ProCap Financial, Inc. 10-K

ITEM 1. BUSINESS Overview Founded in 2025, ProCap is a U.S.-based, modern finance company. Our mission is to help independent investors make money. We initially launched with Bitcoin-focused media products and Bitcoin holdings on our consolidated balance sheet. In February 2026, we added strategies related to the use of AI and automation to support the development and delivery of financial products and services. Our business is built upon a foundational belief that advances in 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 our operating model. We further believe that Bitcoin represents a superior long-term store of value and a viable alternative to traditional fiat-based reserve assets. We believe Bitcoin will play an increasingly important role as a reserve asset for individuals, corporations, and governments worldwide. A key objective of our 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 our mission. To support our operations, we have initiated our plan to accumulate and hold Bitcoin as a long-term treasury reserve asset. AI Products and Strategy In connection with our strategic expansion into artificial intelligence software, announced in February 2026, we intend to develop and commercialize AI-powered products and services focused on financial education, portfolio analysis, and investor decision support. We believe that the adoption of AI technologies in financial services is accelerating, with industry participants increasingly deploying AI systems across compliance, risk management, customer engagement, and financial planning functions. We intend to position our Company to capitalize on this trend through the development and commercialization of AI-powered financial tools for consumers and, over time, institutional and enterprise users. Merger Agreement with CFO Silvia To support our AI strategy, on February 9, 2026, we entered into an Agreement and Plan of Merger (the “Merger Agreement”) with Silvia Merger Sub, Inc., a Delaware corporation and a direct wholly owned subsidiary of the Company (“Merger Sub”), CFO Silvia, Inflection Points, Inc. , a Delaware corporation (“Inflection Points”), Shain Noor, an individual ( “Noor”), (Noor and, together with Inflection Points, the “Sellers”), and Shain Noor, solely in his capacity as the stockholder representative. Under the Merger Agreement, Merger Sub will merge with and into CFO Silvia, with CFO Silvia surviving as a direct wholly owned subsidiary of the Company (the “Merger”). 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 more than 10,000 financial account integrations, including brokerage accounts, retirement accounts, cryptocurrency wallets, real estate valuation services, and alternative investment platforms, to deliver users a consolidated, real-time view of their net worth, holdings, and liabilities. As of February 2026, the platform had approximately 12,000 users with approximately $30 billion in aggregate tracked assets. 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. Following the closing of the Merger, the Company expects to leverage CFO Silvia’s technology platform, data infrastructure, and development team, to be led by Shain Noor in his capacity as our Chief Technology Officer, to expand its AI product offerings. For more information on the Merger see “ Part II -- Item 7 -- Management’s Discussion and Analysis of Financial Condition And Results Of Operations -- Business Combination Transaction and Recent Developments--Merger Agreement with CFO Silvia ” elsewhere in this Annual Report. Our AI-powered products and strategy are at an early stage of development. CFO Silvia has limited historical operations, and we have not yet generated material revenue from AI-powered products or services. The development, launch, and commercialization of our AI-powered product offerings will require significant additional investment in technology, talent, and infrastructure. The market for AI-powered financial products is rapidly evolving and increasingly competitive, and there can be no assurance that the Company’s products will achieve market acceptance, generate meaningful revenue, or compete effectively against existing or future competitors with greater resources and more established market positions. See “ Part I -- Item 1A.-- Risk Factors ” elsewhere in this Annual Report for additional discussion of risks related to our AI-powered products and strategy. Media Products We offer media products to help independent investors understand financial markets, current events, and technology advancements. These “media products ” include social media accounts, email newsletters, and audio or video content. We launched our media products in August of 2025. The media products are built on the knowledge and experience gained from Anthony Pompliano’s car eer and other media businesses, which have utilized a combination of social and traditional media aimed to generate advertising and sponsorship revenue. Leveraging our experience in this field, and through the Investment Consulting and Marketing Services Agreement (the “Services Agreement”) between ProCap and Professional Capital Management (described below) we are able to execute at a high level, while reducing our media products operations expenses. However, we may still face challenges in building and maintaining large audiences for our media products, which may be due to talent availability, scheduling, and demand. In the ordinary course of our media operations, we enter into non-exclusive agreements to advertise certain Bitcoin-related products and services of third parties on our audio podcast and video podcasts broadcast on our YouTube channel and X account, in exchange for fees. In general, the terms of the agreements are structured as follows: (i) ProCap provides advertisements for advertisers on ProCap’s podcast, which is disseminated via audio, video, and social media channels for a fixed period, which may be renewed by mutual agreement or canceled at any time; and (ii) the advertisers pay to ProCap a fixed fee, which may be paid in a combination of fiat, Bitcoin, stable coin, or the advertiser’s token, subject to ProCap’s consent. However, in the future ProCap may determine that it is in its best interests to accept other digital assets. The revenue from these agreements will be used to operate the business and fund additional media products. Should we not be able to enter into additional advertising agreements, we may face challenges in continuing to grow our advertising-based revenue. - 5 - On June 23, 2025, Professional Capital Management and Legacy ProCap entered into the Services Agreement. Pursuant to the Services Agreement, Professional Capital Management agreed to provide certain investment consulting, marketing and advertising services pursuant to the statements of work, including production, editing, and distribution services for our media products. In consideration for such services, Legacy ProCap issued to Professional Capital Management 10,000,000 common units of ProCap (the “Common Units”), which subsequently transferred 500,000 Common Units to Jeffrey Park. The Services Agreement has a term of four (4) years following the effective date and will automatically renew for a subsequent one (1) year term, unless either party gives the other party at least sixty (60) days’ prior written notice of non-renewal or otherwise terminates the Services Agreement or any statement of work as set forth therein. In addition to our advertising and sponsorship revenue, we may participate in “staking” activities involving Bitcoin, and we may evaluate emerging protocols that enable Bitcoin holders to engage in staking-like arrangements. We may collaborate with our advertising partners to evaluate and provide feedback on their staking-related products and services. Staking is a mechanism available on certain proof-of-stake (“PoS”) blockchains whereby users delegate or lock up a specified amount of tokens to help validate transactions and secure the network. In return, participants may earn rewards, typically in the form of additional tokens. These rewards are generally distributed by the network protocol. We plan to use less than 5% of our total Bitcoin holdings, if any, for staking activities. Staked Bitcoin typically remains custodied and subject to an unbonding period of approximately seven days, during which it is not transferable. In connection with our staking activities, we intend to adhere to the following guidelines: ● Allocation Limits : ProCap will allocate no more than 5% of ProCap’s Bitcoin holdings for use in staking activities. ● Custody Protocols: Under the custody agreements (the “Custody Agreements”), all staked Bitcoin will remain with a qualified institutional custodian engaged by ProCap, which are currently Anchorage Digital Bank, N.A. (“Anchorage”), BitGo Holdings Inc. (“BitGo”), Coinbase Trust Company, LLC (“Coinbase”), and FalconX (defined below). The custodian may facilitate access to third-party staking or yield protocols on behalf of ProCap. In the future, we may engage additional or alternative custodians to support these activities, provided that all such custodians meet applicable regulatory and institutional standards. ● Oversight and Approvals: All staking decisions require approval from our Chief Executive Officer and activity is subject to ongoing monitoring by our senior management team and compliance officer. ● Unbonding Period: We will not exceed an unbonding period of approximately 7 days without approval from our Chief Investment Officer. ● Risk Controls: We will monitor potential risks associated with staking, including liquidity constraints and counterparty exposure. Further, we and our audit committee will periodically review participation in connection with our general risk management protocols. While Bitcoin does not use a PoS consensus mechanism and cannot be staked natively, emerging protocols such as Babylon, enable Bitcoin holders to lock Bitcoin as economic security on PoS chains. These mechanisms do not involve validating transactions on the Bitcoin blockchain but enables Bitcoin to serve as collateral for security in other blockchain ecosystems. In return, participants may receive rewards, if any, distributed by the PoS protocol and not by the Bitcoin network. In exchange for evaluating or using our partners’ staking platforms or services, including those involving Bitcoin staking via external protocols, we may receive fixed advertising fees and, where applicable, a portion of any staking rewards generated by our participation. - 6 - Bitcoin Treasury