Company: CDAQF
Filing Date: 2025-03-25
Form Type: 10-K
Source: 0001641172-25-000421
Chunk: 604

Company: Compass Digital Acquisition Corp.
Filing Date: 2025-03-25
Form: 10-K
Item: Item 2
Chunk 604
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 or, at the lender’s discretion, up to $1,500,000
of notes may be converted upon consummation of a Business Combination into warrants at a price of $1.50 per warrant. These warrants would
be identical to the Private Placement Warrants. In the event that a Business Combination does not close, the Company may use a portion
of proceeds held outside the Trust Account to repay the Working Capital Loans, but no proceeds held in the Trust Account would be used
to repay the Working Capital Loans.

2021
Promissory Note Payable – Legacy Sponsor

On
December 30, 2021, there was a written agreement in place for the 2021 Working Capital Loan. The Company issued an unsecured promissory
note (the “2021 Promissory Note”) in the principal amount of up to $1,000,000 to YAS International, LLC (d/b/a Gupta Capital
Group), an affiliate of the Legacy Sponsor (“GCG”). The 2021 Promissory Note bears no interest and is repayable in full upon
consummation of the initial Business Combination. GCG has the option to convert any unpaid balance of the 2021 Promissory Note into 2arrants
to purchase one share of Class A Ordinary Shares equal to the principal amount of the 2021 Promissory Note so converted divided by $1.50
(the “2021 Note Warrants”). The terms of any such 2021 Note Warrants will be identical to the terms of the Private Placement
Warrants. As of December 31, 2024 and 2023, there was $125,000 outstanding on the 2021 Working Capital Loan. The Company determined that
the conversion option embedded in its Legacy Working Capital Loan should be bifurcated and accounted for as a derivative in accordance
with ASC 815. However, the exercise price of the underlying 2021 Note Warrants was greater than the closing price of the Private Placement
Warrants as of December 31, 2024 and 2023, 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.

    F-17

COMPASS
DIGITAL ACQUISITION CORP.

NOT