CAPSTONE COMPANIES, INC.

Overview

*General.*Capstone Companies, Inc. (“Company” or “CAPC”) is a Florida corporation. The Company is a designer, promoter and licensor of consumer products that are designed to simplify daily living through technology. The current product is the Connected Chef kitchen tablet. The Company is also engaged in the development of a health, fitness and social activities business at dedicated facilities (as described in “Health, Fitness and Social Activities Business” below) as a long-term business line.

Status of Consumer Product Business.Connected Chef Product Line. During 2023, the Company developed a Connected Surface Chef kitchen utility tablet, the “Connected Chef”. The Connected Chef, a purpose-built kitchen tablet with an accessory platform to accommodate food prep accessories such as a cutting board, was developed to bring Internet connectivity in a device designed to withstand the conditions in a kitchen. The Connected Chef has Google mobile service allowing for pre-installation of specific Google applications, including Playstore, voice assistant and YouTube. The Connected Chef was ready for formal introduction in at the end of 2023, however management was unsuccessful in finding adequate funding to permit the Company to fully promote, market, or order product for inventory. In the second half of fiscal year 2024, the Company focused on licensing the Connected Chef to third parties for promotion, marketing, production and sales or distribution of the Connected Chef. This strategy was adopted to permit the commercial exploitation of the product without incurring the working capital costs of the Company handling all phases of commercial exploitation of the Connected Chef. The Company received expressions of interest in third party distribution of the Connected Chef in 2024 and is pursuing agreements for third party licensing of the promotion, marketing, production and distribution of the Connected Chef. The Company’s 2024 third party licensing operations for the Connected Chef elicited interest from prospective licensors in the latter half of fiscal year 2024. The Company is optimistic about securing a third-party licensing arrangement for the marketing and production of the Connected Chef in first half of fiscal year 2025. The third-party licensing approach to consumer products replaced the Company’s prior business model of production of consumer products by the Company and then the Company directly marketing and selling those consumer products to fill bulk orders from “big box” retailers like Costco, Walmart and Target. Due to financial constraints, the Company pursued the third-party licensing operation for new its new consumer product, the Connected Chef, as the most viable, affordable approach to commercial exploitation of the Connected Chef..

Smart Mirror Product Line. In 2024, due to a lack of sufficient sales of its Smart Mirror connected surface product (“Smart Mirror”), the Company ceased active marketing and production of the Smart Mirror, reduced staffing and overhead to adjust to existing revenues and liquidated the inventory for Smart Mirrors. With the cessation of the Smart Mirror production, the Company had no products in bulk production during fiscal year 2024 and focused on licensing the promotion, marketing, production, distribution and sales of the Connected Chef development of its health, fitness and social activities business, including efforts to raise long-term working capital funding. The Company focused on licensing of the Connected Chef in 2024 and into 2025 for its consumer product business.

LED Lighting Product Line. Historically, LED lighting products were the Company’s core business. The Capstone Lighting andHoover Home LED brands, combined, sold millions of LED lighting products, but by 2023 the LED lighting products had matured and ceased to garner sufficient orders to maintain production. The impact of tariffs also adversely impacted the commercial viability of the LED lighting products. The Company switched its business focus to its Connected Surface products as a replacement product line. The Smart Mirrors and Connected Chef are products under the Connected Surfaces initiative, which initiative seeks to develop Internet-connected, “smart” consumer products.

Health, Fitness and Social Activities Business. The Company commenced in 2024 its business development of a second business line focused on year-round health, fitness and social activities business at facilities that would be owned, leased or operated by the Company (this business line being referred to as “HFS” or “HFS business”). Due to the popularity of sports like pickle ball and flag football, health, fitness and social activities at dedicated facilities are being developed nationwide. Pickle ball has been the fastest growing sport in America since 2021 and its popularity is based in large part in that it can be played by all fitness active demographics groups (e.g. children, adults and elders (since it does not require the skills and athleticism of tennis or other physically demanding sports)) and can be played as a recreational or competitive amateur/collegiate and professional sport. Professional pickle ball is increasingly popular sports entertainment. A typical HFS facility offers sports like indoor and outdoor pickle ball, padel and often another recreational sport or sports (e.g. martial arts, swimming, basketball, racquetball, tennis) with a food-drink-entertainment area. Some HFS facilities add field sports like soccer, lacrosse, and football (traditional and flag) in order to host tournaments, local school competitions, or recreational league play. The HFS facilities typically seek individual, family and group memberships charging periodic fees as well as additional fees for special offerings or events. Special events consist of children summer camps, birthday parties, corporate employee outings, or corporate sponsor events promoting their specific products (e.g. drinks, cooler products, drink ware, sporting equipment). Coaching and training in sports, especially pickle ball, is a common HFS business offering. With the broad appeal of pickle ball, HFS business has appeal to a broad demographic from children to adults to elders.

The Company’s business concept is to feature indoor and outdoor pickle ball courts as a primary attraction, but also to offer other sports and entertainment-social events in order to attract customers year-round and morning-to-evening and also to attract league, tournament and corporate events. As of the date of the filing of this Form 10-K report, the Company is seeking to obtain working capital funding for internal HFS facility development as well as seeking potential acquisition of HFS company or operation. The Company needs to raise working capital to fund either internal development of a HFS operation or acquisition of an existing HFS company or operation.

In furtherance of the HFS business development, the Company entered into a Management Transition Agreement, dated October 31, 2024, with Coppermine Ventures, LLC, a private Maryland limited liability company, (“Coppermine”) to identify and nominate a chief executive officer and two board members for the Company as a management team to focus on development of the health, fitness and social business line. Coppermine operates a successful and growing health, fitness and sports business in the State of Maryland. On December 4, 2024, the Company employed an experienced founder and manager of an established health, fitness and social company, Alexander Jacobs, as Company’s Chief Executive Officer, in order to lead the HFS business development. Mr. Jacobs is the founder, senior executive and owner of Coppermine. On January 20, 2025, the Company’s Board of Directors (“Board”) appointed Brian Rosen, a nominee of Coppermine, as a non-employee director of the Company. Mr. Rosen has a business relationship with Coppermine. The Company also appointed Warner Session, a Washington, D.C. real estate lawyer and lobbyist, as an independent director to the Board on January 9, 2025, in order to assist in the Company’s efforts to develop the health, fitness and social business line. Mr. Session’s experience and skills in real estate transaction and funding and lobbying are deemed as important skill sets for the HFS business.

