UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q

(Mark One)

☒ QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended March 31, 2026

☐ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from to

Commission File Number: 001-42995

PROCAP FINANCIAL, INC.

(Exact name of registrant as specified in its charter)

Delaware		39-2767031
(State or other jurisdiction of incorporation or organization)		(I.R.S. Employer Identification No.)

600 Lexington Avenue, Floor 2 New York, New York		10022
(Address of principal executive offices)		(Zip Code)

(305) 938-0912

(Registrant’s telephone number, including area code)

Not Applicable

(Former name, former address and former fiscal year, if changed since last report)

Securities registered pursuant to Section 12(b) of the Act:

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
Common Stock, par value $0.001 per share	BRR	The Nasdaq Stock Market LLC
Redeemable warrants, each whole warrant exercisable for one share of Common Stock at an exercise price of $11.50 per share	BRRWW	The Nasdaq Stock Market LLC

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit such files). Yes ☒ No ☐

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a smaller reporting company or an emerging growth company. See the definitions of “large accelerated filer,” “accelerated filer,” “smaller reporting company,” and “emerging growth company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer	☐	Accelerated filer	☐
Non-accelerated filer	☒	Smaller reporting company	☒
		Emerging growth company	☒

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. ☐

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes ☐ No ☒

As of May 13, 2026, there were 90,573,524 shares of common stock, par value $0.001 per share, of the registrant issued and outstanding.

PROCAP FINANCIAL, INC.

TABLE OF CONTENTS

	PAGE

PART I. FINANCIAL INFORMATION	1
Item 1. Financial Statements	1
Condensed Consolidated Balance Sheets as of March 31, 2026 (unaudited) and December 31, 2025	1
Condensed Consolidated Statement of Operations for the Three Months Ended March 31, 2026 (unaudited)	2
Condensed Consolidated Statement of Changes in Stockholders’ Equity for the Three Months Ended March 31, 2026 (unaudited)	3
Condensed Consolidated Statement of Cash Flows for the Three Months Ended March 31, 2026 (unaudited)	4
Notes to Unaudited Condensed Consolidated Financial Statements	5
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	22
Item 3. Quantitative and Qualitative Disclosures About Market Risk	27
Item 4. Controls and Procedures	28
PART II. OTHER INFORMATION	29
Item 1. Legal Proceedings	29
Item 1.A Risk Factors	29
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds	31
Item 3. Defaults Upon Senior Securities	31
Item 4. Mine Safety Disclosure	31
Item 5. Other Information	31
Item 6. Exhibits	32
SIGNATURES	33

PART I - FINANCIAL INFORMATION

Item 1. Financial Statements

PROCAP FINANCIAL, INC.

CONDENSED CONSOLIDATED BALANCE SHEETS

(in thousands, except per share data)

		March 31, 2026 (unaudited)			December 31, 2025
ASSETS
Current assets
Cash and Cash equivalents	$	25,964		$	44,976
Restricted cash		-			149,885
Accounts receivable		-			45
Prepaid expenses and other assets, current		1,620			2,121
Total current assets		27,584			197,027

Digital assets		372,277			441,791
Right-of-use asset		1,029			-
Fixed assets, net		168			52
Deposits		82			-
Prepaid expenses, non-current		365			16
TOTAL ASSETS	$	401,505		$	638,886

LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable and accrued expenses	$	1,684		$	1,831
Derivative securities liabilities		-			428
Lease liability, current		241			-
Deferred revenue		-			1
Income Tax payable		193			-
Total current liabilities		2,118			2,260
Long-term liabilities
Lease liability, non-current		812			-
Conversion feature liability - Convertible Notes		131			2,278
Convertible Notes, net		91,496			214,172
TOTAL LIABILITIES		94,557			218,710

STOCKHOLDERS’ EQUITY
Preferred stock; 50,000,000 authorized shares; no shares issued and outstanding as of March 31, 2026 and December 31, 2025		-			-
Common stock; $0.001 par value; 550,000,000 authorized shares; 85,563,025 shares issued and 82,056,573 shares outstanding as of March 31, 2026, 85,166,604 shares issued and 84,327,208 shares outstanding as of December 31, 2025		85			85
Treasury stock, at cost; 3,506,452 shares and 839,396 shares as of March 31, 2026 and December 31, 2025, respectively		(10,845	)		(2,847	)
Additional paid-in capital		454,443			451,914
Accumulated deficit		(136,735	)		(28,976	)
Total stockholders’ equity		306,948			420,176
TOTAL LIABILITIES AND STOCKHOLDERS’ EQUITY	$	401,505		$	638,886

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

PROCAP FINANCIAL, INC.

