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Item 2. Management’s Discussion and Analysis

2026-08-13 compared with 2026-05-14 · 412 added, 242 removed, 52 unchanged (93% of the section changed)

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

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

the context otherwise requires, all references in this section to the “Company,” “ProCap,” “we,”

“us,” or “our” refer to ProCap Financial, Inc., a Delaware corporation, and its subsidiaries.

The following

discussion and analysis of the financial condition and results of operations of the Company should be read together with our

unaudited condensed consolidated financial statements and the related notes included elsewhere in this Quarterly Report for the

three months ended March 31, 2026 (the “Unaudited Condensed Consolidated Financial Statements”)the Annual Report on Form

10-K filed on February 18, 2026 (the “Annual Report”), and the Definitive Proxy Statement filed on March 2, 2026 and

Risk Factors contained therein.

This discussion contains forward-looking statements that involve risks and uncertainties.

Unless the context otherwise requires, all references

in this section to the “Company,” “ProCap,” “we,” “us,” or “our” refer to

ProCap Financial, Inc., a Delaware corporation, and its subsidiaries.

The following discussion and analysis of the financial condition

and results of operations of the Company should be read together with our unaudited condensed consolidated financial statements and the

related notes included elsewhere in this Quarterly Report on Form 10-Q (the “Quarterly Report”) for the six months ended June

30, 2026 (the “Unaudited Condensed Consolidated Financial Statements”), the Annual Report on Form 10-K filed on February 18,

2026 (the “Annual Report”), and the Definitive Proxy Statement filed on March 2, 2026 and Risk Factors contained therein.

On December 5, 2025, the Company completed a business

combination (the “Transaction”) with Columbus Circle Capital Corp I (“CCCM”), which was accounted for as a reverse

recapitalization in accordance with U.S.

generally accepted accounting principles (“GAAP”).

ProCap BTC, LLC (“ProCap

was determined to be the accounting acquirer and CCCM was treated as the acquired company for financial reporting purposes.

Following the Transaction, the Company became the publicly traded parent company, and ProCap BTC became its operating subsidiary.

result, the historical financial statements of ProCap BTC became the historical financial statements of the Company.

Accordingly, the

comparative financial information presented for periods prior to the Transaction, including the period from June 10, 2025 (inception)

through June 30, 2025, reflects the historical results of ProCap BTC.

This discussion contains forward-looking statements that involve

risks and uncertainties.

Note Regarding Forward-Looking Statements

Quarterly Report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act, and Section

21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”).

We have based these forward-looking statements

on our current expectations and projections about future events.

Quarterly Report includes forward-looking statements within the meaning of Section 27A of the Securities Act, and Section 21E of the

Securities Exchange Act of 1934, as amended (the “Exchange Act”).

We have based these forward-looking statements on our

current expectations and projections about future events.

These forward-looking statements are subject to known and unknown risks,

uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be materially

different from any future results, levels of activity, performance or achievements expressed or implied by such forward-looking statements.

In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “could,”

“would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,”

and “continue,” or the negative of such terms or other similar expressions.

Such statements include, but are not limited

to, possible business combinations and the financing thereof, and related matters, as well as all other statements other than statements

of historical fact included in this Form 10-Q.

Factors that might cause or contribute to such a discrepancy include, but are not limited

to, those described in our other SEC filings.

Except as expressly required by applicable securities law, we disclaim any intention or

obligation to update or revise any forward-looking statements whether as a result of new information, future events or otherwise.

in 2025, we are 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 balance sheet.

We believe 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 ours 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 our operations, we have initiated its plan to accumulate

and hold Bitcoin as a long-term treasury reserve asset.

Our 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

uncertainties and assumptions about us that may cause our actual results, levels of activity, performance or achievements to be

materially different from any future results, levels of activity, performance or achievements expressed or implied by such

forward-looking statements.

In some cases, you can identify forward-looking statements by terminology such as “may,”

“should,” “could,” “would,” “expect,” “plan,” “anticipate,”

“believe,” “estimate,” and “continue,” or the negative of such terms or other similar

Such statements include, but are not limited to, statements regarding our future operating results and financial

position, our business strategy and plans, market growth, and our objectives for future operations regarding our asset management

business and the proposed Silvia ETFs;

our Bitcoin treasury strategy;

the integration of CFO Silvia;

the remediation of the material

weakness in our internal control over financial reporting;

possible business combinations and the financing thereof, and related

as well as all other statements other than statements of historical fact included in this Quarterly Report.

that might cause or contribute to such a discrepancy include, but are not limited to, those described in our other U.S.

and Exchange Commission (“SEC”) filings.

Except as expressly required by applicable securities law, we disclaim any

intention or obligation to update or revise any forward-looking statements whether as a result of new information, future events or

ProCap Financial, Inc.

is a U.S.-based modern finance company.

The Company’s

mission is to help independent investors make money.

Historically, the Company’s operations included investor-focused media, educational

content, and strategic investments designed to support independent investors through digital platforms and other content offerings.

believe advances in artificial intelligence and automation have the potential to transform financial analysis, investment research, and

investor decision support.

