Digital Asset Acquisition Corp-A(DAAQ) - 2025 Q1 - Quarterly Report

PART 1 - FINANCIAL INFORMATION This part presents the company's condensed financial statements, management's discussion, market risk disclosures, and controls and procedures Item 1. CONDENSED FINANCIAL STATEMENTS This section presents Digital Asset Acquisition Corp.'s unaudited condensed financial statements and detailed notes for Q1 2025, covering balance sheets, operations, equity changes, cash flows, and key accounting policies Condensed Balance Sheets This table presents the company's condensed balance sheets as of March 31, 2025, and December 31, 2024, detailing assets, liabilities, and shareholder's equity | Metric | March 31, 2025 (unaudited) | December 31, 2024 | | :-------------------------------- | :------------------------- | :------------------ | | ASSETS | | | | Deferred offering costs | $201,170 | $25,000 | | TOTAL ASSETS | $201,170 | $25,000 | | LIABILITIES AND SHAREHOLDER'S EQUITY (DEFICIT) | | | | Accrued expenses | $34,407 | $4,791 | | Accrued offering costs | $88,322 | — | | Due to related party | $321 | $321 | | Promissory note - related party | $112,848 | — | | Total Liabilities | $235,898 | $5,112 | | Total Shareholder's Equity (Deficit) | $(34,728) | $19,888 | | LIABILITIES AND SHAREHOLDER'S EQUITY (DEFICIT) | $201,170 | $25,000 | Unaudited Condensed Statement of Operations This table presents the unaudited condensed statement of operations for the three months ended March 31, 2025, including net loss and loss per share | Metric | For the Three Months Ended March 31, 2025 (Unaudited) | | :---------------------------------- | :---------------------------------------------------- | | General and administrative expenses | $54,616 | | Net loss | $(54,616) | | Weighted average shares outstanding | 5,000,000 | | Basic and diluted net loss per ordinary share | $(0.01) | Unaudited Condensed Statement of Changes in Shareholder's Deficit This table presents the unaudited condensed statement of changes in shareholder's deficit from January 1 to March 31, 2025 | Metric | Balance at January 1, 2025 | Net loss | Balance at March 31, 2025 | | :-------------------------- | :------------------------- | :------- | :------------------------ | | Class B Ordinary Shares (Amount) | $575 | — | $575 | | Additional Paid-in Capital | $24,425 | — | $24,425 | | Accumulated Deficit | $(5,112) | $(54,616) | $(59,728) | | Total Shareholder's Equity (Deficit) | $19,888 | $(54,616) | $(34,728) | Unaudited Condensed Statement of Cash Flows This table presents the unaudited condensed statement of cash flows for the three months ended March 31, 2025, detailing operating and non-cash activities | Metric | For the Three Months Ended March 31, 2025 (Unaudited) | | :------------------------------------------------ | :---------------------------------------------------- | | Net loss | $(54,616) | | Operating expenses paid via promissory note - related party | $25,000 | | Changes in operating assets and liabilities: Accrued expenses | $29,616 | | Net cash used in operating activities | — | | Net Change in Cash | — | | Cash - Beginning of period | — | | Cash - End of period | $— | | Non-Cash Investing and Financing Activities: Deferred offering costs included in accrued offering costs | $88,322 | | Non-Cash Investing and Financing Activities: Deferred offering costs paid via promissory note - related party | $87,848 | | Non-Cash Investing and Financing Activities: Operating expenses paid via promissory note - related party | $25,000 | Notes to Unaudited Condensed Financial Statements This section provides detailed notes explaining the company's financial statements, accounting policies, and related transactions NOTE 1. DESCRIPTION OF ORGANIZATION, BUSINESS OPERATIONS AND LIQUIDITY This note describes Digital Asset Acquisition Corp.'s formation as a blank check company, its IPO, the establishment of a Trust Account, and its liquidity position and timeline for a business combination - Digital Asset Acquisition Corp. is a blank check company (SPAC) incorporated on December 9, 2024, with the purpose of entering into a business combination[21] - The company completed its Initial Public Offering (IPO) on April 30, 2025, issuing 17,250,000 units and generating gross proceeds of $172,500,000[23] - Simultaneously with the IPO, the company sold 5,450,000 Private Placement Warrants for $5,450,000[24] - Following the IPO, $172,500,000 from the net proceeds was placed in a Trust Account, to be invested in U.S. government