CSLM Digital Asset Acquisition Corp III, Ltd

Previous wording

Unless otherwise stated or the context otherwise requires, references in this quarterly report to (i) the “Company,” “us,” or “we” are to CSLM Digital Asset Acquisition Corp. III, Ltd, a Cayman Islands exempted company; (ii) “founder shares” are to shares of our Class B ordinary shares initially purchased by our Sponsor in a private placement prior to our Initial Public Offering, and the shares of our Class A ordinary shares issued upon the conversion thereof; and (iii) “Sponsor” are to CSLM Acquisition Sponsor II, Ltd, a Delaware limited liability company. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited condensed financial statements and the notes thereto contained elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2025. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

Current wording

Unless otherwise stated or the context otherwise requires, references in this quarterly report to (i) the “Company,” “us,” or “we” are to CSLM Digital Asset Acquisition Corp III, Ltd, a Cayman Islands exempted company; (ii) “founder shares” are to shares of our Class B ordinary shares initially purchased by our Sponsor in a private placement prior to our Initial Public Offering, and the shares of our Class A ordinary shares issued upon the conversion thereof; and (iii) “Sponsor” are to CSLM Acquisition Sponsor II, Ltd, a Cayman Islands exempted company. The following discussion and analysis of the Company’s financial condition and results of operations should be read in conjunction with the unaudited condensed financial statements and the notes thereto contained elsewhere in this Quarterly Report on Form 10-Q and our Annual Report on Form 10-K for the year ended December 31, 2025. Certain information contained in the discussion and analysis set forth below includes forward-looking statements that involve risks and uncertainties.

Previous wording

This quarterly report, including statements under this “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” includes forward-looking statements. These forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations, beliefs, intentions or strategies regarding the future. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not a forward-looking statement. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements. For information identifying some of the important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the discussion under the headings “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” in our final prospectus filed with the U.S. Securities and Exchange Commission (the “SEC”) on August 27, 2025. The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, we disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

Current wording

This quarterly report, including statements under this “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” includes forward-looking statements. These forward-looking statements include, but are not limited to, statements regarding our or our management team’s expectations, beliefs, intentions or strategies regarding the future, including statements regarding the Business Combination with First Digital, the anticipated timing of the Business Combination and the ability of the parties to complete the Business Combination. In addition, any statements that refer to projections, forecasts or other characterizations of future events or circumstances, including any underlying assumptions, are forward-looking statements. The words “anticipate,” “believe,” “continue,” “could,” “estimate,” “expect,” “intends,” “may,” “might,” “plan,” “possible,” “potential,” “predict,” “project,” “should,” “would” and similar expressions may identify forward-looking statements, but the absence of these words does not mean that a statement is not a forward-looking statement. Such forward-looking statements relate to future events or future performance, but reflect management’s current beliefs, based on information currently available. A number of factors could cause actual events, performance or results to differ materially from the events, performance and results discussed in the forward-looking statements, including the risk that the Business Combination is not completed in a timely manner or at all, the amount of redemptions by our public shareholders and the risks relating to First Digital’s business. For information identifying some of the important factors that could cause actual results to differ materially from those anticipated in the forward-looking statements, please refer to the discussion under the headings “Cautionary Note Regarding Forward-Looking Statements” and “Risk Factors” in our final prospectus filed with the U.S. Securities and Exchange Commission (the “SEC”) on August 27, 2025. The Company’s securities filings can be accessed on the EDGAR section of the SEC’s website at www.sec.gov. Except as expressly required by applicable securities law, we disclaim any intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

Previous wording

As indicated in the accompanying unaudited condensed financial statements as of June 30, 2026 and December 31, 2025, we had $2,469,590 and $3,108,288 in cash and cash equivalents, respectively, $237,411,325 and $233,253,391 of treasury securities held in the Trust Account, respectively, and working capital of $1,705,532 and $2,973,730, respectively. Further, we expect to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to raise capital or to complete our initial business combination will be successful. These factors, among others, raise substantial doubt about our ability to continue as a going concern.