Consistent with this approach, we expect to increasingly rely on software-based systems and automated processes

as part of our operating model.

2026, we 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”).

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.

strategy is centered on developing scalable technology platforms, expanding our proprietary data and analytical capabilities, and pursuing

strategic opportunities that enhance our products, services, and long-term growth prospects.

Through a combination of internal development

initiatives and strategic acquisitions, we seek to provide technology-enabled solutions designed to improve the accessibility, efficiency,

and quality of financial information and analysis available to investors.

2026, we expanded our AI-focused initiatives through the launch of ProCap Insights and the acquisition of CFO Silvia Inc., a

Delaware corporation (“CFO Silvia” and such acquisition, the “CFO Silvia Acquisition”).

ProCap Insights is

an AI-driven research product designed to provide investors with market intelligence and investment research.

CFO Silvia is a consumer-focused financial technology platform that utilizes AI to aggregate and analyze financial information.

Together, these initiatives support our objective of developing technology-enabled solutions that improve the accessibility and

efficiency of financial analysis and investor engagement.

addition, we have adopted a Bitcoin treasury strategy and intend to hold Bitcoin as a long-term treasury reserve asset.

We believe 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.

and Regulatory Uncertainty

AI-related initiatives operate in rapidly evolving and competitive markets and are subject to changing legal, regulatory, and technological

developments, including those relating to data privacy, cybersecurity, intellectual property, consumer protection, and the use of automated

financial analysis tools.

As we continue to develop and expand our platforms, we expect innovation, technology development, and disciplined

capital allocation to remain important components of our strategy.

of CFO Silvia

April 6, 2026 (the “Acquisition Date”), we completed the CFO Silvia Acquisition, a consumer-focused financial technology

platform that utilizes artificial intelligence to aggregate, organize, and analyze financial information.

The CFO Silvia Acquisition

expands our AI-driven product offerings and supports our strategy of developing technology-enabled solutions designed to improve

financial analysis, research, and investor decision-making.

results of CFO Silvia have been included in our Unaudited Condensed Consolidated Financial Statements since the Acquisition Date.

Additional information regarding the CFO Silvia Acquisition is included in Note 3 to the Unaudited Condensed Consolidated Financial

Additional information regarding the CFO Silvia Acquisition and related agreements is also included in our Current

Report on Form 8-K filed on April 6, 2026.

Silvia has developed a consumer-facing AI platform that aggregates and organizes financial data to provide users with automated financial

1 unchanged sentence

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

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.

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

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.

AI and Regulatory Uncertainty

The Company’s AI-related initiatives are subject to evolving regulatory, technological, and competitive conditions,

including uncertainty regarding data privacy, consumer protection, intellectual property, and the use of automated financial analysis

December 5, 2025, we 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, with our company being deemed the accounting acquirer.

connection with the transaction:

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).

shareholders received approximately 10.6 million shares, after significant redemptions.

common shares outstanding immediately following the transaction were approximately 85.2 million.

proceeds from the transaction were approximately $12.2 million, after redemptions and transaction costs.

a result of the reverse recapitalization:

historical financial statements of ProCap became those of the Company.

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.

We are an early-stage company with a limited operating history.

As a result, investors should consider the risks associated with

evaluating our Company with limited historical financial information and evolving operations, as described in Part I, Item 1A.

“ Risk Factors ” of our Annual Report.

of March 31, 2026, our material asset consists primarily of approximately 5,457 Bitcoin with a fair value of $372.3 million.

Notes Repurchase

February 9, 2026, we entered into privately negotiated note repurchase agreements (the “Repurchase Agreements”) with certain

holders (the “Noteholders”) of our outstanding 0.00% Convertible Senior Secured Notes due 2028 (the “Convertible Notes”)

under the Indenture, pursuant to which we agreed to repurchase approximately $135.4 million in aggregate principal amount of the Convertible

Notes held by the Noteholders for an aggregate of approximately $119.2 million in cash (the “Repurchase”).

Repurchase settled on or about February 10, 2026.

Upon settlement of the Repurchase, the aggregate principal amount of the Convertible

Notes outstanding was reduced to approximately $99.6 million.

Repurchase Program

December 9, 2025, the board of directors of the Company (the “Board”) approved a share repurchase program (the

“2025 Repurchase Program”) providing for the repurchase of up to $100 million of our outstanding shares of common stock,

par value $0.001 (“Common Stock”).

Under the 2025 Repurchase Program, we are authorized to repurchase shares of Common

Stock through open market purchases, privately-negotiated transactions, accelerated share repurchases, or otherwise in accordance

with applicable federal securities laws, including through Rule 10b5-1 trading plans and under Rule 10b-18 of the Exchange Act.

2025 Repurchase Program does not obligate us to repurchase shares of Common Stock and the specific timing and amount of repurchases

will vary based on available capital resources and other financial and operational performance metrics, market conditions,

securities law limitations and other factors.

connection with the 2025 Repurchase Program, on December 12, 2025, we entered into an Open Market Share Repurchase Agreement (the “Repurchase

Agreement”) with TD Securities Inc.

