Note 5 – Investment in Equity Securities

In January 2024, AEI Capital, the Company’s controlling stockholder, entered into an advisory engagement with a client, a privately held company, pursuant to which AEI Capital became entitled to advisory fees consisting of equity interests representing 3.5% of the client’s outstanding equity and cash consideration of $200,000. In October 2024, CapForce International entered into an assignment agreement with AEI Capital pursuant to which AEI Capital assigned to CapForce International a portion of AEI Capital’s rights and obligations under the engagement, including advisory fees consisting of equity interests representing 2.1% of the client’s outstanding equity and cash consideration of $120,000. Following the assignment, CapForce International satisfied the first performance obligation under the engagement during the fourth quarter of 2024 and earned equity consideration with a fair value of $5.0 million. During the second quarter of 2025, CapForce International satisfied another performance obligation under the engagement and earned additional equity consideration with a fair value of $4.0 million.

On December 1, 2025, the Company acquired all the issued and outstanding shares of Sun Investment Enterprises Limited, or SIE, a holding company that owns iCapX Sdn. Bhd. (“iCapX”), a Malaysia-based provider of cap table management fintech platform services and related corporate advisory services. Prior to the acquisition, iCapX had been assigned a portion of the advisory engagement described above, consisting of advisory fees equivalent to 1.4% of the client’s outstanding equity interests and cash consideration of $80,000. On December 30, 2025, iCapX assigned its rights and obligations under that portion of the engagement to CapForce International. During the fourth quarter of 2025, CapForce International satisfied the remaining performance obligations under the engagement and earned aggregate equity consideration with a fair value of $26.0 million, consisting of $12.0 million attributable to the original 2.1% interest previously assigned to CapForce International by AEI Capital and $14.0 million attributable to the separate 1.4% interest assigned by iCapX. CapForce International also earned aggregate cash consideration of $200,000, consisting of $120,000 attributable to the original assignment by AEI Capital and $80,000 attributable to the separate assignment by iCapX (see Note 12).

In connection with the Company’s advisory services for the client, pursuant to a services agreement between CapForce International and the European Credit Investment Bank (“ECIB”), CapForce International owes ECIB $3,020,000 in shares of the client’s equity for its investment banking services. Such amount remains accrued and unpaid as of March 31, 2026.

The CEO of AEI Capital and former CEO and current Chairman of the Board of Directors of CapForce Inc., serves as a member of the Board of Directors of the advisory engagement client, making the client a related party. The agreements between the client, AEI Capital, iCapX, and CapForce International were conducted in the ordinary course of business and on terms the Company believes are comparable to those with unrelated third parties. The Company’s management and Board of Directors have evaluated the relationship and concluded that appropriate governance and conflict of interest procedures were followed.

As of March 31, 2026 and 2025, the Company held an investment in the equity securities of the client valued at $35.0 million and $5.0 million, respectively, which is classified as a non-current asset on the accompanying unaudited condensed consolidated balance sheet. The investment was received as consideration for services rendered and represents a non-controlling equity interest in a privately held entity.

The Company estimated the fair value of the investment based on an anticipated initial public offering by the client expected to occur within the next twelve months. The estimated valuation is derived from pricing and valuation metrics provided by the issuer and underwriters in connection with the planned initial public offering. This estimate is subject to significant judgment and market risk and is not based on observable inputs. In the event the final initial public offering valuation results in proceeds to the Company of less than $35.0 million for these shares of equity securities, the client has contractually agreed to issue additional shares to the Company to ensure that the total value of the equity consideration received equals $35.0 million. The Company accounts for this investment under ASC 321, Investments – Equity Securities. Since the equity securities do not have a readily determinable fair value, the Company has elected the measurement alternative and, accordingly, it is carried at its estimated fair value calculated as its cost less any impairment charges until such time as there is evidence of an orderly transaction. As of March 31, 2026, no fair value adjustments have been recognized, nor have there been any impairment charges. This investment is considered a financial asset that is measured at fair value on a non-recurring basis.