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 UNITED STATES

 SECURITIES AND EXCHANGE COMMISSION

 Washington, DC 20549

 FORM 10-K

 (Mark One)

 ANNUAL
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the fiscal year ended December 31, 2024

 or

 TRANSITION
REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 For the transition period from _______ to _______

 Commission File Number 000-28831

 CAPSTONE COMPANIES, INC.

 (Exact name of small business issuer as specified
in its charter)

 Florida

 84-1047159

 (State or Other Jurisdiction of Incorporation)

 (I.R.S. Employer No.)

 # 144-V 10 Fairway Drive, Suite 100,

 Deerfield Beach, Florida 33441

 (Address
of principal executive offices) (Zip Code)

 ( 954)
 252-3440

 (Small
business issuer's telephone number, including area code)

 Securities
registered pursuant to Section 12(b) of the Exchange Act:

 Title of each
 class Trading

 Name of each
 exchange on which registered

 Symbol(s)

 None

 N/A

 N/A

 Securities
registered pursuant to Section 12(g) of the Act:

 COMMON
STOCK, $0.0001 PAR VALUE

by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes
 No

by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes No

by check mark whether the Registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange
Act of 1934 during the preceding 12 months, and (2) has been subject to such filing requirements for the past 90 days. Yes
No

by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted pursuant to Rule
405 of Regulation S-T (232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required
to submit and post such files). Yes No

by check mark whether the registrant is a large, accelerated filer, an accelerated filer, a non-accelerated filer, emerging growth company
or a smaller reporting company. See definitions of "large, accelerated filer", "accelerated filer", "emerging
growth company" and "smaller reporting Company" in Rule 12b-2 of the Exchange Act. (Check one):

 Large
accelerated filer Accelerated filer Non-accelerated filer Smaller reporting Company
Emerging Growth Company

 If
an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying
with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

Indicate by check mark whether the registrant has filed a report on and attestation to its management's assessment of the effectiveness
of its internal control over financial reporting under Section 404(b) of the Sarbanes-Oxley Act (15 U.S.C. 7262(b)) by the registered
public accounting firm that prepared or issued its audit report.

Indicate by check mark whether any of those error corrections are restatements that required a recovery analysis of incentive-based compensation
received by any of the registrant's executive officers during the relevant recovery period pursuant to §240.10D-1(b).

by check mark whether the registrant is a shell Company (as defined in Rule 12b-2 of the Exchange Act). Yes No

 As
of June 30, 2024, the last business day of the registrant's most recently completed second fiscal quarter, the aggregate market
value of our common stock issued and outstanding, other than shares held by persons who may be deemed affiliates of the registrant, computed
by reference to the closing sales price for the common stock on June 30, 2024, as reported on the OTC QB Venture Market, was $ 358,899

 Number
of estimated shares outstanding of the Registrant's Common Stock as of March 17, 2025 is 48,826,864.

 DOCUMENTS
INCORPORATED BY REFERENCE

 None

 TABLE
OF CONTENTS

 Item
 Number

 Description

 Page

 Part
 I

 Item 1.

 Business

 Item 1A.

 Risk Factors

 Item 1B.

 Unresolved
 Staff Comments

 Item 1C.

 Cybersecurity

 Item 2.

 Properties

 Item 3.

 Legal Proceedings

 Item 4.

 Mine Safety
 Disclosures (Not Applicable)

 Item 5.

 Market for Registrants
 Common Equity and Related Stockholder Matters

 Item 6.

 [RESERVED]

 Item 7.

 Management's
 Discussion and Analysis of Financial Condition and Results of Operation

 Item 7A.

 Quantitative
 and Qualitative Disclosures About Market Risk (Not Applicable)

 Item 8.

 Financial
 Statements and Supplementary Data

 Item 9.

 Change
 in and Disagreements with Accountants on Accounting and Financial Disclosure

 Item 9A.

 Controls and Procedures

 Item 9B.

 Other Information

 Item 9C.

 Disclosure Regarding Foreign
 Jurisdictions that Prevent Inspection

 Item 10.

 Directors,
 Executive Officers and Corporate Governance

 Item 11.

 Executive Compensation

 Item 12.

 Security Ownership of Certain
 Beneficial Owners and Management and Related Stockholder Matters

 Item 13.

 Certain Relationships and
 Related Transactions, and Director Independence

 Item 14.

 Principal Accounting Fees
 and Services

 Item 15.

 Exhibits, Financial Statement
 Schedules

 Item 16.

 Form 10-K Summary

 DEFINITIONS:

 As
used in this Annual Report on Form 10-K, the following terms have the stated meaning or meanings:

 (1)

 "Capstone International
 Hong Kong Ltd" or "CIHK" is a wholly owned subsidiary of Capstone Companies, Inc. and a Hong Kong registered Company.

 (2)

 "Capstone Industries,
 Inc., a Florida corporation and a wholly owned subsidiary of CAPC, may also be referred to as "CAPI" or "Capstone".

 (3)

 "Capstone Companies,
 Inc.," a Florida corporation, may also be referred to as "we," "us" "our," "Company,"
 or "CAPC". Unless the context indicates otherwise, "Company" includes in its meaning all of Capstone Companies,
 Inc. Subsidiaries.

 (4)

 "China" means
 People's Republic of China.

 (5)

 References to "33
 Act" or "Securities Act" means the Securities Act of 1933, as amended.

 (6)

 References to "34
 Act" or "Exchange Act" means the Securities Exchange Act of 1934, as amended.

 (7)

 "SEC" or "Commission"
 means the U.S. Securities and Exchange Commission.

 (9)

 "Subsidiaries"
 means Capstone Industries, Inc. ("CAPI"), Capstone International H.K Ltd., ("CIHK").

 (10)

 Any reference to fiscal
 year in this Annual Report on Form 10-K means our fiscal year, ending December 31 st.

 (11)

 "LED" or "LED's"
 means a light-emitting diode component(s) which can be assembled into light bulbs or can be used in lighting fixtures.

 (12)

 "OEM" means
 "original equipment manufacturer."

 (13)

 "Connected Surfaces"
 or "Connected Products" means smart home devices with embedded sensors that provide communication and data transfer between
 the Connected Surface and internet-enabled systems of the Company or associated third parties. Connected Surfaces may permit internet
 access for defined functions.

 (14)

 "GMS" means
 Google Mobile Service

 We
may use "FY" to mean "fiscal year" and "Q or QTR" to mean fiscal quarter in this Report.

 FORWARD
LOOKING STATEMENTS

 This Annual Report on Form 10-K ("Form
10-K report") contains "forward-looking statements". Those statements appear in a number of places in this Form
10-K report and include, without limitation, statements regarding the intent, belief and current expectations of the Company,
its directors or its officers, with respect to: Company's future business and financial prospects and ability to sustain
operations; the development and commercialization of new products; the Company's policies regarding investments, dispositions,
financings, conflicts of interest and other matters; and trends affecting the Company's financial condition or results of
operations. Forward looking statements include words like "expect," "anticipate," "hope,"
"project," "may," "should," "could," or similar words or variants thereof. Any
forward-looking statement is not a guarantee of future performance and involves several risks and uncertainties. Actual results
may differ materially from those results implied in the forward-looking statement as a result of various factors, some factors
being beyond the Company's control or ability to foresee. Among the factors that could cause plans, actions and results
to differ materially from current expectations are, without limitation: general economic conditions and consumer confidence
in the economy, impact of government actions on the economy, and disruption from natural or human causes, including severe
weather, accidents, fires, earthquakes, terrorist acts and epidemic or pandemic diseases, government or other restrictions
in response to epidemics or pandemics, and trade disputes between the U.S. and other nations, especially the impact of tariffs
on business and financial results and future prospects. The accompanying information contained in this Form 10-K report, including
the "Management's Discussion and Analysis of Results of Operations and Financial Condition" and "Risk
Factors" identifies other important factors that could cause such differences. With respect to any forward-looking statement
that includes a statement of its underlying assumptions or bases, the Company cautions that, while it believes such assumptions
or bases to be reasonable and has formed them in good faith, assumed facts or bases almost always vary from actual results, and
the differences between assumed facts or bases and actual results can be significant or "material" depending on the
circumstances. When, in any forward-looking statement, the Company, or its management, expresses an expectation or belief as to
future results, that expectation or belief is expressed in good faith and is believed to have a reasonable basis, but there can
be no assurance that the stated expectation or belief will result or be achieved or accomplished. Further, the Company is a "penny
stock" company with no primary market makers and the public auditors of the Company have expressed doubt as to the Company
as a going concern. Such a status makes highly risky any investment in the Company
securities. See "Risk Factors" below. The forward-looking statements in this Form 10-K report are made as of the date
hereof, and, unless required by law or regulation, we do not assume any obligation to update, amend or clarify them to reflect
events, new information or circumstances occurring after the date hereof.

 You
should read this Form 10-K report and the documents that we may reference in this Form 10-K report and have filed with the SEC, with
the understanding that our actual future results, performance, and events and circumstances may be materially different from what we
expect.

 PART
I

 Item
1. Business

 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 and Hoover 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:

 -

 Connected Chef, a purpose-built kitchen appliance tablet, which is a unique form factor with Google GMS operating system, with an integrated platform for cooking accessories, i.e.: cutting board.

 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:

 -

 LED Lighting

 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 Linked In, 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:
and

 INSTAGRAM 2:

 PINTEREST 3:

 X (TWITTER) 4

 YOUTUBE 5

 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:

 Develop
 a product with increasing technology and functionality with enhanced quality and performance, and at a very competitive cost;
 and

 Solidify new manufacturing relationships with contract manufacturers in Thailand.

 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 – Components
 and supplies are subject to sample inspections upon arrival at the contract manufacturer, to ensure the correct specified components
 are being used in production.

 Work in Process –
 Our quality control inspectors conduct quality control tests at different points during the product stages of our manufacturing process
 to ensure that quality integrity is maintained.

 Finished Goods –
 Our inspectors perform tests on finished and packaged products to assess product safety, integrity and package compliance.

 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 the Dodd-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:

 Patent
 / Trademark Serial Number

 Patent
 / Trademark Name

 Status
 / Issue Date

 Patent
 / Trademark Expiration Date

 Country

 Description

 97365117

 Connected
 Chef

 Pending

 N/A

 USA

 Trademark
 on name

 90758255

 Capstone
 Connected

 Pending

 N/A

 USA

 Trademark
 on name and logo

 90286667

 Thin
 Cast

 Pending

 N/A

 USA

 Trademark
 on name and logo

 10,203,262

 Apparatus
 and method for switch state detection and controlling electrical power

 03/12/2019

 03/12/2039

 USA

 apparatus
 and method for switch state detection and controlling electrical power

 D779,109
 S

 Lamp
 simulating a UFO

 02/14/2017

 02/14/2032

 USA

 Design
 patent – lamp simulating UFO

 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:

 hurricanes, fire, flood
 and other natural disasters

 power outage

 internet, computer system,
 telecommunications or data network failure hacking as well as malware, computer viruses, ransomware and similar malicious
 software code

 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:

 Employee Function

 Number
 of Employees

 Sales/Customer
 Service/Distribution

 Research
 & Development/Technology/Product Development

 Administrative

 TOTAL

 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:  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.

 Item
1A. Risk Factors.

 Described below and throughout this
Form 10-K report are certain factors and risks that the Company's management believes are applicable to the Company's
business and the industries in which it operates. If any of the described events occur, the Company's business, results
of operations, financial condition, liquidity, or access to funding could be materially adversely affected. When stated below
that a risk or factor may have a material adverse effect on the Company business, it means that such risk may have one or more
of these effects. There may be additional risks that are not presently material or known. There are also risks within the economy,
the industry, and the capital markets that could have a material adverse effect on the Company, including those associated with
an economic recession, inflation, a global economic slowdown, political instability, government regulation (including tax regulation),
employee attraction and retention, and customers' inability or refusal to pay for the products and services provided by
the company. There are also risks associated with the occurrence of extraordinary events, such as war, terrorist attacks
or natural disasters (such as tsunamis, hurricanes, tornadoes, and floods) and pandemics or epidemics. These risks and factors
affect businesses generally, including the Company, its customers and suppliers and, as a result, are not discussed in detail
below, but are applicable to the Company. As a "penny stock" without primary market maker support, and our public
auditors expressing substantial doubt about our ability to continue as a going concern any investment in our Common Stock
is highly risky and should only be considered by investors who can afford to lose their entire investment. These risk factors
are not the only risks that we may face. Additional risks and uncertainties not presently known to us or not currently believed
to be important also may adversely affect our business.

 Business
and Operational Risks

 Our
auditors have issued a going concern opinion, and we will not be able to achieve our objectives and will have to cease operations if
we cannot adequately fund our operations.

 Our public auditors issued a going concern opinion
in connection with the audit of our annual financial statements for the fiscal year ended December 31, 2024. A going concern opinion
means that there is substantial doubt that the company can continue as an ongoing business for the next 12 months. If we are unable to
continue as a going concern, we might have to liquidate our assets and the values we receive for our assets in liquidation or dissolution
could be significantly lower than the values reflected in our financial statements. In addition, the inclusion of an explanatory paragraph
regarding substantial doubt about our ability to continue as a going concern and our lack of cash resources may materially adversely
affect our share price and our ability to raise new capital or to enter into critical contractual relations with third parties. There
is no assurance that we will be able to adequately fund our operations in the future.

 The declining revenues in 2024
and 2023 of our business line of LED lighting products and the lack of a sufficient revenue generating operation in
2024 have resulted in significant operating losses and imposed a need to sustain operations with outside funding of
working capital. If the Company cannot obtain adequate, affordable funding, whether equity or debt, as needed, the Company
will have difficulty sustaining the Company as a going concern.

 Cash flow from operations was and is not
sufficient to sustain operations and fully fund its HFS business and Connected Chef licensing program. In order to attempt
to secure adequate working capital in 2024, we took the actions detailed below. These actions are not deemed sufficient to meet
all expected working capital needs for 2025 or to license the Connected Chef or complete a business combination or purchase a
new revenue generating product line. We anticipate the need to raise working capital funding to meet our funding needs in 2025
as we do not have any cash flow from operations. Because of the low market price and liquidity of our Common Stock, our declining
financial performance, lack of hard assets required for asset based loans, and our transition from a declining product line and
primary source to a new, unproven product line, we may be unable to raise necessary, affordable and timely working capital in
2025 and that failure could be fatal to our ability to sustain the Company as an operating company.

 During the year ended December 31, 2024,
the Company used cash in operations of $289,548 and generated net operating losses of $995,815. As of December 31, 2024, the Company
has working capital deficit of $144,755 and an accumulated deficit of $11,784,360. The Company's cash balance decreased
approximately $20,000 from $36,466 as of December 31, 2023, to $15,850 as of December 31, 2024. Although we have cash on hand,
the Company does not have sufficient cash on hand to finance its plan of operations for the next 12 months from the filing of
this report and we will need to seek additional capital through debt and/or equity financing to fully fund operational overhead
and fully fund the effort to license the Connected Chef product line or establish the HFS business as the primary revenue
source in 2025. While certain directors have provided working capital funding to the Company in the past, including 2024, there
is no guarantee, and none can be given that these insiders will do so when and as required by the Company in 2025.

 If the HFS business does not produce
revenues in 2025, and if the Connected Chef licensing program does not become a viable revenue source in 2025, the Company
will need additional third-party funding to sustain operations and efforts to establish the HFS program and the Connected
Chef licensing program as a viable revenue sources. The Company has not yet received pre-production orders for the Connected Chef
product line under its licensing program and has not yet acquired or internally developed a HFS operation. The Company
currently lacks the working capital to extensively market the Connected Chef licensing program or fully implement the HFS
program. Company has no consumer products in active production as of the date of the filing of this Form 10-K report.

 In 2024, the Company did
not have an alternative consumer product line to the Connected Chef product line and would be unable to develop an alternative
in 2025 due to a lack of adequate working capital. The Company has not raised the working capital to acquire or launch
a HFS operation as of the date of the filing of this Form 10-K report. Absent adequate working capital funding in 2025, and
a lack of revenue from the Connected Chef licensing program, the financial condition of the Company may at some point
force the Company to seek to effect an extraordinary corporate transaction to protect shareholder value and sustain the Company
as an operating company. An extraordinary corporate transaction could include a merger or sale of the Company or reorganization
of the Company under bankruptcy protection. The Company may be unable to effect, if necessary, an extraordinary corporate transaction
or obtain significant funding for a new product line in 2025 to sustain the Company as an operating company. Reorganization under
the protection of the bankruptcy code is one possible extraordinary corporate transaction if the Connected Chef licensing program
and HFS business do not become a viable revenue sources and other extraordinary corporate transactions are not possible.
While the Connected Chef licensing program is intended to remove the burden of funding production of products for licensees
or licensors, if the Company has to fund a pre-production bulk order for the Connected Chef under
the licensing program, the Company will have to raise working capital to fund production and the Company may be unable to raise
that funding on affordable terms or at all.

 Our operating results and sustainability
as an operating company in the future are substantially dependent on the success of the Connected Chef licensing program
and HFS development program in 2025.

 There can be no assurance that the
Connected Chef licensing program or HFS development program will generate sufficient or any revenues, or any continued revenues to
fund ongoing operations of the Company.

 Our operations depend on a small number
of personnel and the loss of key personnel or the inability to replace or add key personnel could have a significant impact on our ability
to grow or sustain operations.

 We operate the executive operations with a relatively
small number of personnel. Company has not developed personnel to readily replace key personnel. The loss of key personnel, being Alexander
Jacobs, the Company's newly appointed Chief Executive Officer, would severely harm the business. The Company hired Dana Eschenburg
Perez, as an external consultant as of January 1, 2023, to perform the functions of Chief Financial Officer. We do not have key man life
insurance.

 Our personnel are focused on executive
management or marketing. Our marketing is supplemented from time to time by contractor sales agencies, and we have a relatively
small research and development capability overseas. We rely on original equipment or contract manufacturers ("OEMs")
for certain technical development and design, and we have no current plans to develop an in-house technical development staff.
The loss of an OEM would disrupt our Connected Chef licensing program if we or the licensee could not find a suitable replacement
in short order. Company evaluates potential OEM's from time to time to identify possible alternative production and technical
development resources. If our operations grow, we may have to increase the number of our personnel in the future to handle any
growth or expansion. Our ability to find and retain qualified personnel when needed by our growth or existing operations will
be an important factor in determining our success in coping with any growth or efficiently handling existing operational burdens.

 During a downturn in the economy,
or periods of increased inflation, consumer purchases of discretionary items are usually affected, which could materially harm
the prospects and performance of the Connected Chef licensing business. Historic inflation in 2022 through 2024 has created
uncertainty about consumer confidence and its impact on demand for our products in 2024. Inflation remains a concern in 2025
due to U.S. imposition of tariffs on China and major trading partners of the U.S.

 Our sole consumer product, the Connected
Chef, may be considered discretionary purchase for consumers. Factors affecting the level of consumer
spending for such discretionary items include general economic conditions, unemployment, current inflationary or recession
concerns among consumers, the availability of consumer credit and consumer confidence in future economic conditions. Further,
the HFS business may be deemed a non-essential expense by consumers that is also affected by
economic and inflationary concerns and events. Uncertainty by consumers about current or future U.S. economic conditions,
including inflationary and recession concerns, trends in consumer discretionary spending remain unpredictable. Historically,
consumer purchases of discretionary items tend to decline during recessionary periods of high inflation or uncertain economic
conditions or trends, when disposable income is lower or anticipated to be lower, which may lead to declines in sales
and slow our long-term growth expectations. Any near or long-term downturn in the U.S. economy may adversely impact our HFS business
development and Connected Chef licensing program. Continued inflationary pressure on essentials, like food and transportation
prices, will reduce consumer purchases of discretionary items.

 The markets in which we operate are highly
competitive and have evolving technical or consumer requirements.

 In the HFS industry markets and consumer
products markets, we compete with or will compete with companies that have greater financial and funding resources, personnel
resources, market share, name recognition and technical resources than we do. Competitors may and do offer new products or services
with aggressive pricing. Aggressive pricing actions by our competitors could reduce margins if we are not able to reduce costs
at an equal or greater rate than the sales price decline. Our Company may lack the financial resources to be able to withstand
predatory pricing from competitors.

 With the increased demand for consumer
smart products, which product category includes the Connected Chef, of which, licensing is the focus of this business segment
in 2024 and 2025, we will continue to face increased extensive competition in the future. If the investment in capacity
exceeds the growth in demand the electronic consumer market is likely to become more competitive with additional pricing pressures.
With the emerging and evolving smart mirror market, we face growing competition and rapidly changing product technology and functionalities.
The rapidly increasing number of competitors nationwide in the HFS industry and possible consolidation of those competitors
into regional or national companies presents a significant challenge to our company in efforts to penetrate the market in 2025.

 Adequate, affordable and available
funding is a key factor in our ability to compete in the HFS industry and consumer products market featuring smart
products.

 Competitors may try
to align with some of our licensees or licensors in our Connected Chef business or target Company relationships with licensees
and licensors. This could lead to lower prices for our products, reduced demand for our products and a corresponding reduction
in our ability to recover development, engineering and manufacturing costs. Any of these developments could have an adverse effect
on our business, results of operations or financial condition.

 If our products or services
fail to perform or fail to meet customer requirements or expectations, we could incur significant additional costs, including
costs associated with the recall of those items.

 If our products or services do not
meet consumer expectations or preferences, we may be required to replace or rework the products or revise our service offerings.
In some cases, our products may contain undetected defects that only become evident after shipment and used by consumers,
or our realization of customer dissatisfaction with or waning interest in our services may only come after a significant loss
of our customer base. Even if our Connected Chef product does meet standard specifications, the products' customers
may attempt to use our products in applications for which they were not designed resulting in product failures and creating customer
satisfaction issues. For a small company, identifying and meeting consumer demand and product and service quality standards are
critical to our business and financial performance in both the Connected Chef business and HFS business. We may lack the
financial or other resources in both industries to respond in a timely manner or at all to changing consumer tastes or preferences.

 We may remain liable for product
defects or failures in the Connected Chef business in certain licensing arrangements. If such failures or defects occur
and the Company has responsibility or liability for those failures or defects, then they could result in significant
losses or product recalls due to:

 costs associated with the
 removal, collection and destruction of the product.

 payments made to replace
 product.

 costs associated with repairing
 the product.

 the write-down or destruction
 of existing inventory.

 insurance recoveries that
 fail to cover the full costs associated with product recalls.

 lost sales due to the unavailability
 of product for a period.

 delays, cancellations or
 rescheduling of order for our products; or

 increased product returns.

 For any products being sold and purchased
by consumers, a significant product recall could also result in possible adverse publicity, damage to our reputation and
a loss of customer or consumer confidence in our products and could substantially undermine or delay any success in the Connected
Chef product licensing. Further, while we believe that product liability for consumer electronic products is not significant or
widespread, we could face product liability lawsuits or regulatory proceedings by the Consumer Product Safety Commission (CPSC),
if it remains in existence or continues to fully function under the current downsizing of the Federal Government, and could
suffer losses from a significant product liability judgment or adverse CPSC finding against us if the use of our products at issue
is determined to have caused injury or contained a substantial product hazard to the public.

 Our results of operations could
be materially harmed if we are unable to accurately forecast demand for our products or, for offerings of any HFS operation,
demand for services.

 If we do not accurately predict consumer demand
for products and services, we may be unable to produce products or offer services that are in demand and our financial
performance will suffer.

 Factors that could affect our ability to accurately
forecast demand for our products or services include:

 an
 increase or decrease in consumer demand for our products or services.

 our failure to accurately
 forecast consumer acceptance for our new products or services.

 product introductions or
 new service offerings by competitors.

 unanticipated changes in
 general market conditions or other factors, which may result in cancellations of product orders or memberships for services.

 weakening of economic conditions
 or consumer confidence in future economic conditions, which could reduce demand for discretionary items, such as our products or
 any HFS service offerings;

 terrorism or acts of war, or the threat thereof, political or labor instability
 or unrest, public health concerns about using public facilities caused by disease epidemics
 or pandemics, or government actions in response to epidemics or pandemics, which could adversely affect
 consumer confidence and spending, or interrupt production and distribution of products and supply of necessary
 raw materials, or cause customers to stop using HFS facilities; and

 constraints on
 marketing and promotional efforts and analysis, inability to conduct business development efforts, due to limited financial
 resources.

 While the Connected Chef licensing
program does not anticipate maintenance of inventory by the Company, if the Company does maintain inventory levels in excess of
customer or licensee/licensor demand may result in inventory write-downs or write-offs and the sale of excess inventory
at discounted prices or in less preferred distribution channels, which could have an adverse effect on gross margin. In addition,
if we or licensees of the Connected Chef licensing program underestimate the demand for our products, our contract manufacturers
may not be able to produce products to meet our licensees', licensors' or customers' requirements,
and this could result in delays in the shipment of our products and our ability to recognize revenue, lost sales, as well as damage
to our reputation and retailer and distributor relationships.

 The consumer product industry is subject
to significant pricing pressure caused by many factors, including technological advancements, intense competition, consolidation
in the retail industry, pressure from retailers to reduce the costs of products and changes in consumer demand, and increasing
need to exploit e-commerce and Social Media.

 Fluctuations in the cost of Connected Chef products
could negatively affect our operating results.