(the “Broker”) whereby the Broker has agreed to act as a non-exclusive agent on

behalf of us to repurchase shares of Common Stock in the open market pursuant to Rule 10b5-1 and Rule 10b-18 of the Exchange Act.

Repurchase Agreement will continue in effect until terminated by either us or the Broker, with or without cause, upon written notice

to the other party.

We will pay the Broker a commission at a rate of $0.01 for each share of Common Stock repurchased pursuant to the

Repurchase Agreement.

the quarter ended March 31, 2026, we repurchased 2,667,056 shares of Common Stock in the open market for approximately $8.0 million including

commissions, at an average price of $3.00 per share.

$89 million remains under the approved 2025 Repurchase Program.

with CFO Silvia

April 6, 2026, we completed our previously announced acquisition of CFO Silvia pursuant to the Agreement and Plan of Merger dated February

9, 2026 (the “Merger”).

Following the closing, CFO Silvia became our wholly owned subsidiary.

The transaction was approved

by our stockholders on March 27, 2026.

merger consideration consisted of approximately 7.5 million shares of our Common Stock issued at closing, after adjustment for certain

unpaid liabilities, 0.9 million shares placed in escrow to secure indemnification obligations for a period of twelve months, and up to

9.0 million additional shares issuable as earnout consideration upon achievement of specified stock price-based performance conditions

during the five-year period following the closing date.

acquisition reflects our previously announced strategic focus on AI operations while continuing our Bitcoin treasury strategy.

in the second quarter of 2026, the results of CFO Silvia will be included in our consolidated financial statements.

The transaction resulted

in acquisition-related and integration costs and may result in additional dilution if the earnout conditions are achieved and the related

shares are issued.

connection with the transaction, we also entered into related ancillary agreements, including escrow, lock-up, registration rights and

restrictive covenant arrangements.

Additional information regarding the acquisition and related agreements is included in our Current

Report on Form 8-K filed on April 6, 2026.

CFO Silvia 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.

Asset Management

During the quarter ended June 30, 2026, the Company expanded its business

to include asset management through the launch of Silvia Innovation Fund I, LP, a Delaware limited partnership (the “Initial Fund”

and together with any other private funds, alternative investment vehicles or co-investment vehicles that we or our subsidiaries sponsor,

advise or manage, the “Funds”;

the term “Funds” does not include the Silvia ETFs described below under “Proposed

Exchange-Traded Funds”).

The Initial Fund invests in early-stage companies aligned with the Company’s CFO Silvia

platform strategy and is advised by ProCap Investment Advisers, LLC, a Delaware limited liability company and wholly-owned subsidiary

of the Company (the “Investment Manager”).

The Company holds indirectly an interest in the Initial Fund through Silvia Innovation

Fund I GP, LLC, the general partner of the Initial Fund (the “General Partner”).

The launch of the Initial Fund represents

the Company’s initial expansion into investment management activities supporting its broader AI-enabled financial technology strategy.

As of June 30, 2026, the Fund and related entities had not commenced significant operations and had not engaged in material transactions.

of Independent Director and Nasdaq Compliance

On July 15, 2026, the Company appointed Benjamin Buchanan as an independent

director of the Company’s board of directors (the “Board”) and member of the audit committee of the Board (the “Audit

As a result of this appointment, the Company regained compliance with The Nasdaq Stock Market LLC (“Nasdaq”)

corporate governance requirements relating to Board and Audit Committee independence.

On July 21, 2026, the Company received notice from

Nasdaq confirming that the compliance matter had been resolved and closed.

Exchange-Traded Funds

August 13, 2026, Tidal Trust IV, a Delaware statutory trust that is not affiliated with us, filed a registration statement on Form N-1A with the

SEC with respect to five proposed actively managed exchange-traded funds (the “Silvia ETFs”).

Tidal Investments LLC serves

as investment adviser to the Silvia ETFs, and the Investment Manager is proposed to serve as investment sub-adviser and to provide portfolio

management services.

In connection with these arrangements, the Investment Manager expects to register with the SEC as an investment

adviser under the Investment Advisers Act of 1940, as amended.

registration statement remains subject to SEC review and comment and may be amended, delayed or withdrawn.

No Silvia ETF may commence

operations until its registration statement has become effective, its shares have been approved for listing on a national securities

exchange, and applicable distribution and operational arrangements are in place.

We have not earned any sub-advisory fees to date and

do not expect the Silvia ETFs to generate meaningful revenue in the near term.

See Part II, Item 1A, “Risk Factors - Risks Related

to Our Expansion into Exchange-Traded Funds.”

Quarterly Report is not an offer to sell or the solicitation of an offer to buy shares of any Silvia ETF.

Any offering of shares of a

Silvia ETF will be made only by means of a prospectus.

