XXI 10-K & 10-Q changes, risk factors and insider trading

Factors that could cause our actual results to differ materially from our expectations, as described in this Quarterly Report and described below, include the risk factors described in the “Risk Factors” section of the 2025 Form 10-K as of and for the period from March 7, 2025 (inception) to December 31, 2025, filed with the SEC on March 31, 2026, and in the Part II, “Item 1A, Risk Factors” of the First Quarter 2026 Form 10-Q as of and for the three months ended March 31, 2026. filed with the SEC on May 13, 2025. The risks described in our 2025 Form 10-K and First Quarter 2026 Form 10-Q are not the only risks we face. Additional risks and uncertainties not currently known to us or that we currently consider immaterial may also materially adversely affect our business, financial condition, results of operations, and cash flows.

We may engage in transactions to acquire Strike, a leading Bitcoin financial services company, and Elektron, a large-scale global Bitcoin mining platform. We currently have no binding commitments or agreements with respect to any such transactions,transaction, nor has any such transaction been evaluated or approved by our Board of Directors. There can be no assurance that such transactions will be entered into or consummated and if consummated, how they may impact our results of operations.

OnThe AprilCompany 29,has 2026, Mr. Mallerspreviously announced theits Company’s potential transactions or acquisitions involving Strike and Elektron. Mr.Raphael MallersZagury, is the founder andour Chief Executive Officer of Strike, and Raphael Zagury, one of our Directors, is the Chief Executive Officer of the entity providing management services to Elektron, and accordingly may have a material financial interest in any such transaction that may differ from the interests of our shareholders. We currently have no binding commitments or agreements with respect to any such transactions,transaction, the transaction structure has not yet been agreed, and our Board of Directors has not evaluated or approved such transactions.transaction. If we determine to pursue any acquisition of Strike and Elektron, any such transactionstransaction would constitute related person transactions that would be subject to review and approval in accordance with our related person transaction policy and applicable provisions of the Texas Business Organizations Code. There can be no assurance that we will enter into or eventually consummate any such transactions.transaction. The process of integrating acquired assets into our operations may result in unforeseen operating difficulties and expenditures and may absorb significant management attention that would otherwise be available for the ongoing development of our business. In addition, we have limited experience in performing acquisitions and managing growth. There can be no assurance that the anticipated benefits of any acquisition will be realized. In addition, future acquisitions could result in potentially dilutive issuances of equity securities, the incurrence of debt and contingent liabilities and amortization expenses related to goodwill and other intangible assets, any of which could materially and adversely affect our operating results and financial position.

Unless the context otherwise requires, references in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” to “Twenty One Capital, Inc,Inc.”, “we”, “us”, “our”, and the “Company” are intended to refer to (i) following the Business Combination, the business and operations of Twenty One Capital, IncInc. and its consolidated subsidiary (ii) prior to the Business Combination, operations of Twenty One Assets, LLC and Twenty One Capital, IncInc. combined and its consolidated subsidiaries.

On AprilJuly 29,21, 2026, Mr.Twenty Mallers,One ourCapital Chiefissued Executive Officer,a announcedpress release regarding the Company’s overview of its operating strategy centered on the potential transactions or acquisitionsacquisition involving Zap Solutions Holding, Inc. (doing business as Strike) and Elektron Energy Operations Limited and related operations (collectively, doing business as Elektron)., Mr.as Mallerspreviously announced on April 29, 2026, and reported that Twenty One Capital is no longer pursuing the founder and Chief Executive Officeracquisition of Strike. We currently have no binding commitments or agreements with respect to anythe suchacquisition acquisitions,of Elektron, nor has any such transaction been evaluated or approved by our Board of Directors. There can be no assurance that we will eventually enter into or consummate any acquisitions, or that if we do consummate such acquisitions, that they will achieve the intended benefits. See “Risk Factors–WeFactors-We may engage in transactions to acquire Strike, a leading Bitcoin financial services company, and Elektron, a large-scale global Bitcoin mining platform. We currently have no binding commitments or agreements with respect to any such transactions, nor has any such transaction been evaluated or approved by our Board of Directors. There can be no assurance that such transactions will be entered into or consummated and if consummated, how they may impact our results of operations”. under “Item 1A, Risk Factors” in the Part II of our First Quarter 2026 Form 10-Q. These transactions, if we determine to pursue them, will be evaluated in accordance with the relevant provisions of the Texas Business Organizations Code and our related person transaction policy.

