Company: CDT
Filing Date: 2025-03-28
Form Type: 10-K
Source: 0001641172-25-001246
Chunk: 215

Company: CDT Equity Inc.
Filing Date: 2025-03-28
Form: 10-K
Item: Item 2
Chunk 215
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 issuance of notes payable of $3.2 million, proceeds from the exercise of warrants of $0.2 million
and proceeds from the exercise of warrants of $0.1 million, partially offset by repayments of notes payable of $0.8 million.

Net
cash provided by financing activities during the year ended December 31, 2023 was $11.0 million. resulting from the proceeds from the
Merger and related PIPE financing, net of transaction costs of $8.5 million, $2.3 million from issuance of convertible notes payable,
and $0.2 million capital contribution from a related party.

Contractual
Obligations and Other Commitments

Laboratory Lease

As
of December 31, 2024, we are the lessee under one laboratory space lease for a term of two years. The annual rent payments
are $0.1 million for the years ending December 31, 2025 and December 31, 2026. The laboratory space lease has a remaining lease term
of approximately 1.2 years.

Critical
Accounting Estimates

The
preparation of financial statements in conformity with U.S. GAAP requires us to make estimates, judgments and assumptions that affect
the amounts reported in the Consolidated Financial Statements. These estimates, judgments and assumptions are evaluated on an ongoing
basis. We base our estimates on historical experience and on various other assumptions that we believe are reasonable at that time, the
results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent
from other sources. Actual results may differ materially from those estimates. The accounting policies that reflect our more significant
estimates, judgments and assumptions and which we believe are the most critical to aid in fully understanding and evaluating our reported
financial results include the following:

66

Fair
Value of Convertible Notes

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.
To value the convertible debt, the Company utilizes Binomial Lattice Pricing Models. The Binomial Lattice Pricing Models involve the
construction of various intermediate lattices: stock price tree, conversion value tree, conversion probability tree, and discount rate
tree. In doing so, we assume the holders act rationally to maximize return and minimize cost at each decision point. We computed the