Business context and reporting period
Entity discrepancy: The request identifies CDT Equity Inc., but the supplied Form 10-Q is for Murphy Canyon Acquisition Corp. This summary reflects the filing text. The quarter ended June 30, 2022; the financial statements are unaudited.
Murphy Canyon is a blank-check company formed to pursue a business combination, with a stated search focus on real estate. It had not selected a target or begun substantive discussions with one. It had not commenced operating activities and expected no operating revenue before completing a business combination.
Financial performance and position
- Revenue: No operating revenue. For the three months ended June 30, 2022, net loss was $117,539; for the six months, net loss was $371,075. Basic and diluted loss per share was $0.01 and $0.03, respectively.
- Expenses and income: Second-quarter expenses were $279,420, including $249,420 in general and administrative expenses and $30,000 in related-party administration fees. Six-month expenses were $543,138. Trust-account interest income was $191,585 for the quarter and $201,767 for the six months.
- Cash flow: Six-month operating cash use was $819,400; investing cash use was $134.895 million, principally the Trust Account deposit; financing cash provided was $136.504 million. Cash increased by $789,132 to $837,687.
- Liquidity and assets: At June 30, cash was $837,687, working capital was $1,317,085, and Trust Account investments were $135.097 million. Total assets were $136.469 million.
- Liabilities and equity: Total liabilities were $4.767 million, including $4.629 million of deferred underwriting commission payable only if a business combination closes. The $177,057 Sponsor note outstanding at year-end was repaid in February; no working-capital loans were outstanding. Stockholders’ deficit was $3.295 million. Public shares subject to redemption were classified as temporary equity at $134.997 million.
- Margins: Not meaningful because the company had no operating revenue.
Changes versus the prior comparable period
The filing presents 2022 results only; it does not provide a prior-year comparable operating period. Compared with December 31, 2021, the company completed its February 2022 IPO and private placement, funded the Trust Account, and reported substantially higher cash, assets, and liabilities. The Sponsor note was repaid, and redeemable Class A shares and deferred underwriting commissions were recorded.
Outlook, risks and unusual items
- Management reported that no target had been selected and that there was no assurance of completing a business combination within the permitted period.
- The filing states that the combination period is less than one year from the financial-statement issuance date and that acquisition-related costs, together with uncertainty about completing a transaction, raise substantial doubt about the company’s ability to continue as a going concern. The financial statements include no adjustments for this uncertainty.
- The stated initial deadline was 12 months after the February 7, 2022 IPO closing, with a possible extension to 18 months subject to conditions; extensions may require trust deposits. If no transaction is completed, public shares are to be redeemed and warrants may expire worthless.
- Management said COVID-19 could negatively affect the company’s financial position, operations, and target search, but the specific impact was not readily determinable.
- The Sponsor’s trust-account indemnity has exceptions, including certain waived or unenforceable third-party claims. Public-share redemptions are subject to a $5,000,001 net-tangible-asset floor and other transaction terms.
- No off-balance-sheet arrangements, legal proceedings, or material changes to previously disclosed risk factors were reported. Management concluded disclosure controls were effective and reported no material change in internal control over financial reporting.
Most important facts for investors to verify
- Confirm the filing’s issuer: the supplied report is for Murphy Canyon Acquisition Corp., not CDT Equity Inc.
- Check whether a target was identified and whether the company completed or extended its business-combination period after this filing.
- Review Trust Account balances, redemption terms, extension deposits, and the deferred underwriting fee payable upon a completed transaction.
- Assess the going-concern warning, available operating cash, and any subsequent funding or transaction developments.
- Confirm the financial figures and share counts in the filed financial statements and subsequent SEC disclosures.