CONDENSED CONSOLIDATED STATEMENT OF OPERATIONS

(unaudited)

(in thousands, except per share data)

	Three Months Ended March 31, 2026
Revenue	$	1

Operating expenses:
General and administrative		4,059
Stock-based compensation		3,540
Loss from operations		(7,598	)

Other income (expense):
Change in fair value of digital assets		(105,467	)
Change in fair value of Convertible Notes conversion feature		838
Realized loss on put option liability		(914	)
Gain on extinguishment of debt		5,933
Interest and dividend income		742
Interest expense		(1,100	)
Other expense, net		(99,968	)

Net loss before taxes		(107,566	)

Income tax expense		(193	)

Net loss	$	(107,759	)

Weighted average number of shares of common stock outstanding, basic and diluted		82,898,332
Net loss per common stock, basic and diluted	$	(1.30	)

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

PROCAP FINANCIAL, INC.

CONDENSED CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS’ EQUITY

(in thousands, except per share data, unaudited)

	Shares		Amount		Shares		Amount		Shares			Amount			Capital			Deficit			Equity
	Preferred Stock				Common Stock				Treasury Stock						Additional Paid-in			Accumulated			Total Stockholders’
	Shares		Amount		Shares		Amount		Shares			Amount			Capital			Deficit			Equity
Balance, December 31,2025		-	$	-		85,166,604	$	85		(839,396	)	$	(2,847	)	$	451,914		$	(28,976	)	$	420,176
Balance		-	$	-		85,166,604	$	85		(839,396	)	$	(2,847	)	$	451,914		$	(28,976	)	$	420,176
Stock-based compensation		-		-		-		-		-			-			3,540			-			3,540
Purchase of treasury stock		-		-		-		-		(2,667,056	)		(7,998	)		-			-			(7,998	)
Issuance of restricted stock, net of withholding taxes		-		-		396,421		-		-			-			(1,011	)		-			(1,011	)
Net loss		-		-		-		-		-			-			-			(107,759	)		(107,759	)
Balance, March 31, 2026		-	$	-		85,563,025	$	85		(3,506,452	)	$	(10,845	)	$	454,443		$	(136,735	)	$	306,948
Balance		-	$	-		85,563,025	$	85		(3,506,452	)	$	(10,845	)	$	454,443		$	(136,735	)	$	306,948

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

PROCAP FINANCIAL, INC.

CONDENSED CONSOLIDATED STATEMENT OF CASH FLOWS

(in thousands, unaudited)

	For the three months ended March 31, 2026
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(107,759	)
Adjustments to reconcile net loss to net cash used in operations:
Change in fair value of digital assets		105,467
Realized loss on put option liability		914
Amortization of right-of-use asset		51
Gain on extinguishment of debt		(5,933	)
Change in fair value of Convertible Notes conversion feature		(838	)
Stock based compensation		3,540
Depreciation		39
Amortization of discount and debt issuance costs on Convertible Notes		1,100
Changes in operating assets and liabilities:
Accounts receivable		45
Prepaid expenses and other current assets		154
Deposits		(82	)
Accounts payable and accrued expenses		(149	)
Deferred revenue		(1	)
Lease liability		(27	)
Income tax payable		193
CASH USED IN OPERATING ACTIVITIES		(3,286	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of digital assets		(35,953	)
Purchase of fixed assets		(155	)
CASH USED IN INVESTING ACTIVITIES		(36,108	)

CASH FLOWS FROM FINANCING ACTIVITIES
Payments of Convertible Notes		(119,152	)
Proceeds from derivative securities		889
Purchase of derivative securities		(1,653	)
Settlement of derivative securities		(578	)
Taxes paid on RSU vesting		(1,011	)
Purchase of treasury stock		(7,998	)
CASH USED IN FINANCING ACTIVITIES		(129,503	)

NET CHANGE IN CASH		(168,897	)
Cash, cash equivalents and restricted cash, beginning of period		194,861
Cash, cash equivalents and restricted cash, end of period	$	25,964

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

PROCAP FINANCIAL, INC.

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

(in thousands, except share, per share data, Bitcoin, and per Bitcoin data)

(unaudited)

Note 1. Organization

Founded in 2025, ProCap Financial, Inc., together with its subsidiaries (collectively, the “Company” or “ProCap”), is a U.S.-based modern finance company. The Company’s mission is to help independent investors make money. The Company initially launched with Bitcoin-focused media products and Bitcoin holdings on its corporate balance sheet.

ProCap believes that Bitcoin represents a superior long-term store of value and a viable alternative to traditional fiat-based reserve assets and that Bitcoin will play an increasingly important role as a reserve asset for individuals, corporations, and governments worldwide. A key objective of the Company is to support the broader Bitcoin information ecosystem, including through audio podcasts, video interviews, and text-based articles designed to help individuals and organizations understand Bitcoin’s significance and utility of its mission. To support its operations, the Company has initiated its plan to accumulate and hold Bitcoin as a long-term treasury reserve asset.

