Company: CDAQF
Filing Date: 2025-03-25
Form Type: 10-K
Source: 0001641172-25-000421
Chunk: 878

Company: Compass Digital Acquisition Corp.
Filing Date: 2025-03-25
Form: 10-K
Item: Item 5
Chunk 878
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 two classes of Ordinary Shares. Net
(loss) income per Ordinary Share is calculated by dividing the net (loss) income 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) income 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.

37

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 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 value. Conditionally redeemable Ordinary
Shares (including Ordinary Shares that feature redemption rights that are either within the control of the holder or subject to redemption
upon the occurrence of uncertain events not solely within