Company: CDAQF
Filing Date: 2025-05-14
Form Type: 10-Q
Source: 0001641172-25-010268
Chunk: 17

Company: Compass Digital Acquisition Corp.
Filing Date: 2025-05-14
Form: 10-Q
Item: Part I, Item 1
Chunk 17
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 share price targets as set forth above, the vesting of such Earnout Shares will accelerate, and
the Earnout Shares will be issuable upon the closing of such transaction.

    8

COMPASS DIGITAL ACQUISITION CORP.

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

MARCH 31, 2025

Liquidity and Going Concern

As of March 31, 2025, the Company had $1,403 in its
operating bank accounts and a working capital deficit of $2,572,223.

To date, the Company’s
liquidity needs have been satisfied through (i) a payment of $25,000
from the Legacy Sponsor to cover certain expenses on behalf of the Company in exchange for the issuance of the Founder Shares, (ii)
a loan of approximately $195,000
from the Legacy Sponsor pursuant to a promissory note for up to $250,000
(the “IPO Promissory Note”), (iii) the net proceeds from the consummation of the Private Placement not held in the Trust
Account, (iv) the Polar Capital Investment (as defined in Note 5), and (v) the Working Capital Loans (as defined in Note 5) pursuant
to the 2021 Promissory Note and the 2024 Promissory Note (each as defined in Note 5). The Company fully repaid the IPO Promissory
Note on October 19, 2021. No additional borrowing is available under the IPO Promissory Note (see Note 5).

As of March 31, 2025, the Company had drawn $1,250,000
from the Polar Capital Investment that was fair valued at $227,273, $125,000 outstanding from the 2021 Working Capital Loans (as defined
below) and $1,381,019 outstanding from the 2024 Working Capital Loan (see Note 5).

Based on the foregoing, Management believes that the
Company may not have sufficient working capital to meet its anticipated obligations through the earlier of the consummation of an initial
Business Combination or one year from the date of the accompanying unaudited condensed financial statements. Over this period, the Company
will be using these funds for paying existing accounts payable, operating costs, identifying and evaluating prospective initial Business
Combination candidates, performing due diligence on prospective target businesses, paying for travel expenditures, selecting the target
business to merge with