Form 10-Q - Quarterly report [Sections 13 or 15(d)]

 

UNITED STATES 

SECURITIES AND EXCHANGE COMMISSION

 Washington, D.C. 20549

 

FORM 10-Q

 

☒ QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2024

 

☐ 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 Registrant as specified in its charter)

 

Florida	84-1047159
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)

 

144-10 Fairway Drive, Suite 200, Deerfield Beach, Florida 33441

(Address of principal executive offices)

 

[phone]

(Issuers Telephone Number)

 

Indicate 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 past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. ☒ Yes ☐ No

 

Indicate by check mark whether the registrant has submitted electronically every Interactive Data File required to be submitted during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

 

Indicate by check mark whether the registrant is a large, accelerated file, an accelerated filer, a non-accelerated filer, smaller reporting company, or emerging growth company. See the definitions of “large, accelerated filer, “accelerated filer, “smaller reporting company and “emerging growth company in Rule 12b-2 of the Exchange Act.

 

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. ☐

 

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

 

Title of each class	Trading Symbol(s)	Name of each exchange on which registered
None	N/A	N/A

 

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

 

As of November 14, 2024, the Company had 48,826,864 shares of Common Stock issued and outstanding. The Common Stock is quoted on the OTCQB Venture Market of the OTC Markets Group, Inc. under the trading symbol “CAPC”.

 

1

 

Use of Certain Defined Terms. Except as otherwise indicated by the context, the following terms have the stated meanings.

 

As used in this Form 10-Q Quarterly Report for the fiscal period ending September 30, 2024 (“Form 10-Q Report” or “Form 10-Q”), “COVID-19” refers to Coronavirus/COVID-19 virus and all variants of that virus, a highly contagious novel virus that was declared a global pandemic by the World Health Organization or “WHO on March 11, 2020. “COVID-19 pandemic” refers to “global pandemic” (as defined by WHO) caused by COVID-19. “Company”, “Capstone”, “we, “our”, and “us” refers to Capstone Companies, Inc. and its subsidiaries, unless context indicates just Capstone Companies, Inc.

 

Additionally:

 

(1)	“Capstone Lighting Technologies, L.L.C.” or “CLTL” is a wholly owned subsidiary of Capstone Companies, Inc.
(2)	“Capstone International Hong Kong Ltd” or “CIHK” is a wholly owned subsidiary of Capstone Companies, Inc. and a Hong Kong registered Company, that is currently in a dormant status.
(3)	“Capstone Industries, Inc.”, a Florida corporation and a wholly owned subsidiary of CAPC, may also be referred to as “CAPI”
(4)	“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.
(5)	“China” means People’s Republic of China.
(6)	“W” means watts.
(7)	References to “33 Act” or “Securities Act” means the Securities Act of 1933, as amended.
(8)	References to “34 Act” or “Exchange Act” means the Securities Exchange Act of 1934, as amended.
(9)	“SEC” or “Commission” means the U.S. Securities and Exchange Commission.
(10)	“Subsidiaries” means Capstone Industries, Inc. (“CAPI”), Capstone International H.K Ltd., (“CIHK”), and Capstone Lighting Technologies, Inc. (“CLTL”).
(11)	Any reference to fiscal year in this Annual Report on Form 10-K means our fiscal year, ending December 31, 2023.
(12)	“LED” or “LEDs” means a light-emitting diode component(s) which can be assembled into light bulbs or can be used in lighting fixtures.
(13)	“OEM” means “original equipment manufacturer.
(14)	“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.

 

We may use “FY” to mean “fiscal year” and “Q” to mean fiscal quarter ended September 30, 2024.

 

2

 

CAPSTONE COMPANIES, INC. 

Quarterly Report on Form 10-Q

 Nine Months Ended September 30, 2024

 

TABLE OF CONTENTS

 

PART 1	FINANCIAL INFORMATION
Item 1.	Condensed Consolidated Financial Statements (Unaudited)	4
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operation	21
Item 3.	Quantitative and Qualitative Disclosures about Market Risk	33
Item 4.	Controls and Procedures	33
PART II	Other Information	34
Item 1.	Legal Proceedings	34
Item 1A.	Risk Factors	34
Item 2.	Unregistered Sale of Equity Securities and Use of Proceeds	35
Item 3.	Defaults of Senior Securities	35
Item 4.	Mine Safety Disclosures	35
Item 5.	Other Information	35
Item 6.	Exhibits	35

 

3

 

 

CAPSTONE COMPANIES, INC., AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS

 

		September 30,				December 31,
		2024				2023
Assets:			(Unaudited)				(audited)
Current Assets:
Cash		$	1,895			$	36,466
Prepaid expenses			22,673				22,120
Due from affiliates			9,570				9,570
Total Current Assets			34,138				68,156
Property and equipment, net			32,228				42,970
Goodwill			1,312,482				1,312,482
Total Assets		$	1,378,848			$	1,423,608
Liabilities and Stockholders’ Equity:
Current Liabilities:
Accounts payable and accrued liabilities		$	1,014,660			$	804,623
Accounts payable due to related party			47,899				—
Notes payable related parties and accrued interest-current			2,105,186				1,946,315
Notes payable unrelated party and accrued interest-current			614,401				594,161
Total Current Liabilities			3,782,146				3,345,099
Long-Term Liabilities:
Deferred tax liabilities -long-term			320,329				320,329
Total Long-Term Liabilities			320,329				320,329
Total Liabilities			4,102,475				3,665,428
Commitments and Contingencies: (Note 4)
Stockholders’ Equity:
Preferred Stock, Series B-1, par value $.0001 per share, authorized 5,000,000 shares, issued and outstanding- 15,000 shares at September 30, 2024, and December 31, 2023 (Liquidation Preference $15,000)			2				2
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 September 30, 2024 and December 31, 2023.			4,884				4,884
Additional paid-in capital			8,550,510				8,550,510
Accumulated deficit			(11,279,023	)			(10,797,216	)
Total Stockholders’ Deficit			(2,723,627	)			(2,241,820	)
Total Liabilities and Stockholders’ Deficit		$	1,378,848			$	1,423,608

 

 

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

4

 

CAPSTONE COMPANIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

		For the Three Months Ended September 30,								For the Nine Months Ended September 30,
		2024				2023				2024				2023
Revenues, net		$	—			$	63,771			$	143,268			$	95,968
Cost of sales			—				(163,194	)			(38,019	)			(199,287	)
Gross Profit			—				(99,423	)			105,249				(103,319	)
Operating Expenses:
Sales and marketing			—				9,733				17,403				66,144
Compensation			—				115,662				153,430				376,658
Professional fees			35,787				93,085				230,222				321,175
Product development			2,365				25,115				4,268				76,454
Other general and administrative			27,371				52,397				91,789				260,598
Total Operating Expenses			65,523				295,992				497,112				1,101,029
Operating Loss			(65,523	)			(395,415	)			(391,863	)			(1,204,348	)
Other Income (Expenses):
Other income			—				—				4				63,972
Interest expense, net			(30,014	)			(28,183	)			(89,114	)			(74,199	)
Total Other Income (Expenses), net			(30,014	)			(28,183	)			(89,110	)			(10,227	)
Loss Before Income Taxes			(95,537	)			(423,598	)			(480,973	)			(1,214,575	)
Income Tax Expense			—				—				834				800
Net Loss		$	(95,537	)		$	(423,598	)			(481,807	)			(1,214,375	)
Net Loss per Common Share
Basic and Diluted		$	(0.00	)		$	(0.01	)			(0.01	)		$	(0.02	)
Weighted Average Shares Outstanding
Basic and Diluted			48,826,864				48,826,864				48,826,864				48,826,864

 

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

5

  

  

CAPSTONE COMPANIES, INC., AND SUBSIDIARIES

CONDENSED  CONSOLIDATED STATEMENTS OF STOCKHOLDERS DEFICIT

 FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2024, AND SEPTEMBER 30, 2023

(Unaudited)

 

		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				Deficit
Balance at December 31, 2022			15,000			$	2				—			$	—				48,826,864			$	4,884			$	8,550,510			$	(9,100,777	)		$	(545,381	)
Net Loss			—				—				—				—				—				—				—				(466,675	)			(466,675	)
Balance at March 31, 2023			15,000				2				—				—				48,826,864				4,884				8,550,510				(9,567,452	)			(1,102,056	)
Net Loss			—				—				—				—				—				—				—				(325,102	)			(325,102	)
Balance at June 30, 2023			15,000			$	2				—			$	—				48,826,864			$	4,884			$	8,550,510			$	(9,892,554	)		$	(1,337,158	)
Net Loss			—				—				—				—				—				—				—				(423,598	)			(423,598
Balance at September 30, 2023			15,000			$	2				—			$	—				48,826,864			$	4,884			$	8,550,510			$	(10,316,152	)		$	(1,760,756	)
Balance at December 31, 2023			15,000			$	2				—			$	—				48,826,864			$	4,884			$	8,550,510			$	(10,797,216	)		$	(2,241,820	)
Net Loss			—				—				—				—				—				—				—				(262,260	)			(262,260	)
Balance at March 31, 2024			15,000				2				—				—				48,826,864				4,884				8,550,510				(11,059,476	)			(2,504,080	)
Net Loss			—				—				—				—				—				—				—				(124,010	)			(124,010	)
Balance at June 30, 2024			15,000			$	2				—				—				48,826,864			$	4,884			$	8,550,510			$	(11,183,486	)		$	(2,628,090	)
Net Loss			—				—				—				—				—				—				—				(95,537	)			(95,537	)
Balance at September 30, 2024			15,000			$	2				—				—				48,826,864			$	4,884			$	8,550,510			$	(11,279,023	)		$	(2,723,627	)

---

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

6

 

 

CAPSTONE COMPANIES, INC., AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS

 (Unaudited)

 

		For the Nine Months Ended
		September 30,
		2024				2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss		$	(481,807	)		$	(1,215,375	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation			10,742				—
Noncash lease expense			—				34,151
Accrued interest added to notes payable related and unrelated parties			89,111				76,199
Increase in accounts receivable, net			—				(52,359	)
Decrease in inventories			—				197,833
Decrease in prepaid expenses			(553	)			(13,768	)
Decrease in deposits			—				24,039
Increase in accounts payable and accrued liabilities			257,936				413,204
Decrease in operating lease liabilities			—				(37,535	)
Net cash used in operating activities			(124,571	)			(573,611	)
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			90,000				583,504
Net cash provided by financing activities			90,000				583,504
Net Decrease in Cash			(34,571	)			(33,077	)
Cash at Beginning of Period			36,466				61,463
Cash at End of Period		$	1,895			$	28,386
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest cash paid		$	—			$	—
Income taxes paid		$	—			$	—

 

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

7

 

CAPSTONE COMPANIES, INC., AND SUBSIDIARIES

NOTES TO CONDENSED CONSOLIDATED FINANCIAL STATEMENTS

 

NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

This summary of accounting policies for Capstone Companies, Inc. (“CAPC”, “Company”, “we”, “our” or “us”), a Florida corporation and its wholly owned subsidiaries 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 Basis of Presentation

 

The condensed consolidated financial statements contained in this report are unaudited. In the opinion of management, the condensed consolidated financial statements include all adjustments, which are of a normal recurring nature, necessary to present fairly the Company’s financial position as of September 30, 2024, and results of operations, stockholders’ equity and cash flows for the three and nine months ended September 30, 2024 and 2023. All material intercompany accounts and transactions are eliminated in consolidation. These condensed consolidated financial statements and notes are presented in accordance with the rules and regulations of the SEC relating to interim financial statements and in conformity with U.S. GAAP. Certain information and note disclosures have been condensed or omitted in the condensed financial statements pursuant to SEC rules and regulations, although the Company believes that the disclosures made herein are adequate to make the information not misleading. The condensed unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Annual Report”) filed with the SEC on March 29, 2024.

 

The operating results for any interim period are not necessarily indicative of the operating results to be expected for any other interim period or the full fiscal year.

 

Liquidity and Going Concern

 

The accompanying unaudited condensed 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.

 

As of September 30, 2024, the Company had negative working capital of $3,748,008, an accumulated deficit of $11,279,023, a cash balance of $1,895, short- term notes payable of $2,719,587 and $320,329 of long-term liabilities for deferred taxes. Further, during the nine months ended September 30, 2024, the Company incurred a net loss of $481,807 and used cash in operations of $124,571.

 

For the nine months ended September 30, 2024 and 2023, the Company reported a $47,000 or 49% increase in net revenue from $96,000 in 2023 to $143,000 in 2023. The increase in revenue period to period is due to a liquidation sale of the Smart Mirrors for $80,000. The net loss for the nine months ended September 30, 2024 was $482,000 as compared to $1,215,000 in 2023. During the nine months ended September 30, 2024 and 2023 the Company used in operating activities approximately $125,000 of cash in 2024 and $574,000 in 2023. The decrease in net cash used in operations primarily relates to decrease in right of use operating lease expense for the non-renewal of the office lease, and decreases in inventory and operating expenses during 2024 as the company has moved to a remote work environment and decreased overhead and workforce costs significantly. 

   

These liquidity conditions 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 debt or equity funding through issuance of securities, or other alternative financing measures.

 

On October 31, 2024 the Company signed an Unsecured Promissory Note (“Note”) with Coppermine Ventures, LLC (“Coppermine”), a private Maryland limited liability company based in Baltimore County, Maryland, of $125,914 (“Principal”) to the Company. The Principal is to be used to pay the working capital debts of the Company listed in Exhibit Two to the Note. The Principal accrues interest at a simple annual rate of 7%. Principal and accrued interest thereon is due and payable in a single lump sum due on July 31, 2025, unless occurrence of certain events causes all sums to become due prior to July 31, 2025, including certain events of default. The Note is not secured by collateral or any other secured interest and does not provide for any conversion of debt-to-equity securities or issuance of any securities. See Note 6.

8

 

In addition, as an inducement to make the loan evidenced by the Note and to make a financial commitment to fund the essential working capital needs of the Company through March 31, 2025, the Company and Coppermine signed a Management Transition Agreement (“MTA”) on October 31, 2024. MTA provides, in part, that Coppermine will: (1) designate two (2) persons for appointment to the Company’s Board of Directors to fill vacancies on the Company’s Board of Directors; (2) designate a person to act as Chief Executive Officer and President of the Company upon the resignation of the incumbent Chief Executive Officer of the Company; and (3) fund certain essential and projected working capital needs of the Company, as set forth in Attachment Two to the MTA, through March 31, 2025. The “essential working capital needs” are those Company expenses that are necessary to pay to maintain the Company as a reporting company under the 1934 Act, cover the annual fee for the quotation of the Company’s Common Stock on The OTC Markets Group (“OTC”) QB Venture Market and OTC Blue Sky monitoring service through August 2025, retain the acting Chief Financial Officer of the Company, retain outside legal counsel to the Company and maintain Directors’ and Officers’ liability insurance coverage. See Note 6.

 

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, or finds and consummates an alternative transaction to improve its financial condition, 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 Form 10-Q.  

   

Nature of Business

 

The Company has its principal executive offices in Deerfield Beach, 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.

 

From 2007 until 2022, the Company, through Capstone Industries, Inc “CAPI”, was primarily engaged in the business of developing, marketing, and selling home LED products (“Lighting Products”) through national and regional retailers in North America and in certain overseas markets. The LED category has matured and is no longer the innovative “must have” consumer product as in previous years. As such, the Company entered into another home goods product segment by developing a smart interactive mirror (“Smart Mirror”) for residential use. The development of the Smart Mirrors was part of the Company’s strategic effort to find new product lines to replace the Lighting Products. The Smart Mirrors have not provided sufficient sustained revenues to support the Company operations.

 

The Company’s products have been typically manufactured in Thailand and China by contract manufacturing companies. As of the date of these consolidated financial statements, the Company’s future product development effort is focused on the development of a “Connected Surfaces” portfolio. The Connected Surfaces portfolio is designed to tap into consumer’s ever-expanding Internet of Things, wireless connected lifestyles prevalent today. The Company has finalized development of a kitchen appliance, the “Connected Chef”, which is a purpose-built tablet with an integrated platform for cooking accessories, i.e.: cutting board, and designed to safely deliver and access content on mobile and web based platforms. The Connected Chef is not yet in production and has not produced any pre-production sales orders or revenues as of the nine months ended September 30, 2024. The Company would have to raise funding to pay for the production and acquisition of inventory for any Connected Chef orders, which funding may not be possible to raise in light of the financial condition of the Company.