 The components used by our suppliers and
contract manufacturers for the Connected Chef product will be made of raw materials that may be subject to significant price fluctuations
or shortages that could materially adversely affect our cost of goods sold. In addition, certain of our contract manufacturers
may be subject to government regulations related to wage rates, and therefore the labor costs to produce our products may fluctuate.
The cost of transporting our products for distribution and sale is also subject to fluctuation. Because the Connected Chef product
will be manufactured abroad, any Connected Chef products must be transported by third parties over large geographical distances,
increased demand for freight services at a time of reduced ocean freight capacity, can significantly increase costs. Manufacturing
delays or unexpected transportation delays can also cause us to rely more heavily on airfreight to achieve timely delivery to
our customers, which significantly increases freight costs. Any of these fluctuations may increase the cost of products
and have an adverse effect on our profit margins, results of operations and financial condition.

 Regulatory
and Legal Risks

 Our
business may be impaired by claims that we infringe the intellectual property rights of others.

 Litigation between competitors over
intellectual property rights can be a common business practice in an industry like the consumer product industry as a means
to protect or gain market share. Litigation to determine the validity of patents or claims by third parties of infringement of
patents or other intellectual property rights could result in significant legal expense and divert the efforts of our, or our
licensee's or licensor's, technical personnel and management, even if the litigation results in a determination
favorable to us or them. In the event of an adverse result in such litigation, we could be required to:

 pay substantial damages.

 indemnify our product customers or licensees or licensors.

 stop the manufacture of the product, and use and sale of products,
 found to be infringing.

 discontinue the use of
 processes found to be infringing.

 expend significant resources
 to develop non-infringing products or processes; or

 obtain a license to use
 third party technology.

 The
risk of infringement claims may be greater in emerging products and technologies like smart devices.

 There can be no assurance that third parties will
not attempt to assert infringement claims against us with respect to our consumer products. Additionally, if an infringement claims
against the Company or its customers is successful, the Company may be required to pay damages or seek royalty or license arrangements,
which may not be available on commercially reasonable terms. The payment of any such damages or royalties may significantly increase
the Company's operating expenses and materially harm the company's operating results and financial condition. Further, royalty
or license arrangements may not be available at all, which would then require the company to stop selling certain products or using certain
technologies, which could negatively affect the company's ability to compete effectively. We do not have reserves for litigation
or insurance for infringement litigation costs. This kind of litigation is typically very expensive to litigate, and we may lack the
funds to aggressively litigate infringement claims against us or against competitors, which could lead to a materially adverse impact
on our business.

 For HFS operations, we will face potential liabilities common to health, fitness and social activities facilities servicing the general
public.

 Operating a HFS operation exposes the operator
to potential litigation or liabilities resulting customers, visitors or personnel suffering personal injuries, illness, or death on company
premises or as a result of company's services or activities. Other potential liabilities and litigation risks result from or be
based upon: discrimination claims from customers or company personnel; violations of health, safety or food codes; sexual harassment
or sexual assault suffered by customers, visitors or company personnel on company premises; data security breaches or fraudulent activities
associated with our computer systems, including privacy data law violations; conduct by individuals actually or perceived to be affiliated
with us or employed by us and that could violate ethical standards or otherwise harm the reputation of our brand; regulatory, investigative
or other actions relating to business practices; and other actionable torts common
to operating facilities open to the general public.

 For HFS operations,
the high level of competition in the health, fitness and social industry may materially and adversely affect our business.

 Our competition would consist of a
large number of companies, including the following providers: other HFS operators; traditional health and fitness clubs; physical fitness
and recreational facilities established by non-profit organizations and businesses for their employees; private studios and other boutique
fitness offerings; racquet, tennis, pickleball and other athletic clubs; amenity and condominium/apartment clubs; country clubs; online
personal training and fitness coaching; delivery of digital fitness content; the home-use fitness equipment industry; local tanning salons;
businesses offering similar services; and other businesses that rely on consumer discretionary spending. We may not be able to penetrate
the market or, if we establish an operation, be able to compete effectively in the markets in which we operate. Competitors may attempt
to undermine our business by pricing that we cannot afford to match, or copy our business model, or portions thereof, and thereby erode
our ability to win any market share and gain any brand recognition. Most if not all of our competitors will probably be larger financial
and marketing resources than us, have established brand recognition and be able to offer in-demand services or facilities that we cannot
afford to offer. Non-profit organizations or local governments in our market may be able to obtain land and construct facilities at a
lower cost and collect membership dues and fees without paying taxes, thereby allowing them to charge lower prices. Due to the increased
number of low-cost health and fitness and social event alternatives, we may be unable to compete with such alternatives. This competition
may limit our ability to attract customers or retain existing customers. We may also lack the funding to offer online customer registration,
scheduling and account management, and the lack of such offerings may adversely impact our ability to attract customers or retain existing
customers.

 Our Connected Chef licensing program may result in our
conducting business in foreign countries and that would expose us to certain risks inherent in doing business
internationally, which may adversely affect our business, results of operations or financial condition.

 If we have revenues, operations and contract
manufacturing arrangements or licensing arrangements overseas, then that may expose us to certain risks. Fluctuations in
exchange rates may affect our revenue, expenses and results of operations as well as the value of our assets and liabilities as
reflected in our financial statements. We are also subject to other types of risks, including the following:

 Delays in shipping or production of products or increased costs in production
 and shipping of products from international sources, including delays in unloading shipped products in U.S. or foreign
 ports.

 protection of intellectual property and trade secrets in foreign nations.

 tariffs, customs, trade sanctions, trade embargoes and other barriers to importing/exporting materials and products in a cost effective and timely manner, or changes in applicable tariffs or custom rules.

 rising labor costs or labor unrest.

 the burden of complying with foreign and international laws.

 adverse tax consequences.

 the risk that because our brand names may not be locally or nationally recognized, we must spend significant amounts of time and money to build brand recognition without certainty that we will be successful.

 political conflict or trade wars affecting our efforts to conduct business abroad.

 Changes in regulatory, geopolitical,
social, economic, or monetary policies and other factors may have a material adverse effect on our business conducted overseas
in the future or may require us to significantly modify our current business practices. Abrupt political change, terrorist activity
and armed conflict pose a risk of general economic disruption in affected countries, which could also result in an adverse effect
on our business and results of operations. We do not have extensive prior experience in conducting business in Thailand, which
is the location of our prior consumer product development and production (supplemented by contractors in China). This lack of
experience may delay accomplishing our business milestones for development or production of consumer product produced by our Thailand
OEMs under our Connected Chef licensing program.

 Our financial results and ability to grow our
business may be negatively impacted by economic, regulatory and political risks beyond our control.

 If we are subject to risks associated
with doing business abroad in the consumer product segment, then those risks include:

 political or labor unrest, terrorism, public health crises, disease epidemics and economic instability resulting in the disruption of trade from foreign countries in which our products are manufactured.

 currency exchange fluctuations or requirements to transact in specific currencies.

 the imposition of new laws and regulations or government-imposed protective or preventative measures, including those relating to labor conditions, quality and safety standards and disease epidemics or other public health concerns, as well as rules and regulations regarding climate change.

 actions of foreign or U.S.
 governmental authorities impacting trade and foreign investment, particularly during periods of heightened tension between U.S. and
 foreign governments, including the imposition of new import limitations, duties, anti-dumping penalties, trade restrictions or restrictions
 on the transfer of funds.

 reduced protection for
 intellectual property rights in some countries.

 disruptions or delays in
 shipments.

 changes in local economic
 conditions in countries where our customers, manufacturers and suppliers are located.

 These risks could negatively affect the ability
of our contract manufacturers to produce or deliver our products or procure materials and increase our cost of doing business
generally, any of which could have an adverse effect on our results of operations, cash flows and financial condition. If one or more
of these factors, make it undesirable or impractical for us to conduct business in a particular country our business could be adversely
affected.

 Additional Financial Risk Factors

 Our inadequate or expensive funding and financing alternatives.

 Our current short-term debt level as of December
31, 2024, and 2023 was $180,760 and $2,540,476, respectively.

 The Company will need additional outside
working capital funding in fiscal year 2025 to support the Company's operations.

 Other adverse consequences could include:

 a significant portion of our cash from operations could be dedicated to the payment of interest and principal on future debt, which could reduce the funds available for operations.

 the level of our future debt could leave us vulnerable in a period of significant economic downturn; and

 we may not be financially able to withstand significant and sustained competitive pressures.

 Since we have transitioned our consumer
product business to the licensing of the Connected Chef product, past financial performance is not indicative of any future growth
or future financial performance. We will have to establish our Connected Chef licensing program and product line in the face of
extensive competition as an entirely new segment within the Smart Home category and establish the HFS business in the face
of extensive and growing competition.

 Currency fluctuations may significantly
increase our expenses and affect the results of operations, especially where the currency is subject to intense political and other outside
pressure.

 All our sales in 2024 were transacted in U.S.
dollars. The weakening of the U.S. dollar relative to foreign currencies can negatively impact our operating profits, through higher unit
costs. Changes in currency exchange rates may also affect the relative prices at which we and our competitors sell products in the same
market. There can be no assurance that the U.S. dollar foreign exchange rates will be stable in the future or that fluctuations in such
rates will not have a material adverse effect on our business, results of operations, or financial condition.

 If
we fail to maintain an effective system of internal control over financial reporting in the future, we may not be able to accurately
or timely report our financial condition or results of operations. If our internal control over financial reporting is not effective,
it may adversely affect investor confidence in us and the price of our common stock.

 As
a public company we are required to maintain internal control over financial reporting and to report any material weaknesses in such
internal control. Section 404 of the Sarbanes-Oxley Act requires that we evaluate and determine the effectiveness of our internal control
over financial reporting and provide a management report on our internal control over financial reporting. If we identify material weaknesses
in our internal control over financial reporting, we will be unable to assert that our internal control over financial reporting is effective.
If we are unable to assert that our internal control over financial reporting is effective, if our independent registered public accounting
firm is unable to express an opinion as to the effectiveness of our internal control over financial reporting, or if we are unable to
comply with the requirements of the Sarbanes-Oxley Act in a timely manner, then, we may be late with the filing of our periodic reports,
investors may lose confidence in the accuracy and completeness of our financial reports and the market price of our common stock could
be negatively affected.

 Risk
Factors for our Common Stock

 Penny
Stock and Volatile Market Price.

 The Company's Common Stock is subject
to possible volatile trading, including rapid increases and decreases in market price due to trading in the open market. Company's
declining business and financial condition has depressed the already low market price and trading of the Company's Common
Stock in 2024. The Company's Common Stock lacks the primary market makers and institutional investors who can protect the
market price from volatility in trading and market price. Company does not have any research analyst issuing recommendations.
The Common Stock is also a "penny stock" under SEC rules and suffers the limitations and burdens in
trading of penny stocks. This lack of market support and penny stock status means that trading, especially by day traders, can
cause a rapid increase or decrease in market price of the Common Stock and makes any investment in the Common
Stock extremely risky and unsuitable for investors who cannot withstand the loss of their entire investment and requires
on demand liquidity in the investment. An investment in the Common Stock remains an extremely risky investment that is
not suitable for investors who cannot afford the loss of investment and can withstand or tolerate a possible lack of liquidity.

 We were a former shell company
(under current SEC rules and interpretations thereof) during the early 1990's. As such, our stock transfer agent requires
a legal opinion as well as other paperwork to lift restrictive legends from stock certificates for non-affiliated as well as affiliated
shareholders. The restrictive legends can only be lifted for at most a 90-day period for sales under Rule 144 for affiliated and
non-affiliated shareholders. Further, our stock transfer agent will not permanently remove restrictive legends on stock certificates
held by shareholders. absent registration of the shareholder's shares of common stock under the Securities Act. This
status may make our common stock even more unappealing to investors and potential purchasers and more difficult to sell or trade.
"Affiliated shareholders" are generally Company officers, directors, and holders of more than 10% of the issued shares
of the Common Stock.

 Further, our Common Stock
is quoted on The OTC Markets Group, Inc. QB venture market. Many brokerage houses will not accept OTC stocks for deposit or for
trading due to the compliance burdens and reduced financial benefits of trading in OTC stocks. Some shareholders may hold paper
stock certificates and experience difficulty in finding a broker who will accept such stock or experience difficulty in meeting
the requirements for deposit of such stock in a brokerage account. These difficulties further decrease the appeal of our Common
Stock to investors.

 No Dividends.

 We have not paid, and we do not intend to pay dividends
on our Common Stock in the foreseeable future. We currently intend to retain all future earnings, if any, to finance our current and proposed
business activities. We may also incur indebtedness in the future that may further prohibit or effectively restrict the payment of cash
dividends on our Common Stock.

 Our controlling stockholders may take
actions that conflict with your interests.

 A current director and a former director
of the Company beneficially own approximately 40% of our outstanding common stock as of the date hereof. Assuming support from
public shareholders with a sufficient voting power, and the if the current director and former director vote the same,
then they will be able to exercise control over all matters requiring stockholder approval, including the election of directors,
amendment of our certificate of incorporation and approval of significant corporate transactions, and they will, if the vote
as a group, have significant control over our management and policies. The directors elected by these stockholders may be
able to influence decisions affecting our capital structure significantly. This potential control may have the effect of
delaying or preventing changes in control or changes in management or limiting the ability of our other stockholders to approve
transactions that they may deem to be in their best interest. For example, if the director and former director vote the same and
are joined by public shareholders to the extent necessary to control more than 50% of the vote, then these shareholders
could block a sale or other disposition of the Company to another entity. As of the date of the filing of this Form 10-K report,
four of the five directors are not deemed to be affiliates of the director and former director and the Company is not aware of
any agreement by the director and former director to vote a group.

 General
Risk Factors

 The
Company's operations could be disrupted by natural or human causes beyond its control.

 The Company's operations,
whether in consumer products or HFS business, are subject to disruption from natural or human causes beyond its control, including
physical risks from hurricanes, severe storms, floods and other forms of severe weather, accidents, fires, earthquakes, terrorist
acts and epidemic or pandemic diseases such as the COVID-19 or variants of that virus, any of which could result in suspension
of operations or harm to people or the environment. While all of the Company's corporate operations are located in the United
States, the Company has used and may use Chinese and Thailand contract manufacturers, and if a disease spreads sufficiently
to cause a pandemic (or to cause the fear of a pandemic to rise) or governments regulate or restrict the flow of labor or products
or impede the travel of Company personnel, the Company's ability to access these foreign contract manufacturers for its
Connected Chef licensing program could be materially and adversely affected. Epidemics and pandemics can cause the failure
of companies engaged in businesses, like the HFS business, that are open to and depend on the willingness of the public to use
public facilities. Natural disasters can damage or destroy HFS facilities and deprive the operator of revenues as well as imposing
potentially significant liabilities.

 We may not successfully execute our long-term
strategies, which may negatively impact our results of operations.

 Our ability to execute on our long-term
strategies depends, in part, on successfully executing on strategic growth initiatives in key areas, such as our Connected Chef
licensing program and HFS business. Our growth in these areas depends on our ability to successfully implement the HFS
business line and license the Connected Chef product. Our long-term strategy depends on our ability to successfully drive expansion
of our gross margins, manage our cost structure and drive return on our investments. If we cannot effectively execute our long-term
growth strategies while managing costs effectively, our business could be negatively impacted, and we may not achieve our expected
results of operations.

 If we fail to adequately protect intellectual
property rights, competitors may manufacture and market similar products, which could adversely affect our market share and results of
operations.

 We rely on trademark, trade secret, patent and
copyright laws to protect our intellectual property rights. Our trademarks are of material importance to our business and are among our
most important assets. Accordingly, our future success may depend, in part, upon the goodwill associated with our trademarks and brand
names. We own a number of patents; patent applications and other technology which we believe are significant to our business.

 For any Connected Chef products made
in China and Thailand, we would face risks that our proprietary information may not be afforded the same protection in China as
it is in countries with well-developed intellectual property laws, and local laws may not provide an adequate remedy in the event of
unauthorized disclosure of confidential information. Costly and time-consuming litigation could be necessary to enforce and determine
the scope of our proprietary rights in China, and failure to obtain or maintain trade secret protection could adversely affect our competitive
business position. We cannot be sure that these intellectual property rights will be maximized or that they can be successfully asserted.
There is a risk that we will not be able to obtain and perfect, or maintain our own intellectual property rights or, where appropriate,
license intellectual property rights necessary to support new product introductions. We cannot be certain that these rights, if obtained,
will not be invalidated, circumvented or challenged in the future, and we could incur significant costs in connection with legal actions
to defend our intellectual property rights.

 Even
if such rights are obtained in the United States, the laws of some of the other countries in which our products are or may be sold do
not protect intellectual property rights to the same extent as the laws of the United States. If other parties infringe our intellectual
property rights, they may dilute the value of our brands in the marketplace, which could diminish the value that consumers associate
with our brands and harm our sales. The failure to perfect or successfully assert our intellectual property rights could make us less
competitive and could have a material adverse effect on our business, operating results, and financial condition.

 There
may be emerging, or new technologies patented by others. These new technologies may be critical to competing in a product niche, especially
one like the emerging smart devices in smart home industry. We may be unable to license or affordably license new technologies owned
by others and critical to competing in the product niche.

 Our
results of operations and financial condition could be seriously impacted by security breaches, including cybersecurity incidents.

 Failure
to effectively prevent, detect and recover from security breaches, including attacks on information technology and infrastructure by
hackers; viruses; breaches due to employee error or actions; or other disruptions could result in misuse of our assets, business disruptions,
loss of property, and confidential business information. Such attacks could result in unauthorized parties gaining access to at least
certain confidential business information. However, to date, we have not experienced any financial impact, changes in the competitive
environment or business operations that we attribute to such attacks. Although management does not believe that we have experienced any
security breaches or cybersecurity incidents, there can be no assurance that we will not suffer such attacks in the future. We actively
manage the risks within our control that could lead to business disruptions and security breaches and have expended significant resources
to enhance our control environment, processes, practices and other protective measures. Despite these efforts, as these threats continue
to evolve, particularly around cybersecurity, such events could adversely affect our business, financial condition or results of operations.

 In the HFS business, privacy data
will be collected from customers and the operation will be exposed to potential liability if it fails to adequately protect that
data from unauthorized access or use, or misappropriation. The cost of protecting privacy data could be significant if we operate
several facilities or have a large customer base.

 We
expect our results of operations to fluctuate on a quarterly and annual basis.

 Company's revenue and results of operations
could vary significantly from period to period and may fail to match expectations because of a variety of factors, some of which are outside
of our control. As a result of the potential variations in our revenue and results of operations, period-to-period comparisons may not
be meaningful and the results of any one period should not be relied on as an indication of future performance. In addition, our results
of operations may not meet the expectations of investors or public market analysts who follow us, which may adversely affect our stock
price. Since the Connected Chef is a new product, we lack the operational experience to determine if Connected Chef has seasonal sales
cycles.

 Item 1B. Unresolved SEC Staff Letters.

 None for the fiscal year ended December 31,
2024.

 Item 2. Properties.

 The Company had operating lease agreements for its
principal executive offices in Fort Lauderdale, Florida that expired June 30, 2023. The Company's principal executive office was
located at 431 Fairway Drive, Suite 200, Deerfield Beach, Florida 33441. The Company did not renew the expiring operating lease.

 On July 1, 2023, the Company commenced an office space
license to use designated office space at #144-V, 10 Fairway Drive, Suite 1000, Deerfield Beach, Florida 33441. The short-term lease is
a month-to-month agreement for professional office space for a monthly fee of $75 with a security deposit of $75. The agreement may be
terminated by the Company or the licensor of the office space upon a written notice provided thirty (30) days in advance.

 Item
1C. Cybersecurity.

 Risk
Management and Strategy

 Our information systems consist of computer
systems used by the Company's Chief Executive Officer and Chief Financial Officer. They actively monitor our threat environment
for cybersecurity threats using various methods, including automated detection tools, scans of the threat environment, investigations
of potential threats they discover or that are reported to them, and reports and services that identify threats. They monitor our information
systems for vulnerabilities using internal and third-party penetration testing, intelligence feeds, and vulnerability databases.

 Company's computer
systems involve the use of third-party technology or service providers, or vendors, such as hosting platforms, open-source software, and
application providers. Employees are provided specific guidance to mitigate the risk of a cybersecurity attack. This guidance includes
safeguards over confidential data, being aware of suspicious emails, choosing passwords, protection of Company issued and use of personal
devices, managing large data transfers. Employees are directed to immediately contact the Chief Executive Officer if they encounter any
suspicious activity.

 If a cybersecurity risk is identified,
Company's policy is to use vendors to assist the Company to identify, assess, and manage material risks from cybersecurity threats
to corporate systems, which consulting firms may include consulting firms, external legal counsel, incident response vendors, auditors,
monitoring technology, and cybersecurity data providers.

 The
 Company's Chairman of the Board of Directors is tasked with reporting on
 cybersecurity measures and issues to the entire board of directors. In the event of a
 cybersecurity incident, Company policy is for the Company Chairman of the Board of
 Directors to report the cybersecurity incident to the Company's Board
 of Directors and take remedial actions to mitigate and remediate cybersecurity
 incidents.

 As of and for the year ended December 31, 2024,
there have been no cybersecurity incidents that have materially affected the Company's business strategy, results of operations,
or financial condition.

 Item
3. Legal Proceedings.

 We
are not a party to any material pending legal proceedings and, to the best our knowledge, no such action by or against us has been threatened.
From time to time, we may be subject to legal proceedings and claims that arise in the ordinary course of business. Although occasional
adverse decisions or settlements may occur in such routine lawsuits, we believe that the final disposition of such routine lawsuits will
not have material adverse effect on our financial position, results of operations or cash flows.

 Other
Legal Matters

 To
the best of our knowledge, none of our directors, officers or owner of record of more than five percent (5%) of the securities of the
Company, or any associate of any such director, officer or security holder is a party adverse to us or has a material interest adverse
to us in reference to pending litigation.

 Item
4. Mine Safety Disclosures (Not Applicable).

 PART
II

 Item
5. Market for Registrants Common Equity and Related Stockholder Matters.

 The
Company's Common Stock is quoted on The OTC Markets Group, Inc.'s QB Venture Market Tier under the trading symbol "CAPC".

 As of March 17, 2025, there were 230 approximately holders
of record (excluding OBO/Street Name accounts) of our Common Stock and 48,826,864 outstanding shares of the Common Stock.

 Dividend
Policy

 We
have not declared or paid any cash or other dividends on shares of our Common Stock in the last seven years, and we presently have no
intention of paying any cash dividends on shares of our Common Stock. We do not currently anticipate, based on existing financial performance,
to be declaring or paying dividends on any series of our preferred stock in the foreseeable future. Our current policy is to retain earnings,
if any, to finance the expansion and development of our business. The future payment of dividends on shares of our Common Stock are at
the sole discretion of our board of directors.

 Recent
Sales of Unregistered Securities

 On December 18, 2024, the Company entered into
a cancellation agreement with related party promissory note holders for cancellation of $3,665,303 in outstanding principal and interest
in exchange for issuance of 750,075 shares of the Company's B-1 Preferred Stock. The B-1 Preferred Stock issuances were issued
in reliance upon an exemption from registration under Section 4(a)(2) of the Securities Act and Rule 506(b) of Regulation D under the
Securities Act. The B-1 Preferred Stock is not registered under the Exchange Act. It is convertible into shares of the Company's
Common Stock.

 Unregistered Sales of Equity Securities and
Use of Proceeds.

 Adoption of Stock Repurchase Plan

 On August 23, 2016, the Company's Board
of Directors authorized the Company to implement a stock repurchase plan for up outstanding common stock. The repurchase plan may be discontinued
at any time at the Company's discretion.

 On December 19, 2018, Company entered a Purchase
Plan pursuant to Rule 10b5-1 under the Exchange Act, with Wilson Davis & Co., Inc., a registered broker-dealer. Under the Purchase
Plan, Wilson Davis & Co., Inc will make periodic purchases of shares at prevailing market prices, subject to the terms of the Purchase
Plan.

 On May 31, 2019, the Company's Board of
Directors the maximum amount of aggregate funding available for possible stock repurchases under the stock repurchase program remained
at $1,000,000 during the renewal period.

 During May and June 2022, the Company repurchased
66,167 shares of the Company's outstanding common stock in the open market. The total purchase cost was $11,662.

 On July 7, 2022, the Board of Directors
resolved to discontinue the stock purchase agreement. As of December 31, 2023, a total of 816,167 of the Company's common
stock was repurchased since the plan was incepted at a total cost of 119,402. The cost of the repurchased shares was recorded
as a reduction of additional paid-in capital.

 Item
6. Reserved.

 Item
7. Management's Discussion and Analysis of Financial Condition and Results of Operations

 This Item 7, "Management's
Discussion and Analysis of Financial Condition and Results of Operations," and other parts of this Report contain forward-looking
statements that involve risks and uncertainties. Forward-looking statements provide current expectations of
future events based on certain assumptions and include any statement that does not directly relate to any historical or current
fact. Forward-looking statements can also be identified by words such as "future," "anticipates," "believes,"
"estimates," "expects," "intends," "plans," "predicts," "will,"
"would," "could," "can," "may," and similar terms. Forward-looking statements
are not guarantees of future performance and Company's actual results may differ significantly from the results discussed
in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed
in this Report under the heading "Risk Factors," which are incorporated herein by reference. The following discussion
should be read in conjunction with the consolidated financial statements and notes thereto included in this Report. All information
presented herein is based on Company's fiscal year 2024 results. Unless otherwise stated, references to particular
years or quarters refer to the Company's fiscal years ended in December and the associated
quarters of those fiscal years. Company assumes no obligation to revise or update any forward-looking statements for any reason,
except as required by law.