The Company’s business is also built upon a foundational belief that advances in artificial intelligence (“AI”) may enable more scalable and efficient tools for portfolio analysis, financial planning, and investor decision support. Consistent with this approach, the Company expects to increasingly rely on software-based systems and automated processes as part of its operating model. In 2026, the Company added strategies related to the use of AI and automation to support the development and delivery of financial products and services, including the launch of ProCap Insights and the acquisition of CFO Silvia, Inc, a Delaware corporation (“CFO Silvia”) in April 2026. See Note 15 for further details relating to the transaction.

The Company launched ProCap Insights, the first agentic research platform in finance, in April 2026. Leveraging the latest AI technology, ProCap aims to deliver institutional-grade research to help independent investors make more informed investment decisions.

CFO Silvia has developed a consumer-facing AI platform that aggregates and organizes financial data to provide users with automated financial education, tracking and analytical tools. The CFO Silvia platform connects to financial account integrations, including brokerage accounts, retirement accounts, crypto currency wallets, real estate valuation services, and alternative investment platforms, to deliver users a consolidated, real-time view of their net worth, holdings and liabilities.

The platform utilizes AI-driven analytical tools to perform portfolio tracking, concentration analysis, fee analysis, scenario modeling, and informational financial summaries through a conversational interface accessible via chat, email, and voice. The platform is designed to surface potential portfolio risks, including sector or asset class overconcentration, elevated fee structures, and inefficient cash allocation. The platform does not provide personalized investment advice within the meaning of the Investment Advisers Act of 1940 and is not intended to serve as a registered investment adviser or replace the judgment of a qualified financial professional.

Business Combination

On December 5, 2025, the Company completed a business combination with Columbus Circle Capital Corp I (“CCCM”), a special purpose acquisition company, resulting in the Company becoming a publicly traded entity. The transaction was accounted for as a reverse recapitalization in accordance with U.S. GAAP. The Company deemed to be the accounting acquirer based on Accounting Standard Update No. 2025-03. Business Combinations (Topic 805) and Consolidation (Topic 810): Determining the Accounting Acquirer in the Acquisition of a Variable Interest Entity, which we early adopted.

In connection with the transaction:

	●	Legacy ProCap equity holders received an aggregate of approximately 74.6 million shares of the Company’s common stock (after applying the exchange ratio, including preferred unit conversion).
	●	CCCM shareholders received approximately 10.6 million shares, after significant redemptions.
	●	Total common shares outstanding immediately following the transaction were approximately 85.2 million.
	●	Net proceeds from the transaction were approximately $12.2 million, after redemptions and transaction costs.

As a result of the reverse recapitalization:

	●	The historical financial statements of ProCap became those of the Company.
	●	All prior-period equity amounts and share counts have been retroactively restated to reflect the exchange ratio established in the transaction.

Additionally, previously issued public and private placement warrants of CCCM remained outstanding and became warrants of the Company.

Note 2. Liquidity and Capital Resources

As of March 31, 2026, the Company had $25,964 in cash and cash equivalents and working capital of $25,466.

For the three months ended March 31, 2026, the Company reported a net loss of $107,759. This net loss was primarily driven by factors that are inherently volatile and subject to market conditions, including:

	●	Unrealized losses related to Bitcoin holdings due to fluctuations in the market price of Bitcoin;
	●	General and administrative expenses associated with operating as a public company and stock-based compensation expense.

Because digital assets and derivative instruments are measured at fair value, the Company’s results of operations may fluctuate significantly from period to period, as discussed further in “Note 4”.

As of March 31, 2026, the Company had an aggregate of $99,600 of principal of Convertible Notes outstanding. (See Note 7).

Based on the cash and cash equivalents balance of $25,964 as of March 31, 2026, and fair value of the Company’s Bitcoin holdings of $372,277, the Company has determined that the Company’s sources of liquidity will be sufficient to meet the Company’s needs for the one-year period from the issuance of these unaudited condensed consolidated financial statements.

Note 3. Summary of Significant Accounting Policies

Basis of Presentation

The accompanying condensed unaudited consolidated financial statements have been prepared by the Company in accordance with accounting principles generally accepted in the United States (“GAAP”) for interim financial reporting and as required by Rule 8-03 of Regulation S-X. Accordingly, the condensed unaudited consolidated financial statements may not include all of the information and notes required by GAAP for audited financial statements. The condensed consolidated balance sheet as of December 31, 2025 included herein was derived from audited financial statements but does not include all disclosures required by GAAP for complete financial statements. In the opinion of the Company’s management, the accompanying condensed unaudited consolidated financial statements contain all adjustments, consisting of items of a normal and recurring nature, necessary to present fairly the Company’s financial position as of March 31, 2026, the results of its operations for the three months ended March 31, 2026, cash flows for the three months ended March 31, 2026, and stockholders’ equity for the three months ended March 31, 2026. The results of operations for the three months ended March 31, 2026 are not necessarily indicative of the results to be expected for the full year. The preparation of condensed consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets and liabilities, and related disclosures, as of the date of the financial statements, and the amounts of revenues and expenses reported during the period. Actual results could differ from estimates. The accompanying condensed unaudited consolidated financial statements should be read in conjunction with the Company’s audited consolidated financial statements and the accompanying notes for the year ended December 31, 2025.

