Immaterial Out of Period Adjustments

During the three months ended March 31, 2024, the Company identified an immaterial error related to the calculation of preferred stock par value and additional paid-in capital for the Company’s Series D convertible preferred stock that impacted the Company’s previously issued 2023 consolidated financial statements. Management evaluated the effect of the error on the 2023 and 2024 consolidated financial statements and concluded that the error was not material. As a result, in the three months ended March 31, 2024, the Company recorded an out-of-period adjustment to decrease preferred stock par value and increase additional paid-in capital, each by approximately $2.5 thousand.

During the three months ended March 31, 2024, the Company identified an immaterial error related to the inclusion of balances of accumulated other comprehensive loss representing historic translation adjustments of previously dissolved subsidiaries that impacted the Company’s previously issued 2023 and 2022 consolidated financial statements. Management evaluated the effect of the error on the 2024, 2023, and 2022 consolidated financial statements and concluded the error was not material. As a result, in the three months ended March 31, 2024, the Company recorded an out-of-period adjustment to increase the loss on deconsolidation of subsidiaries and decrease accumulated other comprehensive loss, each by approximately $75.1 thousand.

Use of Estimates

Use of Estimates

In preparing financial statements in conformity with GAAP, management is required to make estimates and assumptions that affect the reported amounts of assets and liabilities and the disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. In the accompanying consolidated financial statements, estimates are used for, but not limited to, liquidity assumptions, revenue recognition, stock-based compensation, allowances for credit losses and inventory obsolescence, discount rates used to discount unpaid lease payments to present values, deferred tax assets and liabilities and related valuation allowance, the estimated useful lives of long-lived assets, and the recoverability of long-lived assets. Actual results could differ from those estimates.

Foreign Currency

Foreign Currency

iCapX and CapForce Singapore are located in Malaysia and Singapore, respectively, and each use a currency other than the United States dollar as its functional currency. As a result, all assets and liabilities of these entities are translated into United States dollars based on exchange rates at the end of the reporting period. Income and expense items are translated at the average exchange rates prevailing during the reporting period. Translation adjustments are reported in accumulated other comprehensive income, a component of stockholders’ equity. Foreign currency transaction gains and losses, excluding gains and losses on intercompany balances where there is no current intent to settle such amounts in the foreseeable future, are included in the determination of net income. Unless otherwise noted, all references to “$” or “dollar” refer to the United States dollar.

Cash and Cash Equivalents and Restricted Cash

Cash and Cash Equivalents and Restricted Cash

The Company considers all highly liquid instruments with original maturities of three months or less to be cash equivalents. The Company has cash and cash equivalents deposited in financial institutions in which the balances occasionally exceed the Federal Deposit Insurance Corporation (“FDIC”) insured limit of $250,000. The Company also holds a portion of its cash and cash equivalents in accounts with foreign financial institutions that are not federally insured. While the Company has not experienced any losses related to its cash concentrations, the Company may be subject to risks relating to its cash held in U.S. financial institutions in excess of the FDIC limit or in financial institutions that are not FDIC-insured.

At December 31, 2025 and 2024, the Company had funds totaling $302,262 which are required as collateral for letters of credit benefiting a landlord and information technology vendor. These funds are reflected in other noncurrent assets on the accompanying consolidated balance sheets.

The following table provides a reconciliation of cash and cash equivalents and restricted cash reported within the consolidated balance sheets that sum to the total of the same amounts shown in the consolidated statements of cash flows:

Schedule of reconciliation of cash, cash equivalents and restricted cash
	December 31,
	2025		2024
Cash and cash equivalents	$	531,277	$	1,310,653
Restricted cash		302,262		302,262
Total cash and cash equivalents and restricted cash in the consolidated statements of cash flows	$	833,539	$	1,612,915

Investment in Equity Securities

Investment in Equity Securities

The Company currently has a single investment in equity securities issued by a privately held entity. In the fourth quarter of 2024, CapForce International performed part of its listing sponsorship and consulting services and completed the first performance obligation pursuant to the agreement with its client, generating proceeds of $5.0 million in the client’s equity. During the second quarter of 2025, CapForce International completed the second performance obligation within the engagement agreement, earning proceeds of $4.0 million in the client’s equity, and during the fourth quarter of 2025, CapForce International completed the remaining performance obligations within the engagement agreement, earning proceeds of $26.0 million in the client’s equity and $0.2 million in cash consideration (see Note 5). The Company has elected to account for this investment using the measurement alternative as the investment does not have a readily determinable fair value. Pursuant to this alternative, the investment is carried at its estimated fair value calculated as its cost minus any impairment. The Company will adjust the investment to fair value only when it identifies observable price changes in orderly transactions for identical or similar investments of the same issuer. The Company will evaluate the investment at each reporting period to determine whether the investment is impaired.

Long-Lived Assets

Long-Lived Assets

Property and Equipment

Property and equipment is stated at cost and depreciated on a straight-line basis over the estimated useful lives of the related assets. The estimated service lives range from three to ten years. Depreciation expense for property and equipment was $150,725 and $151,057 for the years ended December 31, 2025 and 2024, respectively. Property and equipment consisted of the following at December 31, 2025 and 2024:

Schedule of property and equipment
	Decemeber 31,
	2025			2024
Laboratory and manufacturing equipment	$	614,036		$	614,036
Office furniture and equipment		207,164			207,164
Computers and network equipment		245,983			245,983
Leasehold improvements		1,627,998			1,627,998
		2,695,181			2,695,181
Less accumulated depreciation		(1,766,631	)		(1,615,906	)
Property and equipment, net	$	928,550		$	1,079,275

Property and equipment is reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. Recoverability measurement and estimation of undiscounted cash flows is performed at the lowest possible level for which the Company can identify assets. If such assets are considered to be impaired, impairment is recognized as the amount by which the carrying amount of the assets exceeds the fair value of the assets. In the first quarter of 2024, the Company identified and subsequently entered into an agreement with an assignee for its office space. As a result, the Company had a change in estimate related to the impairment of its leasehold improvements and recognized a gain of $1.2 million in the six months ended June 30, 2024. No impairment was identified during the year ended December 31, 2025.