Summary

 Total net revenue for the year ended December
31, 2024, decreased 25% to $143,269 as compared to $192,176 in the same period of last year. The net operating loss was $995,815
for the year 2024 compared to $1,634,854 for the year 2023. The Company had an estimated net tax (benefit) expense provision in 2024
and 2023 of approximately ($100,000) and $35,000, respectively.

 The following discussion is designed to provide a
better understanding of our audited consolidated financial statements and notes thereto, including a brief overview of our business and
products, key factors that impacted our performance and a summary of operating results.

 Overview

 Capstone Companies, Inc. ("Company"
or "CAPC") is a public holding company organized under the laws of the State of Florida. The Company is a leading designer,
manufacturer and marketer of consumer inspired products that simplify daily living through technology. Over the past decade, the Company's
various product lines have been distributed globally including consumer markets in Australia, Japan, Korea, North America, South America,
and the United Kingdom. The primary operating subsidiary is Capstone Industries, Inc. ("CAPI"), a Florida corporation located
at the principal executive offices of the Company. Capstone International Hong Kong, Ltd., or "CIHK", was established to expand
the Company's product development, engineering, and factory resource capabilities. With the 2021 shift of manufacturing to Thailand
from China, the CIHK operation was dormant. The Company has a history of exploiting technologies in areas of induction charging, power
failure control, security and home LED lighting products and most recently has entered the electronics market with its introduction of
Capstone's Connected Chef a purpose-built kitchen tablet with an accessory platform to accommodate food prep accessories such as
a cutting board. The Connected Chef has Google mobile services allowing for pre-installation of specific Google applications
including Playstore, voice assistant, YouTube to name those highly recognized.

 The Company's focus through
2017 was the integration of LEDs into most commonly used consumer lighting products in today's home and the resulting
LED lighting products was the Company's initial consumer product line. The LED category has matured and is no longer
the innovative "must have" consumer product as in previous years, as such, revenues for the LED product line have
declined significantly in 2023. The Smart Mirror failed to replace the LEG lighting products as the new product line. The
Connected Chef is the Company's effort to establish business in an emerging segment that is intended for future revenue
growth.

 The Connected Chef, a purpose-built
kitchen tablet with an accessory platform to accommodate food prep accessories such as a cutting board. The Connected Chef has Google
mobile service allowing for pre-installation of specific Google applications including Playstore, voice assistant, YouTube to
name those highly recognized. The Connected Chef was ready for formal introduction in quarter four of 2023, and the Company began
marketing the Connected Chef tablet to appliance manufacturers and distributors. The ability of the Company to promote any new,
related "connected" consumer products was dependent on securing adequate, affordable and timely funding from lenders
and investors. Due to the lack of orders and funding, the Connected Chef was not in production in 2024.

 The Company developed and commenced
development of the HFS business in 2024 as the long-term strategic plan and business line. Company has not acquired or internally
developed a HFS facility in 2024.

 Principal Factors Affecting Our Financial
Performance

 There are a number of industry factors that
affect our financial performance which include, among others:

 Overall Demand for Products and Services. Our potential
 for growth depends on a successful introduction and consumer and licensee/licensor acceptance of the Connected Chef
 and establishing revenue generating and profitable HFS operation(s). This product and service are both characterized as non-essential and economic conditions, especially consumer uncertainty or worries over economic
 conditions and growth, affect consumer demand. Uncertainty over domestic or global economic conditions that may affect
 the U.S. economy or foreign market economy is not conducive to consumer purchases of our category of consumer products.
 These uncertainties make demand difficult to forecast for us and our customers or licensees and licensors in the consumer
 product business.

 Strong and Constantly Evolving Competitive Environment.
 While we have demonstrated our abilities to compete successfully in consumer products since our inception, competition
 in the marketplace we serve is strong. Many companies have made significant investments in product development, production
 equipment and product marketing. Product pricing pressures exist as market participants often initiate pricing strategies
 to gain or protect market share. To remain competitive, market participants must continuously increase product performance
 or functionality, reduce costs and develop improved ways to support their customers. These factors apply to our licensing
 approach in consumer products as well as our prior approach in the consumer product business.

 Profit Margins. The Company's product and services
 planning strategies are driven by the need to deliver sustainable profit margins. This, in conjunction with close management
 of related marketing costs, are required to sustain or grow the Company's market presence.

 Affordable Funding. The Company needs to secure affordable
 funding resources to support future product development and new market penetration and fully fund the HFS business.

 Intellectual Property Issues. Market
participants rely on patented and non-patented proprietary information relating to product development and other core competencies of
their business. Protection of intellectual property is important. Therefore, steps such as patent applications, confidentiality and non-disclosure
agreements, as well as other security measures are generally taken. The Company has not created a litigation reserve for intellectual
property rights litigation. As a business judgment, the Company does not patent or copyright or trademark all intellectual property due
to a combination of factors, including, in part, the cost of registration and maintenance of registration, odds and cost of successful
defense of the registration and commercial value of the intellectual property rights. To enforce or protect intellectual property rights,
litigation or threatened litigation is common. The Company has not sued any third parties over intellectual property rights.

 Results of operations

 Net Revenues

 For 2024, revenue was derived from sales of
our residential lighting products and Connected Surfaces Smart Mirrors. The residential products were directed towards consumer home
LED lighting for both indoor and outdoor applications while the Smart Mirrors were sold directly to consumers and liquidators via e-commerce
efforts. We recognize revenue upon shipment of the order to the customer when all performance obligations have been completed,
and title has transferred to the customer and in accordance with the respective sale's contractual arrangements. Each contract
on acceptance will have a fixed unit price. All of our sales were to the U.S. market in 2024. Net revenue also includes the cost of instant
rebate coupons, promotional coupons, and product support allowances provided to retailers to promote certain products. All of our revenue
is denominated in U.S. dollars.

 Cost
of Goods Sold

 Our cost of goods sold consists primarily of
purchased products from contract manufacturers and when applicable associated duties and inbound freight. In addition, our cost of goods
sold also includes reserves for potential warranty claims and freight allowances. We source our manufactured LED lighting products based
on customer orders. Beginning in 2021 with the launch of our Connected Surfaces Smart Mirror, we maintained inventory on hand for direct-to-consumer
shipment to fulfill sales orders. As the Smart Mirror product line had limited sales for 2023, and all inventory was expensed as
of December 31, 2023.

 Gross
Profit

 Our
gross profit has and will continue to be affected by a variety of factors, including average sales price for our products, product mix,
promotional allowances, our ability to reduce product cost fluctuations in the cost of our purchased components. See "Risk
Factors" above in Item 1A.

 Operating
Expenses

 Operating expenses include sales and marketing expenses,
consisting of sales representatives' commissions, advertising, and costs related to employee's compensation. In addition,
operating expensed includes charges relating to product development, office and warehousing, accounting, legal, and insurance.

 CONSOLIDATED RESULTS OF OPERATIONS AND OUTLOOK

 December 31, 2024

 December 31, 2023

 Dollars

 % of Revenue

 Dollars

 % of Revenue

 Revenue, Net

 $

 100.0
 %

 $

 100.0
 %

 Increase in inventory reserve and inventory write offs

 —

 —

 133,775

 (69.8
)%

 Cost of sales

 38,019

 (26.5
)%

 324,041

 (168.6
)%

 Gross Profit (Loss)

 105,250

 73.5
 %

 (265,640
)

 (138.2
)%

 Operating Expenses:

 Sales and marketing

 17,313

 12.1
 %

 75,890

 39.6
 %

 139,078

 97.1
 %

 469,599

 244.8
 %

 Professional fees

 274,559

 192.6
 %

 426,157

 221.9
 %

 Product development

 6,233

 4.4
 %

 101,409

 52.6
 %

 Other general and administrative

 124,565

 86.9
 %

 296,159

 154.2
 %

 Goodwill impairment

 539,317

 376.4
 %

 Total Operating Expenses

 1,101,065

 768.53
 %

 1,369,214

 713.0
 %

 Operating Loss

 (995,815
)

 (695.1
)%

 (1,634,854
)

 (851.6
)%

 Other Income (Expenses)

 Miscellaneous Income, net

 —
 %

 77,106

 40.1
 %

 Interest expense, net

 (90,943
)

 (63.5
)%

 (103,741
)

 (54.2
)%

 Total Other Income, net

 (90,939
)

 (63.5
)%

 (26,635
)

 (14.1
 %

 Loss Before Tax Benefit

 (1,086,754
)

 (758.54
)%

 (1,661,489
)

 (865.1
)%

 Income Tax Expense (Benefit)

 (124,370
)

 (86.8
)%

 0.5
 %

 $
 (962,384
)

 (671.70
)%

 $
 (1,696,439
)

 (883.3
)%

 Net
Revenues

 For the year ended December 31, 2024,
net revenues were $143,269, a decrease of 25% from $192,176, in fiscal 2023.

 In April 2024, the Company liquidated the remaining
Smart Mirror inventory for $80,000. The remaining sales for 2024 relate to e-commerce sales of Smart Mirrors and $58,000 in LED lighting
sales.

 Sales reductions for anticipated discounts,
coupons, allowances and other deductions are recognized during the period the related revenue is recorded. The reduction of accrued allowances
is included in net revenues and amounted to approximately $850 and $17,000 for the years ended December 31, 2024, and 2023, respectively.

 All sales were domestic for 2024 and 2023.

 The following table disaggregates net revenue by major source:

 For the
 Year Ended December 31, 2024

 For the
 Year Ended December 31, 2023

 Capstone
 Brand

 %
 of Revenue

 Capstone
 Brand

 %
 of Revenue

 Lighting Products- U.S.

 $

 57,829

 %

 $

 65,025

 %

 Smart Mirror Products- U.S.

 85,440

 %

 127,151

 %

 Total Revenue

 $

 %

 $

 %

 Gross Profit and Cost of Sales

 Gross profit (loss) for the year ended December 31,
2024, was approximately $105,250, or 73.4% of net revenues and ($265,640), or (138.2%) of net revenues, for fiscal 2023. For the years
ended December 31, 2024, and 2023, cost of sales was approximately $0 and $458,000, respectively. The gross profit increase
is the result of the write off of the Smart Mirror inventory in 2023 and the final liquidation sales of the remaining inventory on hand
during 2024. Management is currently reviewing licensing opportunities for the Connected Chef, a purpose-built kitchen tablet
with an accessory platform to accommodate food prep accessories such as a cutting board. The Connected Chef has Google mobile services
allowing for pre-installation of specific Google applications including Playstore, voice assistant, YouTube, to name those
highly recognized.

 Operating Expenses

 Sales and Marketing Expenses

 In fiscal 2024 and 2023, sales and marketing expenses
were approximately $17,000 and $76,000 respectively, a reduction of $59,000 or 77%. As a percent to revenue, 2024 sales and marketing
expenses were 12% as compared to 40% in 2023. The Company did not have an active product line for the last half of 2024 and therefore
marketing expenses decreased accordingly.

 Compensation Expenses

 For the years ended December 31, 2024,
and 2023 compensation expenses were approximately $139,000 and $469,600, respectively, a reduction of $330,000 or 70%. As a percent of
net revenues, 2024 expenses were 97.2% as compared to 244.4% in 2023. The Company continued to reduce the workforce as a result of not
having an active product line during 2024.

 Professional Fees

 For fiscal 2024, professional fees were approximately
$275,000 compared to $426,200 in 2023, a reduction of $151,200 or 36%. As a percent of net revenue 2024 expenses were 192.6% as
compared to 221.8% in 2023. In 2024, consulting fees were approximately $97,000, a decrease of $93,000, compared to $190,000 for 2023.
Accounting, legal and other expenses were $178,000, a decrease of $197,600 from $235,700 in the prior year.

 Product Development Expenses

 For the years ended December 31, 2024, and 2023, product
development expenses were approximately $6,000 and $101,000, respectively, a decrease of $95,000 or 94%. In 2023 the Company invested
$79,000 in the development of the Connected Chef and spent $22,000 in Smart Mirror development. In 2024, the Company maintained the product
certifications for the Connected Chef.

 Other General and Administrative Expenses

 For fiscal 2024 and 2023, other general and
administration expenses were approximately $124,000 and $296,000, respectively, a decrease of $172,000 or 58%. As a percent to revenue,
other general and administrative expenses were 86.9% as compared to 154.2% in 2023. The directors and officers insurance decreased
in 2024 from $114,000 in 2023 to $71,000 a $43,000 or 38% decrease. As the Company did not have an active product line during the last
half of 2024, we discontinued the product liability insurance, a decrease of $18,000. Travel expenses decreased from $12,000 in 2023
to $1,000 in 2024. Rent expense decreased from $96,000 in 2023 to $2,500 in 2024. These reductions are a result of the cost reduction
strategies taking by Management to reduce operating overhead as much as possible.

 Goodwill Impairment Expense

 The Company recognized a goodwill impairment
of approximately $539,000 during 2024, as the fair value of the Company was less than the carrying value of the Company.

 Total Operating Expenses

 For the years ended December 31, 2024, and 2023,
total operating expenses were approximately $1,000,000 and $1,370,000, respectively. This represents a $370,000 or 27.0% decrease over
fiscal year 2023.

 Operating Loss

 For the year ended December 31, 2024, the operating
loss was approximately $996,000 as compared to $1,634,000 in 2023, a loss decrease of $737,000 over 2023.

 Other Income (Expense)

 For fiscal 2024 other income was $4 compared
to $77,106 in 2023, a decrease of $77,102 over 2023. The other income for the year ended December 31, 2023, resulted from $49,000
in employee retention tax credit received under Cares act 2020-2021 coupled with insurance premium refunds and insurance payouts on damage
freight claims.

 Interest expense for 2024 amounted to approximately
$90,000 compared to $104,000 in 2023, a decrease of $14,000 or 13%, due to the cancellation of debt and issuance of preferred B-1 stock.

 For the years ended December 31, 2024, the
net tax expense for income tax was estimated at $100,000 compared to a net tax expense of $35,000 in the same period 2023.

 The effective tax rate for the years ended
December 31, 2024, and 2023, respectively, was (10.07%) and (2.10%) and the statutory tax rate was 23.5% in 2024
and 23.82% in 2023.

 For fiscal 2024 and 2023 net loss before taxes
was approximately $1,087,000 and $1,661,000, respectively, a net loss decrease of approximately $578,000 over the previous
year due to the reasons summarized above.

 RESULTS OF OPERATIONS AND BUSINESS OUTLOOK

 Our goal is to license the Connected
Chef kitchen utility device in 2025 through licensing arrangements with an appliance or other condumer product distributors,
consumer product manufacturers and possibly other commercial food or kitchen product companies.

 The Company will require additional
working capital funding until such time as its Connected Chef licensing business and/or HFS business establish revenue generating
operations. The Company may also require additional funding to cover the costs of manufacturing Connected Chef product under certain
licensing arrangements.

 Contractual Obligations

 The following table represents contractual obligations as of December
31, 2024.

 Payments
 Due by Period

 Total

 2025

 2026

 2027

 After
 2028

 Accounts payable and accrued
 liabilities

 $

 $

 $

 —

 $

 —

 $

 —

 Short-Term Debt – related parties

 180,760

 180,760

 —

 —

 —

 Total Contractual Obligations

 $

 181,060

 $

 181,060

 $

 —

 $

 —

 $

 —

 Notes to Contractual Obligations Table

 Accounts payable and accrued liabilities —
Comprised of the Company's liability for goods and services in the normal course of business as well as deferred compensation
for management.

 Short Term Debt – notes payable with related
parties – Related to working capital funding.

 LIQUIDITY
AND CAPITAL RESOURCES

 During the year ended December 31, 2024, the
Company used cash in operations of approximately $290,000 and generated net operating losses of $996,000. As of December 31, 2024,
the Company had working capital deficit of $144,755 and an accumulated deficit of $11,784,360. The Company's cash balance
decreased by approximately $20,000 from $36,000 as of December 31, 2023, to $16,000 as of December 31, 2024. With the reduced
revenues in 2024 and 2023 the Company initiated an expense mitigation plan that reduced discretionary spending including travel, and
trade show expenses, deferred executive management compensation, and closed the Hong Kong operation.

 The Company is actively seeking alternative sources
of liquidity, including but not limited to accessing the capital markets, strategic partnerships, or other alternative financing measures.
but has been unable to secure unrelated, long-term funding or secure other sources of liquidity. As stated, Company's low
market price for its common stock and poor financial condition and performance hinder these efforts.

 Besides the efforts to license the
Connected Chef kitchen appliance product, the Company is seeking to establish revenue generating operations in the HFS business
by internal development of HFS operations or acquiring or being acquired by an existing, operating HFS company. Management
is closely monitoring its operations, liquidity, and capital resources and is actively working to minimize the current and future
impact of this unprecedented situation.

 Director and former Chief Executive
Officer, Stewart Wallach, has funded working capital since 2022 as the Company navigates these challenges. Total working capital
note proceeds received as of the date of this filing are $672,500. Coppermine has funding working capital beginning
in 2024. Total working capital note proceeds received as of the date of this filing of the Form 10-K report from Coppermine
are $292,295. Coppermine has committed to lending a total of $485,163 in working capital funding through September 30, 2025.
However, there is no assurance that level of funding provided by Coppermine will be adequate to meet the operating needs, licensing
expenses and operating expenses of a potential business combination during 2025.

 The Company does not have sufficient
cash on hand to finance its plan of operations for the next 12 months from the date of the filing of this report and will
need to seek additional capital through debt and/or equity financing. These factors raise substantial doubt about the Company's
ability to continue as a going concern.

 Summary of Cash Flows

 Years ended December 31,

 2024

 2023

 (In thousands)

 Net
 cash provided by (used in):

 Operating
 Activities

 $

 (289,548

)

 $

 (614,527

)

 Investing
 Activities

 -

 (42,970

)

 Financing
 Activities

 268,932

 632,500

 Net
 increase (decrease) in cash

 $

 (20,616

)

 $

 (24,997

)

 As of December 31, 2024, the Company's working capital
deficit was approximately $145,000 of which $16,000 was cash. Current liabilities were $181,000 and include:

 Accounts payable of approximately
 $299 for amounts due vendors and service providers.

 Accrued expenses of approximately
 $1 for wages.

 Notes payable – related
 parties - current portion of approximately $180,700.

 Cash
Flows provided by (used in) Operating Activities

 Cash used in operating activities was approximately
$290,000 in 2024 compared with approximately $614,000 in 2023. The cash used in operating activities in 2024 included the negative cash
impact of the net loss, which was approximately $962,000, offset by the goodwill impairment of $539,000, a decrease in accounts
payable and accrued expenses of $141,000.

 Cash Flows used in Investing Activities

 Cash provided by in investing activities in
2024 was $0 compared to cash used in investing activities of $42,970 in 2023. The Company finalized production of the Connected Chef during
2023 and purchased the product mold for future manufacturing. Future capital requirements will increase to fund future mold and tooling
if the Company expands the Connected Chef manufacturing.

 Cash Flows used in Financing Activities

 Cash received and used in financing activities for
the years ended December 31, 2024, and 2023, was approximately $269,000 and $632,000, respectively. During 2023, the Company received
$632,000 in working capital. In 2024, the Company received $269,000 in working capital funding from related parties.

 Exchange Rates

 We sell all of our products in U.S. dollars
and pay for all of our manufacturing costs in U.S. dollars.

 While exchange rates have been stable for several
years, we cannot assure you that the exchange rate between the United States, Chinese and Thailand currencies will continue to be stable
and exchange rate fluctuations may have a material effect on our business, financial condition or results of operations.

 Off Balance Sheet Arrangements

 We do not have material off-balance sheet arrangements
that have or are reasonably likely to have a material future effect on our results of operations or financial condition.

 DIVIDENDS

 We have not declared or paid any cash or other
dividends on shares of our Common Stock in the last eight years, and we presently have no intention of paying any cash dividends
on shares of our Common Stock.

 RECENT ACCOUNTING PRONOUNCEMENTS

 See Note 1 of the Consolidated Financial Statements
at Item 15 of this Report.

 CRITICAL ACCOUNTING POLICIES

 The preparation of consolidated financial statements
in conformity with accounting principles generally accepted in the United States of America ("U.S. GAAP") requires management
to make certain estimates and assumptions regarding matters that are inherently uncertain and that ultimately affect the reported amounts
of assets, liabilities, revenues and expense, and the disclosure of contingent assets and liabilities. On an ongoing basis, management
evaluates its estimates and judgments, including those related to revenue recognition; inventory valuation; depreciation; amortization
and the recovery of long-lived assets; including goodwill and intangible assets; shared base-based payment expense; product warranty;
and other reserves and assumptions based on management's experience and understanding of current facts and circumstances, historical
experience and other relevant factors. These estimates may differ from actual results. Certain of our accounting policies are considered
critical as they are both important to reflect our financial position and results of operations and require significant or complex judgement
on the part of management. The following is a summary of certain accounting policies considered critical by management.

Recognition

 The
Company recognizes lighting product revenue when the Company's performance obligations as per the terms in the customers purchase
order have been fully satisfied, specifically, when the specified product and quantity ordered has been manufactured and shipped pursuant
to the customers requested ship window, when the sales price as detailed in the purchase order is fixed, when the product title and risk
of loss for that order has passed to the customer, and collection of the invoice is reasonably assured. This means that the product ordered
and to be shipped has gone through quality assurance inspection, customs and commercial documentation preparation, the goods have been
delivered, title transferred to the customer and confirmed by a signed cargo receipt or bill of lading. Only at the time of shipment
when all performance obligations have been satisfied will the judgement be made to invoice the customer and complete the sales contract.

 The
Company may enter into a licensing agreement with globally recognized companies, that allows the Company to market products under a licensed
brand to retailers for a designated period of time, and whereby the Company will pay a royalty fee, typically a percentage of licensed
product revenue to the licensor in order to market the licensed product.

 The
Company may also enter into a private label agreement, whereby the Company produces and ships products to a customer that has been packaged
and will be marketed under the customers own private label.

 The
Company expenses license royalty fees and sales commissions when incurred and these expenses are recognized during the period the related
sale is recorded. These costs are recorded within sales and marketing expenses.

 We
provide our customers with limited rights of return for non-conforming product warranty claims. As a policy, the Company does not accept
product returns from retail customers, however occasionally as part of a customers in store test for new product, we may receive back
residual inventory.

 Sales reductions for anticipated discounts,
promotional and marketing allowances, defective warranty claims, and other deductions are recognized during the period the related revenue
is recorded. The Company may be subject to chargebacks from customers for negotiated promotional allowances, that are deducted from open
invoices and reduce collectability of open invoices. For the years ended December 31, 2024, and 2023, the Company had processed
approximately $0 and $17,000, respectively for such allowances.

 Goodwill

 On September 13, 2006, the Company entered
into a Stock Purchase Agreement with Capstone Industries, Inc., a Florida corporation ("Capstone"). Capstone was incorporated
in Florida on May 15, 1996 and is engaged primarily in the business of wholesaling technology inspired consumer products to distributors
and retailers in the United States. Under the Stock Purchase Agreement, the Company acquired 100% of the issued and outstanding shares
of Capstone's Common Stock, and recorded goodwill of $1,936,020.

 Goodwill acquired in business combinations is initially
computed as the amount paid by the acquiring company in excess of the fair value of the net assets acquired.

 In January 2017, the FASB issued ASU 2017-04,
 Simplifying the Test for Goodwill Impairment, which requires an entity to perform a one-step quantitative impairment test, whereby
a goodwill impairment loss will be measured as the excess of a reporting unit's carrying amount over its fair value (not to exceed
the total goodwill allocated to that reporting unit). ASU 2017-04 was effective for the Company's fiscal year ended December 31,
2019. The adoption of ASU 2017-04 did not have a material effect on the Company's consolidated financial statements.

 Goodwill is tested for impairment on December
31 of each year or more frequently if events or changes in circumstances indicate that the asset might be impaired. If the carrying amount
exceeds its fair value, an impairment loss is recognized. Goodwill is not amortized. The Company estimates the fair value of its single
reporting unit relative to the Company's market capitalization. There was an impairment expense of $539,317 and $0, respectively,
for the year ended December 31, 2024 and 2023, for a balance of goodwill of $773,165 and $1,312,482, respectively as of December
31, 2024, and 2023.

 Accrued
Liabilities

 Accrued
liabilities contained in the accompanying consolidated balance sheets include accruals for estimated amounts of credits to be issued
in future years based on potential product warranties, compensation, benefits, marketing allowances and other liabilities.

 Income
Taxes

 The
Company is subject to income taxes in the U.S. federal jurisdiction, various state jurisdictions and certain other jurisdictions. The
Company accounts for income taxes under the provisions of Financial Accounting Standards Board ("FASB") Accounting Standard
Codification ("ASC") 740 Income Taxes. ASC 740 requires recognition of deferred income tax assets and liabilities
for the expected future income tax consequences, based on enacted tax laws, of temporary differences between the financial reporting
and tax bases of assets and liabilities. The Company and its U.S. subsidiaries file consolidated income tax returns.

