KOKUA CAPITAL MANAGEMENT

Form ADV Part 2A: Firm Brochure Item 1 – Cover Page Chapman Financial Group, LLC DBA (“doing business as”) Chapman Financial Group and Kokua Capital Management 437A Hualani Street, Kailua, HI 96734 https://www.kokuacap.com/ 312-994-2390 or 808-400-3787 Date of Disclosure Brochure: March 24, 2026 This disclosure brochure provides information about the qualifications and business practices of Chapman Financial Group, LLC (also referred to as we, the firm, CFG and Chapman Financial Group throughout this disclosure brochure). If you have any questions about the contents of this disclosure brochure, please contact Todd Erskine at todd@kokuacap.com. Information in this disclosure brochure has not been approved or verified by the United States Securities and Exchange Commission or by any state securities authority. information about Chapman Financial Group is also available on the Additional Internet at www.adviserinfo.sec.gov. You can view the firm’s information on this website by searching for Chapman Financial Group, LLC or the firm’s CRD number 168439. *Registration as an investment adviser does not imply a certain level of skill or training. Chapman Financial Group, LLC Page 1 Form ADV Part 2A Disclosure Brochure  Item 2 – Material Changes The United States Securities and Exchange Commission requires Chapman Financial Group to summarize all material changes since the last annual update of its Form ADV brochure (Brochure) and to offer to provide the entire Brochure free of charge. Since our last annual brochure filing dated January 23, 2025, the firm has had the following material changes: • The Firm has updated Item 5 to reflect its typical current fee schedule. This summary does not contain detail about every revision to the Brochure; clients are encouraged to review the Brochure in its entirety. A complete brochure may be obtained by contacting todd@kokuacap.com or 312- 994-2390. You may request such brochure at any point during the year, and it will be provided to you without charge. Additional information about Chapman Financial Group, LLC is also available on the SEC’s website at www.adviserinfo.sec.gov. Chapman Financial Group, LLC Page 2 Form ADV Part 2A Disclosure Brochure  Item 3 – Table of Contents Item 1 – Cover Page ...................................................................................................................................... 1 Item 2 – Material Changes ............................................................................................................................ 2 Item 3 – Table of Contents ............................................................................................................................ 3 Item 4 – Advisory Business ........................................................................................................................... 4 Item 5 – Fees and Compensation .................................................................................................................. 6 Item 6 – Performance-Based Fees and Side-By-Side Management ............................................................. 8 Item 7 – Types of Clients ............................................................................................................................... 8 Item 8 – Methods of Analysis, Investment Strategies and Risk of Loss ........................................................ 9 Item 9 – Disciplinary Information ................................................................................................................. 12 Item 10 – Other Financial Industry Activities and Affiliations ....................................................................... 12 Item 11 – Code of Ethics, Participation in Client Transactions and Personal Trading ................................. 13 Item 12 – Brokerage Practices .................................................................................................................... 13 Item 13 – Review of Accounts ..................................................................................................................... 16 Item 14 – Client Referrals and Other Compensation ................................................................................... 16 Item 15 – Custody ....................................................................................................................................... 16 Item 16 – Investment Discretion .................................................................................................................. 17 Item 17 – Voting Client Securities ................................................................................................................ 17 Item 18 – Financial Information ................................................................................................................... 18 Chapman Financial Group, LLC Page 3 Form ADV Part 2A Disclosure Brochure  Item 4 – Advisory Business Chapman Financial Group is an investment adviser currently registered with the SEC. The firm is a limited liability company (LLC) formed under the laws of the State of Illinois. The firm, which has been registered as an investment adviser since July 2013, is currently 100% owned by Todd Erskine. In December 2024, the firm completed the acquisition of the assets of, and combination with Kokua Capital Management, LLC and was acquired by Todd Erskine, the former owner of Kokua Capital Management. The firm is doing business as Chapman Financial Group to legacy clients and is otherwise doing business as Kokua Capital Management. Description of Advisory Services Chapman Financial Group offers two types of services: 1. Wealth Management services, in which Chapman Financial Group offers services ranging from financial planning to discretionary investment management of investments ranging from equities to fixed income. 2. Separate Account Management services, in which we provide fixed income portfolio management for other investment advisory firms on a subadvisory basis. Wealth Management Services Chapman Financial Group offers investment management services, which involves CFG providing you with continuous and regular supervision over and investment of your specified accounts. You must appoint the firm as your investment adviser of record on specified accounts (collectively, the “Account”). The Account consists only of separate account(s) held by qualified custodian(s) under your name. The qualified custodians maintain physical custody of all funds and securities of the Account, and you retain all rights of ownership (e.g., right to withdraw securities or cash, exercise or delegate proxy voting and receive transaction confirmations) of the Account. The Account is managed by us based on your financial situation, investment objectives and risk tolerance. We actively monitor the Account and provide advice regarding buying, selling, reinvesting or holding securities, cash or other investments of the Account. We will need to obtain certain information from you to determine your financial situation and investment objectives. You will be responsible for notifying us of any updates regarding your financial situation, risk tolerance or investment objective and whether you wish to impose or modify existing investment restrictions; however we will contact you at least annually to discuss any changes or updates regarding your financial situation, risk tolerance or investment objectives. We are always reasonably available to consult with you