As further progress in the HFS business, on March 13, 2025, the Company entered into a Memorandum of Understanding (“MOU”) with Coppermine whereby the Company will produce a development plan (“Plan”) for an online customer registration and management application (“CRM Application”) for Coppermine’s owned, affiliated or managed HFS business facilities in the State of Maryland (“Facilities”). These Facilities currently lack an integrated, single customer registration and management application. Upon and subject to acceptance of the completed Plan by Coppermine, which Plan is anticipated to be completed by May 31, 2025, the Company and Coppermine intend to enter into an application development agreement based on the Plan accepted by Coppermine (“CRM Agreement”) whereby Capstone will produce the CRM Application with assistance from a Capstone software developer contractor.

Under a signed CRM Agreement, Coppermine would fund the development of the CRM Application by Capstone. The contract cost of that development will be determined as part of producing the Plan and will be set forth in the CRM Agreement. The intent of the companies is to develop and implement the CRM Application for the Facilities in 2025. If Coppermine accepts the Plan and enters into the CRM Agreement, the ability of the Company to develop the CRM Application will depend on funding of that development fees and costs by Coppermine.

Upon and subject to completion and successful implementation of the CRM Application at the Facilities, the Company intends to explore the (1) commercial potential of licensing the CRM Application to third parties who own and operate health, fitness and social activities facilities, health clubs, exercise gyms and similar businesses in North America and (2) the suitability of the CRM Application for any future HFS business facilities developed or acquired by the Company.

This summary of the MOU is qualified in its entirety by reference to MOU, which is attached as Exhibit 10.1 to the Current Report on Form 8-K filed by the Company with the SEC on March 14, 2025. The summary of the MTA is qualified in its entirety by reference to the. MTA, which is attached as Exhibit 10.2 to the Current Report on Form 10-K filed by the Company with the SEC on November 5, 2024.

Competitors in HFS. Competition in the HFS consists mostly of small companies servicing a locality and local government sponsored facilities with HFS. Emerging in the HFS industry in 2024 and into 2025 are companies seeking to build regional or greater market presence with multiple facilities or franchisors. Companies like Dill Dinkers, The Picklr, Pickleball Kingdom and Ace Pickleball Club are seeking expanded market reach with multiple facilities and these companies focus on pickle ball courts with areas for social events (usually a sports bar or restaurant). More entertainment-oriented companies in the HFS business seeking a larger market reach are Chicken and Pickle and Crush Yard. Some competitors have professional pickle ball players as resident directors or company sponsors. All of these companies feature pickle ball courts. According to the Sports & Fitness Industry Association’s Topline Participation Report, pickle ball is the fastest growing sport in the U.S. with 51.8 percent from 2022 to 2023 and 223.5 percent growth from 2021 through 2023. According to a January 2025 posting by U.S.A. Pickleball organization: 4,000 new pickle ball facilities opened in 2024 and a total of 68,458 courts nationwide as of 2024, with 18,455 new courts added in 2024.

Corporate Status. In light of the viability and continuous operation of the third party licensing program for the Connected Chef throughout 2024 and into 2025, and the Company’s concurrent operational efforts and progress in the HFS business in 2024 and into 2025, the Company has determined that it was not a public shell company during fiscal year 2024, and is not a public shell company in 2025 to the date of the filing of this Form 10-K report, under applicable SEC rules. Prior references to shell status in forward looking statements or otherwise by the Company were the result of an underestimation of the third party licensing program for the Connected Chef as an ongoing, viable continuation and replacement of the traditional, pre-2024 consumer product business of the Company, which pre-2024 business model was focused on volume orders from “big box” retailers, and not crediting the progress and viability of the HFS business in 2024 and in 2025 on determination of corporate status. The Company maintained operation of its traditional consumer product business in 2024 through its third-party licensing program of the Connected Chef. Any prior disclosures to the contrary are rescinded.

Working Capital Funding. In 2024 and into 2025, the Company has sought working capital funding for (1) Connected Chef consumer product business; (2) HFS business; and (3) basic working capital for essential corporate operations and regulatory compliance costs necessary as a reporting company under the Exchange Act and a company with its common stock quoted on the OTC Market Group QB Venture Market.

2024 Working Capital Funding Commitments and Progress in HFS Business Development. On October 31, 2024, the Company was successful in securing a new funding source for operating working capital, from Coppermine Ventures LLC (“Coppermine”). The Company received two capital advances during 2024, totaling $178,932 under an unsecured promissory note, amended on January 29, 2025, (“Note”) issued by Coppermine. The Note accrued simple interest at 7%, matures December 31, 2025, and will provide working capital of $485,163 over the life of the Note. The Company also executed a Management Transition Agreement (“MTA”) on October 31, 2024, amended November 6, 2024. Under the terms of the amended MTA, Coppermine agreed to 1) nominate two qualified persons to be appointed and serve on the Company’s board of directors, 2) specify a qualified person as nominee to serve as Chief Executive Officer. Under the terms of the amended MTA, the Company agreed to 1) have the board of directors accept the resignation of the incumbent Chief Executive Officer, 2) two incumbent directors would resign. Subsequent to the execution of the MTA, incumbent board directors Jeffery Postal and George Wolf resigned effective December 6, 2024, and Alexander Jacobs, founder, owner and senior operations executive of Coppermine and affiliated companies, was appointed as the Chief Executive Officer and director of the Company. The appointment of Mr. Jacobs and the MTA were initial progress in the Company’s development of its proposed health, fitness and social business. Mr. Jacobs is the founder, owner and senior executive of Coppermine’s health, fitness and social operations in the State of Maryland, which has 20 facilities, and has extensive experience in founding, operating and growing health, fitness and social activities operations as well as managing the real estate component of. The HFS business. The addition of directors Warner Session and Brian Rosen in January 2025 was an additional step in adding personnel who can assist in the HFS business development.

