[10-Q] CDT Equity Inc. Quarterly Earnings Report
CDT Equity Inc. filed its quarterly report for September 30, 2025. The company reported a net loss of
Management disclosed “substantial doubt” about the company’s ability to continue as a going concern. The company plans to seek additional financing and noted its remaining at‑the‑market capacity of approximately
Stockholders’ equity improved to
- None.
- Going concern uncertainty: management states “substantial doubt” about continuing as a going concern amid $17.9M YTD loss and $10.9M operating cash burn.
Insights
Going concern risk highlighted amid ongoing losses and cash burn.
CDT Equity posted a nine‑month net loss of
Liquidity was supported by equity issuance (ATM proceeds within financing cash flows of
Risk hinges on access to additional capital and cost control. The company held
UNITED STATES
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As
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CDT EQUITY INC.
Form 10-Q
Table of Contents
| Page | |||
| Part I-Financial Information. | |||
| Item 1. | Financial Statements. | 1 | |
| Condensed Consolidated Balance Sheets as of September 30, 2025 (unaudited) and December 31, 2024. | 1 | ||
| Unaudited Condensed Consolidated Statements of Operations and Comprehensive Loss for the three and nine months ended September 30, 2025 and 2024. | 2 | ||
| Unaudited Condensed Consolidated Statements of Changes in Stockholders’ Deficit for the three and nine months ended September 30, 2025 and 2024. | 3 | ||
| Unaudited Condensed Consolidated Statements of Cash Flows for the nine months ended September 30, 2025 and 2024. | 4 | ||
| Notes to Unaudited Condensed Consolidated Financial Statements. | 5 | ||
| Item 2. | Management’s Discussion and Analysis of Financial Condition and Results of Operations. | 27 | |
| Item 3. | Quantitative and Qualitative Disclosures About Market Risk. | 36 | |
| Item 4. | Controls and Procedures. | 36 | |
| Part II-Other Information. | |||
| Item 1. | Legal Proceedings. | 37 | |
| Item 1A. | Risk Factors. | 37 | |
| Item 2. | Unregistered Sales of Equity Securities and Use of Proceeds. | 37 | |
| Item 3. | Defaults Upon Senior Securities. | 37 | |
| Item 4. | Mine Safety Disclosures. | 37 | |
| Item 5. | Other Information. | 37 | |
| Item 6. | Exhibits. | 38 | |
| Part III-Signatures. | 39 | ||
| i |
CAUTIONARY STATEMENT REGARDING FORWARD-LOOKING STATEMENTS
This Quarterly Report on Form 10-Q (this “Quarterly Report”) for the quarterly period ended September 30, 2025 contains forward-looking statements. Forward-looking statements are neither historical facts nor assurances of future performance. Instead, they are based only on our current beliefs, expectations, and assumptions regarding the future of our business, future plans and strategies, projections, anticipated events and trends, the economy, and other future conditions. This includes, without limitation, statements regarding the financial position and the plans and objectives of management for our future operations. Such statements can be identified by the fact that they do not relate strictly to historical or current facts. When used in this Quarterly Report, words such as “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intend,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “strive,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not forward-looking. Factors that could materially affect our business operations and financial performance and condition include, but are not limited to, those risks and uncertainties described herein under “Item 1A. Risk Factors,” those described in our Annual Report on Form 10-K for the year ended December 31, 2024, under “Item 1A. Risk Factors,” filed with the U.S. Securities and Exchange Commission (the “SEC”). You are urged to consider these factors carefully when evaluating the forward-looking statements and are cautioned not to place undue reliance on the forward-looking statements. The forward-looking statements are based on information available to us as of the filing date of this Quarterly Report. Unless required by law, we do not intend to publicly update or revise any forward-looking statements to reflect new information or future events or otherwise. You should, however, review the risk factors we describe in the reports we will file from time to time with the SEC after the date of this Quarterly Report.
This Quarterly Report may also contain market data related to our business and industry. These market data include projections that are based on a number of assumptions. If these assumptions turn out to be incorrect, actual results may differ from the projections based on these assumptions. As a result, our markets may not grow at the rates projected by these data, or at all. The failure of these markets to grow at these projected rates may harm our business, results of operations, financial condition, and the market price of our Common Stock.
| ii |
PART I-FINANCIAL INFORMATION
Item 1. Financial Statements.
CDT EQUITY INC.
CONDENSED CONSOLIDATED BALANCE SHEETS
(in thousands, except share and per share amounts)
September 30, 2025 (Unaudited) | December 31, 2024 | |||||||
| ASSETS | ||||||||
| Current assets | ||||||||
| Cash and cash equivalents | $ | $ | ||||||
| Digital assets | - | |||||||
| Prepaid R&D services- related party (see Note 7 and Note 12) | ||||||||
| Prepaid expenses and other current assets | ||||||||
| Total current assets | ||||||||
| Operating lease right-of-use assets, net | ||||||||
| Equipment and clinical assets, net | ||||||||
| Prepaid expenses and other long-term assets | ||||||||
| Total assets | $ | $ | ||||||
| LIABILITIES AND STOCKHOLDERS’ EQUITY (DEFICIT) | ||||||||
| Current liabilities | ||||||||
| Accounts payable | $ | $ | ||||||
| Accrued expenses and other current liabilities | ||||||||
| Operating lease liability, current portion | ||||||||
| Convertible promissory note payable | - | |||||||
| Convertible promissory notes payable at fair value | ||||||||
| Convertible promissory notes payable at fair value – related parties | - | |||||||
| Convertible promissory notes payable at fair value | - | |||||||
| Notes payable | - | |||||||
| Notes payable – related parties | - | |||||||
| Notes payable | - | |||||||
| Total current liabilities | ||||||||
| Operating lease liability, non-current portion | ||||||||
| Derivative warrant liability | ||||||||
| Total liabilities | ||||||||
| Commitments and contingencies (see Note 14) | - | - | ||||||
| Stockholders’ equity (deficit) | ||||||||
| Common stock, par value $ | - | - | ||||||
| Preferred stock, par value $ | - | - | ||||||
| Additional paid-in capital | ||||||||
| Accumulated deficit | ( | ) | ( | ) | ||||
| Accumulated other comprehensive income | ||||||||
| Total stockholders’ equity (deficit) | ( | ) | ||||||
| Total liabilities and stockholders’ equity (deficit) | $ | $ | ||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 1 |
CDT EQUITY INC.
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS AND COMPREHENSIVE LOSS
(unaudited)
(in thousands, except share and per share amounts)
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Three Months ended September 30, | Nine Months ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development expenses | $ | $ | $ | $ | ||||||||||||
| General and administrative expenses | ||||||||||||||||
| Total operating expenses | ||||||||||||||||
| Operating loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expense): | ||||||||||||||||
| Other expense, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Interest income | - | |||||||||||||||
| Interest expense | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total other expense, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Basic and diluted net loss per share | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
| Basic and diluted weighted-average common shares outstanding | ||||||||||||||||
| Comprehensive loss: | ||||||||||||||||
| Foreign currency translation adjustment | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total comprehensive loss | $ | ( | ) | $ | ( | ) | ( | ) | $ | ( | ) | |||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 2 |
CDT EQUITY INC.
CONDENSED CONSOLIDATED STATEMENTS OF CHANGES IN STOCKHOLDERS’ EQUITY
(DEFICIT)
(unaudited)
(in thousands, except share amounts)
| Common stock | Treasury | Additional paid-in | Accumulated | Accumulated other comprehensive | Total stockholders’ equity | |||||||||||||||||||||||
| Shares | Amount | Stock | capital | deficit | income | (deficit) | ||||||||||||||||||||||
| Balance at July 1, 2025 | $ | - | $ | ( | ) | $ | $ | ( | ) | $ | $ | |||||||||||||||||
| Issuance of Common Stock under the ATM Program | - | - | - | - | ||||||||||||||||||||||||
| Issuance of Common Stock upon exercise of conversion option | - | - | - | - | ||||||||||||||||||||||||
| Issuance of Common Stock upon vesting of restricted stock units | - | - | - | - | - | - | ||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | ||||||||||||||||||||||||
| Share cancellation | ( | ) | - | ( | ) | - | - | - | ||||||||||||||||||||
| Foreign currency translation adjustment | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||
| Net loss | - | - | - | - | ( | ) | - | ( | ) | |||||||||||||||||||
| Balance at September 30, 2025 | $ | - | $ | - | $ | $ | ( | ) | $ | $ | ||||||||||||||||||
| Common stock | Treasury | Additional paid-in | Accumulated | Accumulated other comprehensive | Total stockholders’ equity | |||||||||||||||||||||||
| Shares | Amount | Stock | capital | deficit | income | (deficit) | ||||||||||||||||||||||
| Balance at January 1, 2025 | $ | - | $ | - | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||||
| Issuance of Common Stock for services | - | - | - | - | ||||||||||||||||||||||||
| Issuance of Common Stock under the ATM Program | - | - | - | - | ||||||||||||||||||||||||
| Issuance of Common Stock upon exercise of conversion option | - | - | - | - | ||||||||||||||||||||||||
| Issuance of Common Stock upon vesting of restricted stock units | - | - | - | - | - | - | ||||||||||||||||||||||
| Stock-based compensation | - | - | - | - | ||||||||||||||||||||||||
| Share repurchases | - | ( | ) | - | - | - | ( | ) | ||||||||||||||||||||
| Share cancellation | ( | ) | - | ( | ) | - | - | - | ||||||||||||||||||||
| Foreign currency translation adjustment | - | - | - | - | - | ( | ) | ( | ) | |||||||||||||||||||
| Net loss | - | - | - | - | ( | ) | - | ( | ) | |||||||||||||||||||
| Balance at September 30, 2025 | $ | - | $ | - | $ | $ | ( | ) | $ | $ | ||||||||||||||||||
| Shares | Amount | capital | deficit | income | (deficit) | |||||||||||||||||||
| Common stock | Additional paid-in | Accumulated | Accumulated other comprehensive | Total stockholders’ equity | ||||||||||||||||||||
| Shares | Amount | capital | deficit | income | (deficit) | |||||||||||||||||||
| Balance at July 1, 2024 | $ | - | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||
| Issuance of Common Stock for note payable | - | - | - | |||||||||||||||||||||
Issuance of Common Stock for licensing right | - | - | - | |||||||||||||||||||||
| Stock-based compensation | - | - | - | - | ||||||||||||||||||||
| Foreign currency translation adjustment | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||
| Net loss | - | - | - | ( | ) | - | ( | ) | ||||||||||||||||
| Balance at September 30, 2024 | $ | - | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||
| Common stock | Additional paid-in | Accumulated | Accumulated other comprehensive | Total stockholders’ equity | ||||||||||||||||||||
| Shares | Amount | capital | deficit | income | (deficit) | |||||||||||||||||||
| Balance at January 1, 2024 | $ | - | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||
| Balance | $ | - | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||
| Issuance of Common Stock for services | - | - | - | |||||||||||||||||||||
| Issuance of Common Stock upon vesting of restricted stock units | - | - | - | - | - | |||||||||||||||||||
| Issuance of Common Stock for note payable | - | - | - | |||||||||||||||||||||
| Issuance of Common Stock for licensing right | - | - | - | |||||||||||||||||||||
| Issuance of Warrants | - | - | - | - | ||||||||||||||||||||
| Stock-based compensation | - | - | - | - | ||||||||||||||||||||
| Foreign currency translation adjustment | - | - | - | - | ( | ) | ( | ) | ||||||||||||||||
| Net loss | - | - | - | ( | ) | - | ( | ) | ||||||||||||||||
| Balance at September 30, 2024 | $ | - | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||
| Balance | $ | - | $ | $ | ( | ) | $ | $ | ( | ) | ||||||||||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 3 |
CDT EQUITY INC.
