Company: CDT
Filing Date: 2025-03-28
Form Type: 10-K
Source: 0001641172-25-001246
Chunk: 67

Company: CDT Equity Inc.
Filing Date: 2025-03-28
Form: 10-K
Item: Item 1A
Chunk 67
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.2 million capital contribution from a related party.

Contractual
Obligations and Other Commitments

Laboratory Lease

As
of December 31, 2024, we are the lessee under one laboratory space lease for a term of two years. The annual rent payments
are $0.1 million for the years ending December 31, 2025 and December 31, 2026. The laboratory space lease has a remaining lease term
of approximately 1.2 years.

Critical
Accounting Estimates

The
preparation of financial statements in conformity with U.S. GAAP requires us to make estimates, judgments and assumptions that affect
the amounts reported in the Consolidated Financial Statements. These estimates, judgments and assumptions are evaluated on an ongoing
basis. We base our estimates on historical experience and on various other assumptions that we believe are reasonable at that time, the
results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ materially from those estimates. The accounting policies that reflect our more significant
estimates, judgments and assumptions and which we believe are the most critical to aid in fully understanding and evaluating our reported
financial results include the following:

66

Fair
Value of Convertible Notes

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.
To value the convertible debt, the Company utilizes Binomial Lattice Pricing Models. The Binomial Lattice Pricing Models involve the
construction of various intermediate lattices: stock price tree, conversion value tree, conversion probability tree, and discount rate
tree. In doing so, we assume the holders act rationally to maximize return and minimize cost at each decision point. We computed the
notes payoff at maturity and at intermediate decision nodes based upon the better of (i) conversion or (ii) repayment of principal and
interest.

The
significant inputs and assumptions used to estimate the fair value include: (i) the Company’s stock price, (ii) the term of the
convertible debt, (iii) the sum of the notes’ principal and unpaid accrued interest, (iv) expected volatility, (v) risk-free interest
rate, (vi) the corporate bond yield, (vii) the credit spread, (viii) probability of default,