Company: CDAQF
Filing Date: 2025-05-14
Form Type: 10-Q
Source: 0001641172-25-010268
Chunk: 98

Company: Compass Digital Acquisition Corp.
Filing Date: 2025-05-14
Form: 10-Q
Item: Part I, Item 8
Chunk 98
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31, 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 March 31, 2025 and December 31, 2024, there
was $1,381,019 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

MARCH 31, 2025

However, the exercise price
of the underlying 2024 Note Warrants was greater than the closing price of the Private Placement Warrants as of March 31, 2025, and when
the 2024 Promissory Notes were drawn on. The Company