 Tax
regulations within each jurisdiction are subject to the interpretation of the relaxed tax laws and regulations and require significant
judgement to apply. The Company is not subject to U.S. federal, state and local tax examinations by tax authorities generally for a period
of 3 years from the later of each return due date or date filed.

 If the Company were to subsequently record an
unrecognized tax benefit, associated penalties and tax related interest expense would be recorded as a component of income tax expense.

 As of December 31, 2024, the Company had federal
and state net operating loss carry forwards of approximately $6,672,000 and $6,540,000 respectively. The federal net operating
loss is available to the Company indefinitely and available to offset up to 80% of future taxable income each year. The net deferred
tax liability as of December 31, 2024, and 2023 was $196,000 and $320,000, respectively, and is reflected in long-term liabilities
in the accompanying consolidated balance sheets.

 The effective tax rate for the years ended
December 31, 2024, and 2023, respectively, was 11.44% and (2.10%) and the statutory tax rate was 23.5% in 2024 and 23.82% in 2023.

 The Company recognizes the tax benefit from
an uncertain tax position only if it is more likely than not the tax position will be sustained on examination by the taxing authorities,
based on the technical merits of the position.

 Deferred tax assets are to be reduced by a valuation
allowance if it is more likely than not that some portion or all of the deferred assets will not be realized. The Company has evaluated
the positive and negative evidence bearing upon its ability to realize the deferred tax assets. Management has considered the Company's
history of cumulative net losses incurred and has concluded that it is more likely than not that the Company will not realize the benefits
of the deferred tax assets. Accordingly, a full valuation allowance has been established against the deferred tax assets as of December
31, 2024, and 2023. Since indefinite-lived assets cannot be used as a source of taxable income to support the realization of deferred
tax asset, a valuation allowance was recorded against the deferred tax assets, and a net deferred tax liability or naked credit of approximately
$196,000 and $320,000 is presented on the company's balance sheet, respectively. The Company's valuation allowance
decreased by $112,000 in 2024.

 The Company recognizes liabilities for uncertain tax
positions based on a two-step process. The first step is to evaluate the tax position for recognition by determining if the weight of
available evidence indicates that it is more likely than not that the position will be sustained on audit, including resolution of related
appeals or litigation processes, if any. The second step is to measure the tax benefit as the largest amount that is more than 50% likely
of being realized upon settlement. While the Company believes that it has appropriate support for the positions taken on its tax returns,
the Company regularly assesses the potential outcome of examinations by tax authorities in determining the adequacy of its provision for
income taxes.

 Item
7A. Quantitative and Qualitative Disclosures about Market Risk. (Not Applicable)

 Item
8. Financial Statements and Supplementary Data.

 The
financial statements and financial statement schedules of CAPC as well as supplementary data are listed in Item 15 below and are included
after the signature page to this Form 10-K report.

 Item
9. Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.

 None.

 Item
9A. Controls and Procedures.

 Disclosure
Controls and Procedures

 Evaluation
of Disclosure Controls and Procedures.

 Based on an evaluation under the
supervision and with the participation of the Company's management, the Company's principal executive officer and
principal financial officer have concluded that the Company's disclosure controls and procedures as defined in Rules 13a-15(e)
and 15d-15(e) under the Exchange Act were effective as of December 31, 2024 to provide reasonable assurance that information required
to be disclosed by the Company in reports that it files or submits under the Exchange Act is (i) recorded, processed, summarized
and reported within the time periods specified in the SEC rules and forms and (ii) accumulated and communicated to the Company's
management, including its principal executive officer and principal financial officer, as appropriate to allow timely decisions
regarding required disclosure.

 Management's Annual Report on Internal
Control over Financial Reporting. The Company's management is responsible for establishing and maintaining adequate internal
control over financial reporting (as defined in Rule 13a-15(f) under the Exchange Act). Management conducted an assessment of the effectiveness
of the Company's internal control over financial reporting based on the criteria set forth in Internal Control – Integrated
Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (2013 framework). Based on the Company's
assessment, management has concluded that its internal control over financial reporting was effective as of December 31, 2024,
to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements in accordance
with GAAP and includes those policies and procedures that:

 Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company.

 Provide reasonable assurance
 that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting
 principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management
 and directors of the Company; and

 Provide reasonable assurance
 regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could
 have a material effect on the financial statements.

 Changes in Internal Control over
Financial Reporting

 There were no changes in the Company's
internal control over financial reporting during the fourth quarter of 2024, which were identified in connection with management's
evaluation required by paragraph (d) of Rules 13a-15 and 15d-15 under the Exchange Act, that have materially affected, or are
reasonably likely to materially affect, the Company's internal control over financial reporting.

 Because
the Company is a smaller reporting company, this Form 10-K report does not include an attestation report of our independent registered
public accounting firm regarding internal control over financial reporting. Management's report was not subject to attestation
by our independent registered public accounting firm.

 Management,
including the Company's Chief Executive Officer and Chief Financial Officer, does not expect that the Company's internal
controls will prevent or detect all errors and all fraud. A control system, no matter how well designed and operated, can provide only
reasonable, not absolute, assurance that the objectives of the control system are met. Further, the design of a control system must reflect
the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the
inherent limitations in all control systems, no evaluation of internal controls can provide absolute assurance that all control issues
and instances of fraud, if any, have been detected. Also, any evaluation of the effectiveness of controls in future periods are subject
to the risk that those internal controls may become inadequate because of changes in business conditions, or that the degree of compliance
with the policies or procedures may deteriorate.

 The certifications of our Chief Executive
Officer and Chief Financial Officer attached as Exhibits 31 and 32 and to this Form 10-K report include information concerning
our disclosure controls and procedures and internal control over financial reporting.

 Item
9B. Other Information. None

 Item
9C. Disclosure Regarding Foreign Jurisdictions that Prevent Inspection. Not applicable.

 Part
III

 Item
10. Directors, Executive Officers and Corporate Governance.

 Code of Ethics. The board of directors has
adopted a written Code of Ethics applicable to all officers, directors and employees, including our principal executive officer, principal
financial officer, principal accounting officer or controller, or persons performing similar functions. We have posted a current copy
of our Code of Ethics on our website at www.lemonade.com in the "Investors Relations". The Company intends to satisfy the
disclosure requirement under Item 5.05 of Form 8-K regarding amendment to, or waiver from, a provision of our Code of Ethics, as well
as any OTC Markets Group requirement to disclose waivers with respect to directors and executive officers, by posting such information
on our website at the address and location specified above. The information contained on the Company website is not incorporated by reference
into this Form 10-K.

 On February 24, 2025, the board of directors
adopted a stand-alone insider trading policy to update and expand the scope of the insider trading policy that was included in the Code
of Ethics. The Company filed a Current Report on Form 8-K to report this change.

 Insider Trading Compliance Policy. The board
of directors has adopted a written Insider Trading Policy applicable to all officers, directors, employees and other covered persons,
governing the purchase, sale and other disposition of our securities that we believe are reasonably designed to promote compliance with
insider trading laws, rules and regulations and any applicable OTC Markets Group QB Venture Market standards. A copy of our Insider Trading
Policy is filed as Exhibit 19.1 to this Form 10-K.

 CURRENT
BOARD OF DIRECTORS

 The incumbent and current members of the Board of
Directors are:

 1.

 Stewart Wallach. Mr. Wallach has been a Director since April 2007.

 2.

 Alexander Jacobs became a Director on December 4, 2024.

 3.

 Jeffrey Postal. Mr. Postal has been a Director since January 2004 and resigned December 6, 2024.

 4.

 Jeffrey Guzy. Mr. Guzy was appointed as a Director on May 3, 2007. Mr. Guzy is deemed an "Independent Director" under applicable standards.

 5.

 George Wolf was appointed as a Director on January 13, 2022, and resigned December 6, 2024.

 Directors appointed in 2025:

 1.

 Warner Session was appointed as a Director on January 9, 2025. He
 is deemed to be an independent director based on NASDAQ guidelines.

 2.

 Brian Rosen was appointed as a Director on January 20, 2025 and on February
 24, 2025, Mr. Rosen was appointed as a member of the Audit Committee. Mr. Rosen is a non-employee director but
 is not deemed to be independent due to a business relationship with a company controlled by Alexander Jacobs, Company's
 Chief Executive Officer and affiliated with Coppermine.

 Each Director's term is for one year. Company
Directors have typically been elected in the past by written consent of stockholders holding more than 50% of the current voting power.
The Company uses the written consent because a small number of shareholders have sufficient voting power to decide the election of Directors
and approval or denial of any other corporate resolution and the cost of conducting an annual stockholders' meeting is significant
for a small reporting company.

 Further, stockholders may make inquiries in
writing by sending their inquiries to Secretary, Capstone Companies, Inc., #144-V 10 Fairway Drive, Suite 100, Deerfield Beach, Florida
33441. The information required in Part III of this Form 10-K report is set forth in the information statement filed for the written consent
approval of nominee slates of Directors and the requirements for stockholders to submit proposed resolutions and Director nominees is
set forth in this Form 10-K report.

 DIRECTOR PROFILES

 Stewart Wallach, Age 73, former
Chief Executive Officer and Chairman of the Board of Directors since April 23, 2007, a director of the Company since September 22, 2006,
and the founder and Chief Executive Officer and Chairman of the Board of Directors of Capstone Industries, Inc., a wholly owned subsidiary,
and principal operating subsidiary of the Company since September 20, 2006. Mr. Wallach is an American entrepreneur and has founded and
operated a number of successful businesses over his 35-year career. Over the past 17 years, Mr. Wallach has been focused on technology-based
companies in addition to consumer product businesses, the field in which he has spent most of his career. Prior to founding Capstone
Industries, Inc., he sold Systematic Marketing, Inc., which designed, manufactured, and marketed automotive consumer products to mass
markets, to Sagaz Industries, Inc., a leader in these categories. He served as President of Sagaz Industries, Inc. for 10 years before
forming Capstone Industries, Inc. In 1998, Mr. Wallach co-founded Examsoft Worldwide, Inc. ("Examsoft"), which developed
and delivered software technology solving security challenges of laptop-based examinations for major educational institutions and state
bar examiners.

 Mr.
Wallach remained chairman of Examsoft until it was acquired in late 2009. Mr. Wallach has designed and patented a number of innovations
over the span of his career and has been traveling to China establishing manufacturing and joint venture relationships since the early
1980s.

 Alexander Jacobs, Age 52, Chief Executive
Officer and Director appointed on December 4, 2025, Mr. Jacobs has spent 30+ years as a serial entrepreneur starting and operating several
companies across many different industries from apparel to sports complexes. Over the past few decades, Alex has employed
over 1,000 people and has sold over $100,000,000 of products and services in the following companies he founded: Chesapeake Design Works
Inc., Inkworks Inc., Brandmark Inc. and the Coppermine ecosystem. www.gocoppermine.com

 In 2011, Alex started Coppermine, a
privately held sports complex in Baltimore, Maryland. Coppermine now serves 35,000 customers per week in 20 locations
in Carrol County, Harford County, Baltimore County, Baltimore City, and Anne Arundel County. Coppermine has become
one of the largest sports operators in the Mid-Atlantic region for the offering programs in karate, soccer, lacrosse, dance,
gymnastics, football, baseball, squash, tennis, pickleball, baseball, aquatics, health & fitness, summer camps, birthday parties
and more.

 Jeffrey Guzy, Age 72. Director.
He was appointed to the Company's Board of Directors on May 3, 2007. He serves as Chairman and Chief Executive Officer of
CoJax Oil and Gas Corporation, an SEC reporting company. Mr. Guzy is an outside director of Leatt Corporation, an SEC reporting
company (OTCQB: LEAT). Mr. Guzy served, from October 2007 to August 2010 as President of Leatt Corporation. Mr. Guzy has an MBA
in Strategic Planning and Management from The Wharton School of the University of Pennsylvania; a M.S. in Systems Engineering
from the University of Pennsylvania; a B.S. in Electrical Engineering from Penn State University; and a Certificate in Theology
from Georgetown University. Mr. Guzy has served as an executive manager or consultant for business development, sales, customer
service and management in the telecommunications industry, specifically, with IBM Corp., Sprint International, Bell Atlantic Video
Services, Loral CyberStar and FaciliCom International. Mr. Guzy has also started his own telecommunications company providing
Internet services in Western Africa. He serves as an independent director and chairman of the audit committee of public company,
Purebase Corporation (OTC.PUBC), and as an independent director and chairman of the audit committee and the corporate governance
committee of Blue Star Foods Corporation (OTC.BSFC) a public company.

 Profiles of Directors who resigned
on December 6, 2024:

 Dr. Jeffrey Postal, Age 67. Director. He
has served as a director of the Company since January of 2004. Dr. Postal presently is a businessman and entrepreneur in the Miami, Florida
region. Dr. Postal owns, founded or funded numerous successful businesses over the last few years, including but not limited to: Sportacular
Art, a company that was licensed by the National Football League, Major League Baseball and National Hockey League to design and manufacture
sports memorabilia for retail distribution in the U.S; Co-Owner of Natures Sleep, LLC, a major distributor of Visco Memory Foam mattresses,
both nationally and internationally; Dr. Postal is a Partner in Social Extract, LLC, a Social Media company offering consulting services
to many major companies in the U.S.; Dr. Postal is the principal investor of Postal Capital Funding, LLC, a private investment fund whose
mission is to find undervalued/under capitalized companies and extend funding to them in exchange for equity and/or capital consideration;
and Dr. Postal is the founder of Datastream Card Services, a company that provides innovative billing solutions to companies conducting
business on the internet.

 George Wolf, Age 74. Mr. Wolf has provided sales and
business development consulting services to the Company since 2014. Prior to Mr. Wolf providing these consulting services, he served
as President and Chief Executive Officer of Systematic Development Group, LLC from 2010 into 2014, President and Chief Executive Officer
of ExamSoft Worldwide, Inc. (1998 – 2009) and as Executive Vice President of Sagaz Industries, Inc. (1986 – 1997).

 Set forth below is a tabular disclosure summarizing
some of the specific qualifications, attributes, skills and experiences of our directors.

 Name

 Title

 Qualifications

 Chairman of the Board and former Chief Executive

 He has extensive experience in executive management
 of companies.
 He has experience in growing operations and merger
 and acquisition transactions. He has extensive experience in arranging the design, development and production of products
 in foreign nations for shipment and sale in the U.S. and conducting business abroad.
 His experience provides insight for the implementation
 of effective operational, financial and strategic leadership of the Company.

 Jeffrey Postal

 Director – resigned December 6, 2024

 He has extensive experience in investing in
 companies.
 He has extensive experience in management and business,
 He has experience growing a company and mergers
 and acquisitions.

 Alexander Jacobs

 Director and Chief Executive Officer

 He is the founder, senior operations executive
 and the owner of Coppermine Ventures LLC ("Coppermine") and affiliated companies. Coppermine operates 20 facilities
 in Maryland that provide year-round social, athletic, and fitness programming for children, adults and families.

 Jeffrey Guzy

 Through his MBA in Strategic Planning &
 Management and his knowledge of U.S. capital markets, Mr. Guzy provides invaluable guidance and perspective to the Board.
 He serves and has served as an officer and director
 of public companies and worked for large corporations in business development. He brings this experience to the Board.

 George Wolf

 Director – resigned December 6, 2024

 He has extensive experience in sales and business
 development and has prior management experience. He is familiar with the Company's sales and business development strategies
 and operations and has worked closely with executive officers of the Company in sales and business development.

 Profile of Directors appointed in
January 2025

 Warner Session, Age 69, Director.
 He was appointed to the Company's Board of Directors on January 9, 2025. He owns the Session Law Firm, P.C., specializing in
real estate, corporate transactions, government procurement, and relations. He also owned Session Title Services, LLC, a title insurance
and settlement company. Mr. Warner has worked for the U.S. House of Representatives as Staff Director and Counsel, overseeing airline
safety, minority business participation, and drafting legislation and reports. Mr. Warner has managed residential and commercial
transactions, drafted condominium documents, and is affiliated with various professional organizations including the DC Building Industry
Association, DC Chamber of Commerce and DC Land Title Association. Warner is a former Chairman of the Metropolitan Washington
Airports Authority (Dulles and National Airports) and is current a Trustee at the University of the District of Columbia.

 Brian Rosen,
Age 55, Director. He was appointed to the Company's Board of Directors on January 20, 2025. He served as Senior
Vice President of Global Government Affairs, Market Access, and Advocacy for Novavax, Inc, an SEC reporting company. Mr.
Rosen received his juris doctorate from Hofstra University School of Law and a Bachelor of Arts degree from Tufts University.
Mr. Rosen previously served as Senior Vice President of commercial strategy for Novavax, and has more than 25 years of biotech,
legal, and patient advocacy experience with the vast majority engaged in government affairs, advocacy, reimbursement, and policy
work. Prior to Novavax, Mr. Rosen was most recently the Chief Policy, Advocacy and Patient Access Officer for the Leukemia &
Lymphoma Society, where he oversaw all legislative and regulatory efforts and the delivery of patient services nationwide. Previously,
he developed and ran the government affairs, policy, and alliance development functions for MedImmune, Inc, which was subsequently
acquired by AstraZeneca, a publicly held company. Mr. Rosen currently serves on the board of directors of Learning Undefeated,
a nonprofit organization that provides STEM education and workforce development to underserved communities.

 POLICY
REGARDING BOARD ATTENDANCE

 Company Directors are expected to attend all
annual and special board meetings per Company policy. An attendance rate of less than 75% over any 12-month period is grounds for removal
from the Board of Directors. In fiscal year 2024, all Directors attended the (2) two board meetings.

 ROLE
OF THE BOARD OF DIRECTORS IN CORPORATE GOVERNANCE

 The Board of Directors is responsible
for overseeing the Chief Executive Officer and other senior management in order to assure that such officers are competent and
ethical in running the Company on a day-to-day basis and to assure that the long-term interests of the stockholders are being
served by such management. The Directors must take a pro-active focus and approach to their obligation in order to set and enforce
standards to ensure that the Company is committed to business success through maintenance of the highest standards of responsibility
and ethics. The Company has adopted a Code of Ethics, which is posted on  The contents of the
Company Website are not incorporated herein by reference and that Website provided in this Report is intended to be an inactive
textual reference only. Since appointment of Alexander Jacobs as Company's Chief Executive Officer, Chairman of the Board
of Directors, Stewart Wallach, has assumed executive management responsibility for Connected Chef product licensing as well as
for cybersecurity oversight.

 AUDIT
COMMITTEE

 The Audit Committee was established in
accordance with Section 3(a)(58) (A) of the Exchange Act. It is primarily responsible for overseeing the services performed by
the Company's Independent Registered Public Accounting Firm, evaluating the Company's accounting policies and its
system of internal controls and reviewing significant financial transactions. The members of the Audit Committee in fiscal year
2024 were Jeffrey Guzy and Jeffrey Postal. The Company believes that Mr. Guzy is an Independent Director under SEC and NASDAQ
standards. The Board of Directors has determined that Mr. Guzy qualifies as an "Audit Committee Financial Expert"
as defined under applicable SEC rules and also meets the additional criteria for independence of Audit Committee members set forth
in Rule 10A-3(b)(1) under the Exchange Act. Mr. Postal resigned as an Audit Committee and Director on December 6, 2024. Mr. Brian
Rose was appointed to the Audit Committee on February 24, 2025. Mr. Rosen is deemed to possess the skills and experience to
perform his duties as an Audit Committee member. Mr., Rosen is not deemed to be an "Independent Director" under SEC
and NASDAQ standards due to a business relationship with a company controlled by Company's Chief Executive Officer Alexander
Jacobs and affiliated with Coppermine.

 REPORT
OF THE AUDIT COMMITTEE

 The
Audit Committee is responsible for providing oversight to Company's accounting and financial reporting processes and the audit
of the Company's financial statements. The Audit Committee monitors the Company's external audit process, including auditor
independence matters, the scope and fees related to audits, and the extent to which the Independent Registered Public Accounting Firm
may be retained to perform non-audit services. The Audit Committee also reviews the results of the external audit with regard to the
adequacy and appropriateness of our financial, accounting and internal controls over financial reporting. It also generally oversees
the Company's internal compliance programs. The function of the Audit Committee is not intended to duplicate or to certify the
activities of the management and the Independent Registered Public Accounting Firm, nor can the Audit Committee certify that the independent
registered public accounting firm is "independent" under applicable rules. The Audit Committee members are not professional
accountants or auditors. Under its Charter, the Audit Committee has authority to retain outside legal, accounting or other advisors as
it deems necessary to carry out its duties and to require the Company to pay for such expenditures.

 The
Audit Committee provides counsel, advice and direction to management and the Independent Registered Public Accounting Firm on matters
for which it is responsible, based on the information it receives from management and the independent registered public accounting firm
and the experience of its members in business, financial and accounting matters.

 The Company's management is responsible
for the preparation and integrity of its financial statements, accounting and financial reporting principles, and internal controls and
procedures designed to ensure compliance with accounting standards, applicable laws and regulations.

 In this context, the Audit Committee hereby
reports as follows:

 1)

 Company's
 management has represented to the Audit Committee that the 2024 audited financial statements were prepared in accordance with
 accounting principles generally accepted in the United States of America. The Audit Committee has reviewed and discussed the audited
 financial statements for year 2024 with Company's management and the independent registered public accounting firm.

 2)

 The Audit Committee has received written disclosures and a letter from the Independent Registered Public Accounting Firm, Assurance Dimensions, required by the PCAOB and has discussed with Assurance Dimensions, their independence.

 3)

 Based on the review and
 discussion referred to above, the Audit Committee recommended to the board, and the board has approved, that the audited financial
 statements be included in Company's Annual Report on Form 10-K for the year ended December 31, 2024, as filed with the Commission
 on March 17, 2025.

 The
foregoing report is provided by the undersigned Chairman of the Audit Committee.

 /s/Jeffrey
Guzy

 Jeffrey
Guzy, Chairman of Audit Committee

 COMPENSATION
AND NOMINATION COMMITTEE ("Compensation and Nomination Committee")

 Company's Compensation and Nomination
Committee is currently composed of two members (both Company directors): Mr. Jeffrey Guzy and Mr. Jeffrey Postal. Only Mr. Guzy, who
serves as Chairman of the Compensation and Nomination Committee, is "independent" within the meaning of the NASDAQ Marketplace
Rules. Mr. Postal resigned as a Compensation and Nomination Committee member and Director on December 6, 2024.

 Company's
Compensation and Nomination Committee assists the Company Board of Directors in reviewing and approving the compensation structure of
executive officers, including all forms of compensation to be provided to the executive officers. The chief executive officer and chief
financial officer may not be present at any Compensation and Nomination Committee meeting during which the executive's compensation
is discussed and deliberated.

 The
Compensation and Nomination Committee is responsible for, among other customary duties, the following:

 Reviewing, overseeing and
 approving the compensation of Company's executive officers; and

 Periodically reviewing
 and making recommendations to the Company Board of Directors about incentive compensation, stock or equity compensation plans, annual
 bonus programs and grants, any employee pension or welfare benefit plans and any similar forms of benefit plans; and

 Periodically reviewing
 and approving corporate performance and corporate performance goals that are applicable to compensation of Company's chief
 executive officer and chief financial officer, evaluating the performance of those executives in light of corporate performance and
 corporate performance goals; and determining the compensation for the Company's chief executive officer and chief financial
 officer.

 DIRECTOR MEETINGS IN FISCAL YEAR 2024

 The Board of Directors had (3) three
official meetings in year 2024. During 2024, all Directors attended 75% or more of the Board meeting, which were held during the period
of time that such person served on the Board or such committee.

 Board Leadership Structure and Board's
Role in Risk Oversight

 The Company's Board of Directors endorses
the view that one of its primary functions is to protect stockholders' interests by providing independent oversight of management,
including the Chief Executive Officer. The Chief Financial Officer is allowed and encouraged to address the Board of Directors on any
issues affecting the Company or its stockholders. The Company also allows outside counsel to participate in some of the board meetings
in order to provide legal counsel and an outside perspective on corporate governance and risk issues.

 Board Structure. With the appointment of Alexander
Jacobs to Chief Executive Officer or "CEO" on December 4, 2024, the former CEO, Stewart Wallach, maintained his role
as Chairman of the Board of Directors for business knowledge and continuity purposes.

 The CEO is responsible for setting the strategic
direction for the Company and the day-to-day leadership and performance of the Company, while the Chairman of the Board of Directors
provides guidance to senior management and sets the agenda for Board of Directors meetings and presides over meetings of the full Board
of Directors. Mr. Jacobs is also responsible for executive leadership for the HFS business development efforts.

 Our CEO serves on our Board of Directors, which
we believe helps the CEO serve as a bridge between management and the Board of Directors, ensuring that both groups act with a common
purpose. We believe that the CEO's presence on the Board of Directors enhances his ability to provide insight and direction on important
strategic initiatives to both management and the independent directors and, at the same time, ensures that the appropriate level of independent
oversight is applied to all decisions by the Board of Directors.

 Stewart Wallach, as Chairman of the
Board and as former CEO, has managed the Connected Chef licensing program in 2024 and into 2025 and handles cybersecurity oversight
duties.

 The Chairman of the Board or "Chair"
has no greater nor lesser vote on matters considered by the Board than any other director, and neither the Chairman nor any other
director votes on any related party transaction. All directors of the Company, including the Chairman, are bound by fiduciary obligations,
imposed by law, to serve the best interests of the stockholders. Accordingly, separating the offices of Chairman and Chief Executive
Officer would not serve to enhance or diminish the fiduciary duties of any director of the Company.

