Company: CDAQF
Filing Date: 2025-08-13
Form Type: 10-Q
Source: 0001641172-25-023544
Chunk: 163

Company: Compass Digital Acquisition Corp.
Filing Date: 2025-08-13
Form: 10-Q
Item: Part I, Item 2
Chunk 163
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 private companies adopt the new or revised
standard. This may make comparison of our financial statements with another public company that is neither an emerging growth company
nor an emerging growth company that has opted out of using the extended transition period difficult or impossible because of the potential
differences in accounting standards used.

Use
of Estimates

The
preparation of financial statements in conformity with GAAP requires Management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the
reported amounts of revenues and expenses during the reporting period.

Making
estimates requires Management to exercise significant judgment. It is at least reasonably possible that the estimate of the effect of
a condition, situation or set of circumstances that existed at the date of the financial statements, which Management considered in formulating
its estimate, could change in the near term due to one or more future confirming events. Accordingly, the actual results could differ
significantly from those estimates.

Critical
Accounting Policies

We
have identified the following as our critical accounting policies:

Net
Loss Per Ordinary Share

We
comply with accounting and 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