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(unaudited)
(in thousands)
| 2025 | 2024 | |||||||
| Nine Months ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Cash flows used in operating activities: | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | ||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Gain on debt extinguishment, net | ( | ) | - | |||||
| Unrealized foreign exchange loss | ( | ) | ( | ) | ||||
| Loss on change in fair value of convertible notes payable | - | |||||||
| Gain on change in fair value of derivative warrant liability | ( | ) | ( | ) | ||||
| Loss on change in fair value of crypto holdings | - | |||||||
| Gain on waiver of accrued interest | ( | ) | - | |||||
| Non-cash lease expense | - | |||||||
| Issuance of warrants for lock-up | - | |||||||
| Interest expense on convertible promissory note | - | |||||||
| Stock-based compensation expense | ||||||||
| Non-cash interest expense | ||||||||
| Operating lease obligations | - | ( | ) | |||||
| Depreciation expense | ||||||||
| Amortization of financed directors and officers insurance | ||||||||
| Issuance of common stock for services | - | |||||||
| Amortization expense | ||||||||
| Changes in operating assets and liabilities: | ||||||||
| Prepaid expenses and other current assets | ( | ) | ( | ) | ||||
| Accounts payable | ( | ) | ||||||
| Accrued expenses and other liabilities | ||||||||
| Lease liability | ( | ) | - | |||||
| Net cash flows used in operating activities | ( | ) | ( | ) | ||||
| Cash flows used in investing activities: | ||||||||
| Purchases of equipment and clinical assets | ( | ) | ( | ) | ||||
| Purchase of digital assets | ( | ) | - | |||||
| Purchases of short-term investments | ( | ) | ( | ) | ||||
| Proceeds from the sale of short-term investments | - | |||||||
| Net cash flows used in investing activities | ( | ) | ( | ) | ||||
| Cash flows provided by financing activities: | ||||||||
| Net proceeds from the issuance of notes payable | - | |||||||
| Proceeds from issuance of warrants from lock-up | - | |||||||
| Bank overdraft | - | |||||||
| Proceeds from issuance of common shares related to the ATM program | - | |||||||
| Repayment of notes payable – related parties | ( | ) | - | |||||
| Repayment of notes payable | ( | ) | - | |||||
| Repayment of convertible notes payable – related parties | ( | ) | - | |||||
| Repayment of convertible notes payable | ( | ) | - | |||||
| Purchases of treasury stock | ( | ) | - | |||||
| Net cash flows provided by financing activities | ||||||||
| Net change in cash and cash equivalents before effect of exchange rate changes | ( | ) | ||||||
| Effect of exchange rate changes on cash and cash equivalents | ( | ) | ( | ) | ||||
| Net change in cash | ( | ) | ||||||
| Cash and cash equivalents at beginning of period | ||||||||
| Cash and cash equivalents at end of period | $ | $ | ||||||
| Supplemental cash flow information: | ||||||||
| Cash paid for interest | $ | - | $ | |||||
| Non-cash investing and financing activities | ||||||||
| Right-of-use assets obtained in exchange for operating lease liabilities | $ | - | $ | |||||
| Issuance of common stock upon exercise of conversion option | - | |||||||
| Issuance of common stock for services | - | |||||||
| Cancellation of shares | - | |||||||
| Receivables from issuance of warrants for lock-up | - | |||||||
| Receivable from issuance of note payable | - | |||||||
The accompanying notes are an integral part of these condensed consolidated financial statements.
| 4 |
CDT EQUITY INC.
NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
1. Nature of the Business, Basis of Presentation and Summary of Significant Accounting Policies
CDT Equity Inc., formerly Conduit Pharmaceuticals Inc., a Delaware corporation (“CDT”, “CDT Equity” or the “Company”), is a data-driven pharmaceutical development and digital asset treasury management company focused on identifying, enhancing, and advancing high-potential therapeutic assets through scientific innovation and strategic partnerships. The Company has evolved into a broader, more agile platform that leverages artificial intelligence, solid-form chemistry, and efficient asset repositioning to accelerate the development of novel treatments.
The Company’s strategy is centered on unlocking the untapped value of clinical-stage compounds, particularly those deprioritized by larger pharmaceutical companies with strong, supporting Phase I safety data. Through advanced co-crystallization and solid-form technologies developed at our Cambridge facilities, the Company improves drug properties and extends patent life by up to 20 years. In partnership with Sarborg Limited, the Company also applies AI-powered disease mapping to rapidly identify new therapeutic applications for existing compounds.
The Company’s pipeline includes candidates that target autoimmune disorders, as well as idiopathic male infertility, oncology, dermatology, and animal health. Ongoing in vitro and in vivo studies, guided by AI insights, are designed to support licensing and commercialization partnerships. The Company will seek an exit through third-party license deals following successful in vitro and in vivo pre-clinical trials, by entering into agreements with third-parties to pursue further development, FDA approval, commercialization and marketing of the Company’s assets.
Operating with a lean, asset-agnostic model, CDT Equity prioritizes speed, adaptability, and capital efficiency. We avoid the cost burden of late-stage clinical trials, focusing instead on high-leverage development strategies.
On May 23, 2025, the Company’s Common Stock commenced trading, as further described herein, on The Nasdaq Capital Market under the symbol “CDT”. Effective August 5, 2025, the Company changed its name from Conduit Pharmaceuticals Inc. to CDT Equity Inc. Our name change to CDT Equity Inc. reflects the evolution of our strategy as a data-driven biotech development company focused on identifying, enhancing, and advancing high-potential therapeutic assets through scientific innovation and strategic partnerships.
Basis of Presentation
The accompanying unaudited condensed consolidated financial statements have been prepared by the Company in accordance with U.S. GAAP as set forth by the Financial Accounting Standards Board (“FASB”) and pursuant to the rules and regulations of the United States Securities and Exchange Commission (“SEC”). References to U.S. GAAP issued by the FASB in these notes to the accompanying unaudited condensed consolidated financial statements are to the FASB Accounting Standards Codifications (“ASC”) and Accounting Standards Update (“ASUs”).
The accompanying unaudited condensed consolidated financial statements and related notes have been prepared in accordance with U.S. GAAP for interim financial information, and with the rules and regulations of the SEC set forth in Article 8 of Regulation S-X. Accordingly, they do not include all of the information and footnotes required by U.S. GAAP for complete financial statements. The unaudited interim financial statements furnished reflect all adjustments (consisting of normal recurring accruals) which are, in the opinion of management, necessary to a fair statement of the results for the interim periods presented. Unaudited interim results are not necessarily indicative of the results for the full fiscal year. These condensed consolidated financial statements should be read along with our Annual Report on Form 10-K for the year ended December 31, 2024, filed with the SEC on March 28, 2025. The consolidated balance sheet as of December 31, 2024 was derived from the audited consolidated financial statements as of and for the year then ended.
| 5 |
Principles of Consolidation
The accompanying unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiaries Conduit UK Management Ltd. (United Kingdom) and Conduit Pharmaceuticals, Ltd. (Cayman Islands). As used herein, references to the “Company” or “CDT” include references to CDT Equity Inc. and its subsidiaries. All intercompany balances and transactions have been eliminated in consolidation.
Liquidity and Going Concern
In
accordance with ASC 205-40, Going Concern, the Company has evaluated whether there are conditions and events considered in the
aggregate that raise substantial doubt about the Company’s ability to continue as a going concern within one year after the date
the financial statements are issued. Since its inception, the Company has generated significant losses and as of September 30, 2025,
the Company had an accumulated deficit of $
Management has determined that it does not have sufficient cash and other sources of liquidity to fund its current business plan. These factors raise substantial doubt regarding the Company’s ability to continue as a going concern for at least the next 12 months from the financial statement filing date.
The
Company’s expectation is to generate operating losses and negative operating cash flows in the future and will need additional
funding to support its current business plan in addition to the remaining at the market offering program of approximately $
These financial statements have been prepared assuming the Company will continue as a going concern and do not include adjustments to reflect the possible effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.
Reverse Stock Splits
During 2025, the Company completed three reverse stock splits: a 1-for-100 split effective January 24, 2025 (the “January Reverse Stock Split”), a 1-for-15 split effective May 19, 2025 (the “May Reverse Stock Split”), and a 1-for-8 split effective October 10, 2025 (the “October Reverse Stock Split”). Each split reduced the number of issued and outstanding shares without affecting the number of authorized shares or the par value of the Common Stock. No fractional shares were issued; instead, stockholders received cash in lieu of fractional shares based on the respective post-split closing share prices. All share and per-share information has been retroactively adjusted to reflect these reverse stock splits for all periods presented.
| 6 |
All historical share and per-share amounts reflected throughout the accompanying consolidated financial statements and other financial information in this Quarterly Report on Form 10-Q have been retroactively adjusted to reflect the January Reverse Stock Split, May Reverse Stock Split and October Reverse Stock Split as if the splits occurred as of the earliest period presented.
Other Risks and Uncertainties
The Company is subject to risks common to companies in the development stage and pharmaceutical industry including, but not limited to, uncertainties related to pre-clinical and clinical outcomes competitor products, regulatory approvals, dependence on key products, dependence on key suppliers and protection of intellectual property rights (see Note 14 for details on a claim against our AZD 1656 co-crystal patent). Clinical assets currently under development will require significant additional research and development efforts, including extensive preclinical and clinical testing and regulatory approval prior to commercialization. These efforts will require significant amounts of additional capital, adequate personnel, infrastructure, and extensive compliance and reporting capabilities. Even if the Company’s efforts are successful, it is uncertain when, if ever, the Company will realize significant revenue and cash flow from royalties or product sales.
The Company licenses clinical assets from AstraZeneca (see Note 7 for further detail). A breach or other termination of such agreements could have a material adverse effect on the Company’s business, financial condition, operating results, and prospects.
Related party transactions and arrangements, specifically research and development related transactions, the Company enters into subject the Company to certain risks. Related party transactions in general are regarded as increasing the risk of omissions or misstatements in financial reporting, the risk of transactions being done on other than arm’s length terms due to the close ties between the parties involved and the risk of regulatory non-compliance. In addition, related-party transactions present potential conflicts of interest that could result in decisions prioritizing the economic interests of certain individuals over the primary objectives of the Company’s research and development activities, the interests of the Company, and the interests of its stockholders. In the instance of a dispute under any related-party agreement, the interests of affiliated parties may not align with the Company’s interest, and the resolution of such disputes may be less favorable than what the Company might achieve in a transaction with an unaffiliated third party.
The Company is also subject to risks associated with the Nasdaq Stock Market (“Nasdaq”) correspondence.
In
August 2024, the Company received deficiency letters from Nasdaq notifying the Company that it was not in compliance with Listing Rule
5450(a)(1) (the “Bid Price Rule”), Listing Rule 5450(b)(2)(C) (the “MVPHS Rule”) and Listing Rule 5450(b)(2)(A)
(the “MVLS Rule”, together with the Bid Price Rule and the MVPHS Rule, the “Rules”). The Company had until February
10, 2025, and February 11, 2025, to regain compliance with the Rules. On December 17, 2024, Nasdaq issued a letter to the Company that
as of December 17, 2024, it determined that the Company’s securities had a closing bid price of $
| 7 |
Summary of Significant Accounting Policies
Use of Estimates
The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and related disclosures of contingent assets and liabilities at the date of the financial statements as well as the reported amounts of revenues and expenses during the reporting period. Estimates are based on several factors including the facts and circumstances available at the time the estimates are made, historical experience, risk of loss, general economic conditions and trends, and the assessment of the probable future outcome. Actual results could differ materially from such estimates. Estimates and assumptions are reviewed periodically by management and changes in estimates are made as management becomes aware of changes in circumstances surrounding the estimates. The effects of changes are reflected in the financial statements in the period that they are determined. Our significant accounting policies that involve significant judgment and estimates include accounting for the fair value of convertible notes payable, stock based compensation, contingencies and going concern.
Cash and Cash Equivalents
Cash
and cash equivalents are primarily maintained with major financial institutions in the United States and the United Kingdom. The Company
considers cash equivalents to be short-term, highly liquid investments that (a) are readily convertible into known amounts of cash, (b)
are traded and held for cash management purposes, and (c) have original maturities of three months or less at the time of purchase. The
UK bank account, with a balance at September 30, 2025 of approximately £
The
Company had $
Digital Assets
Digital assets are included in current assets in the consolidated balance sheets. Digital assets are accounted for as indefinite-lived intangible assets and are initially measured in accordance with FASB Accounting Standards Codification (“ASC”) Topic 350 - Intangibles-Goodwill and Other. The Company measures gains or losses on the disposition of digital assets in accordance with the first-in-first-out (“FIFO”) method of accounting. Refer to Note 3, Digital Assets, for further information regarding the Company’s impact of the adoption of ASU 2023-08.
As
of September 30, 2025, the Company held Bitcoin (“BTC”) as digital assets totaling approximately $
Fair Value Measurements
ASC Topic 820, Fair Value Measurements and Disclosures, defines fair value, establishes a framework for measuring fair value, and expands disclosures about fair value measurements. Fair value is to be determined based on the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants. In determining fair value, the Company used various valuation approaches. A fair value hierarchy has been established for inputs used in measuring fair value that maximizes the use of observable inputs and minimizes the use of unobservable inputs by requiring that the most observable inputs be used when available. Observable inputs are those that market participants would use in pricing the asset or liability based on market data obtained from sources independent of the Company.
Unobservable inputs reflect the Company’s assumption about the inputs that market participants would use in pricing the asset or liability developed based on the best information available in the circumstances. The fair value hierarchy is categorized into three levels, based on the inputs, as follows:
| ● | Level 1-Valuations based on quoted prices for identical instruments in active markets. Since valuations are based on quoted prices that are readily and regularly available in an active market, valuation of these instruments does not entail a significant degree of judgment. | |
| ● | Level 2-Valuations based on observable inputs other than quoted prices included in Level 1, such as quoted prices for either similar instruments in active markets, identical or similar instruments in markets that are not active, or model-derived valuations whose inputs or significant value drivers are observable or can be corroborated by observable market data. | |
| ● | Level 3-Valuations based on inputs that are unobservable. These valuations require significant judgment. |
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The Company’s Level 1 assets consist of cash and cash equivalents, inclusive of Bitcoin, in the accompanying balance sheets, the value of accrued expenses and other current liabilities approximate fair value due to the short-term nature of these assets and liabilities.
As of September 30, 2025, the Company has two financial liabilities, warrant liabilities for which the fair value is determined based on Level 2 and Level 3 inputs, and convertible debt carried at fair value for which the fair value is determined based on Level 3 input. The Level 2 inputs are valued based on observable inputs other than quoted prices included in Level 1, such as quoted prices for similar instruments in active markets. The Level 3 inputs as such inputs are based on unobservable inputs and require significant judgement.