relative to the status of your Account. You have the ability to impose reasonable restrictions on the management of your accounts, including the ability to instruct us not to purchase certain securities. It is important that you understand that we manage investments for other clients and at times give them advice or take actions for them or for our personal accounts that is different from the advice we provide to you or actions taken for you. We are not obligated to buy, sell or recommend to you any security or other investment that we buy, sell or recommend for any other clients or for our own accounts. Conflicts can arise in the allocation of investment opportunities among accounts that we manage. We strive to allocate investment opportunities believed to be appropriate for your account(s) and other accounts advised by the firm among such accounts equitably and consistent with the best interests of all accounts involved. However, there can be no assurance that a particular investment opportunity that comes to our Chapman Financial Group, LLC Page 4 Form ADV Part 2A: Firm Brochure  attention will be allocated in any particular manner. If we obtain material, non-public information about a security or its issuer that we cannot lawfully use or disclose, we have absolutely no obligation to disclose the information to any client or use it for any client’s benefit. Chapman Financial Group is a fiduciary under the Employee Retirement Income Security Act of 1974, as amended (“ERISA”) with respect to investment management services and investment advice provided to ERISA plans and ERISA plan participants. Chapman Financial Group is also a fiduciary under Section 4975 of the Internal Revenue Code of 1986, as amended (the “IRC”) with respect to investment management services and investment advice provided to individual retirement accounts (“IRAs”), ERISA plans, and ERISA plan participants. As such, Chapman Financial Group is subject to specific duties and obligations under ERISA and the IRC, as applicable, that include, among other things, prohibited transaction rules which are intended to prohibit fiduciaries from acting on conflicts of interest. As a fiduciary, we have duties of care and of loyalty to you and are subject to obligations imposed on us by the federal and state securities laws. As a result, you have certain rights that you cannot waive or limit by contract. Nothing in our agreement with you should be interpreted as a limitation of our obligations under the federal and state securities laws or as a waiver of any non-waivable rights you possess. Separate Account Management Services You may gain access to our investment management services through programs or investment platforms sponsored by unaffiliated investment advisors (each a Client-facing Adviser). These programs include wrap- fee programs, lists of available investment managers, or general asset allocation programs. Through these programs, we will be available to clients for selection as sub-adviser to manage a portion of their accounts. To do so, you must establish an account directly with your Client-facing Adviser. Your Client-facing Adviser interviews you and collects data through an investment profile at the opening of the account as to your investment experience, liquidity requirements, and tolerance for risk, as well as for general financial information. The investment strategy or strategies, selected by your Client-facing Adviser, and guided by your chosen account objectives then guides the placement and investments for your managed accounts. Chapman Financial Group will have the power and authority, as granted by the client through the Client- facing Adviser’s agreement or our client agreement, to make investment decisions on a discretionary basis over the portion of the client’s assets delegated to Chapman Financial Group for management. Advice to Certain Types of Investments Chapman Financial Group provides investment advice on the following types of investments: • • • • • • • • • • US and international equities (stocks) Mutual funds and closed-end funds Exchange-traded funds US government securities Certificates of deposit Municipal securities Corporate debt securities Mortgage-backed securities Options contracts on securities and warrants Structured products Although we generally provide advice only on the products previously listed, we reserve the right to offer advice on any investment product that is suitable for each client’s specific circumstances, needs, goals and objectives. It is not our typical investment strategy to attempt to time the market, but in certain circumstances we could Chapman Financial Group, LLC Page 5 Form ADV Part 2A: Firm Brochure  increase cash holdings modestly as deemed appropriate based on your risk tolerance and our expectations of market behavior. We reserve the right to modify our investment strategy to accommodate special situations such as low basis stock, stock options, legacy holdings, inheritances, closely held businesses, collectibles, or special tax situations. (Please refer to Item 8 – Methods of Analysis, Investment Strategies and Risk of Loss for more information.) Tailored Advisory Services to Individual Needs of Clients Chapman Financial Group’s advisory services are always provided based on your individual needs. This means, for example, that when we provide asset management services, you are given the ability to impose restrictions on the accounts we manage for you, including specific investment selections and sectors. We work with you on a one-on-one basis through interviews and questionnaires to determine your investment objectives and suitability information. We will not enter into an investment adviser relationship with a prospective client whose investment objectives are incompatible with our investment philosophy or strategies or where the prospective client seeks to impose unduly restrictive investment guidelines. Client Assets Managed by Chapman Financial Group The amount of clients’ assets managed by Chapman Financial Group totaled $223,936,529 as of December 31, 2025. The entire amount is managed on a discretionary basis. See Item 16 – Investment Discretion for more information. Item 5 – Fees and Compensation In addition to the information provided in Item 4 – Advisory Business, this section provides additional details regarding the firm’s services along with descriptions of each service’s fees and compensation arrangements. It should be noted that lower fees for comparable service may be available from other sources. The exact fees and other terms will be outlined in the agreement between you and Chapman Financial Group. Chapman Financial Group is required to pay Hawaii’s General Excise Tax (GET) on revenues derived from clients based in Hawaii. This is a tax on the gross receipts for goods and services in the state which is paid by businesses but passed through to customers (similarly to how a sales tax functions in many other states). Chapman Financial Group has clients located in the state of Hawaii and these clients will be assessed this tax. The tax ranges from 0.5% to 4.6% depending on the county of residence and the nature of the client- business relationship. Wealth Management Services Fees charged for our asset management services are charged based on a percentage of assets under management, billed in advance (at the start of the billing period) on a quarterly calendar basis and calculated based on the fair market value of your account (including any cash and cash equivalents, margin