Company: FLDDW
Filing Date: 2025-03-28
Form Type: 10-K
Source: 0001013762-25-004107
Chunk: 1903

Company: Fold Holdings, Inc.
Filing Date: 2025-03-28
Form: 10-K
Item: Item 11
Chunk 1903
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 The Company evaluated the classification and accounting of the issuance of the Investor Shares under ASC 815-40, “Derivatives
and Hedging – Contracts in Entity’s Own Equity”. The Company concluded that the monetary value of the obligation is
a known and fixed amount at inception as the monetary value of the obligation will be defined and provided to each investor with the
final number of Investor Shares stated in the non-redemption agreements. Therefore, the settlement terms of the non-redemption agreement
(i.e., number of shares held by the holder) is considered an input into a fixed-for-fixed contract and the shares issued will be recorded
in equity. The Company estimated the aggregate fair value of the 1,112,500 Investor Shares attributable to the non-redeeming shareholders
to be $838,825 or $0.754 per share. The fair value of the Investor Shares was recorded as an expense with a corresponding credit to additional
paid-in capital. The fair value was determined using the standard closed-form Black Scholes model which is considered to be a Level 3
fair value measurement.

The key inputs into the Black Scholes model for
the Investor Shares were as follows at January 3, 2024:

    Input 
    January 3, 2024 
  
    Risk-free interest rate 
     3.90%
  
    Term (in years) 
     5.0 
  
    Probability of de-SPAC 
     20.0%
  
    Exercise price 
    $11.50 
  
    Public Warrant Price 
    $0.053 

Subscription Agreement

The Company evaluated the accounting for the Subscription
Agreement under ASC 480 “Distinguishing Liabilities from Equity”. The Company concluded that the subscription shares to be
issued as part of the bundled transaction are classified and accounted for as equity. Therefore, the proceeds are required to be allocated
based on the relative fair values of the base instrument of the investment amount and the Common Stock in accordance with the guidance
in ASC 470 “Debt.” On April 2, 2024 and January 2, 2024, Polar contributed a $200,000 Capital Contribution and a $350,000
Capital Contribution, respectively, pursuant to the Subscription Agreement. At December 31, 2024 and 2023, $550,000 and $0 were outstanding
under the promissory note of the subscription agreement, respectively.

The table below summarizes the outstanding promissory note under