 

The Company believes the MTA and new management members will serve the best interests of the Company and its public shareholders by potentially expanding the expertise, funding sources and business development capabilities and networks of the Company and bringing possible new perspectives and ideas to the efforts to establish a viable business operation for the Company. The Company is currently focused on the development or acquisition of a new business line capable of generating operating revenues instead of the internal development and launch of a new consumer product. The development or acquisition of a new business line will require funding in excess of amounts provided under the Note and MTA. There is no assurance that additional funding can be obtained for development or acquisition of a new business line.

The Company’s operations through September 2024 consisted of one reportable segment for financial reporting purposes: Consumer Home Goods. 

 

Inventories

 

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. During the fourth quarter of 2023, Management reviewed the valuation of inventory on hand and decided to write 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.

10

 

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. There was no impairment charge for the nine month ended September 30, 2024 or 2023.

 

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 September 30, 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 September 30, 2024 and 2023, the total number of potentially dilutive common stock equivalents excluded from the diluted earnings per share calculation was 208,288 options, 199,733 warrants and 15,000 of preferred B-1 stock convertible into 999,900 shares of common stock for 2024 and 408,288 options, 199,733 warrants and 15,000 of preferred B-1 stock convertible into 999,900 shares of common stock for 2023.

 

Revenue Recognition for Consumer Product Business

 

The Company has generated revenue from developing, marketing and selling consumer products through national and regional retailers. The Company’s products are targeted for applications such as home indoor and outdoor lighting as well as Internet-of-Thing devices and will have different functionalities. Capstone operated in the consumer electronic products category in the Unites States and in specific overseas markets. These products were offered either under the Capstone brand or a private brand. The Company does not have a product line that is generating revenues as of the date of the filing of this Form 10-Q.

 

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. 

11

 

 

With respect to its former consumer products business, the Company recognized 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.

 

Direct-to-consumer orders for the Connected Surfaces Smart Mirrors were sold initially through e-commerce platforms. The Company also sold the Connected Surfaces Smart Mirror program through independent retailers. The Company only billed the customer and recognized revenue upon the customer obtaining control of the Smart Mirror order which generally occurred upon delivery.

 

The Company expensed 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:

		For the Nine Months Ended September 30, 2024								For the Nine Months Ended September 30, 2023
		Revenues				% of Revenue				Revenues				% of Revenue
Lighting Products – U.S.			57,829				40	%			—				—
Smart Mirror Products- U.S.			85,439				60	%			95,968				100	%
Total Net Revenue		$	143,268				100	%		$	95,968				100	%

 

We provide our wholesale 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 as part of a customers in store test for new product, we may receive back residual inventory.

 

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

 

Our Smart Mirror customers were charged when executing the e-commerce purchase. We do not have extended payment terms for our Smart Mirror customers. Our Lighting Product payment terms varied 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. As of September 30, 2024, the Company was not actively marketing the Smart Mirror products and existing inventory was expensed as of December 31, 2023.

 

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 $840 and $15,500 for the nine months ended September 30, 2024 and 2023, respectively.

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Warranties

 

As of September 30, 2024, the Company is not marketing or selling any products, but is focused on developing the Connected Chef as a potential new product and, as an alternative approach, acquiring or developing a new business line. Efforts to develop the Connected Chef as a new product line had not succeeded as of September 30, 2024.

 

For the LED product line, the Company provided 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 the 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 direct to customer sales of the Smart Mirror, the product had a One Year Limited Warranty. There have been no online sales of the Smart Mirror during the third quarter. The liquidation sale of the remaining Smart Mirrors were sold “as is” and accordingly no warranties apply.

 

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. The Company accrued warranty liability of $0 as of September 30, 2024 and $1,288 as of December 31, 2023.

 

Sales and Marketing

 

Sales and marketing costs, including advertising, public relations, and trade show expenses, are expensed as incurred and included in sales and marketing expenses. Sales and marketing expenses were $17,403 and $66,144 for the nine months ended September 30, 2024, and 2023. Due to declining revenues, and the end of the LED product line as a revenue source, coupled with ending efforts to promote the Smart Mirror in 2024, the Company reduced advertising and promotion expenses in 2024. As of September 30, 2024, the only marketing efforts by the Company have been the Company’s Chief Executive Officer seeking potential funding and pre-production purchasers of the Connected Chef.

 

Product Development

 

All research and development costs are charged to results of operations as incurred.

 

For the nine months ended September 30, 2024, and 2023, product development expenses were $4,268 and $76,454, respectively. Expenses in 2023 were related to the development of the Connected Chef, expanding the Connected Surfaces product portfolio.

 

Accounts Payable and Accrued Liabilities

 

The following table summarizes the components of accounts payable and accrued liabilities as of September 30, 2024, and December 31, 2023, respectively:

		September 30,				December 31,
		2024				2023
Accounts payable		$	45,058			$	69,267
Accounts payable due to related parties			47,899				—
Accrued warranty reserve			—				1,200
Accrued compensation and deferred wages			969,602				734,156
Total		$	1,062,559			$	804,623

 

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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 Compensation

 

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 condensed 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 each of the nine months ended September 30, 2024, and 2023 was $0.

 

Use of Estimates

 

The preparation of condensed 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 revenue recognition, periodic impairment tests, product warranty obligations, valuation of inventories, tax related contingencies, valuation of stock-based compensation, other contingencies and litigation, among others. 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 financial statements. However, circumstances could change, and actual results could differ materially from those estimates.

 

Adoption of New Accounting Standards

 

In June 2016, the FASB issued Accounting Standards Update (“ASU) 2016-13, “Financial Instruments – Credit Losses. This ASU sets forth a current expected credit loss model which requires the Company to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost and applies to some off-balance sheet credit exposures. In November 2019, the effective date of this ASU was deferred until fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, with early adoption permitted. The Company adopted ASC 326 on January 1, 2023, and ASC 326 did not have a material impact on its condensed consolidated financial statements.

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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. ASU 2023-07 is effective for public business entities for fiscal years beginning after December 15, 2023, with early adoption permitted. The Company adopted ASC 280 on January 1, 2024, and ASC 280 did not have a material impact on its condensed consolidated financial statements.

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.

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 September 30, 2024 and December 31, 2023, the Company did not have any cash deposits in excess of FDIC insurance limits.

  

Accounts Receivable

 

The Company grants credit to its customers, located throughout the United States and their international locations. The Company typically does not require collateral from national retail customers. Credit risk is limited due to the financial strength of the customers comprising the Company’s customer base and their dispersion across different geographical regions. The Company monitors exposure of credit losses and maintains allowances for anticipated losses considered necessary under the circumstances. Stripe is the company that processes online payments for our e-commerce website. We should receive payment from them within 3 days of the product shipment. If the product is shipped through Amazon online platform, it could take between 20 and 30 days for collection.

 

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.

 

Major Customers

 

The Company had two customers who comprised 56% and 40%, respectively, of net revenue during the nine months ended September 30, 2024. The Company had one major customer who comprised 78% of net revenue for the nine months ended September 30, 2023.

 

Major Vendors

 

The Company had one vendor from which it purchased 94% of merchandise during the nine months ended September 30, 2024. The Company had one major customer who comprised 78% of net revenue for the nine months ended September 30, 2023.

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NOTE 3 – NOTES PAYABLE TO RELATED AND UNRELATED PARTIES

 

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 Stewart Wallach and Jeffrey Postal and E. Fleisig, a natural person who is 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. Under this agreement the interest terms are 5% based on a 365- day year. The note payable was amended for a new maturity date of November 30, 2024. As of September 30, 2024, the principal outstanding and accrued interest is $1,020,000 and $150,625, respectively.

 

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 Stewart Wallach (through Group Nexus, a company controlled by Mr. Wallach), Jeffrey Postal, and an individual unrelated shareholder, each entered into a capital funding agreement. The term of each agreement was 18 months with principal accruing a simple interest rate of 5 percent per annum, amended to mature on November 1, 2024. On September 30, 2024, Mr. Postal and Mr. Wallach’s agreements were amended for a new maturity date of November 30, 2024. The individual unrelated shareholder’s agreement was not amended and is in default. The Company is currently negotiating with this individual as of the date of this filing. These loans may be prepaid in full or partially without any penalty. As of September 30, 2024, the principal outstanding and accrued interest is $600,000 and $72,577, respectively.

 

On October 13, 2022, the Company negotiated a $50,000 Working Capital Funding agreement with Director Jeffrey Postal, a director, to provide funding for daily operations. The initial term of this agreement was 18 months and was amended to mature November 30, 2024. Principal accrues simple interest at a rate of 5 percent per annum. As of September 30, 2024, the principal outstanding and accrued interest is $50,000 and $4,918, respectively.

 

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 initial term of this agreement was 18 months and was amended to mature November 30, 2024. Principal accrues simple interest at a rate of 5 percent per annum. The loan may be prepaid in full or partially without any penalty. As of September 30, 2024, the principal outstanding and accrued interest is $50,000 and $4,582 , respectively.

 

On January 3, 2023, the Company negotiated a $40,000 Working Capital Funding agreement with Director Stewart 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. The loan may be prepaid in full or partially without any penalty. As of September 30, 2024, the principal outstanding and accrued interest is $40,000 and $3,485, respectively.

  

On March 27, 2023, the Company negotiated a Working Capital Funding agreement with Director Stewart Wallach to provide funding for daily operations. Total funding under the agreement amounted to $632,500 as of September 30, 2024. Principal accrues simple interest at a rate of 5 percent per annum, amended to mature November 30, 2024. The loan may be prepaid in full or partially without any penalty. As of September 30, 2024, the principal outstanding and accrued interest is $632,500 and $39,134, respectively.

 

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. The loan may be prepaid in full or partially without any penalty. As of September 30, 2024, the principal outstanding and accrued interest is $50,000 and $1,767, respectively. 

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As of September 30, 2024 and December 31, 2023, the Company had a total of $2,442,500 and $2,352,502, respectively of outstanding principal, on the above referenced funding agreements, and accrued interest of $277,087 and $187,974, respectively. The outstanding principal balances and accrued interest has been presented on the condensed and consolidated balance sheet as follows:

			Notes Payable
			September 30, 2024				December 31, 2023
Current portion of notes payable and accrued interest, related parties		$	2,105,186			$	1,946,315
Current portion of notes payable and accrued interest, unrelated parties			614,401				594,161
Total notes payable principal and accrued interest			2,719,587				2,540,476
Less accrued interest			(277,087	)			(187,974	)
Total notes payable		$	2,442,500			$	2,352,502

 

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. The Company’s principal executive office were 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.

 

The Company’s rent expense is recorded on a straight-line basis over the term of the lease. The rent expense for the nine months ended September 30, 2024 and 2023, amounted to $2,485 and $94,065, respectively.

 

Employment Agreements

 

On February 5, 2023, 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, 2023 and ends February 5, 2025. 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.

   

Beginning in 2020 and through 2024, executive salaries and consulting fees have been deferred from time to time to conserve cash flow. Deferrals amounted to $969,603 and $734,156, as of September 30, 2024 and December 31, 2023, respectively, include an estimate for employer payroll liability taxes, and are included in accounts payable and accrued liabilities.

 

The Board of Directors ceased salary accrual as of July 1, 2024, due to the Company having no active product line during the third quarter of 2024. 

 

There is a provision in Mr. Wallach’s employment agreement, if his employment is terminated by death or disability or without cause, the Company is obligated to pay to his estate or him, 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: the sum of twelve (12) months base salary at the rate he was earning as of the date of termination and (b) the sum of “merit” based bonuses earned by the him 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 Mr. Wallach, 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 his health and dental insurance benefits for 6 months starting at the Executives date of termination. If he had family health coverage at the time of termination, the additional family premium obligation would remain theirs and will be reduced against his severance package. The employment agreements have an anti-competition provision for 18 months after the end of employment.

17

 

The Company did not accrue for benefits owed at the time of death or disability as it is not probable as of the period ended September 30, 2024.

  

The following table summarizes potential payments upon termination of employment :

		Salary Severance				Bonus  Severance				Gross up  Taxes				Benefit  Compensation				Grand Total
Stewart Wallach		$	301,521			$	—			$	12,600			$	6,600			$	320,721

 

Directors Compensation

 

On July 5, 2022, the Board voted to suspend granting compensation to the independent directors for the remainder of the fiscal year 2022. There have been no payments to the Board of Directors since the year ended December 31, 2022.

 

NOTE 5 - STOCK TRANSACTIONS

 

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 $1.4 million of restricted shares of common stock to five investors on April 5, 2021. The issuance of these warrants were made an exemption from registration under Section 4(a)(2) and Rule 506(b) of Regulation D under the Securities Act.

 

As of September 30, 2024 and December 31, 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”). The B-1 preferred stock are 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 shares 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.

 

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 B-1 Convertible Preferred Stock to each of the Lenders. Each preferred share converts into 66.66 shares of common stock at the option of the 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 B-1 shares have a liquidation preference of $1.00 per share or $15,000 as of September 30, 2024.

 

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 September 30, 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 $0.475 and have a weighted average contractual term remaining of 0.89 years. During the nine months ended September 30, 2024, 200,000 options expired, there were no stock option grants, exercises, nor stock-based compensation expense.

 

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.

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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 September 30, 2024, a total of 816,167 shares of the Company’s common stock has been repurchased since the plan was incepted at a total cost of $119,402. The cost of the repurchased shares were recorded as a reduction of additional paid-in capital.

 

NOTE 6 - SUBSEQUENT EVENTS

 

Unsecured Promissory Note

 

On October 31, 2024, the Company signed an Unsecured Promissory Note (“Note”) evidencing a loan from Coppermine Ventures, LLC, a private Maryland limited liability company based in Baltimore County, Maryland, (“Coppermine”) of $125,914 (“Principal”) to the Company. The Principal is to be used to pay the working capital debts of the Company listed in Exhibit Two to the Note. The Principal accrues interest at a simple annual rate of 7%. Principal and accrued interest thereon is due and payable in a single lump sum due on July 31, 2025, unless occurrence of certain events causes all sums to become due prior to July 31, 2025, including certain events of default. The Note is not secured by collateral or any other secured interest and does not provide for any conversion of debt-to-equity securities or issuance of any securities.

 

Management Transition Agreement

 

As an inducement to make the loan evidenced by the Note and to make a financial commitment to fund the essential working capital needs of the Company through March 31, 2025, Company and Coppermine signed the MTA on October 31, 2024. MTA provides, in part, that Coppermine will: (1) designate two (2) persons for appointment to the Company’s Board of Directors to fill vacancies on the Company’s Board of Directors; (2) designate a person to act as Chief Executive Officer and President of the Company upon the resignation of the incumbent Chief Executive Officer of the Company; and (3) fund certain essential and projected working capital needs of the Company, as set forth in Attachment Two to the MTA, through March 31, 2025. The “essential working capital needs” are those Company expenses that are necessary to pay to maintain the Company as a reporting company under the 1934 Act, cover the annual fee for the quotation of the Company’s Common Stock on The OTC Markets Group (“OTC”) QB Venture Market and OTC Blue Sky monitoring service through August 2025, retain the acting Chief Financial Officer of the Company, retain outside legal counsel to the Company and maintain Directors’ and Officers’ liability insurance coverage.

 

Under the MTA, the Company agreed to accept the resignation of two (2) incumbent directors and the incumbent Chief Executive Officer upon receipt of designation of Coppermine’s two (2) candidates for appointment to the Company’s Board of Directors and designation of Coppermine’s candidate for appointment as Chief Executive Officer and President of the Company, which Coppermine candidates would be appointed to their respective positions upon resignation of the two incumbent directors and Chief Executive Officer of the Company, and which appointments would be subject to the Company’s Board of Directors verification that the Coppermine candidates are qualified and eligible to serve in their respective positions with the Company. Coppermine has not designated its candidates as of the date of the filing of this Form 10-Q. Under the MTA, Coppermine has until November 30, 2024, or December 31, 2024 if extended by written notice, to designate its candidates for appointment to the Company’s Board of Directors and appointment as Chief Executive Officer and President of the Company.