Reclassification

Certain prior-period amounts have been reclassified to conform to the current-period presentation in the unaudited condensed consolidated financial statements and accompanying notes. Specifically, amounts previously presented in “Other current assets” have been reclassified and combined with “Prepaid and other current assets” to align with the current-year balance sheet presentation. No other reclassifications were made. These reclassifications did not have a material impact on the Company’s unaudited condensed consolidated financial statements, related disclosures, or prior-period results.

Principles of Consolidation

The accompanying unaudited condensed consolidated financial statements include the accounts of ProCap Financial, Inc. and the Company’s wholly-owned subsidiaries. All intercompany transactions have been eliminated upon consolidation of these entities.

Use of Estimates

The preparation of the accompanying unaudited condensed consolidated financial statements in conformity with GAAP requires management to make certain estimates and assumptions that affect the reported amounts and disclosure of assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period.

Making estimates requires management to exercise significant judgment. It is at least reasonably possible that the estimate is the effect of a condition, situation or set of circumstances that existed at the date of the financial statements, which could change in the near term due to one or more future confirming events. Significant accounting estimates include valuations of derivative liabilities and the valuations of share-based awards. Accordingly, the actual results could differ significantly from those estimates.

Segment Information

ASC 280, “Segment Reporting” (“ASC 280”), defines operating segments as components of an enterprise where discrete financial information is available that is evaluated regularly by the chief operating decision-maker (“CODM”) in deciding how to allocate resources and in assessing performance. The Company operates as a 1single operating segment managed on a consolidated basis. The Company’s CODM is the Chief Executive Officer, who has ultimate responsibility for the operating performance of the Company and the allocation of resources. The CODM uses net loss as the primary measure to manage the business and does not segment the business for internal reporting or decision making. Significant segment expenses are consistent with those presented on the condensed consolidated statement of operations and total segments assets are consistent with total assets presented on the condensed consolidated balance sheets.

Concentration of Credit Risk

Financial instruments that potentially subject the Company to concentrations of credit risk consist of cash, cash equivalents, restricted cash, and Bitcoin. The Company maintains its cash, cash equivalents, restricted cash, and Bitcoin with major financial institutions and reputed Bitcoin custodians. The Company’s cash consists of accounts held within financial institutions which, at times, may exceed federally insured limits. The cash balance in excess of the federally insured limits was $25,714 as of March 31, 2026, including cash accounts held through Bitcoin custodians, Anchorage Digital Bank, N.A., and BitGo Trust Company, which totaled $4. Our Bitcoin is held offline in cold storage with multiple third-party providers. As of March 31, 2026, approximately 60% of our Bitcoin was held at Anchorage Digital Bank, N.A., and approximately 40% of our Bitcoin was held at BitGo Trust Company. The Company has historically not experienced any losses on its cash and investments in relation to federally insured limits.

Cash and Cash Equivalents

The Company considers all short-term investments with an original maturity date of three months or less when purchased to be cash equivalents.

Restricted Cash

The Company classifies cash as restricted cash when it is held in a separate bank account and its withdrawal or general use is legally restricted, or when a portion of cash is designated as collateral. The Company had restricted cash of $0 and $149,885 as of March 31, 2026 and December 31, 2025, respectively.

Fixed Assets, net

Property, plant and equipment are stated at cost, less accumulated depreciation. Betterments, renewals, and extraordinary repairs that materially extend the useful life of the asset are capitalized; other repairs and maintenance charges are expensed as incurred. The Company includes equipment, furniture and fixtures, and leasehold improvements in fixed assets, net.

The Company’s depreciation expense is calculated using the straight-line method over the estimated useful lives of the related assets, which results in depreciation being incurred evenly over the life of an asset. Fully depreciated assets are retained in property and accumulated depreciation accounts until they are removed from service.

Prepaid Expenses

The Company includes in prepaid expenses payments made in advance for goods and services for which the Company will receive a future benefit. Prepaid expenses are recorded at cost and are expensed over the period in which the benefit is realized.

Fair value measurement

The Company’s financial assets and liabilities are accounted for in accordance with FASB ASC Topic 820, Fair Value Measurements and Disclosures (“ASC 820”) which defines fair value as the exchange price that would be received for an asset or paid to transfer a liability (an exit price) in the principal or most advantageous market for the asset or liability in an orderly transaction between market participants on the measurement date. The fair value hierarchy requires an entity to maximize the use of observable inputs when measuring fair value and classify those inputs into three levels:

Level 1 — Quoted prices (unadjusted) in active markets for identical assets or liabilities.