We are not the issuer of, and do not offer, shares of any Silvia ETF.

of Operations

The Company was incorporated on June 10, 2025 and therefore no comparable prior-year interim period exists for the

three months ended March 31, 2026.

following table sets forth a summary of our results of operations:

and administrative

from operations

income (expense):

in fair value of digital assets

in fair value of Convertible Notes conversion feature

in fair value of sold put option liability

on extinguishment of debt

As discussed in Note 1 to our Unaudited Condensed

Consolidated Financial Statements, the comparative financial information presented for the period from June 10, 2025 (inception) through

June 30, 2025, reflects the historical results of ProCap BTC.

(All figures in this Item 2 in thousands, except

share, per share data, Bitcoin, and per Bitcoin data )

of the Three Months Period Ended June 30, 2026, and the Period from June 10, 2025 (Inception) through June 30, 2025

For the Three Months Ended

Period from June 10, 2025 (Inception) through

June 30, 2026

June 30, 2025

Increase (Decrease)

Percentage Change

Operating Expenses:

General and administrative

Stock-based compensation

Total Operating Expenses

Operating Loss

Other income (expense)

Unrealized (loss) gain on digital

Realized loss on digital

Change in fair value of convertible notes conversion feature

Interest and dividend income

Interest expense

Change in fair value of derivative liability

Other (expense) income, net

Net (loss) income before taxes

Income tax benefit

Net (Loss) Income

Revenue for the three months ended June 30, 2026 was

$0.04 million and for the period from June 10, 2025 (Inception) through June 30, 2025 was $0.

Revenue remained limited as we launched

new revenue generating products during the period relating to ProCap Insights and CFO Silvia.

The Company’s revenue growth will

depend on the successful commercialization of its products and services and the continued execution of its growth strategy.

General and Administrative Expenses

General and administrative expenses were $11.3 million

for the three months ended June 30, 2026, compared to $0 for the period from June 10, 2025 (Inception) through June 30, 2025.

period reflects operations as a public company and inclusion of $6.7 million of payroll compensation (including a one-time signing bonus of $5.0 million for

the Chief Technology Officer), $1.3 million of software licensing fees, $1.2 million of amortization of acquired intangible assets, $1.0

million of professional fees (including acquisition related expenses), among other expenses.

The inception period reflected only limited

administrative activities as we had recently commenced operations then and had not yet developed the infrastructure, personnel base, and

operational scale necessary to support its current business activities.

Stock-based compensation

Stock-based compensation expense was $3.7 million

for the three months ended June 30, 2026, compared to $0 for the period from June 10, 2025 (inception) through June 30, 2025.

was attributable to equity awards granted to employees and consultants under the Company’s equity incentive plans.

Other Income (Expense), net

Other expense, net for the three months ended June

30, 2026 was $52.6 million, compared to other income, net of $24.6 million for the period from June 10, 2025 (Inception) through June

The Company’s results during the period were primarily driven by the change in fair value of digital assets as a result

of decline in Bitcoin market prices.

gain (loss) on digital assets

loss on digital assets was $49.4 million for the three months ended June 30, 2026, compared to an unrealized gain on digital assets of

$14.3 million for the period from June 10, 2025 (inception) through June 30, 2025.

The change was primarily attributable to declines

in the fair value of the Company’s Bitcoin holdings during the 2026 period.

loss on digital assets

loss on digital assets was $2.7 million for the three months ended June 30, 2026, compared to $0 for the period from June 10, 2025 (inception)

through June 30, 2025.

The loss was attributable to sales of digital assets during the 2026 period.

and dividend income

loss before taxes

for the three months ended March 31, 2026, was $1 and not material to overall results.

The Company has not yet demonstrated an ability

to generate sustainable or predictable revenue, and there can be no assurance that it will do so in the future.

The Company has

not yet established material recurring revenue streams and expects operating results to depend on its ability to scale its AI and financial

technology platforms, increase user adoption, and develop monetization revenues or profitability.

and Administrative Expenses

and administrative expenses consist primarily of personnel-related costs, professional fees, and other corporate overhead expenses.

the three months ended March 31, 2026, general and administrative expenses totaled $4,059.

Personnel-related costs included $730 of salary

and bonus expense.

Professional fees totaled $1,781 and were primarily attributable to legal, accounting and auditing, advisory, and

other professional services, incurred in part due to the acquisition of CFO Silvia, as well as costs associated with being a public company.

The remaining general and administrative expenses consisted of insurance, technology, facilities, and other corporate costs incurred

during the period.

Income (Expense)

income (expense) for the three months ended March 31, 2026, was a net expense of $99,968 primarily driven by changes in fair value of

digital assets, realized loss on put option liability, and interest expense, offset by change in fair value of Convertible Notes conversion

feature, a gain on extinguishment of debt, and interest and dividend income.

recognized an unrealized loss of $105,467 related to changes in the fair value of our digital asset holdings.

These losses were driven

by volatility in Bitcoin market prices during the period and reflect the Company’s strategy of holding Bitcoin as a primary treasury

reserve asset, which subjects results of operations to significant market price fluctuations.

