Company: CDT
Filing Date: 2025-08-14
Form Type: 10-Q/A
Source: 0001641172-25-024123
Chunk: 14

Company: CDT Equity Inc.
Filing Date: 2025-08-14
Form: 10-Q/A
Chunk 14
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 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:

| 7 |

| ● | 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