Company: QSEA
Filing Date: 2025-02-24
Form Type: S-1
Source: 0001829126-25-001168
Chunk: 272

Company: Quartzsea Acquisition Corp
Filing Date: 2025-02-24
Form: S-1
Chunk 272
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as they occur and adjust the carrying amount of the instrument to equal the redemption value at the end of each reporting period. The
Company has elected to recognize the changes immediately. The accretion or remeasurement will be treated as a deemed dividend (i.e.,
a reduction to retained earnings, or in absence of retained earnings, additional paid-in capital).

<div align='center'>F-11</div>

<div align='center'>QUARTZSEA ACQUISITION CORPORATION

NOTES TO FINANCIAL STATEMENTS</div>

Note 2 — Summary of Significant Accounting Policies (cont.)

Rights Accounting

The Company accounts for rights as either equity-classified
or liability-classified instruments based on an assessment of the right’s specific terms and applicable authoritative guidance
in ASC 480 and ASC 815. The assessment considers whether the rights are freestanding financial instruments pursuant to ASC 480, meet
the definition of a liability pursuant to ASC 480, and whether the rights meet all of the requirements for equity classification under
ASC 815, including whether the rights are indexed to the Company’s own ordinary shares and whether the right holders could potentially
require “net cash settlement” in a circumstance outside of the Company’s control, among other conditions for equity
classification. This assessment, which requires the use of professional judgment, is conducted at the time of right issuance and as of
each subsequent quarterly period end date while the rights are outstanding.

Recent Accounting Standards

In August 2020, the Financial Accounting Standards
Board (“FASB”) issued Accounting Standards Update (“ASU”) 2020-06, Debt — Debt with Conversion and Other Options (Subtopic 470-20) and Derivatives and Hedging — Contracts in Entity’s Own Equity (Subtopic 815-40) (“ASU
2020-06”), to simplify accounting for certain financial instruments. ASU 2020-06 eliminates the current models that require separation
of beneficial conversion and cash conversion features from convertible instruments and simplifies the derivative scope exception guidance
pertaining to equity classification of contracts in an entity’s own equity. The new standard also introduces additional disclosures
for convertible debt and free-standing instruments that are indexed to and settled in an entity’s own equity. ASU 2020-06 amends
the diluted earnings per share guidance, including the requirement to use the if-converted method for all convertible instruments. ASU
2020-06 is effective January 1, 2024 and should be applied on