Level 2 — Observable, market-based inputs, other than quoted prices included in Level 1, for the assets or liabilities either directly or indirectly.

Level 3 — Unobservable inputs in which there is little or no market data, which require the reporting entity to develop its own assumptions.

Observable inputs are based on market data obtained from independent sources, while unobservable inputs are based on the Company’s market assumptions. Unobservable inputs require significant management judgment or estimation. In some cases, the inputs used to measure an asset or a liability may fall into different levels of the fair value hierarchy. In those instances, the fair value measurement is required to be classified using the lowest level of input that is significant to the fair value measurement. Such determination requires significant management judgment.

Digital Assets

As a result of the adoption of ASU 2023-08, Intangibles—Goodwill and Other—Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”), the Company accounts for its qualifying crypto assets within the scope of ASC 350-60. Accordingly, such crypto assets are measured at fair value at each reporting date.

The fair value of the Company’s digital assets is determined using the period-end closing price quoted on Coinbase, an active market, in accordance with ASC 820, Fair Value Measurement. Because digital asset markets operate on a continuous, 24-hour basis, the Company uses the price as of 23:59:00 UTC Coordinated Universal Time (UTC) as of the reporting date. Quoted prices for identical digital assets in active markets represent Level 1 inputs in the fair value hierarchy.

Changes in the fair value of digital assets are recognized as a change in fair value of digital assets within other income (expense) in the unaudited condensed consolidated statement of operations. When the Company sells digital assets, realized gains or losses are measured as the difference between the cash proceeds received and the carrying value of the digital assets sold, as determined using the first-in, first-out method. Realized gains and losses are recorded in realized gain or loss on sale of digital assets in the unaudited condensed consolidated statement of operations.

The Company’s current treasury strategy is to retain Bitcoin as its primary treasury reserve asset. Based on this strategy, the Company classifies its digital assets as non-current assets on the unaudited condensed consolidated balance sheet. The Company held its Bitcoin with third-party custodians, consisting of approximately 3,300 and 2,500 Bitcoin as of March 31, 2026 and December 31 2025 respectively, with Anchorage Digital Bank, N.A. and approximately 2,157 and 2,500 Bitcoin held with BitGo Trust Company, Inc. as of March 31, 2026 and December 31, 2025 respectively. The Company retains control over the underlying digital assets held with these custodians.

Accounts Payable and Accrued Expenses

The Company’s payables and accrued expenses result primarily from the administration of the Company. The Company records accounts payable upon receipt of a vendor invoice. Accrued expenses are recognized when incurred, not when paid, to accurately reflect expenses within the period they relate to, ensuring proper matching under accrual basis accounting.

Revenue Recognition Policy

The Company recognizes revenue in accordance with ASC 606, Revenue from Contracts with Customers (“ASC 606”). Revenue is recognized when control of promised services is transferred to customers in an amount that reflects the consideration to which the Company expects to be entitled in exchange for those services.

The Company typically provides advertising and marketing services through weekly digital media placements, including audio, and social media advertisements. Revenue is recognized over time, as the customer simultaneously receives and consumes the benefits of the services as they are performed (ASC 606-10-25-27(a)). For contracts in which services are provided evenly over the term of the arrangement, the Company applies a time-elapsed (straight-line) measure of progress, as this method best reflects the pattern of satisfaction of the performance obligation.

Customer payments are typically due upfront or within 30 days of service commencement. Amounts invoiced and cash received upfront, but not yet earned, are recorded as deferred revenue until the related services are performed.

Management evaluates all contracts to determine performance obligations, transaction price, variable consideration (if any), and the existence of any significant financing components. The Company does not typically incur incremental costs to obtain contracts; therefore, no contract costs are capitalized under ASC 340-40.

Accounts Receivable

Accounts receivable represents amounts due from customers for services sold in the ordinary course of business and are initially recorded at the original invoice amount. Receivables are reported at net realizable value, net of an allowance for credit losses. The allowance is estimated using historical collection data, with uncollectible amounts written off when deemed uncollectable. As of March 31, 2026, the Company had no accounts receivable outstanding. As of December 31, 2025, accounts receivable totaled $45, which were subsequently written off during the three months ended March 31, 2026.

Convertible notes

When the Company issues convertible debt, it first evaluates the balance sheet classification of the convertible instrument in its entirety to determine: (1) whether the instrument should be classified as a liability under ASC 480, and (2) whether the conversion feature should be accounted for separately from the host instrument. If it is determined that the conversion feature should be bifurcated from the host instrument, it is then classified as a derivative liability on the unaudited condensed consolidated balance sheet and marked at fair value at period-ends, with any changes in its fair value recognized in the unaudited condensed consolidated statement of operations.

