Company: CDT
Filing Date: 2025-03-28
Form Type: 10-K
Source: 0001641172-25-001246
Chunk: 657

Company: CDT Equity Inc.
Filing Date: 2025-03-28
Form: 10-K
Item: Item 7
Chunk 657
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Stock-Based
Compensation

We
record stock compensation expense related to our 2023 Plan in accordance with ASC 718, Compensation-Stock Compensation
which requires our stock-based awards, including restricted stock units (“RSUs”) and stock options to be measured at
fair value.

The
fair value of stock options is estimated on the grant date using the Black-Scholes option-valuation model. The calculation of stock-based
compensation expense requires that we make assumptions and judgments about the variables used in the Black- Scholes option-valuation
model, including the fair value of our common stock, expected term, expected volatility of the underlying common stock, and risk-free
interest rate.

The
assumption inputs subject to significant estimation include:

Expected
Term. The expected term represents the period that the Company’s stock options are expected to be outstanding. Due to
limitations on the sale or transfer of the Company’s common stock under the lock-up agreements and market standoff components of
the stock option agreements, the Company does not believe its historical exercise pattern is indicative of the pattern it will experience
after restricted periods expire. The Company uses the simplified method to calculate the expected term, which is the average of the contractual
term and vesting period.

Volatility. We
determine the price volatility based on the historical volatilities of industry peers as we have limited trading history for our common
stock price. We intend to continue to consistently apply this process using the same or a similar peer group of public companies, until
a sufficient amount of historical information regarding the volatility of our own common stock price becomes available, or unless circumstances
change such that the identified peer companies are no longer similar, in which case other suitable peer companies whose common stock
prices are publicly available would be utilized in the calculation.

68

Recent
Accounting Pronouncements

A
discussion of recent accounting pronouncements is included in Note 1 - Nature of the Business and Basis of Presentation and Summary
of Significant Accounting Policies to our financial statements included elsewhere in this Annual Report.

Emerging
Growth Company Status and Smaller Reporting Company Status

The
Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under
the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of
the JOBS Act until such time as those standards apply to private companies. The Company has elected to use