Further, Section 102(b)(1) of the JOBS Act exempts emerging growth companies from being required to comply with new or revised financial accounting standards until private companies (that is, those that have not had a Securities Act registration statement declared effective or do not have a class of securities registered under the Exchange Act) are required to comply with the new or revised financial accounting standards. The JOBS Act provides that a company can elect to opt out of the extended transition period and comply with the requirements that apply to non-emergingnonemerging growth companies but any such election to opt out is irrevocable. The Company has elected not to opt out of such extended transition period which means that when a standard is issued or revised and it has different application dates for public or private companies, the Company, as an emerging growth company, can adopt the new or revised standard at the time private companies adopt the new or revised standard. This may make comparison of the Company’s financial statements with another public company which is neither an emerging growth company nor an emerging growth company which has opted out of using the extended transition period difficult or impossible because of the potential differences in accounting standards used.

Twenty One Capital expects to remain an emerging growth company until the earlier of (i) the last day of the fiscal year (1) following the fifth anniversary of the consummation of the Business Combination, (2) in which Twenty One Capital has total annual gross revenue of at least $1.235 billion, or (3) in which the Company is deemed to be a large accelerated filer, which means the market value of Company Stock that is held by non-affiliatesnonaffiliates equaled or exceeded $700 million as of the end of that year’s second fiscal quarter, and (ii) the date on which Twenty One Capital has issued more than $1.00 billion in non-convertible debt securities during the prior three-year period. The Company expects to remain a smaller reporting company until the last day of the fiscal year in which (i) the market value of the Company’s Common Stock held by non-affiliates is equal to or exceeds $250 million as of the end of that year’s second fiscal quarter, or (ii) its annual revenues is equal to or exceeds $100 million during such completed fiscal year and the market value of the Company’s Common Stock held by non-affiliates is equal to or exceeds $700 million as of the end of that year’s second fiscal quarter.

The following table sets forth our unaudited condensed consolidated statement of operations for the three months ended June 30, 2026 and 2025 and the six months ended June 30, 2026 and the period from March 31,7, 20262025 (inception) to June 30, 2025:

General and administrative expenses were $10,463,888 for the three months ended MarchJune 31,30, 2026,2026 were $10,613,461 compared to $399,082 for the three months ended June 30, 2025. The $10,214,379 increase in general and comprisedadministrative expenses mainly ofreflects professionalan feesincrease andin stock based compensation.compensation and legal and other professional fees.

Interest expenses of $1,307,552$1,333,003 and $2,640,555 for the three and six months ended MarchJune 31,30, 20262026, respectively, comprises interest on the Convertible Notes and amortization of debt issuance costs.

Interest income received on deposits at bank was $265 $224 and $489 for the three and six months ended MarchJune 31,30, 2026.2026, respectively.

The gain on disposal of digital asset of digital assets$0 ofand $3,180 for the three and six months ended MarchJune 31,30, 20262026, respectively, is a result of a payment made in 1 Bitcoin.

The change in fair value of digital assets of $847,815,783 $401,476,433 and $1,249,295,396 for the three and six months ended MarchJune 31,30, 20262026, respectively, is a result of a decrease in Bitcoin value from December 31, 2025 to MarchJune 31, 30, 2026.

As of MarchJune 31,30, 2026 and December 31, 2025, the Company held 43,514 and 43,515 Bitcoin, respectively, and had 346,807,836 and 346,548,153 shares of Class A Common Stock outstanding, respectively, representing BPS (in Sats) of 12,55712,547 atand each12,557, period.respectively.

As noted above, these KPlsKPIs are narrow in their purpose and are used by management to assist it in assessing whether we are raising and deploying capital in a manner accretive to shareholders solely as it pertains to our Bitcoin holdings. In calculating these KPls,KPIs, we do not consider the source of capital used for the acquisition of our Bitcoin. If we purchase Bitcoin using proceeds from offerings of non-convertible notes or non-convertible preferred stock, or convertible notes or preferred stock that carry conversion prices above the current trading price of our common stock or conversion rights that are not then exercisable, such transactions have the effect of increasing the BPS and BRR, while also increasing our indebtedness and senior claims of holders of instruments other than Class A Common Stock with respect to dividends and to our assets, including our Bitcoin, if we were to liquidate, in a manner that is not reflected in these metrics.