The Company records the Convertible Notes as a long-term liability at face value net of debt discount and debt issuance costs. If any of the conditions to the convertibility of the Convertible Notes are satisfied, or the Convertible Notes become due within one year, then the Company may be required under applicable accounting standards to reclassify the carrying value of the Convertible Notes as a current liability.

Debt issuance costs related to the Convertible Notes were capitalized and are presented net against the balance of the Convertible Notes on the unaudited condensed consolidated balance sheet. Debt issuance costs consist of underwriting, legal and other direct costs related to the issuance of the Convertible Notes. The debt discount related to the Convertible Notes was capitalized and is presented net against the balance of the Convertible Notes on the unaudited condensed consolidated balance sheet. Debt issuance costs and debt discount are amortized to interest expense over the term of the Convertible Notes using the straight-line method which approximated the effective interest method using an effective interest rate of approximately 9.0%.

Stock-based Compensation

The Company accounts for its stock-based compensation awards in accordance with ASC 718, Compensation - Stock Compensation (“ASC 718”). ASC 718 requires companies to measure the cost of employee and non-employee services received in exchange for an award of an equity instrument and to recognize it as an expense in the unaudited condensed consolidated statement of operations based on their grant award date fair values. Stock-based compensation expense is recognized on a straight-line basis over the requisite service period.

Net Loss Per Share

The Company complies with accounting and disclosure requirements of FASB ASC Topic 260, “Earnings Per Share” which requires presentation of basic and diluted earnings per share (“EPS”) on the face of the statement of operations for all entities with complex capital structures and requires a reconciliation of the numerator and the denominator of the basic EPS computation to the numerator and denominator of the diluted EPS. Basic net loss per share is computed by dividing net loss by the weighted average number of common stock par value $0.001 (“Common Stock”) outstanding for the period. It excludes the dilutive effects of any potentially issuable common shares. Diluted net loss per share is calculated by including any potentially dilutive share issuance in the denominator and potentially dilutive securities are evaluated using the treasury stock method or the if-converted method, as applicable. For the three months ended March 31, 2026, all potentially dilutive securities were not included in the calculation of diluted net loss per share as their effect would be anti-dilutive.

The computation of basic and diluted net loss per share for the three months ended March 31, 2026 is as follows:

	For the three months ended March 31, 2026
Numerator:
Net loss	$	(107,759	)

Denominator:
Weighted average number of shares of common stock outstanding, basic and diluted		82,898,332
Net loss per common stock, basic and diluted	$	(1.30	)

As of March 31, 2026, the following potentially dilutive securities were excluded from the computation of diluted net loss per share because their inclusion would have been anti-dilutive:

	Number of Shares
Warrants		12,852,500
RSUs (See Note 10)		9,097,214
Convertible Notes		7,659,240
Total		29,608,954

Income Taxes

The Company follows the asset and liability method of accounting for income taxes under FASB ASC 740, which requires an asset and liability approach to financial accounting and reporting for income taxes. Deferred tax assets and liabilities are recognized for the estimated future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that included the enactment date. Valuation allowances are established, when necessary, to reduce deferred tax assets to the amount expected to be realized.

FASB ASC 740 prescribes a recognition threshold and a measurement attribute for the financial statement recognition and the measurement of tax positions 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. The Company recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. The Company is currently not aware of any issues under review that could result in significant payments, accruals or material deviation from its position. The Company is subject to income tax examinations by major taxing authorities since inception.

Treasury Stock

The Company accounts for treasury stock using the cost method in accordance with U.S. GAAP. When the Company repurchases its own Common Stock, the purchase price, including any directly attributable transaction costs, is recorded as treasury stock, a reduction to stockholders’ equity. Treasury shares are not considered outstanding and therefore are excluded from the calculation of earnings per share and dividends.

When treasury shares are reissued, the Company uses the average cost of the shares held in treasury to determine the cost basis. Any excess of the reissuance price over the cost of the shares is recorded as an increase to additional paid-in capital. If the reissuance price is below cost, the difference is first charged to additional paid-in capital to the extent of previous net gains from treasury stock transaction; any remaining shortfall is recorded as a reduction to retained earnings.

The Company does not recognize gains or losses in the unaudited condensed consolidated statement of operations from the purchase, reissuance or retirement of treasury stock. If treasury shares are formally retired, the Company reduces Common Stock and additional paid-in capital based on the original issuance amounts, with any difference between the carrying amount of the treasury shares and the amounts removed from equity recorded in retained earnings.

Leases

The Company accounts for leases in accordance with ASC 842, Leases. At contract inception, the Company determines whether an arrangement contains a lease based on whether it conveys the right to control the use of an identified asset for a period of time in exchange for consideration.

Right-of-use (“ROU”) assets represent the Company’s right to use an underlying asset over the lease term, and lease liabilities represent the Company’s obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of lease payments over the lease term.

