Company: DAAQ
Filing Date: 2025-08-19
Form Type: 10-Q
Source: 0001213900-25-078074
Chunk: 9

Company: Digital Asset Acquisition Corp.
Filing Date: 2025-08-19
Form: 10-Q
Item: Item 8
Chunk 9
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AUDITED CONDENSED FINANCIAL STATEMENTS

Offering
Costs Associated with the Initial Public Offering

The
Company complies with the requirements of ASC 340-10-S99-1 and SEC Staff Accounting Bulletin Topic 5A - Expenses of Offering.
Offering costs consist principally of professional and registration fees incurred through the balance sheet date that are related to
the Initial Public Offering. Offering costs directly attributable to the issuance of an equity contract to be classified in equity are
recorded as a reduction in equity. Offering costs for equity contracts that are classified as assets and liabilities are expensed immediately.
The Company incurred offering costs amounting to $10,931,212, consisting of $1,725,000 of cash underwriting fees, $1,725,000 of underwriting
fees paid via the issuance of Private Placement Warrants, $6,900,000 of deferred underwriting fees and $581,212 of other offering costs.
As such, the Company recorded $10,881,785 of offering costs as a reduction of temporary equity and $49,427 of offering costs as a reduction
of permanent equity.

Income
Taxes

The
Company accounts for income taxes under ASC Topic 740, Income Taxes (“ASC 740”). ASC 740 requires the recognition
of deferred tax assets and liabilities for both the expected impact of differences between the financial statements and tax basis of
assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. ASC 740 additionally
requires a valuation allowance to be established when it is more likely than not that all or a portion of deferred tax assets will not
be realized.

ASC
740 also clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements and prescribes
a recognition threshold and measurement process for financial statement recognition and measurement of a tax position taken or expected
to be taken in a tax return. For those benefits to be recognized, a tax position must be more-likely-than-not to be sustained upon examination
by taxing authorities. ASC 740 also provides guidance on derecognition, classification, interest and penalties, accounting in interim
periods, disclosure and transition. Based on the Company’s evaluation, it has been concluded that there are no significant uncertain
tax positions requiring recognition in the Company’s financial statements.

The
Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. There were no unrecognized
tax benefits and no amounts accrued for interest and