Because unrealized gains and losses are recognized in earnings, the Company ’s

reported operating results may vary significantly between periods and may not be indicative of underlying operating performance or cash

income included $838 related to a gain on the change in the fair value of the conversion feature embedded in the Company’s Convertible

Notes and a gain on debt extinguishment of $5,933.

expenses included $914 related to a realized loss on the put option liability.

expense, totaled $1,100, primarily attributable to amortization of capitalized financing-related costs incurred and amortization of debt

discount during the three months ended March 31, 2026.

and dividend income during the period of $742 was primarily attributable to interest and dividends earned on cash balances.

and dividend income was $0.1 million for the three months ended June 30, 2026, compared to $0 for the period from June 10, 2025 (inception)

through June 30, 2025.

The increase was primarily attributable to income earned on cash, cash equivalents, and investments held during

the 2026 period.

in fair value of derivative liabilities

in fair value of derivative liabilities was $0 for the three months ended June 30, 2026, compared to $10.3 million for the

period from June 10, 2025 (inception) through June 30, 2025.

The change was attributable to the absence of derivative liabilities during

the 2026 period.

of the Six Months Period Ended June 30, 2026, and the Period from June 10, 2025 (Inception) through June 30, 2025

For the Six Months Ended

Period from June 10, 2025 (Inception) through

June 30, 2026

June 30, 2025

Increase (Decrease)

Percentage Change

Operating Expenses:

General and administrative

Stock-based compensation

Total Operating Expenses

Operating Loss

Other income (expense)

Unrealized (loss) gain on digital assets

Realized loss on digital assets

Change in fair value of convertible notes conversion feature

Realized loss on put option liability

Gain on extinguishment of debt

Interest and dividend income

Interest expense

Change in fair value of derivative liability

Other (expense) income, net

Net (loss) income before taxes

Income tax benefit

Net (Loss) Income

Revenue for the six months ended June 30, 2026

and for the period from June 10, 2025 (Inception) through June 30, 2025 was $0.04 million and $0, respectively, as we launched new

revenue generating products during the June 30, 2026 period relating to ProCap Insights and the CFO Silvia Acquisition.

Company’s revenue growth will depend on the successful commercialization of its products and services and the continued

execution of its growth strategy.

General and Administrative Expenses

General and administrative expenses were $15.6 million

for the six months ended June 30, 2026, compared to $0 for the period from June 10, 2025 (Inception) through June 30, 2025.

The 2026 period

reflects operations as a public company and inclusion of $7.7 million of payroll compensation (including a one-time signing bonus of $5.0 million for

the Chief Technology Officer), $1.3 million of software licensing fees, $1.2 million of amortization of acquired intangible assets, $2.8

million of professional fees (including acquisition related expenses), among other expenses.

The inception period reflected only limited

administrative activities as we had recently commenced operations then and had not yet developed the infrastructure, personnel base, and

operational scale necessary to support its current business activities.

Stock-based compensation

Stock-based compensation expense was $7.3 million

for the six months ended June 30, 2026, compared to $0 for the period from June 10, 2025 (inception) through June 30, 2025.

was attributable to equity awards granted to employees and consultants under the Company’s equity incentive plans.

Other Income (Expense), net

Other expense, net was $152.5 million for the six

months ended June 30, 2026, compared to other income, net of $24.6 million for the period from June 10, 2025 (inception) through June

The change was primarily attributable to unrealized losses on digital assets recognized during the 2026 period.

gain (loss) on digital assets

loss on digital assets was $154.8 million for the six months ended June 30, 2026, compared to an unrealized gain on digital assets of

$14.3 million for the period from June 10, 2025 (inception) through June 30, 2025.

The change was primarily attributable to declines

in the fair value of the Company’s Bitcoin holdings during the 2026 period.

loss on digital assets

loss on digital assets was $2.7 million for the six months ended June 30, 2026, compared to $0 for the period from June 10, 2025 (inception)

through June 30, 2025.

The loss was attributable to sales of digital assets during the 2026 period.

in fair value of convertible notes

in fair value of convertible notes resulted in income of $0.9 million for the six months ended June 30, 2026, compared to $0 for the

period from June 10, 2025 (inception) through June 30, 2025.

The income was attributable to changes in the fair value of the conversion

feature embedded within the Company’s convertible notes.

loss on put option liabilities

loss on put option liabilities was $0.9 million for the six months ended June 30, 2026, compared to $0 for the period from June 10, 2025

(inception) through June 30, 2025.

The loss was attributable to the settlement of put option liabilities during the period.

on extinguishment of debt

on extinguishment of debt was $5.9 million for the six months ended June 30, 2026, compared to $0 for the period from June 10, 2025 (inception)

through June 30, 2025.

The gain was primarily attributable to the repurchase of a portion of the Company’s outstanding convertible

notes at a discount to the principal outstanding.

expense was $1.9 million for the six months ended June 30, 2026, compared to $0 for the period from June 10, 2025 (inception) through

June 30, 2025.