Lease liabilities are measured using the present value of fixed lease payments. The Company uses its incremental borrowing rate at the commencement date to discount the lease payments, as the rate implicit in the lease is generally not readily determinable.

ROU assets are measured as the initial amount of the lease liability, adjusted for lease prepayments, initial direct costs, and lease incentives received. Lease expense for operating leases is recognized on a straight-line basis over the lease term.

The Company has elected the short-term lease exemption for leases with an initial term of 12 months or less; such leases are not recognized on the balance sheet and lease payments are recognized as expense on a straight-line basis over the lease term.

Leases are presented on the Company’s balance sheet as ROU assets, lease liability, current, and lease liability, non-current. Cash payments for operating leases are included in operating activities.

Recent Accounting Pronouncements, recently adopted:

In December 2024, the FASB issued ASU No. 2024-04, Debt—Debt with Conversion and Other Options (Subtopic 470-20): Induced Conversions of Convertible Debt Instruments. This ASU provides guidance on the accounting for induced conversions of convertible debt instruments and eliminates the current requirement to recognize an expense equal to the fair value of all securities and other consideration transferred in an induced conversion that is in excess of the fair value of securities issuable pursuant to the original conversion terms. The amendments are effective for fiscal years beginning after December 15, 2025, with early adoption permitted. The adoption of this ASU did not have a material impact on the Company’s unaudited condensed consolidated financial statements.

In July 2025, the FASB issued ASU 2025-05, Financial Instruments - Credit Losses (Topic 326): Simplifications to the Current Expected Credit Losses Model for Certain Financial Assets. This ASU introduces a practical expedient that permits entities to estimate expected credit losses for certain short-term financial assets, including trade receivables and contract assets, based on current conditions without requiring reasonable and supportable forecasts. The new guidance is effective for fiscal years beginning after December 15, 2025, including interim periods within those fiscal years, with early adoption permitted. The adoption of this ASU did not have a material impact on the Company’s unaudited condensed consolidated financial statements.

Recent Accounting Pronouncements, not yet adopted:

In November 2024, the FASB issued (“ASU 2024-03”), “Income Statement-Reporting Comprehensive Income-Expense Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses” (“ASU 2024-03”), requiring public entities to disclose additional information about specific expense categories in the notes to the financial statements on an interim and annual basis. ASU 2024-03 is effective for fiscal years beginning after December 15, 2026, and for interim periods beginning after December 15, 2027, with early adoption permitted. The Company is currently evaluating the impact of adopting ASU 2024-03.

The Company’s management does not believe that any other recently issued, but not yet effective, accounting pronouncements, if currently adopted, would have a material effect on the Company’s unaudited condensed consolidated financial statements.

Note 4. Digital Assets

The following table sets forth the units held, cost basis and fair value of crypto assets held, as shown on the balance sheet as of March 31, 2026 and December 31, 2025, respectively:

	As of March 31, 2026
	Quantity		Cost Basis		Fair Value
BTC		5,457	$	502,749	$	372,277
Total			$	502,749	$	372,277

	As of December 31, 2025
	Quantity		Cost Basis		Fair Value
BTC		5,000	$	466,797	$	441,791
Total			$	466,797	$	441,791

The following table presents a reconciliation of the fair values of the Company’s digital assets as of March 31, 2026 based on the fair value model under ASU 2023-08:

	Fair value
Digital assets fair value as of December 31, 2025	$	441,791
Purchase of digital assets		35,953
Net unrealized loss on digital assets		(105,467	)
Digital assets fair value as of March 31, 2026	$	372,277

The vast majority of the Company’s assets are concentrated in its Bitcoin holdings. Bitcoin is a digital asset, which is a novel asset class that is subject to significant legal, commercial, regulatory and technical uncertainty. Holding Bitcoin does not generate any cash flows and involves custodial fees and other costs. Additionally, the price of Bitcoin has historically experienced significant price volatility, and a significant decrease in the price of Bitcoin would adversely affect the Company’s financial condition and results of operations. The Company’s strategy of acquiring and holding Bitcoin also exposes it to counterparty risks with respect to the custody of its Bitcoin, cybersecurity risks, and other risks inherent to holding a digital asset. In particular, the Company is subject to the risk that, if its private keys with respect to its digital assets are lost or destroyed or other similar circumstances or events occur, the Company may lose some or all of its digital assets, which could materially adversely affect the Company’s financial condition and results of operations.

Note 5. Prepaid Expenses and Other Current Assets

Prepaid expenses and other current assets consisted of the following:

Prepaid expenses and other assets:	March 31, 2026		December 31, 2025
Prepaid insurance	$	1,421	$	1,813
Prepaid expenses - current		199		50
Other current assets		-		258
Total prepaid expenses and other assets - current	$	1,620	$	2,121
Prepaid expenses - non-current	$	365	$	16

Note 6. Fixed Assets, net

Fixed assets consist of the following:

Schedule of Fixed Assets

	March 31, 2026			December 31, 2025
Furniture and equipment	$	10		$	9
Leasehold improvements		229			75
Total		239			84
Less: accumulated depreciation		(71	)		(32	)
Total fixed assets, net	$	168		$	52

During the three months ended March 31, 2026, the Company recognized straight-line depreciation expense of $39.

