item 1A. Risk Factors,” filed with the U.S. Securities and Exchange Commission (the “SEC”). You are urged to consider these factors carefully in evaluating the forward-looking statements and are cautioned not to place undue reliance on the forward-looking statements. The forward-looking statements are based on information available to us as of the filing date of this Quarterly Report. Unless required by law, we do not intend to publicly update or revise any forward-looking statements to reflect new information or future events or otherwise. You should, however, review the risk factors we describe in the reports we will file from time to time with the SEC after the date of this Quarterly Report.

This Quarterly Report may also contain market data related to our business and industry. These market data include projections that are based on a number of assumptions. If these assumptions turn out to be incorrect, actual results may differ from the projections based on these assumptions. As a result, our markets may not grow at the rates projected by these data, or at all. The failure of these markets to grow at these projected rates may harm our business, results of operations, financial condition, and the market price of our common stock.

iii

PART I-FINANCIAL INFORMATION

Item 1. Financial Statements.

CDT EQUITY INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except share and per share amounts)

	March 31, 2025 (Unaudited) (As Restated)			December 31, 2024 (Audited)
ASSETS
Current assets
Cash and cash equivalents	$	2,130		$	554
Prepaid R&D services- related party (see Note 8 and Note 13)		1,814			380
Prepaid R&D services (see Note 8)		279			-
Prepaid expenses and other current assets		1,726			1,781
Total current assets		5,949			2,715
Operating lease right-of-use assets. net		234			263
Equipment and clinical assets, net		434			40
Prepaid expenses and other long-term assets		1,097			1,175
Total assets	$	7,714		$	4,193
LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT)
Current liabilities
Accounts payable	$	714		$	1,428
Accrued expenses and other current liabilities		1,045			1,963
Operating lease liability, current portion		126			119
Convertible promissory note payable		-			800
Convertible promissory notes payable at fair value		2,663			2,985
Convertible promissory notes payable at fair value – related parties		-			2,871
Convertible promissory notes payable at fair value		-			2,871
Notes payable		-			150
Notes payable – related parties		-			425
Notes payable		-			425
Total current liabilities		4,548			10,741
Operating lease liability, non-current portion		78			107
Derivative warrant liability		8			138
Total liabilities		4,634			10,986

Commitments and contingencies (see Note 16)		-			-

Stockholders’ equity (deficit)
Common stock, par value $0.0001; 250,000,000 shares authorized at March 31, 2025 and December 31, 2024, respectively, 9,512,058 shares and 1,384,801 shares issued and outstanding at March 31, 2025 and December 31, 2024, respectively		19			14
Preferred stock, par value $0.0001; 1,000,000 shares authorized at March 31, 2025 and December 31, 2024, respectively; nil shares issued and outstanding at March 31, 2025 and December 31, 2024		-			-
Additional paid-in capital		36,569			21,880
Accumulated deficit		(33,854	)		(29,101	)
Accumulated other comprehensive income		346			414
Total stockholders’ equity (deficit)		3,080			(6,793	)
Total liabilities and stockholders’ equity (deficit)	$	7,714		$	4,193

The accompanying notes are an integral part of these condensed consolidated financial statements.

CDT EQUITY INC.

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS

(unaudited)

(in thousands, except share and per share amounts)

	2025			2024
	Three Months ended March 31,
	2025			2024
	(As restated)
Operating expenses:
Research and development expenses	$	916		$	128
General and administrative expenses		2,700			2,827
Total operating expenses		3,616			2,955
Operating loss		(3,616	)		(2,955	)
Other income (expense):
Other income (expense), net		(969	)		(487	)
Interest income		8			9
Interest expense		(176	)		(119	)
Total other (expense) income, net		(1,137	)		(597	)
Net loss	$	(4,753	)	$	(3,552	)
Basic and diluted net loss per share	$	(1.22	)	$	(4.81	)
Basic weighted-average common shares outstanding		3,885,758			738,295
Diluted weighted-average common shares outstanding		3,885,758			738,295
Comprehensive loss:
Foreign currency translation adjustment		(68	)		(23	)
Total comprehensive loss	$	(4,821	)	$	(3,575	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

CDT EQUITY INC.

CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY (DEFICIT)

(unaudited)

(in thousands, except share amounts)

	Shares		Amount		capital		deficit			income			deficit
	Common stock				Additional paid-in		Accumulated			Accumulated other comprehensive			Total stockholders’ Equity
	Shares		Amount		capital		deficit			income			(deficit)

Balance at January 1, 2025		1,384,801	$	14	$	21,880	$	(29,101	)	$	414		$	(6,793	)
Issuance of common stock for services		2,450,191		1		2,211		-			-			2,212
Issuance of common stock under the ATM program		4,345,866		1		8,167		-			-			8,168
Issuance of common stock upon exercise of conversion option		1,331,200		3		4,077		-			-			4,080
Stock-based compensation		-		-		234		-			-			234
Foreign currency translation adjustment		-		-		-		-			(68	)		(68	)
Net loss		-		-		-		(4,753	)		-			(4,753	)
Balance at March 31, 2025 (As Restated)		9,512,058		19		36,569		(33,854	)		346			3,080

	Common stock				Additional paid-in		Accumulated			Accumulated other comprehensive			Total stockholders’
	Shares		Amount		capital		deficit			income			deficit

Balance at January 1, 2024		738,295	$	7	$	10,424	$	(11,299	)	$	411		$	(457	)
Balance		738,295	$	7	$	10,424	$	(11,299	)	$	411		$	(457	)
Issuance of Warrants for lock-up		-		-		502		-			-			502
Stock-based compensation		-		-		431		-			-			431
Foreign currency translation adjustment		-		-		-		-			(23	)		(23	)
Net loss		-		-		-		(3,552	)		-			(3,552	)
Balance at March 31, 2024		738,295	$	7	$	11,357	$	(14,851	)	$	388		$	(3,099	)
Balance		738,295	$	7	$	11,357	$	(14,851	)	$	388		$	(3,099	)

The accompanying notes are an integral part of these condensed consolidated financial statements.

CDT EQUITY INC.

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

(unaudited)

(in thousands)

	2025			2024
	Three Months ended March 31,
	2025			2024
	(As Restated)
Cash flows used in operating activities:
Net loss	$	(4,753	)	$	(3,552	)
Adjustments to reconcile net loss to net cash used in operating activities:
Loss on debt extinguishment, net		1,840			-
Unrealized foreign exchange loss (gain)		(26	)		6
Gain on change in fair value of convertible notes payable		(274	)		-
Gain on change in fair value of warrants		(130	)		(19	)
Gain on waiver of accrued interest		(371	)		-
Operating lease obligations		29			(25	)
Issuance of warrants for lock-up		-			502
Stock-based compensation expense		234			431
Non-cash interest expense		167			79
Depreciation expense		5			-
Amortization of financed Directors and Officers insurance		369			422
Amortization Expense		192			-
Changes in operating assets and liabilities:
Prepaid expenses and other current assets		(255	)		(153	)
Accounts payable		(721	)		(97	)
Accrued expenses and other liabilities		(207	)		49
Lease liability		(28	)		-
Net cash flows used in operating activities		(3,929	)		(2,357	)
Cash flows used in investing activities:
Purchases of equipment and clinical assets		(404	)		-
Net cash flows used in investing activities		(404	)		-
Cash flows provided by financing activities:
Proceeds from issuance of common shares related to ATM program		8,061			-
Repayment of notes payable – related parties		(425	)		-
Repayment of notes payable		(151	)		-
Repayment of convertible notes payable - related parties		(927	)		-
Repayment of convertible notes payable		(631	)		-
Net cash flows provided by financing activities		5,927			-
Net change in cash and cash equivalents before effect of exchange rate changes		1,594			(2,357	)
Effect of exchange rate changes on cash and cash equivalents		(18	)		(27	)
Net change in cash		1,576			(2,384	)
Cash and cash equivalents at beginning of period		554			4,228
Cash and cash equivalents at end of period	$	2,130		$	1,844

Non-cash investing and financing activities
Right of Use Asset obtained in exchange for Operating Lease Liabilities	$	-		$	350
Issuance of Common Stock Upon Exercise of Conversion Option	$	4,077		$	-

Supplemental Cash Disclosures
Cash paid for interest	$	170		$	80

The accompanying notes are an integral part of these condensed consolidated financial statements.

