Company: CDT
Filing Date: 2025-03-28
Form Type: 10-K
Source: 0001641172-25-001246
Chunk: 159

Company: CDT Equity Inc.
Filing Date: 2025-03-28
Form: 10-K
Item: Item 1A
Chunk 159
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 regulations of The Nasdaq Stock Market. If the Company has not held a special meeting
of the stockholders to approve the full conversion of the August 2024 Nirland Note on or before January 9, 2025, then the Company
shall be obligated to pay Nirland a penalty of $0.1
million per day until the special meeting is held. In addition, the existing conversion rate was amended to be two and one half
times the sum of (x) the portion of the principal to be converted, redeemed or otherwise with respect to which this determination is
being made and (y) all accrued and unpaid interest (including default interest) with respect to such portion of the principal
amount, if any divided by $0.10, prior to the Reverse Stock Split, (or following any reverse splits that may occur in a ratio greater than 10 to 1, the lower of
such reverse split price and the market price per share at the time of the Conversion Date, but in no event less than $1.00),
subject to adjustment as provided therein and to take into account any future share splits or reverse splits to maintain the
economic equivalence of the conversion rights as at the amendment effective date. The Company notes that the reverse split provision
in the preceding sentence was tripped, effective January 25, 2025, following the 1-for-100
reverse stock split that occurred on that date.

As
of the Second Amendment, the Company elected to account for the August 2024 Nirland Note at fair value under ASC 825. The Company determined that the amendment to the conversion features present in the Second Amendment fall under the
guidance within ASC 825 that notes that if a significant modification of debt occurs an entity is able to make an accounting election
on that date to account for that debt under the fair value option. At the end of each
reporting period, the Company calculates the fair value of the August 2024 Nirland Note, and any changes in fair value are reported in
the current period’s consolidated statements of operations and comprehensive income (loss).

The
Company remeasured the fair value of the August 2024 Nirland Note as of the Second Amendment date and calculated a fair value of $4.5
million using a binomial lattice model. See Note 3 for additional information regarding the fair value measurement of the August 2024
Nirland Note. The Company accounted for the Second Amendment as a debt extinguishment, as