Note 7. Long-Term Debt

The net carrying value of the Company’s outstanding debt consisted of the following, as of :

Schedule of Outstanding Debt

	March 31, 2026			December 31, 2025
Convertible Notes due 2028	$	99,600		$	235,000
Discount, net (1)		(4,431	)		(11,387	)
Debt issuance costs, net (2)		(3,673	)		(9,441	)
Convertible Notes, net	$	91,496		$	214,172

(1)

Discount as of March 31, 2026 consisted of $7,050 of original issue discount and $4,629 for the initial fair value of the embedded derivative, less accumulated amortization of $893 and gain on debt modification of $6,355.

(2)

Debt issuance costs as of March 31, 2026 consisted of $9,683 in debt issuance costs, less accumulated amortization of $741 and gain on debt modification of $5,269.

Management determined the fair value of the Convertible Notes due 2028 as of March 31, 2026 and December 31, 2025 were $99,469 and $225,671, respectively, based on an implied Cost of Debt Capital of 0.05% (Level 3 input). A change in those inputs to a different amount might result in a significantly higher or lower fair value measurement.

The table below reflects the principal amount of loan maturities due over the next five years as of March 31, 2026:

Schedule of Loan Maturities

	5-Year Loan Maturities Fiscal Year
	2026		2027		2028		2029		2030		Total
2028 Convertible Notes	$	-	$	-	$	99,600	$	-	$	-	$	99,600

The table below presents the disaggregation of interest expense for the period March 31, 2026:

	For the three -months ended March 31,2026
Debt discount amortization	$	601
Debt issuance cost amortization		499
Interest expense, net	$	1,100

The Convertible Notes have a conversion rate of 76.9 shares per $1,000 equal to an approximately $13.00 conversion price, zero interest rate, maturity of up to 36 months, and are collateralized by certain Bitcoin assets. Under the indenture associated with the Convertible Notes, the Company must maintain at all times a 1.0:1.0 (loan-to-collateral ratio compliance level) times collateralization of the Convertible Notes using a mix of Bitcoin (with Bitcoin being valued at 50% for collateral calculation purposes), and cash and cash equivalents (with cash and cash equivalents being valued at 100% for collateral calculation purposes). This note has an effective interest rate of 9.09%. U.S. Bank Trust Company, National Association serves as collateral agent and trustee with regard to the Convertible Notes and associated indenture and security agreements. As of March 31, 2026, the Company had 3,300 Bitcoin on deposit, of which only 2,929 Bitcoin were required to be used as collateral, at Anchorage Digital Bank, N.A as collateral for the Convertible Notes. The Company retains sole discretion and control over Bitcoin held as collateral. Lenders have no rights to sell, pledge and re-hypothecate this asset.

Each Convertible Note investor may, at its option, convert each $1,000 principal amount of their Convertible Note into a number of shares of Common Stock equal to the conversion rate in effect on the conversion date, cash, or a combination of Common Stock and cash at any time from the issue date until the close of business on the second scheduled trading date immediately before the maturity date. The embedded conversion of the Convertible Notes meets the criteria for bifurcation and is recognized as a separate derivative instrument.

If an event of default occurs, then the principal amounts on all the Convertible Notes then outstanding will immediately become due and payable.

On February 9, 2026, the Company entered into privately negotiated note repurchase agreements (the “Repurchase Agreements”) with certain Noteholders (the “Noteholders”) of its outstanding Convertible Notes (the Repurchase). Pursuant to the Repurchase Agreements, the Company agreed to repurchase $135,400 in aggregate principal amount of the Convertible Notes for an aggregate cash purchase price of $119,152. The outstanding principal balance of the Convertible Notes after the Repurchase was $99,600.

In accordance with ASC 470-50, Debt - Modifications and Extinguishments, the Company evaluated the Repurchase and determined that it represents a debt extinguishment. Accordingly, upon settlement, the Company derecognized a portion of the unamortized debt issuance costs, debt discount and conversion feature derivative liability associated with the extinguished portion of the debt. The Company recognized a net gain on extinguishment of debt of $5,933 recorded in other income (expense) in the Company’s unaudited condensed consolidated statement of operations for the three months ended March 31, 2026.

The following table summarizes the net gain on the extinguishment of debt:

Gain on

extinguishment

of debt

Excess of the net carrying amount of the repurchased Convertible Notes

16,248

Derecognition of debt discount

(

SEC Form 10-Q filed by ProCap Financial Inc.