CDT EQUITY INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

1. Nature of the Business, Basis of Presentation and Summary of Significant Accounting Policies

On August 5, 2025, Conduit Pharmaceuticals, Inc. filed an amendment to its Second Amended and Restated Certificate of Incorporation (the “Certificate of Incorporation”), to effect a change of the Company’s name from “Conduit Pharmaceuticals Inc.” to “CDT Equity Inc.” (the “Name Change” with both names referring to the “Company”), which became effective at 5 p.m. Eastern Time on August 5, 2025. The Company is a dynamic, multi-asset clinical stage, life science company delivering an efficient model for compound development. Conduit both acquires and funds the development of Phase 2-ready assets, building an integrated and advanced platform-driven approach powered by artificial intelligence (AI) and cybernetics, and seeking an exit through third-party license deals following successful clinical trials. Our novel approach addresses unmet medical needs and lengthens the intellectual property for our existing assets through cutting-edge solid-form technology with the expectation of commercializing these products with life science companies. Led by a highly experienced team of executives including Dr. Andrew Regan and Dr. Freda Lewis-Hall, this novel approach is a departure from the traditional pharma/biotech business model of taking assets through regulatory approval. At this time, we do not expect that we will commercialize any clinical assets or seek marketing approval from the FDA (or similar organizations) as we intend to enter into agreements with third parties for each such clinical asset that would provide that such third party would pursue the further development, commercialization, and marketing of such assets.

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”) 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.

Basis of Presentation

The accompanying unaudited condensed 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 unaudited condensed consolidated financial statements are to the FASB Accounting Standards Codifications (“ASC”) and Accounting Standards Update (“ASUs”).

The accompanying interim unaudited condensed consolidated financial statements included in this quarterly report have been prepared in accordance with U.S. GAAP and, in the opinion of the Company, contain all adjustments, consisting of only normal recurring adjustments, necessary for a fair statement of its financial position as of March 31, 2025, and its results of operations for the three months ended March 31, 2025 and 2024, and cash flows for the three months ended March 31, 2025 and March 31, 2024. The condensed consolidated balance sheet at December 31, 2024, was derived from the audited annual financial statements but does not contain all of the footnote disclosures from the annual financial statements.

Reclassifications

In certain instances, amounts reported in prior years’ consolidated financial statements have been reclassified to conform to the current presentation. Such reclassifications had no effect on previously reported stockholders’ equity (deficit) or net loss.

Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements include the accounts of the Company 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 March 31, 2025, the Company had an accumulated deficit of $33.9 million. As of March 31, 2025 and December 31, 2024, the Company had cash and cash equivalents of $2.1 million and $0.6 million, respectively. For the three months ended March 31, 2025 and 2024, the Company had net losses of $4.8 million and $3.6 million, respectively, and cash used in operating activities of $3.9 million and $2.4 million, respectively.

Management has determined that it does not have sufficient cash and other sources of liquidity to fund its current business plan. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern for at least the next 12 months from the financial statement filing date.

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 in addition to the remaining at the market offering program (the “Sales Agreement”) of approximately $12.0 million (see Note 11), as of the financial statement issuance date. Management’s plans to alleviate the conditions that raise substantial doubt through the pursuit of additional cash resources through public or private equity or debt financings. 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.

Reverse Stock Split

On January 24, 2025, the Company amended its Second Amended and Restated Certificate of Incorporation with the Secretary of State of the State of Delaware in order to effect a 1-for-100 reverse stock split of its outstanding shares of common stock (the “Reverse Stock Split”). As a result of the reverse stock split, every 100 shares of the Company’s common stock issued or outstanding were automatically reclassified into one new share of common stock, subject to the treatment of fractional shares as described below, without any action on the part of the holders. All historical share and per-share amounts reflected throughout the accompanying consolidated financial statements and other financial information in this Quarterly Report on Form 10-Q have been retroactively adjusted to reflect the 2025 Reverse Stock Split as if the split occurred as of the earliest period presented. The Reverse Stock Split did not affect the number of authorized shares of common stock or the par value of the common stock. No fractional shares were issued in connection with the Reverse Stock Split. Stockholders who would otherwise have been entitled to receive fractional shares as a result of the Reverse Stock Split were entitled to a cash payment in lieu thereof at a price equal to the fraction to which the stockholder would otherwise be entitled multiplied by the closing price per share of the common stock (as adjusted to give effect to the Reverse Stock Split) on The Nasdaq Global Market on January 24, 2025.