or other borrowing balances and accrued interest) as of the last business day of the previous billing period. Fees are prorated (based on the number of days service is provided during the initial billing period) for your account opened at any time other than the beginning of the billing period. If asset management services are commenced in the middle of the billing period, then the prorated fee for that billing period is based on the value of the Account when services commence and is due immediately and will be deducted from Account when services commence. The asset management services continue until terminated by either party. You or Chapman Financial Group can cancel services at any time upon prior written notice unless the agreement between you and CFG specifies otherwise. Any prepaid, unearned fees will be promptly refunded by Chapman Financial Group to Chapman Financial Group, LLC Page 6 Form ADV Part 2A: Firm Brochure  you. Fee refunds will be determined on a pro rata basis using the number of days services are actually provided during the final period. Fees charged for our asset management services are negotiable based on a number of factors, including the complexity of the client's situation, the composition of the client's account (i.e., equities versus mutual funds), the potential for additional account deposits, the relationship of the client with the firm, and the total amount of assets under management for the client. We typically use a blended, tiered fee schedule to determine the percentage fee assessed to your Account. The following is a sample fee schedule provided for illustrative purposes but represents a typical fee schedule used by the firm. In some cases, our annual fee for advisory services is as much as 1.25%. Your exact fee schedule will be detailed in your service agreement. Asset Level Annualized Fee Zero - $1 million $1 million to $2 million $2 million to $5 million $5 million to $10 million $10 million+ 100 basis points (1.00% per annum) 75 basis points (0.75% per annum) 60 basis points (0.60% per annum) 45 basis points (0.45% per annum) Negotiable Chapman Financial Group believes that its annual fee is reasonable in relation to: (1) services provided and (2) the fees charged by other investment advisers offering similar services/programs. However, our annual investment advisory fee may be higher than that charged by other investment advisers offering similar services/programs. In addition to our compensation, you may also incur brokerage commissions and/or transaction ticket fees charged by the qualified custodian billed directly to you by the qualified custodian. Chapman Financial Group does not receive any portion of such commissions or fees from you or the qualified custodian. In addition, you may incur certain charges imposed by third parties other than Chapman Financial Group in connection with investments made through your account including, but not limited to, mutual fund sales loads, 12b-1 fees and surrender charges, variable annuity fees and surrender charges, IRA and qualified retirement plan fees, and charges imposed by broker-dealers and the qualified custodian(s) of your account (including but not limited to any custodian fees, account maintenance fees and trade away fees). Management fees charged by Chapman Financial Group are separate and distinct from the fees and expenses charged externally managed investments (including separately managed accounts and private funds) and by investment company securities including mutual funds and ETFs recommended to you. A description of mutual fund and ETF fees and expenses are available in each investment company security’s prospectus. You can choose how to pay your investment advisory fees. The investment advisory fees can be deducted from your account and paid directly to the firm by the qualified custodian(s) of your account or you can pay the firm upon receipt of a billing notice sent directly to you. If you choose to have the investment advisory fees deducted from your account, you must authorize the qualified custodian(s) of your account to deduct fees from your account and pay such fees directly to Chapman Financial Group. You should review your account statements received from the qualified custodian(s) and verify that appropriate investment advisory fees are being deducted. The qualified custodian(s) will not verify the accuracy of the investment advisory fees deducted. If you choose to pay the fees after receiving a statement, fees are due upon your receipt of a billing notice sent directly to you. Chapman Financial Group, LLC Page 7 Form ADV Part 2A: Firm Brochure  Separate Account Management Services Participants in a program using our firm as fixed income sub-adviser will pay an annualized investment management fee to Chapman Financial Group of 0.15% or 0.20% of the assets under Chapman Financial Group’s management. Our fee schedule is currently 0.20%, though some clients are subject to a legacy 0.15% rate. In some cases, Chapman Financial Group’s fee will be charged separately from and in addition to the overall program fee charged to a client by the sponsor investment adviser firm. Fees are charged based on a percentage of assets under management, billed in advance (at the start of the billing period) on a quarterly calendar basis and calculated based on the fair market value of your account as of the last business day of the previous billing period. Fees are prorated (based on the number of days service is provided during the initial billing period) for your account opened at any time other than the beginning of the billing period. If asset management services are commenced in the middle of the billing period, the prorated fee for the initial billing period is billed in arrears at the same time as the next full billing period’s fee is billed. Our policy is to deduct all fees directly from your account when we are responsible for calculating and debiting fees. To debit fees from your account, you must authorize the qualified custodian(s) of your account to deduct fees from your account and pay such fees directly to Chapman Financial Group. Our firm will send you or your sponsor investment adviser firm (as your third-party representative) a billing statement prior to the time that fee deduction instruction is sent to the qualified custodian(s) of your account. The billing statement will detail the formula used to calculate the fee, the assets under management and the time period covered. You should review your account statements received from the qualified custodian(s) and verify that appropriate investment advisory fees are being deducted. The qualified custodian(s) will not verify the accuracy of the investment advisory fees deducted. In some circumstances, our fee is included in the overall program fee charged to the client as calculated and billed by the sponsor investment adviser firm. In these situations, Chapman Financial Group will invoice the sponsor investment adviser firm directly. The separate account management services continue until terminated by either party. Your Client-facing Adviser or Chapman Financial Group can cancel services at any time upon prior written notice unless the agreement (between your Client-facing Adviser and CFG or you and CFG) specifies otherwise. Any prepaid, unearned fees will be promptly refunded by Chapman Financial Group to you. Fee refunds will be determined on a pro rata basis using the number of days services are actually provided during the final period. Item 6 – Performance-Based