Company: CDAQF
Filing Date: 2025-08-13
Form Type: 10-Q
Source: 0001641172-25-023544
Chunk: 34

Company: Compass Digital Acquisition Corp.
Filing Date: 2025-08-13
Form: 10-Q
Item: Part I, Item 1
Chunk 34
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2025 and December 31, 2024, and when the 2021 Working Capital Loan was drawn on. The Company believes that the
likelihood of GCG’s exercise of the option to convert to 2021 Note Warrants is de minimis. As a result, the Company recorded zero
liability related to the conversion option on the 2021 Working Capital Loan.

2024
Promissory Note – related party

On
November 21, 2024, there was a written agreement in place for the 2024 Working Capital Loan. The Sponsor agreed to loan the Company up
to $2,500,000 pursuant to a promissory note (the “2024 Promissory Note”). The 2024 Promissory Note is non-interest bearing,
unsecured and due on the earlier of (i) upon the consummation of an initial Business Combination or (ii) the date of liquidation. The
Company may use a portion of proceeds held outside the Trust Account to repay the 2024 Promissory Note, but no proceeds held in the Trust
Account can be used to repay the 2024 Promissory Note. If prior to an initial business combination, the 2024 Promissory Note has not
been paid in full, then at the Sponsor’s option up to $1,350,000 of unpaid principal balance may be converted into warrants (the
“2024 Note Warrants”) at a price of $1.50 per 2024 Note Warrant. The 2024 Note Warrants would be identical to the Private
Placement Warrants.

As
of June 30, 2025 and December 31, 2024, there was $1,532,122 and $1,115,000, respectively, outstanding on the 2024 Promissory Note. The
Company determined that the conversion option embedded in its 2024 Promissory Note should be bifurcated and accounted for as a derivative
in accordance with ASC 815.

    14

COMPASS
DIGITAL ACQUISITION CORP.

NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

JUNE
30, 2025

However,
the exercise price of the underlying 2024 Note Warrants was greater than the closing price of the Private Placement Warrants as of June
30, 2025, and when the 2024 Promissory Notes were drawn on. The Company believes