Company: DAAQ
Filing Date: 2025-11-14
Form Type: 10-Q
Source: 0001213900-25-110841
Chunk: 62

Company: Digital Asset Acquisition Corp.
Filing Date: 2025-11-14
Form: 10-Q
Item: Item 8
Chunk 62
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 sheets, primarily due to their short-term nature.

Warrants

The Company accounts 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 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 the Company’s
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 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 as liabilities 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 in the condensed statements of operations.

The Public Warrants and Private Placement Warrants
are not precluded from equity classification and were accounted for as such on the date of issuance.

11

DIGITAL ASSET ACQUISITION CORP.

SEPTEMBER 30, 2025

NOTES TO UNAUDITED CONDENSED FINANCIAL STATEMENTS

Share-Based Compensation 

The Company records share-based compensation
in accordance with ASC Topic 718, Compensation-Share Compensation (“ASC 718”). ASC 718 defines a fair value-based
method of accounting for an employee share option or similar equity instrument. The Company recognizes all forms of share-based
payments at their fair value on the grant date, which are based on the estimated number of awards that are ultimately expected to
vest. Share-based payments are valued using a Black-Scholes option pricing model. Grants of share-based payment awards issued to
non-employees for services rendered have been recorded at the fair value of the share-based payment, which is the more readily
determinable value. The grants are amortized on a straight-line basis over the requisite service periods, which is generally the
vesting period. If