Company: CDAQF
Filing Date: 2025-03-25
Form Type: 10-K
Source: 0001641172-25-000421
Chunk: 833

Company: Compass Digital Acquisition Corp.
Filing Date: 2025-03-25
Form: 10-K
Item: Item 4
Chunk 833
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issory 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 December 31, 2024 and 2023, there was $1,115,000 and $0, 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. However, the exercise price of the underlying 2024 Note Warrants was greater than the closing price of the Private Placement
Warrants as of December 31, 2024, 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 days’ prior
written notice, the Sponsor may require a drawdown against the capital commitment in order to meet the Sponsor’s commitment to
the Company under a drawdown request (such funded amounts, the “Polar Capital Investment”). The Polar Capital Investment
will be repaid to Polar by the Company upon the closing of an initial Business Combination. Polar may elect to receive such repayment
(i) in cash or (ii) in Class A Ordinary Shares at a rate of one Class A Ordinary Share for each ten dollars of the Polar Capital Investment.
The Company must (i) to the extent feasible and in compliance with all applicable laws and regulations, register the shares issued to
Polar as part