treasury obligations or money market funds[25] - The company has until October 30, 2026 (or January 30, 2027, with an extension) to complete a Business Combination[35] Liquidity and Capital Resources (March 31, 2025) | Metric | Amount | | :-------------------- | :------- | | Cash | $0 | | Working Capital Deficit | $(235,898) | NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This note details the company's significant accounting policies, including GAAP basis, emerging growth company status, deferred offering costs, income taxes, and treatment of shares and warrants - The company is an 'emerging growth company' and has elected to use the extended transition period for complying with new or revised financial accounting standards, which may affect comparability with other public companies[42][43] - Deferred offering costs of $201,170 as of March 31, 2025, were incurred and will be charged to temporary or permanent equity upon IPO completion[47] - The company is an exempted Cayman Islands Company and is not subject to income taxes in the Cayman Islands or the United States[51] - Class A ordinary shares with redemption features are classified as temporary equity in accordance with ASC 480[52] - Warrants are accounted for as equity-classified instruments, with changes in fair value not recognized as long as they remain equity-classified[57][59] - The company adopted ASU 2023-07 (Segment Reporting) for the annual period ended December 31, 2024, and the interim period for the three months ended March 31, 2025, with no material impact[61][63] NOTE 3. INITIAL PUBLIC OFFERING The company completed its Initial Public Offering, selling 17,250,000 Units, including the full exercise of the over-allotment option, generating $172,500,000 in gross proceeds. Each Unit consisted of one Class A ordinary share and one-half of one redeemable warrant - The Company sold 17,250,000 Units in its Initial Public Offering, including the full exercise of the over-allotment option[65] - The IPO generated gross proceeds of $172,500,000[65] - Each Unit comprised one Class A ordinary share and one-half of one redeemable warrant[65] NOTE 4. PRIVATE PLACEMENT Concurrently with the IPO, the company sold 5,450,000 Private Placement Warrants at $1.00 per warrant, generating $5,450,000. These proceeds were added to the Trust Account, and the warrants will expire worthless if a business combination is not completed within the Combination Period - The Company sold 5,450,000 Private Placement Warrants at $1.00 per warrant[66] - This sale generated gross proceeds of $5,450,000, which were added to the Trust Account[66] - The Private Placement Warrants will expire worthless if a Business Combination is not completed within the Combination Period[66] NOTE 5. SEGMENT INFORMATION The company operates as a single reportable segment, with the Chief Financial Officer identified as the Chief Operating Decision Maker (CODM). The CODM reviews overall operating results, including net income/loss and total assets, to make resource allocation and performance assessment decisions. Key metrics reviewed include general and administrative expenses and deferred offering costs - The Company has determined it has only one reportable segment[68] - The Chief Financial Officer is identified as the Chief Operating Decision Maker (CODM)[68] - The CODM assesses performance and allocates resources based on net income or loss and total assets[70] Key Metrics Reviewed by CODM | Metric | March 31, 2025 | December 31, 2024 | | :-------------------------- | :------------- | :---------------- | | Deferred offering costs | $201,170 | $25,000 | | Total Assets | $201,170 | $25,000 | | General and administrative expenses (3 months ended March 31, 2025) | $54,616 | N/A | | Net Loss (3 months ended March 31, 2025) | $54,616 | N/A | NOTE 6. RELATED PARTY TRANSACTIONS This section details transactions with related parties, including the issuance and transfer of Founder Shares to the Sponsor, directors, and advisors. It also covers a non-interest bearing promissory note from the Sponsor to cover IPO expenses, which was repaid in full after the IPO, and an administrative support agreement with the Sponsor for monthly services - The Sponsor was issued 5,750,000 Class B ordinary shares (Founder Shares) for $25,000[72] - 750,000 Founder Shares were initially subject to forfeiture but are no longer subject to forfeiture as the over-allotment option was exercised in full[72] - The Sponsor transferred 75,000 Founder Shares to director nominees and 