CDT

CDT Equity Inc. (CDT) - Q1 2026 10-Q Summary

Business Context and Reporting Period

This report covers the quarterly period ended March 31, 2026. CDT Equity Inc. (formerly Conduit Pharmaceuticals Inc.) is a data-driven pharmaceutical development and digital asset treasury management company. The company focuses on advancing high-potential therapeutic assets using AI, solid-form chemistry, and strategic partnerships. The company completed four reverse stock splits between January 2025 and March 2026, resulting in a cumulative approximate 1-for-300,000 split. All share data presented is retroactively adjusted.

Key Financial Metrics

Note: The significant increase in Total Assets and Equity is primarily driven by a $123 million equity method investment in Sarborg Limited, recorded at fair value.

Material Changes vs. Prior Period

• Investment in Sarborg: In February 2026, the company acquired a 20% equity interest in Sarborg Limited for total consideration of $123 million (stock, pre-funded warrants, and deferred cash). This investment is accounted for under the equity method and resulted in a $68,000 loss for the quarter.
• Liquidity Position: Cash and cash equivalents decreased from $1.5 million at year-end 2025 to $0.1 million at March 31, 2026, due to operating cash outflows.
• Operating Expenses: Total operating expenses remained relatively flat at $3.7 million, with R&D expenses decreasing 15% to $0.8 million and G&A expenses increasing 7% to $2.9 million.
• Other Income/Expense: Net other expense decreased significantly to $0.4 million (from $1.1 million in Q1 2025), primarily due to reduced fair value adjustments on convertible notes.

Outlook, Risks, and Contingencies

• Going Concern: Management has concluded there is substantial doubt regarding the company's ability to continue as a going concern for at least 12 months. The company has an accumulated deficit of $72.4 million and insufficient cash to fund current operations without additional financing.
• Capital Requirements: The company estimates a working capital requirement of approximately $19.5 million for the next 12 months. It plans to fund this through its At-The-Market (ATM) offering program (approx. $76 million available) and debt financing.
• Deferred Consideration: The company has an $8 million cash obligation related to the Sarborg investment, payable upon raising at least $20 million via the ATM program.
• Legal Proceedings:
  • Strand Litigation: A judgment of approximately $9.6 million was finalized against a subsidiary (CPL) in December 2025. While CPL was sold to a related party, the company consolidated the liability. The company is vigorously defending against enforcement.
  • IP Dispute: St George Street Capital has challenged the company's ownership of the AZD 1656 co-crystal patent. The company does not believe this will result in monetary damages but notes potential diversion of management attention.
• Subsequent Events: In April and June 2026, the company settled the A.G.P. Convertible Note and the Ascent Note. Additionally, a new $2.0 million senior secured promissory note was issued to J.J. Astor & Co. in June 2026.

Investor Verification Checklist

• Going Concern Status: Verify the company's ability to raise the required $19.5 million in working capital within the next 12 months to avoid insolvency.
• Sarborg Investment: Review the terms of the $123 million investment in Sarborg, specifically the $8 million deferred cash payment contingent on raising $20 million via the ATM program.
• Legal Liability: Monitor the status of the $9.6 million Strand litigation liability and the company's defense against enforcement actions.
• Convertible Debt: Track the conversion or repayment of outstanding convertible notes (A.G.P. and Ascent notes were settled post-quarter; new J.J. Astor note issued).
• Reverse Stock Splits: Confirm the impact of the cumulative 1-for-300,000 reverse stock split on share count and per-share metrics.