CDT Equity Inc 10-K, filed Mar 29, 2022

CDT Equity Inc. (CDT)

10-K 2022-03-29 For: 2021-12-31

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Added on April 12, 2026

About this 10-K

CDT Equity Inc filed this 10-K on March 29, 2022, covering the fiscal year ended December 31, 2021.

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Title of each class	Trading Symbol	Name of each exchange on which registered

Units, each consisting of one share of Class A Common Stock and one Redeemable Warrant	MURFU	The Nasdaq Stock Market LLC
Class A Common Stock, par value $0.0001 per share	MURF	The Nasdaq Stock Market LLC
Redeemable Warrants, each whole warrant exercisable for one share of Class A Common Stock at an exercise price of $11.50	MURFW	The Nasdaq Stock Market LLC

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

PART I

Item 1.	Business	1
Item 1A.	Risk Factors	20
Item 1B.	Unresolved Staff Comments	56
Item 2.	Properties	56
Item 3.	Legal Proceedings	56
Item 4.	Mine Safety Disclosures	56

PART II

Item 5.	Market For Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	56
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	58
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	63
Item 8.	Financial Statements and Supplementary Data	63
Item 9.	Changes in and Disagreements with Accountants on Accounting and Financial Disclosure	63
Item 9A.	Controls and Procedures	64
Item 9B.	Other Information	64

PART III

Item 10.	Directors, Executive Officers and Corporate Governance	64
Item 11.	Executive Compensation	70
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	70
Item 13.	Certain Relationships and Related Transactions, and Director Independence	71
Item 14.	Principal Accountant Fees and Services	74

PART IV

Item 15.	Exhibits and Financial Statement Schedules	74
Item 16.	Form 10-K Summary. Signatures.	75

	●	our ability to select an appropriate target business or businesses in our target industry or otherwise;

	●	our ability to complete our initial business combination in our target industry or otherwise;

	●	our expectations around the performance of the prospective target business or businesses in the real estate industry, including construction, homebuilding, real estate owners and operators, arrangers of financing, insurance, and other services for real estate, and adjacent businesses and technologies targeting the real estate space, which we may refer to as “Proptech” businesses;

	●	the requirement that we complete our initial business combination within the prescribed time frame may give potential target businesses leverage over us in negotiating an initial business combination and may decrease our ability to conduct due diligence on potential business combination targets as we approach our dissolution deadlines;

	●	our ability to complete our initial business combination within the prescribed time frame, in which case we would cease all operations except for the purpose of winding up and we would redeem our public shares and liquidate, in which case our public stockholders may only receive $10.20 per share, or less than such amount in certain circumstances, and our warrants will expire worthless;

	●	a determination that we are an investment company under the Investment Company Act;

	●	a potential business combination with a financially unstable business or an entity lacking an established record of revenue, cash flow or earnings;

	●	issuance of debt securities, or otherwise incurring substantial debt, to complete an initial business combination;

	●	dependence on key personnel;

	●	the delisting of our securities by Nasdaq;

	●	conflicts of interest between us, our sponsor and our officers and directors;

	●	lack of protections afforded to investors of blank check companies;

	●	shares being redeemed and warrants becoming worthless;

	●	our competitors with advantages over us in seeking business combinations;

	●	ability to obtain additional financing;

	●	our initial stockholders controlling a substantial interest in us;

	●	warrants’ and founder shares’ adverse effect on the market price of our common stock;

	●	disadvantageous timing for redeeming warrants;

	●	adverse effect of registration rights on the market price of our common stock;

	●	the impact of COVID-19 and related risks;
	●	business combination with a company located in a foreign jurisdiction;

	●	changes in laws or regulations; tax consequences to business combinations; and

	●	exclusive forum provisions in our amended and restated certificate of incorporation, or the certificate of incorporation.

