Company: CDAQF
Filing Date: 2025-08-13
Form Type: 10-Q
Source: 0001641172-25-023544
Chunk: 30

Company: Compass Digital Acquisition Corp.
Filing Date: 2025-08-13
Form: 10-Q
Item: Part I, Item 1
Chunk 30
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. 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 into employment agreements,
which include base salaries and bonuses for employees who may support both the Company and its affiliated entities. Under the terms of
employment agreements, the Sponsor may pay employee compensation through any entity it controls, including the Company. Management determines that allocating base salary and discretionary bonuses ratably among its affiliated entities  is a fair and standard
practice, as employees typically support multiple entities simultaneously. This approach ensures that compensation costs are proportionally
shared based on the benefit each affiliated entity receives, preventing any single entity from bearing an unfair share of shared expenses. It aligns
with common practices in multi-entity investment platforms, while still allowing management the flexibility to adjust allocations based
on