Company: CDAQF
Filing Date: 2025-08-13
Form Type: 10-Q
Source: 0001641172-25-023544
Chunk: 99

Company: Compass Digital Acquisition Corp.
Filing Date: 2025-08-13
Form: 10-Q
Item: Part I, Item 8
Chunk 99
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 Shares in the 2023 Founder Share Conversion. As of
June 30, 2025 and December 31, 2024, the Company had 2,110,122 Class B Ordinary Shares issued and outstanding.

Pursuant
to the Letter Agreement, the Sponsors have agreed not to transfer, assign or sell any of their Founder Shares until the earlier to occur
of: (i) one year after the completion of a Business Combination or (ii) the date on which the Company completes a liquidation, merger,
capital share exchange or similar transaction that results in the Company’s shareholders having the right to exchange their Ordinary
Shares for cash, securities or other property. Notwithstanding the foregoing, if the last sale price of the Class A Ordinary Shares or
exceeds $12.00 per share (as adjusted for share splits, share dividends, reorganizations, recapitalizations and the like) for any 20
trading days within any 30-trading day period commencing at least 120 days after the Business Combination, the Founder Shares will be
released from the lock-up.

 In
connection with the closing of the Initial Public Offering, the Legacy Sponsor sold equity interest of the Legacy Sponsor equivalent
to 1,547,727 Founder Shares to the Institutional Anchor Investors at the original purchase price of $0.004 per share. The Company estimated
the aggregate fair value of the Founder Shares attributable to the Institutional Anchor Investors to be $6.73 per share. The fair value
of the Founder Shares was valued based on the probability of the Company completing a Business Combination and marketability. The excess
of the fair value of the Founder Shares was determined to be an offering cost in accordance with SEC Staff Accounting Bulletin Topic
5A, “Expensing of Offering” and SEC Staff Accounting Bulletin Topic 5T, “Accounting for Expenses or Liabilities Paid
by Principal Stockholder(s)” (“SAB 5T”). Accordingly, the offering cost was allocated to the separable financial instruments
issued in the Initial Public Offering based on a relative fair value basis, compared to total proceeds received. Offering costs related
to the Founder Shares amounted to $10,414,655, of which $10,062,469 was charged to shareholders’ deficit upon the completion of
the Initial Public Offering and $352,186 was expensed to the accompanying unaudited condensed statements of operations and included in
transaction costs attributable to Warrant liabilities.

Sponsor Employment Agreement

The Sponsor has entered