Company: PCAP
Filing Date: 2025-11-10
Form Type: 10-Q
Source: 0001213900-25-108209
Chunk: 16

Company: ProCap Acquisition Corp
Filing Date: 2025-11-10
Form: 10-Q
Item: Part I, Item 1
Chunk 16
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atives 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 value
reported in the statements of operations. The classification of derivative instruments, including whether such instruments should be recorded
as liabilities or as equity, is evaluated at the end of each reporting period. Derivative liabilities are classified in the balance sheet
as current or non-current based on whether or not net cash settlement or conversion of the instrument could be required within 12 months
of the balance sheet date. The underwriters’ over-allotment option is deemed to be a freestanding financial instrument indexed on
the contingently redeemable shares and will be accounted for as a liability pursuant to ASC 480 if not fully exercised at the time of
the Initial Public Offering. On May 22, 2025, at the closing of the Company’s Initial Public Offering, the underwriters partially
exercised their over-allotment option. There was no remaining over-allotment liability as of September 30, 2025 as the remaining portion
of the over-allotment option expired unexercised on July 7, 2025 (see Note 5).

Warrant Instruments

The Company accounted for the Public Warrants
issued in connection with the Initial Public Offering and the Private Placement Warrants issued as part of the Private Placement Units,
in accordance with the guidance contained in FASB ASC Topic 815, “Derivatives and Hedging”. Accordingly, the Company
evaluated and classified the Warrant instruments under equity treatment at their assigned values.

9

PROCAP ACQUISITION CORP

NOTES TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2025

(Unaudited)

Class A Ordinary Shares Subject to Possible
Redemption

The Public Shares contain a redemption feature
which allows for the redemption of such Public Shares in connection with the Company’s liquidation, or if there is a shareholder
vote or tender offer in connection with the Company’s initial Business Combination. In accordance with ASC 480-10-S99, the Company
classifies Public Shares subject to possible redemption outside of permanent equity as the redemption provisions are not solely within
the control of the Company. The Company recognizes changes in redemption value immediately as they occur and will adjust the carrying
value of redeemable shares to equal the redemption value at the end of