40,000 to company advisors[73] - A non-interest bearing promissory note from the Sponsor for up to $300,000 to cover IPO expenses had $112,848 outstanding as of March 31, 2025, and was repaid in full after the IPO[81] - The Company has an administrative support agreement to pay the Sponsor up to $20,000 per month for office space and administrative services[83] NOTE 7. COMMITMENTS AND CONTINGENCIES The company has commitments related to registration rights for holders of Founder Shares, Private Placement Warrants, and warrants from working capital loans, obligating it to register up to 12,700,000 Class A ordinary shares and 6,500,000 warrants. Additionally, the underwriting agreement includes a lock-up period for certain securities and details the underwriting discount and deferred fees, with the deferred fee payable only upon completion of a Business Combination - Holders of Founder Shares, Private Placement Warrants, and warrants from working capital loans have registration rights[86] - The Company is obligated to register up to 12,700,000 Class A ordinary shares and 6,500,000 warrants[86] - The Sponsor, executive officers, and directors are subject to a 180-day lock-up period on certain securities post-IPO[87] - Underwriters received a $0.20 per Unit discount ($3,450,000 total) and a deferred fee of $0.40 per Unit ($6,900,000 total), payable only upon completion of a Business Combination[89] NOTE 8. SHAREHOLDER'S EQUITY This note details the company's authorized and outstanding share capital, including preference shares (none issued), Class A ordinary shares (17,250,000 outstanding post-IPO, subject to redemption), and Class B ordinary shares (5,750,000 outstanding, held by the Sponsor and related parties, convertible to Class A). It also describes the 14,075,000 warrants issued in connection with the IPO, their exercise terms, redemption conditions, and accounting classification as equity - The Company is authorized to issue 5,000,000 preference shares, none of which are issued or outstanding[92] - Post-IPO, there are 17,250,000 Class A ordinary shares issued and outstanding, all subject to possible redemption[93] - There are 5,750,000 Class B ordinary shares issued and outstanding, held by the Sponsor, which automatically convert to Class A shares upon a Business Combination[94][96] - 14,075,000 warrants were issued in connection with the IPO (8,625,000 Public Warrants and 5,450,000 Private Placement Warrants)[98][105] - Public Warrants are exercisable at $11.50 per share, commencing 30 days after a Business Combination, and expire five years after completion of the Business Combination[98] - The Company may call warrants for redemption if Class A ordinary shares equal or exceed $18.00 per share for 20 trading days within a 30-trading day period[101] NOTE 9. SUBSEQUENT EVENTS The company reviewed subsequent events up to the financial statement issuance date and identified no events requiring adjustment or disclosure beyond the Initial Public Offering, which is already disclosed throughout the document - No subsequent events requiring adjustment or disclosure were identified, other than the Initial Public Offering[106] Item 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS Management discusses the company's financial condition and operational results, detailing net loss, post-IPO liquidity, and contractual obligations as a blank check company focused on a business combination - The Company is a blank check company formed to effect a business combination and has not generated any operating revenues to date[109][110] Results of Operations (Three Months Ended March 31, 2025) | Metric | Amount | | :-------------------------- | :------- | | Net loss | $(54,616) | | General and administrative expenses | $54,616 | - Net cash used in operating activities for the three months ended March 31, 2025, was $25,000[112] - Following the IPO, $172,500,000 was placed in a Trust Account, intended primarily for the initial Business Combination[115][116] - The Company does not anticipate needing additional funds for operating its business post-IPO, but may require financing for a business combination or significant redemptions[117] - As of March 31, 2025, the Company did not have any off-balance sheet arrangements[118] - Contractual obligations include registration rights for up to 12,700,000 Class A ordinary shares and 6,500,000 warrants, and a deferred underwriting fee of $6,900,000 payable upon completion of a Business Combination[119][122] Item 