The unaudited condensed consolidated financial statements as of MarchJune 31,30, 2026 have been prepared assuming the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the ordinary course of business. The Company reported a net loss of $859,691,958$413,539,273 and $1,273,231,231 for the three and six months ended MarchJune 31,30, 2026.2026, respectively. As of MarchJune 31,30, 2026, the Company had an aggregate cash balance of $114,057,427, $106,132,084, a net working capital of $117,850,738$110,571,694 and an accumulated deficit of $1,123,142,688.$1,536,681,961.

The Company received proceeds of $82,256,882 as a result of the Business Combination in December 2025, after giving effect to stockholder redemptions and payment of transaction expenses in connection with the Business Combination. As of MarchJune 31,30, 2026, the fair value of digital asset holdings was $2,951,638,847.$2,550,162,413. The combined value of cash and digital asset totaled $3,065,696,274$2,656,294,497 as of MarchJune 31,30, 2026.

We hold a significant digital asset position, which declined by $847,815,783$401,476,433 and $1,249,295,396 during the three and six months ended MarchJune 31,30, 2026, respectively, due to the decline in fair value of Bitcoin. While we classify our digital assets, net of current portion, as long-term, consistent with our bitcoin treasury approach, our significant bitcoin holdings, along with associated unrealized gains, may provide a potential source of liquidity if monetized. However, approximately 16,116 Bitcoin are held as collateral to the Convertible Notes. The Bitcoin that serves as collateral to the Convertible Notes cannot be used as a source of liquidity for the Company.

Further, historically, the Bitcoin markets have been characterized by significant volatility in price, limited liquidity and trading volumes compared to sovereign currencies markets, relative anonymity, a developing regulatory landscape, potential susceptibility to market abuse and manipulation, compliance and internal control failures at exchanges and various other risks inherent in its entirely electronic, virtual form and decentralized network. During times of market instability, we may not be able to sell our Bitcoin at favorable prices or at all. As a result, our Bitcoin holdings may not be able to serve as a source of liquidity for us to the same extent as cash and cash equivalents. In addition, upon sale of our Bitcoin, we may incur additional taxes related to any realized gains or we may incur capital losses as to which the tax deduction may be limited. See “Risks Related to the Business and Strategy of Twenty One Capital –- Twenty One Capital’s Bitcoin holdings are less liquid than its cash and cash equivalents and may not be able to serve as a source of liquidity for Twenty One Capital.” in the “Risk Factors” section of the 2025 Form 10-K for the period from March 7, 2025 (inception) to December 31, 2025, which was filed on March 31, 2026.

As of MarchJune 31,30, 2026, our short-term and long-term liquidity needs include the following:

Cash flows for the threesix months ended March 31,June 30, 2026 and the period from March 7, 2025 (inception) to June 30, 2025:

Net cash used in operating activities for three the six months ended MarchJune 31,30, 2026 was $3,645,506$11,570,849, and is primarily related to the net loss for the period, increase in prepaid and other current assets, partially offset by a decrease in other non current assets and a decrease in accounts payable and accrued expenses.

These unaudited condensed consolidated financial statements include the accounts of the Company and its wholly owned subsidiary.subsidiaries. All significant intercompany transactions and balances have been eliminated upon consolidation.

As a result of the adoption of ASU 2023-08, Intangibles-Goodwill and Other-Crypto Assets (Subtopic 350-60): Accounting for and Disclosure of Crypto Assets (“ASU 2023-08”), digital assets are measured at fair value as of each reporting period. The fair value of digital assets is measured using the period-end closing price in accordance with ASC 820. Since the digital assets are traded on a 24-hour period, the Company utilizes the price as of midnight UTC time. Changes in fair value are recognized in gainchange (loss) onin fair value of digital assets, in operatingother incomeexpense (lossincome) on the statement of operations. When the Company sells digital assets, gains or losses from such transactions are measured as the difference between the cash proceeds and the carrying basis of the digital assets as determined on a First In-First Out basis and are also recorded within the same line item gains (loss)gain on fair valuedisposal of digital assets. Cryptocurrencies are classified as non-current assets because the Company intends to hold the coins past one year.