Certain members of the Company’s management (“Corporate Insiders and Directors”) provided short-term funding from time to time in 2024 to support the Company’s basic operational funding needs, but there is no guarantee that this funding will be available in the future to fund operations or Connected Chef program third-party licensing program or the efforts to develop the health, fitness and social business development. The Company has been relying upon funding from Coppermine since November 2024 to fund essential corporate operations and regulatory compliance costs. There is no assurance that this funding will extend beyond the third fiscal quarter of 2025.

Finding affordable, timely and adequate funding from third party sources in 2025 will be essential to sustaining Company operations.

As of the filing of this Form 10-K report, all of the Company’s retail sales are made on an order-by-order basis, rather than through long-term sales contracts. As such, the nature of the Company’s business did not provide visibility of material forward-looking information from its customers and suppliers beyond a few months.

Our Current Strategy

The Company’s business operations in 2024 and into 2025 are the HFS business and third-party licensing of the Connected Chef. The long-term business strategy of the Company is focused on the HFS business with the third-party licensing of the Connected Chef as a secondary business. The implementation of the long-term business strategy will depend on having adequate working capital until revenue flow from operations replaces third party funding as the principal means of funding overhead. We have third party funding for basic operational overhead through the third fiscal quarter of 2025. We may be unable to achieve sufficient working capital when and, in the amounts, required to meet operational overhead beyond three fiscal quarter of 2025. We have not achieved adequate funding for all working capital needs as of the date of the filing of this Form 10-K.

In terms of HFS business, the Company is seeking to penetrate an industry that is rapidly expanding nationwide with many existing and new companies that have established operations and brand recognition. The HFS industry also has emerging regional or potentially national HFS chains and franchises. There is also a growing number of funding sources, including private equity funds and strategic partners (typically, in restaurant or entertainment business) for HFS business, especially companies featuring pickle ball. The Company may be unable to establish a competitive, sustainable HFS operation in the face of a rapidly growing industry with competitors who have established operations, greater funding than the Company and established brand recognition. The Company needs to raise sufficient working capital to acquire an existing HFS operation or establish an HFS operation that has offerings that appeal to a broad demographic range of customers. The Company believes that a competitive edge in HFS industry is offerings that appeal to a broad demographic group (children, families and adults) as opposed to offerings that are primarily aimed at appealing to adults seeking pickle ball courts with a sport bar or social activities environment.

As a consumer product company with a third-party licensing product, the Connected Chef, the Company competes in competitive consumer market channels that can be affected by volatility from a number of general business and economic factors such as, consumer confidence and preferences, employment levels, new technologies, credit availability, costs and barriers of producing products from foreign original equipment manufacturers (“OEMs”) and commodity costs. Demand for the consumer products like the Connected Chef is highly dependent on economic drivers such as consumer spending and discretionary income. Technological changes can also undermine the appeal of devices like the Connected Chef. Consumers can opt to use a smart cell phone, tablet or laptop for Internet access for recipes and kitchen arts instead of using a dedicated device like the Connected Chef. Further, Amazon.com offers the Echo Show 21-inch kitchen hub with built-in Fire TV and Alexa functions. While the Echo Show is not focused on recipes and kitchen arts like the Connected Chef, being more a general smart TV with Internet connection for the kitchen, it is still potentially competitive to the Connected Chef. The purported market appeal of the Connected Chef is that it’s tailored to kitchen use for recipes and kitchen arts and designed to withstand the conditions of a kitchen, which is not the case for smart cell phones, tablets and laptops. The Connected Chef is counting on consumers preferring a dedicated kitchen device rather than using and risking damage to devices primarily designed and used for other functions and uses.

As is true for any consumer product company, the Company faces competition from numerous competitors in the consumer product industry, foreign and domestic, and some of those competitors have substantially greater market share, brand recognition, distribution and financial and technical resources than the Company. The Company’s strategy has been to develop well designed and well-made products that appeal to a niche market. The Company also relies on the production and engineering resources and technical expertise of its contract manufacturers to compensate for a lack of those resources internally. The lack of working capital hinders the ability of the Company to leverage the development, design and production capabilities of OEMs.

Due to working capital constraints, the Company’s focus for the Connected Chef is licensing of the promotion, marketing, production and sales/distribution to third parties. A typical arrangement would be a distributor or product company licensing the right to promote, market, distribute and sell the Connected Chef, which would be ordered from a Company’s authorized contract manufacturer. The Company would be merely the licensor and would not be required to fund or handle the promotion, marketing, production, distribution and sale of the product. The Company is exploring such an arrangement with a limited number of prospective distributors.

Perceived or Essential Strengths

Capstone believes that the following competitive strengths have traditionally served to support its business strategies:

HFS Development. The Company’s Chief Executive Officer, Alexander Jacobs, has an established record since 2011 of successfully founding, operating, and growing a HFS company. His expertise is key to the HFS development effort of the Company. He has developed for his Coppermine company a selection of HFS offerings that appeal to and attracts a broad demographic group – children, adults, families, elders – as well as appealing to corporate events and sports tournament and league events. Unlike other HFS companies that are geared primarily to appeal to adults seeking pickle ball and sports bar entertainment, the concept developed by Mr. Jacobs, and the concept that the Company is pursuing, is to tailor facility offerings to the locality and to appeal to a broader demographic group rather than the demographic approach aimed primarily at adults seeking pickle ball/sports bar facility.

The success of Mr. Jacobs at another company is a not an indication of and should not be deemed to be an indication or projection or guarantee of the potential performance of any Company HFS operation. The Company cannot fully implement its HFS business without sufficient working capital for internal development of a HFS operation or acquisition of an existing HFS company or operation, and such working capital has not been obtained as of the date of the filing of this Form 10-K report. Even with adequate funding, the Company will face significant competition in the growing HFS industry and may, as a new entrant in the industry, be unable to successfully compete in that industry.

