Company: PCAP
Filing Date: 2025-07-03
Form Type: 10-Q
Source: 0001213900-25-061163
Chunk: 51

Company: ProCap Acquisition Corp
Filing Date: 2025-07-03
Form: 10-Q
Item: Part I, Item 8
Chunk 51
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 taxable income. Valuation allowances are established, when necessary, to reduce deferred
tax assets to the amount expected to be realized.

ASC Topic 740 prescribes a recognition threshold
and a measurement attribute for the financial statement recognition and measurement of tax positions taken or expected to be taken in
a tax return. For those benefits to be recognized, a tax position must be more likely than not to be sustained upon examination by taxing
authorities. The Company’s management determined that the Cayman Islands is the Company’s major tax jurisdiction. The Company
recognizes accrued interest and penalties related to unrecognized tax benefits as income tax expense. As of March 31, 2025, there were
no unrecognized tax benefits and no amounts accrued for interest and penalties. The Company is currently not aware of any issues under
review that could result in significant payments, accruals or material deviation from its position.

The Company is considered to be an exempted Cayman
Islands company with no connection to any other taxable jurisdiction and is presently not subject to income taxes or income tax filing
requirements in the Cayman Islands or the United States. As such, the Company’s tax provision was zero.

8

PROCAP ACQUISITION CORP

NOTES TO FINANCIAL STATEMENTS

MARCH 31, 2025

(Unaudited) 

Net Loss per Ordinary Share

Net loss per ordinary share is computed by dividing
net loss by the weighted average number of ordinary shares outstanding during the period, excluding ordinary shares subject to forfeiture.
Weighted average shares were reduced for the effect of an aggregate of 825,000 ordinary shares that are subject to forfeiture if the over-allotment
option is not exercised by the underwriters (see Note 5). As of March 31, 2025, the Company did not have any dilutive securities and other
contracts that could, potentially, be exercised or converted into ordinary shares and then share in the earnings of the Company. As a
result, diluted loss per ordinary share is the same as basic loss per ordinary share for the period presented.

Derivative Financial Instruments

The Company evaluates its financial instruments
to determine if such instruments are derivatives or contain features that qualify as embedded derivatives in accordance with ASC Topic 815,
“Derivatives and Hedging”. For derivative financial instruments that are accounted for as liabilities, the derivative instrument
is initially recorded at its fair value on the grant date and is then re-valued at each reporting date, with changes in the fair