The increase was primarily attributable to amortization of debt discount and debt issuance costs associated with the Company’s

convertible notes, as well as the repayment of a portion of such notes during the period.

in fair value of derivative liabilities

in fair value of derivative liabilities was $0 for the six months ended June 30, 2026, compared to income of $10.3 million for the period

from June 10, 2025 (inception) through June 30, 2025.

The decrease was attributable to the absence of derivative liabilities during the

and Capital Resources

of March 31, 2026, we had cash and cash equivalents of approximately $25,964 and working capital of approximately $25,466.

the three months ended March 31, 2026, we reported a net loss of approximately $107,759.

This net loss was primarily driven by factors

that are inherently volatile and subject to market conditions, including:

losses related to Bitcoin holdings due to fluctuations in the market price of Bitcoin and;

and administrative expenses associated with operating as a public company and stock-based compensation expense.

digital assets and derivative instruments are measured at fair value, our results of operations may fluctuate significantly from period

to period, as discussed further in Note 8 to our Unaudited Condensed Consolidated Financial Statements for more information.

do not maintain any committed external sources of liquidity, including credit facilities or other financing arrangements.

Our liquidity

is derived primarily from cash on hand.

on the cash and cash equivalents balance of $25,964 and our Bitcoin holdings of 5,457 with a fair value of $372,277 as of March 31, 2026,

we have determined that our sources of liquidity will be sufficient to meet our needs for the one-year period from the issuance of the

Unaudited Condensed Consolidated Financial Statements.

However, our liquidity position may be materially impacted by volatility in the

market price of Bitcoin and other market conditions.

of March 31, 2026, we did not have any material commitments for capital expenditures.

Subsequent to quarter-end, we entered into an

employment agreement with Shain Noor, Chief Technology

Officer, that includes a one-time cash signing bonus of $5.0 million, payable within 90 days of commencement and subject to

continued employment.

This represents a contractual cash commitment that was funded from existing cash on hand in May 2026.

Additional information is included in our Current Report on Form 8-K filed with the SEC on April 6, 2026.

the short term, we expect to use cash primarily to fund working capital requirements and operating expenses.

Over the long term, cash

may be used to support expansion initiatives, technology investments, and potential strategic acquisitions.

The timing and extent of

such expenditures will depend on market conditions, business performance, and capital availability.

Although we believe existing cash and Bitcoin

holdings will be sufficient to meet anticipated operating requirements for at least the next twelve months, a significant decline in the

market value or liquidity of Bitcoin could adversely affect the Company’s financial flexibility and liquidity position.

Flows for the Three Months Ended March 31, 2026

following table summarizes our cash flows from operating, investing and financing activities for the three months ended March 31, 2026:

cash used in operating activities

cash used in investing activities

cash used in financing activities

As of June 30, 2026, we had cash and

cash equivalents of approximately $15.3 million and working capital of approximately $(77.3 million).

The working capital deficit

resulted primarily from the reclassification of the Company’s outstanding convertible notes as current liabilities as of June

30, 2026 due to holders’ contractual repurchase rights that may become exercisable within the next twelve months.

As of June 30, 2026, the aggregate principal

amount of the outstanding convertible notes was $99.6 million.

Although the notes mature in December 2028, holders may have contractual

repurchase rights that become exercisable beginning June 5, 2027.

As a result, the convertible notes were classified as current liabilities

as of June 30, 2026.

See Note 7, Convertible Notes, for additional information.

As of June 30, 2026, we held approximately 5,355

Bitcoin with an aggregate fair value of approximately $313.4 million, a portion of which serves as collateral under our convertible note

arrangements.

Other than collateral arrangements associated

with financing activities , we currently have no off-balance sheet financing arrangements and did not have any material capital

expenditure commitments as of June 30, 2026.

We do not maintain any committed external sources of liquidity, including

credit facilities or other financing arrangements.

In evaluating our liquidity position, we

considered our anticipated operating cash needs, the timing and nature of potential obligations under the convertible notes, our

current cash and cash equivalents balance, and the availability of financing and capital-raising alternatives.

While our Bitcoin is

held for long-term appreciation, we also considered it in the overall evaluation of our liquidity position given its active trading

As a result, a significant increase or decrease in the market value or liquidity of bitcoin would impact our evaluation.

Based on these considerations, we believe the Company has sufficient resources to satisfy its obligations as they become due,

including any obligations that may arise under the convertible notes.

In the near term, we expect to use available

resources primarily to fund operating expenses, working capital requirements, investments in technology and infrastructure, and the development

of our asset management and exchange-traded fund businesses, including registration and compliance costs, personnel and systems, the

General Partner’s capital contributions to the Initial Fund and seed capital, expense limitation or reimbursement obligations

we agree to provide in connection with the Silvia ETFs, if any.

As of the date of this Quarterly Report,

we have not committed to provide seed capital to any Silvia ETF.

Amounts we commit to these businesses would not be available for our

existing operations, debt service, acquisitions or other corporate purposes.