Fair Value Option
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. As a result, the August 2024 Nirland Note was recorded at fair value subsequent to the Second Amendment and the A.G.P. Convertible Note was recorded at fair value upon issuance. The notes will subsequently be remeasured at fair value each reporting date until settled or converted. The Company reports interest expense, including accrued interest, related to the convertible debt under the fair value option, separately from within the change in fair value of the convertible debt in the accompanying condensed consolidated statement of operations and comprehensive loss. Any changes in fair value caused by instrument-specific credit risk are presented separately in other comprehensive income.
Research and Development
Research and development expenses consist primarily of costs incurred in connection with the research and development of our clinical assets and programs, see Note 7 for further discussion of research and development expense. CDT licenses its assets from a large pharmaceutical company and conducts clinical research with third-party contract research organizations. The Company expenses research and development costs and intangible assets acquired that have no alternative future use as incurred. These expenses include:
| ● | expenses incurred under agreements with organizations that support the Company’s drug discovery and development activities; | |
| ● | expenses incurred in connection with the preclinical and clinical development of the Company’s clinical assets and programs, including under agreements with contract research organizations, or CROs; | |
| ● | costs related to contract manufacturing organizations, or CMOs, that are primarily engaged to provide drug substance and product for our clinical trials, research and development programs, as well as investigative sites and consultants that conduct the Company’s clinical trials, nonclinical studies and other scientific development services; | |
| ● | the costs of acquiring and manufacturing nonclinical and clinical trial materials, including manufacturing registration and validation batches; | |
| ● | employee-related expenses, including salaries, related benefits and equity-based compensation expense, for employees engaged in research and development functions; | |
| ● | acquisition costs related to the purchase of licensed intellectual property; | |
| ● | costs related to compliance with quality and regulatory requirements; | |
| ● | payments made under third-party licensing agreements; and | |
| ● | direct and allocated costs related to facilities, information technology, personnel and other overhead. |
Advance payments that we make for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses. Such amounts are recognized as an expense as the goods are delivered or consumed or the related services are performed, or until it is no longer expected that the goods will be delivered, or the services rendered.
Purchased Research and Development Assets
The Company accounts for its research and development costs in accordance with ASC 730, Research and Development. ASC 730 requires that research and development are generally recognized as an expense as incurred. However, some costs associated with research and development activities that have an alternative future use may be capitalizable. Purchases of assets related to research and development activities are evaluated based on the usefulness to the Company currently and for alternative future uses. Purchased research and development assets with alternative future use are recorded at cost and subsequently amortized using the straight-line method over their estimated useful lives. To date, the Company has one purchased asset, a diagnostic tool used to monitor clinical trials, aggregate data on an ongoing basis and tracking intellectual property patent status. The Company determined that the diagnostic tool has an alternative future use, namely using its predictive modeling capability to track and evaluate delisted patents in the marketplace, potentially facilitating strategic entry into de-prioritized asset markets that might otherwise be overlooked by other market participants. The asset is depreciated on a straight-line basis over its useful life of two years.
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Income Taxes
ASC Topic 740, Income Taxes, sets forth standards for financial presentation and disclosure of income tax liabilities and expense. Interest and penalties recognized have been classified in the unaudited condensed consolidated statements of operations and comprehensive loss as income taxes. Deferred tax assets and liabilities are recognized for future tax consequences attributable to temporary differences between the financial statement carrying amount of existing assets and liabilities and their respective tax bases and operating losses carried forward. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effects of changes in tax rates on deferred tax assets and liabilities are recognized in the unaudited condensed consolidated statements of operations and comprehensive loss in the period that includes the enactment date. The measurement of deferred tax assets is reduced, if necessary, by a valuation allowance for any tax benefits of which future realization is uncertain.
Net Loss per Share Attributable to Common Stockholders
The Company calculates basic and diluted net loss per share under ASC Topic 260, Earnings Per Share. Basic net loss per share is computed by dividing the net loss by the number of weighted-average common shares outstanding for the period. Diluted net loss is computed by adjusting net loss based on the impact of any dilutive instruments. Diluted net loss per share is computed by dividing the diluted net loss by the number of weighted-average common shares outstanding for the period including the effect, if dilutive, of any instruments that can be settled in common shares. When computing diluted net loss per share, the numerator is adjusted to eliminate the effects that have been recorded in net loss (net of tax, if any) attributable to any liability-classified dilutive instruments.
Warrants
The Company determines the accounting classification of Warrants as either liability or equity by first assessing whether the Warrants meet liability classification in accordance with ASC Topic 480, Distinguishing Liabilities from Equity (“ASC 480”). Under ASC 480, a financial instrument that embodies an unconditional obligation, or a financial instrument other than an outstanding share that embodies a conditional obligation, that the issuer must or may settle by issuing a variable number of its equity shares must be classified as a liability (or an asset in some circumstances) if, at inception, the monetary value of the obligation is based solely or predominantly on any one of the following: (a) a fixed monetary amount known at inception; (b) variations in something other than the fair value of the issuer’s equity shares; or (c) variations inversely related to changes in the fair value of the issuer’s equity shares.
If financial instruments, such as the Warrants, are not required to be classified as liabilities under ASC 480, the Company assesses whether such instruments are indexed to the Company’s own stock under ASC 815-40. In order for an instrument to be considered indexed to an entity’s own stock, its settlement amount must always equal the difference between the following: (a) the fair value of a fixed number of the Company’s equity shares, and (b) a fixed monetary amount or a fixed amount of a debt instrument issued by the Company. The Company determined that the settlement amount of the Equity Classified Warrants would equal the difference between the fair value of a fixed number of shares and a fixed monetary amount (or a fixed amount of a debt instrument) and must be classified as equity, while the settlement amount of the Liability Classified Warrants would not equal the difference between the fair value of a fixed number of shares and a fixed monetary amount (or a fixed amount of a debt instrument) and must be classified as a liability.
The Equity Classified Warrants are recorded in stockholders’ equity (deficit) and the Liability Classified Warrants are recorded as liabilities in the Condensed Consolidated Balance Sheet. The Liability Classified Warrants are remeasured each period with changes in fair value recorded in the Condensed Consolidated Statements of Operations and Comprehensive Loss.
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Stock Options
The Company estimates the fair value of each option award on the date of grant using the Black-Scholes option-pricing model. The Company then recognizes the grant date fair value of each option as compensation expense ratably using the straight-line attribution method over the service period (generally the vesting period). The Black-Scholes model incorporates the following assumptions:
| ● | Expected volatility – the Company estimates the volatility of the share price of their peer companies at the date of grant using a “look-back” period which coincides with the expected term, defined below. The Company believes using a “look-back” period which coincides with the expected term is the most appropriate measure for determining expected volatility. | |
| ● | Expected term – the Company estimates the expected term using the “simplified” method outlined in SEC Staff Accounting Bulletin No. 107, “Share-Based Payment.” | |
| ● | Risk-free interest rate – the Company estimates the risk- free interest rate using the U.S. Treasury Yield curve for periods equal to the expected term of the options in effect at the time of grant. | |
| ● | Dividends – the Company uses an expected dividend yield of zero because the Company has not declared nor paid a cash dividend, nor are there any plans to declare a dividend. |
Foreign Currency Translation
The Company translated the assets and liabilities of foreign subsidiaries from their respective functional currency, the British pound, to United States dollars at the appropriate spot rates as of the balance sheet date. Income and expenses of operations are translated to United States dollars using weighted average exchange rates during the year. The foreign subsidiaries use the local currency as their functional currency. The effects of foreign currency translation adjustments are included as a component of accumulated other comprehensive income in the accompanying consolidated statements of changes in stockholders’ equity (deficit). Non-monetary items in the subsidiaries’ functional currency are re-measured into the reporting currency at the historical exchange rate (i.e., the rate of exchange at the date of the transaction).
Recently Issued Accounting Standards Adopted
In December 2023, the FASB issued ASU No. 2023-08, Intangibles-Goodwill and Other-Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets. The amendments in ASU No. 2023-08 are intended to improve the accounting for certain crypto assets by requiring an entity to measure those crypto assets at fair value each reporting period with changes in fair value recognized in net income. The amendments also improve the information provided to investors about an entity’s crypto asset holdings by requiring disclosure about significant holdings, contractual sale restrictions, and changes during the reporting period. The amendments are effective for all entities for fiscal years beginning after December 15, 2024, including interim periods within those fiscal years. Early adoption is permitted for both interim and annual financial statements. The Company elected to adopt ASU 2023-08, effective as of July 1, 2025, the first quarter in which the Company held digital assets. Refer to Note 3 for further information.
Recently Issued Accounting Standards Not Yet Adopted
In December 2023, the FASB issued ASU 2023-09, Income Taxes (Topic 740): Improvements to Income Tax Disclosures (“ASU 2023-09”). ASU 2023-09 modifies the reporting requirements for income tax disclosures related to effective tax rates and cash income taxes paid. Pursuant to ASU 2023-09, public business entities are required to disclose certain categories in the income tax rate reconciliation, as well as additional information for reconciling items that meet a specific quantitative threshold. Additionally, ASU 2023-09 requires annual disclosures of income taxes paid for all entities, including the amount of income taxes paid, net of refunds received, disaggregated by federal, state, and foreign jurisdictions. ASU 2023-09 is effective for the Company in its annual reporting for fiscal 2025 on a prospective basis. Early adoption and retrospective reporting are permitted. The Company is currently evaluating the impact of ASU 2023-09 on its consolidated financial statements.
In November 2024, the FASB issued ASU 2024-03, Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses, which is intended to provide more detailed information about specified categories of expenses (purchases of inventory, employee compensation, depreciation and amortization) included in certain expense captions presented on the consolidated statements of operations and comprehensive income (loss). The guidance in this ASU is effective for fiscal years beginning after December 15, 2026, and interim periods within fiscal years beginning after December 15, 2027. Early adoption is permitted. The amendments may be applied either (1) prospectively to financial statements issued for periods after the effective date of this ASU or (2) retrospectively to all prior periods presented in the consolidated financial statements. The Company is currently evaluating the impact that the adoption of ASU 2024-03 will have on its consolidated financial statements and disclosures.
2. Fair Value
The following table presents as of September 30, 2025 the Company’s assets and liabilities subject to measurement at fair value on a recurring basis (in thousands):
Schedule of Assets Subject to Measurement at Fair Value on Recurring Basis
| Fair Value Measurements as of September 30, 2025 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets: | ||||||||||||||||
| Cash equivalents | $ | $ | - | $ | - | $ | ||||||||||
| Digital assets | - | - | ||||||||||||||
| Total Assets | $ | $ | - | $ | - | $ | ||||||||||
| Liabilities: | ||||||||||||||||
| Convertible notes payable, at fair value | $ | - | $ | - | $ | $ | ||||||||||
| Liability Classified Warrants | - | - | ||||||||||||||
| Total Liabilities | $ | - | $ | - | $ | $ | ||||||||||
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The following table presents as of December 31, 2024 the Company’s assets and liabilities subject to measurement at fair value on a recurring basis (in thousands):
| Fair Value Measurements as of December 31, 2024 | ||||||||||||||||
| Level 1 | Level 2 | Level 3 | Total | |||||||||||||
| Assets: | ||||||||||||||||
| Cash equivalents | $ | $ | - | $ | - | $ | ||||||||||
| Total Assets | $ | $ | - | $ | - | $ | ||||||||||
| Liabilities: | ||||||||||||||||
| Convertible notes payable, at fair value | $ | - | $ | - | $ | $ | ||||||||||
| Liability Classified Warrants | - | - | ||||||||||||||
| Total Liabilities | $ | - | $ | - | $ | $ | ||||||||||
The following table presents additional information about the Convertible Notes Payable subject to measurement at fair value on a recurring basis and warrant liabilities, for which the Company used significant unobservable inputs (Level 3) (in thousands):
Schedule of Additional Information About the Financial Liabilities Subject To Measurement at Fair Value
Convertible Notes Payable | Liability Classified Warrants | |||||||
| Balance as of December 31, 2024 | $ | $ | ||||||
| Repayment of convertible notes | ( | ) | - | |||||
| Change in fair value | ( | ) | ( | ) | ||||
| Balance as of March 31, 2025 | $ | $ | ||||||
| Conversion of convertible notes | ( | ) | - | |||||
| Interest expense | - | |||||||
| Change in fair value | ( | ) | ||||||
| Balance as of June 30, 2025 | $ | $ | ||||||
| Balance | $ | $ | ||||||
| Conversion of convertible notes | ( | ) | - | |||||
| Interest expense | - | |||||||
| Change in fair value | ( | ) | - | |||||
| Balance as of September 30, 2025 | $ | $ | ||||||
| Balance | $ | $ | ||||||
During the three and nine months ended September 30, 2025, there were no transfers between Level 1 and Level 2, nor into or out of Level 3.
Digital Assets
Digital assets are measured at fair value on a recurring basis using quoted prices in their principal market (Level 1 inputs). The Company has designated a principal market based on the market the Company has access to and that has the greatest volume and level of orderly transactions for BTC. The Company reassesses its principal market when facts and circumstances change, including but not limited to when new markets become accessible, or the volume/activity in the current principal market declines.
