Company: CDT
Filing Date: 2025-05-15
Form Type: 10-Q
Source: 0001641172-25-010405
Chunk: 86

Company: CDT Equity Inc.
Filing Date: 2025-05-15
Form: 10-Q
Item: Part I, Item 8
Chunk 86
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 to the conversion rate contained therein,
(ii) remove Nirland’s Mandatory Prepayment Right, and (iii) remove 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
would 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.

The
Company 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 was carried at amortized cost using the effective interest method. The
Company accounted for the First Amendment as a debt extinguishment, as the First Amendment added a substantive conversion option.

On November 22, 2024, the
Company and Nirland entered into a Second Amendment to the August 2024 Nirland Note (the “Second Amendment”). Pursuant to
the Second Amendment, the August 2024 Nirland Note may not be converted (other than partial conversions that may be permitted pursuant
to the rules and regulations of Nasdaq (or any successor entity)) prior to receipt of stockholder approval to provide for such conversion
of the August 2024 Nirland Note, and subsequent issuance of the Company’s Common Stock, pursuant to the stockholder approval rules
under the rules and regulations of The Nasdaq Stock Market. If the Company had not held a special meeting of the stockholders to approve
the full conversion of the August 2024 Nirland Note on or before January 9, 2025, then the Company was obligated to pay Nirland a penalty
of $0