Financial Analysis

NOTE 4 COMMITMENTS AND CONTINGENCIES Operating Leases 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. Leases with a lease term of 12 months or less are not recorded on the balance sheet and lease expense is recognized on a straight-line basis over the lease term. The Company currently has no finance leases. The rent expense for the year ended December 31, 2025 and 2024, amounted to $ 900 and $2,485 , respectively. CAPSTONE COMPANIES, INC. AND SUBSIDIARIES NOTES TO CONSOLIDATED FINANCIAL STATEMENTS NOTE 4 COMMITMENTS AND CONTINGENCIES (continued) Directors Compensation On July 5, 2022, The Board of Directors voted to suspend compensation to the independent directors indefinitely. Legal Matters The Company is not a party to any other pending or threatened legal proceedings and, to the best our knowledge, no such action by or against us has been threatened. From time to time, we are subject to legal proceedings and claims that arise in the ordinary course of our business. Although occasional adverse decisions or settlements may occur in such routine lawsuits, we believe that the fina …

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NOTE 6 - INCOME TAXES Effective January 1, 2025, the Company adopted ASU 2023-09, Income Taxes: Improvements to Income Tax Disclosures . The amendments in ASU 2023-09 enhance the transparency and decision usefulness of income tax disclosures by requiring, among other things, (i) expanded rate reconciliation disclosures with specified categories presented both in dollar amounts and as a percentage of pretax loss, and (ii) disaggregation of income taxes paid (net of refunds) by federal, state and foreign jurisdictions, including separate disclosure of material jurisdictions. The disclosures for the year ended December 31, 2024 were prepared in accordance with the income tax disclosure requirements of ASC 740-50 prior to the adoption of ASU 2023-09, and are presented in the format previously required. Accordingly, the 2024 rate reconciliation and related disclosures reflect the previously required categories and disclosure objectives under the prior guidance and are not required to be reformatted under the new standard. The components of income tax benefit from operations consisted of the following: Schedule of components of income tax benefit December 31, 2025 December 31, 2024 Current income tax benefit: U.S. Federal $ (162,365 ) $ (113,256 ) State (33,594 ) (11,114 ) Foreign Total current tax provision from operations $ (195,959 ) $ (124,370 ) Deferred income tax benefit: U.S Federal 288,725 19,646 State 81,912 (31,231 ) Foreign Total deferred income taxes 370,637 (11,585 ) C …

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Recently Issued Accounting Pronouncements In November 2023, the FASB issued ASU 2023-07, Segment Reporting (Topic 280): Improvements to Reportable Segment Disclosures, which requires public entities to disclose significant segment expenses and other segment items on an interim and annual basis, and provide in interim periods all disclosures about a reportable segments profit or loss and assets that are currently required annually. The ASU does not change how a public entity identifies its operating segments, aggregates them, or applies the quantitative threshold to determine its reportable segments. The new disclosure requirements are also applicable to entities that account and report as a single operating segment entity. ASU 2023-07 is effective for fiscal years beginning after December 15, 2023, and for interim periods within fiscal years beginning after December 15, 2024. The Company adopted the guidance for the annual reporting period ended December 31, 2024. There was no impact on the Companys reportable segments identified and additional required disclosures have been included in Note 12, Segment Reporting in the Notes to Consolidated Financial Statements. Effective January 1, 2025, the Company adopted ASU 2023-09, Improvements to Income Tax Disclosures , which requires expanded disaggregation of income tax information to enhance transparency and comparability. As a result, the Company now presents a more detailed reconciliation of the U.S. federal statutory income tax …

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NOTE 7 OPERATING SEGMENTS The Companys Chief Executive Officer serves as the Chief Operating Decision Maker (CODM). The CODM reviews financial information, allocates resources, and assesses performance on a consolidated basis. Accordingly, the Company has determined that it operates in one reportable segment, which is identified as Consumer Home Goods. The CODM evaluates segment performance primarily based on segment net loss. The measure of segment net loss includes net revenue and significant operating expenses that are regularly provided to the CODM. The Companys operations, including sales and marketing, product design and development, and research and development consulting, are managed on a centralized basis. The following table presents net revenue, significant segment expenses, and segment net loss for the Companys single reportable segment for the years ended December 31, 2025 and 2024: Schedule of significant segment expenses Consumer Home Goods December 31, 2025 December 31, 2024 Revenue, net $ $ 143,269 Less: Cost of goods sold 38,019 Less: Sales and marketing 17,313 Product development 2,190 6,233 Consultancy fees 96,850 Professional fees 196,668 274,559 Other segment expenses 872,036 706,110 Segment net loss (1,070,894 ) (995,815 ) Other segment items include operating expenses regularly provided to the CODM that are separately disclosed above Reconciliation of loss: Other income 4 Loss on disposal of equipment (17,904 ) Interest expense (27,328 ) (90,943 ) Loss …

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NOTE 5 - EQUITY Warrants During the years ended December 31, 2025 and 2024, the Company did not issue any warrants. As of December 31, 2025, and 2024, the Company had 199,733 warrants outstanding. Series B-1 Preferred Stock On June 15, 2023, the Company amended the Articles of Incorporation to authorized 5,000,000 shares of the B-1 Stock (B-1 shares). The B-1 shares are convertible into common shares, at a rate of 66.66 of common stock for each share of B-1 shares. The par value of the B-1 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 Stockholders are entitled to distribution prior to common stockholders but not before any other preferred stockholders. On December 18, 2024, the Company entered into a cancellation agreement with related party promissory note holders for cancellation of $ 3,665,303 in outstanding principal and interest in exchange for issuance of 750,075 shares of the Companys B-1 Stock. The Series B-1 Preferred Shares and any shares of common stock issued under the aforementioned agreements are restricted securities under Rule 144 of the Securities Act of 1933, as amended. The B-1 Shares have a liquidation preference of $ 1.00 per share or $ 767,075 as of December 31, 2025 and 2024, respectively. Options In 2005, the Company authorized the 2005 Equity Plan that made available shares of common stock for issuance through awards of options, restricted stock, stock bonus …

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NOTE 8 - SUBSEQUENT EVENTS Amended Related Party Note Payable On January 9, 2026, the Company entered into an amended and revised unsecured promissory note (New Note) with Coppermine. The new note revised the January 25, 2025 note for a commitment of additional working capital of $ 73,191 during the first quarter of 2026 and an amended principal balance of $ 558,191 and amended the maturity date to December 31, 2026 . The new note is to provide for projected funding needs of the Company to pay for essential corporate maintenance expenses due in the first three fiscal quarters of 2026, necessary to meet the reporting and filing requirements under federal and state securities laws and regulations, maintenance of the quotation of the Companys Common Stock on the OTC Markets Group QB Venture Market and maintenance of directors and officers insurance and basic management and accounting operations. The amended principal amount is intended to provide sufficient working capital to maintain the corporate existence of the Company while the executive management continues efforts to develop or acquire a new business line or revenue generating operation. The Company has received $45,000 of the 2026 working capital funding as of the date of filing this Form 10-K. Renewal of CFO Agreement On January 9, 2026, the Company renewed Ms. Perezs contracting agreement for Chief Financial Officer services, commencing January 1, 2026, with services billed at an hourly rate of $ 275 , and ending upon …

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