Convertible Notes Payable
As discussed in Note 5, on October 31, 2024, the Company and Nirland agreed to amend the Senior Secured Promissory Note entered into by the Company and Nirland on August 6, 2024 (the “August 2024 Nirland Note”), whereby the August 2024 Nirland Note was amended to provide for the conversion of the August 2024 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. The August 2024 Nirland Note was then amended for a second time on November 22, 2024. On February 12, 2025, the August 2024 Nirland Note was repaid in full.
Additionally,
as discussed in Note 4, during November 2024, the Company issued to A.G.P./Alliance Global Partners (“A.G.P.”) a convertible
promissory note (the “A.G.P. Convertible Note”) in the principal amount of $
The Company elected to account for the August 2024 Nirland Note and A.G.P. Convertible Note (collectively the “Convertible Notes Payable”) at fair value. The fair value of the Convertible Notes Payable is estimated each period using a binomial lattice model. Significant estimates in the binomial lattice model include the Company’s stock price, volatility, risk-free rate, corporate bond yield, credit spread, probability of default, and recovery upon default.
As of September 30, 2025, no obligations remain under the August 2024 Nirland Note (refer to Note 5 for details) and therefore only the fair value of the A.G.P. Convertible Note was estimated using a binomial lattice model.
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The following table outlines the range of significant unobservable inputs used in calculating the fair value of the A.G.P. Convertible Note as of September 30, 2025, and December 31, 2024:
Schedule of Fair Value of Assumptions
September 30, 2025 | December 31, 2024 | |||||||
| Stock Price | $ | $ | ||||||
| Term (years) | ||||||||
| Corporate bond yield | % | % | ||||||
| Credit Spread | % | % | ||||||
| Probability of default | % | % | ||||||
| Probability of maturity extension (six months) | % | % | ||||||
| Recovery upon default | % | % | ||||||
| Volatility | % | % | ||||||
Liability Classified Warrants
The A.G.P. 2024 Warrants, as defined in Note 14, are accounted for as liabilities in accordance with ASC 815-40 and are presented within Warrant liabilities in the condensed consolidated balance sheets. Warrant liabilities are measured at fair value at inception and on a recurring basis, with changes in fair value presented within other income (expense), net in the condensed consolidated statements of operations and comprehensive loss.
The measurement of the A.G.P. 2024 Warrants is classified as Level 3 due to the use of an option-pricing model that utilizes unobservable inputs and requires significant judgment. The Company estimated the fair value of the A.G.P. 2024 Warrants as of September 30, 2025 and December 31, 2024, utilizing a Black-Scholes option-pricing model with the following assumptions:
Schedule of Fair Value of Assumptions
September 30, 2025 | December 31, 2024 | |||||||
| Closing stock price | $ | $ | ||||||
| Contractual exercise price | $ | $ | ||||||
| Risk-free rate | % | % | ||||||
| Estimated volatility | % | % | ||||||
| Time period to expiration (in years) | ||||||||
3. Digital Assets
Adoption of ASU 2023-08, Accounting for and Disclosure of Crypto Assets
Effective during the third quarter of 2025, the Company adopted ASU 2023-08, which requires entities to measure crypto assets at fair value with changes recognized in the Consolidated Statement of Operations each reporting period. The Company’s did not hold any digital assets prior to the release of ASU 2023-08 and no accounting for the transition guidance was necessary.
The following table presents the Company’s significant Digital Asset holdings as of September 30, 2025:
Schedule of Digital Assets
| Quantity | Cost Basis | Change in Fair Value | Fair Value as of September 30, 2025 | |||||||||||||
| Bitcoin | $ | $ | ( | ) | $ | |||||||||||
| Total digital assets held as of September 30, 2025 | $ | $ | ( | ) | $ | |||||||||||
The following table presents a reconciliation of the fair values of the Company’s investments in digital assets as of September 30, 2025.
Schedule of Investments Digital Assets
| Digital Assets | ||||
| Balance as of December 31, 2024 | $ | - | ||
| Purchases | ||||
| Dispositions | - | |||
| Realized gains (losses) on dispositions | - | |||
| Unrealized gains (losses) from changes in fair value of digital assets | ( | ) | ||
| Balance as of September 30, 2025 | $ | |||
4. Balance Sheet Details
Prepaid expenses and other current assets consisted of the following as of September 30, 2025 and December 31, 2024 (in thousands):
Schedule of Balance Sheet Details
As of September 30, 2025 | As of December 31, 2024 | |||||||
| Prepaid expenses | $ | $ | ||||||
| Tax receivable | - | |||||||
| Prepaid directors’ and officers’ insurance | ||||||||
| Prepaid expenses – related parties | - | |||||||
| Other receivables | - | |||||||
| Total prepaid expenses and other current assets | $ | $ | ||||||
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Accrued expenses and other current liabilities consisted of the following as of September 30, 2025 and December 31, 2024 (in thousands):
Schedule of Accrued Expenses and Other Current Liabilities
As of September 30, 2025 | As of December 31, 2024 | |||||||
| Accrued professional fees | $ | $ | ||||||
| Accrued legal contingency | ||||||||
| Accrued research & development costs | ||||||||
| HMRC payable | ||||||||
| Other | ||||||||
| Other Accrued payroll | ||||||||
| Accrued board of director fees | - | |||||||
| Accrued interest | - | |||||||
| Accrued commission payable | - | |||||||
| Total accrued expenses and other current liabilities | $ | $ | ||||||
5. Convertible Notes Payable
Convertible Promissory Note Payable
During
March 2023, the Company issued a convertible promissory note payable (the “Convertible Promissory Note Payable”) with an
aggregate principal amount of $
On
March 6, 2025, the Company reached a Settlement Agreement (the “Settlement Agreement”) with the loan holder to pay $
In
connection with the Settlement Agreement, the Company entered into a consulting agreement with a third party to negotiate the settlement
of the Convertible Promissory Note Payable with the loan holder on behalf of the Company. In exchange for negotiating the Settlement
Agreement, the Company agreed to pay $
For
the three months ended September 30, 2025 and 2024, the Company incurred interest expense on the Convertible Promissory Note Payable
of nil and $
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August 2024 Nirland Note
During
January and February 2025, Nirland exercised their conversion option and converted $
For
the nine months ended September 30, 2025, the Company recorded $
A.G.P. Convertible Note
A.G.P
was a financial advisor to both MURF and Old Conduit in connection with the Merger transaction. Upon the completion of the Merger, A.G.P.:
(i) received a cash fee of $
For
the three and nine months ended September 30, 2025, the Company recorded $
On
November 25, 2024, the Company issued to A.G.P. the A.G.P. Convertible Note in the principal amount of $
Per
the terms of the A.G.P. Convertible Note, conversion could not occur prior to the Company having sufficiently authorized shares of Common
Stock to permit the entire conversion of the convertible promissory note. In addition, the conversion of the A.G.P. Convertible Note
could also not occur prior to receipt of stockholder approval to provide for such conversion, 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. Further, A.G.P.
will not be entitled to receive the Company’s Common Stock upon conversion, if such conversion would result in A.G.P. owning greater
than
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The Company may prepay the A.G.P. Convertible Note in whole or in part. In the event of certain Events of Default (as defined in the A.G.P. Convertible Note), all outstanding principal and accrued interest under 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 determined the fair value of the A.G.P. Convertible Note to be $
On
March 31, 2025, A.G.P. exercised their conversion option and converted $
On
April 11, 2025, April 16, 2025, June 2, 2025, June 17, 2025, June 26, 2025 and September 29, 2025, the holder of the A.G.P.
Convertible Note converted $
On
September 30, 2025, the Company remeasured the fair value of the A.G.P. Convertible Note through the use of a binomial lattice model
and calculated a fair value of approximately $
6. Loans Payable
Loans
On May 1, 2022, the Company entered into two non-interest-bearing loan
agreements totaling $
On
October 9, 2024, the parties amended the loan agreements to extend the maturity date to
The
Company repaid the remaining principal balance of $
October 2024 Nirland Note
In
October 2024, the Company issued a $
In
December 2024, the Company reduced the exercise price of the PIPE Warrants held by Nirland to $
The
Company made additional repayments of $
For
the three and nine months ended September 30, 2025, the Company recorded nil and approximately $
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7. Research and Development Expense
August 2024 License Agreement
On August 7, 2024, the Company and AstraZeneca AB (PUBL) (“AstraZeneca”) entered into a License Agreement, dated August 7, 2024 (the “August 2024 License Agreement”). Pursuant to the August 2024 License Agreement, AstraZeneca agreed to grant a license to the Company under certain intellectual property rights controlled by AstraZeneca related to HK-4 Glucokinase activators AZD1656 and AZD5658 in all indications and myeloperoxidase inhibitor AZD5904 for the treatment, prevention, and prophylaxis of idiopathic male infertility. The Company will be responsible for the development and commercialization of the Licensed Products under the August 2024 License Agreement.
As
consideration for the grant of the license, the Company (i) granted AstraZeneca Common Stock pursuant to a stock issuance agreement (the
“Issuance Agreement”), (ii) paid AstraZeneca an up-front payment of $
AstraZeneca has been granted a right of first negotiation to develop, manufacture, and commercialize a Licensed Product (as defined in the August 2024 License Agreement) if the Company receives an offer for, or solicits, a transaction where a third party would obtain the right to develop, manufacture, or commercialize a Licensed Product. If AstraZeneca exercises such right, the parties will negotiate in good faith for an agreed period of time on an exclusive basis.
Either party may terminate the August 2024 License Agreement for material breach (subject to a cure period) or insolvency of the other party. The Company may terminate the August 2024 License Agreement for convenience (in its entirety or on a Licensed Product-by-Licensed Product basis). In addition, AstraZeneca may terminate the August 2024 License Agreement in certain circumstances, including (but not limited to) the Company ceasing development of all Licensed Products (subject to certain exceptions for normal pauses or gaps between clinical studies).
As a result of the August 2024 License Agreement, the Company is no longer funding the development of AZD1656 or AZD5904 under the terms of the Exclusive Funding Agreement, dated March 26, 2021 with St George Street Capital (the “Funding Agreement”). In this regard, the Company previously entered into a deed of amendment to such Funding Agreement. The parties agreed that the project funding provisions of such Funding Agreement whereby the Company had the right to fund a project or refer other parties to St George Street Capital, were amended to provide that St George Street Capital must still include the Company in any project funding opportunities and requests but may now seek other third-parties to fund projects in addition to the Company. In November and December 2024, the Company received a letter from St George Street Capital and formal complaints filed with the Intellectual Property Office claiming the Company was not the sole owner of the AZD 1656 co-crystal patent. See Note 14 for additional details on the claim.
SARBORG Service Agreement – Related Party
On December 12, 2024, the Company entered into a Services Agreement (the “Sarborg Service Agreement”) with SARBORG Limited (“Sarborg”), a Cayman Islands company and related party of the Company. See Note 12 for further reference to the relationship between the Company and Sarborg. Under the terms of the Sarborg Service Agreement, Sarborg will provide algorithmic and cybernetic technology services to CDT, including the development of decision-support tools and advanced cybernetic systems tailored to enhance CDT’s decision-making processes and maximize the value of its pharmaceutical asset portfolio.
Sarborg will perform the services to CDT comprised of three phases: the Initial Phase (0-24 weeks) focuses on establishing a foundation for collaboration and aligning Sarborg’s services with CDT’s strategic goals; the Development Phase (24-36 weeks) involves building technological infrastructure, including dashboards and predictive models; and the Ongoing Services Phase (36-52 weeks) ensures the sustained functionality and relevance of Sarborg’s deliverables while supporting CDT’s growth through iterative improvements and updates. Sarborg will create specific deliverables, including reports, computer programs, software applications, APIs, mobile applications, source code, written technical specifications and designs, operating and maintenance manuals, and other recorded data and information arising from or relating to the services. Sarborg will provide all necessary resources to perform the services and deliver the deliverables in accordance with the Sarborg Service Agreement.
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The Sarborg Service Agreement has an initial term of 12 months, which commenced in December 2024, and may be renewed or extended upon mutual written agreement of the parties. Either party may terminate the Sarborg Service Agreement for any reason upon 90 days’ written notice or immediately upon written notice if the other party breaches any material term of the Sarborg Service Agreement and fails to cure such breach within thirty days or becomes insolvent, files for bankruptcy, or is placed under the control of a receiver, trustee, or similar authority.
The Sarborg Service Agreement includes provisions for the ownership and use of intellectual property. Sarborg will own its pre-existing intellectual property rights, including proprietary tools and methodologies used in the performance of the services. CDT will own all deliverables resulting from the services performed by Sarborg under the Sarborg Service Agreement.
The Sarborg Service Agreement provides Sarborg with registration rights for any Common Stock of CDT that Sarborg receives as consideration under the Sarborg Service Agreement. In such event, CDT will use commercially reasonable efforts to (i) file a registration statement covering the resale of the Common Stock within 60 days after the issuance; and (ii) ensure that such registration statement becomes effective within 90 days after filing. This Agreement also includes confidentiality obligations, representations and warranties, indemnification, limitation of liability, and insurance requirements.