 Board of Director – 2024 Compensation
Table

 Name (1)

 Audit
 Committee

 Nomination and Compensation Committees

 Total

Awards

 Stewart Wallach (2)

 $

 —

 —

 —

 George Wolf (2)

 $

 —

 —

 —

 Jeff Guzy

 $

 —

 —

 —

 Jeff Postal

 $

 —

 —

 —

 Jacobs (2)

 $

 —

 —

 —

 (1)

 The individuals listed
 were appointed to the Board of Directors for 2022-2024.

 (2)

 As
 Company Employees, these Directors did not receive compensation for participating as a Director on the Board.

 On July 5, 2022, the Company approved the suspension
of cash compensation for services as a director and services as a member of the Audit Committee, Compensation and Nomination Committee
for independent directors Jeffrey Postal and Jeffrey Guzy until further notice.

 Independent Directors. The Board of the Company
is typically comprised five directors, one of whom is an independent director under the listing standards of quotation systems like The
NASDAQ Stock Market in 2024. With the appointment of Warner Session to the Board on January 9, 2025, the Company has two independent
directors under the listing standards of quotation systems like The NASDAQ Stock Market. Although we have D&O insurance, the Company
was generally unsuccessful in recruiting independent directors in the past, which we believe was caused by the financial condition of
the Company, its status as a microcap and penny stock company. This is a problem commonly faced by micro-cap, "penny stock"
companies like our Company.

 Brian Rosen was appointed as a non-employee Director
on January 20, 2025, but he is not deemed independent because of a business and financial relationship with a company owned and managed
by Alexander Jacobs, Company's CEO.

 Our
senior officers are responsible for the day-to-day management of risks the Company faces, while the Board, as a whole and through its
committees, has responsibility for the oversight of risk management. In its risk oversight role, the Board of Directors has the responsibility
to satisfy itself that the risk management processes designed and implemented by management are adequate and functioning as designed.
To do this, the Chairman of the Board and other non-officer directors met quarterly on average with management to discuss strategy and
the risks facing the Company. Senior management, each member being also a director, attends the Board meetings and is available to address
any questions or concerns raised by the Board on risk management and any other matters. The Chairman of the Board and members of the
Board work together to provide strong, independent oversight of the Company's management and affairs through its standing committees
and, when necessary, special meetings of directors. Since most of the directors live in the same area, informal meetings between directors
and officers also occur to discuss business risk and appropriate responses.

- Minimum Qualifications. The Compensation and Nominating Committee has adopted a set of criteria that it considers when it selects
individuals not currently on the Board of Directors to be nominated for election to the Board of Directors. A candidate must meet the
eligibility requirements set forth in the Company's Bylaws. A candidate must also meet any qualification requirements set forth
in any Board or committee governing documents. If the candidate is deemed eligible for election to the Board of Directors, the Compensation
and Nominating Committee will then evaluate the prospective nominee to determine if he or she possesses the following qualifications,
qualities or skills:

 contributions to the range
 of talent, skill and expertise appropriate for the Board.

 financial, regulatory and
 business experience, knowledge of the operations of public companies and ability to read and understand financial statements.

 familiarity with the Company's
 market.

 personal and professional
 integrity, honesty and reputation.

 the ability to represent
 the best interests of the shareholders of the Company and the best interests of the institution.

 the ability to devote sufficient
 time and energy to the performance of his or her duties; and

 independence under applicable
 Commission and listing definitions.

 The
Compensation and Nominating Committee will also consider any other factors it deems relevant. With respect to nominating an existing
director for re-election to the Board of Directors, the Compensation and Nominating Committee will consider and review an existing director's
Board and committee attendance and performance; length of Board service; experience, skills and contributions that the existing director
brings to the Board; and independence.

Nomination Process. The process that the Compensation and Nominating Committee follows when it identifies and evaluates individuals
to be nominated for election to the Board of Directors is as follows:

 For
purposes of identifying nominees for the Board of Directors, the Compensation and Nominating Committee relies on personal contacts of
the committee members and other members of the Board of Directors and will consider director candidates recommended by stockholders in
accordance with the policy and procedures set forth above. The Compensation and Nominating Committee has not used an independent search
firm to identify nominees.

 In
evaluating potential nominees, the Compensation and Nominating Committee determines whether the candidate is eligible and qualified for
service on the Board of Directors by evaluating the candidate under the selection criteria, which are discussed in more detail below.
If such individual fulfills these criteria, the Compensation and Nominating Committee will conduct a check of the individual's
background and interview the candidate to further assess the qualities of the prospective nominee and the contributions he or she would
make to the Board of Directors.

 Consideration
of Recommendation by Stockholders. It is the policy of the Compensation and Nomination Committee of the Board of Directors of the
Company to consider director candidates recommended by stockholders who appear to be qualified to serve on the Company's Board
of Directors. The Compensation and Nominating Committee may choose not to consider an unsolicited recommendation if no vacancy exists
on the Board of Directors and the Compensation and Nomination Committee does not perceive a need to increase the size of the Board of
Directors. To avoid the unnecessary use of the Compensation and Nominating Committee's resources, the Compensation and Nomination
Committee will consider only those director candidates recommended in accordance with the procedures set forth below.

 Stockholder
Proposal Procedures. To submit a recommendation of a director candidate to the Compensation and Nomination Committee, a stockholder
should submit the following information in writing, addressed to the Chairperson of the Compensation and Nomination Committee, care of
the Corporate Secretary, at the main office of the Company:

 1.

 The name of the person
 recommended as a director candidate.

 2.

 All information relating
 to such person that is required to be disclosed in solicitations of proxies for election of directors pursuant to Regulation 14A
 under the Securities Exchange Act of 1934.

 3.

 The written consent of
 the person being recommended as a director candidate to being named in the proxy statement as a nominee and to serving as a director
 if elected.

 4.

 The name and address of
 the stockholder making the recommendation, as they appear on the Company's books; provided, however, that if the stockholder
 is not a registered holder of the Company's common stock, the stockholder should submit his or her name and address along with
 a current written statement from the record holder of the shares that reflects ownership of the Company's common stock; and

 5.

 A statement disclosing
 whether such stockholder is acting with or on behalf of any other person and, if applicable, the identity such person.

 Shareholder nominations of director
candidates must satisfy the following notice requirements and deadlines: The nomination must be received by the Company not later than
(i) in the case of an annual meeting, one hundred twenty (120) days prior to the anniversary date of the Company's proxy statement relating
to the immediately preceding annual meeting or date of immediately preceding election of directors by written consent, and (ii) in the
case of a special meeting, the close of business on the tenth day following the date on which the Company first makes public disclosure
of the date of the special meeting. Each notice given by such shareholder shall set forth: (A) the name and address of the shareholder
who intends to make the nomination and of the person or persons to be nominated; (B) a representation that the shareholder is a holder
of record of stock of the Company entitled to vote at such meeting (or if the record date for such meeting is subsequent to the date
required for such shareholder notice, a representation that the shareholder is a holder of record at the time of such notice and intends
to be a holder of record on the record date for such meeting), setting forth the number and class of shares so held, and intends to appear
in person or by proxy at the meeting to nominate the person or persons specified in the notice; (C) a description of all arrangements
or understandings between the shareholder and each nominee and any other person or persons (naming such person or persons) pursuant to
which the nomination or nominations are to be made by the shareholder; (D) such other information regarding each nominee proposed by
such shareholder as would have been required to be included in a proxy statement filed pursuant to the proxy rules of the SEC had each
nominee been nominated, or intended to be nominated, by the Board and (E) the consent of each nominee to serve as a director of the Company
if so elected.

 MANAGEMENT
OF THE COMPANY

 CURRENT
OFFICERS. The current officers of the Company are:

 1.

 Stewart Wallach, age 73, was appointed as Chief Executive Officer and President
 of the Company on April 23, 2007. Mr. Wallach is also the senior executive officer and director of Capstone. Mr. Wallach
 resigned as Chief Executive Officer on December 4, 2024, and Alexander Jacobs was appointed as his successor.

 2.

 Dana Eschenburg Perez,
 age 47, was engaged as a consultant to perform the duties of Chief Financial Officer on January 1, 2023. She was appointed as Chief
 Financial Officer on March 27, 2023.

 FAMILY
RELATIONSHIP: There is no family relationship between members of Company management.

 Delinquent Section 16(a) Reports.

 Section 16(a) of the Securities Exchange
Act of 1934 requires the Company's directors and executive officers, and owners of more than ten percent of the Company's
Common Shares ("10% stockholders"), to file with the Commission initial reports of ownership and reports of changes in ownership
of Common Shares of the Company. Executive officers, directors and 10% stockholders are required by SEC regulations to furnish the Company
with copies of all forms they file pursuant to Section 16(a).

 With respect to late filings of Form
3 and Form 4 filings due in fiscal year ending December 31, 2024: (1) former director Jeffrey Postal's December 20, 2024 Form 4
filing was not timely filed due to unanticipated need to file for replacement filing codes; (2) former director George Wolf's December
20, 2024 Form 4 was not timely filed due to unanticipated need to file for filing codes; (3) director Stewart Wallach's December
20, 2024. Form 4 filing was not timely filed due to delay in locating filing codes; and (4) director and Chief Executive Officer Alexander
Jacobs' December 4, 2024, Form 3 was not timely filed due to problems in timely processing of the Form ID application for filing
codes. With respect to late Form 4 filings by Mr. Postal and Mr. Wallach, they had used the same commercial EDGAR filing service in the
past for processing their Section 16(a) filings and that service had ceased operations without notice to Mr. Postal and Mr. Wallach,
which necessitated locating filing codes for a new EDGAR commercial filing service. Former director George Wolf's Form 3 filing
was not timely filed for his initial appointment as a director by the Company.

 In light of these not timely filings,
the Company has requested that all officers and directors to read and sign an EDGAR SEC Filing Code Policy to acknowledge Section 16(a)
filing obligations and EDGAR filing process and filling requirements. Form 3 filings for new director appointments in 2025 were timely
filed.

 Item
11. Executive Compensation.

 Role
of Management

 The
Company believes that it is important to have our Chief Executive Officer's input in the design of compensation programs for his
direct reports. The Chief Executive Officer reviews his direct reports' compensation programs annually with the Committee, evaluating
the adequacy relative to the marketplace, inflation, internal equity, external competitiveness, business and motivational challenges
and opportunities facing the Company and its executives. In particular, he considers base salary a critical component of compensation
to remain competitive and retain his executives. All final decisions regarding compensation for the Chief Executive Officer's direct
reports listed in the Summary Compensation Table are made by the Compensation Committee. The Chief Executive Officer does not make recommendations
with regard to his own compensation.

 Role
of the Compensation Consultant

 While
we may consult industry sources on compensation for executives, we have not engaged a consultant to analyze our compensation levels.

Components

 For 2024, the principal components of compensation
for each named executive officer ("NEO(s)") were:

 base salary.

 annual incentive.

 long-term incentive compensation (restricted stock awards); and

 perquisites and other benefits.

 Due to the financial condition of the Company, cash
compensation has been deferred since 2024 - See "Salary Deferrals" below.

 EXECUTIVE
COMPENSATION

 Name
 & Principal Position

 Year

 Salary
 $

 Bonus
 $

 Stock
 Awards $

 Non-Equity
 Incentives $

 All
 Others $

 TOTAL

 2024

 $

 $

 —

 $

 —

 $

 —

 $

 —

 $

 Chief

 (8, 9)

 Stewart
 Wallach,

 2024

 $

 126,873

 $

 —

 $

 —

 $

 —

 $

 —

 $

 126,873

 Chief

 2023

 $

 $

 —

 $

 —

 $

 —

 $

 —

 $

 (1,3,4,5,6, 7, 8)

 2022

 $

 $

 —

 $

 —

 $

 —

 $

 —

 $

 James
 G. McClinton,

 2024

 $

 —

 $

 —

 $

 —

 $

 —

 $

 —

 $

 —

 Chief
 Financial

 2023

 $

 —

 $

 —

 $

 —

 $

 —

 $

 —

 $

 —

 & COO (2,3,4,5)

 2022

 $

 191,442

 $

 —

 $

 —

 $

 —

 $

 —

 $

 191,442

 Dana
 Eschenburg Perez

 2024

 $

 54,433

 —

 —

 —

 —

 $

 54,433

 Chief
 Financial Officer

 2023

 $

 49,700

 —

 —

 —

 —

 $

 49,700

 2022

 —

 —

 —

 —

 —

 —

 Footnotes:

 (1) On February 5, 2023, the Company
extended Stewart Wallach's Employment Agreement, whereby Mr. Wallach will be paid $301,521 per annum.

 (2) On February 5, 2020, the Company
entered into a new Employment Agreement with James McClinton, whereby Mr. McClinton would be paid $191,442 per annum.

 (3) The Company has no non-equity incentive
plans.

 (4) The Company has no established
bonus plan. Any bonus payments are made ad hoc upon recommendation of the Compensation Committee. Bonuses are only paid on a performance
basis.

 (5) On January 1, 2022, fifty percent of
both Mr. Wallach and Mr. McClinton's salary was deferred for payment until further notice.

 (6) On October 1, 2022, one hundred percent
of Mr. Wallach's salary was deferred for payment until further notice.

 (7) On July 1, 2024, salary deferral for
Stewart Wallach ceased, per the Board of Directors resolution.

 (8) On December 4, 2024, Alexander Jacobs
was named the Company's CEO and Stewart Wallach resigned, with Mr. Wallach remaining as Chairman of the Board.

 (9) Mr. Jacobs was agreeable to a base salary
of one dollar per year, due to the financial constraints of the Company.

 Key Developments impacting Executive Compensation

 The financial condition of the Company over
the last few years has caused the Company to defer cash compensation of senior executives. The Company did not replace the retired
chief financial officer with a full-time chief financial officer. There were no grants of incentive compensation to senior executives.
 See "Salary Deferrals" below.

 Compensation Objectives

 The overall objectives of the Company's
compensation program for NEO's are as follows:

 Motivate executives to achieve and maintain a high level of performance and foster company performance that attains sustained profitability

 align the interests of our executives with the interests of our shareholders;

 provide for market-competitive levels of compensation to the extent that can be supported by our financial condition and performance; and

 Retain key executives and employees of outstanding ability.

 CEO
Pay Ratio

 As required by Section 953(b) of the Dodd-Frank
Wall Street Reform and Consumer Protection Act, and Item 402(u) of Regulation S-K, we are providing the following information regarding
the ratio of the annual total compensation of the Company's median employee to the annual total compensation of Stewart Wallach,
the Company's Chief Executive Officer and President. We consider the pay ratio specified below to be a reasonable estimate, calculated
in a manner that is intended to be consistent with the requirements of Item 402(u) of Regulation S-K. For the fiscal year ended
December 31, 2024:

 The
 median of the annual total compensation of all employees of the Company, except the Chief Executive Officer and President, was $54,432;

 The annual total compensation of the Company's Chief Executive Officer and President was $301,521;

 On
 July 1, 2024, salary deferral for Stewart Wallach ceased, per the Board of Directors resolution.

 The ratio of the median of the annual total compensation of all Company employees, other than the Company's President and former Chief Executive Officer, to the annual total compensation of the Company's President and Chief Executive Officer was approximately 2 to 1.

 Pay versus Performance Table

 Name

 Year

 Summary Compensation Table Total for Principle Executive Officer ("PEO")

 Compensation Actually Paid to PEO

 Average Compensation actually paid to Non-PEO named executive officers

 Total Shareholder Return

 Stewart Wallach, former Chief Executive Officer

 2024

 $
 126,873

 $
 126,873

 $
 54,432

 -1
 %

 $
 (962,384
)

 Alexander Jacobs, Chief Executive Officer

 2024

 $

 $

 $
 54,432

 -1
 %

 $
 (962,384
)

 Stewart Wallach, Chief Executive Officer

 2023

 $

 $

 $
 191,442

 -3
 %

 $
 (1,696,439
)

 The Company chose December 31, 2024, as the
date for determining the employee population used to identify the median employee. The Company used base salaries to identify the median
employee because the Company does not widely distribute annual equity awards to employees and because this measure approximately
reflects the total annual compensation of employees. The Company calculated the median employee's and the Chief Executive Officer's
annual total compensation consistent with the disclosure requirements for the Summary Compensation Table. For purposes of this calculation,
the median employee's annual total compensation consisted of wages, premium pay (including overtime and holiday pay), paid time
off, non-equity incentive plan compensation, change in pension value and retirement plan contributions.

 Compensation Peer Review

 To better review the compensation practices
of similar companies ("peer group companies"), the Company has from time to time in the past reviewed the median compensation
levels of companies of peer group companies as a reference point for determining the competitiveness of the Company's compensation
of its principal executive officers. No peer group companies review was conducted in 2024 due to the financial condition of the
Company and the deferral of cash compensation of the principal executive officers. On July 1, 2024, salary deferral for Stewart Wallach
ceased, per the Board of Directors resolution.

Compensation Best Practices the Company Follows

 What
 we will provide

 What
 we do not provide

 Provide
 limited executive perquisites

 No
 grants of Stock Appreciation Rights

 Align
 total executive compensation with shareholders' interests

 No
 repricing of granted stock options

 Bonuses
 based on performance

 No
 agreements guaranteeing employment

Philosophy

 The Company's guiding philosophy in setting
executive compensation is that the compensation of executive officers should reflect the scope of their job responsibilities,
and the level of individual and corporate performance achieved. With the declining financial condition of the Company in 2024 and into
the first fiscal quarter of 2025, the compensation of senior executives ceased, per the Board of Directors resolution, as of July 1,
2024.

 EMPLOYMENT AGREEMENTS

 Alexander Jacobs, Chief Executive Officer

 Due to the financial condition of the Company,
Mr. Jacobs agreed to a base salary of $1 per year.

 Stewart Wallach, former Chief Executive

 On February 5, 2020, the Company entered into
an Employment Agreement with Stewart Wallach, whereby Mr. Wallach would be paid $301,521 per annum. The term of this new agreement began
February 5, 2020, and ends February 5, 2023. The parties may extend the employment period of this agreement by mutual consent with approval
of the Company's Board of Directors, but the extension may not exceed two years in length.

 On February 5, 2023, was extended through February
5, 2025.

 On July 1, 2024, salary deferral for Stewart
Wallach ceased, per the Board of Directors resolution.

 The February 5, 2020, Employment Agreement with Mr.
Wallach was filed by the Company as an exhibit to Report Form 10-K for fiscal year ended December 31, 2019 - (as filed by the Company
with the Commission on March 30, 2020).

 Dana Eschenburg Perez Chief Financial Officer

 The February 5, 2020, Consulting Agreement
with Ms. Perez, was filed by the Company as an exhibit to Report Form 8-K on March 28, 2023. The Consulting Agreement was
extended in 2025 and filed by the Company as an exhibit to Report Form 8-K on January 23, 2025.

 Salary Deferrals

 Effective September 1, 2020, through
December 31, 2020, payments equivalent to fifty percent of Mr. Wallach's salary or approximately $48,707 was deferred until further
notice.

 Effective January 1, 2021, through March
31, 2021, payments equivalent to fifty percent of Mr. Wallach's salary or approximately $40,589 was deferred until further notice.

 On January 1, 2022, fifty percent of Mr. Wallach's
salary was deferred for payment until further notice.

 On October 1, 2022, one hundred percent of Mr.
Wallach's salary was deferred for payment until further notice.

 Total salary deferral for Mr. Wallach amounted
to $608,840 through December 31, 2024.

 On December 18, 2024, the Company's
Board of Directors approved the cancellation of related party notes payable, inclusive of the deferred salary noted above, 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"). Mr. Wallach received a total of 284,978 shares of B-1 Stock for the cancellation of his working capital
advances to the Company and his deferred salary through June 30, 2024.

 Key Provisions in Employment Agreement:

 The following provisions were contained in Mr.
Wallach's employment agreement: If the officer's employment is terminated by death or disability or without cause, the Company
is obligated to pay to the officer's estate or the officer, an amount equal to accrued and unpaid base salary as well as all accrued
but unused vacation days through the date of termination. The Company will also pay sum payments equal to (a) the sum of twelve (12) months
base salary at the rate the Executive was earning as of the date of termination and (b) the sum of "merit" based bonuses earned
by the Executive during the prior calendar year of his termination. Any payments owed by the Company shall be paid from a normal payroll
account on a bi-weekly basis in accordance with the normal payroll policies of the Company. The amount owed by the Company to the Executive,
from the effective Termination date, will be paid out bi-weekly over the course of the year but at no time will be no more than twenty
(26) installments. The Company will also continue to pay the Executive's health and dental insurance benefits for 6 months starting
at the Executives date of termination. If the Executive had family health coverage at the time of termination, the additional family premium
obligation would remain theirs and will be reduced against the Executive's severance package. The employment agreements have an
anti-competition provision for 18 months after the end of employment.

 The above summary of the employment agreements is
qualified by reference to the actual employment agreements, which were filed as exhibits to the Form 10-K by the Company for fiscal year
ended December 31, 2019 (as filed by the Company with the Commission on March 30, 2020).

 This amended agreement supersedes
any existing employment agreement and are the only employment agreements with Company directors or officers.

 On December 4, 2024, Stewart Wallach resigned,
and Alexander Jacobs became the Chief Executive Officer of the Company. Mr. Jacobs does not have an employment agreement as of the date
of the filing of this Form 10-K.

 SUMMARY TABLE OF OPTION GRANTS TO OFFICERS OF COMPANY (1)

 As of December 31, 2024

 Name

 No. of Shares Underlying

 % of Total Options Granted Employees

in 2024

 Expiration Date

 Restricted Stock Grants

 No. Shares underlying Options Granted

in 2024

 —

 —

 —

 —

 —

 —

 —

 —

 —

 —

 Dana Eschenburg Perez

 —

 —

 —

 —

 —

 OTHER COMPENSATION (1)

 NAME/POSITION

 YEAR

 SEVERANCE
 PACKAGE

 CAR
 ALLOWANCE

 CO.
 PAID SERVICES

 TRAVEL
 LODGING

 TOTAL
 ($)

 Stewart
 Wallach

 2024

 —

 —

 —

 —

 —

 Former
 Chief Executive

 2023

 —

 —

 —

 —

 —

 —

 —

 —

 —

 —

 2024

 —

 —

 —

 —

 —

 Chief

 2023

 —

 —

 —

 —

 —

 Dana
 Eschenburg Perez

 2024

 —

 —

 —

 —

 —

 Chief
 Financial Officer

 2023

 —

 —

 —

 —

 —

 Footnotes:

 (1)

 There were no equity awards, no 401(k) matching contributions by the Company and no medical supplemental payments by the Company in any of the years specified.

 OUTSTANDING EQUITY AWARDS FOR YEAR END 2024
TABLE

 OPTIONS (1)

 NAME

 Securities Underlying Unexercised Options

 Option Exercise

Price

 Option

Expiration Date

 —

 —

 —

 —

 —

 —

 Dana Eschenburg Perez

 —

 —

 —

 Footnotes:

 (1)

 The Company does not have
 any stock awards for the years specified for the above-named senior officers.

 2024 OPTION EXERCISES AND VESTED OPTIONS

 Name

 Number of Shares

Acquired on Exercise

 Value Realized on

Exercise

 —

 —

 —

 —

 Dana Eschenburg Perez

 —

 —

 Indemnification.

 The Company maintains directors and officer's
liability insurance or "D&O insurance" coverage to reduce its exposure to such obligations, and payments made under these
agreements historically have not been material. Further, the Company's articles of incorporation and bylaws provide for indemnification
of directors and officers.

 Item
12. Security of Certain Beneficial Owners and Management and Related Stockholder Matters.

 VOTING
RIGHTS AND SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT:

 The sole class of voting Common Stock of the
Company as of March 17, 2025, that are issued and outstanding is the Common Stock, $0.0001 par value per share, or "Common
Stock". The table below sets forth, as of March 17, 2025, ("Record Date"), certain information $0.0001 par value
per share, or "Common Stock" information with respect to the Common Stock beneficially owned by (i) each Director,
nominee and executive officer of the Company; (ii) each person who owns beneficially more than 5% of the Common Stock; and (iii) all
Directors, nominees and executive officers as a group. There were 48,826,864 shares of Common Stock outstanding as of March 17,
2025

 NAME, ADDRESS & TITLE

 STOCK OWNERSHIP

 % OF STOCK OWNERSHIP

 SHARES - COMMON STOCK ISSUABLE UPON CONVERSION

 STOCK OWNERSHIP AFTER CONVERSION -ALL OPTIONS, WARRANTS & THOSE EXERCISEABLE WITHIN NEXT 60 DAYS

 % OF STOCK OWNED AFTER CONVERSION – OPTIONS, WARRANTS INCLUDES EXERCISEABLE WITHIN THE 60 DAYS

 OPTIONS & WARRANTS VESTED

 OPTIONS & WARRANTS EXPIRED

 OPTIONS, WARRANTS NOT VESTED

 Stewart Wallach, CEO, 144-V 10 Fairway Drive, Suite 100, Deerfield Beach, FL 33441

 9,831,745

 20.1

 %

 19,496,583

 29,328,328

 36.1

 %

 —

 1,515,556

 —

 Dana Eschenburg Perez, CFO, 144-V 10 Fairway Drive, Suite 100, Deerfield Beach, FL 33441

 —

 —

 %

 —

 —

 —

 %

 —

 —

 —

 Jeff Postal, Director, 144-V 10 Fairway Drive, Suite 100, Deerfield Beach, FL 33441

 9,034,120

 18.5

 %

 12,610,339

 21,748,603

 26.8

 %

 104,144

 800,000

 —

 Jeff Guzy, Director, 3130 19th Street North, Arlington, VA 22201

 52,800

 0.01

 %

 —

 156,944

 0.2

 %

 104,144

 800,000

 —

 ALL OFFICERS & DIRECTORS AS A GROUP

 18,918,665

 %

 32,106,922

 51,233,875

 63.1

 %

 3,115,556

 —

 Notes
to Table.