ProCap’s Bitcoin treasury strategy is grounded in the belief that Bitcoin represents an attractive store of value, characterized by its fixed supply, verifiable scarcity, and global liquidity. ProCap has adopted a Treasury Reserve Policy (the “Treasury Reserve Policy”) that establishes Bitcoin as the primary treasury reserve asset, while maintaining sufficient cash and cash equivalents to meet working capital, operational, and contractual requirements. The key elements of ProCap’s Bitcoin strategy include: ● Opportunistic Purchases: ProCap will monitor macroeconomic indicators, market valuation metrics (including, but not limited to, Market Value to Realized Value (“MVRV”) ratio, relative strength index, and on-chain analytics), and industry sentiment to identify periods of market dislocation or undervaluation. During such periods, ProCap may accelerate Bitcoin accumulation through discretionary purchases. We will retain sufficient cash and cash equivalents for operating needs and obligations. Our Bitcoin holdings are not intended to replace working capital reserves. ● Capital Raising: ProCap may periodically access capital markets through the issuance of equity, debt, or convertible instruments, with the objective of deploying proceeds into additional Bitcoin acquisitions. ProCap may also utilize innovative financing strategies, such as Bitcoin-collateralized debt instruments, to enhance its ability to accumulate Bitcoin in a manner that is accretive to shareholders on a per-share basis. ● Long-Term Holdings: ProCap views its Bitcoin holdings as a strategic, long-term reserve asset. ProCap will continue to accumulate Bitcoin as market conditions and capital availability permit. We do not plan to sell Bitcoin except in extraordinary circumstances, such as to meet critical liquidity needs, to address adverse regulatory changes, purchase our Common Stock when conditions are advantageous, for tax purposes or in the event of a fundamental change in ProCap’s strategic outlook. ● Governance and Risk Management: ProCap’s board of managers has broad discretion over the investment, leverage and cash management policies it authorizes, whether in respect of ProCap’s Bitcoin holdings or other activities it may pursue, and has the power to change its current policies, including its strategy of acquiring and holding Bitcoin. All Bitcoin acquisition and treasury management activities are overseen by the senior management team and the Board, in consultation with external advisors with expertise in Bitcoin and corporate finance. ProCap will maintain internal controls, risk limits, and compliance protocols to ensure prudent execution of its Bitcoin strategy. As of February 12, 2026, we hold approximately 5,007 Bitcoin. In addition to maintaining sufficient cash and cash equivalents to meet working capital, operational, and contractual requirements, our policy is to hold a majority of our total treasury reserve assets in Bitcoin. While we only intend to sell Bitcoin in extraordinary circumstances, we plan to enter into various investment strategies such as put and call options contracts as part of a broader Bitcoin treasury and yield generating strategy to manage exposure to fluctuations in the market price of Bitcoin or for trading purposes. Put options provide the right to sell Bitcoin at a specified strike price on or before a stated maturity date, or the obligation to buy Bitcoin at the strike price if the put option is written. Call options provide the right to buy Bitcoin at a specified strike price on or before a stated maturity date, or the obligation to sell Bitcoin at the strike price if the call option is written. The contracts may be exchange-traded or over-the-counter (“OTC”) and may be cash-settled or physically settled. While these strategies may result in Bitcoin being sold if options are exercised, such dispositions are an expected feature of the strategy rather than discretionary sales. While we do not have policies in place to address air drops, incidental rights and hard forks, we plan to discuss with our board of directors the potential need for such policies in the future. Our audit committee and board of directors will monitor the need for such policies as part of their risk management oversight. To facilitate our Bitcoin purchases, we plan to purchase Bitcoin through third-party trading platforms and certain brokers. We entered into several customary purchase and sale agreements with various counterparties, pursuant to which the counterparties will execute the Company’s Bitcoin transactions. In the ordinary course of our business, we may enter into additional similar, customary agreements with other third party providers. - 7 - Hedging and Risk Management Practices To reduce the volatility inherent in our Bitcoin holdings and better manage capital efficiency, we may implement selective hedging strategies. These include: ● Use of exchange-listed Bitcoin derivatives, such as CME Bitcoin futures and options; ● Put options, covered call or collar strategies to limit downside risk or monetize price volatility; and ● Strategic counterparty arrangements for risk reduction in liquidity or event-driven scenarios. We do not engage in speculative trading or market-making activities. All derivatives transactions are for bona fide risk management, not for speculative gain. All hedging transactions are conducted solely for our own account and in compliance with the Commodity Exchange Act of 1936, as amended (the “CEA”), applicable exchange rules, SEC regulations, and relevant internal risk and hedging policies. See “- Government Regulation ” below for more information. We have implemented a comprehensive Know Your Customer (“KYC”) and Anti-Money Laundering (“AML”) Policy to comply with global AML and Counter-Terrorist Financing (“CTF”) laws, aiming to prevent misuse of its services for illicit activities. The policy includes governance by the Board of Directors, annual risk assessments, compliance with key regulations, thorough customer identification and enhanced due diligence for high-risk customers, ongoing transaction monitoring, daily sanctions screening, and prompt reporting of suspicious activities. Additionally, all employees receive annual AML/KYC training, and the program is independently audited yearly to address emerging risks. Potential Advantages and Disadvantages of Holding Bitcoin ProCap believes that Bitcoin is an attractive asset because it can serve as a store of value, supported by a robust and public open-source architecture, that is untethered to sovereign monetary policy. We also believe that, due to its limited supply, Bitcoin may offer the potential to serve as a hedge against inflation in the long-term and, if its adoption increases, the opportunity for appreciation in value. Bitcoin exists entirely in electronic form, as virtually irreversible public transaction ledger entries on the blockchain, and transactions in Bitcoin are recorded and authenticated not by a central repository, but by a decentralized peer-to-peer network. This decentralization mitigates the risks of certain threats common to centralized computer networks, such as denial-of-service attacks, and reduces the dependency of the Bitcoin network on any single system. The decentralization of user nodes and miners also mitigates the risk of a 51% attack, which would be very costly and difficult to execute with respect to Bitcoin because the Bitcoin network is open source and widely distributed, and transactions on the blockchain require significant computing power to be validated. However, while the Bitcoin network as a whole is decentralized, the private keys used to access Bitcoin balances are not widely distributed and are susceptible to phishing and other attacks designed to obtain sensitive information or gain access to password-protected systems. Loss of such private keys can result in an inability to access, and effective loss of, the corresponding Bitcoin. Consequently, Bitcoin holdings are susceptible to all of the risks inherent in holding any electronic data, such as power failure, data corruption, security breach, communication failure and user error, among others. These risks, in turn, make Bitcoin substantially more susceptible to theft, destruction, or loss of value from hackers, corruption, viruses and other technology-specific factors as compared to conventional fiat currency or other conventional financial assets. For more information on risks associated with holding Bitcoin, please see “ Risk Factors - Risks Related to our Business and Bitcoin Treasury Strategy ” of this Annual Report. In addition, the Bitcoin network relies on open-source developers to maintain and improve the Bitcoin protocol. Accordingly, Bitcoin may be subject to protocol design changes, governance disputes such as “forked” protocols, competing protocols, and other open source-specific risks that do not affect conventional proprietary software. Custody of ProCap’s Bitcoin ProCap will secure all Bitcoin holdings in custody accounts at top-tier, U.S.