Fees and Side-By-Side Management Performance-based fees are defined as fees based on a share of capital gains on or capital appreciation of the assets held in a client’s account. Item 6 is not applicable to this Disclosure Brochure because we do not charge or accept performance-based fees. Item 7 – Types of Clients Chapman Financial Group generally provides investment advice to individuals including high net worth individuals. You are required to execute a written agreement with Chapman Financial Group specifying the particular advisory services in order to establish a client arrangement with Chapman Financial Group. Minimum Investment Amounts Required Chapman Financial Group generally requires a minimum of $500,000 in order to open an account. To reach this account minimum, clients can aggregate all household accounts. Exceptions can be granted to this Chapman Financial Group, LLC Page 8 Form ADV Part 2A: Firm Brochure  minimum for at our discretion. For example, we waive the account minimum in certain situations for our family members and children of current clients. Item 8 – Methods of Analysis, Investment Strategies and Risk of Loss Methods of Analysis Chapman Financial Group uses the following methods of analysis in formulating investment advice: Fundamental – This is a method of evaluating a security by attempting to measure its intrinsic value by examining related economic, financial and other qualitative and quantitative factors. Fundamental analysts attempt to study everything that can affect the security's value, including macroeconomic factors (like the overall economy and industry conditions) and individually specific factors (like the financial condition and management of a company). The end goal of performing fundamental analysis is to produce a value that an investor can compare with the security's current price in hopes of figuring out what sort of position to take with that security (underpriced = buy, overpriced = sell or short). Fundamental analysis is considered to be the opposite of technical analysis. Fundamental analysis is about using real data to evaluate a security's value. Although most analysts use fundamental analysis to value stocks, this method of valuation can be used for just about any type of security. The risk associated with fundamental analysis is that it is somewhat subjective. While a quantitative approach is possible, fundamental analysis usually entails a qualitative assessment of how market forces interact with one another in their impact on the investment in question. It is possible for those market forces to point in different directions, thus necessitating an interpretation of which forces will be dominant. This interpretation may be wrong and could therefore lead to an unfavorable investment decision. Technical – This is a method of evaluating securities by analyzing statistics generated by market activity, such as past prices and volume. Technical analysts do not attempt to measure a security's intrinsic value, but instead use charts and other tools to identify patterns that can suggest future activity. Technical analysts believe that the historical performance of stocks and markets are indications of future performance. Technical analysis is even more subjective than fundamental analysis in that it relies on proper interpretation of a given security's price and trading volume data. A decision might be made based on a historical move in a certain direction that was accompanied by heavy volume; however, that heavy volume may only be heavy relative to past volume for the security in question, but not compared to the future trading volume. Therefore, there is the risk of a trading decision being made incorrectly, since future trading volume is an unknown. Technical analysis is also done through observation of various market sentiment readings, many of which are quantitative. Market sentiment gauges the relative degree of bullishness and bearishness in a given security, and a contrarian investor utilizes such sentiment advantageously. When most traders are bullish, then there are very few traders left in a position to buy the security in question, so it becomes advantageous to sell it ahead of the crowd. When most traders are bearish, then there are very few traders left in a position to sell the security in question, so it becomes advantageous to buy it ahead of the crowd. The risk in utilization of such sentiment technical measures is that a very bullish reading can always become more bullish, resulting in lost opportunity if the money manager chooses to act upon the bullish signal by selling out of a position. The reverse is also true in that a bearish reading of sentiment can always become more bearish, which may result in a premature purchase of a security. Chapman Financial Group, LLC Page 9 Form ADV Part 2A: Firm Brochure  Investment Strategies Chapman Financial Group primarily follows an actively managed, long-term investment strategy which means we generally select investments to be held for a term of at least six to twelve months. The risk associated with long term investing is that we do not actively change our positions when there are short term periods of fluctuation and volatility. This is because we strive to select investments based on anticipated results for longer periods rather than short-term swings in the market. Because we do not manage accounts for short-term benefits, our managed accounts may not take advantage of short-term price fluctuations compared to a market-timer or short-swing investor. Our Separate Account Management strategies utilize the following strategies: o Core Municipal: Seeks both the preservation of capital and the maximization of after-tax returns through investments in debt obligations of U.S. municipalities. o Core Taxable: Seeks both the preservation of capital and the maximization of risk-adjusted returns through investments in investment grade bonds/funds. o Total Return Taxable: Seeks high absolute returns through investments in both investment grade and high yield (“junk”) bonds and funds. o Custom: Investment objectives and constraints are tailored to the specific needs of each client and in some cases include combinations of the above strategies or other types of investments. Risk of Loss All investments are subject to the risk of loss which clients should be prepared to bear. Past performance is not indicative of future results. Therefore, you should never assume that future performance of any specific investment or investment strategy will be profitable. Investing in securities (including stocks, mutual funds, and bonds, etc.) involves risk of loss. Even when the value of the securities when sold is greater than the value when purchased, there is the risk that the appreciation will be less than inflation. Further, depending on the different types of investments there may be varying degrees of risk. You should be prepared to bear investment loss including loss of original principal. Investments such as those primarily used by Chapman Financial Group for client portfolios (including, but not limited to, stocks, bonds, mutual funds, and ETFs) are not deposits in a bank and are not insured or guaranteed by the Federal Deposit Insurance Corporation or any other governmental agency. Because of the inherent risk of loss associated with investing, the firm is unable to represent, guarantee, or even imply that our services and methods of analysis can or will predict future results, successfully identify market tops or bottoms, or insulate