In
consideration of the services, CDT agreed to pay Sarborg an initial cash payment of $
The
initial cash payment of $
Under
the Sarborg Service Agreement, the Company will be provided with a dashboard that will be utilized for both the Company’s existing
and future asset portfolio. Specifically, the dashboard includes a clinical trial monitoring functionality and a dynamic pharmaceutical
patent landscape module to assess both the Company’s current assets undergoing clinical trials and delisted patents in the marketplace
that may be overlooked by other market participants. These features will be used by management to monitor progress, assess trial status,
identify new opportunities, and support decision-making across all current and future development programs. The Company assessed the
guidance in ASC 730 and determined that $
All other costs under the Sarborg Service Agreement shall be expensed as incurred and recorded within research and development expense in the condensed consolidated statement of operations and comprehensive income loss, as the services are designed to aid in the Company’s research and development activities.
During
the three and nine months ended September 30, 2025, Sarborg was paid $
| 18 |
SARBORG Additional Agreement
Effective
March 31, 2025, the Company entered into an additional license and use agreement (the “Sarborg Additional Agreement”) with
Sarborg, a related party, covering certain additional deliverables and incorporating a new scope of work focused on analysis of the Company’s
acquired AstraZeneca assets. The term of the Sarborg Additional Agreement is for six months and provides for the payment, in aggregate,
of $
During
the three and nine months ended September 30, 2025, Sarborg was paid $
First Addendum to the SARBORG Additional Agreement
Effective
July 1, 2025 the Company entered into an Addendum (the “First Addendum”) to the Additional Agreement with Sarborg,
a related party. Under the terms of the Addendum, Sarborg will expand the scope of the Additional Agreement to provide external analysis
of third-party pharma companies assets suitable for drug re-purposing and evaluate the efficacy of the assets utilizing Conduit’s
license to Sarborg’s machine learning platform. The scope of work is expected to be completed in 4 weeks, which may be renewed
or extended upon the mutual written agreement of the parties. The total consideration for the additional services, payable in cash in
two tranches, was $
Second Addendum to the SARBORG Additional Agreement
Effective August 11, 2025 the Company entered into Addendum 2 (the “Second Addendum”) to the Additional Agreement with Sarborg. Under the terms of the Second Addendum, Sarborg expanded the scope of work to integrate a Cryptocurrency AI Agent, developed specifically for identifying, forecasting and recommending digital currencies into CDT Equity’s operations as part of its treasury strategy.
The
term of the Second Addendum is a minimum of four (4) months, which may be renewed or extended upon the mutual written agreement of
the Company and Sarborg. The initial consideration for the expanded scope of work was $
In total, the Company
recorded $
Master Service Agreement – CDT Equity Inc. and Charles River Laboratories
On
February 7, 2025, the Company and Charles River Laboratories (“Charles River”) entered into a Master Services Agreement (the
“Charles River MSA”). Under the Charles River MSA, Charles River agreed to provide preclinical testing and research services
to CDT, including the evaluation of compounds in animal models and other related services. The services are defined in individual Statements
of Work (“SOWs”) or Protocols, which outline the specific scope, design, and timelines for each study. To date, one SOW,
dated February 11, 2025, has been entered into with a total commitment of $
Consulting Agreement
Effective
March 25, 2025, the Company entered into a Consulting Agreement (the “Consulting Agreement”) with Thesprogen PC (“Thesprogen”),
an expert in advising clients on strategies for pharmaceutical and biotech development. Total fees under the Consulting Agreement total
to $
Manoira Joint Development Agreement
On June 3, 2025, the Company entered into a joint development agreement (the “Joint Development Agreement”) with Manoira Corporation (“Manoira”) for a term of one year, which will be automatically renewed for successive one-year terms unless advance termination notice is provided in accordance with the terms of the Joint Development Agreement. Manoira is an entity controlled by Dr. Andrew Regan, of which he is sole director, and is therefore considered a related party of the Company. 15 Note 12 for additional details.
Pursuant to the Joint Development Agreement, CDT granted Manoira a non-exclusive, non-transferable, non-sublicensable, fully paid-up, royalty-free license to the intellectual property rights related to the pharmaceutical compounds known individually and together as AZD1656 and AZD5658 (the “CDT Assets”). Manoira will evaluate the CDT Assets’ applicability in animal health, explore veterinary market opportunities, and provide data from the evaluations to inform CDT’s human clinical programs. The license does not grant Manoira the right to distribute, market, promote or sell the products or services that are related to or incorporate the CDT Assets.
Effective
June 3, 2025, in exchange for the approximate $
| 19 |
8. Share Based Compensation
On
September 22, 2023, in connection with the Merger, the Company adopted the CDT Equity Inc. 2023 Stock Incentive Plan (the “2023
Plan”). The 2023 Plan became effective upon the closing of the Merger. The 2023 Plan initially provided for the issuance of up
to
On
August 5, 2025, at the Company’s 2025 Annual Meeting of Stockholders, stockholders approved an amendment and restatement of the
Company’s 2023 Stock Incentive Plan (as amended, the “Amended 2023 Stock Incentive Plan”) to authorize an additional
Board of Directors Shares
On
March 30, 2025, certain non-employee directors elected to receive their unpaid cash retainers due through the period ended June 30, 2025,
under the Director Compensation Program, in the form of fully vested shares of Common Stock. In total, $
On
April 16, 2025,
On
August 5, 2025, the Company approved and granted equity awards to non-employee directors under the 2023 Plan, in the form of
Cryptocurrency Consulting
Effective
June 27, 2025, the Company entered into an agreement (the “Crypto Consulting Agreement”) for a third-party consultant to
evaluate and advise on the potential adoption of a part cryptocurrency treasury reserve strategy. The Crypto Consulting Agreement contains
a term of 12 months and required compensation of $
Management Shares
Effective
September 19, 2025,
Restricted Stock
By unanimous written consent of the Board, the Company granted
There
were
Stock Options
The
Company granted
| 20 |
The Company accounts for forfeitures as they occur, which may result in the reversal of compensation costs in subsequent periods as the forfeitures arise.
The following table summarizes stock option activity for the 2023 Plan:
Schedule of Stock Option Activity
Number of Options | Weighted Average Exercise Price | Weighted Average Remaining Contractual Term (years) | Aggregate Intrinsic Value (in thousands) | |||||||||||||
| Outstanding at December 31, 2024 | $ | $ | - | |||||||||||||
| Granted | - | $ | - | - | $ | - | ||||||||||
| Cancelled/forfeited | ( | ) | $ | - | $ | - | ||||||||||
| Exercised | - | $ | - | - | $ | - | ||||||||||
| Outstanding at September 30, 2025 | $ | $ | - | |||||||||||||
| Exercisable | $ | $ | - | |||||||||||||
| Unvested | $ | $ | - | |||||||||||||
The
aggregate intrinsic value of options is calculated as the difference between the exercise price of the underlying options and the fair
value of the Company’s Common Stock for those options that had exercise prices lower than the fair value of the Company’s
Common Stock. As of September 30, 2025, the total compensation cost related to non-vested option awards not yet recognized was $
For
the three months ended September 30, 2025 and 2024, there was a total of $
For
the nine months ended September 30, 2025 and 2024, there was a total of $
9. Income Taxes
On
July 4, 2025, the United States Congress passed the budget reconciliation bill H.R. 1, known as the One Big Beautiful Bill Act
(“OBBBA”). Key provisions include the repeal of Section 174 R&D capitalization requirements,
For
the nine months ended September 30, 2025, and 2024, the Company’s effective tax rate was
10. Common Stock and Preferred Stock
At-the-Market Offering
On
October 23, 2024, the Company entered into the Sales Agreement with A.G.P. (the “Sales Agreement”) relating to the sale
of shares of the Company’s Common Stock. In accordance with the terms of the Sales Agreement, the Company may offer and sell
shares of our Common Stock having an aggregate offering price of up to $
The
compensation to A.G.P. for sales of Common Stock sold pursuant to the Sales Agreement will be equal to
During
the three and nine months ended September 30, 2025, the Company sold
| 21 |
Share Repurchase Program
On
April 10, 2025, the Company’s Board of Directors authorized a share repurchase program under which the Company may purchase up
to $
11. Net Loss Per Share Attributable to Common Stockholders
Potentially dilutive securities (upon conversion) that were not included in the diluted per share calculations because they would have been anti-dilutive were as follows:
Schedule of Potentially Dilutive Securities
As of September 30, | As of September 30, | |||||||
| 2025 | 2024 | |||||||
| Public Warrants | ||||||||
| PIPE Warrants | - | |||||||
| A.G.P. Warrants | ||||||||
| Convertible Promissory Notes Payable | - | |||||||
| Stock Options | ||||||||
| A.G.P. Convertible Note | - | |||||||
| March 2024 Warrants | ||||||||
| April 2024 Warrants | ||||||||
| Restricted stock units | - | |||||||
| A.G.P. 2024 Warrants | - | |||||||
| Antidilutive Securities | ||||||||
12. Related Party Transactions
Corvus Capital Limited
Corvus
Capital Limited (“Corvus”) is a significant investor in the Company through subscribing to
For
the three months ended September 30, 2025 and 2024, the Company incurred director travel expenses payable to Dr. Regan of approximately
$
In
September 2023, concurrently with the completion of the Merger, pursuant to the PIPE Subscription Agreement (the “PIPE Subscription
Agreement “) for an aggregate purchase price of $
| 22 |
Nirland
On August 6, 2024, the Company entered into the August 2024 Nirland Note with Nirland, a related party of the Company. The Company determined that Nirland was a related party due to Nirland’s ownership interest in the Company concurrently with the execution of the August 2024 Nirland Note. Additionally, on October 28, 2024, the Company issued Nirland the October 2024 Nirland Note; on October 31, 2024, the Company and Nirland amended the August 2024 Nirland Note; and on November 22, 2024, the Company and Nirland amended the August 2024 Nirland Note for a second time. As of September 30, 2025, no obligations remained under the terms of the August 2024 Nirland Note and October 2024 Nirland Note, and Nirland did not own or beneficially own shares of the Company’s Common Stock. Refer to Note 5 and Note 6 for additional information.
SARBORG
On
December 12, 2024, March 31, 2025, July 1, 2025 and August 11, 2025, the Company entered into the Sarborg Service Agreement, the Sarborg
Additional Agreement, the First Addendum and Second Addendum respectively. Dr. Andrew Regan, Chief Executive Officer and member of the
Board, also sits on the board of directors of Sarborg but does not have an equity interest in Sarborg. On January 17, 2025, the Company
issued
During the three and nine months ended
September 30, 2025, the Company recorded $
Officers and Directors
On
April 22, 2024, the Company issued in a private placement Common Stock purchase warrants (the “April Warrants”) to third
parties which also included certain directors, to purchase up to an aggregate of
Manoira
On
June 3, 2025, the Company entered into a joint development agreement (the “Joint Development Agreement”) with Manoira
Corporation. Dr. Andrew Regan, Chief Executive Officer and member of the Board, also is a director and controlling member of
Manoira. Through the Joint Development Agreement, the Company
and Manoira intend to jointly evaluate AZD1656, and any of its derivatives, as well as AZD5658, in animal health indications and
produce transitional data to inform the Company’s human clinical programs while exploring veterinary market opportunities. The
Company delivered shares of the Company’s Common Stock worth $
| 23 |
13. Other Expense, net
The following table presents other income (expense), net, for the three and nine months ended September 30, 2025 and 2024 (in thousands):
Schedule of Other Expense, Net
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
For the three months ended September 30, | For the nine months ended September 30, | |||||||||||||||
| 2025 | 2024 | 2025 | 2024 | |||||||||||||
| Other income: | ||||||||||||||||
| Unrealized foreign currency transaction gain | $ | - | $ | $ | $ | |||||||||||
| Gain on change in fair value of derivative warrant liability | - | - | ||||||||||||||
| Interest income | ||||||||||||||||
| Gain on debt extinguishment | - | - | - | |||||||||||||
| Gain on waiver of accrued interest | - | - | - | |||||||||||||
| Research and development tax receivable | - | - | ||||||||||||||
| Gain on the issuance of shares for services | - | - | - | |||||||||||||
| Total other income: | ||||||||||||||||
| Other expense: | ||||||||||||||||
| Loss on the change in fair value of convertible notes payable | - | - | ||||||||||||||
| Loss on the change in fair value of digital assets | - | - | ||||||||||||||
| Interest expense | ||||||||||||||||
| Interest expense on deferred commission payable | - | - | ||||||||||||||
| Interest expense on convertible promissory note payable | - | - | ||||||||||||||
| Amortization of debt issuance costs | - | - | ||||||||||||||
| Loss on contingent liability | - | - | ||||||||||||||
| Loss on issuance of warrants for lock-up | - | - | - | |||||||||||||
| Other | ||||||||||||||||
| Total other expense | ||||||||||||||||
| Total other expense, net | $ | ( | ) | $ | ( | ) | $ | ( | ) | $ | ( | ) | ||||
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14. Commitments and Contingencies
Legal Proceedings
The
Company is subject to certain claims and contingent liabilities that arise in the normal course of business. While we do not expect that
the ultimate resolution of any of these pending actions will have a material effect on our consolidated results of operations, financial
position or cash flows, litigation is subject to inherent uncertainties. As such, there can be no assurance that any pending legal action,
does not become material in the future. As of September 30, 2025, a contingency of $
In August 2023, prior to the Business Combination, Conduit Pharmaceuticals
Limited, our now wholly-owned subsidiary, received a letter from
Strand Hanson Limited (“Strand”) claiming it was owed advisory fees pursuant to a previously executed letter. CDT rejected
the claim from Strand and disputed the substance of the letter in full. Following such rejection, on September 7, 2023, Strand filed
a claim in the Business and Property Courts of England and Wales claiming it is entitled to be paid the sum of $
In November and December 2024, the Company received a letter from St George Street Capital and formal complaints filed with the Intellectual Property Office claiming the Company was assigned the US Application, and was not the sole owner, of the AZD 1656 co-crystal patent. In January 2025, CDT issued a counterstatement to the Intellectual Property Office disputing the claim filed by St George Street Capital. As of September 30, 2025, the range of possible loss cannot be estimated and is not considered probable. As such, the Company has not accrued a loss contingency in the accompanying financial statements. The Company intends to vigorously defend against these claims. Regardless of its outcome, the litigation may impact our business due to, among other factors, legal costs and the diversion of management’s attention.