-based institutional qualified custodians with demonstrated records of regulatory compliance and information security. As of the date of this Annual Report, all of ProCap’s Bitcoin is held in a custody account with Anchorage, BitGo, Coinbase, and FalconX. ProCap’s custody framework includes: ● Diversification of custody across multiple providers to mitigate counterparty risk; ● Utilization of multi-signature cold storage solutions to enhance security, which store private keys in offline, air-gapped environments that are not connected to the internet, significantly reducing the risk of cyberattacks, unauthorized access, or online breaches; ● Rigorous due diligence and ongoing monitoring of custodians and service providers; and ● Negotiation of contractual protections to ensure ProCap’s property interests in Bitcoin are safeguarded in the event of custodian insolvency or other adverse events. - 8 - In the ordinary course of our business, we entered into customary custody services agreements (the “Custody Agreements”) with custodians such as Anchorage, BitGo, Coinbase, and FalconX, pursuant to which we engage the custodians to provide custodial services for our Bitcoin holdings. Under the Custody Agreements, all of our Bitcoin assets held with any of the custodians are fully segregated on-chain and are not commingled with the assets of other clients. All of our Bitcoin assets are held in cold storage, and ProCap is the only party with access to its Bitcoin held in custody with its custodians. The existence of ProCap’s Bitcoin held in custody pursuant to the Custody Agreements may be verified by third party auditors, subject to ProCap’s consent for the custodians to share account information with such auditors. The Custody Agreements have various terms and automatically renew for various terms, unless written notice is provided to the other party thirty days prior to the expiration of the Custody Agreements. The Custody Agreements may be terminated for cause by the non-breaching party upon a material breach which is not cured within thirty days after receipt by the breaching party of written notice from the non-breaching party of a material breach, however, the Custody Agreements may be terminated immediately under certain circumstances. In the ordinary course of our business, we may enter into other customary custody agreements with other third-party providers. Anchorage is chartered as a national trust bank and is regulated by the Office of the Comptroller of the Currency (“OCC”). As a national trust bank, Anchorage is authorized to perform fiduciary custody of digital assets, including Bitcoin, and is subject to ongoing regulatory oversight by the OCC. Anchorage maintains insurance coverage for certain losses of Bitcoin and other digital assets held in its custody. Anchorage holds insurance policies with aggregate policy limits, rather than per-account limits, including coverage for: the loss of property due to theft, robbery, burglary and third-party computer and funds transfer fraud ($100,000,000 policy limit), cyber/technology errors and omissions ($1,000,000 policy limit), general liability ($4,000,000 policy limit, inclusive of umbrella coverage), workers’ compensation (in accordance with minimum state law requirements), employer’s liability ($1,000,000 policy limit) and automobile liability ($4,000,000 policy limit, inclusive of umbrella coverage). However, digital assets held in Anchorage’s custody are not guaranteed by Anchorage and are not subject to the insurance protections of the Federal Deposit Insurance Corporation (“FDIC”) or the Securities Investor Protection Corporation (“SIPC”). BitGo is a state-chartered trust company organized under the laws of the State of South Dakota and regulated by the South Dakota Division of Banking. As a regulated trust company, BitGo is authorized to provide fiduciary custody services for digital assets, including Bitcoin, and is subject to ongoing regulatory oversight by its primary banking regulator. BitGo is considered a qualified custodian under applicable regulatory frameworks and holds client digital assets in segregated custody accounts that are not commingled with BitGo’s proprietary assets. BitGo maintains insurance coverage for certain losses of digital assets held in its custody through policies underwritten by a syndicate of insurers, including Lloyd’s of London and European market participants, with an aggregate specie insurance limit of up to $250 million for digital assets where BitGo holds all private keys and ancillary crime coverage (subject to customary exclusions, deductibles, and policy terms). However, digital assets held in BitGo’s custody are not guaranteed by BitGo and are not subject to the insurance protections of the FDIC or the SIPC. Coinbase is a limited-purpose trust company chartered under the New York Banking Law and is regulated by the New York State Department of Financial Services (“NYDFS”). As a fiduciary and regulated entity, Coinbase is authorized to provide secure custody services for a wide range of digital assets and is subject to rigorous regulatory oversight and capital requirements. Coinbase is a qualified custodian under the Investment Advisers Act of 1940, as amended (the “Advisers Act”) and maintains client digital assets in segregated accounts that are legally distinct from Coinbase’s corporate assets. To protect against external threats, Coinbase maintains insurance coverage designed to cover losses resulting from theft or cybersecurity breaches. However, digital assets held by Coinbase are not guaranteed by Coinbase, insured by the FDIC, or protected by the SIPC, and their value may fluctuate. FalconX is an institutional prime brokerage and operates through several subsidiaries, including FalconX Bravo, Inc., a Commodity Futures Trading Commission-registered swap dealer and a member of the National Futures Association, and FalconX Delta, Inc., a Money Services Business registered with Financial Crimes Enforcement Network (“FinCEN”) (collectively, “FalconX”). FalconX is a cryptocurrency-focused firm authorized to provide institutional access to the OTC derivatives market that also maintains numerous state-level money transmitter licenses. As a prime broker, FalconX provides integrated trading, credit, and custody services, utilizing bankruptcy-remote structures to ensure that client digital assets are held in segregated accounts and are not commingled with the firm’s proprietary assets. In addition to its own custodial infrastructure, FalconX provides “Prime Connect” services, allowing clients to trade while keeping assets in third-party qualified custody with NYDFS-regulated partners. Like other custodians, FalconX maintains insurance coverage for digital assets held in its custody, but digital assets in its custody are not guaranteed by FalconX, insured by the FDIC or protected by the SIPC. ProCap will continuously review and enhance its custody arrangements to ensure the highest standards of asset protection and operational resilience. Industry and Market Overviews AI AI refers broadly to computer systems and algorithms designed to perform tasks that traditionally require human intelligence, including learning from data, recognizing patterns, making predictions, and generating content. Modern AI systems are built on machine learning techniques, including deep learning and large language models, which are trained on large datasets to perform complex analytical and generative tasks. The recent emergence of generative AI, which can produce text, code, images, and structured analysis in response to natural language prompts, has significantly expanded the practical applications of AI across industries. - 9 - In financial services, AI is being applied to automate and augment a range of activities historically performed by human professionals, including financial planning, investment analysis, portfolio construction, risk assessment, fraud detection, regulatory compliance, and customer engagement. AI-powered financial tools seek to deliver these services at lower cost, greater speed, and broader scale than traditional advisory models, making personalized financial guidance accessible to a wider population of consumers and institutions. The global AI market has grown substantially over the past five years. According to industry estimates, the global AI market was valued at approximately $294 billion to $391 billion in 2025, depending on the scope of measurement, and is projected to grow to approximately $376 billion or more by the end of 2026. Multiple industry research firms project the global AI market will exceed $2 trillion by the early 2030s, with compound annual growth rates (“CAGR”) generally estimated between 27% and 37%. These projections underscore AI’s emergence as a foundational technology with applications across virtually every sector of the global economy. Within financial services specifically, the AI market has experienced particularly rapid expansion. Industry estimates place AI-powered products in the finance market at approximately $38 billion in 2024, projected to grow to over $190 billion by 2030, representing a CAGR of approximately 30.6%. Generative AI within financial services, a more nascent segment, was estimated at approximately $2.2 billion in 2024 and is projected to reach approximately $25.7 billion by 2033, reflecting a CAGR of approximately 31.0%. The growth of AI-powered financial planning tools has been driven by several factors, including rising consumer demand for low-cost, accessible financial guidance; the increasing sophistication of AI models capable of processing complex financial data; and the willingness of traditional financial institutions to adopt and integrate AI-driven capabilities into their existing platforms. Partnerships between fintech companies and established financial institutions have also contributed to market growth, accounting for an estimated 28% of revenue growth in the sector in 2025. While the AI-powered financial services market presents significant growth opportunities, it remains subject to considerable uncertainty and competitive pressure. The market is characterized by rapid technological change, evolving consumer expectations, and a regulatory environment that is still taking shape. The pace at which new AI capabilities emerge, including advances in generative AI, autonomous agents, and multimodal models, can rapidly alter the competitive landscape, rendering existing products less differentiated or obsolete. See the risk factors entitled “The Company operates in a highly competitive market, and many of the Company’s current and potential competitors have significantly greater resources” and “The regulatory environment for AI-powered financial products is evolving and uncertain, and future regulations could materially and adversely affect the Company’s business.” The AI-powered financial services industry is dynamic and rapidly evolving, offering substantial opportunities alongside significant risks. The Company will continue to monitor technological, regulatory, and market developments to navigate this complex landscape effectively. Proliferation of Open-Source Models in AI The development and proliferation of open-source AI models has been one of the most significant trends shaping the AI industry. Open-source AI refers to machine learning models and related software whose underlying code, model weights, and training methodologies are made publicly available, allowing developers, researchers, and enterprises to inspect, modify, fine-tune, and deploy these models without proprietary licensing restrictions. Major open-source model families include Meta’s Llama, Kimi K2, Mistral AI’s Mistral and Ministral, Alibaba’s Qwen, Google’s Gemma, and DeepSeek, among others. The pace of open-source releases has accelerated significantly, with an estimated 1,000 to 2,000 new models uploaded daily to Hugging Face, the leading open-source AI repository, by late 2025. Open-source AI models have rapidly closed the performance gap with proprietary alternatives. Models such as Meta’s Llama 3.3 and DeepSeek R1 have demonstrated