	●	Property Technology. We will seek to focus our search on identifying transformative, technology-driven businesses targeting the real estate sector that can benefit from the leading brand, operational expertise and global network of our sponsor and management team in the real estate industry. Our management team has developed significant experience at Presidio Property Trust, Inc. in evaluating transaction candidates across many stages of the real estate investment and business life cycles, and we will seek to capitalize on that multifaceted expertise in sourcing and assessing potential business combination targets.

	●	Value Creation. We intend to focus our efforts on identifying one or more later-stage businesses that we believe have significant potential for attractive risk-adjusted returns for shareholders, weighing potential growth opportunities and operational improvements in the target business against any identified downside risks.

	●	Growth Potential. We will seek to acquire one or more businesses that have the potential for significant revenue and earnings growth through a combination of organic growth, potential to leverage competitive advantages and innovation through our expertise and scale as a vertically integrated real estate platform.

	●	Benefit From Presidio Property, Inc.’s Proven Platform. We intend to acquire one or more businesses that we believe will benefit from Presidio Property, Inc.’s differentiated industry network, brand and proprietary value-creation capabilities in order to improve financial performance and business planning.

	●	Competitive Position. We will seek to acquire one or more businesses that demonstrate advantages when compared to their competitors, including the potential to disrupt the market through technology driven transformation, defensible proprietary technology, strong adoption rates, and low or manageable risks of technological obsolescence.

	●	Management Team. We will seek to invest in one or more businesses that have proven management teams with a compelling strategy of selling their product and recruiting talent.

	●	Benefit from Being a Public Company. We intend to invest in one or more businesses that will benefit from being publicly listed and can effectively utilize the broader access to capital and the public profile to grow and accelerate shareholder value creation.

	●	*Status as a Publicly Listed Acquisition Company*. We believe our structure will make us an attractive business combination partner to prospective target businesses. As a publicly listed company, we will offer a target business an alternative to the traditional initial public offering process. We believe that some target businesses will favor this alternative, which we believe is less expensive, while offering greater certainty of execution, than the traditional initial public offering process. During an initial public offering, there are typically underwriting fees and marketing expenses, which would be costlier than a business combination with us. Furthermore, once a proposed business combination is approved by our stockholders (if applicable) and the transaction is consummated, the target business will have effectively become public, whereas an initial public offering is always subject to the underwriter’s ability to complete the offering, as well as general market conditions that could prevent the offering from occurring. Once public, we believe our target business would have greater access to capital and additional means of creating management incentives that are better aligned with stockholders’ interests than it would as a private company.

	●	*A.G.P. Brings Deal Flow and Extensive Understanding of Capital Markets and Public Market Investors.* We will be supported by A.G.P. and its team of investment banking professionals, each of whom have meaningful transaction experience, including corporate finance, mergers and acquisitions, equity and debt capital markets, strategic consulting, and operations. A.G.P. has developed an extensive network of contacts and corporate relationships which we believe will provide us with an important source of initial business combination opportunities as well as assistance with potential future financing needs. A.G.P. is a leading advisor to public company boards of directors and executives, including technology companies, on matters of public markets capital raising, corporate strategy, and M&A. We believe that the significant knowhow of A.G.P. will allow us to effectively gauge target companies that possess a readiness for being public, as well as to support their executives in the process of going public.

	●	have market leadership positions in their respective products and services;

	●	have an attractive risk profile, including revenues under long-term contracts and/or a strong backlog of business;

	●	have attractive organic and inorganic growth opportunities which may be accelerated with our expertise and/or access to a public listing;

	●	can benefit from an improved capital structure or streamlined ownership structure;

	●	would benefit from a relationship with a public company; and

	●	offer an attractive risk-adjusted return for our stockholders.

Type of Transaction		Whether Stockholder Approval is Required
Purchase of assets		No
Purchase of stock of target not involving a merger with the company		No
Merger of target into a subsidiary of the company		No
Merger of the company with a target		Yes

	●	we issue shares of Class A common stock that will be equal to or in excess of 20% of the number of shares of our Class A common stock then outstanding (other than in a public offering);

	●	any of our directors, officers or substantial stockholders (as defined by Nasdaq rules) has a 5% or greater interest (or such persons collectively have a 10% or greater interest), directly or indirectly, in the target business or assets to be acquired or otherwise and the present or potential issuance of common stock could result in an increase in outstanding common stock or voting power of 5% or more; or

	●	the issuance or potential issuance of common stock will result in our undergoing a change of control.