you from losses due to market corrections or declines. There are certain additional risks associated with investing in securities through our investment management program, as described below: • Market Risk – Either the stock market as a whole, or the value of an individual company, goes down resulting in a decrease in the value of client investments. This is also referred to as systemic risk. • Equity (stock) market risk – Common stocks are susceptible to general stock market fluctuations and to volatile increases and decreases in value as market confidence in and perceptions of their issuers change. If you held common stock, or common stock equivalents, of any given issuer, you would generally be exposed to greater risk than if you held preferred stocks and debt obligations of the issuer. • Company Risk. When investing in stock positions, there is always a certain level of Chapman Financial Group, LLC Page 10 Form ADV Part 2A: Firm Brochure  company- or industry-specific risk that is inherent in each investment. This is also referred to as unsystematic risk and can be reduced through appropriate diversification. There is the risk that the company will perform poorly or have its value reduced based on factors specific to the company or its industry. For example, if a company’s employees go on strike or the company receives unfavorable media attention for its actions, the value of the company may be reduced. • Fixed Income Risk. When investing in bonds, there is the risk that the issuer will default on the bond and be unable to make payments. Absent a default, investors in fixed income securities may also lose money if the securities are sold prior to maturity. Such losses often occur following a period of rising interest rates. Further, individuals who depend on set amounts of periodically paid income face the risk that inflation will erode their spending power. Fixed-income investors receive set, regular payments that face the same inflation risk. • Options Risk. Options on securities may be subject to greater fluctuations in value than an investment in the underlying securities. Purchasing and writing put and call options are highly specialized activities and entail greater than ordinary investment risks. • ETF and Mutual Fund Risk. When investing in an ETF or mutual fund, you will bear additional expenses based on your pro rata share of the ETF’s or mutual fund’s operating expenses, including the potential duplication of management fees. The risk of owning an ETF or mutual fund generally reflects the risks of owning the underlying securities the ETF or mutual fund holds. You will also incur brokerage costs when purchasing ETFs. More information regarding the specific risks associated with investment in a particular mutual fund is available in that mutual fund’s prospectus. • Alternative Investment Risk. Alternative Investments are subject to a high degree of risk, are not suitable for all investors, and typically have limited liquidity and delays in tax reporting. By themselves, Alternative Investments do not constitute a balanced investment portfolio. Clients should carefully review and consider potential risks before investing in Alternative Investments, including carefully reviewing all disclosure documents, private offering memoranda, prospectuses, or other offering materials and/or consulting tax or legal counsel, if appropriate. • Structured Product Risk. A structured product, also known as a market-linked product, is generally a pre- packaged investment strategy based on derivatives, such as a single security, a basket of securities, options, indices, commodities, debt issuances, and/or foreign currencies, and to a lesser extent, swaps. Structured products are usually issued by investment banks or affiliates thereof. They have a fixed maturity and have two components: a note and a derivative. The derivative component is often an option. The note provides for periodic interest payments to the investor at a predetermined rate, and the derivative component provides for the payment at maturity. Some products use the derivative component as a put option written by the investor that gives the buyer of the put option the right to sell to the investor the security or securities at a predetermined price. Other products use the derivative component to provide for a call option written by the investor that gives the buyer of the call option the right to buy the security or securities from the investor at a predetermined price. A feature of some structured products is a "principal guarantee" function, which offers protection of principal if held to maturity. However, these products are not always Federal Deposit Insurance Corporation insured; they may only be insured by the issuer, and thus have the potential for loss of principal in the case of a liquidity crisis, or other solvency problems with the issuing company. Investing in structured products involves a number of risks including but not limited to: fluctuations in the price, Chapman Financial Group, LLC Page 11 Form ADV Part 2A: Firm Brochure  level or yield of underlying instruments, interest rates, currency values and credit quality; substantial loss of principal; limits on participation in any appreciation of the underlying instrument; limited liquidity; credit risk of the issuer; conflicts of interest; and, other events that are difficult to predict. • Liquidity Risk. Although typically associated with micro-cap and small-cap stocks or securities, liquidity risks can arise during times of market financial crisis. The risk arises when there is a lack of marketability for a fund’s underlying security that cannot be bought or sold quickly enough to prevent or mitigate a loss. • Cybersecurity Risk. The computer systems, networks, and devices used by Chapman Financial Group and service providers to us and our clients to carry out routine business operations employ a variety of protections designed to prevent damage or interruption from computer viruses, network failures, computer and telecommunication failures, infiltration by unauthorized persons and security breaches. Despite the various protections utilized, systems, networks, or devices potentially can be breached. You could be negatively impacted as a result of a cybersecurity breach. Cybersecurity breaches can include unauthorized access to systems, networks, or devices; infection from computer viruses or other malicious software code; and attacks that shut down, disable, slow, or otherwise disrupt operations, business processes, or website access or functionality. Cybersecurity breaches may cause disruptions and impact business operations, potentially resulting in financial losses to a client; impediments to trading; the inability by me and other service providers to transact business; violations of applicable privacy and other laws; regulatory fines, penalties, reputational damage, reimbursement or other compensation costs, or additional compliance costs; as well as the inadvertent release of confidential information. Similar adverse consequences could result from cybersecurity breaches affecting issuers of securities in which a client invests; governmental and other regulatory authorities; exchange and other financial market operators, banks, brokers, dealers, and other financial institutions; and other parties. In addition, substantial costs may be incurred by these entities in order to prevent any cybersecurity breaches in the future. • Management Risk. Your investment with the firm varies with the success