 

As of the date of the filing of this Form 10-Q, no new management members have been appointed by the Company.

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Conversion of Deferred Wages and Consulting Fees to Notes Payable

 

On November 11, 2024, CEO Stewart Wallach executed a promissory note with the Company to evidence money owed to Stewart Wallach for services rendered as Company’s Chief Executive Officer from September 2020 to June 2024 amounting to $608,840.  The principal balance of this Note shall be payable by the Company on the earlier to occur of: (a) November 30, 2024; (b) the date on which the Company consummates a merger or other business combination in which the Company is not the surviving corporation; or (c) the date the Board of Directors of the Company approve a plan of complete liquidation. The date on which any of the foregoing events occur shall be referred to as the “Maturity Date”. The principal balance may be prepaid at any time, at the election of the Company, without penalty or charge. The principal is in the amount of deferred salary owed to the Payee as of the dates stated above for services rendered to the Company as a senior officer.

 

On November 11, 2024, consultant George Wolf executed a promissory note with the Company to evidence money owed to George Wolf for services rendered as Company’s sales and business development consultant from September 2020 to June 2024 amounting to $366,875 . The principal balance of this Note shall be payable by the Company on the earlier to occur of: (a) November 30, 2024; (b) the date on which the Company consummates a merger or other business combination in which the Company is not the surviving corporation; or (c) the date the Board of Directors of the Company approve a plan of complete liquidation. The date on which any of the foregoing events occur shall be referred to as the “Maturity Date”. The principal balance may be prepaid at any time, at the election of the Company, without penalty or charge. The principal is in the amount of deferred salary owed to the Payee as of the dates stated above for services rendered to the Company as a consultant.

 

The Company does not believe any gain or loss will be recorded due to the conversion of deferred wages to notes payable.

 

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Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

 

This discussion should be read in conjunction with Management’s Discussion and Analysis of Financial Condition and Results of Operations in the Company’s 2023 Annual Report.

 

Cautionary Statement Regarding Forward-Looking Statements

 

This Form 10-Q Report contains forward-looking statements that are contained principally in the sections describing our business as well as in “Risk Factors, and in “Management’s Discussion and Analysis of Financial Condition and Results of Operations”. These statements involve known and unknown risks, uncertainties and other factors which may cause our actual results, performance, or achievements to be materially different from any future results, performances or achievements expressed or implied by the forward-looking statements. All statements other than statements of historical facts contained, or incorporated by reference, in this Form 10-Q Report, including, without limitation, those regarding our business strategy, financial position, results of operations, plans, prospects, actions taken or strategies being considered with respect to our liquidity position, valuation and appraisals of our assets and objectives of management for future operations, our ability to weather the impacts of the any pandemic or similar event, financing opportunities, and future cost mitigation and cash conservation efforts and efforts to reduce operating expenses and capital expenditures are forward-looking statements. These risks and uncertainties include, but are not limited to, the factors described in the section captioned “Risk Factors” in our latest 2023 Annual Report. In some cases, you can identify forward-looking statements by terms such as “anticipates, “believes, “could, “estimates, “expects, “intends, “may, “plans, “potential, “predicts, “projects, “should, “would and similar expressions (including the negative and variants of such words). Forward-looking statements reflect our current views with respect to future events and are based on assumptions and are subject to various risks and uncertainties. Given these uncertainties, a reader of this Form 10-Q Report should not place undue reliance on these forward-looking statements. The forward-looking statements contained in this Form 10-Q Report are made as of the date of filing this Form 10-Q Report. You should not rely upon forward-looking statements as predictions of future events. The Company assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law. Examples of these risks, uncertainties and other factors include, but are not limited, to the impact of:

 

·                     Company has no product line or operations generating revenues and has relied on loans or advances from its chief executive officer to sustain basic executive operations, which funding is not assured to fund those operations through fiscal year 2024. If Company cannot find outside funding to develop and promote a new product line or acquire a new business line in fiscal 2025, Company may lack sufficient funds to sustain operations.

·                     Company needs to find third party funding to fund development, marketing and acquisition of inventory for any new product line, and lacks such funding to market and purchase inventory for the Connected Chef, which is the only product ready for production as of September 30, 2024. Since the Company lacks hard assets, has no revenue generating operations, and significant debts, and as the Common Stock has a low market price and limited liquidity, third party funding may not be available to produce and promote a new product line.

·                     Company may be unable to acquire a new business line or acquire a new business line that is able to fund the overhead necessary to maintain the Company as a public company.

·                     The financial condition of the Company raises a substantial doubt about the Company’s ability to continue as a going concern.

·                     The significant debt obligations, while mostly owed to two of the Company’s directors, if not resolved or restructured, may pose a hinderance to developing a profitable new product line or acquisition of a new business line.  

·                     The Company may be unable to restructure or resolve all or most of its debt obligations in any transaction for acquisition of a new business or business line, or to fund production and promotion of any new product line. 

·                     Other risk factors are stated in Item 1A of Company’s 2023 Annual Report.

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It is not possible to predict or identify all such risks. There may be additional risks that we consider immaterial, or which are unknown as of the date of the filing of this Form 10-Q.

 

Risk Factors affecting Efforts to Develop or Acquire a New Business Line

The challenge facing the Company is to acquire a new business line, or to establish a new profitable product line, whether the Connected Chef or another product line, before the cost of marketing and penetrating a new product market company impose unsustainable financial burdens and losses on the Company.

 

The appointment of the new management members under the MTA has not occurred as of the date of the filing of this Form 10-Q and there are no assurances that new management members will result in the development of a new business line for the Company or will enhance the ability or capabilities of the Company’s management to develop or acquire a new business line for the Company. The funding under the Note and the financial support of essential corporate overhead expenses of the Company under the MTA, if provided in accordance with the MTA, will allow the Company to continue efforts to develop a new business line. With significant financial support from Company’s Chief Executive Officer, who has been personally funding essential corporate overhead expenses in 2024, ending after October 2024, funding by Coppermine under the Note and MTA is the sole source of working capital funding for the Company as of the date of the filing of this Form 10-Q.

No assurances can be given that any new management members or funding by Coppermine will in fact result in a new business line for the Company or cover all future operating expenses of the Company. The financial commitment under the MTA extends only through the first fiscal quarter of 2025 and, if Coppermine does not provide additional funding after the first fiscal quarter of 2025, or the Company does not develop revenue generating operations prior to the end of the first fiscal quarter of 2025, then the Company will need to obtain a new source of working capital funding for operating expenses after the first fiscal quarter of 2025 in order to sustain operations and efforts to develop a new business line. The Company does not have an alternative source of working capital funding to funding by Coppermine.

Even if the Company locates a new business line to develop or acquire, the Company may lack the funding necessary to consummate the development or acquisition of a new business line. Further, the low market price of the Company’s Common Stock, the Company’s status as a penny stock company, the limited liquidity of the market for the Company’s Common Stock, the status of the Company as a company with no active operations as of the date of the filing of this Form 10-Q and the costs of and regulatory requirements for consummating an acquisition with a company with no active operations and the limited working capital funding available to the Company are factors adversely affecting the Company’s ability to develop or acquire a new business line.

If the Company does develop or acquire a new business line, that new business line may not generate revenues sufficient to sustain Company’s and new business line’s operations, may fail to achieve profitability, or may fail to attract sufficient funding to sustain or grow operations.

The Company intends to develop or acquire a new business line that is not involved in the production of consumer products that are discretionary purchases for consumers, which was the Company’s prior business line. The shift in focus is due to the low profit margins typically provided by those consumer products; the funding needed for developing, producing, warehousing and marketing those consumer products; the Company’s lack of an effective e-commerce operation and reliance on bulk orders by a limited number of retailers for those consumer products; and vulnerability of those consumer products to changing consumer preferences and retailers’ buying preferences.

 

General Risk Factors for Investment in Company’s Common Stock.

The Company is a “penny stock” company under Commission rules and the public stock market price for our common stock is impacted by the lack of significant institutional investor and primary market maker support. Investment in our common stock is highly risky and should only be considered by investors who can afford to lose their investment and do not require on demand liquidity. Potential investors should carefully consider risk factors in our SEC filings. The Company’s common stock lacks the primary market maker and institutional investor support to protect the public market from being unpredictable and volatile. Investors may not have liquidity or desired liquidity in our common stock as an investment. With the lack of any revenues and active business line, any investment in the Company’s common stock would be highly risky.

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The above examples are not exhaustive and new risks emerge from time to time. Such forward-looking statements are based on our current beliefs, assumptions, expectations, estimates and projections regarding our present and future business strategies and the environment in which we expect to operate in the future. These forward-looking statements speak only as of the date made. We expressly disclaim any obligation or undertaking to release publicly any updates or revisions to any forward-looking statement to reflect any change in our expectations with regard thereto or any change of events, conditions, or circumstances on which any such statement was based, except as required by law.

  

Overview of Our Business

 

Capstone Companies, Inc. (“Company” or “CAPC”) is a public holding company organized under the laws of the State of Florida. The Company is a 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’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 2023. The Connected Surfaces is the Company’s effort to establish business in an emerging segment that is intended for future revenue growth. The Connected Surfaces products did not achieve significant sales in 2023 – either online or through efforts to sell in bulk to brick-and-mortar, “big box” retailers and all inventory was expensed as of December 31, 2023.

  

The Connected Chef, is 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 has actively marketing the Connected Chef tablet to appliance manufacturers and distributors, but the product has no purchase commitments from retailers as of the date of the filing of this Form 10-Q. Due to the lack of orders and funding, the Connected Chef is not in production.

 

On October 31, 2024, the Company secured a working capital promissory note for $125,914, maturing July 31, 2025 accruing 7% interest per annum. 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.

 

Liquidity and Going Concern

 

The accompanying condensed 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.

 

For the nine months ended September 30, 2024 and 2023, the Company reported a $47,000 or 49% increase in net revenue from $96,000 in 2023 to $143,000 in 2024. The increase in revenue period to period is due to a liquidation sale of the Smart Mirrors for $80,000. The net loss for the nine months ended September 30, 2024 and 2023 was $482,000 as compared to $1,215,000 in 2023. During the nine months ended September 30, 2024 and 2023 the Company used in operating activities approximately $125,000 in 2024 and $574,000 in 2023. The decrease in net cash used in operations primarily relates to a decrease in right of use operating lease expense for the non-renewal of the office lease, and decreases in inventory and workforce during 2024 as the company has moved to a remote work environment and decreased overhead costs significantly.

 

As of September 30, 2024, the Company has negative working capital of approximately $3,748,000 and an accumulated deficit of $11,279,000. The Company’s cash balance decreased by approximately $35,000 from $37,000 as of December 31, 2023 to $2,000 as of September 30, 2024. These conditions raise substantial doubt about the Company’s ability to continue as a going concern.

 

The Company is actively seeking alternative sources of liquidity, including but not limited to accessing the capital markets, or other alternative financing measures. 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 Company reviews alternatives to its current business approach, including, without limitation, sale of the public company or merger of the Company with a private operating company and other common strategic alternatives to a company facing business and financial challenges and uncertainties such as ours. 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.

23

 

 

Director and 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 $632,500. The

note payable accrues simple interest at a rate of 5 percent per annum, matures November 30, 2024, with the ability for the Company to request a 90-day extension.

 

Our Current Strategy

 

The Company’s looking forward strategy is focused on developing or acquiring a new business line that can generate sufficient revenues to sustain the Company’s operations. These efforts will depend on having adequate working capital from funding to establish a new business line or acquire a new business line and adequate cash flow from product sales or the new business line. We may be unable to achieve sufficient working capital when and, in the amounts, required to meet operational needs and overhead or to pursue or establish a new product lines or a new business line. The funding under the Note and MTA will provide working capital for essential working capital needs but will not be sufficient to fund the development or acquisition of a new business line. Other than the funding under the Note and MTA, the Company has not achieved adequate funding as of the date of the filing of this Form 10-Q report to fund more essential working capital needs and the Company may be unable to achieve sufficient working capital when and, in the amounts, required to meet operational needs and overhead. The lack of adequate, timely and affordable funding may undermine the efforts of the Company to establish a revenue stream from a new business line developed internally or continue operations while seeking to develop or acquire a new business line, and efforts to sustain Company operations.

 

As a former consumer product company, the Company competed in competitive consumer market channels that could 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 Company’s products was highly dependent on economic drivers such as consumer spending and discretionary income. The Company faced 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 was to develop well designed and made products that appeal to a niche market. When the Company was producing and promoting a product line, the Company relied 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, and results from prior e-commerce marketing efforts, the Company is not investing any funds in e-commerce marketing and promotion efforts.

 

Reason for Development of Connected Surfaces. While consistently launching successful lighting programs in years prior to 2022, the Company determined that it needed to develop a new product line with greater profit margin potential than LED Lighting and as a replacement revenue generating source. The Company refocused its development and marketing initiatives and is focused on developing the Connected Surfaces products as its primary business line to replace the LED lighting business, which is no longer being actively promoted by the Company. The discontinuance of the LED lighting product line was due to gross margin reductions as a result of increased tariffs.

 

The Company’s prior product roadmap outlined a plan for the launch at the end of 2024 of the Connected Chef, a kitchen appliance item, which is a purpose-built tablet integrated into a multi-purpose cutting board and designed to safely deliver and access content on mobile and web-based platforms a kitchen utility item.  The Company received Google Mobile Service (“GMS”) approval during 2023 which allows the tablet integrated in the Connected Chef to operate the Android Operating System and pre-install Google’s proprietary applications such as Chrome, Drive, Gmail, Playstore, Youtube directly through the Connected Chef tablet (“Google” is a trademark of Google LLC, a subsidiary of Alphabet, Inc., a SEC reporting company). Rather than using and sharing recipes on one’s smartphone in the kitchen, recipes can be looked up directly using the users preferred search engine (like, Chrome). With access to content online with millions of cooking and food related websites and videos as well as tutorials and cooking classes all in one place the Connected chef™ becomes a digital recipe bookshelf. The Connected Chef™ also provides a cleaner and safer appliance in the cooking area. The Connected Chef was designed to become an anchor in the digital kitchen. The design is aimed at tastefully styled and coupled with excellent quality in order to appeal to the discerning eye while maintaining affordability for mainstream use.

  

The Company believed the Connected Chef program would leverage existing relationships with its traditional retail partners and collectively contribute organic growth for the Company, as well as serving as a basis for partnering with appliance manufacturers and distributors. The ability of the Company to promote any of its Connected Surface products and any new, related “connected” consumer products was dependent on securing adequate, affordable and timely funding from lenders and investors. As of the date of the filing of this Form 10-Q report, the Company has not secured that funding and the Connected Chef is not in production and has no pre-production orders. Efforts to promote and launch the Connected Chef ended in September 2024. The focus of the Company is on a new business line not involving the production and sale of discretionary consumer products. The Company regards the consumer product business line as too capital intensive to be pursued by the Company at this time.

  

Periodic Strategic Review

Like many companies, the Company conducts periodic strategic reviews where the feasibility of significant corporate transactions are considered, including mergers, asset purchases or sales and diversification or change in business lines. The financial condition of the Company has prompted an enhanced consideration and search for a significant corporate transaction, including, without limitation, a possible merger and acquisition transaction or reorganization to sustain operations or to acquire a new business line that can support company operations. 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 consummate a significant corporate transaction that sustains operations or creates a new viable product line or business line.

 

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Tariffs. The President Trump administration implemented certain tariffs that directly affected the Company’s competitiveness. 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 has seen promotional schedules cut back and retailers have requested pricing adjustments that would not be known to them in advance to products being shipped. The Company’s previous business model insulates the Company from paying duties as its retail partners are the importers of record. The obvious unknown is the final impact of tariffs to the landed costs. Accordingly, retailers demonstrated caution in their promotional planning schedules.

 

Sales and Marketing of Consumer Product Line

 

We used direct sales by our Chief Executive Officer and sales agents to sell our consumer products, which effort included direct sales aimed to Big Box and home-goods chain retailers. Company’s e-commerce initiatives did not provide significant sales as of the nine months ended September 30, 2024.