	●	conduct the redemptions in conjunction with a proxy solicitation pursuant to Regulation 14A of the Exchange Act, which regulates the solicitation of proxies, and not pursuant to the tender offer rules, and

	●	file proxy materials with the SEC.

	●	conduct the redemptions pursuant to Rule 13e-4 and Regulation 14E of the Exchange Act, which regulate issuer tender offers, and

	●	file tender offer documents with the SEC prior to completing our initial business combination which contain substantially the same financial and other information about the initial business combination and the redemption rights as is required under Regulation 14A of the Exchange Act, which regulates the solicitation of proxies.

	●	restrictions on the nature of our investments; and

	●	restrictions on the issuance of securities, each of which may make it difficult for us to complete our initial business combination.

	●	registration as an investment company with the SEC;

	●	adoption of a specific form of corporate structure; and

	●	reporting, record keeping, voting, proxy and disclosure requirements and other rules and regulations that we are currently not subject to.

	●	default and foreclosure on our assets if our operating revenues after an initial business combination are insufficient to repay our debt obligations;

	●	acceleration of our obligations to repay the indebtedness even if we make all principal and interest payments when due if we breach certain covenants that require the maintenance of certain financial ratios or reserves without a waiver or renegotiation of that covenant;

	●	our immediate payment of all principal and accrued interest, if any, if the debt security is payable on demand;

	●	our inability to obtain necessary additional financing if the debt security contains covenants restricting our ability to obtain such financing while the debt security is outstanding;

	●	our inability to pay dividends on our Class A common stock;

	●	using a substantial portion of our cash flow to pay principal and interest on our debt, which will reduce the funds available for dividends on our Class A common stock if declared, our ability to pay expenses, make capital expenditures and acquisitions, and fund other general corporate purposes;

	●	limitations on our flexibility in planning for and reacting to changes in our business and in the industry in which we operate;

	●	increased vulnerability to adverse changes in general economic, industry and competitive conditions and adverse changes in government regulation;

	●	limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, and execution of our strategy; and

	●	other disadvantages compared to our competitors who have less debt.

	●	higher costs and difficulties inherent in managing cross-border business operations and complying with different commercial and legal requirements of overseas markets;

	●	rules and regulations regarding currency redemption;

	●	complex corporate withholding taxes on individuals;

	●	laws governing the manner in which future business combinations may be effected;

	●	tariffs and trade barriers;

	●	regulations related to customs and import/export matters;

	●	longer payment cycles and challenges in collecting accounts receivable;

	●	tax issues, including but not limited to tax law changes and variations in tax laws as compared to the United States;

	●	currency fluctuations and exchange controls;

	●	rates of inflation;

	●	cultural and language differences;

	●	employment regulations;

	●	crime, strikes, riots, civil disturbances, terrorist attacks, natural disasters and wars;

	●	deterioration of political relations with the United States; and

	●	government appropriations of assets.

	●	a limited availability of market quotations for our securities;

	●	reduced liquidity with respect to our securities;

	●	a determination that our shares of common stock are “penny stock” which will require brokers trading in our shares of common stock to adhere to more stringent rules, possibly resulting in a reduced level of trading activity in the secondary trading market for our shares of common stock;

	●	a limited amount of news and analyst coverage for our company; and

	●	a decreased ability to issue additional securities or obtain additional financing in the future.

	●	may significantly dilute the equity interest of investors in our initial public offering;

	●	may subordinate the rights of holders of our common stock if preferred stock is issued with rights senior to those afforded our common stock;

	●	could cause a change of control if a substantial number of shares of our common stock are issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors;

	●	may have the effect of delaying or preventing a change of control of us by diluting the stock ownership or voting rights of a person seeking to obtain control of us; and

	●	may adversely affect prevailing market prices for our units, common stock and/or warrants.

