Company: CDAQF
Filing Date: 2025-11-12
Form Type: 10-Q
Source: 0001493152-25-021994
Chunk: 105

Company: Compass Digital Acquisition Corp.
Filing Date: 2025-11-12
Form: 10-Q
Item: Part I, Item 8
Chunk 105
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 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 September 30, 2025 and December 31, 2024, there was $1,760,872 and $1,240,000, 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

SEPTEMBER
30, 2025

Through
the date of this filing, the Company has drawn an additional $27,000 on the 2024 Promissory Note. The total outstanding balance on the 2024
Promissory Note is $1,662,872.

However,
the exercise price of the underlying 2024 Note Warrants was greater than the closing price of the Private Placement Warrants as of September
30, 2025, and when the 2024 Promissory Notes were drawn on. The Company believes that the likelihood of the Sponsor’s exercise
of the option to convert to 2024 Note Warrants is de minimis. As a result, the Company recorded zero liability related to the conversion
option on the 2024 Promissory Note.

Polar
Capital Investment Payable – related party

On
September 6, 2023, the Company entered into a subscription agreement (the “Polar Subscription Agreement”) with the Sponsor
and Polar Multi-Strategy Master Fund (“Polar”), pursuant to which Polar agreed to fund up to $1,500,000 to Company, subject
to certain funding milestones. Once the Company has reached a defined milestone, upon on at least five (5) calendar