Other Risks and Uncertainties

The Company is subject to risks common to companies in the development stage and pharmaceutical industry including, but not limited to, uncertainties related to pre-clinical and clinical outcomes competitor products, regulatory approvals, dependence on key products, dependence on key suppliers and protection of intellectual property rights (see Note 16 for details on a claim against our AZD 1656 co-crystal patent). 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 and cash flow from royalties or product sales.

The Company licenses clinical assets from AstraZeneca. See Note 8. 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.

The Company is also subject to risks associated with the Nasdaq Stock Market (“Nasdaq”) correspondence and subsequent Nasdaq Capital Market Listing application.

In August 2024, the Company received deficiency letters from Nasdaq notifying the Company that it was not in compliance with Listing Rule 5450(a)(1) (the “Bid Price Rule”), Listing Rule 5450(b)(2)(C) (the “MVPHS Rule”) and Listing Rule 5450(b)(2)(A) (the “MVLS Rule”, together with the Bid Price Rule and the MVPHS Rule, the “Rules”). The Company had until February 10, 2025, and February 11, 2025, to regain compliance with the Rules. On December 17, 2024, Nasdaq issued a letter to the Company that as of December 17, 2024, it determined that the Company’s securities had a closing bid price of $0.10 or less for ten consecutive trading days. As a result, Nasdaq had determined to delist the Company’s common stock and redeemable warrants from The Nasdaq Global Market, on December 27, 2024. The Company subsequently requested and received a hearing (the “Nasdaq Hearing”) from the Nasdaq Hearings Panel (the “Panel”). The Company submitted a written plan of compliance to cure its Rule deficiencies to Nasdaq on January 22, 2025, and attended the Nasdaq Hearing for the Company on February 11, 2025. On March 5, 2025, the Company received a written notification (the “Notice”) from the Panel confirming it has granted the Company such an extension for the Company to regain compliance with the MVPHS and MVLS rules, provided that the Company, (i) on or before March 12, 2025, files an application to transfer to the Nasdaq Capital Market, which application was submitted on March 7, 2025, and (ii) on or before March 31, 2025, demonstrates compliance with all Nasdaq listing rules, which the Company believe it has. To date, the Company has not been notified by Nasdaq whether its application to transfer to the Nasdaq Capital has been accepted and the Company continues to trade on the Nasdaq Global Market. Additionally, the Company was also notified in the Notice that as of February 26, 2025, it had regained compliance with the Bid Price Rule. There is no guarantee that the Company can maintain ongoing compliance with the Bid Price Rule.

Summary of Significant Accounting Policies

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.

Cash and Cash Equivalents

Cash and cash equivalents are primarily maintained with major financial institutions in the United States and the United Kingdom. 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 UK bank account, with a year-end balance of approximately £206,000 (or approximately $266,000) exceeds the country’s deposit limit of £85,000 (approximately $110,000). 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 three months ended March 31, 2025.

The Company had $2.1 million and $0.6 million in cash and cash equivalents on hand as of March 31, 2025 and December 31, 2024, respectively. As of March 31, 2025, $4,000 of the Company’s $2.1 million cash and cash equivalents balance was invested in money market funds. The money market funds do not have significant liquidity restrictions that would require the exclusion from cash and cash equivalents

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, convertible notes payable 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 March 31, 2025, the Company has two financial liabilities, warrant liabilities for which the fair value is determined based on Level 2 and Level 3 inputs, and convertible debt carried at fair value for which the fair value is determined based on Level 3 input. The Level 2 inputs are valued based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar instruments in active markets. The level 3 inputs as such inputs are based on unobservable inputs and require significant judgement.

Fair Value Option

The Company has elected the fair value measurement option for convertible debt with embedded derivatives that would otherwise require bifurcation and has recorded the entire hybrid financial instrument at fair value under the guidance in ASC 825, Financial Instruments. As a result, the August 2024 Nirland Note was recorded at fair value subsequent to the Second Amendment and the A.G.P. Convertible Note was recorded at fair value upon issuance. The notes will subsequently be remeasured at fair value each reporting date until settled or converted. The Company reports interest expense, including accrued interest, related to the convertible debt under the fair value option, separately from within the change in fair value of the convertible debt in the accompanying condensed consolidated statement of operations and comprehensive loss. Any changes in fair value caused by instrument-specific credit risk are presented separately in other comprehensive income.