 (1)

 Unless otherwise indicated, the persons named in the table have sole voting and investment power with respect to all shares of common stock shown as beneficially owned by them.

 (2)

 Mr. Wallach's ownership
 of common stock in the table does not include 19,496,583 shares issuable upon conversion of Series B-1 Convertible Preferred
 Stock.

 (3)

 Mr. Postal's ownership
 of common stock in the table does not include 12,610,339 shares issuable upon conversion of Series B-1 Convertible Preferred
 Stock.

 I tem
13. Certain Relationships and Related Transactions, and Director Independence.

 Controlling Stockholders. As of the date
of the filing of this Form 10-K report, no stockholder owns or controls more than 50% of the voting power of the Company. Chairman of
the Board Stewart Wallach and former Director Jeffrey Postal own in the aggregate approximately 38.6% of the issued Common Stock.

 Mr. Postal and Mr. Wallach own shares of Series
B-1 Preferred Stock. If Stewart Wallach and Group Nexus, LLC, which is controlled by Mr. Wallach, convert all of the shares of Series
B-1 Preferred Stock received under their cancellation agreements of debts owed to them, and after the expiration of a lock-up restriction
imposed on the Series B-1 Preferred Stock, and assuming no sales or transfers of shares of Common Stock or shares of Series B-1 Preferred
Stock, then Mr. Wallach would control a total of 37,802,926 shares of Common Stock.

 If Jeffrey Postal converts all of the shares of
Series B-1 Preferred Stock received under his cancellation agreement after the lock-up period imposed on the Series B-1 Preferred Stock,
and assuming no sales or transfers of shares of Common Stock, then Mr. Postal would own or control a total of approximately 21,144,479
shares of Common Stock.

 The aggregate ownership of Common Stock, including
shares issued upon conversion of the Series B-1 Preferred Stock, would result in Mr. Wallach with approximately 36% of the issued shares
of Common Stock and Mr. Postal with approximately 26% of the issued shares of Common Stock.

 The Company is not aware of any agreement or understanding
between Mr. Wallach and Mr. Postal to act as a "group" (as defined in Section 13(d)(3) of the Exchange Act) or to vote the
same on any proposed corporate actions, the issuance of shares of Series B-1 Preferred Stock under the cancellations agreements and subsequent
conversion of those shares in to shares of Company Common Stock by Jeffrey Postal, Stewart Wallach and Group Nexus, LLC, could possibly
provide them, if acting jointly or in concert, with sufficient voting control to approve or disapprove corporate actions requiring a
vote of Company Common Stock shareholders. The voting power of Mr. Wallach and affiliates and Mr. Postal would depend on the number of
shares of Company Common Stock issued upon conversion of shares of Series B-1 Preferred Stock by other parties under debt cancellation
agreements and issuance of additional shares of Company Common Stock by the Company in transactions other than a conversion of shares
of Series B-1 Preferred Stock under the cancellation agreements, which additional issuances are not readily ascertainable as of the date
of the filing of this Form 10-K.

 Director Independence. Currently,
only Jeffrey Guzy and Warner Session qualify as an "independent director" under the listing standards of most stock
exchanges or quotation systems. No other directors qualify as an "independent director" under those rules because
they are officers of the Company or have business relationships with the Company. The CAPC Board adopted a written policy for approval
of transactions between the Company and its directors, director nominees, executive officers, greater than 5% beneficial owners and their
respective immediate family members. The policy governs transactions in which the value exceeds or is expected to exceed $120,000 in
a single calendar year.

 A
"related-person transaction" will be a transaction, arrangement or relationship (or any series of similar transactions, arrangements
or relationships) in which we and any "related person" are participants involving an amount that exceeds $120,000. Transactions
involving compensation for services provided to us as an employee, director, consultant or similar capacity by a related person will
not be covered by this policy. A related person will be any executive officer, director or a holder of more than five percent of our
common stock, including any of their immediate family members and any entity owned or controlled by such persons.

 The
policy provides that the Audit Committee reviews transactions subject to the policy and determines whether to approve or ratify those
transactions. The Audit Committee considers, among other factors it deems appropriate, the following factors:

 Benefits derived by the
 related person from the transaction versus the benefits derived by the Company.

 Total value of the transaction.

 Whether the transaction
 was undertaken in the ordinary course of business of the Company; and

 Were the terms and conditions
 of the transaction usual and customary and commercially reasonable.

 The
Audit Committee does not have any policies on expedited or pre-approval of certain routine related person transactions.

 From
time to time, the Company borrows working capital on a short-term basis, usually with maturity dates of less than a year, from Company
directors and officers. The Company believes that these working capital loans are commercially reasonable, especially in light of the
inability of the Company to obtain such short-term financing from traditional funding sources.

 During 2023 and 2024, the
Company negotiated working capital funding agreements with Directors S. Wallach and J. Postal for $632,500 and $50,000 of proceeds to
provide funding for daily operations, respectively. The agreements were cancelled in exchange for shares of Series B-1 Convertible Preferred
Stock of the Company, calculated at a price of $0.07 per share. 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 stockholders'
equity as of December 31, 2024.

 Process
for Identifying Related Person Transactions.

 To
identify related-person transactions in advance, we are expected to rely on information supplied by our executive officers, directors
and certain significant stockholders. In considering related-person transactions, our board of directors will take into account the relevant
available facts and circumstances including, but not limited to:

 the risks, costs and benefits
 to us.

 the impact on a director's
 independence in the event the related person is a director, immediate family member of a director or an entity with which a director
 is affiliated.

 the terms of the transaction.

 the availability of other
 sources for comparable services or products; and

 the terms available to
 or from, as the case may be, unrelated third parties or to or from our employees generally.

 Promoters
and Certain Control Persons

 We
did not have any promoters at any time during the past five fiscal years.

Independence

 Our
Board of Directors has determined that our director, Mr. Jeffery Guzy, is an independent director, as the term "independent"
is defined by the rules of the Nasdaq Stock Market. The Company was not successful in recruiting additional, qualified and interested
independent directors in fiscal year 2024.

 Item
14. Principal Accountant Fees & Services

 The following is a summary of the fees billed
to date by Assurance Dimensions CPA, for professional services rendered for the years ended December 31, 2024, and 2023:

 2024

 2023

 Audit
 Fees

 $
 47,378

 $
 45,000

 Other
 Fees

 —

 —

 Total

 $
 47,378

 $
 45,000

 The following is a summary of the fees billed
to date by D. Brooks & Associates CPA's, P.A., for professional services rendered for the year ended December 31, 2023:

 2024

 2023

 Audit Fees

 $
 —

 $
 7,000

 Tax Fees

 —

 —

 Total

 $
 —

 $
 7,000

 Audit
Fees. Consists of fees billed for professional services rendered for the audits of our consolidated financial statements, reviews
of our interim consolidated financial statements included in quarterly reports, services performed in connection with filings with the
Commission and related comfort letters and other services that are normally provided by the Independent Registered firm in connection
with statutory and regulatory filings or engagements.

 Tax
Fees. Consists of fees billed for professional services for tax compliance, tax advice and tax planning. These services include assistance
regarding federal, state and local tax compliance and consultation in connection with various transactions and acquisitions.

 AUDIT
COMMITTEE PRE-APPROVAL OF AUDIT AND PERMISSIBLE NON-AUDIT SERVICES OF INDEPENDENT AUDITORS

 The
Audit Committee is to pre-approve all audit and non-audit services provided by the independent auditors. These services may include audit
services, audit-related services, tax services and other services as allowed by law or regulation. Pre-approval is generally provided
for up to one year and any pre-approval is detailed as to the particular service or category of services and is generally subject to
a specifically approved amount. The independent auditors and management are required to periodically report to the Audit Committee regarding
the extent of services provided by the independent auditors in accordance with this pre-approval and the fees incurred to date. The Audit
Committee may also pre-approve particular services on a case-by-case basis.

 The
Audit Committee pre-approved 100% of the Company's 2024 audit fees, audit-related fees, tax fees, and all other fees to
the extent the services occurred after the effective date of the SEC's final pre-approval rules.

 Part
IV

 Item
15. Exhibits, and Financial Statement Schedules Reports

 (a)
The following documents are filed as part of this Report.

 1.
FINANCIAL STATEMENTS

 Report of Independent
 Registered Public Accountants for the Years Ended December 31, 2024, and 2023 (PCAOB Firm ID: 5036)

 Consolidated Balance Sheets as of
 December 31, 2024, and 2023

 Consolidated Statements of Operations
 for the Years Ended December 31, 2024, and 2023

 Consolidated Statements of Stockholders'
 Equity (Deficit) for the Years Ended December 31, 2024, and 2023

 Consolidated Statements of Cash Flows
 for the Years Ended December 31, 2024, and 2023

 Notes to Consolidated Financial Statements

 2.
FINANCIAL STATEMENT SCHEDULES

 All
schedules are omitted because they are not applicable, or the required information is shown in the financial statements or notes thereto.

 3.
EXHIBITS

 Exhibits
Required by Item 601 of Regulation S-K. Pursuant to the Instructions to Exhibits, certain instruments defining the rights of holders
of long-term debt securities of the Company and its consolidated subsidiaries are not filed because the total amount of securities authorized
under any such instrument does not exceed 10 percent of the total assets of the Company and its subsidiaries on a consolidated basis.
A copy of such instrument will be furnished to the Securities and Exchange Commission upon request.

 3.1

 Articles of Incorporation of CHDT Corp. Incorporated by reference to Annex G to the Special Meeting Proxy Statement, Dated April 15, 2004, filed by CHDT Corporation with the Commission on April 20, 2004.

 3.1.1

 Amended and Restated Articles of Incorporation of Capstone Companies, Inc. Incorporated by reference to Exhibit 3.1 to Form 8-K filed by Capstone Companies, Inc. with the Commission on July 14, 2009.

 3.1.1.1

 Amendment to Amended and Restated Articles of Incorporation of Capstone Companies, Inc., as filed with Florida Secretary of State on June 8, 2016. Incorporated by reference to Exhibit 3.1 to the Form 8-K filed by Capstone Companies, Inc. with the Commission on June 8, 2016.

 3.2

 By-laws of Capstone Companies, Inc. Incorporated by reference to Annex H the Special Meeting Proxy Statement, Dated April 15, 2004, filed by CHDT Corporation with the Commission on April 20, 2004.

 4.6

 Description
 of Capstone Companies, Inc. Securities as of December 31, 2021

 10.01

 Employment
 Agreement by Capstone Companies, Inc. and Stewart Wallach, dated February 5, 2020, filed by Capstone Companies, Inc with the
 Commission on March 30, 2020.

 10.02

 Consulting
 Agreement by Capstone Companies, Inc. and Eschenburg Perez CPA, LLC, dated January 20, 2025.

 10.08

 Financial Services Agreement dated March 1, 2017, by Capstone Companies, Inc. and Wilmington Capital Securities, LLC. Incorporated by reference to Exhibit 10.18 to Form 10-K filed by Capstone Companies, Inc with the Commission on March 28, 2018.

 Code of Ethics Policy. Exhibit 14 of the Capstone Companies, Inc. Form 8-K, as filed with the Commission on March 22, 2018.

 Insider Trading
 Policy, dated February 25, 2025

 21.1

 Subsidiaries of Capstone Companies, Inc. ^

 31.1

 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Stewart Wallach, Chief Executive Officer^

 31.2

 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Gerry McClinton, Chief Financial Officer and Chief Operating Officer^

 32.1

 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002, by Stewart Wallach, Chief Executive Officer. ^

 32.2

 Certification Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 by Gerry McClinton, Chief Financial Officer & Chief Operating Officer^

 101.INS

 101.SCH

 101.CAL

 101.DEF

 101.LAB

 101.PRE

 Note: CHDT Corp. is a prior name of Capstone Companies, Inc.

 ^ Filed Herein.

 Item
16. Form 10-K Summary. Not Applicable.

 In accordance with Section 13 or 15(d) of the Securities Exchange
Act of 1934, Capstone Companies, Inc. has caused this report to be signed on its behalf by the undersigned, thereunto duly authorized,
in Broward County, Florida on this 17th day of March 2025.

 CAPSTONE COMPANIES, INC.

 Dated: March 17, 2025

 By: /s/ Alex Jacobs

 Alex Jacobs

 Chief Executive Officer and Director

 In accordance with the Exchange Act, this report has
been signed below by the following persons on behalf of Capstone Companies, Inc. and in the capacities and on the dates indicated.

 /s/ Stewart Wallach

 Chairman

 March 17, 2025

 /s/ Jeffrey Guzy

 Jeffrey Guzy

 March 17, 2025

 /s/ Warren Session

 Warren Session

 March 17, 2025

 /s/ Brian Rosen

 Brian Rosen

 March 17, 2025

TO FINANCIAL STATEMENTS

 Contents

 Page
 No.

 Reports
 of Independent Registered Public Accounting Firm (PCAOB ID: 5036)

 Consolidated
 Balance Sheets as of December 31, 2024, and 2023

 Consolidated
 Statements of Operations for the Years Ended December 31, 2024, and 2023

 Consolidated
 Statements of Stockholders' Equity (Deficit) for the Years Ended December 31, 2024, and 2023

 Consolidated
 Statements of Cash Flows for the Years Ended December 31, 2024, and 2023

 Notes
 to the Consolidated Financial Statements

 REPORT
OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

 To
the Board of Directors and

Stockholders of Capstone Companies, Inc.

 Opinion
on the Consolidated Financial Statements

 We
have audited the accompanying consolidated balance sheets of Capstone Companies, Inc. (the Company) as of December 31, 2024 and 2023,
and the related consolidated statements of operations, stockholders' equity (deficit), and cash flows for each of the years in
the two-year period ended December 31, 2024 and the related notes (collectively referred to as the consolidated financial statements).
In our opinion, the consolidated financial statements present fairly, in all material respects, the financial position of the Company
as of December 31, 2024 and 2023, and the results of its operations and its cash flows for each of the years in the two-year period ended
December 31, 2024, in conformity with accounting principles generally accepted in the United States of America.

 Explanatory
Paragraph – Going Concern

 The
accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed
in Note 1 to the consolidated financial statements, the Company has incurred recurring operating losses, has incurred negative cash flows
from operations and has an accumulated deficit. These and other factors raise substantial doubt about the Company's ability to
continue as a going concern. Management's plan regarding these matters is also described in Note 1 to the consolidated financial
statements. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 Basis
for Opinion

 These
consolidated financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion
on the Company's consolidated financial statements based on our audits. We are a public accounting firm registered with the Public
Company Accounting Oversight Board (United States) (PCAOB) and are required to be independent with respect to the Company in accordance
with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.

 We
conducted our audits in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the consolidated financial statements are free of material misstatement, whether due to error or fraud.
The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part
of our audits, we are required to obtain an understanding of internal control over financial reporting, but not for the purpose of expressing
an opinion on the effectiveness of the Company's internal control over financial reporting. Accordingly, we express no such opinion.

 Our
audits included performing procedures to assess the risks of material misstatement of the consolidated financial statements, whether
due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence
regarding the amounts and disclosures in the consolidated financial statements. Our audits also included evaluating the accounting principles
used and significant estimates made by management, as well as evaluating the overall presentation of the consolidated financial statements.
We believe that our audits provide a reasonable basis for our opinion.

 Critical
Audit Matters

 The
critical audit matters communicated below are matters arising from the current period audit of the consolidated financial statements
that were communicated or required to be communicated to the audit committee and that: (1) relate to accounts or disclosures that are
material to the consolidated financial statements and (2) involved our especially challenging, subjective, or complex judgments. The
communication of critical audit matters does not alter in any way our opinion on the consolidated financial statements, taken as a whole,
and we are not, by communicating the critical audit matters below, providing separate opinions on the critical audit matters or on the
accounts or disclosures to which they relate.

 ASSURANCE DIMENSIONS, LLC

 also d/b/a McNAMARA and ASSOCIATES, LLC

 TAMPA BAY: 4920 W Cypress Street, Suite 102
| Tampa, FL 33607 | Office: 813.443.5048 | Fax: 813.443.5053

 JACKSONVILLE: 7800 Belfort Parkway, Suite
290 | Jacksonville, FL 32256 | Office: 888.410.2323 | Fax: 813.443.5053

 ORLANDO: 1800 Pembrook Drive, Suite 300 |
Orlando, FL 32810 | Office: 888.410.2323 | Fax: 813.443.5053

 SOUTH FLORIDA: 3111 N. University Drive, Suite
621 | Coral Springs, FL 33065 | Office: 754.800.3400 | Fax: 813.443.5053

 www.assurancedimensions.com

 "Assurance Dimensions" is
the brand name under which Assurance Dimensions, LLC including its subsidiary McNamara and Associates, LLC (referred together as
"AD LLC") and AbitOs Advisors, LLC ("AbitOs Advisors"),
provide professional services. AD LLC and AbitOs Advisors practice
as an alternative practice structure in accordance with the AICPA Code of Professional Conduct and applicable laws, regulations, and professional
standards. AD LLC is a licensed independent CPA firm that provides attest services to its
clients, and AbitOs Advisors provide tax and business consulting services to their clients.
 AbitOs Advisors, and its subsidiary entities are not licensed CPA firms.

 F- 1

 Description
of the Matter

 The
Company is required to test the carrying amount of goodwill at least annually, or more frequently upon the occurrence of certain events.
The Company is also required to assess if certain events occur or circumstances change that may be indicators of impairment. We identified
this area as a critical audit matter because the annual goodwill impairment test requires significant judgment regarding the evaluation
of qualitative factors. Additionally, these assessments also require appropriate determination of reporting units.

 How
we addressed the matter in our audit

 Our
audit procedures to address the risk of material misstatement relating to goodwill included, among others, evaluating the appropriateness
of the reporting unit level. Our
audit procedures focused on evaluating the appropriateness of management's assumptions and methodologies used in assessing goodwill impairment
and have addressed the matter by evaluating management's quantitative analysis. We also tested
the Company's calculation for mathematical accuracy; testing the estimated fair value of the reporting unit; testing the
carrying value of the reporting unit; validating the appropriateness and reliability of inputs
and amounts used; and evaluating the adequacy of the financial statement disclosures relating to goodwill, including key assumptions
and judgments. As a result of our testing we did not take exception to management's evaluation, which resulted in an impairment
expense of goodwill for the year ended December 31, 2024.

 Based
on our audit procedures and evaluations, we concluded that the assumptions and methodologies applied by management in assessing goodwill
impairment were reasonable and in accordance with generally accepted accounting principles.

 Assurance
Dimensions, LLC.

 We
 have served as the Company's auditor since 2023.

 Coral
 Springs, Florida

 March
 17, 2025

 ASSURANCE DIMENSIONS, LLC

 also d/b/a McNAMARA and ASSOCIATES, LLC

 TAMPA BAY: 4920 W Cypress Street, Suite 102
| Tampa, FL 33607 | Office: 813.443.5048 | Fax: 813.443.5053

 JACKSONVILLE: 7800 Belfort Parkway, Suite
290 | Jacksonville, FL 32256 | Office: 888.410.2323 | Fax: 813.443.5053

 ORLANDO: 1800 Pembrook Drive, Suite 300 |
Orlando, FL 32810 | Office: 888.410.2323 | Fax: 813.443.5053

 SOUTH FLORIDA: 3111 N. University Drive, Suite
621 | Coral Springs, FL 33065 | Office: 754.800.3400 | Fax: 813.443.5053

 www.assurancedimensions.com

 "Assurance Dimensions" is
the brand name under which Assurance Dimensions, LLC including its subsidiary McNamara and Associates, LLC (referred together as
"AD LLC") and AbitOs Advisors, LLC ("AbitOs Advisors"),
provide professional services. AD LLC and AbitOs Advisors practice
as an alternative practice structure in accordance with the AICPA Code of Professional Conduct and applicable laws, regulations, and professional
standards. AD LLC is a licensed independent CPA firm that provides attest services to its
clients, and AbitOs Advisors provide tax and business consulting services to their clients.
 AbitOs Advisors, and its subsidiary entities are not licensed CPA firms.

 F- 2

 CAPSTONE COMPANIES, INC.
 AND SUBSIDIARIES

 CONSOLIDATED BALANCE
 SHEETS

 2024

 2023

 Assets:

 Current Assets:

 Cash

 $
 15,850

 $
 36,466

 Prepaid expenses

 20,455

 22,120

 Due from related party

 —

 9,570

 Total Current Assets

 36,305

 68,156

 Property and equipment, net

 28,647

 42,970

 Goodwill

 773,165

 1,312,482

 Total Assets

 $
 838,117

 $
 1,423,608

 Liabilities and Stockholders' Deficit:

 Current Liabilities:

 Accounts payable and accrued liabilities

 $

 $
 804,623

 Notes payable related parties and accrued interest-current

 180,760

 1,946,315

 Notes payable unrelated party and accrued interest-current

 —

 594,161

 Total Current Liabilities

 181,060

 3,345,099

 Long-Term Liabilities:

 Deferred tax liabilities -long-term

 195,958

 320,329

 Total Long-Term Liabilities

 195,958

 320,329

 Total Liabilities

 377,018

 3,665,428

 Commitments and Contingencies: ( Note 4)

 —

 Stockholders' Deficit:

 Preferred Stock, Series B-1, par value $.0001 per share, authorized 5,000,000 shares, issued and outstanding 765,075 and 15,000 shares at December 31, 2024, and December 31, 2023 (Liquidation Preference $ 767,075 and $ 15,000)

 Preferred Stock, Series C, par value $ 1.00 per share, authorized 67 shares, issued and outstanding - 0 - shares

 —

 —

 Common Stock, par value $.0001 per share, authorized 295,000,000 shares, issued and outstanding 48,826,864 shares at December 31, 2024 and December 31, 2023.

 4,884

 4,884

 Additional paid-in capital

 12,215,738

 8,550,510

 Accumulated deficit

 ( 11,759,600
)

 ( 10,797,216
)

 Total Stockholders' Equity (Deficit)

 461,099

 ( 2,241,820
)

 Total Liabilities and Stockholders' Equity

 $
 838,117

 $
 1,423,608

 The
accompanying notes are an integral part of these consolidated financial statements.

 F- 3

 CONSOLIDATED
 STATEMENTS OF OPERATIONS

 For the Years Ended

 2024

 2023

 Revenues, net

 $

 $

 Increase in inventory reserve and write offs

 —

 ( 133,775
)

 Cost of sales

 ( 38,019
)

 ( 324,041
)

 Gross Income (Loss)

 105,250

 ( 265,640
)

 Operating Expenses:

 Sales and marketing

 17,313

 75,890

 139,078

 469,599

 Professional fees

 274,559

 426,157

 Product development

 6,233

 101,409

 Other general and administrative

 124,565

 296,159

 Goodwill impairment

 539,317

 —

 Total Operating Expenses

 1,101,065

 1,369,214

 Operating Loss

 ( 995,815
)

 ( 1,634,854
)

 Other Income (Expense):

 Other income, net

 77,106

 Interest expense, net

 ( 90,943
)

 ( 103,741
)

 Total Other Income (Expense), net

 ( 90,939
)

 ( 26,635

 Loss Before Income Taxes

 ( 1,086,754
)

 ( 1,661,489
)

 Income Tax Expense (Benefit)

 ( 124,370
)

 $
 ( 962,384
)

 $
 ( 1,696,439
)

 Net Loss per Common Share

 Basic and Diluted

 $
 ( 0.02
)

 $
 ( 0.03
)

 Weighted Average Shares Outstanding

 Basic and Diluted

 The
accompanying notes are an integral part of these consolidated financial statements.

 F- 4

 CONSOLIDATED STATEMENTS
 OF STOCKHOLDERS' EQUITY (DEFICIT)

 YEARS ENDED DECEMBER
 31, 2024, AND 2023

 Preferred Stock

 Preferred Stock

 Additional

 Series B

 Series C

 Common Stock

 Paid-In

 Accumulated

 Total

 Shares

 Par Value

 Shares

 Par Value

 Shares

 Par Value

 Capital

 Deficit

 Equity

 Balance at December 31, 2022

 15,000

 —

 —

 $
 4,884

 $
 8,550,510

 $
 ( 9,100,777
)

 $
 ( 545,381
)

 —

 —

 —

 —

 —

 —

 —

 ( 1,696,439
)

 ( 1,696,439
)

 Balance at December 31, 2023

 15,000

 $

 —

 $
 —

 $
 4,884

 $
 8,550,510

 $
 ( 10,797,216
)

 $
 ( 2,241,820
)

 Issuance of Preferred Stock Series B-1 for cancellation
 of debt

 750,075

 —

 —

 —

 —

 3,665,228

 —

 3,665,303

 Net
 Loss

 —

 —

 —

 —

 —

 —

 —

 ( 962,384
)

 ( 962,384
)

 Balance
 at December 31, 2024

 765,075

 $

 —

 $
 —

 $
 4,884

 $
 12,215,738

 $
 ( 11,759,600
)

 $
 461,099

 The
accompanying notes are an integral part of these consolidated financial statements.