Current wording

As indicated in the accompanying unaudited condensed financial statements as of September 30, 2026 and December 31, 2025, we had $1,874,641 and $3,108,288 in cash and cash equivalents, respectively, $239,535,078 and $233,253,391 of treasury securities held in the Trust Account, respectively, and working capital of $1,161,164 and $2,973,730, respectively. Further, we expect to incur significant costs in the pursuit of our acquisition plans. We cannot assure you that our plans to raise capital or to complete our initial business combination will be successful. These factors, among others, raise substantial doubt about our ability to continue as a going concern.

Previous wording

We have neither engaged in any operations nor generated any revenues to date. Our only activities since inception have been organizational activities and those necessary to prepare for the IPO that closed on August 28, 2025. Following the IPO, we will not generate any operating revenues until after completion of our initial business combination. We will generate non-operating income in the form of interest income on cash, cash equivalents, and treasury securities held in the Trust Account and dividend income on marketable securities held in the Trust Account after the IPO. After the IPO, we expect to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence expenses.

Current wording

We have neither engaged in any operations nor generated any revenues to date. Our only activities since inception have been organizational activities and those necessary to prepare for the IPO that closed on August 28, 2025, and following the IPO, identifying a target company for a business combination and negotiating and entering into the Business Combination Agreement. We will generate non-operating income in the form of interest income on cash, cash equivalents, and treasury securities held in the Trust Account and dividend income on marketable securities held in the Trust Account. We expect to incur increased expenses as a result of being a public company (for legal, financial reporting, accounting and auditing compliance), as well as for due diligence and transaction expenses in connection with the Business Combination.

Previous wording

For the three months ended June 30, 2026, we had net income of $1,509,367. Net income was comprised of $2,111,206 of interest income on Trust Account and $21,835 of interest income on money market mutual fund, offset by $583,725 of general, formation, and administrative expenses, $18,699 of insurance expense and $21,250 of listing fees.

Current wording

For the three months ended September 30, 2026, we had net income of $1,567,467. Net income was comprised of $2,123,753 of interest income on Trust Account and $18,464 of interest income on money market mutual fund, offset by $534,363 of general, formation, and administrative expenses, $18,904 of insurance expense and $21,483 of listing fees. For the three months ended September 30, 2025, we had net income of $91,073. Net income was comprised of $876,657 of interest income on Trust Account, offset by $559,000 of share-based compensation expense, $210,041 of general, formation, and administrative expenses, $6,986 of insurance expense and $9,557 of listing fees.

Previous wording

Our liquidity needs have been satisfied prior to the completion of IPO through $25,000 paid by the Sponsor to cover certain of our offering and formation costs in exchange for the issuance of the founder shares to our Sponsor and approximately $270,394 in borrowings under an unsecured promissory note from the Sponsor, which was repaid in full at the closing of the IPO. Following the IPO, our liquidity needs have been satisfied from the cash held outside our Trust Account generated from the net proceeds of the IPO and private placement.

Current wording

Our liquidity needs have been satisfied prior to the completion of IPO through $25,000 paid by the Sponsor to cover certain of our offering and formation costs in exchange for the issuance of the founder shares to our Sponsor and $270,394 in borrowings under an unsecured promissory note from the Sponsor, which was repaid in full at the closing of the IPO. Following the IPO, our liquidity needs have been satisfied from the cash held outside our Trust Account generated from the net proceeds of the IPO and private placement.

Previous wording

As of June 30, 2026 and December 31, 2025, we had $2,469,590 and $3,108,288 in cash and cash equivalents, respectively, and working capital of $1,705,532 and $2,973,730 respectively. We have incurred and expect to continue to incur significant costs in pursuit of our acquisition plans. Our plans to raise capital and to consummate our initial business combination may not be successful. These factors among others raise substantial doubt about our ability to continue as a going concern.

