Company: CDAQF
Filing Date: 2025-08-13
Form Type: 10-Q
Source: 0001641172-25-023544
Chunk: 27

Company: Compass Digital Acquisition Corp.
Filing Date: 2025-08-13
Form: 10-Q
Item: Part I, Item 1
Chunk 27
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 qualify as financial instruments under FASB ASC Topic 820, “Fair
Value Measurement” (“ASC 820”), approximates the carrying amounts represented in the accompanying condensed balance
sheets, primarily due to their short-term nature, except for the derivative warrant liabilities (see Note 10).

The
Company applies ASC 820, which establishes a framework for measuring fair value and clarifies the definition of fair value within that
framework. ASC 820 defines “fair value” as an exit price, which is the price that would be received for an asset or paid
to transfer a liability in the Company’s principal or most advantageous market in an orderly transaction between market participants
on the measurement date. The fair value hierarchy established in ASC 820 generally requires an entity to maximize the use of observable
inputs and minimize the use of unobservable inputs when measuring fair value. Observable inputs reflect the assumptions that market participants
would use in pricing the asset or liability and are developed based on market data obtained from sources independent of the reporting
entity. Unobservable inputs reflect the entity’ own assumptions based on market data and the entity’s judgments about the
assumptions that market participants would use in pricing the asset or liability and are to be developed based on the best information
available in the circumstances.

Level
1-Assets and liabilities with unadjusted, quoted prices listed on active market exchanges. Inputs to the fair value measurement are observable
inputs, such as quoted prices in active markets for identical assets or liabilities.

Level
2-Inputs to the fair value measurement are determined using prices for recently traded assets and liabilities with similar underlying
terms, as well as direct or indirect observable inputs, such as interest rates and yield curves that are observable at commonly quoted
intervals.

Level
3-Inputs to the fair value measurement are unobservable inputs, such as estimates, assumptions, and valuation techniques when little
or no market data exists for the assets or liabilities.

    12

COMPASS
DIGITAL ACQUISITION CORP.

NOTES
TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

JUNE
30, 2025

Recent
Accounting Pronouncements

Management
does not believe that any recently issued, but not yet effective, accounting standards updates, if currently adopted, would have a material
effect on the accompanying unaudited condensed financial statements.

NOTE
3 - INITIAL PUBLIC OFFERING

On
October 19, 2021, the Company sold 20,000,000 Units at a purchase