Leases

The Company determines if an arrangement is a lease at inception. For leases where the Company is the lessee, right-of-use (“ROU”) assets represent the Company’s right to use the underlying asset for the term of the lease and the lease liabilities represent an obligation to make lease payments arising from the lease. ROU assets and lease liabilities are recognized at the lease commencement date based on the present value of the future lease payments over the lease term. The Company uses its incremental borrowing rate based on the information available at the commencement date of the underlying lease arrangement to determine the present value of lease payments. The ROU asset also includes any prepaid lease payments and any lease incentives received. The lease term to calculate the ROU asset and related lease liability includes options to extend or terminate the lease when it is reasonably certain that the Company will exercise the option. The Company’s lease agreements generally do not contain any material variable lease payments, residual value guarantees or restrictive covenants.

Lease expense for operating leases is recognized on a straight-line basis over the lease term as an operating expense while expense for financing leases is recognized as depreciation expense and interest expense using the effective interest method of recognition. The Company has made certain accounting policy elections whereby the Company (i) does not recognize ROU assets or lease liabilities for short-term leases (those with original terms of 12 months or less) and (ii) combines lease and non-lease elements of our operating leases.

ROU assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of an asset may not be recoverable. Recoverability of assets to be held and used is measured by a comparison of the carrying amount of an asset to future undiscounted net cash flows expected to be generated by the asset. Recoverability measurement and estimation of undiscounted cash flows is performed at the lowest possible level for which the Company can identify assets. If such assets are considered to be impaired, impairment is recognized as the amount by which the carrying amount of the assets exceeds the fair value of the assets. As a result of the identification of an assignee for its office space discussed above, the Company had a change in estimate related to the impairment of its right-of-use asset and recognized a gain of $0.8 million in the six months ended June 30, 2024. No impairment was identified during the year ended December 31, 2025.

Intangible Assets

Intangible assets represent costs incurred related to the Company’s proprietary platform during the application development stage that are capitalized as finite-lived intangible assets. These costs include external direct costs for infrastructure and services, as well as personnel and related costs for consultants directly involved in the development effort. Once the project is substantially complete and available for use, capitalized costs will be amortized on a straight-line basis over the asset’s estimated useful life.

Intangible assets are reviewed for impairment whenever events or changes in circumstances indicate that the carrying amount of the asset may not be recoverable. No impairment was identified in any of the periods presented.

Research and Development Costs

Research and Development Costs

Research and development costs are expensed as incurred. Research and development costs primarily consist of fees to develop, expand and innovate the Company’s digital investment banking platform, salaries and related expenses for personnel, and fees paid to consultants and outside service providers. Prior to the Company’s repositioning, research and development costs also included laboratory supplies and development materials.

Income Taxes

Income Taxes

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized for the expected future tax consequences attributable to temporary differences between financial statement carrying amounts of existing assets and liabilities and their respective tax basis. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date. A valuation allowance is established when necessary to reduce deferred income tax assets to the amount expected to be realized.

Tax benefits are initially recognized in the financial statements when it is more likely than not the position will be sustained upon examination by the tax authorities. Such tax positions are initially, and subsequently, measured as the largest amount of tax benefit that is greater than 50% likely of being realized upon ultimate settlement with the tax authority, assuming full knowledge of the position and all relevant facts.

The Company had federal net operating loss (“NOL”) carryforwards of approximately $288.1 million at December 31, 2025. NOL’s created prior to 2018 began expiring in 2022 while those created 2018 and after do not expire. Despite the existence of federal NOL’s, the Company may have state tax requirements. Also, use of the NOL carryforwards may be subject to an annual limitation as provided by Section 382 of the Internal Revenue Code of 1986, as amended (the “Code”). To date, the Company has not performed a formal study to determine if any of its remaining NOL and credit attributes might be further limited due to the ownership change rules of Section 382 or Section 383 of the Code. The Company will continue to monitor this matter going forward. There can be no assurance that the NOL carryforwards will ever be fully utilized.

Recently Adopted Accounting Pronouncements

Recently Adopted Accounting Pronouncements

In 2025, the Company adopted ASU No. 2023-09: Income Taxes (Topic 740): Improvements to Income Tax Disclosures that requires entities to disclose additional information about federal, state, and foreign income taxes primarily related to the income tax rate reconciliation and income taxes paid. The new standard also eliminates certain existing disclosure requirements related to uncertain tax positions and unrecognized deferred tax liabilities. The adoption of ASU No. 2023-09 did not affect recognition or measurement in the Company’s consolidated financial statements.

In 2024, the Company adopted ASU No. 2023-07: Improvements to Reportable Segment Disclosures (Topic 280). The new standard improves reportable segment disclosure requirements, primarily through enhanced disclosures about significant segment expenses that are regularly provided to the chief operating decision maker. ASU 2023-07 also clarifies that entities with a single reportable segment are subject to both new and existing reporting requirements under Topic 280. See the Segment Reporting section within Note 3.