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NOTES PAYABLE TO RELATED AND UNRELATED PARTIES

12 Months Ended

Dec. 31, 2024

NOTES PAYABLE TO RELATED AND UNRELATED PARTIES

NOTE 3 – NOTES PAYABLE TO RELATED AND UNRELATED PARTIES

Working Capital Loan with Directors

On January 4, 2021, the Company entered a $750,000 working capital loan agreement with Directors, Stewart Wallach and Jeffrey Postal. The short-term facility ended June 30, 2021 (“Initial Period’). There were no advances taken by the Company on this working capital loan agreement.

In consideration for the Lenders providing the loan under this Agreement for the Initial Period and agreeing to a below market rate of interest, and as payment of a finance fee for the loan on an unsecured basis, the Company issued to the Lenders the following securities 7,500 shares of the Company’s Series B-1 Convertible Preferred Stock (“Preferred Shares”) issued to each Lender. The Preferred Shares shall have the appropriate restrictive legends. Each Preferred Share converts into 66.66 shares of Common Stock at option of Lender. The Preferred Shares and any shares of Common Stock issued under the loan agreement are “restricted” securities under Rule 144 of the Securities Act of 1933, as amended. The Preferred Shares have no further rights, preferences, or privileges. The fair value of the Preferred Shares was determined to be $48,996 based on the number of shares of Common Stock to be issued upon conversion and the market price of the Common Stock on the date the working capital loan agreement was executed. The Company amortized the $48,996 Finance Fee into interest expense over the six months of the agreement. See Note 5 – Stock Transactions.

Purchase Funding Agreement with Directors and Unrelated Party

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 online Smart Mirror business. The Board resolved that certain Directors could negotiate the terms of a Purchase Order Funding Agreement for up to $1,020,000 with Directors S. Wallach and J. Postal and E. Fleisig, a natural person who was not affiliated with the Company. This agreement was finalized on October 18, 2021, and the Company received the funding of $1,020,000 on October 18, 2021 with an original maturity of April 2023 which was extended through November 30, 2024. Under this agreement the interest terms are 5% based on a 365- day year. See cancellation agreement below.

Working Capital Loan with Directors and Unrelated Party

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 S. Wallach (through Group Nexus, a company controlled by Mr. Wallach) and J. Postal and M. Khoury, a natural person. Under these agreements the interest terms are 5% based on a 365-day year, amended to mature November 30, 2024, for J. Postal and S. Wallach. The $200,000 note payable held by M. Khoury matured November 1, 2024 and was not amended. On December 9, 2024, the Unrelated Party note with M. Khoury was purchased by Directors S. Wallach and J. Postal. In accordance with the purchase agreement, S. Wallach and J. Postal assumed the $200,000 note payable owed to M. Khoury. 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 initial term of this agreement was 18 months and amended to mature November 30, 2024. Principal accrues simple interest at a rate of 5 percent per annum. 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 term of this agreement was for 18 months and was amended to mature November 30, 2024. Principal accrues simple interest at a rate of 5 percent per annum. 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, amended to mature 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, amended to mature 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 a 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. See Note 8 – Subsequent Events.

On December 4, 2024, the CEO of Coppermine Ventures, Alexander Jacobs, was appointed as CEO and Director of Capstone Companies, Inc. with former CEO S. Wallach resigning and remaining as Capstone Companies, Inc Chair of the Board of Directors.

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”). The B-1 preferred stock is convertible into common shares, at a rate of 66.66 of common stock for each share of B-1 convertible preferred stock. 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 S. Wallach and G. Wolf, respectively, as reflected in the table below. See Note 4 – Commitments and Contingencies. As the cancellation of debt was agreed upon by existing equity holders and related parties, the Company recorded the cancellation as a capital transaction and recorded in the statement of stockholder’s deficit as of December 31, 2024. See Note 5 - Stock Transactions.


Note Holder	Issuance Date	Maturity Date		Note Amount		Total Due including Accrued Interest		% of Total Due			# of Prorated Shares		B1 Stock Distribution by Party
Estate of E. Fleisig	10/18/2021		11/30/2024	$	340,000	$	390,208		10.646	%		79,853		79,853
G. Nexus	5/1/2022		11/30/2024	$	200,000	$	224,193		6.117	%		45,879
G. Nexus	1/3/2023		11/30/2024	$	40,000	$	43,485		1.186	%		8,899
G. Nexus	10/18/2021		11/30/2024	$	340,000	$	390,208		10.646	%		79,853		134,631
J. Postal	10/18/2021		11/30/2024	$	340,000	$	390,208		10.646	%		79,853
J. Postal	5/1/2022		11/30/2024	$	200,000	$	224,191		6.117	%		45,879
J. Postal	10/13/2022		11/30/2024	$	50,000	$	54,918		1.498	%		11,238
J. Postal	12/1/2022		11/30/2024	$	50,000	$	54,582		1.489	%		11,170
J. Postal	1/16/2024		11/30/2024	$	50,000	$	51,767		1.412	%		10,594
J. Postal	5/1/2022		11/30/2024	$	100,000	$	112,097		3.058	%		22,940		181,674
S. Wallach	5/1/2022		11/30/2024	$	100,000	$	112,097		3.058	%		22,940
S. Wallach	3/27/2023		11/30/2024	$	183,500	$	198,110		5.405	%		40,542
S. Wallach	Q2 - 2023		11/30/2024	$	160,000	$	171,365		4.675	%		35,069
S. Wallach	Q3 - 2023		11/30/2024	$	200,000	$	211,649		5.774	%		43,312
S. Wallach	Q4 - 2023		11/30/2024	$	49,000	$	49,485		1.350	%		10,127
S. Wallach	Q1 - 2024		11/30/2024	$	40,000	$	41,025		1.119	%		8,395
S. Wallach deferred wages	2020-2024		—	$	608,840	$	608,840		16.611	%		124,594		284,979
G. Wolf deferred consulting fees	2020 - 2024		—	$	336,875	$	336,875		9.191	%		68,938		68,938
				$	3,388,215	$	3,665,303		100.000	%		750,075		750,075

As of December 31, 2024 and 2023, the Company had a total of $180,760 and $2,540,476, of outstanding balance respectively, on the above referenced funding agreements, which includes accrued interest of $1,829 and $82,230, respectively. The outstanding principal balances and accrued interest has been presented on the consolidated balance sheet as follows:


	Notes Payable
	Year Ended December 31,
	2024			2023
Current portion of notes payable and accrued interest, related parties	$	180,760		$	1,946,315
Current portion of notes payable and accrued interest, unrelated parties		—			594,161
Less accrued interest		(1,829	)		(187,974	)
Total notes payable	$	178,931		$	2,352,500

Management believes that without additional capital or increased cash generated from operations, there is substantial doubt about the Company’s ability to continue as a going concern and meet its obligations over the next twelve months from the filing date of this report.