Research and Development

The Company accounts for its research and development costs in accordance with ASC 730, Research and Development. Research and development expenses consist primarily of costs incurred in connection with the research and development of our clinical assets and programs, see Note 8 for further discussion of research and development expense. Conduit holds all licenses to conduct clinical research through a third-party pharmaceutical company. 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;
	●	acquisition costs related to the purchase of licensed intellectual property;
	●	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.

Purchased Research and Development Assets

The Company accounts for its research and development costs in accordance with ASC 730, Research and Development. ASC 730 requires that research and development are generally recognized as an expense as incurred. However, some costs associated with research and development activities that have an alternative future use may be capitalizable. Purchases of assets related to research and development activities are evaluated based on the usefulness to the Company currently and for alternative future uses. Purchased research and development assets with alternative future use are recorded at cost and subsequently amortized using the straight-line method over their estimated useful lives. To date, the Company has one purchased asset, a diagnostic tool used to monitor clinical trials, aggregate data on an ongoing basis and tracking intellectual property patent status. The Company determined that the diagnostic tool also has the alternative future use of utilizing the predictive modeling capability to track and evaluate delisted patents in the marketplace to potentially facilitate strategic entry into de-prioritized asset markets that might be otherwise overlooked by other market participants. The asset is depreciated on a straight-line basis over its useful life of two years.

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 unaudited condensed consolidated statements of operations and comprehensive 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 unaudited condensed consolidated statements of operations and comprehensive 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.

Earnings/(Net Loss) per Share Attributable to Common Stockholders

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

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. 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’ equity (deficit) and the Liability Classified Warrants are recorded as liabilities in the Consolidated Balance Sheet. The Liability Classified Warrants are remeasured each period with changes in fair value recorded in the Consolidated Statements of Operations and Comprehensive 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’ equity (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).

Recently Issued Accounting Standards Not Yet Adopted

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. ASU 2023-09 is effective for the Company in its annual reporting for fiscal 2025 on a prospective basis. Early adoption and retrospective reporting are permitted. The Company does not plan to adopt this standard early. The Company is currently evaluating the impact of ASU 2023-09 on its consolidated financial statements.

In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which is intended to provide more detailed information about specified categories of expenses (purchases of inventory, employee compensation, depreciation and amortization) included in certain expense captions presented on the consolidated statements of operations and comprehensive income (loss). The guidance in this ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied either (1) prospectively to financial statements issued for periods after the effective date of this ASU or (2) retrospectively to all prior periods presented in the consolidated financial statements. The Company is currently evaluating the impact that the adoption of ASU 2024-03 will have on its consolidated financial statements and disclosures.

2. Restatement of Previously Issued Financial Statements

Restatement of Previously Issued Financial Statements: March 31, 2025

In connection with the preparation of the Company’s financial statements for the three and six months ended June 30, 2025, the Company’s management determined that a restatement was necessary in its previously issued unaudited financial statements, relating to the balance sheet as of March 31, 2025, condensed consolidated statement of operations and comprehensive loss for the three months ended March 31, 2025, the condensed consolidated statement of changes in stockholders’ deficit as of March 31, 2025 and the condensed consolidated statement of cash flows for the three months ended March 31, 2025. Management has evaluated this change and concluded it was material to the period ending March 31, 2025.

The impact of the errors described above on the condensed consolidated balance sheet as of March 31, 2025, is as follows:

	As Previously Reported			Adjustment		As Restated
	As of March 31, 2025 (Unaudited)
	As Previously Reported			Adjustment		As Restated
Balance Sheets (in thousands)
Assets
Equipment and clinical assets, net		41			393		434
Total Assets		7,321			393		7,714
Stockholders’ deficit
Accumulated deficit		(34,247	)		393		(33,854	)
Total shareholders’ equity		2,687			393		3,080
Total liabilities and shareholders’’ equity		7,321			393		7,714

The impact of the errors described above on the condensed consolidated statement of operations and comprehensive loss for the three months ended March 31, 2025 is as follows (in thousands):

For the three months ended March 31, 2025 (Unaudited)

As Previously
Reported

Adjustment

As Restated

Statements of Operations and Comprehensive Loss (in thousands)

Operating expenses:

Amendment: SEC Form 10-Q/A filed by CDT Equity Inc.