performance comparable to leading proprietary models on a range of benchmarks. By late 2025, Alibaba’s Qwen family had surpassed Llama in cumulative downloads to become the most widely used base model for fine-tuning on Hugging Face, reflecting the global and increasingly competitive nature of open-source AI development. Enterprise adoption of open-source AI has grown meaningfully. Gartner has forecast that more than 60% of businesses will adopt open-source large language models for at least one AI application by the end of 2025, up from approximately 25% in 2023. Deloitte’s “State of AI in the Enterprise” report has indicated that companies using open-source models can achieve cost savings of approximately 40% compared to proprietary alternatives while maintaining comparable performance levels. Open-source adoption has been particularly strong among larger enterprises and in regulated industries such as financial services, healthcare, and telecommunications, where requirements for on-premises deployment, data sovereignty, and the ability to fine-tune models for domain-specific use cases make open-source approaches especially attractive. The growth of the open-source AI ecosystem has significant implications for the competitive landscape. Open-source models lower barriers to entry by reducing the cost and technical complexity of deploying AI capabilities, enabling a broader range of companies to build AI-powered products and services. At the same time, the rapid pace of open-source development creates both opportunities and risks for companies in the AI sector. Companies that effectively leverage open-source models may benefit from reduced development costs, faster time to market, and greater flexibility, while those that rely on proprietary AI capabilities may face pressure to differentiate on application-layer features, data advantages, or domain expertise rather than foundational model performance alone. The continued evolution of open-source AI, including questions around licensing terms, model governance, and the sustainability of open-source development, represents a material factor in the competitive dynamics of the AI industry. - 10 - AI Industry Participants The market for AI-powered financial products and services includes a broad and growing range of participants spanning large technology companies, established financial institutions, specialized fintech companies, and early-stage startups. The competitive landscape is shaped by the convergence of several industries, as technology companies expand into financial services, financial institutions invest heavily in AI capabilities, and new entrants leverage open-source AI models and cloud infrastructure to bring products to market at relatively low cost. Large technology companies, including Microsoft, Google, Amazon, and Apple, represent significant participants in the AI ecosystem that underpins the financial services industry. These companies collectively invested over $400 billion in AI-related capital expenditures in 2025, with projections exceeding $560 billion in 2026, primarily directed toward data center infrastructure, cloud computing capacity, and foundational AI model development. Their cloud platforms, including Amazon Web Services, Microsoft Azure, and Google Cloud, provide the infrastructure on which a substantial portion of AI-powered financial applications are built. Microsoft and Google have also introduced enterprise AI products, such as Microsoft 365 Copilot and Google’s Gemini integrations, that are being adopted across financial services firms. The resources, distribution capabilities, and existing enterprise relationships of these companies position them to compete directly or indirectly in the AI-powered financial services market. Established financial institutions and wealth management firms have accelerated their adoption of AI technologies. By 2025, over 85% of financial institutions had implemented some form of AI-powered capability, according to industry surveys. Major firms including Vanguard, Charles Schwab, Fidelity, LPL Financial, Raymond James, Ameriprise, and others have deployed or are actively developing AI tools for portfolio management, client engagement, compliance, and financial planning. Vanguard’s robo-advisory platform manages approximately $47 billion in assets under management, followed by Schwab Intelligent Portfolios at approximately $10.2 billion. These firms benefit from large existing customer bases, established regulatory relationships, and significant capital to invest in AI development and integration. Specialized fintech and wealthtech companies represent another significant category of industry participants. Companies such as Betterment, Wealthfront, Wealthsimple, Empower, SoFi Technologies, Altruist, and Pontera have built platforms that apply AI and automation to investment management, financial planning, and advisor workflow optimization. Betterment manages approximately $7.4 billion in assets, and Wealthfront approximately $5.0 billion. Several of these companies have expanded beyond their original product offerings: SoFi, for example, now serves over 10.9 million members across lending, saving, investing, and insurance products. Wealthfront announced a strategic collaboration with Nasdaq Private Market in January 2025 to provide wealth management products to private company shareholders following liquidity events. These companies generally compete on the basis of user experience, cost, and the breadth of their automated capabilities. Enterprise financial software providers, including Intuit, represent another category of participants embedding AI into existing products that serve large installed bases of consumers and financial professionals. Intuit has integrated generative AI capabilities across its TurboTax, QuickBooks, and Credit Karma platforms, leveraging its access to extensive financial data and its relationships with tens of millions of users. Companies in this category benefit from deep domain expertise, proprietary data assets, and the ability to distribute AI-powered features through products that consumers and businesses already use. Early-stage AI-native fintech companies represent a growing segment of the market. These companies are building products from the ground up using large language models, autonomous agents, and other advanced AI capabilities to deliver automated financial planning, portfolio analytics, tax optimization, and personalized financial guidance. The availability of open-source AI models, including Meta’s Llama, Mistral AI’s models, Alibaba’s Qwen, and Google’s Gemma, has lowered the barriers to entry for these companies, enabling them to deploy sophisticated AI capabilities without the cost of training proprietary foundational models. CB Insights identified over 100 fintech startups as among the most promising in 2025, many of which are leveraging AI as a core differentiator. The emergence of agentic AI, with 82% of midsize companies and 95% of private equity firms either implementing or planning to implement agentic AI capabilities in 2026, is expected to further expand the range and sophistication of AI-native financial products. The convergence of these participant categories has created a competitive environment characterized by rapid innovation, significant capital investment, and increasing overlap between technology, financial services, and data analytics. The Company’s ability to establish and maintain a competitive position within this landscape will depend on its capacity to deliver differentiated products, attract and retain users, and adapt to the pace of technological and regulatory change. Bitcoin Treasury Introduced in 2008 and launched in 2009, Bitcoin is a decentralized digital currency operating on a peer-to-peer network and is built on free and open-source technology, which is designed to facilitate secure and transparent transactions. This network hosts a public transaction ledger, known as the Bitcoin blockchain, on which all validated transactions that have ever taken place on the Bitcoin network are recorded. One or more “private keys” are stored in individual “wallet” functions, which are used to sign transactions and control the transfer of Bitcoin. The Bitcoin blockchain is maintained by a decentralized network of participants ( i.e. , miners, nodes, and developers), none of whom has unilateral control. As a result, the Bitcoin network can be updated without any single entity owning or operating the network. The global Bitcoin market has grown substantially over the past five years, with its total market capitalization nearing $1.4 trillion as of February 12, 2026. This expansion underscores Bitcoin’s emergence as a globally recognized store of value and a foundational asset within the digital asset ecosystem. Bitcoin’s price rose from approximately over $9,000 in July 2020 to over $120,000 by July 2025, reflecting long-term adoption and increasing institutional participation. After a decline during the coronavirus disease of 2019 (“COVID-19”) in early 2020, Bitcoin rebounded strongly and ended that year near $29,000. In 2021, it surged past $60,000 before briefly correcting below $30,000 mid-year. Through 2022 and 2023, Bitcoin remained at prices significantly below its all-time high. Momentum returned in 2024, driven by exchange-traded fund (“ETF”) inflows and institutional accumulation, pushing prices to over $60,000. In 2025, Bitcoin reached new all-time highs over $120,000, bolstered by favorable regulatory developments and renewed investor confidence. - 11 - Bitcoin’s five-year trajectory highlights the asset’s resilience, sustained growth, institutional validation, and increasing relevance as a long-term investment asset. While Bitcoin is often described as a potential store of value, it has historically exhibited strong volatility. The price of Bitcoin has fluctuated dramatically over short periods of time, and it is not uncommon for Bitcoin to experience double-digit percentage changes within a single day. For example, Bitcoin traded at approximately $16,000 in January 2023 and has since increased to an average of $78,000 as of February 12, 2026, reflecting significant appreciation during this period. At the same time, Bitcoin has also experienced material drawdowns, including a decline of about 77% from November 2021 to November 2022. This volatility is influenced by factors including speculative trading, limited liquidity, concentration of ownership, evolving regulation, technological developments, and shifts in market sentiment. See the risk factors entitled “ Our principal asset is Bitcoin. The concentration of our Bitcoin holdings enhances the risks inherent in our Bitcoin strategy” and “Bitcoin is a highly volatile asset, and our operating results and market price may significantly fluctuate, including due to the highly volatile nature of the price of Bitcoin and erratic market movements .” The Bitcoin industry is dynamic and rapidly evolving, offering substantial opportunities alongside significant risks. We will continue to monitor technological, regulatory, and market developments to navigate this complex landscape effectively. Creation of New Bitcoin and Limits on Supply The Bitcoin protocol limits the total number of Bitcoins that can be generated over time to 21 million. As of February 12, 2026, approximately 20 million Bitcoin have been generated, further highlighting the asset’s scarcity and long-term value proposition. Based on current estimates, we expect that the 21 millionth Bitcoin will be mined around the year 2140. New Bitcoin are created and allocated by the Bitcoin protocol through a “mining” process that rewards users that validate transactions in the Bitcoin blockchain. Validated transactions are added in “blocks” approximately every 10 minutes. The mining process serves to validate transactions and secure the Bitcoin network. Mining is a competitive and costly operation that requires a large amount of computational power to perform repeated hash functions in search of a valid solution under Bitcoin’s “proof-of-work” protocol. To incentivize miners to incur the costs of mining Bitcoin, the Bitcoin protocol rewards miners that successfully validate a block of transactions with newly generated Bitcoin. The current reward for miners that successfully validate a block of transactions is 3.125 Bitcoin per mined block. The mining reward is reduced by half, which is referred to as a Bitcoin halving, after every 210,000 blocks are mined. This halving has historically occurred approximately every four years. The most recent Bitcoin halving occurred in 2024, and the next Bitcoin halving is expected to occur sometime in 2028, although the exact date is uncertain and depends on block times. Modifications to the Bitcoin Protocol The Bitcoin network operates as a decentralized, open-source network that has no central authority, so no one person can unilaterally make changes to the software that runs the network. Bitcoin Core, a widely used Bitcoin software implementation, is maintained by a community of open-source contributors that propose changes to the source code and release periodic updates and other changes. Unlike most software that has a central entity that can push updates to users, Bitcoin network is a peer-to-peer network in which individual network participants, called nodes, decide whether to upgrade the software and accept the new changes. As a practical matter, a proposed change becomes part of the Bitcoin protocol only if a majority of network participants, including miners and nodes, choose to adopt and enforce it through the software they run on the Bitcoin network. For some changes, such as soft forks, activation may involve miners signaling support with their hash power, but enforcement of the rules is determined by node operators. If a certain percentage of the nodes reject the changes, particularly in the case of a hard fork, a chain split can occur, resulting in separate versions of the blockchain based on the software each participant chooses to run. A soft fork is a backward-compatible change to the Bitcoin protocol that tightens or adds new consensus rules. Nodes that have not been upgraded will still accept blocks as valid if those blocks comply with both old and new rules. However, non-upgraded nodes may be unaware of the new restrictions and cannot enforce them. A hard fork, by contrast, is a non-backward-compatible change that alters consensus rules such that nodes running older versions cannot validate blocks created under the new rules. If consensus is not reached, hard forks can result in a split into two separate blockchains. - 12 - Forms of Attack Against the Bitcoin Network and Wallets Blockchain technology has certain built-in security features that make it difficult for hackers and other malicious actors to alter confirmed transaction records or tamper with the blockchain’s historical ledger. However, as with any computer network, the Bitcoin network may still be subject to certain attacks. Some forms of attack include direct attacks, like “denial-of-service attacks” or “51% attacks” on the Bitcoin network, as well as individual-level security breaches, such as unauthorized access to digital wallets. Bitcoin is controllable only by the possessor of the private key(s) associated with the public address to which the Bitcoin is assigned. Private keys are typically generated and stored by individual users or custodians and may be secured in hardware wallets, software wallets, or custodial storage solutions. One form of obtaining unauthorized access to a wallet occurs following a “phishing attack” where the attacker deceives the victim and manipulates them into sharing their private keys or other sensitive information. Loss of private keys generally results in permanent loss of access to the associated Bitcoin. A “denial-of-service attack” occurs when legitimate users are unable to access information systems, devices, or other network resources due to the actions of a malicious actor flooding the network with traffic until the network is unable to respond or crashes. The Bitcoin network has been, and can be in the future, subject to denial-of-service attacks, which can increase transaction fees or delay transaction confirmations, but typically do not result in delays in block creation. A “51% attack” may occur when a group of miners attain more than 50% of the Bitcoin network’s mining power, enabling them to temporarily reorganize the blockchain, censor transactions, or perform double-spend attacks. However, such an attack does not permit altering Bitcoin’s fundamental protocol rules or total supply. As of the date of this Annual Report, we are not aware of any successful “51% attack” on the Bitcoin network. We believe, due to Bitcoin’s globally distributed hash rate, the prohibitively high cost of mounting such an attack, and the existence of community and network-level responses that serve as additional deterrents even if an attack was attempted. See “ Risk Factors - Risks Related to Our Bitcoin Strategy and Holdings ” for more information on the related risks. Bitcoin Industry Participants The primary Bitcoin industry participants are miners, node operators, investors and traders, digital asset exchanges and service providers, including custodians, brokers, payment processors, wallet providers and financial institutions. Developers and infrastructure providers ( e.g. , Lightning Network operators) also play a key role in Bitcoin’s ecosystem, though they may not be primary participants in trading or mining. Miners . Miners range from Bitcoin enthusiasts to professional mining operations that design and build dedicated mining machines and data centers, including mining pools, which are groups of miners that act cohesively and combine their processing power to mine Bitcoin blocks. See “- Creation of New Bitcoin and Limits on Supply ” above. Node operators . Node operators validate transactions and blocks according to the consensus rules coded in their software along with propagating transaction information throughout the peer-to-peer network. These operators can range from individuals to large-scale commercial operators. Investors and Traders . Bitcoin investors and traders include individuals and institutional investors who, directly or indirectly, purchase, hold, and sell Bitcoin or Bitcoin-based derivatives. On January 10, 2024, the SEC issued an order approving several applications for the listing and trading of shares of spot Bitcoin exchange-traded products (“ETPs”) on U.S. national securities exchanges. While the SEC had previously approved ETFs where the underlying assets were Bitcoin futures contracts, this order represented the first time the SEC approved the listing and trading of ETPs that acquire, hold and sell Bitcoin directly. ETPs can be bought and sold on a stock exchange like traditional stocks, and provide investors with another means of gaining economic exposure to Bitcoin through traditional brokerage accounts. We anticipate that the approval of spot Bitcoin ETPs will improve market liquidity and broaden investor access to the Bitcoin ecosystem, which we expect to lead to greater adoption of Bitcoin and long term price stability. - 13 - Digital Asset Exchanges . Digital asset exchanges provide trading venues for purchases and sales of Bitcoin in exchange for fiat or other digital assets. Bitcoin can be exchanged for fiat currencies, such as the U.S. dollar, at rates of exchange determined by market forces on Bitcoin trading platforms, which are typically regulated as money service businesses and not regulated in the same manner as traditional securities exchanges. In addition to these platforms, over-the-counter markets and derivatives markets for Bitcoin also exist. The value of Bitcoin within the market is determined, in part, by the supply of and demand for Bitcoin in the global Bitcoin market, market expectations for the adoption of Bitcoin as a store of value, the number of merchants that accept Bitcoin as a form of payment, the volume of peer-to-peer transactions, macroeconomic conditions, and regulatory developments, among other factors. Service providers . Service providers offer a multitude of services to other participants in the Bitcoin industry, including custodial and trade execution services, commercial and retail payment processing, loans secured by Bitcoin collateral, and financial advisory services. If adoption of the Bitcoin network continues to materially increase, we anticipate that service providers may expand the currently available range of services and that additional parties will enter the service sector for the Bitcoin network. Other Digital Assets As of the date of this Annual Report, Bitcoin was the largest digital asset by market capitalization. However, numerous alternative digital assets exist, which are often referred to as “altcoins,” and many entities, including consortia and financial institutions, are actively researching and investing resources in blockchain platforms and digital assets that utilize consensus mechanisms other than proof-of-work mining, which is employed by the Bitcoin network. For