ProCap Financial, Inc.

Current report

We must satisfy Nasdaq’s continued listing requirements, and a failure to do so could result in the delisting of our Common Stock.

Current report

Our Common Stock and public warrants are listed on Nasdaq. To maintain that listing, we must satisfy Nasdaq’s continued listing requirements, including corporate governance requirements relating to the composition of the Board and its committees, as well as other quantitative and qualitative standards. From time to time, we may not be in compliance with one or more of these requirements, as occurred following a director resignation in January 2026 that is described in our Current Report on Form 8-K filed with the SEC on January 23, 2026. Although we regained compliance and that matter has been closed by Nasdaq, we cannot assure you that we will remain in compliance with all applicable Nasdaq requirements in the future. If we fail to satisfy Nasdaq’s continued listing requirements and do not timely regain compliance, Nasdaq could commence suspension or delisting procedures, which could reduce the liquidity and market price of our Common Stock and impair our ability to raise capital.

Current report

Risks Related to the CFO Silvia Acquisition

Current report

Risks Related to Our Expansion into Asset Management

Current report

Our expansion into the asset management business is a new initiative, and we may not successfully develop or operate this business.

Current report

Our expansion into the asset management business is a new initiative, and we, including our newly formed asset-management subsidiaries, have a limited operating history forming, marketing, managing and administering private funds and other investment products. Our initial asset-management product, the Initial Fund, is intended to be a closed-end private fund, for which the Investment Manager, is expected to provide investment management services. The Initial Fund is intended to seek long-term capital appreciation primarily through technology-sector investments, which investments are generally illiquid and long-term in nature, and the Initial Fund is expected to have broad investment flexibility, including the ability to make co-investments and to invest through alternative investment vehicles and other structures. Although certain members of our management team may have investment experience, operating an asset management platform requires specialized investment, legal, regulatory, compliance, accounting, valuation, tax, investor-relations, information-technology and administrative expertise. Different fund structures and investment strategies may require additional capabilities that we do not currently possess or may be unable to develop, acquire or scale effectively.

Current report

Developing our asset management business may require significant expenditures, investments in personnel and systems, and substantial management attention before the business generates meaningful revenue. These efforts may divert personnel and other resources from our existing operations, disrupt our business, increase our fixed cost base and expose us to additional liabilities. The Initial Fund and any future products may be unable to raise sufficient investor capital, identify and consummate suitable investments, deploy committed capital successfully, generate competitive investment returns, develop products that are attractive to investors or achieve sufficient scale to operate the business profitably.

Current report

We cannot assure you that our asset management business will achieve its anticipated strategic or financial benefits. A failure to develop and operate the business successfully could materially and adversely affect our business, financial condition, results of operations and reputation.

Current report

The success of our asset management business depends on our ability to raise sufficient third-party capital and successor funds in a highly competitive market.

Current report

Our ability to generate management fees and performance-based compensation will depend substantially on the ability of the Investment Manager and the General Partner to raise capital commitments from third-party investors for the Initial Fund and any successor funds or other investment products. Fundraising is subject to numerous factors outside our control, including general economic and financial-market conditions, interest rates, investor liquidity and asset-allocation decisions, the availability of distributions from investors’ existing private-market investments, investment performance and track record, the reputation and continued service of the relevant investment professionals, regulatory developments and the terms offered by competing investment products. The Initial Fund may not reach its target size, and its pool of eligible investors is limited by the private-offering and Investment Company Act of 1940, as amended (the “Investment Company Act”) exemptions on which it relies, which restrict participation to investors that satisfy specified eligibility requirements.

Current report

The asset management industry is highly competitive. We and the Funds compete with established alternative asset managers, traditional asset managers, private equity and venture capital firms, financial institutions, family offices, corporate investors and other sponsors. Many competitors have longer operating histories, established investment records, broader distribution networks, greater financial and personnel resources, more developed compliance and operating infrastructure, and stronger relationships with institutional investors. Certain competitors may also offer lower fees, greater liquidity, more favorable investment terms, broader co-investment opportunities or products with different risk and return characteristics.

Current report

To attract investors, the Investment Manager or the General Partner may reduce or waive management fees, reimburse or bear Fund expenses, provide preferential rights through side letters, offer co-investment opportunities or otherwise agree to terms that reduce the revenues or profitability of our asset management business. In addition, management fees from closed-end Funds may decline following the expiration of their investment periods or as invested capital is realized. The ability to maintain or grow management-fee revenue may therefore depend on the ability to raise successor Funds or other investment products before fees from existing Funds decline.

