Company: CDAQF
Filing Date: 2025-08-13
Form Type: 10-Q
Source: 0001641172-25-023544
Chunk: 105

Company: Compass Digital Acquisition Corp.
Filing Date: 2025-08-13
Form: 10-Q
Item: Part I, Item 8
Chunk 105
---
 after the closing of a
Business Combination. In consideration of the Polar Capital Investment, the Company has agreed to issue, or cause the surviving entity
in the Business Combination to issue, 0.9 of a Class A ordinary share of the surviving entity for each dollar of the Polar Capital Investment
funded as of or prior to the closing of the Business Combination. Upon certain events of default under the Polar Subscription Agreement,
the Company (or the surviving entity, as applicable) must issue to Polar an additional 0.1 of a Class A ordinary share for each dollar
of the Capital Investment funded as of the date of such default, and for each month thereafter until such default of failure is cured,
subject to certain limitations provided for therein. In the event the Company liquidates without consummating a Business Combination,
any amounts remaining in the Company’s cash accounts (excluding the Trust Account) will be paid to Polar by the Company within
five (5) calendar days of the liquidation, and such amounts will be the sole recourse for Polar. As of June 30, 2025 and December 31,
2024, the Company had drawn $1,250,000 on the Polar Capital Investment.

The
Company determined that the conversion option embedded in Polar Capital Investment should be bifurcated and accounted for as a derivative
in accordance with ASC 815. The Company selected the fair value method in the allocation of proceeds to the debt and equity instruments
issued in connection with the Polar Capital Investment. As of June 30, 2025 and December 31, 2024, an aggregate of $1,022,727 had been
allocated as debt discount to reduce the fair value of the Polar Capital Investment to $227,273 as liabilities on the accompanying balance
sheets. Further, as of June 30, 2025 and 2024, $0 and $204,549, respectively, is allocated to non-redeemable Class A Ordinary Shares
and presented as additional paid in capital on the accompanying unaudited condensed statements of changes in shareholders’ deficit.

Administrative
Services Agreement

Commencing
on October 14, 2021, and until completion of the Company’s initial Business Combination or liquidation, the Company may reimburse
the Sponsors up to an aggregate amount of $10,000 per month for office space and secretarial and administrative support pursuant to the
Administrative Services Agreement. Per the Administrative Services Agreement, it is at the Company’s option as to whether or