	(i)	we issue additional shares of Class A common stock or equity-linked securities for capital raising purposes in connection with the closing of our initial business combination at a Newly Issued Price of less than $9.20 per share;

	(ii)	the aggregate gross proceeds from such issuances represent more than 60% of the total equity proceeds, and interest thereon, available for the funding of our initial business combination on the date of the consummation of our initial business combination (net of redemptions), and

	(iii)	the Market Value is below $9.20 per share,

	●	the history and prospects of companies whose principal business is the acquisition of other companies;

	●	prior offerings of those companies;

	●	our prospects for acquiring an operating business;

	●	a review of debt to equity ratios in leveraged transactions;

	●	our capital structure;

	●	an assessment of our management and their experience in identifying operating companies;

	●	general conditions of the securities markets at the time of our initial public offering; and

	●	other factors as were deemed relevant.

	●	may significantly dilute the equity interest of existing shareholders;

	●	may subordinate the rights of holders of our common stock if preferred stock is issued with rights senior to those afforded our common stock;

	●	could cause a change in control if a substantial number of shares of our common stock is issued, which may affect, among other things, our ability to use our net operating loss carry forwards, if any, and could result in the resignation or removal of our present officers and directors;

	●	may have the effect of delaying or preventing a change of control of us by diluting the stock ownership or voting rights of a person seeking to obtain control of us; and

	●	may adversely affect prevailing market prices for our common stock and warrants.

	●	limitations on our ability to borrow additional amounts for expenses, capital expenditures, acquisitions, debt service requirements, and execution of our strategy; and

	●	other purposes and other disadvantages compared to our competitors who have less debt.

	●	staffing for financial, accounting and external reporting areas, including segregation of duties;

	●	reconciliation of accounts;

	●	proper recording of expenses and liabilities in the period to which they relate;

	●	evidence of internal review and approval of accounting transactions;

	●	documentation of processes, assumptions and conclusions underlying significant estimates; and

	●	documentation of accounting policies and procedures.

Name	Age	Position
Jack K. Heilbron	71	Chief Executive Officer, President, and Chairman
Adam Sragovicz	52	Chief Financial Officer, Treasurer, and Director
Ed Bentzen	45	Chief Accounting Officer
Francis Knuettel II	55	Director
Chele Chiavacci Farley	54	Director
Richard E. Feinberg	74	Director

●	the appointment, compensation, retention, replacement, and oversight of the work of the independent registered public accounting firm engaged by us;
●	pre-approving all audit and permitted non-audit services to be provided by the independent registered public accounting firm engaged by us, and establishing pre-approval policies and procedures;
●	setting clear hiring policies for employees or former employees of the independent registered public accounting firm, including but not limited to, as required by applicable laws and regulations;
●	setting clear policies for audit partner rotation in compliance with applicable laws and regulations;
●	obtaining and reviewing a report, at least annually, from the independent registered public accounting firm describing (i) the independent registered public accounting firm’s internal quality-control procedures, (ii) any material issues raised by the most recent internal quality-control review, or peer review, of the audit firm, or by any inquiry or investigation by governmental or professional authorities within the preceding five years respecting one or more independent audits carried out by the firm and any steps taken to deal with such issues and (iii) all relationships between the independent registered public accounting firm and us to assess the independent registered public accounting firm’s independence;
●	reviewing and approving any related party transaction required to be disclosed pursuant to Item 404 of Regulation S-K promulgated by the SEC prior to us entering into such transaction; and
●	reviewing with management, the independent registered public accounting firm, and our legal advisors, as appropriate, any legal, regulatory or compliance matters, including any correspondence with regulators or government agencies and any employee complaints or published reports that raise material issues regarding our financial statements or accounting policies and any significant changes in accounting standards or rules promulgated by the Financial Accounting Standards Board, the SEC or other regulatory authorities.