and failure of our investment strategies, research, analysis and determination of portfolio securities. If our investment strategies do not produce the expected returns, the value of the investment will decrease. Item 9 – Disciplinary Information Item 9 is not applicable to this Disclosure Brochure because there are no legal or disciplinary events that are material to a client’s or prospective client’s evaluation of our advisory business or integrity of our management. Item 10 – Other Financial Industry Activities and Affiliations Chapman Financial Group is not and does not have a related person that is a broker/dealer, municipal securities dealer, government securities dealer or broker, an investment company or other pooled investment vehicle (including a mutual fund, closed-end investment company, unit investment trust, private investment company or "hedge fund," and offshore fund), a futures commission merchant, commodity pool operator, or commodity trading advisor, a banking or thrift institution, an accountant or accounting firm, a lawyer or law firm, an insurance company or agency, a pension consultant, a real estate broker or dealer, and a sponsor or syndicator of limited partnerships. Chapman Financial Group, LLC Page 12 Form ADV Part 2A: Firm Brochure  Item 11 – Code of Ethics, Participation in Client Transactions and Personal Trading Code of Ethics Summary An investment adviser is considered a fiduciary and has a fiduciary duty to all clients. Chapman Financial Group has established a Code of Ethics to comply with the requirements of the securities laws and regulations that reflects its fiduciary obligations. The Code of Ethics also requires compliance with applicable federal and state securities laws. As an investment adviser, Chapman Financial Group intends to act in your best interest in all advisory activities. This section is intended to provide a summary description of the Code of Ethics of Chapman Financial Group. If you wish to review the Code of Ethics in its entirety, you should send us a written request and upon receipt of your request, we will promptly provide a copy of the Code of Ethics to you. Affiliate and Employee Personal Securities Transactions Disclosure In some cases, we buy or sell securities that are also recommended to clients. In order to minimize this conflict of interest, securities recommended by Chapman Financial Group are widely held and publicly traded. In addition, in accordance with our fiduciary duty to clients, we will place Chapman Financial Group client interests ahead of our own investment interests. Item 12 – Brokerage Practices Brokerage Recommendations Chapman Financial Group recommends that clients establish brokerage accounts with the Schwab Institutional division of Charles Schwab & Company, Inc. (“Schwab”), a FINRA-registered broker-dealer, Member SIPC, to maintain custody of clients’ assets and to effect trades for their accounts. Although Chapman Financial Group recommends clients establish accounts at Schwab, it is the client’s decision to custody assets with Schwab. Chapman Financial Group is independently owned and operated and not affiliated with Schwab. In certain circumstances, Chapman Financial Group will recommend additional unaffiliated broker-dealers to affect fixed income transactions. Factors that Chapman Financial Group considers in recommending Schwab include historical relationship with Chapman Financial Group, financial strength, reputation, execution capabilities, pricing, research, and service. Accordingly, although Chapman Financial Group will seek competitive rates, it does not necessarily obtain the lowest possible commission rates for client account transactions. Schwab provides Chapman Financial Group with certain benefits and services based upon the amount of client assets in accounts, including access to its institutional trading and custody services, which are typically not available to Schwab retail investors. These services generally are available to independent investment advisors on an unsolicited basis, at no charge to them so long as a total of at least $10 million of the advisor’s clients’ assets are maintained at Schwab Institutional. Schwab’s brokerage services include the execution of securities transactions, custody, research, and access to mutual funds and other investments that are otherwise generally available only to institutional investors or would require significantly higher minimum initial investment. For Chapman Financial Group’s clients’ accounts maintained in its custody, Schwab generally does not charge separately for custody services but is compensated by account holders through commissions or other transaction-related or asset based fees for securities trades that are executed through Schwab or that settle into Schwab accounts. Schwab Institutional also makes available to Chapman Financial Group other products are services that benefit Chapman Financial Group but may not directly benefit clients’ accounts. Many of these products and services may be used to service all or some substantial number of Chapman Financial Group’s accounts, including accounts not maintained Schwab. These products and services may not benefit all of Chapman Financial Group’s client accounts equally and may not benefit Chapman Financial Group, LLC Page 13 Form ADV Part 2A: Firm Brochure  certain client accounts at all. Schwab’s products and services that assist Chapman Financial Group in managing and administering clients’ accounts include software and other technology that (i) provides access to client account data (such as trade confirmations and account statements); (ii) facilitate trade execution and allocate aggregated trade orders for multiple client accounts; (iii) provide research, pricing and other market data; (iv) facilitate payment of Chapman Financial Group’s fees from some of its accounts; and (v) assist with back-office functions, recordkeeping and client reporting. Schwab Institutional also offers other services intended to help Chapman Financial Group manage and further develop its business enterprise. These services may include: (i) compliance, legal and business consulting; (ii) publications and conferences on practice management and business succession; and (iii) access to employee benefits providers, human capital consultants and insurance providers. Schwab Institutional may discount or waive fees it would otherwise charge for some of these services or pay all or part of the fees of a third-party providing these services to Chapman Financial Group. Schwab Institutional may also provide other benefits such as educational events or occasional business entertainment of Chapman Financial Group personnel. Chapman Financial Group does not make a commitment to invest any specific amount or percentage of client assets in any specific mutual funds, securities, or other products as a result of the above arrangement. While as a fiduciary, Chapman Financial Group endeavors to act in its clients’ best interests, Chapman Financial Group’s recommendation that clients maintain their assets in accounts at Schwab may take into account availability of some of the foregoing products and services and other arrangements not solely on the nature of cost or quality of custody and brokerage services provided by Schwab, which creates a potential conflict of interest as these benefits could influence Chapman Financial Group’s decision to recommend them over other service providers that do not furnish similar support, services, or software to Chapman