We expect these costs to increase in future periods

and to be incurred before, and substantially in advance of, any related revenue.

Over the longer term, we may deploy capital to

support strategic acquisitions, business expansion initiatives, investments in digital assets, and potential share repurchase programs.

The timing and magnitude of these expenditures will depend on market conditions, the availability of capital, and strategic opportunities.

Based on our assessment of its anticipated operating

cash needs, potential obligations under the convertible notes, financial position, and available financing and capital-raising alternatives,

we believe that the Company has sufficient resources to satisfy anticipated working capital and operating requirements for at least the

next twelve months.

Flows for the Six Months Ended June 30, 2026 and for the period from June 10, 2025 (Inception) through June 30, 2025

following table summarizes our cash flows from operating, investing and financing activities for the six months ended June 30, 2026 and

for the period from June 10, 2025 (Inception) through June 30, 2025 (In thousands):

the six months ended

Net cash used in operating activities

Net cash used in investing activities

Net cash (used in) provided by financing activities

Flows Used in Operating Activities

cash used in operating activities for the three months ended March 31,2026, was $3,286.

Non-cash and working capital adjustments to

reconcile net loss to net cash used in operating activities was $104,473 and were primarily due to, an unrealized loss from the

change in fair value of Bitcoin of $105,467, stock-based compensation expense of $3,540, amortization of discount and debt issuance

costs on Convertible Notes of $1,100, realized loss on put option liability of $914, amortization of right-of use asset of $51, and

depreciation expense of $39, offset by gain on debt extinguishment of $5,933, change in fair value of the Convertible Notes

conversion feature of $838, and $133 changes in other operating assets and liabilities.

cash used in operating activities was $14.5 million for the six months ended June 30, 2026, compared to $0 for the period from June 10,

2025 (inception) through June 30, 2025.

the six months ended June 30, 2026, net cash used in operating activities reflected the Company’s net loss of $172.8 million, adjusted

for non-cash items of $162.0 million.

The most significant adjustment was $154.8 million of unrealized losses on digital assets resulting

from declines in the fair value of Bitcoin holdings during the period.

Changes in operating assets and liabilities resulted in a net

use of cash of $3.8 million during the period.

the period from June 10, 2025 (inception) through June 30, 2025, net cash provided by operating activities was not significant.

of $24.6 million, primarily attributable to unrealized gains on digital assets and gains recognized from changes in the fair value of

the conversion feature liability, was largely offset by non-cash fair value adjustments and changes in working capital accounts.

Flows Used in Investing Activities

cash used in investing activities for the three months ended March 31, 2026, was $36,108 and was driven by purchases of Bitcoin of $35,953

and the purchase of fixed assets of $155.

cash used in investing activities was $30.7 million for the six months ended June 30, 2026.

The use of cash was primarily attributable

to $36.0 million of purchases of digital assets, $1.3 million paid in connection with the CFO Silvia acquisition, and $0.3 million of

capital expenditures for property and equipment.

These cash outflows were partially offset by $6.9 million of proceeds from sales of

digital assets.

the period from June 10, 2025 (inception) through June 30, 2025, net cash used in investing activities consisted primarily of $476.0

million of purchases of digital assets.

Flows Used in Financing Activities

cash used in financing activities for the three months ended March 31, 2026, was $129,503 and consisted of the payment of the Convertible

Notes of $119,152, purchase of derivative securities of $1,653, purchase of treasury stock of $7,998, settlement of derivative securities

of $578 and taxes paid on RSU vesting of $1,011, offset by proceeds from derivative securities of $889.

cash used in financing activities was $134.3 million for the six months ended June 30, 2026.

The use of cash primarily consisted of $119.2

million of payments to repurchase a portion of the Company’s outstanding convertible notes, $12.8 million of treasury stock repurchases,

$1.7 million of purchases of derivative securities, $1.0 million of tax payments associated with the vesting of restricted stock units,

and $0.6 million of settlements of derivative securities.

These outflows were partially offset by $0.9 million of proceeds received from

derivative securities.

the period from June 10, 2025 (inception) through June 30, 2025, net cash provided by financing activities consisted primarily of $476.0

million of proceeds from the issuance of preferred units, which were used principally to fund the acquisition of digital assets.

Accounting Policies and Estimates

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are prepared in accordance with GAAP.

The preparation of our Unaudited Condensed Consolidated Financial Statements requires us to make

estimates and assumptions that affect the reported amounts of assets, liabilities, costs and expenses, and related disclosure of contingent

assets and liabilities.

We have based our estimates on various assumptions that are believed to be reasonable under the circumstances,

the results of which form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent

from other sources.

We are subject to uncertainties such as the impact of future events, economic and political factors, and changes

in our business environment;

The preparation of our Unaudited Condensed Consolidated Financial Statements requires us to

make estimates and assumptions that affect the reported amounts of assets, liabilities, costs and expenses, and related disclosure.

