Company: CDAQF
Filing Date: 2025-03-25
Form Type: 10-K
Source: 0001641172-25-000421
Chunk: 949

Company: Compass Digital Acquisition Corp.
Filing Date: 2025-03-25
Form: 10-K
Item: Item 5
Chunk 949
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to the first registration statement filed by the Company or the surviving entity following a Business Combination, which shall be filed
no later than 30 days after the closing of a Business Combination and declared effective no later than 90 days after the closing of a
Business Combination. In consideration of the Polar Capital Investment, the Company has agreed to issue, or cause the surviving entity
in the Business Combination to issue, 0.9 of a Class A ordinary share of the surviving entity for each dollar of the Polar Capital Investment
funded as of or prior to the closing of the Business Combination. Upon certain events of default under the Polar Subscription Agreement,
the Company (or the surviving entity, as applicable) must issue to Polar an additional 0.1 of a Class A ordinary share for each dollar
of the Capital Investment funded as of the date of such default, and for each month thereafter until such default of failure is cured,
subject to certain limitations provided for therein. In the event the Company liquidates without consummating a Business Combination,
any amounts remaining in the Company’s cash accounts (excluding the Trust Account) will be paid to Polar by the Company within
five (5) calendar days of the liquidation, and such amounts will be the sole recourse for Polar. As of December 31, 2024 and 2023, the
Company had drawn $1,250,000 and $500,000, respectively, on the Polar Capital Investment.

The
Company determined that the conversion option embedded in Polar Capital Investment should be bifurcated and accounted for as a derivative
in accordance with ASC 815. The Company selected the fair value method in the allocation of proceeds to the debt and equity instruments
issued in connection with the Polar Capital Investment. As of December 31, 2024, an aggregate of $1,022,727 had been allocated as debt
discount to reduce the fair value of the Polar Capital Investment to $227,273 as liabilities on the accompanying balance sheets. As of
December 31, 2023, $409,091 had been allocated as debt discount to reduce the fair value of the Polar Capital Investment to $90,909 as
liabilities on the accompanying balance sheets. Further, as of December 31, 2024 and 2023, $613,640 and $409,091, respectively, is allocated
to non-redeemable Class A Ordinary Shares and presented as additional paid in capital on the accompanying statements of changes in shareholders’
def