 F- 5

 CONSOLIDATED STATEMENTS
 OF CASH FLOWS

 For the Twelve Months Ended

 2024

 2023

 CASH FLOWS FROM OPERATING ACTIVITIES:

 $
 ( 962,384
)

 $
 ( 1,696,439
)

 Adjustments to reconcile net loss to net cash used in operating activities:

 Depreciation

 14,323

 —

 Deferred tax expense (benefit)

 ( 124,370
)

 Lease amortization expense

 —

 34,151

 Increase in inventory allowance

 —

 133,775

 Accrued interest added to note payable related parties

 90,943

 105,746

 Impairment of goodwill

 539,317

 —

 Increase in deferred income tax liabilities- long term

 —

 —

 Decrease in accounts receivable,
 net

 —

 7,716

 Decrease in
 inventories

 —

 278,486

 Decrease in prepaid
 expenses

 1,665

 14,970

 (Increase) decrease in
 due from related party

 9,570

 ( 9,570
)

 Decrease in deposits

 —

 24,039

 (Decrease) increase in accounts payable and accrued liabilities

 141,388

 495,184

 Decrease in operating lease liabilities

 —

 ( 37,535
)

 Net cash used in operating activities

 ( 289,548
)

 ( 614,527
)

 CASH FLOWS FROM INVESTING ACTIVITIES:

 Purchases of property and equipment

 —

 ( 42,970
)

 Net cash used in investing activities

 —

 ( 42,970
)

 CASH FLOWS FROM FINANCING ACTIVITIES:

 Proceeds from notes payable related parties

 268,932

 632,500

 Net cash provided by financing activities

 268,932

 632,500

 Net Increase (Decrease) in Cash

 ( 20,616
)

 ( 24,997
)

 Cash at Beginning of Year

 36,466

 61,463

 Cash at End of Year

 $
 15,850

 $
 36,466

 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

 Interest cash paid

 $
 —

 $
 —

 Income taxes paid

 $
 —

 $
 —

 NON-CASH FINANCING ACTIVITIES:

 Issuance of Preferred Stock B-1 for cancellation for debt

 $
 3,665,303

 $
 —

 The
accompanying notes are an integral part of these consolidated financial statements.

 F- 6

 NOTES

 NOTE
1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 Principles
of Consolidation

 The
consolidated financial statements for the years ended December 31, 2024, and 2023, include the accounts of the parent entity and
its wholly-owned subsidiaries. All intra-entity transactions and balances have been eliminated in consolidation.

 This summary of accounting policies for Capstone
Companies, Inc. ("CAPC"), a Florida corporation (formerly, "CHDT Corporation") and its wholly owned subsidiaries
(collectively referred to as the "Company", "we", "our" or "us"), is presented to assist
in understanding the Company's consolidated financial statements. The accounting policies conform to accounting principles generally
accepted in the United States of America ("U.S. GAAP") and have been consistently applied in the preparation of the consolidated
financial statements.

 Organization
and Nature of Business

 Capstone
Companies, Inc. is headquartered in Deerfield Beach, Florida and is incorporated under the laws of the State of Florida.

 On
April 13, 2012, the Company established a wholly owned subsidiary in Hong Kong, named Capstone International Hong Kong Ltd ("CIHK")
which provides support services such as engineering, new product development, product sourcing, factory certification and compliance,
product price negotiating, product testing and quality control and ocean freight logistics for the Company's other subsidiaries.
With the shift of manufacturing to Thailand from China, the CIHK operation was downsized and dormant as of March 2022.

 The
Company's focus through 2017 was the integration of LEDs into most commonly used consumer lighting products in today's home.
The LED category has matured and is no longer the innovative "must have" consumer product as in previous years, as such,
revenues for the LED product line have declined significantly in 2024 and 2023 from previous years. The Connected Surfaces was the Company's
effort to establish business in an emerging segment that was intended for future revenue growth. The Connected Surfaces Smart
Mirror products did not achieve significant sales in 2023, and all inventory was expensed as of December 31, 2023.

2023, the Company manufactured the Connected Chef, a purpose-built kitchen tablet with an accessory platform to accommodate food prep
accessories such as a cutting board. 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 quarter four
of 2023, and the Company began marketing the Connected Chef tablet to appliance manufacturers and distributors. The ability of the Company
to promote any new, related "connected" consumer products was dependent on securing adequate, affordable and timely funding
from lenders and investors. Due to the lack of orders and funding, the Connected Chef is not currently in production.

 On
October 31, 2024, the Company secured a working capital promissory note ("note") for $ 125,914,
maturing July
31, 2025, accruing 7 %
interest per annum. On January 27, 2025, the note was amended for principal of $ 485,163
 and a maturity date of December
31, 2025 and working capital installments to be
paid on a quarterly basis through September 30, 2025. For consideration for the working capital loan, the Company signed a Management
Transition Agreement on October 31, 2024. This funding will not be used for promotion or launch of the Connected Chef. See
Note 8 – Subsequent Events.

 F- 7

 NOTES

 NOTE

The Company has explored development or acquisition of a new business line. As of the filing of this report, the Company has not identified
a new business line that could, in the judgment of the Company, attract working capital funding to sustain company operations, or provide
sufficient operating revenues to sustain Company operations through 2025. The Company is continuing efforts to locate a new business
line in case efforts to internally establish a new product line do not succeed. The financial condition of the Company and low market
price of its Common Stock adversely affects the Company's ability to acquire or fund a new business line.

 The
Company's operations consist of one reportable segment for financial reporting purposes: Consumer Home Goods.

 Liquidity
and Going Concern

 The
accompanying consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets
and the satisfaction of liabilities and commitments in the normal course of business.

the year ended December 31, 2024, the Company used cash in operations of $289,548 and generated net operating losses of approximately
$996,000. As of December 31, 2024, the Company had a working capital deficit of $ 144,755
 and an accumulated deficit of $ 11,784,360.
The Company's cash balance decreased by $ 20,616
 from $ 36,466
 as of December 31, 2023 to $ 15,850
 as of December 31, 2024. As of December 31, 2024,
the Company does not have sufficient cash on hand to finance its plan of operations and sought additional capital through debt financing,
which is projected to sustain the operations of the Company through September 30, 2025. The Company will need to source additional capital
through further debt and/or equity financing. These factors raise substantial doubt about the Company's ability to continue as
a going concern.

 We
are seeking alternative sources of liquidity, including but not limited to accessing the capital markets, or other alternative financing
measures and strategic partnerships. However, instability in, or tightening of the capital markets, could adversely affect our ability
to access the capital markets on terms acceptable to us. An economic recession or a slow recovery could adversely affect our business
and liquidity. The lack of operating income from products and the financial condition of the Company are also hindering efforts to locate
working capital funding.

 Certain
directors have provided necessary funding including a working capital line to support the Company's cash needs through this period
of revenue development, but this funding is limited in amount and frequency. Unless the Company succeeds in raising additional capital
or successfully increases cash generated from operations, management believes 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.

 Concentrations
of Credit Risk

 Cash
is deposited with major banks in the United States. From time to time, such deposits may be in excess of insured limit. Generally, the
FDIC limit per bank is $ 250,000. Any loss incurred or a lack of access to such funds above the FDIC limit could have a significant adverse
impact on the Company's financial condition, results of operations and cash flows.

 F- 8

 NOTES

 NOTE
1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued

 Accounts
Receivable

 For
product revenue, the Company invoices its customers at the time of shipment for the sales value of the product shipped. Accounts receivables
are recognized at the amount expected to be collected and are not subject to any interest or finance charges. The Company does not have
any off-balance sheet credit exposure related to any of its customers.

 The Company evaluates the collectability of accounts
receivable based on a combination of factors. In cases where the Company becomes aware of circumstances that may impair a specific customer's
ability to meet its financial obligations subsequent to the original sale, the Company will recognize an allowance against amounts due
and thereby reduce the net recognized receivable to the amount the Company reasonably believes will be collected. For all other customers,
the Company recognizes an allowance for credit losses based on the length of time the receivables are past due and consideration of other
factors such as industry conditions, the current business environment and the Company's historical payment experience. An allowance
for credit losses is established as losses are estimated to have occurred through a provision for bad debts charged to earnings. This
evaluation is inherently subjective and requires estimates that are susceptible to significant revisions as more information becomes
available.

 As of December 31, 2024, and 2023, management
has not recorded an allowance for doubtful accounts and does not have an accounts receivable balance.

 Inventory

 The
Company's inventory, which consisted of finished Thin Cast Smart Mirror products for resale to consumers by Capstone, was recorded
at the lower of landed cost (first-in, first-out) or net realizable value. The Company writes down its inventory balances for estimates
of excess and obsolete amounts. The Company reduces inventory on hand to its net realizable value on an item-by-item basis when the expected
realizable value of a specific inventory item falls below its original cost. Management regularly reviews the Company's investment
in inventories for such declines in value. The write-downs are recognized as a component of cost of sales.

the fourth quarter of 2023, Management reviewed the valuation of inventory on hand and wrote off all Smart Mirror inventory as of December
31, 2023, resulting in a $ 133,775 reduction in inventory to bring the balance to $ 0
 and a corresponding expense to cost of sales.
 The write off of the remaining inventory was due to lower-than-expected sales of the Smart Mirrors coupled with limited
working capital to advance marketing efforts.

 The
Company liquidated all remaining Smart Mirror inventory on hand during the second quarter of 2024 to one wholesaler for $ 80,000. There
is no inventory on hand as of December 31, 2024.

 Prepaid
Expenses

 The
Company's prepaid expenses consist primarily of prepaid insurance, public company listing fees and investor relation services. As
of December 31, 2024 and 2023, prepaid expenses were $ 20,455 and $ 22,120, respectively.

 F- 9

 NOTES

 NOTE

 Due
from Related Party

2023, the Company offered supplemental health care benefits for employees. Employees may add dependents to the health plan where the
employee would pay for the additional dependent's coverage through payroll deductions. Due to the deferral of wages from the CEO,
Stewart Wallach, the portion of health insurance benefits paid by the Company for his dependents were not paid for via employee payroll
deductions. As a result, the Company recorded a $ 9,570 receivable from a related party for the amounts owed for Mr. Wallach's dependents
health insurance coverage. The Company wrote off the receivable during 2024 due to the cancellation of the CEO's deferred wages
and notes payable held by the CEO. See Note 3.

 Property
and Equipment

 Property
and equipment are stated at cost. Depreciation and amortization are computed using the straight-line method over the estimated economic
useful lives of the related assets as follows:

 Schedule of property and equipment

 Useful
 Life

 December
 31, 2024

 December
 31, 2023

 Machinery
 and equipment

 3 years

 42,970

 42,970

 Less:
 Accumulated depreciation

 ( 14,323

)

 —

 Property
 and Equipment, Net

 $

 28,647

 $

 42,970

 Long-lived
assets are reviewed for impairment whenever events or changes in circumstances indicate that the related carrying amount may not be recoverable.
When required, impairment losses on assets to be held and used are recognized based on the fair value of the asset. Long-lived assets
to be disposed of, if any, are reported at the lower of carrying amount or fair value less cost to sell. Upon sale or other disposition
of property and equipment, the cost and related accumulated depreciation or amortization are removed from the accounts and any gain or
loss is included in the determination of income or loss.

 In 2023, the Company invested $42,970 in a manufacturing
mold for the Connected Chef. The mold was not ready for production in 2023 and therefore was not depreciated during 2023.

 Depreciation
and amortization expense was $ 14,323 and $ 0 for the years ended December 31, 2024 and 2023, respectively.

 Leases

 The
Company accounts for leases under ASU 2016-02 which requires leases with durations greater than twelve months to be recognized on the
balance sheet and disclose key information about the leasing arrangements. Operating leases are included in operating lease right-of-use
("ROU") assets and operating lease liabilities on the consolidated balance sheets. See Note 6 "Operating Leases"
for additional disclosures as required by the new standard.

 Goodwill

 On
September 13, 2006, the Company entered into a Stock Purchase Agreement with Capstone Industries, Inc., a Florida corporation ("CAPI").
Capstone was incorporated in Florida on May 15, 1996 and is engaged primarily in the business of wholesaling technology inspired
consumer products to distributors and retailers in the United States. Under the Stock Purchase Agreement, the Company acquired 100% of
the issued and outstanding shares of CAPI's Common Stock, and recorded goodwill of $ 1,936,020.

 Goodwill
acquired in business combinations is initially computed as the amount paid by the acquiring company in excess of the fair value of the
net assets acquired. Goodwill is tested for impairment on December 31 of each year or more frequently if events or changes in circumstances
indicate that the asset might be impaired. The Company will then perform a one-step quantitative impairment text, whereby a goodwill
impairment loss will be measured as the excess of a reporting unit's carrying amount over its fair value (not to exceed the total
goodwill allocated to that reporting unit). Goodwill is not amortized. The Company estimates the fair value of its single reporting unit
relative to the Company's market capitalization. The Company recognized $ 623,538
 of impairment charges during 2020. During the
annual analysis of goodwill, management determined the fair value of the single reporting unit was less than the carrying value of the
Company, as such, management recorded a goodwill impairment of $ 539,317
 as of December 31, 2024. There was no goodwill
impairment recorded for the year ended December 31, 2023. The Company reported goodwill of $ 773,165
 and $ 1,312,482,
respectively as of December 31, 2024 and 2023.

 F- 10

 NOTES

 NOTE

 Fair
Value Measurement

 The
accounting guidance under Financial Accounting Standards Board ("FASB") Accounting Standards Codification ("ASC"),
"Fair Value Measurements and Disclosures" (ASC 820-10) requires the Company to make disclosures about the fair value of certain
of its assets and liabilities. ASC 820-10 clarifies the principle that fair value should be based on the assumptions market participants
would use when pricing an asset or liability and establishes a fair value hierarchy that prioritizes the information used to develop
those assumptions. ASC 820-10 utilizes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair
value into three broad levels. The three levels of the hierarchy are as follows:

 Level
1: Observable inputs such as quoted prices in active markets for identical assets or liabilities.

 Level
2: Inputs other than quoted prices that are observable for the asset or liability, either directly or indirectly.

 Level
3: Significant unobservable inputs.

 Earnings
Per Common Share

 Basic
earnings per common share is computed by dividing net income(loss) by the weighted average number of shares of common stock outstanding
as of December 31, 2024, and 2023. Diluted earnings per share reflects the potential dilution that could occur if securities or
other contracts to issue common stock were exercised or converted into common stock. For calculation of the diluted earnings per share,
the basic weighted average number of shares is increased by the dilutive effect of stock options and warrants using the treasury stock
method. In periods where losses are reported, the weighted average number of common shares outstanding excludes common stock equivalents
because their inclusion would be anti-dilutive. As of December 31, 2024 and 2023, the total number of potentially dilutive common stock
equivalents excluded from the diluted earnings per share calculation was 208,288
 options and 199,733
 warrants for 2024, and 408,288
 options and 199,733
 warrants for 2023.

Recognition

 The
Company generates revenue from developing, marketing and selling consumer products through national and regional retailers. Capstone
currently operates in the consumer electronic products category in the Unites States and in specific overseas markets. These products
may be offered either under the Capstone brand or a private brand.

 A
sales contract occurs when the customer-retailer submits a purchase order to buy a specific product, a specific quantity, at an agreed-fixed
price, within a ship window, from a specific location and on agreed payment terms. The selling price in all of our customers' orders
has been previously negotiated and agreed to including any applicable discount prior to receiving the customer's purchase order.
The stated unit price in the customer's order has already been determined and is fixed at the time of invoicing.

 F- 11

 NOTES

 NOTE

Recognition, continued

 The
Company recognizes lighting product revenue when the Company's performance obligations as per the terms in the customers purchase
order have been fully satisfied, specifically, when the specified product and quantity ordered has been manufactured and shipped pursuant
to the customers requested ship window, when the sales price as detailed in the purchase order is fixed, when the product title and risk
of loss for that order has passed to the customer, and collection of the invoice is reasonably assured. This means that the product ordered
and to be shipped has gone through quality assurance inspection, customs and commercial documentation preparation, the goods have been
delivered, title transferred to the customer and confirmed by a signed cargo receipt or bill of lading. Only at the time of shipment
when all performance obligations have been satisfied will the judgement be made to invoice the customer and complete the sales contract.

 Marketing
allowances include the cost of underwriting an in-store instant rebate coupon or a target markdown allowance on a specific product. The
Company retains these allowances for a period of 3 to 5 years in the event the customer chargebacks for a promotional allowance against
an open invoice or submits an invoice for their claim. Cash discounts represent discounts offered to the retailer off outstanding accounts
receivable in order to initiate early payment. These allowances are evaluated when our relationship with a customer is terminated, or
we cease selling a specific product to a customer and may be released as other income if deemed not required. During the year ended December
31, 2024, and 2023, the Company had no reversals into other income of previously accrued marketing and promotional allowances
for previous product sales that were deemed highly unlikely for the customer to chargeback the Company due to the age of the allowance
and the sales of the specific item ceasing.

 The
Connected Surfaces Smart Mirror program was sold direct-to-consumer with orders sold through e-commerce platforms. The Company also sold
the Connected Surfaces Smart Mirror program through independent retailers. The Company will only bill the customer and recognize revenue
upon the customer obtaining control of the Smart Mirror order which generally occurs upon delivery.

 The
Company expenses license royalty fees and sales commissions when incurred and these expenses are recognized during the period the related
sale is recorded. These costs are recorded within sales and marketing expenses.

 The
following table presents net revenue by geographic location which is recognized at a point in time:

 Schedule of net revenue by major source

 For the Year Ended
 December 31, 2024

 For the Year Ended
 December 31, 2023

 Capstone Brand

 % of

 Capstone Brand

 % of

 Lighting Products- U.S.

 $
 57,829

 %

 $
 65,025

 %

 Smart Mirror Products- U.S.

 85,440

 %

 127,151

 %

 Total Revenue

 $

 %

 $

 %

 We
provide our Smart Mirror and Lighting Product customers with limited rights of return for non-conforming product warranty claims. As
a policy, the Company does not accept product returns from customers, however occasionally we may receive back residual inventory. No
residual inventory has been received as of the date of filing this Form 10-K.

 F- 12

 NOTES

 NOTE

 Revenue,
continued

 Smart
Mirror customer orders are shipped within one to two days of receipt. Revenue is recorded upon processing of the sale with a third-party
merchant processor such as Stripe or Amazon Pay. Lighting Product customer orders received are not long-term orders and are typically
shipped within six months of the order receipt, but certainly within a one-year period.

 Our
Smart Mirror customers are charged when executing the e-commerce purchase. We do not have extended payment terms for our Smart Mirror
customers. Our Lighting Product payment terms may vary by the type of customer, the customer's credit standing, the location where
the product will be picked up from and for international customers and which country their corporate office is located. The time between
invoicing date and when payment is due may vary between 30 days and 90 days depending on the customer type. To ensure there are no payment
issues, overseas customers or new customers may be required to provide a deposit or full payment before the order is delivered to the
customer.

Sales reductions for anticipated discounts, allowances and promotional coupons are recognized during the period the related revenue is
recorded. The discounts, allowances and promotional coupons amounted to approximately $ 850 and $ 17,000 for the years ended December 31,
2024 and 2023, respectively.

 Warranties

 For
the LED product line, the Company provides the end user with limited rights of return as a consumer assurance warranty on all products
sold, stipulating that the product will function properly for the warranty period. The warranty period for all products is one year from
date of consumer purchase.

 Certain retail customers may receive an off invoice-based
discount such as a defective/warranty allowance, that will automatically reduce the unit selling price at the time the order is invoiced.
This allowance will be used by the retail customer to defray the cost of any returned units from consumers and therefore negate the need
to ship defective units back to the Company. Such allowances are charged to cost of sales at the time the order is invoiced. For those
customers that do not receive a discount off-invoice, the Company recognizes a charge to cost of sales for anticipated non-conforming
returns based upon an analysis of historical product warranty claims and other relevant data.

 For the online Smart Mirror customers, the
product has a One Year Limited Warranty. The purchaser must register the product within 30 days from date of purchase with specific product
information to activate the warranty. Capstone warrants the product to be free from defects in workmanship and materials for the warranty
period. If the product fails during normal and proper use within the warranty period, Capstone at its discretion, will repair or replace
the defective parts of the product, or the product itself.

 We
evaluate our warranty reserves based on various factors including historical warranty claims assumptions about frequency of warranty
claims, and assumptions about the frequency of product failures derived from our reliability estimates. Actual product failure rates
that materially differ from our estimates could have a significant impact on our operating results. Product warranty reserves are reviewed
each quarter and recognized at the time we recognize revenue.

 F- 13

 NOTES

 NOTE

 Warranties,
continued

 The
Smart Mirror liquidation sale of $80,000 was sold "as-is" without warranty terms.

 The
following table summarizes the changes in the Company's product warranty liabilities which are included in accounts payable and
accrued liabilities in the accompanying December 31, 2024, and 2023 balance sheets:

 Schedule of changes in product warranty liabilities

 2024

 2023

 Balance at the beginning of the year

 $
 1,200

 $
 1,926

 Amount accrued

 —

 Payments and credits

 —

 ( 1,579
)

 Reversal of prior years' accrual unclaimed

 ( 1,200
)

 —

 Balance at year-end

 $
 —

 $
 1,200

 Advertising
and Promotion

 Advertising
and promotion costs, including advertising, social media, and trade show expenses, are expensed as incurred and included in sales and
marketing expenses. Advertising and promotion expenses were $ 120 and $ 11,903 for the years ended December 31, 2024, and 2023, respectively.

 Product
Development

 Our
research and development team located in Thailand working with our designated factories, are responsible for the design, development,
testing, and certification of new product releases. Our engineering efforts support product development across all products, as well
as product testing for specific overseas markets. All research and development costs are charged to results of operations as incurred.

 For
the year ended December 31, 2024 and 2023, product development expenses were $ 6,233 and $ 101,409, respectively. Product development expenses
for 2024 were related to the maintenance of the Connected Chef. Product development expenses for 2023 were related to the development
of the Company's Connected Chef.

 Shipping
and Handling

 The
Company's shipping and handling costs are included in sales and marketing expenses and are recognized as an expense during the
period in which they are incurred and amounted to $ 13,193 and $ 62,923 for the years ended December 31, 2024 and 2023, respectively.

 Accounts
Payable and Accrued Liabilities

 The
following table summarizes the components of accounts payable and accrued liabilities on December 31, 2024, and 2023:

 Schedule of components of accounts payable and accrued liabilities

 2024

 2023

 Accounts payable

 $

 $
 69,267

 Accrued warranty reserve

 —

 1,200

 Accrued compensation and deferred wages, marketing allowances, customer deposits and other liabilities

 —

 734,156

 Total

 $

 $
 804,623

 F- 14

 NOTES

 NOTE

 Income
Taxes

 The
Company is subject to income taxes in the U.S. federal jurisdiction, various state jurisdictions and certain other jurisdictions.

 The
Company accounts for income taxes under the provisions of 740 Income Taxes. ASC 740 requires recognition of deferred income tax
assets and liabilities for the expected future income tax consequences, based on enacted tax laws, of temporary differences between the
financial reporting and tax bases of assets and liabilities. The Company and its U.S. subsidiaries file consolidated income tax returns.

 The
Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not the tax position will be sustained
on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial
statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized
upon settlement.

 Tax
regulations within each jurisdiction are subject to the interpretation of the relaxed tax laws and regulations and require significant
judgement to apply. The Company is not subject to U.S. federal, state and local tax examinations by tax authorities generally for a period
of 3 years from the later of each return due date or date filed.

 If
the Company were to subsequently record an unrecognized tax benefit, associated penalties and tax related interest expense would be recorded
as a component of income tax expense.

 Stock-Based

 The
Company accounts for stock-based compensation under the provisions of ASC 718 Compensation- Stock Compensation, which requires
the measurement and recognition of compensation expense for all share-based payment awards made to employees and directors, including
employee stock options, based on estimated fair values. ASC 718 requires companies to estimate the fair value of share-based payment
awards on the date of the grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest
is recognized as expenses over the requisite service periods in the Company's consolidated statements of operations.

 Stock-based
compensation expense recognized during the period is based on the value of the portion of share-based payment awards that is ultimately
expected to vest during the period. In conjunction with the adoption of ASC 718, the Company adopted the straight-line single option
method of attributing the value of stock-based compensation expense. The Company accounts for forfeitures as they occur.

 Stock-based
compensation expense recognized during the years ended December 31, 2024 and 2023 was $ 0, respectively.

 Other
Income (Expense)

 Other
income was $ 4 in
2024 compared to $ 77,106
 in 2023, a decrease of $ 77,102.
The other income for the year ended December 31, 2023 resulted from $ 49,000
 in employee retention tax credit received under
Cares act 2020-2021 coupled with insurance premium refunds and insurance payouts on damage freight claims.

 Interest expense for 2024 amounted to approximately
$ 90,000 compared to $ 104,000 in 2023, a decrease of $ 14,000 or 13%, due to the cancellation of debt and issuance of preferred B-1 stock.
See Note 3 – Notes Payable to Related and Unrelated Parties.