 

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, but also relied on the retail sales channels to advertise its products directly to the end user consumers through various promotional activities.

 

In the nine months ended September 30, 2024, the Company had 2 major customers.

 

When we promoted the Connected Surface Smart Mirrors, we utilized social media platforms and online advertising campaigns to further grow the Company’s online presence. In addition to Facebook, Instagram, Pinterest and LinkedIn, The Company has launched a You Tube channel to host Smart Mirror videos and established a X account. Our Social Media marketing did not result in any significant sales of products. We were not 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 is not emphasizing Social Media marketing in 2024 due lack of results and lack of funding to pursue active Social Media marketing:

 

FACEBOOK¹: https://www.facebook.com/capstoneindustries and https://www.facebook.com/capstoneconnected

INSTAGRAM²: https://www.instagram.com/capstoneconnected

PINTEREST³: https://www.pinterest.com/capstoneconnected/

LINKEDIN⁴: https://www.linkedin.com/company/6251882

X⁵ https://x.com/CAPC_Capstone

YOUTUBE⁶ https://www.youtube.com/channel/UCMX5W8PV0Q59qoAdMxKcAig

¹ Facebook is a registered trademark of Facebook, Inc.

² Instagram is a registered trademark of Instagram.

³ Pinterest is a registered trademark of Pinterest.

⁴ LinkedIn is a registered trademark of LinkedIn Corporation.

⁵ X is a registered trademark of X Corp.

⁶YouTube is a registered trademark of YouTube Corporation.

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Competitive Conditions for Consumer Product Line

 

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 new Connected Surfaces internet of things product segments. The Company competes with 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.

 

Research, Product Development, and Manufacturing Activities

 

The Company did not engage in research, product development or manufacturing in the fiscal quarter ended September 30, 2024.

 

For the consumer products previously produced by the Company, the Company’s research and development operations were based in Florida and Thailand and the design and engineering of many of the Company’s products, involved the collaboration from its third-party manufacturing partners, software developers and Capstone U.S. engineering advisers. The Company outsourced the manufacture and assembly of our consumer products to a select group of OEM manufacturers overseas. Our research and development focus typically and in 2023 included efforts to:

 

 

●

Develop products 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 established 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 purchased components that we specified and provided the necessary facilities and labor to manufacture our products. We leveraged the strength of the contract manufacturers and allocated the manufacturing of specific products to the contract manufacturer best suited to the task. Quality control and product testing was conducted at the contract manufacturers facility and at their 3^rd party testing laboratories overseas.

 

CAPI used 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, CAPI used globally recognized certified testing laboratories such as United Laboratories (UL) or Intertek (ETL) to ensure all products were designed and tested to adhere to each country’s individual regulatory standards. The Company also hired quality control inspectors who examine and test products to CAPI’s specification(s) before shipments are released.

 

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Raw Materials used for Consumer Products

 

For consumer products previously produced, the principal raw materials currently used by CAPI were 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 provided the necessary facilities and labor to manufacture the Company’s products. Capstone allocated the production of specific products to the contract manufacturer the Company believed 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 were incorporated at each stage of the manufacturing process, ranging from the inspection of raw materials through production and delivery to the customer. These procedures were in addition 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.

 

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. As of the date of the filing of this Form 10-Q, the Company has no products in production.

 

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 provided 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.

 

For the e-commerce and direct to consumer marketplace, the Company developed a new website with full shopping cart capabilities. The Company had negotiated contracts for secured credit card processing capability, state sales tax compliance services and order fulfillment and logistics services, at a very competitive rate. These efforts did not result in any significant product sales during 2024.

 

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Information Technology

 

The efficient operation of our corporate activities is dependent on our information technology systems. We rely on those systems to manage our daily operations, and maintain our financial and accounting records. When the Company was making and selling consumer products, and in the normal course of business, we received 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
●	Cybersecurity. The Company did not experience any cybersecurity incidents in the fiscal quarter ended September 30, 2024.

 

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.

 

 Critical Accounting Policies

 

We believe that there have been no significant changes to our critical accounting policies during the nine months ended September 30, 2024, as compared to those we disclosed in Management’s Discussion and Analysis of Financial Condition and Results of Operations included in our 2023 Annual Report.

 

CONSOLIDATED OVERVIEW OF RESULTS OF OPERATIONS

 

Results of operations.

 

Net Revenues

 

Revenue was derived from sales of our Connected Surfaces Smart Mirrors. Before 2024, the Company derived revenue from consumer home LED lighting for both indoor and outdoor applications while the Smart Mirrors were sold directly to consumers via e-commerce efforts. We recognized revenue upon shipment of the order to the customer when all performance obligations have been completed and title had transferred to the customer and in accordance with the respective sale’s contractual arrangements. Each contract on acceptance had a fixed unit price. Our sales were to the U.S. market which in 2024 represented 100% of revenues and we expected to the U.S Market to be the major source of revenue for the Company. 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.

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Cost of Goods Sold

 

With respect to the Connected Surface product line, our cost of goods sold consisted 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. On December 31, 2023, we expensed for obsolescence all remaining Smart Mirror inventory one hand. As a result, the $86,289 of revenues derived from the e-commerce sales and the liquidation sale of the remaining inventory of Smart Mirrors for the nine months ending September 30, 2024 did not have cost of goods sold associated with them.

 

Gross Profit

 

Our gross profit was affected by a variety of factors, including average sales price for our products, product mix, promotional allowances, our ability to reduce product costs and fluctuations in the cost of our purchased components.

 

Operating Expenses

 

Operating expenses include sales and marketing expenses, consisting of sales representative’s commissions, advertising expense and costs related to employee’s compensation. In addition, operating expense include charges relating to product development, office and warehousing, accounting, legal, insurance and stock-based compensation.

 

 

 

CONSOLIDATED RESULTS OF OPERATIONS AND OUTLOOK

 

Three Months Ended September 30, 2024, Compared to Three Months Ended September 30, 2023
(In Thousands)
		September 30, 2024								September 30, 2023
		Dollars				% of Revenue				Dollars				% of Revenue
Revenues, net		$	—				—	%		$	64				100	%
Cost of sales			—				—	%			(163	)			(255	)%
Gross Profit			—				—	%			(99	)			(155	)%
Total Operating Expenses			66				—	%			296				463	%
Operating Loss			(66	)			—	%			(395	)			(617	)%
Total Other Income (Expense)			(30	)			—	%			(28	)			(44	)%
Loss Before Tax Benefit			(96	)			—	%			(424	)			(663	)%
Income Tax (Expense)			—				—	%			—				0	%
Net Loss		$	(96	)			—	%		$	(424	)			(663	)%

 

Nine Months Ended September 30, 2024, Compared to Nine Months Ended September 30, 2023
(In Thousands)
		September 30, 2024								September 30, 2023
		Dollars				% of Revenue				Dollars				% of Revenue
Revenues, net		$	143				100	%		$	96				100	%
Cost of sales			(38	)			(27	)%			(199	)			(207	)%
Gross Profit			(105	)			(73	)%			(103	)			(107	)%
Operating Expenses			497				348	%			1,101				1147	%
Operating Loss			(392	)			(274	)%			(1,204	)			(1254	)%
Total Other Income (Expense)			(89	)			(62	)%			(10	)			(10	)%
Loss Before Tax Benefit			(481	)			(336	)%			(1,215	)			(1266	)%
Income Tax (Expense)			1				1	%			—				0	%
Net Loss		$	(482	)			(337	)%		$	(1,215	)			(1266	)%

        

Net Revenues

 

Our business operations and financial performance for the nine months ended September 30, 2024, reflected slow e-commerce sales for the Smart Mirror with all of the inventory sold in a liquidation event during the second quarter.

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There were no revenues for the three months ended September 30, 2024, a decrease of $64,000 or 100% from $64,000 in the same period 2023.

 

Net revenues for the nine months ended September 30, 2024, were $143,000, an increase of $47,000 or 49% from $96,000 in the same period 2023.

 

The following tables disaggregates revenue by geographic area:

 

		For the Three Months Ended September 30,								For the Three Months Ended September 30,
		2024								2023
		Revenues				% of Total Revenue				Revenues				% of Total Revenue
Lighting Products- US		$	—				—	%		$	—				—	%
Smart Mirror Products- U.S.			—				—	%			63,771				100	%
Total Revenue		$	—				—	%		$	63,771				100	%

 

 

		For the Nine Months Ended								For the Nine Months Ended
		September 30, 2024								September 30, 2023
		Revenues				% of Total Revenue				Revenues				% of Total Revenue
Lighting Products- US		$	57,829				40			$	—				—	%
Smart Mirror Products- U.S.			85,439				60	%			95,968				100	%
Total Revenue		$	143,268				100	%		$	95,968				100	%

 

Gross Profit and Cost of Sales

 

Gross profit (loss) for the three months ended September 30, 2024, and 2023, was approximately $0 and ($99,000), respectively, an decrease of $99,000 from the previous year. Gross Profit as a percent of revenue was 0% in the three months ended September 30, 2024 as compared to (154%) in the same period of 2023, due to the Smart Mirror inventory reserve of $60,000 recorded as of September 30, 2023.

 

Gross profit (loss) for the nine months ended September 30, 2024, and 2023, was approximately $105,000 and ($103,000), respectively, an increase of $208,000 from the previous year. Gross Profit as a percent of revenue was 73% in the nine months ended September 30, 2024 as compared to (107%) in the same period of 2023, due to the Smart Mirror inventory valuation adjustment recorded as of September 30, 2023 to reflect the proper carrying value of the Smart Mirrors at lower than cost or net realizable value.

 

Operating Expenses and Other Income (Expenses)

 

The Company made concerted efforts to reduce operating expenses during 2024 in accordance with the liquidation of the Smart Mirror inventory, as denoted further.

 

Sales and Marketing Expenses

 

For the three months ended September 30, 2024, and 2023, sales and marketing expenses were approximately $0 and $10,000, respectively, a decrease of $10,000 or 100%.

 

For the nine months ended September 30, 2024, and 2023, sales and marketing expenses were approximately $17,000 and $66,000, respectively, a decrease of $49,000 or 74%. The Company made concerted efforts to reduce marketing expenses in accordance with the low Smart Mirror sales.

 

30

Compensation Expenses

 

For the three months ended September 30, 2024, and 2023, compensation expenses were approximately $0 and $116,000 respectively, a decrease of $116,000 or 100%.

 

For the nine months ended September 30, 2024, and 2023, compensation expenses were approximately $153,000 and $377,000 respectively, a decrease of $224,000 or 59%. The Company has reduced workforce to essential employees and executives suspended salary accrual as of July 1, 2024.

 

Professional Fees

 

For the three months ended September 30, 2024, and 2023, professional fees were approximately $36,000 and $93,000 respectively, a decrease of $57,000 or 61%.

 

For the nine months ended September 30, 2024, and 2023, professional fees were approximately $230,000 and $321,000 respectively, a decrease of $91,000 or 28%.

 
Product Development Expenses

 

For the three months ended September 30, 2024, product development expenses were approximately $2,000 as compared to $25,000 in 2023, a reduction of $23,000 or 92%.

 

For the nine months ended September 30, 2024, product development expenses were approximately $4,000 as compared to $76,000 in 2023, a reduction of $72,000 or 94%. During 2023, fees were incurred testing and certification of the Connected Chef which were not incurred during 2024.

  

Other General and Administrative Expenses

 

For the three months ended September 30, 2024, other general and administrative expenses were approximately $27,000 as compared to $52,000 in 2023 for a reduction of $25,000 or 48%.

 

For the nine months ended September 30, 2024, other general and administrative expenses were approximately $92,000 as compared to $261,000 in 2023 for a reduction of $169,000 or 65%. Rent expense, operating overhead and travel costs were reduced as part of the reduction in nonessential expenses during 2024.

 

Total Operating Expenses

 

For the three months ended September 30, 2024, and 2023, total operating expenses were approximately $66,000 and $296,000, respectively, a decrease of approximately $231,000 or 78%.

 

For the nine months ended September 30, 2024, and 2023, total operating expenses were approximately $497,000 and $1,101,000, respectively, a decrease of approximately $604,000 or 55%.

 

Operating Loss

 

For the three months ended September 30, 2024 and 2023, the operating loss was approximately $66,000 and $296,000, respectively, a decreased loss of $230,000 or 78%.

 

For the nine months ended September 30, 2024 and 2023, the operating loss was approximately $392,000 and $1,204,000, respectively, a decreased loss of $812,000 or 67%.

 

Total Other Income (Expense), net

 

For the three months ended September 30, 2024, and 2023, other income (expense) was $0.

 

For the nine months ended September 30, 2024, and 2023, other income (expense) was ($89,000), net as compared to ($10,000) for 2023.

 

Net Loss

 

For the three months ended September 30, 2024 the net loss was approximately $96,000 compared to a net loss of $424,000 in the same period 2023, a decreased loss of $328,000 or 77%.

 

For the nine months ended September 30, 2024 the net loss was approximately $481,000 compared to a net loss of $1,215,000 in the same period 2023, a decreased loss of $734,000 or 60%.

 

Off-Balance Sheet Arrangements

 

The Company does 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.

 

Contractual Obligations

 

There were no material changes to contractual obligations for the nine months ended September 30, 2024.

31

 

Cash Flow

 

Cash flow from operations are primarily dependent on our net income adjusted for non-cash expenses and the timing of collections of receivables, level of inventory and payments to suppliers. Cash as of September 30, 2024, and December 31, 2023, was approximately $2,000 and $37,000 respectively, a decrease of approximately $35,000.

 

Summary of Cash Flows		For the Nine Months ended September 30,
		2024				2023
(In thousands)
Net cash used in:
Operating Activities		$	(125	)		$	(574	)
Investing Activities			—				(43	)
Financing Activities			90				584
Net decrease in cash		$	(35	)		$	(33	)

 

As of September 30, 2024, the Company’s working capital deficit was approximately $3,748,000. Current assets were approximately $34,000 and current liabilities were approximately $3,782,000 and include:

 

●	Accounts payable of approximately $45,000 due vendors and service providers and approximately $48,000 due to a related party
●	Accrued expenses of approximately $970,000 in deferred wages.
●	Note payable related and unrelated parties of $2,443,000 with accrued interest of approximately $277,000.

   

Cash Flows used in Operating Activities

Cash used in operating activities in the nine months ended September 30, 2024, and 2023 was approximately $125,000 and $574,000, respectively, a decrease of $449,000 compared to last year.

 

Cash Flows used in Investing Activities

 

Cash used in investing activities in the nine months ended September 30, 2024, and 2023 was $0 and $43,000, respectively.

 

Cash Flows provided by Financing Activities

 

Cash provided by financing activities for the nine months ended September 30, 2024 and 2023, was approximately $90,000 and $584,000, respectively.

 

As of September 30, 2024, and December 31, 2023, the Company had outstanding notes payable $2,720,000 and $2,540,000 which includes accrued interest of $277,000 and $188,000, respectively.

 

Directors and Officers Insurance

 

The Company currently has Directors and Officers liability insurance, and the Company believes the coverage is adequate to cover likely liabilities under such a policy.

 

Exchange Rates

 

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

 

During 2024 the average exchange rate between the U.S. Dollar and Chinese Yuan have been relatively stable approximately RMB 7.00 to U.S. $1.00.

 

The average exchange rate between the U.S. Dollar and Thai Baht has been relatively stable at approximately Baht 35.00 to U.S. $1.00.

 

Operating expenses in Hong Kong are historically paid in either Hong Kong dollars or U.S. dollars. There were no expenses for Hong Kong operations during the first half of 2024.

 

While exchange rates have been stable for several years, we cannot assure you that the exchange rate between the United States, Hong Kong, 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.

 

Country Risks: Changes in foreign, cultural, political, and financial market conditions could impair the Company’s international manufacturing operations and financial performance.

32

 

 

The Company’s manufacturing of consumer products was conducted in China and Thailand. Consequently, when products were being produced, the Company was subject to a number of significant risks associated with manufacturing in overseas, including: 

 

●	The possibility of expropriation, confiscatory taxation, or price controls.
●	Adverse changes in local investment or exchange control regulations.