Current wording

As of September 30, 2026 and December 31, 2025, we had $1,874,641 and $3,108,288 in cash and cash equivalents, respectively, and working capital of $1,161,164 and $2,973,730 respectively. We have incurred and expect to continue to incur significant costs in pursuit of our acquisition plans. Our plans to raise capital and to consummate our initial business combination may not be successful. In addition, if we are unable to complete our initial business combination by August 28, 2027, we will be required to cease all operations except for the purpose of winding up, redeem our public shares and thereafter liquidate and dissolve. These factors among others raise substantial doubt about our ability to continue as a going concern.

Previous wording

The Sponsor transferred $35,000 in cash to the Company during the six months ended June 30, 2026. As such, the due to related party balance is $35,000. The Company intends to repay the amount in full to the Sponsor. No amounts were due to related party as of December 31, 2025.

Current wording

The Sponsor transferred $35,000 in cash to the Company during the nine months ended September 30, 2026. In September 2026, the Company repaid the amount in full to the Sponsor. No amounts were due to related party as of September 30, 2026 and December 31, 2025.

Previous wording

Commencing on the effective date of the Registration Statement, the Company entered into an agreement with our Sponsor to pay an aggregate of $30,000 per month for company administration, office space, utilities, and secretarial and administrative support. Upon completion of the initial Business Combination or the liquidation, the Company will cease paying the $30,000 per month fee. For the three months ended June 30, 2026 and 2025, the Company recorded $90,000 and $0, respectively, and paid $90,000 and $0, respectively under the agreement for the period. For the six months ended June 30, 2026 and 2025, the Company recorded $180,000 and $0, respectively, and paid $180,000 and $0, respectively under the agreement for the period. As of June 30, 2026 and December 31, 2025, no amounts were outstanding under the agreement.

Current wording

Commencing on the effective date of the Registration Statement, the Company entered into an agreement with the Sponsor to pay an aggregate of $30,000 per month for company administration, office space, utilities, and secretarial and administrative support. Upon completion of the initial Business Combination or the liquidation, the Company will cease paying the $30,000 per month fee. For the three months ended September 30, 2026 and 2025, the Company recorded $90,000 and $34,839, respectively, and paid $90,000 and $0, respectively under the agreement for the period. For the nine months ended September 30, 2026 and 2025, the Company recorded $270,000 and $34,839, respectively, and paid $270,000 and $0, respectively under the agreement for the period. As of September 30, 2026 and December 31, 2025, no amounts were outstanding under the agreement.

Previous wording

On November 10, 2025, the Company entered into consulting agreements with Ryan Gentry and Vikas Mittal (the “Consulting Agreements”) pursuant to which Mr. Gentry and Mr. Mittal agreed to provide the Company with consulting services, which may include but are not limited to, assisting with analysis and advice regarding the potential investment opportunities for special purpose acquisition companies, accounting and bookkeeping, and administrative support. Pursuant to the terms of the Consulting Agreements, Mr. Gentry is entitled to a consulting fee of $12,500 per month plus expense reimbursement and Mr. Mittal is entitled to a consulting fee of $17,500 per month, payable at the end of each monthly period. The Consulting Agreements will terminate automatically upon completion of a business combination by the Company, unless sooner terminated by either party subject to the terms and conditions therein. For the three months ended June 30, 2026, the Company incurred $95,045 and paid $92,695 and for the six months ended June 30, 2026, the Company incurred $182,695 and paid $152,695, resulting in an outstanding balance of $30,000 under the Consulting Agreements as of June 30, 2026 which is recorded to consulting services payable – related party on the condensed balance sheets. No amounts were outstanding as of December 31, 2025.

