Company: CDT
Filing Date: 2025-08-14
Form Type: 10-Q
Source: 0001641172-25-024140
Chunk: 26

Company: CDT Equity Inc.
Filing Date: 2025-08-14
Form: 10-Q
Item: Part I, Item 1
Chunk 26
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 the A.G.P. 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 condensed consolidated statements of operations and comprehensive 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 condensed consolidated statements of operations and comprehensive 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 2 for additional information regarding the fair value measurement of the A.G.P Convertible Note. As
of December 31, 2024, $6.1 million of principal and accrued interest remained outstanding and the A.G.P. Convertible Note had a fair
value of $3.0 million.

On
March 31, 2025, A.G.P. exercised their conversion option and converted $0.4 million of principal and interest in exchange for 28,667
shares of Common Stock. As of March 31, 2025, the Company’s Common Stock price was trading below the Conversion Price Floor. For
the purpose of the March 31, 2025 conversion, the Company waived the Conversion Price Floor and allowed A.G.P. to convert at the prior
trading days closing stock price. Upon conversion, the Company recorded a $0.2 million loss on the change in fair value based on the
difference between (i) the fair value of