We have based our estimates on various assumptions that are believed to be reasonable under the circumstances, the results of which

form the basis for making judgments about the carrying values of assets and liabilities that are not readily apparent from other

We are subject to uncertainties such as the impact of future events, economic and political factors, and changes in our

business environment;

therefore, actual results could differ significantly from these estimates under different assumptions or

To the extent that there are differences between our estimates and actual results, our future unaudited condensed consolidated

financial statement presentation, financial condition, results of operations, and cash flows will be affected.

that the Company has no critical accounting estimates.

See “Summary of Significant Accounting Policies” described in Note

3 to our Unaudited Condensed Consolidated Financial Statements included elsewhere in this Quarterly Report for a description of our significant

accounting policies.

To the extent that there are differences between our estimates and actual results, our future Unaudited Condensed

Consolidated Financial Statement presentation, financial condition, results of operations, and cash flows will be

We consider an accounting estimate to be critical

if it requires assumptions about matters that were highly uncertain at the time the estimate was made and if changes in those assumptions,

or changes in the estimate that are reasonably likely to occur from period to period, would have a material effect on our financial condition

or results of operations.

critical accounting estimates are described in our Annual Report on Form 10-K for the year ended December 31, 2025.

During the six months

ended June 30, 2026, we identified the following additional critical accounting estimates as a result of the CFO Silvia Acquisition.

account for acquisitions in accordance with ASC 805, Business Combinations .

The allocation of purchase consideration to the assets

acquired and liabilities assumed requires significant estimates and management judgment, particularly with respect to the valuation of

identifiable intangible assets, contingent consideration arrangements, estimated useful lives of acquired assets, and certain tax-related

valuation of acquired intangible assets and contingent consideration involves the use of significant assumptions, including projected

future cash flows, royalty rates, customer attrition rates, discount rates, expected volatility, and other market-based inputs.

in these assumptions could materially impact the amounts assigned to acquired assets and liabilities, the resulting amount of goodwill

recognized, and future amortization expense.

In addition, because the purchase price allocation remains subject to measurement period

adjustments, future revisions to estimates may result in changes to the recorded amounts of assets acquired and liabilities assumed.

account for share-based compensation in accordance with ASC 718, Compensation—Stock Compensation .

The determination of the

grant-date fair value of certain share-based awards requires significant judgment and the use of valuation models, particularly for awards

containing market-based vesting conditions.

of these awards requires management to develop assumptions regarding expected stock price volatility, expected term, risk-free interest

rates, dividend yield, and other market-based inputs.

Changes in these assumptions may significantly affect the estimated fair value

of awards and, accordingly, the amount and timing of compensation expense recognized in future periods.

“Summary of Significant Accounting Policies” described in Note 2 to our Unaudited Condensed Consolidated Financial

Statements included elsewhere in this Quarterly Report for a description of our significant accounting policies.

Sheet Arrangements

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Accounting Pronouncements

“Recent Accounting Pronouncements” described in Note 3 of our Unaudited Condensed Consolidated Financial Statements included

elsewhere in this Quarterly Report.

“Recent Accounting Pronouncements” described in Note 2 of our Unaudited Condensed Consolidated Financial Statements

included elsewhere in this Quarterly Report.

Growth Company Status

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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 shares of Common Stock that are held by non-affiliates exceeds $700 million as

accelerated filer, which means the market value of our shares of common stock, par value $0.001 per share (“Common Stock”) that are held by non-affiliates exceeds $700 million as

of the prior June 30, and (2) the date on which we have issued more than $1.0 billion in non-convertible debt during the prior three

Market Price Risk

Bitcoin investment is measured using observed prices from active exchanges and adjustments are recorded in net income through “other

income (expenses), net” on our unaudited condensed consolidated statement of operations.

The Bitcoin market price may fluctuate

significantly and a decline in the market price of Bitcoin could result in a material adverse effect on our financial results in future

See the risk factors included under the heading “ Risks Related to Our Business and Bitcoin Treasury Strategy ”

in our Annual Report for more information regarding the risks related to our Bitcoin holdings As of March 31, 2026 and December 31,2025,

the fair value of our Bitcoin investment included in digital assets was $372,277 and $441,791, respectively, and for the three months

ended March 31, 2026, an unrealized loss from the remeasurement of our Bitcoin investment of $105,467.

Bitcoin investment is measured using observed prices from active exchanges and adjustments are recorded in net income through

“other income (expenses), net” on our Unaudited Condensed Consolidated Statement of Operations.

The Bitcoin market price

may fluctuate significantly and a decline in the market price of Bitcoin could result in a material adverse effect on our financial

results in future periods.

See the risk factors included under the heading “ Risks Related to Our Business and Bitcoin

Treasury Strategy ” in our Annual Report for more information regarding the risks related to our Bitcoin holdings.

June 30, 2026 and December 31, 2025, the fair value of our Bitcoin investment included in digital assets was $313.4 million and

$441.8 million, respectively.

For the six months ended June 30, 2026, we recognized an unrealized loss from the remeasurement of our

Bitcoin investment of $154.8 million.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

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What changed 10-Q

Item 2. Management’s Discussion and Analysis