Current report

A failure to raise sufficient fee-paying capital could reduce management fees, limit the ability to deploy capital and earn carried interest or other performance-based compensation, impair the ability to raise future Funds and leave our asset management business with an operating cost base that is disproportionate to its size. In addition, if limited partners default on or delay funding their capital commitments, a Fund’s ability to deploy capital could be impaired, and the General Partner or the Company may elect or agree to provide bridge funding or other support, and such Fund may seek to borrow or obtain other financing, any of which could adversely affect such Fund’s investments, the fees and performance-based compensation payable in respect of such Fund and our reputation.

Current report

Poor investment performance and the structure of our management fees and performance-based compensation could adversely affect our revenues and cause our results to be volatile.

Current report

The revenues and other economic returns generated by our asset management business will depend on the amount of fee-paying capital or assets under management, the applicable fee rates, the investment performance of the Funds and the timing and amount of investment realizations. For the Initial Fund, management fees are payable to the Investment Manager and are based on each limited partner’s capital commitment during the Fund’s investment period and on invested capital thereafter, and carried interest is payable to the General Partner. The Company does not receive any management fees or carried interest directly; those economics are earned by the Investment Manager and the General Partner, respectively. Other current or future products may calculate fees on a different basis. Accordingly, increases or decreases in total capital commitments may not result in proportionate changes in management-fee revenue.

Current report

Carried interest, incentive fees, and other performance-based compensation generally depend on a Fund achieving specified investment returns or distribution thresholds. Because the Initial Fund has a long-term, multi-year investment period, any carried interest is long-dated and depends on the timing and amount of investment realizations; such compensation may not be earned for many years, may be concentrated in a limited number of periods and may vary materially. Newly formed Funds may generate little or no performance-based compensation while they deploy capital, and there can be no assurance that any Fund will generate returns sufficient for the General Partner to earn carried interest or for us to realize the related economics.

Current report

Poor investment performance could reduce the value of fee-paying assets, delay or eliminate performance-based compensation, cause investors to decline to invest in future Funds, result in demands for fee concessions and harm our reputation. Personnel, compliance, technology, insurance and other operating expenses of the asset management business may continue regardless of investment performance or the amount of capital raised.

Current report

The General Partner may be required to return previously distributed carried interest pursuant to a fund-level clawback provision, the amount of which may be affected by investment losses, the timing of realizations, prior distributions, tax payments and the terms of the applicable Fund documents. Because the General Partner is our wholly-owned subsidiary, any such clawback or other repayment obligation would reduce amounts otherwise available to us and could adversely affect our liquidity and results of operations. As a result of these factors, the revenues and earnings generated by our asset management business may be volatile, difficult to predict and uneven from period to period.

Current report

The Initial Fund expects to invest primarily in technology-sector companies and assets, many of which may be private and illiquid. Its areas of focus may include artificial intelligence, defense technology, hardware, health technology, software and other technology-related solutions, although the Initial Fund has broad flexibility as to geography, strategy and asset class. A primary focus on private technology investments may heighten the volatility of the Initial Fund’s performance and increase valuation, exit and fundraising risk, because such investments are often illiquid, may take years to mature, may be difficult to value or realize and are subject to rapid technological, competitive and regulatory change. In addition, to the extent a Fund incurs indebtedness or uses bridge financing, such leverage may magnify investment losses and increase the Fund’s liquidity demands.

Current report

Our asset management activities subject us to extensive and evolving regulatory, fiduciary and compliance obligations and potential liability.

Current report

The asset management industry is subject to extensive and evolving federal, state and foreign regulation. Neither the Investment Manager nor the General Partner, each of which is our wholly-owned subsidiary, is currently registered as an investment adviser with the SEC, and the Investment Manager currently relies on exemptions from registration under applicable federal and state law. In connection with the proposed Silvia ETFs, the Investment Manager expects to register with the SEC as an investment adviser under the Advisers Act, and there can be no assurance that its registration will become effective on the anticipated timeline or at all. The General Partner may also become registered in the future, in its discretion or if required by applicable law, and there can be no assurance that any exemption on which the Investment Manager or the General Partner relies will remain available. Growth in regulatory assets under management, changes in the activities of the Investment Manager or the General Partner, or changes in applicable law could require registration or subject the asset management business to additional regulatory requirements. Depending on the nature and size of our activities, we or one or more of our subsidiaries could also become subject to investment-adviser or other regulation.