 

●	Political or economic instability, government nationalization of business or industries, government corruption, and civil unrest.
●	Legal and regulatory constraints.
●	Tariffs and other trade barriers, including trade disputes between the U.S. and China.
●	Political or military conflict between the U.S. and China, or between U.S. and North Korea, resulting in adverse or restricted access by U.S.-based companies to Chinese manufacturing and markets.

 

Currency: Currency fluctuations could significantly increase our expenses during periods when we produced and sold consumer products and could affect the results of operations, especially where the currency is subject to intense political and other outside pressures.

 

Interest Rate Risk: The Company does not have significant interest rate risk during the nine month period ended September 30, 2024. All outstanding loans have been disclosed including the agreed interest rates.

 

Credit Risk: The Company has not experienced significant credit risk. The e-commerce business requires customer credit approval prior to shipment and the payment is received by the Company between 5 and 20 days after shipment depending on which ordering platform is used by the consumer. To date we have not experienced any credit risk issues, but we will closely monitor the process to assess that this trend continues.

 

Item 3. Quantitative and Qualitative Disclosures about Market Risk

 

Not applicable.

 

Item 4. Controls and Procedures

 

Evaluation of disclosure controls and procedures.

 

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

 

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 Securities Exchange Act of 1934, as amended (the “Exchange Act”) were effective as of September 30, 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.

Changes in Internal Controls over Financial Reporting.

 

There are no changes to our internal control over financial reporting during the fiscal quarter ending September 30, 2024, the period covered by this report, 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.

 

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

33

 

 

Inherent Limitations on Effectiveness of Controls

 

Our management does not expect that our disclosure controls and procedures or our internal control over financial reporting will prevent or detect all errors and all fraud. Internal control over financial reporting, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of internal control are met. Further, the design of internal control must reflect the fact that there are resource constraints, and the benefits of the control must be considered relative to their costs. While our disclosure controls and procedures and internal control over financial reporting are designed to provide reasonable assurance of their effectiveness, because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within our company, have been detected.

 

PART II — OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

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.

 

Other Legal Matters. To the best of our knowledge, none of our directors, officers, or owners 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 1A. Risk Factors.

 

You should carefully consider the “Risk Factors” disclosed under “Item 1A. Risk Factors” in our 2023 Annual Report (as amended or revised by the Risk Factors set forth in this Form 10-Q reflecting the worsening financial condition of the Company in 2024). You should be aware that these risk factors and other information may not describe every risk facing our Company. Additional risks and uncertainties not currently known to us or that we currently deem to be immaterial also may materially adversely affect our business, financial condition and/or operating results.

 

The Company has insufficient revenues to support its basic operating overhead and relies on funding from a director and senior officer to pay basic operating overhead. The Company may be unable to sustain operations through 2024 without continued financial support from the directors and senior officer or investment or funding from a third party. There can be no assurance that the Company can obtain sufficient funding from current funding sources or any new funding sources to sustain operations through 2024. The financial difficulties of the Company severely hamper the pursuit of Connected Surface products and any new business lines and new products.

 

While the Note and MTA provided funding of essential working capital needs, there is substantial doubt about our ability to continue as a going concern if Coppermine or another source does not provide funding past March 31, 2025, of which an ongoing concern may hinder our ability to obtain further financing. Our public auditor’s report for the 2023 Annual Report stated that the Company has incurred operating losses, has incurred negative cash flows from operations and has an accumulated deficit, and these and other  factors raise substantial doubt about the Company’s ability to continue as a going concern. Our financial statements do not include any adjustments that may result from the outcome of this uncertainty.

If funding sources are not available or are inadequate or unwilling to fund operations beyond funding under the Note and MTA, or any new business line is not capable of generating sustainable revenues in the future, we will be required to reduce operating costs even further from existing reductions in operating costs, which could further jeopardize any future strategic initiatives and business plans. Furthermore, uncertainty concerning our ability to continue as a going concern may hinder our ability to obtain future financing. Continued operations and our ability to continue as a going concern are dependent on our ability to obtain additional funding in the near future, whether to supplement, or provide funding after using, the funding under the Note and MTA, and thereafter, and there are no assurances that such funding will be available to us at all or will be available in sufficient amounts or on reasonable terms.

 

There may be risks that are not presently material or known and not discussed in this Form 10-Q or other SEC filings. The Company’s status as a company with no active operations as of the date of the filing of this Form 10-Q and the doubt about the viability of the Company as a going concern creates substantial about the ability of the Company to develop or acquire a new business line or sustain operations beyond funding under the Note and MTA. There are also risks within the economy, the industry, and the capital markets that could materially adversely affect the Company’s ability to develop or acquire a new business, including those associated with an economic recession, inflation, a global economic slowdown, political instability, war, government regulation (including tax regulation), employee attraction and retention and funding working capital needs for a new business line. These factors affect businesses generally, including the Company and, as a result, are not discussed in detail, but are applicable to the Company. As a “penny stock” without primary market maker support, and due to the decline in financial performance of the Company in 2022, 2023 and continuing into 2024, an investment in our common stock involves a very high degree of risk. If any of the following risks actually occurs or continues to impact our business, our business, financial condition or results of operations could worsen. In that case, the trading price of our common stock could decline, and you may lose all or part of your investment. You should read the section entitled “Cautionary Statement Regarding Cautionary Statement Regarding Forward-Looking Statements on page 18 above for a discussion of what types of statements are forward-looking statements, as well as the significance of such statements in the context of this Form 10-Q Report. 

34

 

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

The Company did not issue any unregistered securities in the fiscal quarter ended September 30, 2024.

 

Item 3. Defaults Upon Senior Securities

 

None.

 

 Item 4. Mine Safety Disclosures

 

 Not Applicable.

 

Item 5. Other Information

 

The Company has no information to disclose that was required to be in a report on Form 8-K during the period covered by this report but was not reported. There have been no material changes to the procedures by which security holders may recommend nominees to our board of directors or make shareholder proposals.

  

Item 6. Exhibits

 

The following exhibits are filed as part of this Report on Form 10-Q or are incorporated herein by reference.

 

EXHIBIT #		EXHIBIT TITLE
31.1		Certifications of Principal Executive Officer filed pursuant to Section 302 of the Sarbanes Oxley Act of 2002
31.2		Certifications of Principal Financial Officer filed pursuant to Section 302 of the Sarbanes Oxley Act of 2002
32.1		Certification of Principal Executive Officer furnished pursuant to 18 U.S.C. Section 1350,
32.2		Certification of Principal Financial Officer furnished pursuant to 18 U.S.C. Section 1350,

 

35

 

 

SIGNATURES

 

Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized.

 

Capstone Companies, Inc.

 

Dated: November 14, 2024

 

/s/ Stewart Wallach
Stewart Wallach		Chief Executive Officer
Principal Executive Officer

 

/s/Dana Eschenburg Perez
Dana Eschenburg Perez		Chief Financial Officer
Principal Financial Executive and Accounting Officer

 

 

36

 

 

Exhibit 31.1

 

Section 302 Certifications

 

I, Stewart Wallach, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Capstone Companies, Inc. for the fiscal quarter ended on September 30, 2024.

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report.

 

4. The small business issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have:

  

a)	Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
b)	Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
c)	Evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
d)	Disclosed in this report any change in the small business issuer’s internal control over financial reporting that occurred during the small business issuer’s most recent fiscal quarter (the small business issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and

  

5. The small business issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors and the audit committee of the small business issuer’s board of directors (or persons performing the equivalent functions):

  

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and

 

b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.

  

Date: November 14, 2024

  

/s/ Stewart Wallach
Stewart Wallach
CEO, Director, (Principal Executive Officer)

 

Exhibit 31.2

 

Section 302 Certifications

 

I, Dana E. Perez, certify that:

 

1. I have reviewed this quarterly report on Form 10-Q of Capstone Companies, Inc. for the fiscal quarter ended on September 30, 2024.

 

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report.

 

3. Based on my knowledge, the financial statements, and other financial information included in this report, present in all material respects the financial condition, results of operations and cash flows of the small business issuer as of, and for, the periods presented in this report.

 

4. The small business issuer’s other certifying officer and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the small business issuer and have:

  

a)

Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

 

b)

Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;

 

c)	Evaluated the effectiveness of the small business issuer’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

 

d)

Disclosed in this report any change in the small business issuer’s internal control over financial reporting that occurred during the small business issuer’s most recent fiscal quarter (the small business issuer’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer’s internal control over financial reporting; and

  

5. The small business issuer’s other certifying officer and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the small business issuer’s auditors and the audit committee of the small business issuer’s board of directors (or persons performing the equivalent functions):

  

a)	All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer’s ability to record, process, summarize and report financial information; and

 

b)	Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer’s internal control over financial reporting.

  

Date: November 14, 2024

  

/s/ Dana E. Perez
Dana E. Perez
Interim Chief Financial Officer
(Principal Financial Executive and Accounting Officer)

 

Exhibit 32.1

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Capstone Companies, Inc. (“Company”) on Form 10-Q for the fiscal period ended September 30, 2024, filed with the Securities and Exchange Commission (the “Report”), I, Stewart Wallach, Chief Executive Officer of the Company, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, hereby certify that:

  

(1)	the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

  

IN WITNESS WHEREOF, the undersigned has signed this statement on this 14^th day of September, 2024.

  

/s/ Stewart Wallach
Stewart Wallach
CEO, Director
(Principal Executive Officer)

 

A signed original of this written statement will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

 

 

Exhibit 32.2

 

CERTIFICATION PURSUANT TO

18 U.S.C. SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

 

In connection with the Quarterly Report of Capstone Companies, Inc. (“Company”) on Form 10-Q for the fiscal period ended September 30, 2024, filed with the Securities and Exchange Commission (the “Report”), I, Dana E. Perez, Interim Chief Financial Officer of the Company, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, hereby certify that:

  

(1)	the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and

 

(2)	the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

  

IN WITNESS WHEREOF, the undersigned has signed this statement on this 14th day of September, 2024.

  

/s/ Dana E. Perez
Dana E. Perez
Interim Chief Financial Officer
(Principal Financial Executive and Accounting Officer)

  

A signed original of this written statement will be retained by the Company and furnished to the Securities and Exchange Commission or its staff upon request.

 

 

 

Cover - shares	9 Months Ended
	Sep. 30, 2024	Nov. 14, 2024
Cover [Abstract]
Document Type	10-Q
Amendment Flag	false
Document Quarterly Report	true
Document Transition Report	false
Document Period End Date	Sep. 30, 2024
Document Fiscal Period Focus	Q3
Document Fiscal Year Focus	2024
Current Fiscal Year End Date	--12-31
Entity File Number	000-28831
Entity Registrant Name	CAPSTONE COMPANIES, INC.
Entity Central Index Key	0000814926
Entity Tax Identification Number	84-1047159
Entity Incorporation, State or Country Code	FL
Entity Address, Address Line One	144-10 Fairway Drive
Entity Address, Address Line Two	Suite 200
Entity Address, City or Town	Deerfield Beach
Entity Address, State or Province	FL
Entity Address, Postal Zip Code	33441
City Area Code	954
Local Phone Number	252-3440
Entity Current Reporting Status	Yes
Entity Interactive Data Current	Yes
Entity Filer Category	Non-accelerated Filer
Entity Small Business	true
Entity Emerging Growth Company	false
Entity Shell Company	false
Entity Common Stock, Shares Outstanding		48,826,864

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Current Assets:
Cash	$ 1,895	$ 36,466
Prepaid expenses	22,673	22,120
Due from affiliates	9,570	9,570
Total Current Assets	34,138	68,156
Property and equipment, net	32,228	42,970
Goodwill	1,312,482	1,312,482
Total Assets	1,378,848	1,423,608
Current Liabilities:
Accounts payable and accrued liabilities	1,014,660	804,623
Accounts payable due to related party	47,899
Notes payable related parties and accrued interest-current	2,105,186	1,946,315
Notes payable unrelated party and accrued interest-current	614,401	594,161
Total Current Liabilities	3,782,146	3,345,099
Long-Term Liabilities:
Deferred tax liabilities -long-term	320,329	320,329
Total Long-Term Liabilities	320,329	320,329
Total Liabilities	4,102,475	3,665,428
Commitments and Contingencies: (Note 4)
Stockholders’ Equity:
Common Stock, par value $.0001 per share, authorized 295,000,000 shares, issued and outstanding 48,826,864 shares at September 30, 2024 and December 31, 2023.	4,884	4,884
Additional paid-in capital	8,550,510	8,550,510
Accumulated deficit	(11,279,023)	(10,797,216)
Total Stockholders’ Deficit	(2,723,627)	(2,241,820)
Total Liabilities and Stockholders’ Deficit	1,378,848	1,423,608
Series B-1 Preferred Stock [Member]
Stockholders’ Equity:
Preferred stock value	2	2
Series C Preferred Stock [Member]
Stockholders’ Equity:
Preferred stock value

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Common stock, par value	$ 0.0001	$ 0.0001
Common stock, shares authorized	295,000,000	295,000,000
Common stock, shares issued	48,826,864	48,826,864
Common stock, shares outstanding	48,826,864	48,826,864
Series B-1 Preferred Stock [Member]
Preferred stock, par value	$ 0.0001	$ 0.0001
Preferred stock, shares authorized	5,000,000	5,000,000
Preferred stock, shares issued	15,000	15,000
Preferred stock, shares outstanding	15,000	15,000
Liquidation preference, value	$ 15,000	$ 15,000
Series C Preferred Stock [Member]
Preferred stock, par value	$ 1.00	$ 1.00
Preferred stock, shares authorized	67	67
Preferred stock, shares issued	0	0
Preferred stock, shares outstanding	0	0

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Income Statement [Abstract]
Revenues, net		$ 63,771	$ 143,268	$ 95,968
Cost of sales		(163,194)	(38,019)	(199,287)
Gross Profit		(99,423)	105,249	(103,319)
Operating Expenses:
Sales and marketing		9,733	17,403	66,144
Compensation		115,662	153,430	376,658
Professional fees	35,787	93,085	230,222	321,175
Product development	2,365	25,115	4,268	76,454
Other general and administrative	27,371	52,397	91,789	260,598
Total Operating Expenses	65,523	295,992	497,112	1,101,029
Operating Loss	(65,523)	(395,415)	(391,863)	(1,204,348)
Other Income (Expenses):
Other income			4	63,972
Interest expense, net	(30,014)	(28,183)	(89,114)	(74,199)
Total Other Income (Expenses), net	(30,014)	(28,183)	(89,110)	(10,227)
Loss Before Income Taxes	(95,537)	(423,598)	(480,973)	(1,214,575)
Income Tax Expense			834	800
Net Loss	$ (95,537)	$ (423,598)	$ (481,807)	$ (1,214,375)
Net Loss per Common Share
Net Loss per Common Share Basic	$ (0.00)	$ (0.01)	$ (0.01)	$ (0.02)
Net Loss per Common Share Diluted	$ (0.00)	$ (0.01)	$ (0.01)	$ (0.02)
Weighted Average Shares Outstanding
Weighted Average Shares Outstanding Basic	48,826,864	48,826,864	48,826,864	48,826,864
Weighted Average Shares Outstanding Diluted	48,826,864	48,826,864	48,826,864	48,826,864

CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS DEFICIT (Unaudited) - USD ($)	Preferred Stock Series B [Member]	Preferred Stock Series C [Member]	Common Stock [Member]	Additional Paid-in Capital [Member]	Retained Earnings [Member]	Total
Beginning balance, value at Dec. 31, 2022	$ 2		$ 4,884	$ 8,550,510	$ (9,100,777)	$ (545,381)
Begining balance, shares at Dec. 31, 2022	15,000		48,826,864
Net Loss					(466,675)	(466,675)
Ending balance, value at Mar. 31, 2023	$ 2		$ 4,884	8,550,510	(9,567,452)	(1,102,056)
Ending balance, shares at Mar. 31, 2023	15,000		48,826,864
Net Loss					(325,102)	(325,102)
Ending balance, value at Jun. 30, 2023	$ 2		$ 4,884	8,550,510	(9,892,554)	(1,337,158)
Ending balance, shares at Jun. 30, 2023	15,000		48,826,864
Net Loss					(423,598)	(423,598)
Ending balance, value at Sep. 30, 2023	$ 2		$ 4,884	8,550,510	(10,316,152)	(1,760,756)
Ending balance, shares at Sep. 30, 2023	15,000		48,826,864
Beginning balance, value at Dec. 31, 2023	$ 2		$ 4,884	8,550,510	(10,797,216)	(2,241,820)
Begining balance, shares at Dec. 31, 2023	15,000		48,826,864
Net Loss					(262,260)	(262,260)
Ending balance, value at Mar. 31, 2024	$ 2		$ 4,884	8,550,510	(11,059,476)	(2,504,080)
Ending balance, shares at Mar. 31, 2024	15,000		48,826,864
Beginning balance, value at Dec. 31, 2023	$ 2		$ 4,884	8,550,510	(10,797,216)	(2,241,820)
Begining balance, shares at Dec. 31, 2023	15,000		48,826,864
Net Loss						(481,807)
Ending balance, value at Sep. 30, 2024	$ 2		$ 4,884	8,550,510	(11,279,023)	(2,723,627)
Ending balance, shares at Sep. 30, 2024	15,000		48,826,864
Beginning balance, value at Mar. 31, 2024	$ 2		$ 4,884	8,550,510	(11,059,476)	(2,504,080)
Begining balance, shares at Mar. 31, 2024	15,000		48,826,864
Net Loss					(124,010)	(124,010)
Ending balance, value at Jun. 30, 2024	$ 2		$ 4,884	8,550,510	(11,183,486)	(2,628,090)
Ending balance, shares at Jun. 30, 2024	15,000		48,826,864
Net Loss					(95,537)	(95,537)
Ending balance, value at Sep. 30, 2024	$ 2		$ 4,884	$ 8,550,510	$ (11,279,023)	$ (2,723,627)
Ending balance, shares at Sep. 30, 2024	15,000		48,826,864

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss	$ (481,807)	$ (1,215,375)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation	10,742
Noncash lease expense		34,151
Accrued interest added to notes payable related and unrelated parties	89,111	76,199
Increase in accounts receivable, net		(52,359)
Decrease in inventories		197,833
Decrease in prepaid expenses	(553)	(13,768)
Decrease in deposits		24,039
Increase in accounts payable and accrued liabilities	257,936	413,204
Decrease in operating lease liabilities		(37,535)
Net cash used in operating activities	(124,571)	(573,611)
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	90,000	583,504
Net cash provided by financing activities	90,000	583,504
Net Decrease in Cash	(34,571)	(33,077)
Cash at Beginning of Period	36,466	61,463
Cash at End of Period	1,895	28,386
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Interest cash paid
Income taxes paid

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	9 Months Ended
	Sep. 30, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]
ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES	NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES   This summary of accounting policies for Capstone Companies, Inc. (“CAPC”, “Company”, “we”, “our” or “us”), a Florida corporation and its wholly owned subsidiaries 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 Basis of Presentation   The condensed consolidated financial statements contained in this report are unaudited. In the opinion of management, the condensed consolidated financial statements include all adjustments, which are of a normal recurring nature, necessary to present fairly the Company’s financial position as of September 30, 2024, and results of operations, stockholders’ equity and cash flows for the three and nine months ended September 30, 2024 and 2023. All material intercompany accounts and transactions are eliminated in consolidation. These condensed consolidated financial statements and notes are presented in accordance with the rules and regulations of the SEC relating to interim financial statements and in conformity with U.S. GAAP. Certain information and note disclosures have been condensed or omitted in the condensed financial statements pursuant to SEC rules and regulations, although the Company believes that the disclosures made herein are adequate to make the information not misleading. The condensed unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Annual Report”) filed with the SEC on March 29, 2024.   The operating results for any interim period are not necessarily indicative of the operating results to be expected for any other interim period or the full fiscal year.   Liquidity and Going Concern   The accompanying unaudited condensed 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.   As of September 30, 2024, the Company had negative working capital of $3,748,008, an accumulated deficit of $11,279,023, a cash balance of $1,895, short- term notes payable of $2,719,587 and $320,329 of long-term liabilities for deferred taxes. Further, during the nine months ended September 30, 2024, the Company incurred a net loss of $481,807 and used cash in operations of $124,571.   For the nine months ended September 30, 2024 and 2023, the Company reported a $47,000 or 49% increase in net revenue from $96,000 in 2023 to $143,000 in 2023. The increase in revenue period to period is due to a liquidation sale of the Smart Mirrors for $80,000. The net loss for the nine months ended September 30, 2024 was $482,000 as compared to $1,215,000 in 2023. During the nine months ended September 30, 2024 and 2023 the Company used in operating activities approximately $125,000 of cash in 2024 and $574,000 in 2023. The decrease in net cash used in operations primarily relates to decrease in right of use operating lease expense for the non-renewal of the office lease, and decreases in inventory and operating expenses during 2024 as the company has moved to a remote work environment and decreased overhead and workforce costs significantly.      These liquidity conditions 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 debt or equity funding through issuance of securities, or other alternative financing measures.   On October 31, 2024 the Company signed an Unsecured Promissory Note (“Note”) with Coppermine Ventures, LLC (“Coppermine”), a private Maryland limited liability company based in Baltimore County, Maryland, of $125,914 (“Principal”) to the Company. The Principal is to be used to pay the working capital debts of the Company listed in Exhibit Two to the Note. The Principal accrues interest at a simple annual rate of 7%. Principal and accrued interest thereon is due and payable in a single lump sum due on July 31, 2025, unless occurrence of certain events causes all sums to become due prior to July 31, 2025, including certain events of default. The Note is not secured by collateral or any other secured interest and does not provide for any conversion of debt-to-equity securities or issuance of any securities. See Note 6.   In addition, as an inducement to make the loan evidenced by the Note and to make a financial commitment to fund the essential working capital needs of the Company through March 31, 2025, the Company and Coppermine signed a Management Transition Agreement (“MTA”) on October 31, 2024. MTA provides, in part, that Coppermine will: (1) designate two (2) persons for appointment to the Company’s Board of Directors to fill vacancies on the Company’s Board of Directors; (2) designate a person to act as Chief Executive Officer and President of the Company upon the resignation of the incumbent Chief Executive Officer of the Company; and (3) fund certain essential and projected working capital needs of the Company, as set forth in Attachment Two to the MTA, through March 31, 2025. The “essential working capital needs” are those Company expenses that are necessary to pay to maintain the Company as a reporting company under the 1934 Act, cover the annual fee for the quotation of the Company’s Common Stock on The OTC Markets Group (“OTC”) QB Venture Market and OTC Blue Sky monitoring service through August 2025, retain the acting Chief Financial Officer of the Company, retain outside legal counsel to the Company and maintain Directors’ and Officers’ liability insurance coverage. See Note 6.   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, or finds and consummates an alternative transaction to improve its financial condition, 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 Form 10-Q.       Nature of Business   The Company has its principal executive offices in Deerfield Beach, 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.   From 2007 until 2022, the Company, through Capstone Industries, Inc “CAPI”, was primarily engaged in the business of developing, marketing, and selling home LED products (“Lighting Products”) through national and regional retailers in North America and in certain overseas markets. The LED category has matured and is no longer the innovative “must have” consumer product as in previous years. As such, the Company entered into another home goods product segment by developing a smart interactive mirror (“Smart Mirror”) for residential use. The development of the Smart Mirrors was part of the Company’s strategic effort to find new product lines to replace the Lighting Products. The Smart Mirrors have not provided sufficient sustained revenues to support the Company operations.   The Company’s products have been typically manufactured in Thailand and China by contract manufacturing companies. As of the date of these consolidated financial statements, the Company’s future product development effort is focused on the development of a “Connected Surfaces” portfolio. The Connected Surfaces portfolio is designed to tap into consumer’s ever-expanding Internet of Things, wireless connected lifestyles prevalent today. The Company has finalized development of a kitchen appliance, the “Connected Chef”, which is a purpose-built tablet with an integrated platform for cooking accessories, i.e.: cutting board, and designed to safely deliver and access content on mobile and web based platforms. The Connected Chef is not yet in production and has not produced any pre-production sales orders or revenues as of the nine months ended September 30, 2024. The Company would have to raise funding to pay for the production and acquisition of inventory for any Connected Chef orders, which funding may not be possible to raise in light of the financial condition of the Company.   The Company believes the MTA and new management members will serve the best interests of the Company and its public shareholders by potentially expanding the expertise, funding sources and business development capabilities and networks of the Company and bringing possible new perspectives and ideas to the efforts to establish a viable business operation for the Company. The Company is currently focused on the development or acquisition of a new business line capable of generating operating revenues instead of the internal development and launch of a new consumer product. The development or acquisition of a new business line will require funding in excess of amounts provided under the Note and MTA. There is no assurance that additional funding can be obtained for development or acquisition of a new business line. The Company’s operations through September 2024 consisted of one reportable segment for financial reporting purposes: Consumer Home Goods.    Inventories   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. During the fourth quarter of 2023, Management reviewed the valuation of inventory on hand and decided to write 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. 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. There was no impairment charge for the nine month ended September 30, 2024 or 2023.   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 September 30, 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 September 30, 2024 and 2023, the total number of potentially dilutive common stock equivalents excluded from the diluted earnings per share calculation was 208,288 options, 199,733 warrants and 15,000 of preferred B-1 stock convertible into 999,900 shares of common stock for 2024 and 408,288 options, 199,733 warrants and 15,000 of preferred B-1 stock convertible into 999,900 shares of common stock for 2023.   Revenue Recognition for Consumer Product Business   The Company has generated revenue from developing, marketing and selling consumer products through national and regional retailers. The Company’s products are targeted for applications such as home indoor and outdoor lighting as well as Internet-of-Thing devices and will have different functionalities. Capstone operated in the consumer electronic products category in the Unites States and in specific overseas markets. These products were offered either under the Capstone brand or a private brand. The Company does not have a product line that is generating revenues as of the date of the filing of this Form 10-Q.   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.    With respect to its former consumer products business, the Company recognized 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.   Direct-to-consumer orders for the Connected Surfaces Smart Mirrors were sold initially through e-commerce platforms. The Company also sold the Connected Surfaces Smart Mirror program through independent retailers. The Company only billed the customer and recognized revenue upon the customer obtaining control of the Smart Mirror order which generally occurred upon delivery.   The Company expensed 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:                       For the Nine Months Ended September 30, 2024   For the Nine Months Ended September 30, 2023     Revenues   % of Revenue   Revenues   % of Revenue Lighting Products – U.S.     57,829       40 %     —         —     Smart Mirror Products- U.S.     85,439       60 %     95,968       100 % Total Net Revenue   $ 143,268       100 %   $ 95,968       100 %   We provide our wholesale 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 as part of a customers in store test for new product, we may receive back residual inventory.   Smart Mirror customer orders were shipped within one to two days of receipt. Revenue was recorded upon processing of the sale with a third-party merchant processor such as Stripe or Amazon Pay. Lighting Product customer orders received were not long-term orders and were typically shipped within nine months of the order receipt, but certainly within a one-year period.   Our Smart Mirror customers were charged when executing the e-commerce purchase. We do not have extended payment terms for our Smart Mirror customers. Our Lighting Product payment terms varied 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. As of September 30, 2024, the Company was not actively marketing the Smart Mirror products and existing inventory was expensed as of December 31, 2023.   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 $840 and $15,500 for the nine months ended September 30, 2024 and 2023, respectively.   Warranties   As of September 30, 2024, the Company is not marketing or selling any products, but is focused on developing the Connected Chef as a potential new product and, as an alternative approach, acquiring or developing a new business line. Efforts to develop the Connected Chef as a new product line had not succeeded as of September 30, 2024.   For the LED product line, the Company provided 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 the 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 direct to customer sales of the Smart Mirror, the product had a One Year Limited Warranty. There have been no online sales of the Smart Mirror during the third quarter. The liquidation sale of the remaining Smart Mirrors were sold “as is” and accordingly no warranties apply.   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. The Company accrued warranty liability of $0 as of September 30, 2024 and $1,288 as of December 31, 2023.   Sales and Marketing   Sales and marketing costs, including advertising, public relations, and trade show expenses, are expensed as incurred and included in sales and marketing expenses. Sales and marketing expenses were $17,403 and $66,144 for the nine months ended September 30, 2024, and 2023. Due to declining revenues, and the end of the LED product line as a revenue source, coupled with ending efforts to promote the Smart Mirror in 2024, the Company reduced advertising and promotion expenses in 2024. As of September 30, 2024, the only marketing efforts by the Company have been the Company’s Chief Executive Officer seeking potential funding and pre-production purchasers of the Connected Chef.   Product Development   All research and development costs are charged to results of operations as incurred.   For the nine months ended September 30, 2024, and 2023, product development expenses were $4,268 and $76,454, respectively. Expenses in 2023 were related to the development of the Connected Chef, expanding the Connected Surfaces product portfolio.   Accounts Payable and Accrued Liabilities   The following table summarizes the components of accounts payable and accrued liabilities as of September 30, 2024, and December 31, 2023, respectively:                     September 30,   December 31,     2024   2023 Accounts payable   $ 45,058     $ 69,267   Accounts payable due to related parties     47,899       —     Accrued warranty reserve     —         1,200   Accrued compensation and deferred wages     969,602       734,156   Total   $ 1,062,559     $ 804,623     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 Compensation   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 condensed 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 each of the nine months ended September 30, 2024, and 2023 was $0.   Use of Estimates   The preparation of condensed 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 revenue recognition, periodic impairment tests, product warranty obligations, valuation of inventories, tax related contingencies, valuation of stock-based compensation, other contingencies and litigation, among others. 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 financial statements. However, circumstances could change, and actual results could differ materially from those estimates.   Adoption of New Accounting Standards   In June 2016, the FASB issued Accounting Standards Update (“ASU) 2016-13, “Financial Instruments – Credit Losses. This ASU sets forth a current expected credit loss model which requires the Company to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost and applies to some off-balance sheet credit exposures. In November 2019, the effective date of this ASU was deferred until fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, with early adoption permitted. The Company adopted ASC 326 on January 1, 2023, and ASC 326 did not have a material impact on its condensed consolidated financial statements.   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. ASU 2023-07 is effective for public business entities for fiscal years beginning after December 15, 2023, with early adoption permitted. The Company adopted ASC 280 on January 1, 2024, and ASC 280 did not have a material impact on its condensed consolidated financial statements. 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. 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.

CONCENTRATIONS OF CREDIT RISK AND ECONOMIC DEPENDENCE	9 Months Ended
	Sep. 30, 2024
Risks and Uncertainties [Abstract]
CONCENTRATIONS OF CREDIT RISK AND ECONOMIC DEPENDENCE	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 September 30, 2024 and December 31, 2023, the Company did not have any cash deposits in excess of FDIC insurance limits.    Accounts Receivable   The Company grants credit to its customers, located throughout the United States and their international locations. The Company typically does not require collateral from national retail customers. Credit risk is limited due to the financial strength of the customers comprising the Company’s customer base and their dispersion across different geographical regions. The Company monitors exposure of credit losses and maintains allowances for anticipated losses considered necessary under the circumstances. Stripe is the company that processes online payments for our e-commerce website. We should receive payment from them within 3 days of the product shipment. If the product is shipped through Amazon online platform, it could take between 20 and 30 days for collection.   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.   Major Customers   The Company had two customers who comprised 56% and 40%, respectively, of net revenue during the nine months ended September 30, 2024. The Company had one major customer who comprised 78% of net revenue for the nine months ended September 30, 2023.   Major Vendors   The Company had one vendor from which it purchased 94% of merchandise during the nine months ended September 30, 2024. The Company had one major customer who comprised 78% of net revenue for the nine months ended September 30, 2023.

