Company: CDAQF
Filing Date: 2025-11-12
Form Type: 10-Q
Source: 0001493152-25-021994
Chunk: 104

Company: Compass Digital Acquisition Corp.
Filing Date: 2025-11-12
Form: 10-Q
Item: Part I, Item 8
Chunk 104
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1
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 warrants
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 September 30, 2025 and December 31, 2024, 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 September 30, 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