example, in late 2022 the Ethereum network completed “The Merge,” transitioning from proof-of-work (“PoW”) to a PoS mechanism. Under PoW, miners expend computing power and energy to solve cryptographic puzzles. The first to solve a valid block earns the right to add it to the blockchain and receive newly minted tokens and transaction fees as a reward. By contrast, under PoS, validators pseudo-randomly are selected to propose and attest to blocks based on the amount of network tokens they have locked (or “staked”) as collateral. If validators act dishonestly or violate protocol rules, their “staked” tokens may be subject to “slashing,” resulting in partial or complete forfeiture. Because PoS does not require energy-intensive mining competition, it generally operates with materially lower energy consumption than PoW. Some alternative digital assets, such as stablecoins, are designed to maintain a constant price because of their issuers’ promise to hold high-quality liquid assets (such as U.S. dollar deposits and short-term U.S. treasury securities) equal to the total value of stablecoins in circulation. Stablecoins have grown rapidly, particularly as a medium of exchange and store of value, particularly on digital asset trading platforms where they are often used as trading pairs or to facilitate transactions without converting to fiat currency. Additionally, central banks in some countries have started to introduce digital forms of legal tender known as central bank digital currencies (“CBDCs”), which are digital forms of legal tender issued and controlled by sovereign authorities. Competition AI We expect to face significant competition in the market for AI-powered financial products and services. The financial technology sector has experienced substantial growth in AI-driven offerings, and we compete with a range of established and emerging participants, including large financial institutions and banks deploying proprietary AI tools across their existing customer bases, established personal finance platforms such as Mint, Empower, and Quicken that are integrating AI-driven features into their product suites, enterprise financial software providers including Intuit and Fidelity that are embedding AI capabilities into existing wealth management and financial planning products, and early-stage AI-native fintech companies focused on automated financial planning and portfolio analytics. Many of our competitors have significantly greater financial, technical, and marketing resources, larger user bases, longer operating histories, and more established relationships with financial institutions, data providers, and regulators. Our ability to compete will depend on, among other things, the functionality, reliability, and cost-effectiveness of its platform, its ability to attract and retain users, the pace and quality of its product development, and its capacity to navigate an evolving regulatory environment. There can be no assurance that the Company will compete successfully against current or future competitors, and competitive pressures could materially and adversely affect the Company’s business, financial condition, and results of operations. See “ Part I -- Item 1A.-- Risk Factors ” elsewhere in this Annual Report for additional discussion of competitive risks. Bitcoin Treasury Our Bitcoin strategy generally involves, from time to time, subject to market conditions, (i) issuing debt or equity securities or engaging in other capital raising transactions with the objective of using the proceeds to purchase Bitcoin and (ii) acquiring Bitcoin with our liquid assets that exceed working capital requirements. When we engage in such capital raising transactions, we compete for capital with, among others, the Bitcoin network, ETPs, Bitcoin miners, digital assets exchanges, other digital assets service providers, other private and, increasingly, publicly traded companies that hold Bitcoin or other digital assets as treasury reserve assets, private funds that invest in Bitcoin and other digital assets, and similar vehicles. An increase in the competition for sources of capital could adversely affect the availability and cost of financing for our Bitcoin purchases, and thereby could adversely affect the market price of our listed securities. - 14 - Bitcoin ETFs are designed solely to track the price of Bitcoin and provide passive exposure through a regulated fund structure. In contrast, ProCap will directly acquire and hold Bitcoin as its primary treasury reserve asset. The Treasury Reserve Policy will prioritize the accumulation of Bitcoin using excess cash assets and proceeds from capital raising transactions, with a long-term view toward holding and growing its Bitcoin reserves. This direct ownership model ensures that shareholders have transparent, verifiable exposure to Bitcoin’s price appreciation, while also allowing ProCap to leverage its Bitcoin holdings for strategic and operational purposes. ProCap’s differentiated model - combining direct Bitcoin holdings, marketing services, cash-flowing media products, and public market access - offers investors a multifaceted exposure to the Bitcoin ecosystem that is not available through traditional investment vehicles. We believe that our disciplined capital allocation, robust governance, and thought leadership position us to become a leading choice for investors seeking exposure to Bitcoin and the broader digital asset economy. Our Competitive Strengths Large, Engaged, and Cross-Platform Audience . ProCap’s Chief Executive Officer, Anthony Pompliano, has cultivated a substantial and engaged global audience through his daily newsletter (The Pomp Letter), podcast (The Pomp Podcast), and social media platforms, including X (formerly Twitter), YouTube, Instagram, Facebook, and LinkedIn. As of the date of this Annual Report, Mr. Pompliano’s cumulative following across these platforms exceeds 2.5 million, reflecting high levels of user engagement and trust. This broad reach allows for effective dissemination of digital asset content and timely updates on Bitcoin and macroeconomic trends. Recognized Authority in the Bitcoin and Cryptocurrency-Related Financial Markets Space. Mr. Pompliano has become a leading voice in the cryptocurrency and related financial markets community through years of public advocacy, consistent content production, and appearances on major financial media outlets, including CNBC, Bloomberg, and Fox Business. Mr. Pompliano is widely regarded as a well-known educator and early adopter of Bitcoin, often sought for his views by institutional investors and retail audiences alike. Proven Content and Distribution Strategy . Through daily content including interviews with prominent investors, policymakers, technologists, and entrepreneurs, Mr. Pompliano consistently provides high-value insights tailored for both novice and experienced investors. Mr. Pompliano’s ability to communicate complex financial and technological concepts in accessible formats has led to strong audience retention and subscriber growth across multiple platforms. Integrated Media Products. The integration of media operations with ProCap’s financial services platform creates a powerful feedback loop - educational content and market commentary attract new participants to the Bitcoin ecosystem, while ProCap’s financial products and services benefit from increased awareness and credibility. By producing accessible, high-quality educational content, ProCap demystifies Bitcoin for both institutional and retail audiences, fostering greater understanding and adoption of Bitcoin as an asset class. Strategic Relationships and Industry Influence. Mr. Pompliano maintains strong relationships with certain leaders in venture capital, blockchain infrastructure, and financial media. These relationships offer strategic value in the form of deal flow, brand partnerships, and access to early-stage innovations in the digital asset sector, which may be leveraged for business development and market positioning. Strong Brand Recognition and Monetization History . The “Pomp” brand is widely recognized in the Bitcoin and fintech community. Mr. Pompliano has demonstrated monetization across multiple channels, including premium subscriptions, advertising, live events, educational courses, and media licensing. Mr. Pompliano’s track record reinforces his value as both a content creator and business operator. Institutional and Entrepreneurial Experience. In addition to his public persona, Mr. Pompliano has experience as a venture capitalist and entrepreneur, having co-founded Morgan Creek Digital and invested in over 300 private companies. Mr. Pompliano’s background in both institutional finance and startup ecosystems provides him with a unique perspective on market dynamics, innovation, and capital allocation within the digital economy. - 15 - Government Regulation AI The regulatory landscape governing the use of AI-powered products in financial services is evolving rapidly and remains subject to significant uncertainty. There is currently no single, comprehensive federal statute in the United States that specifically governs the development, deployment, or use of AI technologies. Instead, AI is subject to a patchwork of existing federal and state laws, agency guidance, and emerging regulatory frameworks that may apply to AI-based products and services depending on their design, functionality, and use cases. Federal Regulatory Activity At the federal level, multiple agencies have asserted or expressed interest in regulatory oversight of AI. The U.S. Securities and Exchange Commission (the “SEC”) and Financial Industry Regulatory Authority (“FINRA”), have expressed increasing focus on the use of AI and predictive analytics by financial services firms, including the potential for AI-driven tools to implicate existing regulatory frameworks governing investment advice, data privacy, and algorithmic transparency. We intend to monitor these developments and to design our products and compliance infrastructure to operate within applicable regulatory requirements, though there can be no assurance that future regulatory actions will not impose material constraints on our AI products and strategy. The Federal Trade Commission (the “FTC”) has indicated that it will use its existing authority under Section 5 of the FTC Act to address unfair or deceptive practices involving AI, including AI-generated content, algorithmic decision-making that results in discrimination, and inadequate data security practices. In April 2023, the FTC, U.S. Department of Justice, U.S. Equal Employment