Compass Digital Acquisition Enters Promissory Note Agreement with Sponsor

Compass Digital Acquisition Corp. (NASDAQ: CDAQU) entered into a material definitive agreement on November 21, 2024. The company issued a promissory note (the “Note”) amounting to up to $2,500,000 to HCG Opportunity, LLC, its sponsor. This issuance aligns with advances made and potential future advances by the Sponsor for the company’s working capital expenses. As of the Note’s issue date, the Sponsor had already advanced $415,000 to Compass Digital Acquisition Corp.

The Note, which carries no interest, is repayable in full upon either the completion of the company’s initial business combination or its liquidation. In the event that the principal balance remains outstanding before the business combination, the Sponsor holds the option, subject to specific conditions, to convert up to $1,375,000 of the unpaid principal into warrants of the company (the “Conversion Warrant”). These warrants allow the purchase of Class A ordinary shares at a conversion price of $1.50 per Conversion Warrant, similar to those issued by the company during its initial public offering. Additionally, the Conversion Warrants and the underlying securities are entitled to the registration rights per the Note.

The issuance of the Note falls under the exemption from registration outlined in Section 4(a)(2) of the Securities Act of 1933. For a detailed understanding of the terms and conditions, reference to the Note itself, attached as Exhibit 10.1, is recommended.

With this financial arrangement, Compass Digital Acquisition aims to strengthen its position and financial structure in preparation for potential strategic moves.

In related matters, the company confirmed its status as an emerging growth company, as defined by Rule 405 of the Securities Act of 1933. It was also disclosed that the company had not opted for an extended transition period for adhering to revised financial accounting standards.

This move signifies the company’s prudent financial planning and readiness for future opportunities, further solidifying its position in the market.

Please note that this article solely reflects information provided in the official filing and does not involve any inference or external commentary beyond the documented details.

This article was generated by an automated content engine and was reviewed by a human editor prior to publication. For additional information, read Compass Digital Acquisition’s 8K filing here.

About Compass Digital Acquisition

Compass Digital Acquisition Corp. does not have significant operations. It intends to effect a merger, share exchange, asset acquisition, share purchase, reorganization, or similar business combination with one or more businesses. The company intends to focus its search on companies in the technology sectors, including in the technology led digital transformation software and services sector.