Financial Group. Chapman Financial Group believes that the foregoing products and services are customary and typical of products and services custodians provide to investment advisers similar to Chapman Financial Group, and further believes that the retention of Custodians is in the best interest of Chapman Financial Group’s clients. Through its relationship with Schwab, Chapman Financial Group also uses the Schwab Prime Brokerage service. Prime Brokerage is a service allowing Chapman Financial Group to place trades with other broker/dealers without the need to have individual accounts with the other broker/dealers. The use of Prime Brokerage allows greater flexibility to access more fixed income products, ability to implement trades with companies that may make a market in a security, the ability to access Initial Public Offerings (IPO’s), and the ability to access new issue bonds. Prime Brokerage Service is beneficial because it allows Chapman Financial Group to place trades through several executing broker/dealers, yet receive centralized custody, clearing and settlement, recordkeeping and other services from one source, Schwab. Chapman Financial Group’s decision to use an executing broker/dealer will depend on the executing broker’s respective expertise and costs. All assets will be kept in a Schwab account, with all confirmations and statements generated by Schwab. Other Brokerage Arrangements We trade most of our bonds on online platforms (Alternative Trading Systems (ICE Bonds Securities Corporation and ICE FI Select), and their websites provide analytics on the bonds available for sale. From time to time, we trade bonds through broker-dealer Carty & Co., who will occasionally send us research and analysis from their trading desk on bonds. We typically trade our structured products through broker- dealer Halo Investing (and their trade execution partner ISC Group). Halo Investing has a system that allows us to solicit multiple offers on structured products, and their website has tools for monitoring the structured products we purchase. The information these parties provide could create a conflict of interest Chapman Financial Group, LLC Page 14 Form ADV Part 2A: Firm Brochure  as these benefits could influence Chapman Financial Group’s decision to use them over other service providers that do not furnish similar information to Chapman Financial Group. Chapman Financial Group believes that this information is customary and typical of information these parties provide to investment advisers similar to Chapman Financial Group, and further believes that the receipt of this information is helpful in managing client portfolios. Directed Brokerage Although Schwab is our preferred broker/dealer, clients are allowed to select the broker-dealer that will be used for their accounts (assuming the broker/dealer can be integrated into the firm’s operations and systems). Clients directing the use of a particular broker/dealer or other custodian must understand that we may not be able to obtain the best prices and execution for the transaction. Under a client-directed brokerage arrangement, clients may receive less favorable prices than would otherwise be the case if the client had not designated a particular broker/dealer or custodian. Directed brokerage account trades are generally placed by Chapman Financial Group after effecting trades for other clients of Chapman Financial Group. In the event that a client directs Chapman Financial Group to use a particular broker or dealer, Chapman Financial Group may not be authorized to negotiate commissions and may be unable to obtain volume discounts or best execution. In addition, under these circumstances a disparity in commission charges may exist between the commissions charged to clients who direct Chapman Financial Group to use a particular broker or dealer versus clients who do not direct the use of a particular broker or dealer. Block Trading Policy In some instances, we elect to purchase or sell the same securities for several clients at approximately the same time. This process is referred to as aggregating orders, batch trading or block trading and is used by the firm when Chapman Financial Group believes such action may prove advantageous to clients. If and when we aggregate client orders, allocating securities among client accounts is done on a fair and equitable basis. Typically, the process of aggregating client orders is done in order to achieve better execution, to negotiate more favorable commission rates or to allocate orders among clients on a more equitable basis in order to avoid differences in prices and transaction fees or other transaction costs that might be obtained when orders are placed independently. If and when we determine to aggregate client orders for the purchase or sale of securities, including securities in which Chapman Financial Group or our associated persons invest, we will do so in accordance with the parameters set forth in the SEC No- Action Letter SMC Capital, Inc. Neither we nor our associated persons receive any additional compensation as a result of block trades. Cross Trades Chapman Financial Group utilizes fixed income broker/dealers that may execute cross trades of bonds amongst Chapman Financial Group clients. A cross trade occurs when a transaction is executed between two or more different client accounts. Because Chapman Financial Group represents both the client-sellers and client-buyers, Chapman Financial Group has a conflict of interest when cross trades are made. This is a conflict of interest in that the selling and purchasing client have opposing interests in the execution price to be obtained. We seek to mitigate this conflict of interest by disclosing it to you, and by seeking execution at a price that is fair to both selling and purchasing clients. These types of cross transactions will only be used when it can be reasonably believed that doing so is designed to help achieve the “best execution” possible considering the overall situation and all factors. Cross trades are utilized to benefit clients involved by saving commissions, mark-ups, and market impact costs. Chapman Financial Group has implemented procedures designed to monitor cross trades and document the benefit and effectiveness of this type of transaction. Owners and employees of Chapman Financial Group are not permitted to participate in cross trades with clients on the other side of the trade. Chapman Financial Group, LLC Page 15 Form ADV Part 2A: Firm Brochure  Item 13 – Review of Accounts Account Reviews and Reviewers The firm's principal or a designee periodically reviews each client account to be sure that the holdings are consistent with investment objectives. The reviews include portfolio valuation, cash levels and asset allocations. Individual securities within the portfolios are reviewed on an ongoing basis. Each account's performance results are reviewed monthly. All accounts are reviewed with clients at their discretion (at least annually). Statements and Reports For our asset management services, you are provided with transaction confirmation notices and regular quarterly account statements directly from the qualified custodian. Additionally, Chapman Financial Group provides position or performance reports to certain clients quarterly. You are encouraged to always compare any reports or statements provided by us, a sub-adviser or third- party money manager against the account statements delivered from the qualified custodian. When you have questions about