	●	identifying and screening individuals qualified to serve as directors, consistent with criteria approved by the board, and recommending to the board of directors candidates for nomination for election at the annual meeting of stockholders or to fill vacancies on the board of directors;

	●	developing and recommending to the board of directors and overseeing implementation of our corporate governance guidelines;

	●	overseeing our policies and procedures with respect to the consideration of director candidates recommended by stockholders, including the submission of any proxy access nominees by stockholders;

	●	coordinating and overseeing the annual self-evaluation of the board of directors, its committees, individual directors and management in the governance of the company; and

	●	reviewing on a regular basis our overall corporate governance and recommending improvements as and when necessary.

	●	reviewing and approving on an annual basis the compensation, if any is paid by us, of all of our other officers;
	●	reviewing on an annual basis our executive compensation policies and plans;
	●	implementing and administering our incentive compensation equity-based remuneration plans;
	●	assisting management in complying with our proxy statement and annual report disclosure requirements;
	●	approving all special perquisites, special cash payments and other special compensation and benefit arrangements for our officers and employees;
	●	if required, producing a report on executive compensation to be included in our annual proxy statement; and
	●	reviewing, evaluating and recommending changes, if appropriate, to the remuneration for directors.

	●	each person known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock;

	●	each of our executive officers and directors that beneficially owns shares of our common stock; and

	●	all our executive officers and directors as a group.

	Class A Common Stock					Class B Common Stock⁽²⁾
Name and Address of Beneficial Owner⁽¹⁾	Number of Shares Beneficially Owned		% of Class			Number of Shares Beneficially Owned		% of Class
Jack K. Heilbron ⁽²⁾		709,000		5.07	%		3,306,250		100	%
Adam Sragovicz		-		-			-		-
Ed Bentzen		-		-			-		-
Francis Knuettel II		15,000		*			-		-
Chele Chiavacci Farley		15,000		*			-		-
Richard Feinberg		15,000		*			-		-
All directors and executive officers as a group (six individuals)		754,000		5.39	%		3,306,250		100	%
Murphy Canyon Acquisition Sponsor, LLC		709,000		5.07	%		3,306,250		100	%

(1)	Unless otherwise noted, the business address of each of the entities or individuals listed above is c/o Murphy Canyon Acquisitions Corp., 4995 Murphy Canyon Road, Suite 300, San Diego, CA 92123

(2)	Represents securities held by Murphy Canyon Acquisition Sponsor, LLC, our sponsor, of which Jack K. Heilbron is the managing member. Accordingly, all securities held by our sponsor may ultimately be deemed to be beneficially held by Mr. Heilbron. Mr. Heilbron disclaims beneficial ownership of the reported shares other than to the extent of his ultimate pecuniary interest.

	●	Repayment of up to an aggregate of $300,000 in loans made to us by our sponsor to cover offering-related and organizational expenses;
	●	Payment to Murphy Canyon Management Group, Inc., an affiliate of our sponsor, of $10,000 per month, for up to 12 months, for office space, utilities and secretarial and administrative support (or up to 18 months from the closing of our initial public offering at the election of the Company subject to satisfaction of certain conditions or as extended by the Company’s stockholders in accordance with our certificate of incorporation);
	●	Reimbursement for any out-of-pocket expenses related to identifying, investigating and completing an initial business combination; and
	●	Repayment of non-interest bearing loans which may be made by our sponsor or an affiliate of our sponsor or certain of our officers and directors to finance transaction costs in connection with an intended initial business combination, the terms of which (other than as described above) have not been determined nor have any written agreements been executed with respect thereto. Up to $1,150,000 of such loans may be convertible into units, at a price of $10.00 per unit at the option of the lender, upon consummation of our initial business combination. The units would be identical to the placement units.

1.	Financial Statements: See “Index to Financial Statements” in Part II, Item 8 of this annual report on Form 10-K.

2.	Financial Statement Schedule: Not applicable.

3.	Exhibits: The exhibits listed in the accompanying “Exhibit Index” are filed or incorporated by reference as part of this Form 10-K.