Connected Chef Product. In North America, the Company has been recognized for more than a decade as an innovator and highly efficient, low-cost manufacturer in several product niches. Company believes that its insight into the needs of retail programming and its proven execution track record with noted retailers globally positions it well for future growth.

The Company’s former chief executive officer, Stewart Wallach, has over three decades of consumer product experience and has successfully built and managed other consumer product companies.

In the past, the operating management’s experience in hardline product manufacturing has prepared the Company for successful entries into various consumer product markets, especially its experience in using foreign OEMs to provide capabilities not possessed internally by our company.

Consumer Product Quality*:*With prior product lines, the Company demonstrated a high quality in product’s design and utility through a combination of sourcing quality components, stringent manufacturing quality control and conducting rigorous third-party testing. The Company’s history of developing cost-competitive products without compromising quality standards is a competitive strength of the Company’s consumer products.

Perceived Weaknesses

As of the filing of this Form 10-K report, the Company’s working capital constraints hinder full implementation of the HFS business and a more expansive promotion of the Connected Chef product licensing as well as future innovations to that product.

With respect to the Connected Chef, and in the past with any new product line, the Company’s consumer products will face the risk of new technologies or functionalities shifting consumer demand away from the products produced by the Company. The Company lacks and may lack the financial resources or ability to license or acquire new technologies or functionalities in demand by consumers, which failure may undermine the commercial viability of Connected Chef.

Even if the Connected Chef licensing program is established as a sustainable revenue source, Company lacks the large internal research and development capability of its larger competitors to respond to technological changes that may render the Connected Chef obsolete, or address consumer preference changes requiring revisions to the Connected Chef. Even with sufficient working capital, Capstone operates with a small number of employees whose functions are dedicated to executive management, marketing or administrative support. The limited number of employees may hinder or delay the ability of the Company to identify or respond to consumer preferences or new technology developments in a product line. Hiring may be required with any growth and qualified personnel may not be readily available. We cannot match the compensation packages to prospective employees that many larger competitors may offer, and we lack the funding and other resources to change our operational model and its reliance on contractors for many functions and capabilities. The weakened financial condition of the Company further undermines the ability of the Company to add essential personnel for any effort to re-establish a viable product line or new business line.

As a smaller reporting company, Company lacks the staff, money, internal capabilities and resources and operational experience to significantly or timely respond to significant challenges and adverse changes in business and financial requirements.

Strategic Reviews. Like many companies, the Company conducts periodic strategic reviews where the feasibility of significant corporate transactions is considered, including mergers, asset purchases or sales and diversification or change in business lines. The Company lacks the financial resources of larger companies to withstand adverse, significant and sustained changes in business and financial condition. This vulnerability necessitates an ongoing consideration of alternatives to current operations. Due to the decline in financial performance of the Company since 2021, and the Company being in transition from a declining product line and not yet establishing a profitable product line, as well as the Company having its shares of Common Stock quoted on The OTC Markets Group, Inc. QB Venture Market and being a “penny stock”, the Company may be unable to fully implement the HFS business and aggressively pursue Connected Chef licensing.

Products and Customers

Current product lines under development as of this Form 10-K report are as follows: https://www.connected-chef.com/

The following product lines that are discontinued for manufacturing, but are available for sale as of the date of this Form 10-K report are as follows:

Over the past fifteen years, the Company established product distribution relationships with numerous leading international, national and regional retailers, including but not limited to: Amazon, Costco Wholesale, Sam’s Club-Walmart, the Container Store and Firefly Buys. These distribution channels sold the Company’s products through the internet as well as through retail storefronts and catalogs/mail order. The Company is actively marketing the Connected Chef to appliance manufacturers and distributors as potential licensees of the Connected Chef. The Company may have to pursue a different market segment if it cannot secure a licensing agreement from these prospective licensees. The Company has only one product line and lacks different product lines to offer in lieu of unsuccessful, existing product lines to prospective licensees.

Tariffs. The President Trump administration implemented certain tariffs in 2018 that directly affected the Company’s competitiveness in consumer products – due largely to the consumer products being bulked produced in China. While all companies in certain industries are affected equally, the appeal for these products to consumers was negatively impacted when retail prices increased due to higher duty rates. The Company’s previous business model insulated the Company from paying duties as its retail partners are the importers of record. The 2024-2025 Connected Chef licensing program seeks the same benefit by having the commercial transactions being between third party licensors and licensees. The obvious unknown is the final impact of tariffs to the landed costs. When the Company sold bulk orders of consumer products to retailers, the retailers demonstrated caution in their promotional planning schedules and will continue to do so until the administration has clarified its position enabling importers to calculate estimated landed costs.

2025 Tariffs. President Trump imposed aggregate tariffs of 20% on Chinese imports. These tariffs produced retaliatory tariffs from China on certain U.S. imports. This trade dispute may adversely impact the Connected Chef product licensing business by causing possible Chinese contract manufacturers from producing products for licensees or licensors, or those products being competitively priced after the seller or distributor adds any costs from tariffs. The Company may be able to find other contract manufacturers to replace Chinese contract manufacturers, The Company’s experience in consumer product development and production has primarily been with Chinese contract or OEM manufacturers. The Company lacks sufficient operational history as of the filing of this Form 10-K report to estimate or project the impact of the current trade dispute and tariff hikes on the Connected Chef licensing business.

Tariffs and trade restrictions imposed by the previous U.S. administration provoked trade and tariff retaliation by other countries. A “trade dispute” of this nature or other governmental action related to tariffs or international trade agreements or policies has the potential to adversely impact demand for our products, our costs, customers, suppliers and/or the U.S. economy or certain sectors thereof and, thus, to adversely impact our businesses.

Reduction in Federal Government Personnel and Programs. As of the date of the filing of this Form 10-K report, the Company does not rely upon federal funding of any kind for either the HFS business or Connected Chef licensing business and does not sell products or services to the Federal government. As such, there is no known, current and direct adverse impact from Trump Administration’s significant reduction in the Federal government personnel, elimination of Federal government programs and funding in numerous areas and postponement or cancellation of Federal government spending or purchases. The Company does intend to explore state or local government funding or grants for developing HFS business facilities, but the Company has not sought any such funding or grants as of the date of the filing of this Form 10-K.