NOTES PAYABLE TO RELATED AND UNRELATED PARTIES	9 Months Ended
	Sep. 30, 2024
Debt Disclosure [Abstract]
NOTES PAYABLE TO RELATED AND UNRELATED PARTIES	NOTE 3 – NOTES PAYABLE TO RELATED AND UNRELATED PARTIES   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 Stewart Wallach and Jeffrey Postal and E. Fleisig, a natural person who is 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. Under this agreement the interest terms are 5% based on a 365- day year. The note payable was amended for a new maturity date of November 30, 2024. As of September 30, 2024, the principal outstanding and accrued interest is $1,020,000 and $150,625, respectively.   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 Stewart Wallach (through Group Nexus, a company controlled by Mr. Wallach), Jeffrey Postal, and an individual unrelated shareholder, each entered into a capital funding agreement. The term of each agreement was 18 months with principal accruing a simple interest rate of 5 percent per annum, amended to mature on November 1, 2024. On September 30, 2024, Mr. Postal and Mr. Wallach’s agreements were amended for a new maturity date of November 30, 2024. The individual unrelated shareholder’s agreement was not amended and is in default. The Company is currently negotiating with this individual as of the date of this filing. These loans may be prepaid in full or partially without any penalty. As of September 30, 2024, the principal outstanding and accrued interest is $600,000 and $72,577, respectively.   On October 13, 2022, the Company negotiated a $50,000 Working Capital Funding agreement with Director Jeffrey Postal, a director, to provide funding for daily operations. The initial term of this agreement was 18 months and was amended to mature November 30, 2024. Principal accrues simple interest at a rate of 5 percent per annum. As of September 30, 2024, the principal outstanding and accrued interest is $50,000 and $4,918, respectively.   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 initial term of this agreement was 18 months and was amended to mature November 30, 2024. Principal accrues simple interest at a rate of 5 percent per annum. The loan may be prepaid in full or partially without any penalty. As of September 30, 2024, the principal outstanding and accrued interest is $50,000 and $4,582 , respectively.   On January 3, 2023, the Company negotiated a $40,000 Working Capital Funding agreement with Director Stewart 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. The loan may be prepaid in full or partially without any penalty. As of September 30, 2024, the principal outstanding and accrued interest is $40,000 and $3,485, respectively.    On March 27, 2023, the Company negotiated a Working Capital Funding agreement with Director Stewart Wallach to provide funding for daily operations. Total funding under the agreement amounted to $632,500 as of September 30, 2024. Principal accrues simple interest at a rate of 5 percent per annum, amended to mature November 30, 2024. The loan may be prepaid in full or partially without any penalty. As of September 30, 2024, the principal outstanding and accrued interest is $632,500 and $39,134, respectively.   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. The loan may be prepaid in full or partially without any penalty. As of September 30, 2024, the principal outstanding and accrued interest is $50,000 and $1,767, respectively.    As of September 30, 2024 and December 31, 2023, the Company had a total of $2,442,500 and $2,352,502, respectively of outstanding principal, on the above referenced funding agreements, and accrued interest of $277,087 and $187,974, respectively. The outstanding principal balances and accrued interest has been presented on the condensed and consolidated balance sheet as follows:                       Notes Payable       September 30, 2024       December 31, 2023   Current portion of notes payable and accrued interest, related parties   $ 2,105,186     $ 1,946,315   Current portion of notes payable and accrued interest, unrelated parties     614,401       594,161   Total notes payable principal and accrued interest     2,719,587       2,540,476   Less accrued interest     (277,087 )     (187,974 ) Total notes payable   $ 2,442,500     $ 2,352,502     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.

COMMITMENTS AND CONTINGENCIES	9 Months Ended
	Sep. 30, 2024
Commitments and Contingencies Disclosure [Abstract]
COMMITMENTS AND CONTINGENCIES	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. The Company’s principal executive office were 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.   The Company’s rent expense is recorded on a straight-line basis over the term of the lease. The rent expense for the nine months ended September 30, 2024 and 2023, amounted to $2,485 and $94,065, respectively.   Employment Agreements   On February 5, 2023, 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, 2023 and ends February 5, 2025. 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.     Beginning in 2020 and through 2024, executive salaries and consulting fees have been deferred from time to time to conserve cash flow. Deferrals amounted to $969,603 and $734,156, as of September 30, 2024 and December 31, 2023, respectively, include an estimate for employer payroll liability taxes, and are included in accounts payable and accrued liabilities.   The Board of Directors ceased salary accrual as of July 1, 2024, due to the Company having no active product line during the third quarter of 2024.    There is a provision in Mr. Wallach’s employment agreement, if his employment is terminated by death or disability or without cause, the Company is obligated to pay to his estate or him, 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: the sum of twelve (12) months base salary at the rate he was earning as of the date of termination and (b) the sum of “merit” based bonuses earned by the him 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 Mr. Wallach, 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 his health and dental insurance benefits for 6 months starting at the Executives date of termination. If he had family health coverage at the time of termination, the additional family premium obligation would remain theirs and will be reduced against his severance package. The employment agreements have an anti-competition provision for 18 months after the end of employment.   The Company did not accrue for benefits owed at the time of death or disability as it is not probable as of the period ended September 30, 2024.    The following table summarizes potential payments upon termination of employment :                                               Salary Severance   Bonus  Severance   Gross up  Taxes   Benefit  Compensation   Grand Total Stewart Wallach   $ 301,521     $ —     $ 12,600     $ 6,600     $ 320,721                                               Directors Compensation   On July 5, 2022, the Board voted to suspend granting compensation to the independent directors for the remainder of the fiscal year 2022. There have been no payments to the Board of Directors since the year ended December 31, 2022.

STOCK TRANSACTIONS	9 Months Ended
	Sep. 30, 2024
Equity [Abstract]
STOCK TRANSACTIONS	NOTE 5 - STOCK TRANSACTIONS   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 $1.4 million of restricted shares of common stock to five investors on April 5, 2021. The issuance of these warrants were made an exemption from registration under Section 4(a)(2) and Rule 506(b) of Regulation D under the Securities Act.   As of September 30, 2024 and December 31, 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”). The B-1 preferred stock are 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 shares 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.   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 B-1 Convertible Preferred Stock to each of the Lenders. Each preferred share converts into 66.66 shares of common stock at the option of the 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 B-1 shares have a liquidation preference of $1.00 per share or $15,000 as of September 30, 2024.   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 September 30, 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 $0.475 and have a weighted average contractual term remaining of 0.89 years. During the nine months ended September 30, 2024, 200,000 options expired, there were no stock option grants, exercises, nor stock-based compensation expense.   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 September 30, 2024, a total of 816,167 shares of the Company’s common stock has been repurchased since the plan was incepted at a total cost of $119,402. The cost of the repurchased shares were recorded as a reduction of additional paid-in capital.

SUBSEQUENT EVENTS	9 Months Ended
	Sep. 30, 2024
Subsequent Events [Abstract]
SUBSEQUENT EVENTS	NOTE 6 - SUBSEQUENT EVENTS   Unsecured Promissory Note   On October 31, 2024, the Company signed an Unsecured Promissory Note (“Note”) evidencing a loan from Coppermine Ventures, LLC, a private Maryland limited liability company based in Baltimore County, Maryland, (“Coppermine”) of $125,914 (“Principal”) to the Company. The Principal is to be used to pay the working capital debts of the Company listed in Exhibit Two to the Note. The Principal accrues interest at a simple annual rate of 7%. Principal and accrued interest thereon is due and payable in a single lump sum due on July 31, 2025, unless occurrence of certain events causes all sums to become due prior to July 31, 2025, including certain events of default. The Note is not secured by collateral or any other secured interest and does not provide for any conversion of debt-to-equity securities or issuance of any securities.   Management Transition Agreement   As an inducement to make the loan evidenced by the Note and to make a financial commitment to fund the essential working capital needs of the Company through March 31, 2025, Company and Coppermine signed the MTA on October 31, 2024. MTA provides, in part, that Coppermine will: (1) designate two (2) persons for appointment to the Company’s Board of Directors to fill vacancies on the Company’s Board of Directors; (2) designate a person to act as Chief Executive Officer and President of the Company upon the resignation of the incumbent Chief Executive Officer of the Company; and (3) fund certain essential and projected working capital needs of the Company, as set forth in Attachment Two to the MTA, through March 31, 2025. The “essential working capital needs” are those Company expenses that are necessary to pay to maintain the Company as a reporting company under the 1934 Act, cover the annual fee for the quotation of the Company’s Common Stock on The OTC Markets Group (“OTC”) QB Venture Market and OTC Blue Sky monitoring service through August 2025, retain the acting Chief Financial Officer of the Company, retain outside legal counsel to the Company and maintain Directors’ and Officers’ liability insurance coverage.   Under the MTA, the Company agreed to accept the resignation of two (2) incumbent directors and the incumbent Chief Executive Officer upon receipt of designation of Coppermine’s two (2) candidates for appointment to the Company’s Board of Directors and designation of Coppermine’s candidate for appointment as Chief Executive Officer and President of the Company, which Coppermine candidates would be appointed to their respective positions upon resignation of the two incumbent directors and Chief Executive Officer of the Company, and which appointments would be subject to the Company’s Board of Directors verification that the Coppermine candidates are qualified and eligible to serve in their respective positions with the Company. Coppermine has not designated its candidates as of the date of the filing of this Form 10-Q. Under the MTA, Coppermine has until November 30, 2024, or December 31, 2024 if extended by written notice, to designate its candidates for appointment to the Company’s Board of Directors and appointment as Chief Executive Officer and President of the Company.   As of the date of the filing of this Form 10-Q, no new management members have been appointed by the Company.   Conversion of Deferred Wages and Consulting Fees to Notes Payable   On November 11, 2024, CEO Stewart Wallach executed a promissory note with the Company to evidence money owed to Stewart Wallach for services rendered as Company’s Chief Executive Officer from September 2020 to June 2024 amounting to $608,840.  The principal balance of this Note shall be payable by the Company on the earlier to occur of: (a) November 30, 2024; (b) the date on which the Company consummates a merger or other business combination in which the Company is not the surviving corporation; or (c) the date the Board of Directors of the Company approve a plan of complete liquidation. The date on which any of the foregoing events occur shall be referred to as the “Maturity Date”. The principal balance may be prepaid at any time, at the election of the Company, without penalty or charge. The principal is in the amount of deferred salary owed to the Payee as of the dates stated above for services rendered to the Company as a senior officer.   On November 11, 2024, consultant George Wolf executed a promissory note with the Company to evidence money owed to George Wolf for services rendered as Company’s sales and business development consultant from September 2020 to June 2024 amounting to $366,875 . The principal balance of this Note shall be payable by the Company on the earlier to occur of: (a) November 30, 2024; (b) the date on which the Company consummates a merger or other business combination in which the Company is not the surviving corporation; or (c) the date the Board of Directors of the Company approve a plan of complete liquidation. The date on which any of the foregoing events occur shall be referred to as the “Maturity Date”. The principal balance may be prepaid at any time, at the election of the Company, without penalty or charge. The principal is in the amount of deferred salary owed to the Payee as of the dates stated above for services rendered to the Company as a consultant.   The Company does not believe any gain or loss will be recorded due to the conversion of deferred wages to notes payable.