Current report

The Initial Fund is being offered in a transaction exempt from registration in reliance on Section 4(a)(2) and Regulation D of the Securities Act of 1933, as amended, and relies on the exemption from registration under the Investment Company Act provided by Section 3(c)(1) therein. The availability of these exemptions depends on compliance with numerous conditions, including that each investor satisfy applicable eligibility requirements, generally, that the investor be an “accredited investor” and a “qualified purchaser” or “knowledgeable employee,” as well as restrictions relating to the manner of offering Fund interests, the number and nature of investors, transfers of Fund interests and the activities of the Funds and their affiliates.

Current report

The asset management activities of the Investment Manager and the General Partner may subject them to fiduciary obligations and regulatory requirements and may expose us, through our ownership of them, to related compliance costs, liabilities and reputational risks, including requirements relating to, among other matters:

Current report

Compliance with these requirements may require significant expenditures and substantial attention from management and other personnel. The applicable regulatory framework may change, and regulators may interpret existing requirements differently from us. The launch of additional Funds with different structures, investment strategies or investor bases could further increase the complexity and cost of the compliance program.

Current report

We, our subsidiaries, the Investment Manager, the General Partner, and their respective directors, officers and employees could be subject to liability for errors of judgment, mistakes of law, breaches of fiduciary duty or other acts or omissions in connection with the management of the Funds. A failure to comply with applicable law, regulation or Fund documents could result in regulatory examinations or investigations, investor claims, litigation, fines, censures, disgorgement, limitations on activities, suspension or loss of registrations, disqualification from managing assets for certain investors, termination of advisory relationships and reputational harm. Any of these consequences could materially and adversely affect our business and our ability to raise and manage investor capital.

Current report

Capital we use to seed, warehouse, or support our Funds may be illiquid and expose us to losses, reduce our liquidity, and increase the complexity and volatility of our financial statements.

Current report

The General Partner is expected to contribute all or substantially all of the Initial Fund’s initial capital, which may be used to make the Initial Fund’s initial investments and the Initial Fund’s initial expenses. As third-party investors are admitted at subsequent closings, a portion of the General Partner’s funded capital is expected to be returned. To the extent the General Partner or another of our subsidiaries provides such capital, that capital represents our capital and exposes us to the risks described in this risk factor.

Current report

We may also determine, or be perceived by investors or counterparties as having an obligation, to provide additional capital or support to a Fund beyond the General Partner’s commitment and any pre-closing seed funding, which could include acquiring or warehousing additional investments, bridging investor capital contributions, making loans, or providing guarantees, indemnities or other financial support. We are under no obligation to provide any such additional support unless we agree to do so, and the nature and extent of any such support have not been determined.

Current report

Capital that we fund, directly or through the General Partner or another subsidiary, in or alongside the Funds may be illiquid, long-term in nature and subject to significant valuation uncertainty. There can be no assurance regarding the timing or amount of any return on such capital, we may be required to hold our positions for extended periods, the Funds may perform poorly, and we could lose some or all of the capital we invest. Capital used to fund the General Partner’s commitment or to seed, warehouse or otherwise support the Funds would not be available for our existing operations, debt service, acquisitions or other corporate purposes, which could adversely affect our liquidity and capital resources and may limit our ability to launch additional Funds or pursue other strategic initiatives.

Current report

Whether we are required to consolidate the Initial Fund or any other sponsored investment product in our financial statements depends on our economic interests in, decision-making rights over and other relationships with the relevant vehicle. These determinations are complex, require the application of significant judgment and may change over time as our interests in or relationships with a Fund change. If we were required to consolidate a Fund or another sponsored investment product, the reported size and complexity of our balance sheet could increase, we could be required to recognize a Fund’s assets, liabilities, revenues, expenses and noncontrolling interests, and our reported results could become more volatile.

Current report

Valuations of private and illiquid investments are subjective and may differ materially from the values ultimately realized.

Current report

The Funds may invest in private companies and other assets for which readily observable market prices are unavailable or unreliable. For the Initial Fund, the General Partner will determine the value of the Fund’s assets at least quarterly, and in connection with distributions, in accordance with the Fund’s valuation policies, and the General Partner’s good-faith determinations of value are generally conclusive and binding under the Fund documents. The valuation of these investments requires the application of methodologies, estimates, assumptions and judgments concerning matters such as comparable public companies and transactions, projected financial performance, discount rates, capital structures, market conditions and the probability and timing of future financing, sale or liquidity events.