Sales and Marketing – Consumer Products

With respect to the sale of consumer products in 2024, the Company relied on direct promotion by Company’s Chair of the Board, Stewart Wallach, as supplemented by sales agents. Company’s e-commerce initiatives did not provide significant sales during 2024 or 2023 and is not part of the going forward promotional or marketing strategy.

Our sales within the U.S. are primarily made by our in-house sales effort or independent sales agencies. Our independent sales agencies are paid a commission based upon sales made in their respective territories.

The Company has historically promoted its products to retailers and distributors at North American trade shows, such as the Consumer Electronics Show (“CES”) or the International Hardware Show. In 2024, the Company’s marketing focus shifted to direct solicitation by in-house staff of potential licensees of the Connected Chef.

*Direct Import Sales.*We historically ship finished consumer products directly to buyers from Thailand and China contract manufacturers. Under the Connected Chef licensing business, product will be shipped from contract manufacturer to third party licensee or licensor. The sales transaction and title of goods are completed by delivering products to the customers overseas shipping point. The customer takes title of the goods at that point and is responsible for inbound ocean freight and import duties. Sales in 2024 consisted of liquidation of Smart Mirror inventory and sales of LED lighting products from existing inventory. Due to the poor performance of the Smart Mirrors, the Company wrote off all inventory on hand as of December 31, 2023, and liquidated the remaining stock in April 2024.

We used social media platforms and online advertising campaigns to further grow the Company’s online presence. In addition to Facebook, Instagram, Pinterest and LinkedIn, The Company has launched a YouTube channel to host videos and established a X (formerly, Twitter) account. Our Social Media marketing has not resulted in any significant sales of products. We have not been and may not be able to effectively compete in e-commerce and Social Media marketing and sales. The Company has a Social Media presence on the following Social Media platforms, (however the Company did not emphasizing or actively utilizing Social Media marketing in 2024 or into 2025):

FACEBOOK 1: https://www.facebook.com/capstoneindustries and https://www.facebook.com/capstoneconnected

INSTAGRAM 2: https://www.instagram.com/capstoneconnected

PINTEREST 3: https://www.pinterest.com/capstoneconnected/

X (TWITTER)4 https://twitter.com/CAPC_Capstone

YOUTUBE 5 https://www.youtube.com/channel/UCMX5W8PV0Q59qoAdMxKcAig

1 Facebook is a registered trademark of Facebook, Inc.

2 Instagram is a registered trademark of Instagram.

3 Pinterest is a registered trademark of Pinterest.

4 Twitter is a registered trademark of Twitter Corporation.

5 YouTube is a registered trademark of YouTube Corporation.

Competitive Conditions

HFS Industry**.HFS/pickle ball industry is rapidly expanding nationwide and with competition posed by small companies operating a single facility for a locality; HFS companies with multiple facilities; franchise operators; and restaurant and entertainment companies strategically aligning with HFS companies or offering HFS business as an add-on.**Many of the competitors have significant financial, business, marketing and personnel resources, established market presence and brand recognition and proven business strategies. They may also have sponsorship or promotional partnerships with sports equipment, drink or other sports-oriented companies, which relationships may enhance the competitive strength of competitors. As a new entrant seeking to penetrate the industry Company faces significant obstacles and challenges in establishing a revenue generating, sustainable HFS operation. The Company will rely on the experience of its Chief Executive Officer, Alexander Jacobs, in implementing the HFS business strategic plan. Without sufficient working capital funding that is adequate, affordable and timely, the Company may be unable to establish a profitable, sustainable HFS business. Company efforts to secure that working capital funding are ongoing and being conducted by the Company’s Chair of the Board, and certain of the Company’s directors and professional advisors.

Consumer Products. In terms of the consumer product industry, the Company operates in a highly competitive environment, both in the United States and internationally, in the former LED lighting product segment and in the Connected Chef internet of things product segments. The Company’s consumer products compete with products made by large multinationals with global operations as well as numerous other smaller, specialized national or regional competitors who generally focus on narrower markets, products, or particular categories. Competitors include Gentex Corporation, Seura Solutions, Inc., Magna International, Inc, Amazon and Samsung Electronics Co. Ltd.

Other competitive factors include rapid technological changes, product availability, credit availability, speed of delivery, ability to tailor solutions to customer needs, quality and depth of product lines and training. The Connected Chef product is an emerging industry. The Connected Chef received GMS approval from Google third party testing labs, which allows the Connected Chef to utilize the Google operating system in the tablet. The Company may be unable to develop or license emerging new technologies that are dominant and demanded by consumers, retailers, distributors and resellers. Consumer tastes and preferences change and timing the product line with consumer demand is important in establishing a market for the product line.

Consumer Product** Research, Product Development, and Manufacturing Activities**

The Company’s research and development operations based in Florida and Thailand have designed and engineered many of the Company’s consumer products, with collaboration from its third-party manufacturing partners, software developers and Capstone U.S. engineering advisers. The Company outsources the manufacture and assembly of our products to a select group of OEM manufacturers overseas. With no LED or Smart Mirror product line in production, the Company’s research and development efforts have been limited to the Connected Chef. Our research and development focus includes efforts to:

The Company establishes strict engineering specifications and product testing protocols with the Company’s contract manufacturers and ensure that their factories adhere to all Regional Labor and Social Compliance Laws. These contract manufacturers purchase components that we specify and provide the necessary facilities and labor to manufacture our products. We leverage the strength of the contract manufacturers and allocate the manufacturing of specific products to the contract manufacturer best suited to the task. Quality control and product testing is conducted at the contract manufacturers facility and at their 3 rd party testing laboratories overseas.

With respect to consumer products, Company uses its proprietary manufacturing expertise by maintaining control over all outsourced production and critical production molds. To ensure the quality and consistency of the Company’s products manufactured overseas, Company uses globally recognized certified testing laboratories such as United Laboratories (UL) or Intertek (ETL) to ensure all products are designed and tested to adhere to each country’s individual regulatory standards. The Company also hires quality control inspectors who examine and test products to Company’s specification(s) before shipments are released.