Leases
The
Company has a lease agreement for approximately
| 25 |
15. Segments
The
Company has
The CODM uses consolidated net loss and budget-to-actual variances to assess the operating segment’s performance and determine whether the Company is progressing towards its goals.
The following table presents specific financial data for the Company’s reportable segment (in thousands):
Schedule of Financial Data for the Company’s Reportable Segment
Three Months ended September 30, | Nine Months ended September 30, | |||||||||||||||
| (Dollar amounts in thousands) | 2025 | 2024 | 2025 | 2024 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Research & development expenses-clinical asset development | $ | $ | $ | $ | ||||||||||||
| Research & development expense – related parties | - | - | ||||||||||||||
| Research & development expense – related parties-digital assets | - | - | ||||||||||||||
| General and administrative expenses – legal & professional fees | ||||||||||||||||
| General and administrative expenses – accounting & audit fees | ||||||||||||||||
| General and administrative expenses – salaries, payroll and SBC | ||||||||||||||||
| General and administrative expenses - other | ||||||||||||||||
| General and administrative expenses - digital asset | - | - | ||||||||||||||
| Total operating costs and expenses | ||||||||||||||||
| Operating loss | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Other income (expenses): | ||||||||||||||||
| Other income (expense), net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Interest Income | - | |||||||||||||||
| Interest expense, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Total other (expense) income, net | ( | ) | ( | ) | ( | ) | ( | ) | ||||||||
| Net loss | $ | ( | ) | $ | ( | ) | $ | ( | ) | ( | ) | |||||
Other segment items consist of the items within Note 13 to the condensed consolidated financial statements.
16. Subsequent Events
Sales Agreement with A.G.P.
Through
the date of issuance of the financial statements, the Company utilized the remaining $
Partial Conversion of A.G.P. Convertible Note
On
October 28, 2025, the holder of the A.G.P. convertible note converted $
| 26 |
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
The following discussion and analysis of our financial condition and results of operations should be read in conjunction with the financial statements and the related notes included under Part I, Item 1 of this Quarterly Report on Form 10-Q (this “Quarterly Report”) as well as the Company’s audited financial statements and notes thereto included in its Annual Report on Form 10-K for the year ended December 31, 2024 that was filed with the SEC on March 28, 2025. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties. The following discussion contains forward-looking statements based upon current expectations that involve risks, uncertainties and assumptions. Our actual results may differ materially from those anticipated in these forward-looking statements as a result of various factors, including those set forth under the section titled “Risk Factors” or in other parts of this Quarterly Report. Our historical results are not necessarily indicative of the results that may be expected for any period in the future. All dollar amounts are expressed in thousands of United States dollars (“$”), unless otherwise indicated.
Overview
On September 22, 2023, a merger transaction (the “Business Combination”) between Conduit Pharmaceuticals Limited (“Old Conduit”), Murphy Canyon Acquisition Corp (“MURF”) and Conduit Merger Sub, Inc., a Cayman Islands exempted company and a wholly owned subsidiary of MURF (“Merger Sub”), was completed pursuant to the Agreement and Plan of Merger, dated November 8, 2022, as amended, (the “Merger Agreement”). Pursuant to the terms of the Merger Agreement, at the closing, (i) Merger Sub merged with and into Old Conduit, with Old Conduit surviving the Business Combination as a wholly-owned subsidiary of MURF, and (ii) MURF changed its name from Murphy Canyon Acquisition Corp. to Conduit Pharmaceuticals Inc. Effective August 5, 2025, the Company changed its name from Conduit Pharmaceuticals Inc. to CDT Equity Inc. Our change to CDT Equity Inc. reflects the evolution of our strategy as a data-driven biotech development company focused on identifying, enhancing, and advancing high-potential therapeutic assets through scientific innovation and strategic partnerships.
CDT Equity is a data-driven biotech development and digital asset treasury management company focused on identifying, enhancing, and advancing high-potential therapeutic assets through scientific innovation and strategic partnerships. The Company has evolved into a broader, more agile platform that leverages artificial intelligence, solid-form chemistry, and efficient asset repositioning to accelerate the development of novel therapeutic treatments.
CDT Equity’s strategy is centered on unlocking the untapped value of clinical-stage compounds, particularly those deprioritized by larger pharmaceutical companies with strong, supporting Phase I safety data. Through advanced co-crystallization and solid-form technologies developed at our Cambridge facility, we aim to improve drug properties and have successfully extended the patent life of certain drugs by up to 20 years.
Our current pipeline includes candidates targeting inflammatory and autoimmune disorders, as well as idiopathic male infertility, dermatology, and animal health. The intellectual property portfolio comprises pending patent applications in several international jurisdictions describing a solid-form compound, including the AZD1656 Cocrystal (a HK-4 Glucokinase Activator). Our pipeline research includes a number of compounds that serve as promising alternatives to existing clinical assets currently marketed and sold by large pharmaceutical companies, which we have identified as potential opportunities to develop further intellectual property positions through solid-form technology.
Our collaboration with Sarborg enables us to apply proprietary algorithms utilizing AI-powered disease mapping to identify novel re-purposing opportunities across a database of more than 800 disease signatures. Sarborg’s insights have directly informed two new combination patent filings, strengthening our intellectual property portfolio. In addition, CDT Equity has initiated pre-clinical in-vitro models to explore new indications, guided by AI-insights without human intervention. We will seek an exit through third-party license deals following successful in vitro and in vivo pre-clinical trials, entering into agreements with third parties to pursue further development, FDA approval, commercialization, and marketing of our assets. We continue to evaluate novel artificial intelligence and cybernetics approaches to drug re-purposing, intellectual property, and asset selection to give CDT a competitive advantage.
| 27 |
The Sarborg Agreement entered into between the Company and Sarborg on December 12, 2024 is designed to address longstanding challenges in the pharmaceutical sector, in particular by reducing human error in critical decision-making processes in both clinical development and asset identification. By integrating Sarborg’s algorithmic AI/cybernetics technology, CDT Equity aims to enhance efficiency, lower costs, and accelerate timelines by minimizing human intervention, ultimately optimizing the drug development cycle and giving CDT Equity a competitive advantage in the sector.
Through this relationship, CDT Equity will gain access to cutting-edge predictive models and dashboards, enabling the Company to evaluate drug candidates, streamline clinical trials, and optimize asset management with real-time data. These tools will drive faster, more accurate decisions, improving efficiency and reducing costs. By leveraging these insights, CDT Equity can differentiate itself in a competitive sector and gain unique data-driven insights that position the Company for success across both its current and future asset portfolio.
A further partnership with Manoira enables CDT Equity to expand the scope of its drug portfolio into the animal health market in a cost-efficient manner. This collaboration allows us to accelerate the understanding of the mechanism of action, safety, and potential efficacy of its portfolio across multiple species, while retaining 100% ownership of all data and intellectual property generated relating to human applications. This is expected to enhance the core human therapeutic pipeline but also opens potential new revenue streams in the high-growth veterinary market.
Repositioning CDT Equity enables the Company to explore multiple opportunities in the healthcare, biotech and broader technology innovation. The Board continues to evaluate a cryptocurrency treasury reserve strategy, collaborating with consultants to best advise a novel market which has seen significant recent activity and success for respective stakeholders. Long-term exposure to digital assets can present both strategic and financial benefits as part of a diversified capital management approach.
Operating with a lean disease-agnostic model, CDT Equity prioritizes speed, adaptability, and capital efficiency. We avoid the cost burden of late-stage clinical trials, focusing instead on high-leverage development strategies. Led by highly experienced executives: Dr. Freda Lewis-Hall, former Chief Medical Officer of Pfizer Inc., the Chair of the Company’s Board; Dr. Andrew Regan, CEO and James Bligh, CFO. Our management team includes active senior scientists who have an extensive understanding of the pharmaceuticals market, supporting our strategy of developing clinical assets in a cost-efficient manner focused on therapeutic efficacy.
In 2024, AstraZeneca granted a license to the Company under certain intellectual property rights controlled by AstraZeneca related to HK-4 Glucokinase activators AZD1656 and AZD5658 in all indications and myeloperoxidase inhibitor AZD5904 for the treatment, prevention, and prophylaxis of idiopathic male infertility. The Company will be responsible for development and commercialization of the Licensed Products under the related License Agreement. The Company is required to use commercially reasonable efforts to develop and commercialize the Licensed Products.
AstraZeneca has conducted initial pre-clinical and, in some instances, clinical trials on these assets, but has decided to license them for further development. As the clinical assets have undergone initial pre-clinical and clinical testing conducted by AstraZeneca, we are able to use the safety data generated in these clinical trials to assess which clinical assets to further develop and re-purpose.
Furthermore, CDT Equity is well positioned to pursue, and intends to pursue, additional relationships and/or partnerships with third parties to license assets which are currently deprioritized. We plan to focus our efforts on developing clinical assets to address disorders that impact large populations where there is no present treatment or the existing treatments carry significant unwanted side effects.
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Key Component of Result of Operations
Operating Expenses
Research and Development Expenses
Research and development expenses consist primarily of costs incurred for the research and development of our candidates and programs. We expense research and development costs and intangible assets acquired that have no alternative future use as incurred. These expenses include:
| ● | personnel-related expenses, including salaries, bonuses, benefits, and stock-based compensation for employees engaged in research and development functions; | |
| ● | expenses incurred in connection with the clinical development and regulatory approval of our clinical assets, including under agreements with third parties, such as consultants, contractors, and CROs; | |
| ● | license fees with no alternative use; and | |
| ● | other research and development expenses. |
We expense research and development costs with no alternative future use as incurred. Advance payments that we make for goods or services to be received in the future for use in research and development activities are recorded as prepaid expenses. The prepaid amounts are expensed as the benefits are consumed.
We incurred approximately $1.5 million and $3.1 million on research and development activities during the three months ended September 30, 2025, and September 30, 2024, respectively. We incurred approximately $4.3 million and $3.2 million on research and development activities during the nine months ended September 30, 2025, and September 30, 2024, respectively. Our research and development activities have been focused on developing co-crystals of AZD1656 to increase patent life as well as purchasing technology to help us determine the feasibility that AZD1656, and potentially other de-prioritized assets, reach commercialization. Some of this work was completed by third-party CROs but all intellectual property is retained by us. We currently have one pending international patent application and two pending national patent applications. The successful completion of clinical trials increases the value of clinical assets and may lead to the commercialization and/or licensing of such assets to other pharmaceutical companies. There is no assurance that any clinical trials on the assets owned or licensed by us will be successful.
General and Administrative Expenses
General and administrative expenses consist of salaries and other related costs, legal fees relating to intellectual property and corporate matters, professional fees for accounting, auditing, tax and consulting services, insurance costs, travel, and other operating costs.
We anticipate that our general and administrative expenses will increase substantially for the foreseeable future as we increase our administrative headcount to operate as a public company and as we advance clinical assets through clinical development. We also will incur additional expenses as a result of operating as a public company, including expenses related to compliance with the rules and regulations of the SEC and the Nasdaq listing rules, additional insurance expenses, investor relations activities and other administrative and professional services. In addition, if regulatory approval is obtained for clinical assets, we expect to incur expenses associated with building a sales and marketing team.
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Other Income (Expenses)
Other income (expenses), net
Other income (expenses), net consists of change in the fair value of options, change in fair value of convertible notes, change in fair value of digital assets and expense incurred upon the issuance of warrants during the year.
Interest expense, net
Interest expense, net consists primarily of interest expense on convertible loan notes and promissory notes and interest expense on deferred commissions payable to an advisor for fees related to the merger, as well as a small amount of interest income on cash and cash equivalents held by the Company.