your account statement, you should contact the firm and the qualified custodian preparing the statement. Item 14 – Client Referrals and Other Compensation Client Referrals Chapman Financial Group does not compensate any outside party for client referrals. As explained in Item 4 and Item 5 of this brochure, Chapman Financial Group provides sub-adviser services to clients of unaffiliated investment adviser firms. Therefore, unaffiliated investment adviser firms refer or recommend their clients utilize our sub-adviser services. However, Chapman Financial Group does not pay unaffiliated investment adviser firms recommending our sub-adviser services, or any other persons, a solicitor or referral fee for client referrals. Other Compensation Other than the receipt of advisory fees described in Item 5 - Fees and Compensation, the firm receives no other compensation or revenue in connection with investment management services. However, please refer to Item 12 - Brokerage Practices for information about the benefits and services received from Charles Schwab & Company, Inc. Item 15 – Custody Client assets are held at unaffiliated, qualified custodians. Custody, as it applies to investment advisors, has been defined by regulators as having access or control over client funds and/or securities. In other words, custody is not limited to physically holding client funds and securities. If an investment adviser has the ability to access or control client funds or securities, the investment adviser is deemed to have custody and must implement proper procedures. Chapman Financial Group is deemed to have custody of client funds and securities whenever Chapman Financial Group is given the authority to have fees deducted directly from client accounts. When fees are deducted from an account, Chapman Financial Group is responsible for calculating the fee and delivering instructions to the custodian. It should be noted that authorization to trade in client accounts is not deemed by regulators to be custody. In certain instances, Chapman Financial Group will act on behalf of a client, pursuant to a standing letter of instruction or other similar asset transfer authorization arrangement established by a client with their custodian, to transfer client assets to one or more third parties upon the request of a client. Chapman Chapman Financial Group, LLC Page 16 Form ADV Part 2A: Firm Brochure  Financial Group is deemed to have custody of such assets in order to facilitate these directives for our clients. It is noted the SEC set forth seven conditions whereby, if met by, the SEC would not recommend enforcement action against an adviser if that adviser does not obtain a surprise examination (as would otherwise be required). Chapman Financial Group has established processes whereby we have a belief Chapman Financial Group and client’s custodians are complying with such conditions and report such assets in Item 9 of Chapman Financial Group’s Form ADV Part 1 as required. Therefore, Chapman Financial Group does not engage a third-party examiner to conduct an annual surprise examination consistent with the SEC No-Action Letter Investment Adviser Association dated February 21, 2017. For accounts in which Chapman Financial Group is deemed to have custody, CFG has established procedures that all client funds and securities are held at a qualified custodian in a separate account for each client under that client’s name. Clients or an independent representative of the client will direct, in writing, the establishment of all accounts and therefore are aware of the qualified custodian’s name, address and the manner in which the funds or securities are maintained. Finally, account statements are delivered directly from the qualified custodian to each client, or the client’s independent representative, at least quarterly. Clients should carefully review those statements and are urged to compare the statements against reports received from Chapman Financial Group. When clients have questions about their account statements, they should contact Chapman Financial Group or the qualified custodian preparing the statement. Item 16 – Investment Discretion When providing asset management services, Chapman Financial Group maintains trading authorization over your Account and provides management services on a discretionary basis. Discretionary authority is granted to the firm in the client agreement that you execute before commencing services. By granting discretionary authority, we will have the authority to determine the type of securities and the amount of securities that can be bought or sold for your portfolio without obtaining your consent for each transaction. You will have the ability to place reasonable restrictions on the types of investments that may be purchased in your Account. You may also place reasonable limitations on the discretionary power granted to Chapman Financial Group so long as the limitations are specifically set forth or included as an attachment to the client agreement. Item 17 – Voting Client Securities Chapman Financial Group does not typically vote proxies on behalf of Clients. We have determined that taking on the responsibilities for voting client securities does not add enough value to the services provided to you to justify the additional compliance and regulatory costs associated with voting client securities. Therefore, it is your responsibility to vote all proxies for securities held in your account if you choose to do so. You typically will receive proxies directly from the qualified custodian or transfer agent; we will not provide you with the proxies. You are encouraged to read through the information provided with the proxy-voting documents and make a determination based on the information provided. Previously, it was the policy of CFG to vote proxies on behalf of their advisory client. Based on this pre- existing arrangement, CFG will vote securities on behalf of such clients as set forth in the agreement between those clients and Chapman Financial Group. In such instances, proxies on securities will be voted for the exclusive benefit and in the best interest of clients as determined by Chapman Financial Group in good faith. Chapman Financial Group has adopted policies and procedures designed to require the Firm, when voting proxies, to vote proxies in the best interest of clients and to mitigate potential conflicts of interest that arise when voting proxies. Chapman Financial Group is not aware of any conflicts of interest between its own interests and those of its clients when voting proxies, but if a conflict were to arise, the Firm would address Chapman Financial Group, LLC Page 17 Form ADV Part 2A: Firm Brochure  the conflict either by abstaining from voting or by seeking the advice of a proxy voting service. Clients may obtain a copy of Chapman Financial Group’s proxy voting policy upon request from Todd Erskine at todd@kokuacap.com. Item 18 – Financial Information This Item 18 is not applicable to this brochure. Chapman Financial Group does not require or solicit prepayment of more than $500 in fees per client, six months or more in advance. Therefore, we are not required to include a balance sheet for the most recent fiscal year. We are not subject to a financial condition that is reasonably likely to impair our ability to meet contractual commitments to clients. Finally, Chapman Financial Group has not been the subject of a bankruptcy petition at any time. Chapman Financial Group, LLC Page 18 Form ADV Part 2A: Firm Brochure