For the consumer products business line, the Company must develop new products or new product segments with innovative imbedded technologies to meet consumer’s growing expectations. The Connected Chef product is designed to achieve those expectations. Company’s financial constraints may hinder or undermine efforts to establish or sustain a profitable Connected Chef product licensing business. Establishing the Connected Chef product licensing program as a viable revenue source is essential to sustaining the Company as a consumer product company. The Company will need adequate funding to sustain that business line and operations. Absent such funding or third-party funding for licenses of the Connected Chef, the Company may be forced to cease the licensing program.

Investments in technical and product development are expensed when incurred and are included in the operating expenses.

Raw Materials

The principal raw materials currently used by the Company are sourced in Thailand and China, as the Company orders product exclusively through contract manufacturers in the region. These contract manufacturers purchase components based on the Company’s specifications and provide the necessary facilities and labor to manufacture the Company’s products. Company allocates the production of specific products to the contract manufacturer the Company believes is more experienced to produce the specific product and whose facility is located in the country that most benefits from the U.S. Tariff regulations. To ensure the consistent quality of Capstone’s products, quality control procedures have been incorporated at each stage of the manufacturing process, ranging from the inspection of raw materials through production and delivery to the customer. These procedures are additional to the manufacturers’ internal quality control procedures and performed by Quality Assurance personnel.

Raw materials used in manufacturing include plastic resin, copper, LED bulbs, batteries, and corrugated paper. Prices of materials have remained competitive in the last year. The Company believes that adequate supplies of raw materials required for its operations are available at the present time. The Company cannot predict the future availability or prices of such materials. These raw materials are generally available from a number of different sources, and the prices of those raw materials are susceptible to currency fluctuations and price fluctuations due to transportation, government regulations, price controls, economic climate, or other unforeseen circumstances. In the past, the Company has not experienced any significant interruption in availability of raw materials. We believe we have extensive experience in manufacturing and have taken positions to assure supply and to protect margins on anticipated sales volume.

Section 1502 of Title XV of theDodd-Frank Wall Street Reform and Consumer Protection Act requires SEC-reporting companies to disclose annually whether any conflict minerals are necessary to the functionality or production of a product. Based on our inquiries to our manufacturers, we do not believe as of the date of such inquiries that any conflict minerals are used in making our products.

Distribution and Fulfillment

Since January 2015, the Company has outsourced its U.S. domestic warehousing and distribution needs to a third-party warehousing facility situated in Anaheim, California. The warehouse operator provides full inventory storage, packaging and logistics services including direct to store and direct to consumer shipping capabilities that electronically interface to our existing operations software. The warehouse operator provides full ERP (Enterprise Resource Planning), Inventory Control and Warehouse Management Systems. As the Company does not have an active product line nor product inventory, the Company discontinued the relationship with the 3 rd party warehouse during 2024.

Seasonality

In general, sales for household products and electronics are seasonally influenced. Certain gift products cause consumers to increase purchases during key holiday winter season of the fourth quarter, which requires increases in retailer inventories during the third quarter.

We do not have sufficient operational experience with the Connected Chef to predict the seasonality.

Intellectual Property

CAPC owns a number of patents and trademarks as denoted below:

While the Company may license third party technologies for its products, or may rely on other companies, especially OEMs, for design, engineering and testing, the Company believes that its oversight of design and function of its products and its marketing capabilities are significant factors in the ability of the Company to sell its products.

Value of Patents

The actual protection afforded by a patent, which can vary from country to country, depends upon the type of patent, the scope of its coverage and the availability of legal remedies in the country. Issued patents or patents based on pending patent applications or any future patent applications may not exclude competitors or may not provide a competitive advantage to us. In addition, patents issued or licensed to us may not be held valid if subsequently challenged and others may claim rights in or ownership of such patents. The validity and breadth of claims in technology patents involve complex legal and factual questions and, therefore, the extent of their enforceability and protection is highly uncertain.

Reverse engineering, unauthorized copying or other misappropriation of our technologies could enable third parties to benefit from our technologies without paying us. We cannot assure shareholders that our competitors have not developed or will not develop similar products, will not duplicate our products, or will not design around any patents issued to or licensed by us. We will assess any loss of these rights and determine whether to litigate to protect our intellectual property rights on a case-by-case basis.

We rely on trademark, trade secret, patent, and copyright laws to protect our intellectual property rights. We cannot be sure that these intellectual property rights will be effectively utilized or, if necessary, successfully asserted. There is a risk that we will not be able to obtain and perfect our own intellectual property rights, or, where appropriate, license intellectual property rights from others to support new product introductions. There can be no assurance that we can acquire licenses under patents belonging to others for technology potentially useful or necessary to us and there can be no assurance that such licenses will be available to us, if at all, on terms acceptable to us. Moreover, there can be no assurance that any patent issued to or licensed by us will not be infringed or circumvented by others or will not be successfully challenged by others in lawsuits. We do not have a reserve for litigation costs associated with intellectual property matters. The cost of litigating intellectual property rights claims may be beyond our financial ability to fund.

We have and may have to indemnify licensors and licensees of the Connected Chef against third-party intellectual property infringement claims. With respect to any intellectual property rights claims against us or our customers, we may be required to cease manufacture of the infringing product, pay damages and expend significant Company resources to defend against the claim and or seek a license.

Information Technology

The efficient operation of our business is dependent on our information technology systems. We rely on those systems to manage our daily operations, communicate with our customers and maintain our financial and accounting records. In the normal course of business, we receive information regarding customers, associates, and vendors. Since we do not collect significant amounts of valuable personal data or sensitive business data from others, our internal computer systems are under a light to moderate level of risk from hackers or other individuals with malicious intent to gain unauthorized access to our computer systems. Cyberattacks are growing in number and sophistication and are an ongoing threat to business computer systems, which are used to operate the business on a day-to-day basis. Our computer systems could be vulnerable to security breaches, computer viruses, or other events. The failure of our information technology systems, our inability to successfully maintain our information or any compromise of the integrity or security of the data we generate from our systems or an event resulting in the unauthorized disclosure of confidential information or degradation of services provided by critical business systems, whether by us directly or our third-party service providers, could adversely affect our business operations, sales, reputation with current and potential customers, associates or vendors, results of operations, product development and make us unable or limit our ability to respond to customers’ demands.