Results of Operations
The following table sets forth our results of operations for the periods indicated:
Three Months ended September 30, | Nine Months ended September 30, | |||||||||||||||
| (Dollar amounts in thousands) | 2025 | 2024 | 2025 | 2024 | ||||||||||||
| Operating expenses: | ||||||||||||||||
| Research and development expenses | $ | 1,532 | $ | 3,093 | $ | 4,308 | $ | 3,246 | ||||||||
| General and administrative expenses | 5,501 | 2,718 | 11,293 | 8,660 | ||||||||||||
| Total operating costs and expenses | 7,033 | 5,811 | 15,601 | 11,906 | ||||||||||||
| Operating loss | (7,033 | ) | (5,811 | ) | (15,601 | ) | (11,906 | ) | ||||||||
| Other income (expenses): | ||||||||||||||||
| Other income (expense), net | (44 | ) | (341 | ) | (2,036 | ) | (2,954 | ) | ||||||||
| Interest Income | 7 | - | 19 | 11 | ||||||||||||
| Interest expense, net | (48 | ) | (309 | ) | (281 | ) | (547 | ) | ||||||||
| Total other (expense) income, net | (85 | ) | (650 | ) | (2,298 | ) | (3,490 | ) | ||||||||
| Net loss | $ | (7,118 | ) | $ | (6,461 | ) | $ | (17,899 | ) | (15,396 | ) | |||||
Comparison of the Three Months Ended September 30, 2025 and 2024
Research and Development Expenses
Three Months ended September 30, | Change | |||||||||||||||
| (Dollar amounts in thousands) | 2025 | 2024 | Amount | % | ||||||||||||
| Research and development expenses | $ | 1,532 | $ | 3,093 | $ | (1,561 | ) | (50 | )% | |||||||
Research and development expenses decreased by $1.6 million, or 50%, to $1.6 million for the three months ended September 30, 2025, as compared to $3.1 million for the three months ended September 30, 2024. The decrease was primarily attributable to a $3.1 million decrease in expense related to the August 2024 License Agreement in 2024 with no comparable activity during the three months ended September 30, 2025. The decrease was partially offset by an increase of $1.2 million, $0.1 million, and $0.1 million related to the Sarborg, Thesprogen, and Manoira agreements activity in 2025, respectively.
General and Administrative Expenses
Three Months ended September 30, | Change | |||||||||||||||
| (Dollar amounts in thousands) | 2025 | 2024 | Amount | % | ||||||||||||
| General and administrative expenses | $ | 5,501 | $ | 2,718 | $ | 2,783 | 102 | % | ||||||||
General and administrative expenses increased by $2.8 million, or 102%, to $5.7 million for the three months ended September 30, 2025, compared to $2.7 million for the three months ended September 30, 2024. The increase was primarily driven by a $1.0 million increase in payroll and stock-based compensation expense, $1.4 million increase in legal fees and a $0.3 million increase in travel expense.
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Other Income (Expense), Net
Three Months ended September 30, | Change | |||||||||||||||
| (Dollar amounts in thousands) | 2025 | 2024 | Amount | % | ||||||||||||
| Other income (expense), net | $ | (44 | ) | $ | (341 | ) | $ | 297 | (87 | )% | ||||||
Other income (expense), net changed by $0.3 million or 87%, to $44 thousand expense for the three months ended September 30, 2025, compared to a net expense of $0.3 million for the three months ended September 30, 2024. The change was primarily driven by a $0.4 million contingent liability incurred in the third quarter of 2024 and a $0.1 million research and development tax receivable recorded during the third quarter of 2025, partially offset by $0.1 million change in fair value of convertible notes payable.
For further details refer to Note 13, “Other income (expense), net,” in the unaudited financial statements as of September 30, 2025 and September 30, 2024 included elsewhere in this document.
Interest Expense, Net
Three Months ended September 30, | Change | |||||||||||||||
| (Dollar amounts in thousands) | 2025 | 2024 | Amount | % | ||||||||||||
| Interest expense, net | $ | (48 | ) | $ | (309 | ) | $ | 261 | (84 | )% | ||||||
Interest expense, net decreased by $261 thousand, or 84%, to $48,000 for the three months ended September 30, 2025, as compared to $309 thousand for the three months ended September 30, 2024. The decrease was driven by a decrease of $0.1 million of interest expense related to the amortization of debt discount, decrease of $0.1 million of interest expense on the deferred commission payable to an advisor for fees related to the Merger and a $0.1 decrease of interest expense on convertible notes and notes payable.
Comparison of the Nine Months Ended September 30, 2025 and 2024
Research and Development Expenses
Nine Months ended September 30, | Change | |||||||||||||||
| (Dollar amounts in thousands) | 2025 | 2024 | Amount | % | ||||||||||||
| Research and development expenses | $ | 4,308 | $ | 3,246 | $ | 1,062 | 33 | % | ||||||||
Research and development expenses increased by $1.1 million, or 33%, for the nine months ended September 30, 2025, as compared to $3.2 million for the nine months ended September 30, 2024. The increase was primarily driven by $3.6 million of expense incurred under the Sarborg agreements, $0.3 million of expense incurred under Thesprogen Consulting Agreement, $0.4 million of expense under the Charles River MSA and $0.1 million incurred under the Joint Development Agreement with Manoira, partially offset by a $3.1 million decrease related to the August 2024 License Agreement.
General and Administrative Expenses
Nine Months ended September 30, | Change | |||||||||||||||
| (Dollar amounts in thousands) | 2025 | 2024 | Amount | % | ||||||||||||
| General and administrative expenses | $ | 11,293 | $ | 8,660 | $ | 2,633 | 30 | % | ||||||||
General and administrative expenses increased by $2.6 million, or 30%, to $11.3 million for the nine months ended September 30, 2025, as compared to $8.7 million for the nine months ended September 30, 2024. The increase was primarily driven by a $2.1 million increase in legal expenses, a $0.3 million increase in salaries and stock compensation expense, a $ 0.3 million increase in travel expense, and a $0.1 million increase in professional fees, partially offset by a $0.2 million decrease in insurance expense.
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Other Income (Expense), Net
Nine Months ended September 30, | Change | |||||||||||||||
| (Dollar amounts in thousands) | 2025 | 2024 | Amount | % | ||||||||||||
| Other income (expense), net | $ | (2,036 | ) | $ | (2,954 | ) | $ | 918 | (31 | )% | ||||||
Other income (expense), net changed by $0.9 million, or 31%, to $2.0 million of expense for the nine months ended September 30, 2025, as compared to $3.0 million of net expense for the nine months ended September 30, 2024. The change was primarily driven by a $2.7 million decrease related to the issuance of warrants in exchange for stockholders’ entering into lock-up agreements during the nine months ended September 30, 2024, a $0.4 million decrease related to a waiver of interest on the A.G.P. Convertible Note, a $0.4 million expense related to a loss contingency recorded during the nine months ended September 30, 2024, a $0.3 million gain on debt extinguishment, a $0.1 million gain on the issuance of shares for services and a $0.1 million research and development tax credit receivable recorded during the nine months ended September 30, 2025, partially offset by a $3.0 million loss on the change in fair value and loss on conversion of convertible notes payable.
For further details refer to Note 13, “Other income (expense), net,” in the unaudited financial statements as of September 30, 2025 and September 30, 2024 included elsewhere in this document.
Interest Expense, Net
Nine Months ended September 30, | Change | |||||||||||||||
| (Dollar amounts in thousands) | 2025 | 2024 | Amount | % | ||||||||||||
| Interest expense, net | $ | (281 | ) | $ | (547 | ) | $ | 266 | (49 | )% | ||||||
Interest expense, net decreased by $0.3 million, or 49%, during the nine months ended September 30, 2025, as compared to $0.6 million for the three months ended September 30, 2024. The change was primarily driven by a decrease of $0.1 million of interest expense related to the amortization of debt issuance costs and a decrease of $0.2 million of interest expense on the deferred commission payable to an advisor for fees related to the Merger, partially offset by a $0.1 million increase of interest expense for interest on convertible notes and notes payable.
Liquidity and Capital Resources
Management assesses liquidity in terms of our ability to generate cash to fund operating, investing and financing activities. Since our inception, and in line with our growth strategy, we have prepared our financial statements assuming we will continue as a going concern. Since our inception, we have incurred net losses and experienced negative cash flows from operations. To date, our primary sources of capital have been through convertible debt, private placements of equity securities and the Sales Agreement with A.G.P. During the nine months ended September 30, 2025 and 2024, we incurred operating losses of $17.9 million and $15.4 million, respectively.
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Sources and Uses of Liquidity
Our primary use of cash is to fund our operations as we continue to grow our business. We will require a significant amount of cash for expenditures as we invest in ongoing research and development and business operations. Until such time we can generate significant revenue from the successful approval and commercialization of a product candidate, we expect to finance our cash needs for ongoing research and development and business operations through public or private equity or debt financings or other capital sources, including strategic partnerships. However, we may be unable to raise additional funds or enter into such other arrangements, when needed, on favorable terms or at all. To the extent that we raise additional capital through the sale of equity or convertible debt securities, the ownership interest of our stockholders will be, or could be, diluted, and the terms of these securities may include liquidation or other preferences that adversely affect the rights of our common stockholders. Debt financing and equity financing, if available, may involve agreements that include covenants, limiting or restricting our ability to take specific actions, such as incurring additional debt, making capital expenditures or declaring dividends. We have also considered exploring strategic alternative paths to fund raising through a shift in our fundamental operations as a pharmaceutical development company to a digital asset treasury management company. If we are unable to raise additional funds through equity or debt financing when needed, we may be required to delay, limit, or substantially reduce research and development efforts all of which could have a material adverse effect on the Company and its financial results.
While the Company believes in the viability of its ability to raise additional funds, there can be no assurances to that effect. We have based our estimates on assumptions of operating costs that may prove to be wrong. As a result, we could deplete our capital resources sooner than we currently expect. If, for any reason, our expenses differ materially from our assumptions or we utilize our cash more quickly than anticipated, or if we are unable to obtain funding on a timely basis we may be required to revise our business plan and strategy, which may result in significantly curtailing, delaying or discontinuing one or more of our research or development programs or the commercialization of any product candidates or may result in our being unable to expand our operations or otherwise capitalize on our business opportunities. As a result, our business, financial condition, and results of operations could be materially affected.
Management has concluded that there is substantial doubt regarding our ability to continue as a going concern for a period of at least 12 months from the date of the filing of this Quarterly Report. This is based on our analysis under applicable accounting principles. These financial statements have been prepared assuming the Company will continue as a going concern and do not include adjustments to reflect the possible effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the outcome of this uncertainty.
Cash Requirements
Our material cash requirements include the following contractual and other obligations.
A.G.P Convertible Note
On November 25, 2024, the Company issued to A.G.P. a convertible promissory note (the “A.G.P. Convertible Note”) in the principal amount of $5.7 million to evidence A.G.P.’s currently owed deferred commission payable. Unless earlier converted as specified in the A.G.P. Convertible Note, the principal amount plus all accrued but unpaid interest is due on November 25, 2025 (the “Maturity Date”). The A.G.P. Convertible Note accrues interest at 5.5% per annum.
At any time prior to the full payment of the A.G.P. Convertible Note, provided that A.G.P. has given at least three business days written notice to the Company, A.G.P., in its sole discretion, may elect to have all or any portion of the outstanding principal amount and all interest accrued converted into shares of the Company’s Common Stock, at the lower of the Reverse Split price and the market price per share at the time of the conversion date, but in no event less than $1.00, subject to adjustment as provided therein and to take into account any future share splits or reverse splits. However, the conversion of the A.G.P. Convertible Note may not occur prior to the Company having sufficiently authorized shares of Common Stock to permit the entire conversion of the convertible promissory note. Refer to Note 5 to our financial statements included elsewhere in this Quarterly Report on Form 10-Q.
On March 31, April 11, 2025, April 16, 2025, June 2, 2025, June 17, 2025, June 26, 2025 and September 29, 2025, the holder of the A.G.P. Convertible Note converted $0.4 million, $0.5 million, $0.8 million, $0.1 million, $0.2 million, $0.2 million and $0.3 million of principal and interest into 3,583, 3,583, 8,878, 5,000, 11,250, 12,500 and 60,000 shares of the Company’s Common Stock, respectively. As of September 30, 2025, there was approximately $3.4 million in outstanding principal and interest remaining.
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Working Capital
We currently anticipate that cash required for working capital for the next 12 months is approximately $11.7 million, which includes forecasted research and development costs of $0.1 million, forecasted general and administrative costs of $5.8 million, current liabilities of $2.4 million and a convertible promissory note payable, if not converted prior to maturity of $3.4 million. We do not anticipate being able to fund required working capital for the next 12 months with cash and cash equivalents on hand and current borrowings. Management believes that we will be able to fund cash required for the next 12 months through borrowings and equity raises. We have historically been able to access funds through the issuance of debt, and more recently our at the market offering program through the Sales Agreement and believe we can continue to obtain funding through such debt financing agreements and Sales agreement as needed to meet cash requirements for the next 12 months.
As of September 30, 2025, we had raised $22.1 million out of the $23.9 million available to us through the Sales Agreement and expect to raise an additional $1.8 million over the next 12 months.
