Company: CSTAF
Filing Date: 2025-04-02
Form Type: 10-K
Source: 0001213900-25-027555
Chunk: 555

Company: Constellation Acquisition Corp I
Filing Date: 2025-04-02
Form: 10-K
Item: Item 1C
Chunk 555
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 warrants meet the definition of a derivative
as contemplated in ASC 815, the warrants are recorded as derivative liabilities on the balance sheets and measured at fair value at inception
(on the date of the IPO) and at each reporting date in accordance with ASC 820, “Fair Value Measurement” (“ASC 820”),
with changes in fair value recognized in the statements of operations in the period of change.

Convertible Promissory Note

The Company analyzed the convertible promissory
notes to assess if the fair value option was appropriate, due to the substantial premium which results in an offsetting entry to additional
paid-in capital and under the related party guidance which precludes the fair value option, it was determined the fair value option was
not appropriate. As such, the Company accounted for the convertible promissory notes, analyzing the conversion options embedded in convertible
notes in accordance with ASC 815. ASC 815 generally requires companies to bifurcate conversion options embedded in convertible notes from
their host instruments and to account for them as freestanding derivative financial instruments.

Bifurcated embedded derivatives are initially
recorded at fair value and are then revalued at each reporting date with changes in the fair value reported as non-operating income or
expense. When the equity or convertible debt instruments contain embedded derivative instruments that are to be bifurcated and accounted
for as liabilities, the total proceeds received are first allocated to the fair value of all the bifurcated derivative instruments. The
remaining proceeds, if any, are then allocated to the host instruments themselves, usually resulting in those instruments being recorded
at a discount from their face value. The discount from the face value of the convertible debt, together with the stated interest on the
instrument, is amortized over the life of the instrument through periodic charges to interest expense.

It was determined that the conversion option was
de minimis, as such the Company has recorded the Convertible Promissory Notes at par value.

Offering Costs Associated with the Initial
Public Offering

The Company complies with the requirements of
the ASC 340-10-S99-1. Offering costs consisted of legal, accounting, underwriting fees and other costs incurred through the IPO that
were directly related to the IPO. Offering costs are allocated to the separable financial instruments issued in the IPO based on a relative
fair value basis, compared to total proceeds received. Offering costs associated with warrant liabilities are expensed as incurred, presented
as non-operating expenses in