We have incorporated into our data network various on and off-site data backup processes which should allow us to mitigate any data loss events, however our information technology systems are vulnerable to damage or interruption from:

Environmental Regulations

We believe that the Company is in compliance with environmental protection regulations and will not have a material impact on our financial position and results of operations. The Company is not aware of any national, state or local environmental laws or regulations that will materially affect our earnings or competitive position or result in material capital expenditures. However, the Company cannot predict the effect on our operations due to possible future environmental legislation or regulations. During 2024, there were no material capital expenditures for environmental control facilities and no such material expenditures are anticipated.

Climate Change. With no products in ongoing bulk production in 2024 from OEMs, and only limited sales of product from existing inventory in 2024, the Company did not experience any direct, material impact on business and financial condition in 2024 from pending or existing climate-change related legislation, regulations, and international accords in the U.S., the physical impacts of climate change, or perceived indirect material impact from business trends. On March 6, 2024, the Commission adopted final rules to require registrants to disclose certain climate-related information in registration statements and Form 10-K annual reports. The new rules would have applied to annual reports for the year ending December 31, for smaller reporting companies, except that the SEC voluntarily imposed an administrative stay on implementation the climate change rules on April 4, 2024, due to numerous lawsuits challenging the SEC’s statutory authority to adopt and enforce the climate change rules. Further, on February 11, 2025, Acting SEC Chair Mark Uyeda announced that the commission would pause its legal defense of the climate-related disclosure rule, citing concerns about the rule's legality and the need for further deliberation, according to a statement from the Acting SEC Chair Mark Uyeda.

Employees

As of December 31, 2024, we employed 5 employees and consultants: 1 in our U.S. office and 4 individual consultants, 1 of which resided in Hong Kong, formerly employees of our Hong Kong operation. We consider our relations with our employees and consultants to be good. None of our employees are covered by a collective bargaining agreement. We believe that our staff is adequate to handle the current operations as we do not currently have a manufactured product line. Our ability to hire additional personnel is subject to adequate revenue flow and funding.

The following table sets forth the number of individuals by function:

Corporate Information

Our principal executive offices are located at #144-V, 10 Fairway Drive Suite 100, Deerfield Beach, Florida USA 33441. Our telephone number is (954)570-8889 and our website is at URL: www.capstonecompaniesinc.com. Our U.S. subsidiaries operate out of our principal executive offices.

We file our financial information and other materials required under the Exchange Act electronically with the SEC. These materials can be accessed electronically via the Internet at www.sec.gov. Such materials and other information about the Company are also available through our corporate website: https://www.capstonecompanies.com. Any URL referenced in this Form 10-K report does not incorporate by reference or otherwise the contents of the website pages accessed through the referenced URL.

Government Regulation

Our operations are subject to regulation by federal and state securities authorities as well as various federal, state, foreign and local laws and regulations governing a consumer products company and a for-profit business. We are not subject to any U.S. federal, state or local regulation that poses, in our opinion, any special or unusual burden or obstacle to conducting our business.

Since the Company did not have any active product production in China in 2024, regulatory and trade restrictions in China and Hong Kong SAR was not a factor affecting our 2024 operations. If the Connected Chef licensing program utilizes contract manufacturers in China or Hong Kong SAR, then local regulations as well as the current tariff and trade dispute between the U.S. and China, may adversely impact or potentially undermine the ability of the Company or its licensees to obtain product production in China or Hong Kong SAR We established relationships with a contract manufacturer in Thailand as an alternative to China sources. The Company is currently attempting to ascertain the best available contract manufacturing source for the Connected Chef product. If an affordable, reliable contract manufacturer cannot be located, it will undermine the Connected Chef product licensing program.

The Company’s Hong Kong SAR subsidiary is dormant, and the Company does not have a corporate presence in Hong Kong or China as of 2023. Hong Kong and China remain a possible source for research and development for products and product production in the future. As such, Chinese and Hong Kong legal developments remain a potential, pertinent issue for the Company.

If the Company seeks production of Connected Chef product in China or Hong Kong SAR, the regulatory and political environment for U.S. companies in those regions have become increasingly hostile or difficult. This situation may worsen in light of the ongoing dispute between U.S. and China over status of Taiwan and the 2025 trade dispute between the U.S. and China, which in 2025 resulted in imposition of new tariffs on U.S. imports by China and Chinese imports by U.S. The Company is seeking foreign licensees for the Connected Chef product, in part, in an effort to try avoiding the adverse consequences of the current U.S.-China trade dispute by having potential licensees and licensors not being located in or shipping product directly from China or Hong Kong SAR to the U.S.

In terms of local political situation in China and Hong Kong SAR, the Chinese government has imposed its laws, policies and directives in Hong Kong SAR, which has created uncertainty about whether Hong Kong SAR will continue to encourage and enable foreign companies to conduct business in Hong Kong SAR without undue interference from the Chinese government. Chinese government intervention in Hong Kong’s political and legal affairs since 2020, which has taken the form of unilaterally imposing Chinese laws and policies in Hong Kong, create a heightened threat of Hong Kong’s traditional pro-foreign business policies, regulation and economic environment being altered to suit national security concerns and international objectives of the Chinese government and becoming untenable for foreign businesses, especially U.S. companies conducting business in Hong Kong in light of growing U.S.-Chinese tensions in international affairs and global economic competition. Chinese government’s imposition of the National Security Law in Hong King on June 30, 2020, undermined Hong Kong’s autonomy and introduced heightened uncertainty for foreign and local firms operating in Hong Kong. On March 5, 2022, Chinese Premier Li Keqiang asserted that Beijing intends to exercise “overall jurisdiction over the two SARs,” referring to Hong Kong and Macau. Political or military conflict between the United States and China, who are rivals for power and influence in Asia and to an increasing extent all along the Pacific Rim as well as being diametrically opposed to one another over the status of Taiwan, could provoke an even more strident, anti-U.S. change in Chinese trade or commercial laws and regulation, including Hong Kong trade and commercial laws, that makes it more difficult or expensive for us to obtain consumer products.