Opportunity Commission, and Consumer Financial Protection Bureau (“CFPB”) issued a joint statement warning of the potential for AI to contribute to discriminatory outcomes and pledging coordinated enforcement efforts. The CFPB has separately issued guidance on the applicability of the Equal Credit Opportunity Act (“ECOA”) to AI and machine learning underwriting models, emphasizing requirements for adverse action notices when automated systems are used in credit decisions. These agencies have broad enforcement authority under existing consumer protection, fair lending, and anti-discrimination laws that may be applied to AI technologies in ways that are difficult to predict. State-Level AI Regulation States have also begun to enact AI-specific legislation. The Colorado Artificial Intelligence Act (the “CAIA”), the first comprehensive state AI regulation in the United States, goes into effect in June 2026 and applies to “high-risk AI systems” used to make consequential decisions affecting consumers in areas including employment, education, financial services, healthcare, housing, insurance, and legal services. Among other things, CAIA imposes a duty of reasonable care on developers and deployers of high-risk AI systems to avoid “algorithmic discrimination,” and establishes requirements for risk assessments, impact evaluations, disclosure to consumers, governance frameworks, and documentation. Other states, including California, Texas, and New York, are considering or have enacted legislation addressing various aspects of AI, including requirements for disclosure when AI is used in certain contexts, restrictions on the use of AI in hiring and employment decisions, and obligations related to AI-generated content. We monitor developments in state AI legislation and will work to ensure compliance with applicable requirements, though the patchwork of state laws creates compliance complexity and may impose conflicting obligations across jurisdictions. International Regulation International regulatory developments may also affect our business. The European Union’s Artificial Intelligence Act (the “EU AI Act”), which entered into force in August 2024 and is being implemented in phases through 2027, establishes a comprehensive risk-based regulatory framework for AI systems. The EU AI Act imposes significant compliance obligations on providers and deployers of AI systems, including requirements for conformity assessments, technical documentation, transparency, human oversight, data governance, and cybersecurity for certain categories of high-risk AI systems, as well as outright prohibitions on certain AI practices deemed to pose unacceptable risks. The EU AI Act could impose substantial compliance costs and operational constraints with our international operations. Other jurisdictions, including the United Kingdom, Canada, China, and Brazil, are also developing or have implemented AI-specific regulations that may affect the global competitive landscape and our ability to operate in certain markets. Data Privacy and AI Our AI-powered products and services are also subject to data privacy and protection laws, which impose requirements on the collection, use, storage, and sharing of personal data used to train or operate AI systems. In the United States, these laws include the California Consumer Privacy Act (as amended by the California Privacy Rights Act), Virginia Consumer Data Protection Act, Colorado Privacy Act, and various other state privacy laws, as well as sector-specific federal regulations such as the Gramm-Leach-Bliley Act applicable to financial institutions. Several of these laws include provisions specifically addressing automated decision-making, profiling, and the use of personal data in AI systems, and grant consumers rights to opt out of certain automated processing or to obtain information about the logic involved in automated decisions. We have implemented data privacy and security policies and procedures designed to comply with applicable requirements, but the interaction between evolving AI-specific regulations and general privacy frameworks creates compliance complexity and potential litigation exposure. - 16 - Pending Federal Legislation There is also significant proposed legislation at the federal level addressing AI governance and oversight. Various bills have been introduced in Congress that would establish requirements for algorithmic accountability, transparency, and impact assessments; regulate the use of AI in specific sectors or applications; address AI-generated content and deepfakes; and establish federal AI research and development priorities. The scope, timing, and likelihood of passage of any such legislation is uncertain, and we cannot predict whether or how federal AI legislation may affect our business. We intend to monitor legislative developments and to design our products and compliance infrastructure to operate within applicable legal and regulatory requirements, though there can be no assurance that future legislative or regulatory actions will not impose material constraints on our AI products and strategy. For additional discussion of risks relating to the regulatory environment for our AI products and strategy, see “Part I - Item 1A. - Risk Factors - Risks Related to Our Business and AI” in this Annual Report. Bitcoin Treasury The laws and regulations applicable to Bitcoin and digital assets are evolving and subject to interpretation and change. Governments around the world have reacted differently to digital assets; certain governments have deemed them illegal, and others have adopted regulatory frameworks permitting their use and trade with varying degrees of restriction, while in some jurisdictions, such as the U.S., digital assets are subject to overlapping, uncertain and evolving regulatory requirements. As digital assets have grown in both popularity and market size, the U.S. Executive Branch, Congress and a number of U.S. federal and state agencies, including the Financial Crimes Enforcement Network, the Commodity Futures Trading Commission (“CFTC”), the SEC, FINRA, the Consumer Financial Protection Bureau, the Department of Justice, the Department of Homeland Security, the Federal Bureau of Investigation, the Internal Revenue Service (“IRS”) and state financial regulators, have been examining the operations of digital asset networks, digital asset users and digital asset exchanges, with particular focus on the extent to which digital assets can be used to violate state or federal laws, including to facilitate the laundering of proceeds of illegal activities or the funding of criminal or terrorist enterprises, and the safety and soundness and consumer-protective safeguards of exchanges or other service-providers that hold, transfer, trade or exchange digital assets for users. Many of these state and federal agencies have issued consumer advisories regarding the risks posed by digital assets to investors. In addition, federal and state agencies, as well as other countries have issued rules or guidance regarding the treatment of digital asset transactions and requirements for businesses engaged in activities related to digital assets. Depending on the regulatory characterization of Bitcoin, the markets for Bitcoin in general, and ProCap’s activities in particular, ProCap’s business and Bitcoin strategy, including the “treasury” approach, may be subject to regulation by one or more regulators in the United States and globally. Ongoing and future regulatory actions may alter, to a materially adverse extent, the nature of digital assets markets, the participation of industry participants, including service providers and financial institutions in these markets, and our ability to pursue our Bitcoin strategies. Additionally, U.S. state and federal and foreign regulators and legislatures have taken action against industry participants, including digital assets businesses, and enacted restrictive regimes in response to adverse publicity arising from hacks, consumer harm, or criminal activity stemming from digital assets activity. U.S. federal and state energy regulatory have expressed concern regarding the total electricity consumption of cryptocurrency mining, and the potential impacts of cryptocurrency mining to the supply and dispatch functionality of the wholesale grid and retail distribution systems. Some state legislative bodies have passed, or are actively considering, legislation to address the impact of cryptocurrency mining in their respective states. For risks associated with the regulations to which we may be subject to, please see “ Risk Factors - Risks Related to our Business and Bitcoin Treasury Strategy ” of this Annual Report. The CFTC takes the position that some digital assets, including Bitcoin, fall within the definition of a “commodity” under the CEA. Under the CEA, the CFTC has broad enforcement authority to police market manipulation and fraud in spot digital assets markets in which we may transact. Beyond instances of fraud or manipulation, the CFTC generally does not currently regulate cash or spot market transactions involving digital assets (such as the Bitcoin treasury strategy) or exchanges that facilitate such transactions, provided that such transactions do not utilize margin, leverage, or financing. Rather, the CFTC’s regulations and enforcement authority generally apply to futures, swaps, other derivative products and certain retail leveraged commodity transactions involving digital asset commodities, including the markets on which these products trade. Several proposed pieces of U.S. federal legislation may significantly expand or clarify the jurisdiction of the CFTC or other regulatory agencies over cryptocurrency-related companies, including Bitcoin treasury companies. - 17 - The SEC and its staff have taken the position that certain other digital assets fall within the definition of a “security” under the U.S. federal securities laws. Public statements made by senior officials and senior members of the staff at the SEC indicate that the SEC does not currently consider Bitcoin to be a security under the federal securities laws. However, such statements are not official policy statements by the SEC and reflect only the speakers’ views, which are not binding on the SEC or any other agency or court and cannot be generalized to any other digital assets. Future regulatory developments with respect to Bitcoin from the CFTC, SEC, or any other federal or state regulator, are difficult to predict. In addition, since Bitcoin network transactions are pseudonymous, they may be susceptible