Current report

There is no single standard for determining the fair value of a private or illiquid investment, and different market participants may assign materially different values to the same investment. Information used in a valuation may be incomplete, inaccurate or subsequently revised. The Initial Fund does not intend to commission periodic independent appraisals of its portfolio companies. Even if an administrator, appraisal firm or other third party were engaged to assist with the valuation process, doing so would not eliminate the subjective nature of that process or assure that a reported value will ultimately be realized.

Current report

The amount ultimately realized upon the sale or other disposition of an investment may differ materially from its previously reported value. Valuations may affect, in each case to the extent applicable:

Current report

Investors, auditors or regulators may disagree with the methodologies, assumptions or conclusions used in valuing Fund investments. Valuation errors or disputes could require adjustments to Fund financial statements, reimbursement of fees, changes to carried interest, repayment of previously distributed amounts, changes to our financial statements, litigation or regulatory action. Valuation issues could also impair investor confidence, harm our reputation and make it more difficult to raise additional capital.

Current report

Actual, potential or perceived conflicts of interest could adversely affect our Funds, their investors, our business and our reputation.

Current report

Our asset management activities will create actual, potential and perceived conflicts among us and our subsidiaries, including the Investment Manager and the General Partner, our and their respective directors, officers and employees, the Funds, other investment vehicles and accounts, portfolio companies, co-investors, Fund investors and our public stockholders. In particular, Anthony Pompliano serves as our Chief Executive Officer and Chairman and is identified in the Initial Fund’s offering materials as the Chairman and Chief Executive Officer of the General Partner, the portfolio manager of the Investment Manager, and the Initial Fund’s key person. Other personnel may likewise have overlapping positions, responsibilities or economic interests and may be required to allocate their time and attention among our existing business, the Funds and other affiliated activities.

Current report

Conflicts may arise in connection with, among other matters:

Current report

Different fee structures and performance-based compensation arrangements may create an incentive to allocate opportunities to Funds or accounts that generate greater fees or carried interest. Carried interest may also create an incentive to cause a Fund to make investments with a higher risk of loss, dispose of investments at a particular time or hold investments for longer than would otherwise be the case. Conversely, investments made with capital provided by us may create incentives that differ from those relating to investments made primarily with third-party capital.

Current report

The Investment Manager and the General Partner may establish policies, procedures, information barriers and governance processes designed to identify and mitigate conflicts of interest, and we may seek review by independent directors, advisory committees or other bodies where appropriate. These measures may not identify or adequately address every conflict, and conflicts may not be resolved in favor of us, our public stockholders, a particular Fund or its investors. The duties of our directors and officers to us and our stockholders may differ from, and may conflict with, the fiduciary or contractual duties that the Investment Manager and the General Partner owe to the Funds and their investors. Actual or perceived failures to manage conflicts appropriately could result in investor dissatisfaction, loss of investor capital, adverse publicity, litigation, regulatory investigations or enforcement actions, impair the ability to raise future Funds and damage our reputation.

Previous report

Risks Related to the Merger

Previous report

As a result of the resignation of one of our directors in January 2026, we are not in compliance with Nasdaq rules regarding the composition of our Board and audit committee, and there is a risk of delisting if the non-compliance is not cured within the time period allowed by Nasdaq.

Previous report

On January 21, 2026, William H. Miller IV resigned from our Board. Mr. Miller was one of three members of the audit committee of our Board. As a consequence of Mr. Miller’s resignation, we became out of compliance with Nasdaq Listing Rule 5605(c)(2), which requires that the board of directors of a Nasdaq listed company have an audit committee made up of at least three independent directors. On January 22, 2026, we advised Nasdaq of Mr. Miller’s resignation, its consequences with regard to compliance with Nasdaq Listing Rule 5605(c)(2) and our intention to regain compliance with Nasdaq Listing Rule 5605(c)(2) in a timely manner. In accordance with Nasdaq Listing Rule 5605(c)(4), we have an automatic cure period in order to regain compliance with Nasdaq Listing Rule 5605(c)(2) until (i) the earlier of our next annual stockholders’ meeting or January 21, 2027; or (ii) if our next annual stockholders’ meeting is held before July 20, 2026, then we must evidence compliance no later than July 20, 2026. We intend to appoint a third independent director to our Board and audit committee and thereby regain compliance with Nasdaq Listing Rule 5605(c)(2), prior to our next annual meeting of stockholders. However, if we are unable to regain compliance with Nasdaq Listing Rule 5605(c)(2) in a timely manner, Nasdaq will commence suspension and delisting procedures.

Current report — wording carried from elsewhere

We may fail to realize the anticipated benefits of the CFO Silvia Acquisition.