NOTES AND LOANS PAYABLE TO RELATED PARTIES

9 Months Ended

Sep. 30, 2014

NOTES AND LOANS PAYABLE TO RELATED PARTIES

NOTES AND LOANS PAYABLE TO RELATED PARTIES

NOTE 4 – NOTES AND LOANS PAYABLE TO RELATED PARTIES

Capstone Companies, Inc. - Notes Payable to Officers and Directors

On May 30, 2007, the Company executed a $575,000 promissory note payable to a director of the Company.  This note was amended on July 1, 2009 and again on January 2, 2010. As amended, the note carries an interest rate of 8% per annum.  All principal is payable in full, with accrued interest, on January 2, 2014.  On November 2, 2007, the Company issued 12,074 shares of its Series B Preferred stock valued at $28,975 as payment towards this loan.  The loan grants to the holder a security interest in the accounts receivable of the Company up to the amount of the unpaid Principal.  On July 12, 2011 Stewart Wallach, the Chief Executive Officer and Director of CHDT and JWTR Holdings, LLC owned by a Director, Jeffrey Postal entered into a Securities and Notes Purchase Agreement with Howard Ullman, the previous Chairman of the Board of CHDT, whereby they would purchase equally all of Howard Ullmans notes including the subordinated notes net of any offsets, monies due by Howard Ullman to the Company. The original terms of all notes would remain the same. On July 12, 2011 this note payable was reassigned by Howard Ullman, equally split between Stewart Wallach Director and JWTR Holdings LLC.   The note balance of $466,886 was reduced by $47,940 for offsets due by Howard Ullman. The revised loan balance of $418,946 was reassigned equally $209,473 to Stewart Wallach and $209,473 to JWTR Holdings LLC. As amended the note is due on or before January 2, 2015.  At December 31, 2011, the total amount payable on the reassigned notes to Stewart Wallach was $216,498 which includes accrued interest of $7025 and JWTR Holdings, LLC was $216,498 which includes accrued interest of $7,025.  At December 31, 2012, the total amount payable on the reassigned notes to Stewart Wallach was $233,256 which includes accrued interest of $23,783 and JWTR Holdings; LLC was $233,256 which includes accrued interest of $23,783.  For the revised notes the interest payments are being accrued monthly to the note holders.  As of September 30, 2014 the total combined balance due on these two notes was $525,096 which includes accrued interest of $106,150 ..

On July 11, 2008, the Company received a loan from a director of $250,000.  As amended, the note is due on or before April 1, 2014 and carries an interest rate of 8% per annum.  As part of this note payable, the Company also issued a warrant to the loan holder to purchase 4,000,000 shares of common stock at a price of $.025 per share.  At the date of issuance, the stock price was $.021 per share.  The Company accounted for the debt and warrants using APB 14, whereby the proceeds of $250,000 were allocated between the debt and warrants.  This resulted in the warrants being valued at $56,375, which was recorded as additional paid-in capital, and a discount on the note of $56,375 being recognized.  The discount was amortized over the term of the note (6 months) to interest expense.  At December 31, 2008, the discount had been fully amortized resulting in interest expense of $56,375 being recognized.  The warrants expired July 10, 2013.  At December 31, 2013, the total amount payable on this note was $330,000 including interest of $80,000.  This note along with accrued interest was paid in full on April 23, 2014.

On March 11, 2010, the Company received a loan from a director of $100,000. As amended, the note is due on or before January 2, 2015 and carries an interest rate of 8% per annum.  At December 31, 2013 the total amount payable on this note was $130,466 including interest of $30,466.  At September 30, 2014 the total amount payable on this note was $136,450 including interest of $36,450.

On May 11, 2010, the Company received a loan from a director of $75,000. As amended, the note is due on or before January 2, 2015 and carries an interest rate of 8% per annum.  The loan grants to the holder a security interest in the accounts receivable of the Company up to the amount of the unpaid Principal.  At December 31, 2013 the total amount payable on this note was $96,847 including interest of $21,847.  At September 30, 2014 the total amount payable on this note was $101,335 including interest of $26,335.

On June 11, 2010, the Company received a loan from a director of $150,000. As amended, the note is due on or before April 1, 2014 and carries an interest rate of 8% per annum.  The loan grants to the holder a security interest in the accounts receivable of the Company up to the amount of the unpaid Principal.  At December 31, 2013 the total amount payable on this note was $192,674 including interest of $42,674.  This note and interest was paid in full on April 1, 2014.

During the quarter ended June 30, 2008, the Company executed three notes payable for a combined total of $200,000 to an officer of the Company.  As amended, the notes are due on or before April 1, 2014 and carry an interest rate of 8% per annum.  These loans grant to the holder a security interest in the accounts receivable of the Company up to the amount of the unpaid Principal.  At December 31, 2013 the total amount due on these notes was $264,000 including interest of $64,000.  This note and interest was paid in full on April 23, 2014.

On January 15, 2013, the company received a new loan of $250,000 from Stewart Wallach, the Chief Executive Officer and Director of Capstone Companies, Inc. with due date on or before January 2, 2015 and carries an interest rate of 8% per annum. This loan grants to the holder a security interest in the accounts receivable of the Company up to the amount of the unpaid Principal.  At September 30, 2014 the total amount payable on this note was $284,137 including interest of $34,137.

On January 15, 2013, the company received a new loan of $250,000 from a director of Capstone Companies, Inc. with due date on or before January 2, 2015 and carries an interest rate of 8% per annum.  This loan grants to the holder a security interest in the accounts receivable of the Company up to the amount of the unpaid Principal.  At September 30, 2014 the total amount payable on this note was $ 284,137 including interest of $.34,137.

Purchase Order Assignment- Funding Agreements

On June 14, 2014, Capstone Industries, Inc. received a $125,000 loan from George Wolf.  This loan is due on or before December 31, 2014 and carries an interest rate of 1.0% simple interest per month.  The loan balance at September 30, 2014 is $129,356 including accrued interest of $4,356.

On December 11, 2013, Capstone Industries, Inc. received $620,000 against new note from Jeffrey Postal a director of the Company. The note is due on or before July 2, 2014 and carries an interest rate of 1.0% simple interest per month (12% annul). As of December 31, 2013, the total amount due under this note was $624,077 including accrued interest of $4,077.  This note was paid in full during the first quarter 2014 and no amount is due at March 31, 2014.

On June 9, 2014, Capstone Industries, Inc. received $825,000 against two new notes from Jeffrey Postal a director of the Company.  The notes are due on or before December 31, 2014 and carry an interest rate of 1.0% simple interest per month (12% annul).  As of September 30, 2014, these notes were paid in full.

Working Capital Loan Agreements

On April 1st 2012, the Company signed a working capital loan agreement with Postal Capital Funding, LLC, (“PCF”) a private capital funding company owned by Jeffrey Postal and James McClinton who is a director and director & senior officer of the Company.  Pursuant to the agreement, the company may borrow up to a maximum of $1,000,000 of revolving credit from PCF.  Amounts borrowed carry an interest rate of 8%.  As amended, this loan is due on or before January 2, 2015.  As of December 31, 2013, the loan balance under this agreement was $543,626 including interest of $45,626.  As of September 30, 2014, the loan balance under this agreement was $573,424 including interest of $75,424.

Notes and Loans Payable to Related Parties – Maturities

The total amount payable to officers, directors and related parties as of September 30, 2014 was 2,033,934 including accrued interest of $316,988.  The maturities under the notes and loan payable to related parties for the next five years are:

Year Ended  December  31,
2014	$      129,356
2015	1,904,578
2016	-
2017	-
2018	-
Total future maturities	$   2,033,934