{"url_path":"/sec/cdaqf/10-q/2026/item-1a","section_key":"item-1a","section_title":"Item 1A Risk Factors.**","topic":"sec","document":{"doc_type":"10-Q","doc_date":"2026-05-14","source_url":"https://www.sec.gov/Archives/edgar/data/1851909/0001493152-26-023073-index.html","accession_number":"0001493152-26-023073","cik":"0001851909","ticker":"CDAQF","issuer_name":"Compass Digital Acquisition Corp.","edgar_url":"https://www.sec.gov/Archives/edgar/data/1851909/0001493152-26-023073-index.html","primary_entity_key":"0001851909","primary_entity_name":"Compass Digital Acquisition Corp."},"word_count":1303,"has_tables":true,"body_markdown":"**Item\n1A. Risk Factors.**\n\n \n\nAs\na smaller reporting company under Rule 12b-2 of the Exchange Act, we are not required to include risk factors in the Report. However,\nfor detailed descriptions of the risks relating to our Company, see the section titled “Risk\nFactors” contained in our (i) IPO Registration Statement, (ii) 2025 Annual Report, 2024 Annual Report, 2023 Annual Report, 2022\nAnnual Report and 2021 Annual Report, (iii) Quarterly Reports on Form 10-Q for the quarterly periods ended March 31, 2022, June 30, 2024,\nSeptember 30, 2024 and March 31, 2025, as filed with the SEC on May 5, 2022, August 14, 2024, November 14, 2024 and May 14, 2025, respectively,\nand (iv) Definitive Proxy Statement on Schedule 14A, as filed with the SEC on March 6, 2026.\nAs of the date of the Report, there have been no material changes with respect to those risk factors,\nother than as set forth below. Any of these previously disclosed risk factors could result in a significant or material adverse\neffect on our results of operations or financial condition. Additional risks not presently known to us or that we currently deem immaterial\nmay also affect our ability to consummate an initial Business Combination. We may disclose changes to such risk factors or disclose additional\nrisk factors from time to time in our future filings with the SEC.\n\n \n\nFor\nrisks related to KMC and the KMC Business Combination, please see the KMC Registration Statement.\n\n \n\n**We\nmay seek to further extend the Combination Period, which could reduce the amount held in our Trust Account and have adverse effects on\nour Company.**\n\n \n\nIf we are unable to consummate our initial\nBusiness Combination on or before July 20, 2026, if all three (3) of the available monthly extensions are utilized, we may seek shareholder\napproval to extend the Combination Period by amending our Amended and Restated Articles. In such event, our Public Shareholders will\nbe provided the opportunity to have all or a portion of their Public Shares redeemed. Any redemptions of Public Shares will reduce the\namount held in our Trust Account, the effect of which may adversely affect our ability to consummate our initial Business Combination.\n\n \n\n**Our\nsearch for an initial Business Combination, and any target business with which we may ultimately consummate an initial Business Combination,\nmay be materially adversely affected by current global geopolitical conditions and armed conflicts between Ukraine and Russia and in\nthe Middle East between United States, Israel and Iran and others, as well as by other events that are outside of our control.**\n\n \n\nOur\nability to find a potential target business and the business of any company with which we may consummate a Business Combination could\nbe materially and adversely affected by events that are outside of our control. For example, United States and global markets have experienced\nand may continue to experience volatility and disruption following the geopolitical instability resulting from the ongoing Russia-Ukraine\nconflict and the recent conflict in the Middle East and Southwest Asia between the United States, Israel and Iran and others. Recent\nhostilities between the United States, Israel and Iran and others have caused significant disruption in the normal flow of oil, refined\npetroleum products and related commodities, with consequent price rises and associated economic volatility. In response to such conflicts,\nthe North Atlantic Treaty Organization (“NATO”) deployed additional military forces to eastern Europe, and the United States,\nthe United Kingdom, the European Union and other countries have announced various sanctions and restrictive actions against Russia, Belarus\nand related individuals and entities, including the removal of certain financial institutions from the Society for Worldwide Interbank\nFinancial Telecommunication (SWIFT) payment system. Certain countries, including the United States, have also provided and may continue\nto provide military aid or other assistance to Ukraine and to Israel, or have undertaken or will undertake military strikes in locations\nrelated to the conflicts, including but not limited to Iran, and there have been retaliatory military responses, increasing geopolitical\ntensions among a number of nations.