NOTES AND LOANS PAYABLE TO RELATED PARTIES

9 Months Ended

Sep. 30, 2015

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 was 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 Mr. Ullman’s notes including the subordinated notes net of any offsets, monies due from Mr. 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 April 1, 2016. As of September 30, 2015 the total combined balance due on these two notes was $558,612, which includes accrued interest of $139,666.

On March 11, 2010, the Company received a loan from a Director in the amount of $100,000. As amended, the note is due on or before April 1, 2016 and carries an interest rate of 8% per annum.  At September 30, 2015, the total amount payable on this note was $144,449 including interest of $44,449.

On May 11, 2010, the Company received a loan from a Director and Chief Executive Officer in the amount of $75,000. As amended, the note is due on or before April 1, 2016 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 September 30, 2015, the total amount payable on this note was $107,335 including interest of $32,335.

On January 15, 2013, the Company received a loan in the amount of $250,000 from Stewart Wallach, the Chief Executive Officer and Director of Capstone Companies, Inc. The loan carries an interest rate of 8% per annum. This loan was amended and the due date has been extended until April 1, 2016. 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, 2015, the total amount payable on this note was $304,137 including interest of $54,137.

On January 15, 2013, the Company received a loan in the amount of $250,000 from a Director of Capstone Companies, Inc. The loan carries an interest rate of 8% per annum. This loan was amended and the due date has been extended until April 1, 2016.  At September 30, 2015, the total amount payable on this note was $304,137, including interest of $54,137.  This loan grants to the holder a security interest in the accounts receivable of the Company up to the amount of the unpaid principal.

Purchase Order Assignment- Funding Agreements

On February 9, 2015, Capstone Industries, Inc. received $200,000 against a note from Jeffrey Postal. The note was due on or before December 31, 2015, and carried an interest rate of 1.0% simple interest per month. This note was paid in full during the quarter ended June 30, 2015.

On May 19, 2015, Capstone Companies, Inc. received $250,000 against a note from an entity related to the Company’s Chief Executive Officer. The note is due on or before December 31, 2015, and carries an interest rate of 1.0% simple interest per month. As of September 30, 2015, the total amount due under this note was $261,014 including accrued interest of $11,014.

On May 19, 2015, Capstone Companies, Inc. received $250,000 against a note from Jeffrey Postal. The note is due on or before December 31, 2015, and carries an interest rate of 1.0% simple interest per month. As of September 30, 2015, the total amount due under this note was $261,014 including accrued interest of $11,014.

On May 20, 2015, Capstone Industries, Inc. received $500,000 against a note from Jeffrey Postal. The note was due on or before December 31, 2015, and carried an interest rate of 1.0% simple interest per month.  This note was paid in full during the quarter ended September 30, 2015.

On June 15, 2015, Capstone Industries, Inc. received $400,000 against a note from Phyllis Postal,   mother of Jeffrey Postal. The note was due on or before December 31, 2015, and carried an interest rate of 1.0% simple interest per month.  This note was paid in full during the quarter ended September 30, 2015.

On June 16, 2015, Capstone Industries, Inc. received $500,000 against a note from Jeffrey Postal. The note is due on or before December 31, 2015, and carries an interest rate of 1.0% simple interest per month. As of September 30, 2015, the total amount due under this note was $517,425 including accrued interest of $17,425.

On June 18, 2015, Capstone Industries, Inc. received $400,000 against a note from George Wolf, a consultant. The note is due on or before December 31, 2015, and carries an interest rate of 1.0% simple interest per month. As of September 30, 2015, the total amount due under this note was $413,677 including accrued interest of $13,677.

Working Capital Loan Agreements

On April 1, 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, the Company’s Chief Financial Officer.  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%.  This loan was amended and the due date has been extended until April 1, 2016. As of September 30, 2015, the loan balance under this agreement was $613,264 including interest of $115,264.

Notes and Loans Payable to Related Parties – Maturities

The total amount payable to officers, directors and related parties as of September 30, 2015, was $3,485,064 including accrued interest of $493,118. The notes and loan payable to related parties mature during 2015 and 2016.