to misuse for criminal activities, such as money laundering. Such transactions are recorded on a public ledger, allowing for forensic analysis that can link transactions to individuals or entities under certain circumstances. Nevertheless, this misuse, or the perception of such misuse, could lead to greater regulatory oversight of Bitcoin and Bitcoin platforms, and there is the possibility that law enforcement agencies may seize or shut down digital asset exchanges or service providers, which could prevent users from accessing custodial-held assets. Users who self-custody Bitcoin in private wallets remain outside the direct reach of such actions. For example, the U.S. Treasury Department’s Office of Foreign Assets Control has issued updated advisories regarding the use of virtual currencies, added a number of digital asset exchanges and service providers to the Specially Designated Nationals and Blocked Persons list and engaged in several enforcement actions, including a series of enforcement actions that have either shut down or significantly curtailed the operations of several smaller digital asset exchanges associated with Russian and/or North Korean nationals. Additionally, in January 2025, the Consumer Financial Protection Bureau announced that it is seeking public input on privacy protections and surveillance in digital payments, particularly those offered through large technology platforms. As noted above, activities involving Bitcoin and other digital assets may fall within the jurisdiction of more than one financial regulator and various courts and such laws and regulations are rapidly evolving and increasing in scope. On January 23, 2025, President Trump issued an executive order titled, “Strengthening American Leadership in Digital Financial Technology.” While the executive order did not mandate the adoption of any specific regulations, the executive order identifies certain key objectives to guide agencies involved in cryptocurrency regulation, including (i) protecting the sovereignty of the United States dollar by promoting the development of United States dollar-backed stablecoins, (ii) providing regulatory clarity and certainty built on technology-neutral regulations for individuals and firms involved in digital assets, including through well-defined jurisdictional regulatory boundaries, and (iii) taking measures to protect Americans from the risks of CBDCs. To achieve these objectives, the executive order established a working group on digital asset markets within the National Economic Council, comprised of representatives from key federal agencies, with a tight timeline for examining existing regulations and proposing a new regulatory framework. There have also been several bills introduced in Congress that propose to establish additional regulation and oversight of the digital asset markets. Legislation is currently pending in the U.S. Congress which, if passed and signed into law, could significantly affect the digital currency and digital asset markets. One such piece of legislation is the Digital Asset Market Clarity Act of 2025 (“CLARITY Act”), which would clarify which digital currencies and digital assets are commodities, as opposed to securities. Additionally, the CLARITY Act would subject certain spot-market digital commodities to a comprehensive regulatory regime for the first time. For example, the legislation would require several different types of entities to register with the CFTC and/or SEC and comply with various regulatory requirements that would be promulgated by the CFTC and SEC. Further, the legislation would require issuers of new and “non-mature” digital commodities to make a mandatory filing with the SEC containing information regarding the issuer, planned use of proceeds, economics, governance and development roadmap. The details of the legislation are likely to change from its current form as it is reviewed and revised by the U.S. House of Representatives and the Senate, and it is unknown at this time whether it will be approved. Intellectual Property As of the date of this filing, ProCap maintains and uses trade names, registered and unregistered trademarks, domain names, and logos, which it considers material to its brand identity. ProCap may pursue registration of certain marks or content in various jurisdictions as appropriate. Human Capital As of the date of this Annual Report, ProCap employs five individuals, all of whom are on the executive team and located in the United States. None of ProCap’s employees are represented by a labor union or covered by a collective bargaining agreement. ProCap may, from time to time, engage third-party contractors and consultants to support our operations. ProCap and its board of directors or executive officers may authorize the hiring of additional employees as operational needs expand. - 18 - About Us Our Company was incorporated in Delaware on June 17, 2025. On December 5, 2025 (the “Closing Date”), we consummated the Business Combination Agreement. At the closing of the Business Combination Agreement (the “Closing”), the Company consummated the Business Combination, including the Mergers. Pursuant to the Business Combination Agreement, and subject to the terms and conditions set forth therein, (i) at least one business day prior to the Closing, CCCM de-registered from the Register of Companies in the Cayman Islands by way of continuation and re-registered in the State of Delaware to become a Delaware corporation (the “Domestication”), and (ii) upon the Closing, (x) the parties effected the SPAC Merger, and in connection therewith, each outstanding share of common stock of CCCM immediately prior to the effective time of the SPAC Merger was automatically cancelled in exchange for the right to receive shares of common stock, par value $0.001 per share, of the Company (“Common Stock”), and each holder of a warrant of CCCM (“Warrant”) received a warrant to purchase one share of Common Stock (each, a “Warrant”), and (y) the parties effected the Company Merger, and in connection therewith, the members of Legacy ProCap received, in exchange for their membership interests in Legacy ProCap, shares of Common Stock. As a result of the Business Combination, Legacy ProCap transferred all of its Bitcoin treasury assets to the Company and CCCM and Legacy ProCap became wholly-owned subsidiaries of the Company, all in accordance with applicable law and upon the terms and subject to the conditions set forth in the Business Combination Agreement. The rights of holders of our Common Stock and Warrants are governed by our Amended and Restated certificate of incorporation (our “Charter”), our amended and restated bylaws (the “Bylaws”), and the Delaware General Corporation Law (the “DGCL”). On December 8, 2025, our Common Stock and Warrants began trading under the ticker symbol “BRR” and “BRRWW,” respectively, on Nasdaq. Available Information Our website address is https://www.procapfinancial.com/ . We make available, free of charge through the Investor Relations portion of our website, annual reports on Form 10-K, quarterly reports on Form 10-Q, current reports on Form 8-K, and amendments to those reports filed or furnished pursuant to Section 13(a) or 15(d) of the Securities Exchange Act of 1934, as amended (“Exchange Act”) as soon as reasonably practicable after we electronically file such material with, or furnish it to, the SEC. Information contained on our website or connected thereto does not constitute part of, and is not incorporated by reference into, this Annual Report. Periodic Reporting and Financial Information We have registered the initial sale of our Common Stock and Warrants under the Exchange Act and have reporting obligations, including the requirement that we file annual, quarterly and current reports with the SEC. In accordance with the requirements of the Exchange Act, our annual reports contain financial statements audited and reported on by our independent registered public accountants. The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC at http://www.sec.gov. - 19 - We are required to evaluate and report on our internal control procedures over financial reporting as required by the Sarbanes-Oxley Act of 2002, as amended (“Sarbanes-Oxley Act”). We are an “emerging growth company,” as defined in Section 2(a) of the Securities Act of 1933, as amended (the “Securities Act”), as modified by the Jumpstart Our Business Startups Act of 2012, as amended (the “JOBS Act”). As such, we are eligible to take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a non-binding advisory vote on executive compensation and stockholder approval of any golden parachute payments not previously approved. If some stockholders find our securities less attractive as a result, there may be a less active trading market for our securities and the prices of our securities may be more volatile. In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. In other words, an “emerging growth company” can delay the adoption of certain accounting standards until those standards would otherwise apply to private companies. We intend to take advantage of the benefits of this extended transition period. We will remain an emerging growth company until the earlier of (1) the last day of the fiscal year (a) following the fifth anniversary of the completion of the initial public offering, (b) in which we have total annual gross revenue of at least $1.235 billion, or (c) in which we are deemed to be a large accelerated filer, which means the market value of our common stock that is held by non-affiliates equals or exceeds $700 million as of the prior June 30 th , and (2) the date on which we have issued more than $1.0 billion in non-convertible debt securities during the prior three-year period. References herein to “emerging growth company” shall have the meaning associated with it in the JOBS Act. Additionally, we are a “smaller reporting company” as defined in Rule 10(f)(1) of Regulation S-K. Smaller reporting companies may take advantage of certain reduced disclosure obligations, including, among other things, providing only two years of audited financial statements. We will remain a smaller reporting company until the last day of the fiscal year in which (1) the market value of our common stock held by non-affiliates equals or exceeds $250 million as of the prior June 30th, or (2) our annual revenues equaled or exceeded $100 million during such completed fiscal year and the market value of our common stock held by non-affiliates equals or exceeds $700 million as of the prior June 30th. - 20 -