New Hong Kong Security Law. On March 19, 2024, effective March 23, 2024, Hong Kong Legislative Council unanimously passed the Safeguarding National Security Ordinance under Article 23 of the Basic Law ("NSO Act"). The NSO Act greatly expands the authority of the Hong Kong government to respond to and govern: treason, insurrection, sedition, theft of state secrets, espionage, sabotage and foreign interference in Hong Kong political affairs. As of the filing of this Form 10-K report, the Company is uncertain on the impact of the 212-page NSO Act on the production of the Connected Chef product, if the Company or its licensees seek to produce the Connected Chef product in China or Hong Kong SAR in 2025. The Connected Chef product is not being produced in China or Hong Kong SAR for distribution to licensees as of the date of the filing of this Form 10-K report. Many aspects of the NSO Act, in terms of enforcement and implementing rules and policy, are unclear or not in existence as of the filing of this Form 10-K

Working Capital Requirements and Financing

On April 5, 2021, the Company entered into five separate securities purchase agreements (“SPAs”) whereby the Company privately placed an aggregate of 2,496,667 shares of Common Stock for an aggregate purchase price $1,498,000 (transactions being referred to as the “Private Placement”). The five investors in the Private Placement consisted of four private equity funds and one individual – all being “accredited investors” (under Rule 501(a) of Regulation D under the Securities Act of 1933, as amended, (“Securities Act”). The $1,498,000 in proceeds from the Private Placement was used to purchase start up inventory for the Company’s since discontinued Smart Mirror product line and the remainder for advertising and working capital.

On July 2, 2021, the Board of Directors (“Board”) resolved that the Company required a purchase order funding facility to procure additional inventory to support the since discontinued Smart Mirror product. The Board resolved that certain Directors could negotiate the terms of a Purchase Order Funding Agreement for up to $1,020,000 with Directors Stewart Wallach and J. Postal and E. Fleisig, a natural person. On October 18, 2021, the Company received the $1,020,000 funding under this agreement. The note payable was due on November 30, 2024. See cancellation agreement below.

On May 1, 2022, the Company negotiated three $200,000 working capital funding agreements, to provide $600,000 in funding for daily operations. The Board resolved that certain Directors could negotiate the terms of a Working Capital Funding Agreement for up to a total of $600,000, with Directors Stewart Wallach (through Group Nexus, a company controlled by Mr. Wallach), Jeffrey Postal and M. Khoury, a natural person. Under these agreements the interest terms are 5% based on a 365-day year, and matured November 30, 2024. See cancellation agreement below.

On October 13, 2022, the Company negotiated a $50,000 Working Capital Funding agreement with Jeffrey Postal, a director, to provide funding for daily operations (the “Working Capital Funding Agreement”). The principal accrues simple interest at a rate of 5 percent per annum, and matured November 30, 2024. See cancellation agreement below.

On December 1, 2022, the Company negotiated a $50,000 Working Capital Funding agreement with Jeffrey Postal, a director, to provide funding for daily operations (the “Working Capital Funding Agreement”). Principal accrues simple interest at a rate of 5 percent per annum, and matured November 30, 2024. See cancellation agreement below.

On January 3, 2023, the Company negotiated a $40,000 Working Capital Funding agreement with Director S. Wallach (through Group Nexus, a company controlled by Mr. Wallach), to provide funding for daily operations. Principal accrues simple interest at a rate of 5 percent per annum, and matured November 30, 2024. See cancellation agreement below.

On March 27, 2023, the Company negotiated a Working Capital Funding agreement with Director S. Wallach to provide funding for daily operations. Total funding under the agreement amounted to $632,500 as of December 31, 2024. Principal accrues simple interest at a rate of 5 percent per annum, and matured November 30, 2024. See cancellation agreement below.

On January 16, 2024, the Company negotiated a Working Capital Funding agreement with Director Jeffrey Postal to provide $50,000 in funding for daily operations. Principal accrues simple interest at a rate of 5 percent per annum, amended to mature November 30, 2024. See cancellation agreement below.

On October 31, 2024, the Company executed an unsecured promissory note with a then unrelated party, Coppermine Ventures, LLC (“Coppermine”), to provide $125,914 in working capital funding for daily operations. Principal accrues simple interest at a rate of 7 percent per annum, maturing July 31, 2025. On November 26, 2024, Coppermine provided an additional $53,018 in working capital funding for daily operations.

On December 18, 2024, the Company’s Board of Directors approved the cancellation of the aforementioned notes payable, with the exception of the Coppermine Ventures promissory note, in exchange for shares of Series B-1 Convertible Preferred Stock (“B-1 Stock”) of the Company, calculated at a price of $0.07 per share (“the Exchange Price”). Each aforementioned note holder executed the cancellation agreement and received their pro-rata B-1 Stock in accordance with the Exchange Price. A total of 750,075 B-1 Stock was issued for cancellation of $3,665,303 in principal and accrued interest, inclusive of deferred salary and consulting wages for Stewart Wallach and George Wolf, respectively.

The Company’s ability to maintain sufficient working capital is highly dependent upon funding from related parties. Failure to achieve future operating revenue could have a material adverse effect on the Company’s working capital, ability to obtain financing, and its operations in the future.

In addition, the Company intends to seek alternative sources of liquidity, including but not limited to accessing the capital markets, other alternative financing measures, or a business combination. However, instability in, or tightening of the capital markets, could adversely affect our ability to access the capital markets on terms acceptable to us.

The Company’s liquidity and cash requirements are discussed more fully in Part II, Item 7, Management’s Discussion and Analysis of Financial Condition and Results of Operations, below.