Company: CDT
Filing Date: 2025-03-28
Form Type: 10-K
Source: 0001641172-25-001246
Chunk: 990

Company: CDT Equity Inc.
Filing Date: 2025-03-28
Form: 10-K
Item: Item 9C
Chunk 990
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4 Nirland Note into shares of Common Stock, at Nirland’s
discretion, in a multiple of any unpaid amounts, if not otherwise previously paid, pursuant to the conversion rate contained therein,
(ii) removes Nirland’s Mandatory Prepayment Right, and (iii) removes Nirland’s right of first refusal to participate in any
future equity or debt offerings of the Company. The number of shares of Common Stock issuable upon conversion of any Conversion Amount
pursuant to shall be determined by dividing (x) such conversion amount by (y) the conversion price. Conversion amount means two
and one quarter times the sum of (x) 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 with respect to such portion of the principal amount, if any. Conversion price
means, as of any conversion date or other date of determination, $10.00, subject to adjustment as provided within the amended agreement.

We
evaluated the conversion feature of this note offering for embedded derivatives in accordance with ASC 815, Derivatives
and Hedging, and the substantial premium model in accordance with ASC 470, Debt. Based on our assessment,
separate accounting for the conversion feature of this note offering is not required and will be accounted for under the substantial
premium model. Under the substantial premium model, the excess above the fair value of the August 2024 Nirland Note will be recorded
in additional paid-in-capital. The August 2024 Nirland Note will be carried at amortized cost using the effective interest method.

    F-20

The
Company determined the fair value of the August 2024 Nirland Note to be $3.6 million as of October 31, 2024 through the use of 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 First Amendment as a debt extinguishment, as the First Amendment added a substantive conversion option. As of October
31, 2024, a loss on debt extinguishment of $2.2 million was recorded consisting of (i) the derecognition of the $1.3 million carrying
value immediately prior to the First Amendment (ii) recognition of the $2.7 million par value and (iii) recognition of the $0.8 million
sub