Cash Flows
The following table sets forth our cash flows for the period indicated (in thousands):
| Nine Months ended September 30, | ||||||||
| 2025 | 2024 | |||||||
| Net cash (used in) provided by: | ||||||||
| Operating Activities | $ | (10,919 | ) | $ | (5,869 | ) | ||
| Investing Activities | (1,403 | ) | (128 | ) | ||||
| Financing Activities | 15,681 | 1,857 | ||||||
| Effect of exchange rate changes on cash and cash equivalents | (75 | ) | (17 | ) | ||||
| Net increase (decrease) in cash and cash equivalents | $ | 3,284 | $ | (4,157 | ) | |||
Cash Flows Used in Operating Activities
Net cash used in operating activities for the nine months ended September 30, 2025, was $10.9 million, resulting primarily from a net loss of $17.9 million, adjusted for non-cash items including a $0.4 million gain on waiver of accrued interest, $0.3 million gain on debt extinguishment, $0.1 change in fair value of derivative warrant liability, a $3.0 million change in fair value of convertible notes, $3.0 million of amortization expense, $2.0 million of stock-based compensation, $0.3 million of non-cash interest expense, and a $0.6 million cash outflow from operating assets and liabilities. The $0.6 million cash outflow from operating assets and liabilities is primarily due to a $0.8 million cash outflow from accounts payable, a $0.1 million cash outflow from operating lease liabilities and a $0.2 million cash outflow from prepaid expenses and other current assets, partially offset by a $0.5 million cash inflow from accrued expenses and other current liabilities.
Net cash used in operating activities for the nine months ended September 30, 2024, was $5.9 million, resulting primarily from a net loss of $15.4 million and a change in the fair value of warrants of $0.1 million, adjusted for non-cash items including $1.3 million of stock-based compensation, $1.4 million of amortization expense, $2.7 million expense on the issuance of warrants, $0.2 million interest expense of the deferred commission payable, $1.7 million non-cash share issuance and a $2.3 million cash inflow from operating assets and liabilities. The $2.3 million cash inflow from operating assets and liabilities is primarily due to a $2.5 million cash inflow from accounts payable and accrued expenses and other current liabilities and a $0.2 million cash outflow from prepaid expenses.
Cash Flows Used in Investing Activities
Net cash used in investing activities for the nine months ended September 30, 2025, was $1.4 million, resulting from $0.4 million in diagnostic asset purchases and $1.0 million in digital asset purchase as a part of our digital asset treasury strategy.
Net cash used in investing activities for the nine months ended September 30, 2024, was $0.1 million, resulting from $0.5 million purchases of short-term investments offset by the issuance of a loan to a related party of $0.4 million.
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Cash Flows Provided by Financing Activities
Net cash provided by financing activities for the nine months ended September 30, 2025, was $15.7 million, resulting from proceeds from the issuance of common shares related to the ATM program of $18.0 million, partially offset by repayments of notes payable of $0.2 million, repayments of notes payable – related parties of $0.4 million, repayment of convertible notes payable – related parties of $0.9 million, repayment of convertible notes payable of $0.7 million, and treasury stock purchases of $0.1 million.
Net cash provided by financing activities for the nine months ended September 30, 2024, was $1.9 million, resulting from $1.6 million of proceeds on the issuance of the promissory note to Nirland, $0.1 million of proceeds from the issuance of the April 2024 Warrants and a $0.1 million bank overdraft.
Contractual Obligations and Other Commitments
Laboratory Lease
We are the lessee under a laboratory space lease. 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 two 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:
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 Topic 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 notes payoff at maturity and at intermediate decision nodes based upon the better of (i) conversion or (ii) repayment of principal and interest.
The significant inputs and assumptions used to estimate the fair value include: (i) the Company’s stock price; (ii) the term of the convertible debt; (iii) the sum of the notes’ principal and unpaid accrued interest; (iv) expected volatility; (v) risk-free interest rate; (vi) the corporate bond yield; (vii) the credit spread; (viii) probability of default; and (ix) the estimated recovery upon default. Any change to the unobservable inputs to estimate fair value could produce significantly higher or lower fair value measurements and result in a material change within the financial statements.
The convertible debt will subsequently be remeasured at fair value each reporting date until settled or converted.
Contingencies
In the ordinary course of business, we are involved in various legal proceedings that are complex in nature and have outcomes that are difficult to predict. We describe our legal proceedings and other matters that are significant or that we believe could become significant in Note 15 to the consolidated financial statements. We record accruals for loss contingencies to the extent that we conclude it is probable that a liability has been incurred, and the amount of the related loss can be reasonably estimated. We evaluate, on a quarterly basis, developments in legal proceedings and other matters that could cause an increase or decrease in the amount of liability that has been accrued previously or modifications to contingency disclosures that are considered material.
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Emerging Growth Company Status and Smaller Reporting Company Status
The Company is an emerging growth company, as defined in the Jumpstart Our Business Startups Act of 2012 (the “JOBS Act”). Under the JOBS Act, emerging growth companies can delay adopting new or revised accounting standards issued subsequent to the enactment of the JOBS Act until such time as those standards apply to private companies. The Company has elected to use this extended transition period for complying with new or revised accounting standards that have different effective dates for public and private companies until the earlier of the date that: (i) is no longer an emerging growth company or (ii) affirmatively and irrevocably opts out of the extended transition period provided in the JOBS Act. As a result, these financial statements may not be comparable to companies that comply with the new or revised accounting pronouncements as of public company effective dates.
Upon closing of the Merger, the surviving company remained an emerging growth company, as defined by the JOBS Act until the earliest of (i) the last day of the combined entity’s first fiscal year following the fifth anniversary of the completion of MURF’s initial public offering, (ii) the last day of the fiscal year in which the combined entity has total annual gross revenue of at least $1.235 billion, (iii) the last day of the fiscal year in which the combined entity is deemed to be a large accelerated filer, which means the market value of the combined entity’s Common Stock that is held by non-affiliates exceeds $700.0 million as of the prior December 31st or (iv) the date on which the combined entity has issued more than $1.0 billion in non-convertible debt securities during the prior three year period.
In addition, CDT Equity is a smaller reporting company as defined in the Securities Exchange Act of 1934 (as amended, the “Exchange Act”). The Company may continue to be a smaller reporting company even after we are no longer an emerging growth company. We may take advantage of certain of the scaled disclosures available to smaller reporting companies and will be able to take advantage of these scaled disclosures for so long as (i) CDT Equity’s voting and non-voting Common Stock held by non-affiliates is less than $250.0 million measured on the last business day of our second fiscal quarter or (ii) CDT Equity’s annual revenue is less than $100.0 million during the most recently completed fiscal year and its voting and non-voting Common Stock held by non-affiliates is less than $700.0 million measured on the last business day of its second fiscal quarter.
Item 3. Quantitative and Qualitative Disclosures About Market Risk.
As a smaller reporting company, we are not required to provide disclosure regarding quantitative and qualitative market risk.
Item 4. Controls and Procedures.
Evaluation of Disclosure Controls and Procedures
Disclosure controls and procedures are designed to ensure that information required to be disclosed by us in our Exchange Act reports is recorded, processed, summarized, and reported within the time periods specified in the SEC’s rules and forms, and that such information is accumulated and communicated to our management, including our principal executive officer and principal financial officer or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
Under the supervision and with the participation of our principal executive officer and principal financial officer, we conducted an evaluation of the effectiveness of our disclosure controls and procedures as of the end of the fiscal quarter ended September 30, 2025 and for the comparison fiscal quarter ended September 30, 2024, as such term is defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act. Based on this evaluation, our principal executive officer and principal financial officer concluded that during the periods covered by this Quarterly Report, our disclosure controls and procedures were not effective, due to material weaknesses previously identified and included in the Company’s most recent Form 10-K as not yet remediated as of the end of both such periods.
Changes in Internal Control over Financial Reporting
There have been no changes to in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the most recent fiscal quarter.
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PART II - OTHER INFORMATION
Item 1. Legal Proceedings.
The Company is subject to certain claims and contingent liabilities that arise in the normal course of business. While we do not expect that the ultimate resolution of any of these pending actions will have a material effect on our consolidated results of operations, financial position or cash flows, litigation is subject to inherent uncertainties. As such, there can be no assurance that any pending legal action, does not become material in the future. As of September 30, 2025, a contingency of $0.4 million is considered probable and reasonably estimable in relation to the Company’s legal proceedings. As such, the Company accrued an estimated liability in the accompanying financial statements.
In August 2023, prior to the Business Combination, our now wholly-owned subsidiary, Conduit Pharmaceuticals Limited, received a letter from Strand Hanson Limited (“Strand”) claiming it was owed advisory fees pursuant to a previously executed letter. CDT rejected the claim from Strand and disputed the substance of the letter in full. Following such rejection, on September 7, 2023, Strand filed a claim in the Business and Property Courts of England and Wales claiming it is entitled to be paid the sum of $2 million and, as a result of the completion of the Business Combination, to be issued 541 shares of Common Stock. The trial in this matter concluded during October 2025, with a determination not expected until the first quarter of 2026. Regardless of its outcome, the litigation may impact our business due to, among other things, legal costs and the diversion of the attention of our management.
In November and December 2024, the Company received a letter from St George Street Capital and formal complaints filed with the Intellectual Property Office claiming the Company was assigned the US Application, and was not the sole owner, of the AZD 1656 co-crystal patent. In January 2025, CDT issued a counter statement to the Intellectual Property Office disputing the claim filed by St George Street Capital. As of September 30, 2025, the range of possible loss cannot be estimated and is not considered probable. As such, the Company has not accrued a loss contingency in the accompanying financial statements. We intend to vigorously defend against these claims. Regardless of its outcome, the litigation may impact our business due to, among other things, legal costs and the diversion of the attention of our management.
Item 1A. Risk Factors.
As a smaller reporting company, we are not required to provide disclosure regarding material changes to our previously disclosed risk factors.
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.
No unregistered sales of equity securities occurred during the quarter ended September 30, 2025 that were not previously reported.
The Company did not repurchase any of its Common Stock during the three months ended September 30, 2025.
Item 3. Defaults Upon Senior Securities.
None.
Item 4. Mine Safety Disclosures.
Not applicable.
Item 5. Other Information.
During
the three month period ended September 30, 2025, none of our executive officers or directors (as defined in Section 16 of the Securities
Exchange Act of 1934, as amended),
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Item 6. Exhibits
The following exhibits are filed as part of, or incorporated by reference into, this Quarterly Report on Form 10-Q.
EXHIBIT INDEX
| Exhibit | Description | |
| 3.1 | Certificate of Amendment filed with the Delaware Secretary of State on May 15, 2025 (incorporated by reference to the Company’s Current Report on Form 8-K filed on May 16, 2025). | |
| 3.2 | Certificate of Amendment filed with the Delaware Secretary of State on August 5, 2025 (incorporated by reference to the Company’s Current Report on Form 8-K filed on August 8, 2025). | |
| 3.3 | Certificate of Amendment filed with the Delaware Secretary of State on October 8, 2025 (incorporated by reference to the Company’s Current Report on Form 8-K filed on October 9, 2025). | |
| 3.4 | Second Amended and Restated Bylaws of the Company (incorporated by reference to the Company’s Current Report on Form 8-K filed on August 8, 2025). | |
| 10.1 | CDT Equity Inc. Amended and Restated 2023 Stock Incentive Plan (incorporated by reference to the Company’s Current Report on Form 8-K filed on August 8, 2025). | |
| 31.1* | Certification of Principal Executive Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 31.2* | Certification of Principal Financial Officer pursuant to Securities Exchange Act Rules 13a-14(a) and 15(d)-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002. | |
| 32.1§ | Certification of Principal Executive Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 32.2§ | Certification of Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002. | |
| 101.INS* | Inline XBRL Instance Document. | |
| 101.CAL* | Inline XBRL Taxonomy Extension Calculation Linkbase Document. | |
| 101.SCH* | Inline XBRL Taxonomy Extension Schema Document. | |
| 101.DEF* | Inline XBRL Taxonomy Extension Definition Linkbase Document. | |
| 101.LAB* | Inline XBRL Taxonomy Extension Labels Linkbase Document. | |
| 101.PRE* | Inline XBRL Taxonomy Extension Presentation Linkbase Document. | |
| 104 | Cover Page Interactive Data File (embedded within the Inline XBRL document). |
| * | Filed herewith. |
| § | In accordance with Item 601(b)(32)(ii) of Regulation S-K and SEC Release Nos. 33-8238 and 34-47986, Final Rule: Management’s Reports on Internal Control Over Financial Reporting and Certification of Disclosure in Exchange Act Periodic Reports, the certifications furnished in Exhibits 32.1 and 32.2 hereto is deemed to accompany this Quarterly Report on Form 10-Q and will not be deemed “filed” for purposes of Section 18 of the Exchange Act. Such certification will not be deemed to be incorporated by reference into any filing under the Securities Act or the Exchange Act, except to the extent that the registrant specifically incorporates it by reference. |
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SIGNATURES
In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
| CDT EQUITY INC | ||
| November 13, 2025 | By: | /s/ Dr. Andrew Regan |
| Name: | Dr. Andrew Regan | |
| Title: | Chief Executive Officer | |
| (Principal Executive Officer) | ||
| November 13, 2025 | By: | /s/ James Bligh |
| Name: | James Bligh | |
| Title: | Chief Financial Officer | |
| (Principal Financial and Accounting Officer) | ||
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FAQ
What were CDT (CDT) Q3 2025 results?
How much cash did CDT (CDT) have at September 30, 2025?
Did CDT (CDT) raise capital during the period?
What is CDT’s (CDT) going concern status?
How did liabilities change, especially convertible notes?
How many CDT (CDT) shares were outstanding?
Did CDT (CDT) hold digital assets?