 Use
of Estimates

 The
preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that
affect the reported amounts of assets, liabilities, revenue and expenses and the disclosure of contingent assets and liabilities. The
Company evaluates its estimates on an ongoing basis, including those related to valuation of inventories, goodwill impairment, valuation
of deferred tax assets, and valuation of stock-based compensation. The Company generally bases its estimates on historical experience,
agreed obligations, and on various other assumptions that are believed to be reasonable under the circumstances, the results of which
form the basis of making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources.

 Historically,
past changes to these estimates have not had a material impact on the Company's consolidated financial statements. However, circumstances
could change, and actual results could differ materially from those estimates.

 F- 15

 NOTES

 NOTE

 Recently
Issued Accounting Pronouncements

 In
November 2023, the FASB issued Accounting Standards Update 2023-07 – Segment Reporting (Topic ASC 280) Improvements to Reportable
Segment Disclosures. The ASU improves reportable segment disclosure requirements, primarily through enhanced disclosure about significant
segment expenses. The enhancements under this update require disclosure of significant segment expenses that are regularly provided to
the Chief Operating Decision Maker ("CODM") and included within each reported measure of segment profit or loss, require
disclosure of other segment items by reportable segment and a description of the composition of other segment
items, require annual disclosures under ASC 280 to be provided in interim periods, clarify use of more than one measure of segment
profit or loss by the CODM, require that the title of the CODM be disclosed with an explanation of how the CODM uses the reported measures
of segment profit or loss to make decisions, and require that entities with a single reportable segment provide all disclosures required
by this update and required under ASC 280. The Company adopted ASU 2023-07 for the annual period ending December 31, 2024. See Note
7 – Operating Segments.

 Recently
Issued Accounting Pronouncements Not Yet Adopted

 In
December 2023, the FASB issued Accounting Standards Update 2023-09 – Income Taxes (Topic ASC 740) Income Taxes. The ASU improves
the transparency of income tax disclosures by requiring (1) consistent categories and greater disaggregation of information in the rate
reconciliation and (2) income taxes paid disaggregated by jurisdiction. It also includes certain other amendments to improve the effectiveness
of income tax disclosures. The amendments in ASU 2023-09 will become effective beginning of our 2025 fiscal year. Early adoption is permitted
for annual financial statements that have not yet been issued or made available for issuance. We do not expect that this guidance will
have a material impact upon our financial position and results of operations.

 November
2024, the Financial Account Standards Board (FASB), issued Accounting Standards Update (ASU) 2024-04, Debt-Debt with Conversions
and Other Option. ASU 2024-04 is intended to clarify requirements for determining whether certain settlements of convertible
debt instruments, including convertible debt instruments with cash conversion features or convertible debt instruments that are not currently
convertible, should be accounted for as an induced conversion. This ASU is effective for all entities for annual reporting periods beginning
after December 15, 2025, and interim reporting periods within those annual reporting periods, with early adoption permitted. The Company
is currently evaluating the potential impact of this guidance on its disclosures.

 In
November 2024, the FASB issued Accounting Standards Update No. 2024-03, Income Statement - Reporting Comprehensive Income - Expense
Disaggregation Disclosures (Subtopic 220-40): Disaggregation of Income Statement Expenses ("ASU 2024-03"),
and in January 2025, the FASB issued Accounting Standards Update No. 2025-01, Income Statement - Reporting Comprehensive Income
- Expense Disaggregation Disclosures (Subtopic 220-40): Clarifying the Effective Date ("ASU 2025-01"). ASU 2024-03
requires additional disclosure of the nature of expenses included in the income statement as well as disclosures about specific types
of expenses included in the expense captions presented in the income statement. ASU 2024-03, as clarified by ASU 2025-01, is effective
for us for our annual reporting for fiscal 2028 and for interim period reporting beginning in fiscal 2029 on a prospective basis. Both
early adoption and retrospective application are permitted. The Company is currently evaluating the impact that the adoption of these
standards will have on its consolidated financial statements and disclosures.

 The
Company continually assesses any new accounting pronouncements to determine their applicability to the Company. Where it is determined
that a new accounting pronouncement affects the Company's financial reporting, the Company undertakes a study to determine the
consequence of the change to its financial statements and assures that there are proper controls in place to ascertain that the Company's
financials properly reflect the change.

 NOTE
2 - CONCENTRATIONS OF CREDIT RISK AND ECONOMIC DEPENDENCE

 Financial
instruments that potentially subject the Company to credit risk consist principally of cash and accounts receivable. The Company has
no significant off-balance-sheet concentrations of credit risk such as foreign exchange contracts, options contracts or other foreign
hedging arrangements.

 Cash

 The
Company at times has cash with its financial institution in excess of Federal Deposit Insurance Corporation ("FDIC") insurance
limits. The Company places its cash with high credit quality financial institutions which minimize the risk of loss. To date, the Company
has not experienced any such losses. As of December 31, 2024, the Company did not have cash balances in excess of FDIC insurance limits.

 F- 16

 NOTES

 NOTE
2 - CONCENTRATIONS OF CREDIT RISK AND ECONOMIC DEPENDENCE (continued)

 Accounts
Receivable

 Historically,
the Company granted credit to its established retail customers. The Company typically did not require collateral from these customers.
Credit risk was limited due to the financial strength of the customers comprising the Company's customer base and their dispersion
across different geographical regions. The Company monitored exposure of credit losses and maintained allowances for anticipated losses
considered necessary under the circumstances. With ecommerce revenue, the Company utilized Stripe as the company that processed online
payments for our website. Revenue was received from Stripe within 3 days of the product shipment. If the product was shipped through
Amazon it would take between 20 and 30 days for collection.

 The
Company did not have any revenue from international sales for the years ended December 31, 2024, and 2023.

 Major
Customers

 Schedule of major customers

 Net Revenue %

 Net Accounts Receivable

 Year Ended December 31,

 Year Ended December 31,

 2024

 2023

 2024

 2023

 Customer A

 %

 %

 —

 —

 Customer B

 —

 %

 —

 —

 Customer C

 %

 —

 —

 —

 Total

 %

 %

 $
 —

 —

 Major
Vendors

 The
Company had one vendor from which it purchased 100% of merchandise sold during the year ended December 31, 2024, and 19% of merchandise
sold during the year ended December 31, 2023. The loss of this supplier could adversely impact the business of the Company.

 As
of December 31, 2024, and 2023, approximately 0 % and 22 %, respectively, of accounts payable were due to one vendor.

 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.

 F- 17

 NOTES

 NOTE
3 – NOTES PAYABLE TO RELATED AND UNRELATED PARTIES (continued)

 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.

 F- 18

 NOTES

 NOTE
3 – NOTES PAYABLE TO RELATED AND UNRELATED PARTIES, continued

 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.

 Schedule of cancellation as a capital transaction
and recorded in the statement of stockholders deficit

 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

 $
 340,000

 $
 390,208

 10.646
 %

 79,853

 79,853

 G. Nexus

 5/1/2022

 $

 $
 224,193

 6.117
 %

 45,879

 G. Nexus

 1/3/2023

 $
 40,000

 $
 43,485

 1.186
 %

 8,899

 G. Nexus

 10/18/2021

 $
 340,000

 $
 390,208

 10.646
 %

 79,853

 134,631

 10/18/2021

 $
 340,000

 $
 390,208

 10.646
 %

 79,853

 5/1/2022

 $

 $
 224,191

 6.117
 %

 45,879

 10/13/2022

 $
 50,000

 $
 54,918

 1.498
 %

 11,238

 12/1/2022

 $
 50,000

 $
 54,582

 1.489
 %

 11,170

 1/16/2024

 $
 50,000

 $
 51,767

 1.412
 %

 10,594

 5/1/2022

 $
 100,000

 $
 112,097

 3.058
 %

 22,940

 181,674

 5/1/2022

 $
 100,000

 $
 112,097

 3.058
 %

 22,940

 3/27/2023

 $
 183,500

 $
 198,110

 5.405
 %

 40,542

 Q2 - 2023

 $
 160,000

 $
 171,365

 4.675
 %

 35,069

 Q3 - 2023

 $

 $
 211,649

 5.774
 %

 43,312

 Q4 - 2023

 $
 49,000

 $
 49,485

 1.350
 %

 10,127

 Q1 - 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

 F- 19

 NOTES

 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:

 Schedule for notes payable to related party

 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.

 NOTE
4 – COMMITMENTS AND CONTINGENCIES

 Operating
Leases

 The
Company had operating lease agreements for its principal executive offices in Fort Lauderdale, Florida that expired June 30, 2023.

 On
April 26, 2023, the landlord amended the terms for the operating lease and related common area management expenses ("CAM")
owed by the Company for its principal executive office to extend the payment terms for the remaining three months of the lease term,
ended June 30, 2023, over the following nine months through December 31, 2023. In addition to the monthly rent expense, the landlord
included an estimate for additional CAM charges for the 2023 operating lease year of $ 5,435 and $ 17,124 for additional CAM charges for
the 2022 operating lease year. The Company paid a total of $ 58,500 with monthly payments of $ 6,500 per month for nine months commencing
April 1, 2023 and ending December 31, 2023, to satisfy the aforementioned operating lease liabilities for the executive office lease.

 On
July 1, 2023, the Company commenced an office space license to use designated office space at #144-V, 10 Fairway Drive, Suite 1000, Deerfield
Beach, Florida 33441. The short-term lease is a month-to-month agreement for professional office space for a monthly fee of $ 75 with
a security deposit of $ 75. The agreement may be terminated by the Company or the licensor of the office space upon a written notice provided
thirty (30) days in advance.

 The
Company's rent expense is recorded on a straight-line basis over the term of the lease. The rent expense for the period ended December
31, 2024 and 2023, amounted to $ 2,485 and
$ 95,936,
respectively, including the monthly CAM charges and storage facility rent expense.

 F- 20

 NOTES

 NOTE
4 – COMMITMENTS AND CONTINGENCIES (continued)

 Employment
Agreements

 On
February 5, 2020, the Company entered into a new Employment Agreement with Stewart Wallach, whereby Mr. Wallach will be paid $ 301,521
 per annum. The
initial term of this new agreement began February 5, 2020, and ended February 5, 2023.
The parties may extend the employment period of this agreement by mutual consent with approval of the Company's Board of Directors,
but the extension may not exceed two years in length. On February 5, 2023, the employment agreement was extended for an additional two-year
period through February 5, 2025.

 Beginning
in 2020 and through 2024, executive salaries and consulting fees have been deferred to conserve cash flow. Deferrals amounted to $ 969,603
and $ 734,156, as of September 30, 2024 and December 31, 2023, respectively, and were included in accounts payable and accrued liabilities.
See Note 3 – Notes Payable to Related and Unrelated Parties for cancellation agreement for the deferred wages and consulting fees
in exchange of issuance of Preferred B-1 Stock.

 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 voluntarily resigning and
remaining as Capstone Companies, Inc Chair of the Board of Directors. There is no employment agreement for Mr. Jacobs as of the date
of this filing Form 10-K. Mr. Jacobs has agreed to accrual of a base salary of One Dollar per year and is reflected in Accounts
Payable and Accrued Expenses as of December 31, 2024.

 Directors

 On
July 5, 2022, The Board of Directors voted to suspend compensation to the independent directors indefinitely.

 Legal
Matters

 The
Company is not a party to any other pending or threatened legal proceedings and, to the best our knowledge, no such action by or against
us has been threatened. From time to time, we are subject to legal proceedings and claims that arise in the ordinary course of our business.
Although occasional adverse decisions or settlements may occur in such routine lawsuits, we believe that the final disposition of such
routine lawsuits will not have material adverse effect on its financial position, results of operations or status as a going concern.

 NOTE
5 - STOCK TRANSACTIONS

 Stock
Purchase Agreements

 On
April 5, 2021, the Company entered into a Private Equity Placement with five separate securities purchase agreements ("SPAs")
whereby the Company privately placed an aggregate of 2,496,667 shares ("Shares") of its common stock, $ 0.0001 par value per
share, ("common stock") for an aggregate purchase price $ 1,498,000. The five unrelated 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 Smart Mirror product line, as well as for advertising and working
capital. Under the SPA, each investor is granted five-year piggyback, 'best efforts' registration rights with no penalties.
The Shares are 'restricted securities" under Rule 144 of the Securities Act and are subject to a minimum six month hold period.
Based on representations made to the Company, the five investors do not constitute a "group" under 17 C.F.R. 240.13d-3 and
have purchased the Shares solely as an investment for each investor's own account. No individual investor owns more than 2% of
the issued and outstanding shares of common stock.

 Warrants

 On
April 28, 2021, Company issued common stock warrants to purchase 199,733
 shares of common stock at an exercise price of
$ 0.66
 and exercisable for five years from the issuance
date. The warrants were issued to Wilmington Capital Securities, LLC, a FINRA and SEC registered broker under a financial services and
placement agreement with a broker-dealer in connection with the Company's placement of $ 1,498,000
 of restricted shares of common stock to five
investors on April 5, 2021. The issuance of these warrants was made an exemption from registration under Section 4(a)(2)
and Rule 506(b) of Regulation D under the Securities Act.

 As
of December 31, 2024, and 2023, the Company had 199,733 warrants outstanding.

 Series
"B-1" Preferred Stock

 On
June 7, 2016, the Company authorized 3,333,333
 of the B-1 preferred stock ("B-1 Stock").
On June 15, 2023, the Company amended their Articles of Incorporation for 5,000,000
 in authorized B-1 preferred stock. 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.
The par value of the B-1 preferred shares is $ 0.0001.
The B-1 stock shall not be entitled to any dividends and have no voting rights. In the event of a liquidation, the B-1 holders are entitled
to distribution prior to common stockholders but not before any other preferred stockholders.

 F- 21

 NOTES

 NOTE
5 -STOCK TRANSACTIONS, continued

 On
January 4, 2021, the Company entered a $ 750,000 working capital loan agreement with Directors, Stewart Wallach and Jeffrey Postal ("Lenders").
In consideration for the Lenders allowing for loan advances under the loan agreement, a below market rate of interest and the loan made
on an unsecured basis, as payment of a finance fee for the loan, the Company issued a total of 7,500 shares of Company's B-1 Stock.

 On
December 18, 2024, the Company entered into a cancellation agreement with related party promissory note holders for cancellation of $ 3,665,303
in outstanding principal and interest in exchange for issuance of 750,075 shares of the Company's B-1 Stock. See Note 3 - Notes
Payable to Related and Unrelated Parties.

 The
Series B-1 Preferred Shares and any shares of common stock issued under the aforementioned agreements are "restricted" securities
under Rule 144 of the Securities Act of 1933, as amended.

 The
B-1 Shares have a liquidation preference of $ 1.00
 per share or $ 767,075
 and $ 15,000
 as of December 31, 2024 and 2023, respectively.

 Options

 In
2005, the Company authorized the 2005 Equity Plan that made available shares of common stock for issuance through awards of options,
restricted stock, stock bonuses, stock appreciation rights and restricted stock units.

 As
of December 31, 2024, there were 208,288 stock options outstanding and vested held by directors of the Company. The stock options have
a weighted average exercise price of $ 0.456 and have a weighted average contractual term remaining of 0.63 years. During the year ended
December 31, 2024, there were no stock option grants, exercises and 200,000 options were forfeited.

 Stock
options were issued under Section 4(a)(2) and Rule 506(b) of Regulation D under the Securities Act of 1933.

 For
the years ended December 31, 2024 and 2023, the Company did no t recognized any stock-based compensation expense related to stock options.
All options are fully vested as of the year ended December 31, 2024.

 F- 22

 NOTES

 NOTE
5 - STOCK TRANSACTIONS (continued)

 The
following table sets forth the Company's stock options outstanding as of December 31, 2024, and 2023 and activity for the
years then ended.

of stock options outstanding and activity

 Shares

 Weighted
 Average Exercise Price

 Weighted
 Average Fair Value

 Weighted
 Average Remaining Contractual Term (Years)

 Intrinsic
 Value

 Outstanding,
 January 1, 2023

 608,288

 0.449

 0.18

 1.60

 —

 Granted

 —

 —

 —

 —

 —

 Exercised

 —

 —

 —

 —

 —

 Forfeited/expired

 ( 200,000

)

 0.435

 0.21

 —

 —

 Outstanding,
 December 31, 2023

 408,288

 0.456

 0.15

 1.13

 —

 Granted

 —

 —

 —

 —

 —

 Exercised

 —

 —

 —

 —

 —

 Forfeited/expired

 ( 200,000

)

 0.475

 0.17

 —

 —

 Outstanding,
 December 31, 2024

 0.475

 0.14

 0.63

 —

 Vested/exercisable
 at December 31, 2024

 0.475

 0.14

 0.63

 —

 The
following table summarizes the information with respect to options granted, outstanding and exercisable under the 2005 Plan:

of options granted, outstanding and exercisable

 Exercise
 Price

 Options
 Outstanding

 Remaining
 Contractual Life in Years

 Number
 of Options Currently Exercisable

 $

.435

 0.60

 $

 1.448

 8,288

 1.60

 8,288

 $

.456

 0.63

 Adoption
of Stock Repurchase Plan

 On
August 23, 2016, the Company's Board of Directors authorized the Company to implement a stock repurchase plan for up outstanding
common stock. The repurchase plan may be discontinued at any time at the Company's discretion.

 On
December 19, 2018, Company entered a Purchase Plan pursuant to Rule 10b5-1 under the Exchange Act, with Wilson Davis & Co., Inc.,
a registered broker-dealer. Under the Purchase Plan, Wilson Davis & Co., Inc will make periodic purchases of shares at prevailing
market prices, subject to the terms of the Purchase Plan.

 On
May 31, 2019, the Company's Board of Directors the maximum amount of aggregate funding available for possible stock repurchases
under the stock repurchase program remained at $ 1,000,000 during the renewal period.

 F- 23

 NOTES

 NOTE
5 - STOCK TRANSACTIONS (continued)

May and June 2022, the Company repurchased 66,167 shares of the Company's outstanding common stock in the open market. The total
purchase cost was $ 11,662.

 On
July 7, 2022, the Board of Directors resolved to discontinue the stock purchase agreement.

 As
of December 31, 2024, a total of 816,167 of the Company's common stock was repurchased since the
plan was incepted at a total cost of $ 119,402.
The cost of the repurchased shares was recorded as a reduction of additional paid-in capital.

 NOTE
6 - INCOME TAXES

 As
of December 31, 2024, the Company had federal and state net operating loss carry forwards of $ 6,672,056.
The federal net operating loss is available to the Company indefinitely and available to offset up to 80% of future taxable income each
year.

 Tax
benefit for income taxes differs from the amount computed using the federal US statutory income tax rate as follows:

of income tax reconciliation

 Years Ended December 31,

 2024

 2023

 Tax benefit at U.S. statutory rate

 $
 ( 228,218
)

 $
 ( 348,908
)

 State income taxes, net of federal benefit

 3,962

 ( 46,892
)

 State rate impact of goodwill impairment

 ( 67,819
)

 —

 Non-deductible items

 241,457

 27,278

 Valuation allowance

 ( 112,785

)

 248,057

 Adjustment to net operating loss

 32,522

 155,415

 Other

 6,511

 —

 Income Tax Expense (Benefit)

 $
 ( 124,370
)

 $

 The
effective tax rate for the years ended December 31, 2024 and 2023, respectively, was 11.44 %
and ( 2.10 %)
and the statutory tax rate was 23.5 %
in 2024 and 23.829 %
in 2023.

 F- 24

 NOTES

 NOTE
6 - INCOME TAXES ( continued)

 The income tax benefit for the years ended December
31, 2024, and 2023 consists of:

of income tax expense (benefit)

 Years Ended December 31,

 2024

 2023

 Current:

 Federal

 $
 —

 $
 —

 State

 —

 —

 Deferred:

 Federal

 ( 113,256
)

 29,834
)

 State

 ( 11,114
)

 5,116

 Income Tax Expense (Benefit)

 $
 ( 124,370
)

 $

 The
tax effects of temporary differences and carry forwards that give rise to significant portions of deferred tax assets and liabilities
consist of the following:

of deferred tax assets and liabilities

 Years Ended December 31,

 Deferred tax assets:

 2024

 2023

 Accruals and allowances

 $
 ( 545
)

 $
 179,474

 Capitalized research and development

 20,742

 22,702

 Stock based compensation

 7,464

 15,485

 Net operating allowances

 1,707,978

 1,635,069

 Total deferred tax assets

 1,735,639

 1,852,730

 Deferred tax liabilities:

 Intangible assets

 ( 494,383
)

 ( 328,916
)

 Valuation allowance

 ( 1,731,939
)

 ( 1,844,143
)

 Adjustment for goodwill impairment

 294,725

 269,965

 Net deferred tax assets and liabilities

 $
 ( 195,958
)

 $
 ( 320,329
)

 Deferred
tax assets are to be reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred assets will
not be realized. The Company has evaluated the positive and negative evidence bearing upon its ability to realize the deferred tax assets.
Management has considered the Company's history of cumulative net losses incurred and has concluded that it is more likely than
not that the Company will not realize the benefits of the deferred tax assets. Accordingly, a full valuation allowance has been established
against the deferred tax assets as of December 31, 2024, and 2023. Since indefinite-lived assets cannot be used as a source of taxable
income to support the realization of deferred tax asset, a valuation allowance was recorded against the deferred tax assets, and a net
deferred tax liability or naked credit of approximately $ 196,000
 and $ 320,000
 is presented on the company's balance sheet,
respectively. The Company's valuation allowance deceased by $ 112,204
 in 2024.

 The
Company recognizes liabilities for uncertain tax positions based on a two-step process. The first step is to evaluate the tax position
for recognition by determining if the weight of available evidence indicates that it is more likely than not that the position will be
sustained on audit, including resolution of related appeals or litigation processes, if any. The second step is to measure the tax benefit
as the largest amount that is more than 50% likely of being realized upon settlement. While the Company believes that it has appropriate
support for the positions taken on its tax returns, the Company regularly assesses the potential outcome of examinations by tax authorities
in determining the adequacy of its provision for income taxes.

 F- 25

 NOTES

 NOTE
7 – OPERATING SEGMENTS

 The
Company's Chief Executive Officer serves as the Chief Operating Decision Maker ("CODM") and evaluates the financial
performance of the business and makes resource allocation decisions on a consolidated basis. As a result, the Company operates as a single
reportable segment under ASC 280, Segment Reporting, defined by the CODM as Consumer Home Goods. The Company's operations include
sales and marketing, product design and development, and research and development consulting, all of which are managed centrally. The
CODM assesses financial performance based on consolidated revenue, operating profit, and key operating expenses as detailed below.

 The
following table presents significant segment expenses regularly provided to and reviewed by the CODM:

 Schedule of significant segment expenses

 Consumer Home Goods

 December 31, 2024

 December 31, 2023

 Revenue, net

 $

 $

 Less: Cost of goods sold

 38,019

 457,816

 Less:

 Sales and marketing

 17,313

 75,890

 Product development

 6,233

 101,409

 Consultancy fees

 96,850

 190,467

 Other segment expenses

 980,669

 1,001,448

 Segment net loss

 ( 995,815

)

 ( 1,634,854

)

 Reconciliation of loss:

 Other income (expense)

 77,106

 Interest expense

 ( 90,943

)

 ( 103,741

)

 Income before income taxes

 ( 1,086,754

)

 ( 1,661,489

)

 These
expenses represent the key cost components reviewed by the CODM in assessing the Company's performance.

 The
CODM evaluates income generated from the Company's assets using net income as a key metric. The CODM utilizes this measure to assess
return on assets when making strategic decisions. As the Company operates as one reportable segment, total segment assets and total consolidated
assets are effectively the same. As such, segment assets are equivalent to total consolidated assets as presented on the balance
sheet and all significant accounting policies, major customers, and revenue-related disclosures required under GAAP are included
elsewhere in the financial statements.

 NOTE
8 - SUBSEQUENT EVENTS

 Amended
Related Party Note Payable

 On
January 29, 2025, the Company entered into an amended and revised unsecured promissory note ("New Note") with Coppermine.
The new note revised the October 31, 2024 note for an amended principal balance of $ 485,163 and amended the maturity date to December
31, 2025. The new note is to provide for projected funding needs of the Company to pay for essential corporate maintenance expenses due
in the first three fiscal quarters of 2025, necessary to meet the reporting and filing requirements under federal and state securities
laws and regulations, maintenance of the quotation of the Company's Common Stock on the OTC Markets Group QB Venture Market and
maintenance of directors' and officers' insurance and basic management and accounting operations. The amended principal amount
is intended to provide sufficient working capital to maintain the corporate existence of the Company while the executive
management continues efforts to develop or acquire a new business line or revenue generating operation. On February 3, 2025, the Company
received $ 111,363 of proceeds under the new note to funding working capital for the first quarter of 2025.

 Renewal
of CFO Agreement

 On
January 22, 2025, the Company renewed Ms. Perez's contracting agreement for Chief Financial Officer services, commencing January
1, 2025, and ending upon mutual termination by either party, upon a 14-day notice.

 Appointment of Directors

 On January 9, 2025, Warren Session was appointed
as an independent director of the Company.

 On January 20, 2025, Brian Rosen was appointed as
a non-employee director of the Company and on February 24, 2025, Mr. Rosen was appointed as a member of the Audit Committee.

 Memorandum of Understanding with Coppermine

 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 health, fitness and social activities 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.

 F- 26