Company: CDAQF
Filing Date: 2025-11-12
Form Type: 10-Q
Source: 0001493152-25-021994
Chunk: 141

Company: Compass Digital Acquisition Corp.
Filing Date: 2025-11-12
Form: 10-Q
Item: Part I, Item 8
Chunk 141
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 disclosure requirements of FASB ASC Topic 260, “Earnings Per Share.” We have two classes of Ordinary
Shares, Class A Ordinary Shares and Class B Ordinary Shares. Income is shared pro rata between the two classes of Ordinary Shares. Net
loss per Ordinary Share is calculated by dividing the net loss by the weighted average of Ordinary Shares outstanding for the respective
period. We did not consider the effect of the Warrants issued in connection with the Initial Public Offering and the Private Placement
to purchase an aggregate of 1,240,488 Ordinary Shares in the calculation of diluted loss per share because their exercise is contingent
upon future events. Accretion associated with the redeemable Class A Ordinary Shares is excluded from earnings per share as the redemption
value approximates fair value.

27

Warrant
Liability

We
account for Warrants as either equity-classified or liability-classified instruments based on an assessment of the Warrant’s specific
terms and applicable authoritative guidance in ASC 480 and FASB ASC Topic 815, “Derivatives and Hedging” (“ASC 815”).
The assessment considers whether the Warrants are freestanding financial instruments pursuant to ASC 480, meet the definition of a liability
pursuant to ASC 480, and whether the Warrants meet all of the requirements for equity classification under ASC 815, including whether
the Warrants are indexed to our own Ordinary Shares, among other conditions for equity classification. This assessment, which requires
the use of professional judgment, is conducted at the time of Warrant issuance and as of each subsequent quarterly period end date while
the Warrants are outstanding.

For
issued or modified Warrants that meet all of the criteria for equity classification, the Warrants are required to be recorded as a component
of additional paid-in capital at the time of issuance. For issued or modified Warrants that do not meet all the criteria for equity classification,
the Warrants are required to be recorded at their initial fair value on the date of issuance, and each balance sheet date thereafter.
Changes in the estimated fair value of the Warrants are recognized as a non-cash gain or loss on the unaudited condensed statements of
operations of the financial statements contained elsewhere in this Report.

Class
A Ordinary Shares Subject to Redemption

We
account for our Ordinary Shares subject to possible redemption in accordance with the guidance in ASC 480. Ordinary Shares subject to
mandatory redemption (if any) are classified as a liability instrument and are measured at fair