Company: CDT
Filing Date: 2025-03-28
Form Type: 10-K
Source: 0001641172-25-001246
Chunk: 1279

Company: CDT Equity Inc.
Filing Date: 2025-03-28
Form: 10-K
Item: Item 16
Chunk 1279
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 principal and accrued interest under the Convertible Note will become, or may become at
A.G.P.’s election, immediately due and payable to the A.G.P.

The
Company elected to account for the A.G.P. Convertible Note at fair value under ASC 825. The Company determined that the substantive
conversion option within the A.G.P. Convertible Note falls 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 A.G.P. Convertible Note, and any
changes in fair value are reported in the current period’s consolidated statements of operations and comprehensive income
(loss). The change in fair value attributable to instrument-specific credit risk, if any, will be recognize within other
comprehensive income each reporting period. As an accounting policy, the Company elected to present interest expense separately from
other changes in the A.G.P. Convertible Note’s fair value. Interest expense will be presented within Interest expense, net,
while the other changes in the fair value with be presented within other income (expense), net in the consolidated statements of
operations and comprehensive income (loss).

The
Company determined the fair value of the A.G.P. Convertible Note to be $3.4 million as of November 25, 2024 through the use of a binomial
lattice model. See Note 3 for additional information regarding the fair value measurement of the A.G.P Convertible Promissory Note. The
Company accounted for the issuance on the A.G.P. Convertible Promissory Note as a debt extinguishment, as it was issued to evidence the
A.G.P.’s currently owed deferred commission payable discussed in Note 9. A gain on debt extinguishment of $2.4 million was recorded
as of November 25, 2024, consisting of (i) the derecognition of the $5.7 million deferred commission payable and (ii) recognition of
the $3.4 million fair value of the A.G.P. Convertible Note. For the year ended December 31, 2024, the Company recorded a $0.5 million
gain in the change in fair value of the A.G.P. Convertible Note and interest expense of approximately $32 thousand. The $2.4 million
gain on extinguishment and