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Policies)	9 Months Ended
	Sep. 30, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Organization and Basis of Presentation	Organization and Basis of Presentation   The condensed consolidated financial statements contained in this report are unaudited. In the opinion of management, the condensed consolidated financial statements include all adjustments, which are of a normal recurring nature, necessary to present fairly the Company’s financial position as of September 30, 2024, and results of operations, stockholders’ equity and cash flows for the three and nine months ended September 30, 2024 and 2023. All material intercompany accounts and transactions are eliminated in consolidation. These condensed consolidated financial statements and notes are presented in accordance with the rules and regulations of the SEC relating to interim financial statements and in conformity with U.S. GAAP. Certain information and note disclosures have been condensed or omitted in the condensed financial statements pursuant to SEC rules and regulations, although the Company believes that the disclosures made herein are adequate to make the information not misleading. The condensed unaudited consolidated financial statements should be read in conjunction with the consolidated financial statements and notes in the Company’s Annual Report on Form 10-K for the year ended December 31, 2023 (the “2023 Annual Report”) filed with the SEC on March 29, 2024.   The operating results for any interim period are not necessarily indicative of the operating results to be expected for any other interim period or the full fiscal year.
Liquidity and Going Concern	Liquidity and Going Concern   The accompanying unaudited condensed 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.   As of September 30, 2024, the Company had negative working capital of $3,748,008, an accumulated deficit of $11,279,023, a cash balance of $1,895, short- term notes payable of $2,719,587 and $320,329 of long-term liabilities for deferred taxes. Further, during the nine months ended September 30, 2024, the Company incurred a net loss of $481,807 and used cash in operations of $124,571.   For the nine months ended September 30, 2024 and 2023, the Company reported a $47,000 or 49% increase in net revenue from $96,000 in 2023 to $143,000 in 2023. The increase in revenue period to period is due to a liquidation sale of the Smart Mirrors for $80,000. The net loss for the nine months ended September 30, 2024 was $482,000 as compared to $1,215,000 in 2023. During the nine months ended September 30, 2024 and 2023 the Company used in operating activities approximately $125,000 of cash in 2024 and $574,000 in 2023. The decrease in net cash used in operations primarily relates to decrease in right of use operating lease expense for the non-renewal of the office lease, and decreases in inventory and operating expenses during 2024 as the company has moved to a remote work environment and decreased overhead and workforce costs significantly.      These liquidity conditions 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 debt or equity funding through issuance of securities, or other alternative financing measures.   On October 31, 2024 the Company signed an Unsecured Promissory Note (“Note”) with Coppermine Ventures, LLC (“Coppermine”), a private Maryland limited liability company based in Baltimore County, Maryland, of $125,914 (“Principal”) to the Company. The Principal is to be used to pay the working capital debts of the Company listed in Exhibit Two to the Note. The Principal accrues interest at a simple annual rate of 7%. Principal and accrued interest thereon is due and payable in a single lump sum due on July 31, 2025, unless occurrence of certain events causes all sums to become due prior to July 31, 2025, including certain events of default. The Note is not secured by collateral or any other secured interest and does not provide for any conversion of debt-to-equity securities or issuance of any securities. See Note 6.   In addition, as an inducement to make the loan evidenced by the Note and to make a financial commitment to fund the essential working capital needs of the Company through March 31, 2025, the Company and Coppermine signed a Management Transition Agreement (“MTA”) on October 31, 2024. MTA provides, in part, that Coppermine will: (1) designate two (2) persons for appointment to the Company’s Board of Directors to fill vacancies on the Company’s Board of Directors; (2) designate a person to act as Chief Executive Officer and President of the Company upon the resignation of the incumbent Chief Executive Officer of the Company; and (3) fund certain essential and projected working capital needs of the Company, as set forth in Attachment Two to the MTA, through March 31, 2025. The “essential working capital needs” are those Company expenses that are necessary to pay to maintain the Company as a reporting company under the 1934 Act, cover the annual fee for the quotation of the Company’s Common Stock on The OTC Markets Group (“OTC”) QB Venture Market and OTC Blue Sky monitoring service through August 2025, retain the acting Chief Financial Officer of the Company, retain outside legal counsel to the Company and maintain Directors’ and Officers’ liability insurance coverage. See Note 6.   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, or finds and consummates an alternative transaction to improve its financial condition, 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 Form 10-Q.
Nature of Business	Nature of Business   The Company has its principal executive offices in Deerfield Beach, 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.   From 2007 until 2022, the Company, through Capstone Industries, Inc “CAPI”, was primarily engaged in the business of developing, marketing, and selling home LED products (“Lighting Products”) through national and regional retailers in North America and in certain overseas markets. The LED category has matured and is no longer the innovative “must have” consumer product as in previous years. As such, the Company entered into another home goods product segment by developing a smart interactive mirror (“Smart Mirror”) for residential use. The development of the Smart Mirrors was part of the Company’s strategic effort to find new product lines to replace the Lighting Products. The Smart Mirrors have not provided sufficient sustained revenues to support the Company operations.   The Company’s products have been typically manufactured in Thailand and China by contract manufacturing companies. As of the date of these consolidated financial statements, the Company’s future product development effort is focused on the development of a “Connected Surfaces” portfolio. The Connected Surfaces portfolio is designed to tap into consumer’s ever-expanding Internet of Things, wireless connected lifestyles prevalent today. The Company has finalized development of a kitchen appliance, the “Connected Chef”, which is a purpose-built tablet with an integrated platform for cooking accessories, i.e.: cutting board, and designed to safely deliver and access content on mobile and web based platforms. The Connected Chef is not yet in production and has not produced any pre-production sales orders or revenues as of the nine months ended September 30, 2024. The Company would have to raise funding to pay for the production and acquisition of inventory for any Connected Chef orders, which funding may not be possible to raise in light of the financial condition of the Company.   The Company believes the MTA and new management members will serve the best interests of the Company and its public shareholders by potentially expanding the expertise, funding sources and business development capabilities and networks of the Company and bringing possible new perspectives and ideas to the efforts to establish a viable business operation for the Company. The Company is currently focused on the development or acquisition of a new business line capable of generating operating revenues instead of the internal development and launch of a new consumer product. The development or acquisition of a new business line will require funding in excess of amounts provided under the Note and MTA. There is no assurance that additional funding can be obtained for development or acquisition of a new business line. The Company’s operations through September 2024 consisted of one reportable segment for financial reporting purposes: Consumer Home Goods.
Inventories	Inventories   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. During the fourth quarter of 2023, Management reviewed the valuation of inventory on hand and decided to write 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.
Goodwill	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. There was no impairment charge for the nine month ended September 30, 2024 or 2023.
Fair Value Measurement	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	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 September 30, 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 September 30, 2024 and 2023, the total number of potentially dilutive common stock equivalents excluded from the diluted earnings per share calculation was 208,288 options, 199,733 warrants and 15,000 of preferred B-1 stock convertible into 999,900 shares of common stock for 2024 and 408,288 options, 199,733 warrants and 15,000 of preferred B-1 stock convertible into 999,900 shares of common stock for 2023.
Revenue Recognition for Consumer Product Business	Revenue Recognition for Consumer Product Business   The Company has generated revenue from developing, marketing and selling consumer products through national and regional retailers. The Company’s products are targeted for applications such as home indoor and outdoor lighting as well as Internet-of-Thing devices and will have different functionalities. Capstone operated in the consumer electronic products category in the Unites States and in specific overseas markets. These products were offered either under the Capstone brand or a private brand. The Company does not have a product line that is generating revenues as of the date of the filing of this Form 10-Q.   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.    With respect to its former consumer products business, the Company recognized 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.   Direct-to-consumer orders for the Connected Surfaces Smart Mirrors were sold initially through e-commerce platforms. The Company also sold the Connected Surfaces Smart Mirror program through independent retailers. The Company only billed the customer and recognized revenue upon the customer obtaining control of the Smart Mirror order which generally occurred upon delivery.   The Company expensed 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:                       For the Nine Months Ended September 30, 2024   For the Nine Months Ended September 30, 2023     Revenues   % of Revenue   Revenues   % of Revenue Lighting Products – U.S.     57,829       40 %     —         —     Smart Mirror Products- U.S.     85,439       60 %     95,968       100 % Total Net Revenue   $ 143,268       100 %   $ 95,968       100 %   We provide our wholesale 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 as part of a customers in store test for new product, we may receive back residual inventory.   Smart Mirror customer orders were shipped within one to two days of receipt. Revenue was recorded upon processing of the sale with a third-party merchant processor such as Stripe or Amazon Pay. Lighting Product customer orders received were not long-term orders and were typically shipped within nine months of the order receipt, but certainly within a one-year period.   Our Smart Mirror customers were charged when executing the e-commerce purchase. We do not have extended payment terms for our Smart Mirror customers. Our Lighting Product payment terms varied 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. As of September 30, 2024, the Company was not actively marketing the Smart Mirror products and existing inventory was expensed as of December 31, 2023.   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 $840 and $15,500 for the nine months ended September 30, 2024 and 2023, respectively.
Warranties	Warranties   As of September 30, 2024, the Company is not marketing or selling any products, but is focused on developing the Connected Chef as a potential new product and, as an alternative approach, acquiring or developing a new business line. Efforts to develop the Connected Chef as a new product line had not succeeded as of September 30, 2024.   For the LED product line, the Company provided 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 the 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 direct to customer sales of the Smart Mirror, the product had a One Year Limited Warranty. There have been no online sales of the Smart Mirror during the third quarter. The liquidation sale of the remaining Smart Mirrors were sold “as is” and accordingly no warranties apply.   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. The Company accrued warranty liability of $0 as of September 30, 2024 and $1,288 as of December 31, 2023.
Sales and Marketing	Sales and Marketing   Sales and marketing costs, including advertising, public relations, and trade show expenses, are expensed as incurred and included in sales and marketing expenses. Sales and marketing expenses were $17,403 and $66,144 for the nine months ended September 30, 2024, and 2023. Due to declining revenues, and the end of the LED product line as a revenue source, coupled with ending efforts to promote the Smart Mirror in 2024, the Company reduced advertising and promotion expenses in 2024. As of September 30, 2024, the only marketing efforts by the Company have been the Company’s Chief Executive Officer seeking potential funding and pre-production purchasers of the Connected Chef.
Product Development	Product Development   All research and development costs are charged to results of operations as incurred.   For the nine months ended September 30, 2024, and 2023, product development expenses were $4,268 and $76,454, respectively. Expenses in 2023 were related to the development of the Connected Chef, expanding the Connected Surfaces product portfolio.
Accounts Payable and Accrued Liabilities	Accounts Payable and Accrued Liabilities   The following table summarizes the components of accounts payable and accrued liabilities as of September 30, 2024, and December 31, 2023, respectively:                     September 30,   December 31,     2024   2023 Accounts payable   $ 45,058     $ 69,267   Accounts payable due to related parties     47,899       —     Accrued warranty reserve     —         1,200   Accrued compensation and deferred wages     969,602       734,156   Total   $ 1,062,559     $ 804,623
Income Taxes	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 Compensation	Stock Based Compensation   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 condensed 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 each of the nine months ended September 30, 2024, and 2023 was $0.
Use of Estimates	Use of Estimates   The preparation of condensed 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 revenue recognition, periodic impairment tests, product warranty obligations, valuation of inventories, tax related contingencies, valuation of stock-based compensation, other contingencies and litigation, among others. 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 financial statements. However, circumstances could change, and actual results could differ materially from those estimates.
Adoption of New Accounting Standards	Adoption of New Accounting Standards   In June 2016, the FASB issued Accounting Standards Update (“ASU) 2016-13, “Financial Instruments – Credit Losses. This ASU sets forth a current expected credit loss model which requires the Company to measure all expected credit losses for financial instruments held at the reporting date based on historical experience, current conditions, and reasonable supportable forecasts. This replaces the existing incurred loss model and is applicable to the measurement of credit losses on financial assets measured at amortized cost and applies to some off-balance sheet credit exposures. In November 2019, the effective date of this ASU was deferred until fiscal years beginning after December 15, 2022, including interim periods within those fiscal years, with early adoption permitted. The Company adopted ASC 326 on January 1, 2023, and ASC 326 did not have a material impact on its condensed consolidated financial statements.   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. ASU 2023-07 is effective for public business entities for fiscal years beginning after December 15, 2023, with early adoption permitted. The Company adopted ASC 280 on January 1, 2024, and ASC 280 did not have a material impact on its condensed consolidated financial statements.
Recently Issued Accounting Pronouncements Not Yet Adopted	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. 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.

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Tables)	9 Months Ended
	Sep. 30, 2024
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Schedule of net revenue by major source	For the Nine Months Ended September 30, 2024   For the Nine Months Ended September 30, 2023     Revenues   % of Revenue   Revenues   % of Revenue Lighting Products – U.S.     57,829       40 %     —         —     Smart Mirror Products- U.S.     85,439       60 %     95,968       100 % Total Net Revenue   $ 143,268       100 %   $ 95,968       100 %
Schedule of components of accounts payable and accrued liabilities	September 30,   December 31,     2024   2023 Accounts payable   $ 45,058     $ 69,267   Accounts payable due to related parties     47,899       —     Accrued warranty reserve     —         1,200   Accrued compensation and deferred wages     969,602       734,156   Total   $ 1,062,559     $ 804,623

NOTES PAYABLE TO RELATED AND UNRELATED PARTIES (Tables)	9 Months Ended
	Sep. 30, 2024
Debt Disclosure [Abstract]
Schedule for notes payable to related party	Notes Payable       September 30, 2024       December 31, 2023   Current portion of notes payable and accrued interest, related parties   $ 2,105,186     $ 1,946,315   Current portion of notes payable and accrued interest, unrelated parties     614,401       594,161   Total notes payable principal and accrued interest     2,719,587       2,540,476   Less accrued interest     (277,087 )     (187,974 ) Total notes payable   $ 2,442,500     $ 2,352,502

COMMITMENTS AND CONTINGENCIES (Tables)	9 Months Ended
	Sep. 30, 2024
Commitments and Contingencies Disclosure [Abstract]
Schedule of potential payments upon termination of employment	Salary Severance   Bonus  Severance   Gross up  Taxes   Benefit  Compensation   Grand Total Stewart Wallach   $ 301,521     $ —     $ 12,600     $ 6,600     $ 320,721

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details) - USD ($)	3 Months Ended		9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Sep. 30, 2024	Sep. 30, 2023
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Total net revenue		$ 63,771	$ 143,268	$ 95,968
Capstone Brand [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Total net revenue			$ 143,268	$ 95,968
Percentage of revenue			100.00%	100.00%
Lighting Products U S [Member] | Capstone Brand [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Total net revenue			$ 57,829
Percentage of revenue			40.00%
Smart Mirror Products U S [Member] | Capstone Brand [Member]
Collaborative Arrangement and Arrangement Other than Collaborative [Line Items]
Total net revenue			$ 85,439	$ 95,968
Percentage of revenue			60.00%	100.00%

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details 1) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Organization, Consolidation and Presentation of Financial Statements [Abstract]
Accounts payable	$ 45,058	$ 69,267
Accounts payable due to related parties	47,899
Accrued warranty reserve		1,200
Accrued compensation and deferred wages	969,602	734,156
Total	$ 1,062,559	$ 804,623

ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (Details Narrative) - USD ($)	3 Months Ended						9 Months Ended		12 Months Ended
	Sep. 30, 2024	Jun. 30, 2024	Mar. 31, 2024	Sep. 30, 2023	Jun. 30, 2023	Mar. 31, 2023	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023	Oct. 31, 2024
Debt Instrument [Line Items]
Working capital deficit	$ 3,748,008						$ 3,748,008
Accumulated deficit	11,279,023						11,279,023		$ 10,797,216
Cash	1,895						1,895		36,466
Short term note payable	2,719,587						2,719,587
Deferred tax liability	320,329						320,329
Net loss	95,537	$ 124,010	$ 262,260	$ 423,598	$ 325,102	$ 466,675	481,807
Net cash used in operating activity							124,571	$ 573,611
Net revenue							47,000	47,000
Increase in net revenue							96,000	143,000
Liquidation sale							80,000
Net loss							482,000	1,215,000
Cash used in operating activities							125,000	574,000
Inventory	0						0		133,775
Goodwill	1,936,020						1,936,020
Impairment charge							0	0
Amortization of Debt Issuance Costs and Discounts							840	15,500
Accrued warranty liability							0		$ 1,288
Sales and marketing expenses				$ 9,733			17,403	66,144
Product development expenses							$ 4,268	$ 76,454
Share-Based Payment Arrangement, Option [Member]
Debt Instrument [Line Items]
Total number of potentially dilutive common stock							208,288	408,288
Warrant [Member]
Debt Instrument [Line Items]
Total number of potentially dilutive common stock							199,733	199,733
Preferred B-1 Stock [Member]
Debt Instrument [Line Items]
Total number of potentially dilutive common stock							15,000	15,000
Common Stocks [Member]
Debt Instrument [Line Items]
Total number of potentially dilutive common stock							999,900	999,900
Unsecure Promissory Note [Member] | Subsequent Event [Member]
Debt Instrument [Line Items]
Debt Instrument, Face Amount										$ 125,914
Debt Instrument, Interest Rate, Stated Percentage										7.00%

CONCENTRATIONS OF CREDIT RISK AND ECONOMIC DEPENDENCE (Details Narrative) - Revenue Benchmark [Member] - Customer Concentration Risk [Member]	9 Months Ended
	Sep. 30, 2024
One Customers [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	56.00%
Two Customers [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	40.00%
One Vendor [Member]
Concentration Risk [Line Items]
Concentration risk, percentage	94.00%

NOTES PAYABLE TO RELATED AND UNRELATED PARTIES (Details) - USD ($)	Sep. 30, 2024	Dec. 31, 2023
Debt Disclosure [Abstract]
Current portion of notes payable and accrued interest, related parties	$ 2,105,186	$ 1,946,315
Current portion of notes payable and accrued interest, unrelated parties	614,401	594,161
Total notes payable principal and accrued interest	2,719,587	2,540,476
Less accrued interest	(277,087)	(187,974)
Total notes payable	$ 2,442,500	$ 2,352,502

NOTES PAYABLE TO RELATED AND UNRELATED PARTIES (Details Narrative) - USD ($)	9 Months Ended
	Sep. 30, 2024	Dec. 31, 2023
Principal outstanding	$ 2,442,500	$ 2,352,502
Accrued interest	$ 277,087	$ 187,974
Board of Directors Chairman [Member]
Maturing date	Nov. 30, 2024
Principal outstanding	$ 1,020,000
Accrued interest	$ 150,625
Director [Member]
Maturing date	Nov. 30, 2024
Principal outstanding	$ 600,000
Accrued interest	$ 72,577
Jeffrey Postal [Member]
Maturing date	Nov. 30, 2024
Principal outstanding	$ 50,000
Accrued interest	$ 4,918
Jeffrey Postal One [Member]
Maturing date	Nov. 30, 2024
Principal outstanding	$ 50,000
Accrued interest	$ 4,582
Stewart Wallach [Member]
Maturing date	Nov. 30, 2024
Principal outstanding	$ 40,000
Accrued interest	$ 3,485
Stewart Wallach One [Member]
Maturing date	Nov. 30, 2024
Principal outstanding	$ 632,500
Accrued interest	39,134
Total funding under agreement amount	$ 632,500
Jeffrey Postal Two [Member]
Maturing date	Nov. 30, 2024
Principal outstanding	$ 50,000
Accrued interest	$ 1,767

COMMITMENTS AND CONTINGENCIES (Details) - Stewart Wallach [Member]	Sep. 30, 2024 USD ($)
Defined Benefit Plan Disclosure [Line Items]
Salary Severance	$ 301,521
Bonus Severance
Gross up Taxes	12,600
Benefit Compensation	6,600
Grand Total	$ 320,721

COMMITMENTS AND CONTINGENCIES (Details Narrative) - USD ($)	9 Months Ended
	Sep. 30, 2024	Sep. 30, 2023	Dec. 31, 2023
Commitments and Contingencies Disclosure [Abstract]
Rent expense	$ 2,485	$ 94,065
Accounts payable and accrued liabilities	$ 969,603		$ 734,156

STOCK TRANSACTIONS (Details Narrative) - USD ($)	1 Months Ended		9 Months Ended
	Jun. 30, 2022	May 31, 2022	Sep. 30, 2024	Dec. 31, 2023	May 31, 2019
Class of Stock [Line Items]
Warrant outstanding amount			$ 199,733	$ 199,733
Stock options outstanding			208,288
Weighted average exercise price			$ 0.475
Weighted average contractual term remaining			10 months 20 days
Stock options, expired			200,000
Stock options, granted			0
Stock options, exercised			0
Stock-based compensation expense			$ 0
Stock repurchase program, maximum amount			816,167		$ 1,000,000
Stock repurchase program, number of shares	66,167	66,167
Stock repurchase program, total purchase cost	$ 11,662	$ 11,662	$ 119,402
Series B-1 Preferred Stock [Member]
Class of Stock [Line Items]
Liquidation preference, per share			$ 1.00
Liquidation preference, value			$ 15,000	$ 15,000

SUBSEQUENT EVENTS (Details Narrative) - Subsequent Event [Member] - USD ($)	Nov. 11, 2024	Oct. 31, 2024
Unsecure Promissory Note [Member]
Subsequent Event [Line Items]
Principal amount		$ 125,914
Debt Instrument, Interest Rate, Stated Percentage		7.00%
Promissory Note [Member] | Stewart Wallach [Member]
Subsequent Event [Line Items]
Principal amount	$ 608,840
Promissory Note [Member] | George Wolf [Member]
Subsequent Event [Line Items]
Principal amount	$ 366,875

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