CDT Equity Inc. 10-Q

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. In August 2023, prior to the Business Combination, our now wholly-owned subsidiary, Conduit Pharmaceuticals Limited (“CPL”), received a letter from Strand Hanson Limited (“Strand”) claiming it was owed advisory fees pursuant to a previously executed letter. CDT rejected and disputes 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 21 shares of common stock. In 2024, the Company offered a $0.4 million settlement to Strand Hanson to avoid expensive litigation, thereby booking an estimated liability of $0.4 million in the accompanying financial statements. On December 8, 2025, the Company and Corvus Capital Limited (“Corvus”) entered into a Sale and Purchase Agreement (the “Agreement”) for the issuance of one of the outstanding shares of CPL held of record by the Company to Corvus. The Company sold CPL, including the potential liability associated with the litigation, to Corvus, a wholly-owned subsidiary of the Company’s Chief Executive Officer for a settlement amount of $7 million that was satisfied through the issuance of shares and pre-funded warrants. On or about January 13, 2026, February 20, 2026 and March 4, 2026, CDT received correspondence from Strand, in which, Strand seeks to recover from CDT a judgment it obtained against CPL from the High Court of England and Wales on December 16, 2025 (the “Judgment”), in the amount of approximately $7 million, plus interest and repayment of a fraction of Strand’s costs. CDT denies any and all liability. On December 18, 2024, Conduit UK Management Limited (“Conduit UK”) received a notification from the UK Intellectual Property Office (“UK IPO”) notifying the company that St George Street Capital had initiated patent entitlement proceedings with respect to patent application PCT/IB2022/00775 (“Patent Application”). Conduit UK refutes the claims made by St George Street Capital and filed a counterstatement on February 26, 2025 with the UK IPO. In addition, each of the three inventors named in the Patent Application filed simultaneous counterstatements fully supporting Conduit UK’s position, and assertions that the claims are without merit. Further updates will be made following notification by the UK IPO. 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.