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK As a smaller reporting company, Digital Asset Acquisition Corp. is not required to provide quantitative and qualitative disclosures about market risk - The Company is a smaller reporting company and is not required to provide quantitative and qualitative disclosures about market risk[124] Item 4. CONTROLS AND PROCEDURES The Principal Executive Officer and Chief Financial Officer evaluated the effectiveness of the company's disclosure controls and procedures as of March 31, 2025, concluding they were effective. There have been no material changes in internal control over financial reporting during the most recently completed fiscal quarter - The Principal Executive Officer and Chief Financial Officer concluded that the company's disclosure controls and procedures were effective as of March 31, 2025[126] - There have been no material changes in internal control over financial reporting during the most recently completed fiscal quarter[127] PART II - OTHER INFORMATION This part covers legal proceedings, risk factors, unregistered equity sales, defaults, mine safety, other information, and exhibits Item 1. LEGAL PROCEEDINGS The company reported no legal proceedings - The Company has no legal proceedings[130] Item 1A. RISK FACTORS There have been no material changes to the risk factors previously disclosed in the company's final prospectus for its Initial Public Offering filed on April 30, 2025 - No material changes to the risk factors disclosed in the final prospectus for the Initial Public Offering filed on April 30, 2025[131] Item 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS This section details the unregistered sale of 5,450,000 Private Placement Warrants for $5,450,000, issued under Section 4(a)(2) of the Securities Act. These warrants are identical to Public Warrants but are not redeemable, have transfer restrictions, and can be exercised on a cashless basis. The proceeds from both the IPO and Private Placement Warrants, totaling $172,500,000, were placed in a Trust Account - The Company consummated the sale of 5,450,000 Private Placement Warrants at $1.00 per warrant, generating gross proceeds of $5,450,000[133] - The issuance was made pursuant to the exemption from registration contained in Section 4(a)(2) of the Securities Act[133] - Private Placement Warrants are not redeemable, have transfer restrictions, may be exercised on a cashless basis, and are entitled to registration rights[134] - Following the IPO, $172,500,000 from the net proceeds of the Units and Private Placement Warrants was placed in the Trust Account[135] - The Company paid $10,350,000 in underwriting discounts and commissions and incurred approximately $700,000 for other IPO-related costs[136] Item 3. DEFAULTS UPON SENIOR SECURITIES The company reported no defaults upon senior securities - The Company reported no defaults upon senior securities[137] Item 4. MINE SAFETY DISCLOSURES Mine safety disclosures are not applicable to the company - Mine safety disclosures are not applicable to the Company[138] Item 5. OTHER INFORMATION The company reported no other information - The Company reported no other information[139] Item 6. EXHIBITS This section lists all exhibits filed as part of, or incorporated by reference into, the Quarterly Report on Form 10-Q, including various agreements (Underwriting, Warrant, Letter, Trust, Registration Rights, Private Placement Warrants Purchase, Administrative Services) and certifications (Principal Executive Officer, Principal Financial and Accounting Officer) - The report includes various exhibits such as the Underwriting Agreement, Warrant Agreement, Letter Agreement, Investment Management Trust Agreement, Registration Rights Agreement, Private Placement Warrants Purchase Agreements, and Administrative Services and Indemnification Agreement[141] - Certifications from the Principal Executive Officer and Principal Financial and Accounting Officer are filed/furnished as exhibits[141] SIGNATURES This section contains the official signatures of the company's principal executive and financial officers Signatures The report is duly signed on behalf of Digital Asset Acquisition Corp. by Peter Ort, Principal Executive Officer and Co-Chairman, and Jeff Tuder, Chief Financial Officer and Co-Chairman, on June 12, 2025 - The report was signed by Peter Ort, Principal Executive Officer and Co-Chairman, and Jeff Tuder, Chief Financial Officer and Co-Chairman[146][147] - The signing date for the report was June 12, 2025[146][147]