Current wording

On November 10, 2025, the Company entered into consulting agreements with Ryan Gentry and Vikas Mittal (the “Consulting Agreements”) pursuant to which Mr. Gentry and Mr. Mittal agreed to provide the Company with consulting services, which may include but are not limited to, assisting with analysis and advice regarding the potential investment opportunities for special purpose acquisition companies, accounting and bookkeeping, and administrative support. Pursuant to the terms of the Consulting Agreements, Mr. Gentry is entitled to a consulting fee of $12,500 per month plus expense reimbursement and Mr. Mittal is entitled to a consulting fee of $17,500 per month, payable at the end of each monthly period. The Consulting Agreements will terminate automatically upon completion of a business combination by the Company, unless sooner terminated by either party subject to the terms and conditions therein. For the three months ended September 30, 2026, the Company incurred $90,000 and paid $90,000 and for the nine months ended September 30, 2026, the Company incurred $272,695 and paid $242,695, resulting in an outstanding balance of $30,000 under the Consulting Agreements as of September 30, 2026 which is recorded to consulting services payable – related party on the condensed balance sheets. No amounts were outstanding as of December 31, 2025.

Previous wording

On March 18, 2026, the Audit Committee approved the substitution of Samara Capital Advisors, LLC (“SCA”) for Meteora Capital, LLC as the Company’s consulting services provider under the Company’s previously approved consulting arrangement, with SCA serving as contracting and payroll-processing agent for consulting personnel supporting the Company’s financial analysis, accounting, SEC reporting, transaction readiness, investor relations and Business Combination activities. SCA’s principals include Vikas Mittal, the Company’s Co-CEO and CFO, making SCA a related party under Item 404 of Regulation S-K. Amounts paid to SCA are direct pass-through reimbursement of staffing costs under the previously approved rate card, which was not modified by the substitution. For the three and six months ended June 30, 2026, the Company incurred $100,408 and paid $51,035, resulting in an outstanding balance of $49,373 as of June 30, 2026 which is recorded to consulting services payable – related party on the condensed balance sheets. No amounts were outstanding as of December 31, 2025.

Current wording

On March 18, 2026, the Audit Committee approved the substitution of Samara Capital Advisors, LLC (“SCA”) for Meteora Capital, LLC as the Company’s consulting services provider under the Company’s previously approved consulting arrangement, with SCA serving as contracting and payroll-processing agent for consulting personnel supporting the Company’s financial analysis, accounting, SEC reporting, transaction readiness, investor relations and Business Combination activities. SCA’s principals include Vikas Mittal, the Company’s Co-CEO and CFO, making SCA a related party under Item 404 of Regulation S-K. Amounts paid to SCA are direct pass-through reimbursement of staffing costs under the previously approved rate card, which was not modified by the substitution. For the three months ended September 30, 2026, the Company incurred $149,125 and paid $148,597 and for the nine months ended September 30, 2026, the Company incurred $249,533 and paid $199,632, resulting in an outstanding balance of $49,901 as of September 30, 2026 which is recorded to consulting services payable – related party on the condensed balance sheets. No amounts were outstanding as of December 31, 2025.

Previous wording

Commencing on the effective date of the Registration Statement, we entered into an agreement with our Sponsor to pay an aggregate of $30,000 per month for company administration, office space, utilities, and secretarial and administrative support. Upon completion of the initial Business Combination or the liquidation, we will cease paying the $30,000 per month fee. For the three months ended June 30, 2026 and 2025, we recorded $90,000 and $0, respectively, and paid $90,000 and $0, respectively under the agreement for the period. For the six months ended June 30, 2026 and 2025, we recorded $180,000 and $0, respectively, and paid $180,000 and $0, respectively under the agreement for the period. As of June 30, 2026 and December 31, 2025, no amounts were outstanding under the agreement.

Current wording

Commencing on the effective date of the Registration Statement, the Company entered into an agreement with the Sponsor to pay an aggregate of $30,000 per month for company administration, office space, utilities, and secretarial and administrative support. Upon completion of the initial Business Combination or the liquidation, the Company will cease paying the $30,000 per month fee. For the three months ended September 30, 2026 and 2025, the Company recorded $90,000 and $34,839, respectively, and paid $90,000 and $0, respectively under the agreement for the period. For the nine months ended September 30, 2026 and 2025, the Company recorded $270,000 and $34,839, respectively, and paid $270,000 and $0, respectively under the agreement for the period. As of September 30, 2026 and December 31, 2025, no amounts were outstanding under the agreement.