\n\n \n\nThe\ninvasion of Ukraine by Russia and the escalation of the conflict involving the United States, Israel and Iran and others in the Middle\nEast and Southwest Asia and the resulting measures that have been taken, and could be taken in the future, by NATO, the United States,\nthe United Kingdom, the European Union, Israel and its neighboring states and other countries have created global security concerns that\ncould have a lasting impact on regional and global economies. Although the length and impact of the ongoing conflicts and geopolitical\nturmoil are highly unpredictable, they could lead to market disruptions, including significant volatility in commodity prices, credit\nand capital markets, as well as supply chain interruptions, changes in consumer or producer purchasing behavior and increased cyber-attacks\nagainst U.S. companies. Additionally, any resulting sanctions could adversely affect the global economy and financial markets and lead\nto instability and lack of liquidity in capital markets.\n\n \n\nSimilarly,\nother events outside of our control, including natural disasters, climate-related events and pandemic or health crises (such as the COVID-19\npandemic) may arise from time to time, and any such events may cause significant volatility and declines in the global markets and have\ndisproportionate impacts to certain industries or sectors and disruptions to commerce (including economic activity, travel and supply\nchain), and may adversely affect the global economy or capital markets.\n\n \n\n37\n\n \n\n \n\nAny\nof the abovementioned factors, or any other negative impact on the global economy, capital markets or other geopolitical conditions resulting\nfrom the Russian invasion of Ukraine, the escalation of the conflict involving the United States, Israel and Iran and others in the Middle\nEast and Southwest Asia and subsequent sanctions or related actions, could adversely affect our search for an initial Business Combination\nand any target business with which we may ultimately consummate an initial Business Combination.\n\n \n\nThe\nextent and duration of the ongoing conflicts, resulting sanctions and any related market disruptions are impossible to predict, but could\nbe substantial, particularly if current or new sanctions continue for an extended period of time, if geopolitical tensions result in\nexpanded military operations on a global scale or if there are disruptions in the supply of oil or other commodities.\n\n \n\nAny\nsuch disruptions may also have the effect of heightening many of the other risks described in this Item. If these disruptions or other\nmatters of global concern continue for an extensive period of time, our ability to consummate an initial Business Combination, or the\noperations of a target business with which we may ultimately consummate an initial Business Combination, may be materially adversely\naffected. In addition, our ability to consummate a transaction may be dependent on the ability to raise equity or debt financing, which\nmay be impacted by these and other events, including as a result of increased market volatility or decreased availability of third-party\nfinancing on acceptable terms or at all.\n\n \n\n**Military\nor other conflicts in Ukraine, between the United States, Israel and Iran and others and other in the Middle East and Southwest Asia\nor other armed hostilities may lead to increased volume and price volatility for publicly traded securities, or affect the operations\nor financial condition of potential target companies, which could make it more difficult for us to consummate an initial Business Combination.**\n\n \n\nMilitary\nor other conflicts in Ukraine, between the United States, Israel and Iran and others in the Middle East, and Southwest Asia or other\narmed hostilities may lead to increased volume and price volatility for publicly traded securities, or affect the operations or financial\ncondition of potential target companies, and to other company or industry-specific, national, regional or international economic disruptions\nand economic uncertainty, any of which could make it more difficult for us to identify a Business Combination target and consummate an\ninitial Business Combination on acceptable commercial terms, or at all."}