CAPC Capstone Companies, Inc. - 10-K

Item 1A. Risk Factors.

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

Business and Operational Risks

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

Our public auditors issued a going concern opinion in connection with the audit of our annual financial statements for the fiscal year ended December 31, 2025. A going concern opinion means that there is substantial doubt that the company can continue as an ongoing business for the next 12 months. If we are unable to continue as a going concern, we might have to liquidate our assets and the values we receive for our assets in liquidation or dissolution could be significantly lower than the values reflected in our financial statements. In addition, the inclusion of an explanatory paragraph regarding substantial doubt about our ability to continue as a going concern and our lack of cash resources may materially adversely affect our share price and our ability to raise new capital or to enter into critical contractual relations with third parties. There is no assurance that we will be able to adequately fund our operations in the future.

The declining revenues in 2024 of our business line of LED lighting products and the lack of a sufficient revenue generating operation in 2025 have resulted in significant operating losses and imposed a need to sustain operations with outside funding of working capital. If the Company cannot obtain adequate, affordable funding, whether equity or debt, as needed, the Company will have difficulty sustaining the Company as a going concern.

Cash flow from operations was and is not sufficient to sustain operations and fully fund its HFS business and Connected Chef licensing program. In order to attempt to secure adequate working capital in 2025, we took the actions detailed below. These actions are not deemed sufficient to meet all expected working capital needs for 2026 or to license the Connected Chef or complete a business combination or purchase a new revenue generating product line. We anticipate the need to raise working capital funding to meet our funding needs in 2026 as we do not have any cash flow from operations. Because of the low market price and liquidity of our Common Stock, our declining financial performance, lack of hard assets required for asset based loans, and our transition from a declining product line and primary source to a new, unproven product line, we may be unable to raise necessary, affordable and timely working capital in 2026 and that failure could be fatal to our ability to sustain the Company as an operating company.

During the year ended December 31, 2025, the Company used cash in operations of $282,959 and generated net operating losses of $1,070,894. As of December 31, 2025, the Company has working capital deficit of $459,069 and an accumulated deficit of $12,679,768. The Company’s cash balance increased approximately $23,000 from $15,850 as of December 31, 2024, to $39,122 as of December 31, 2025. Although we have cash on hand, the Company does not have sufficient cash on hand to finance its plan of operations for the next 12 months from the filing of this report and we will need to seek additional capital through debt and/or equity financing to fully fund operational overhead and fully fund the efforts for a possible business combination. While certain related parties have provided working capital funding to the Company in the past, there is no guarantee, and none can be given that these related parties will do so when and as required by the Company in 2026.

The Company will need additional third-party funding to sustain operations and fund any further business development efforts. The Company has no consumer products in active production and has no revenue generating operations as of the date of the filing of this Form 10-K report.

In 2025, the Company did not generate revenue from the Connected Chef product line. The Company has not raised the working capital to acquire or launch an HFS operation as of the date of the filing of this Form 10-K report. Absent adequate working capital funding in 2026, the financial condition of the Company may at some point force the Company to seek to effect an extraordinary corporate transaction to protect shareholder value and sustain the Company as an operating company. An extraordinary corporate transaction could include a merger or sale of the Company or reorganization of the Company under bankruptcy protection. The Company may be unable to effect, if necessary, an extraordinary corporate transaction or obtain significant funding for a new product line in 2026 to sustain the Company as an operating company. Reorganization under the protection of the bankruptcy code is one possible extraordinary corporate transaction. The funding provided under the March 3, 2026 promissory note issued to eBliss will be devoted to basic corporate overhead and is not sufficient or intended to fund development of a new business line or product line.

Our operating results and sustainability as an operating company in the future are substantially dependent on the success of HFS development program in 2026.

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

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

We operate executive operations with a relatively small number of personnel and consultants. The Company has not developed personnel to readily replace key personnel. The loss of key personnel, being Stewart Wallach, Chairman of the Board of Directors, would severely harm the business. The Company hired Dana Eschenburg Perez, as an external consultant as of January 1, 2023, to perform the functions of Chief Financial Officer. The loss of Alexander Jacobs, Chief Executive Officer, would be adverse in terms of any efforts to develop a HFS industry business. Mr. Jacobs devotes time to Chief Executive Officer duties deemed sufficient to perform those duties. We do not have key man life insurance.

Our personnel are focused on executive management. If our operations grow, we will have to increase the number of our personnel in the future to handle any growth or expansion. Our ability to find and retain qualified personnel when needed by our growth or existing operations will be an important factor in determining our success in coping with any growth of or efficiently handling existing operational burdens.

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

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

Adequate, affordable and available funding is a key factor in our ability to maintain operations.

With the end of the licensing arrangement for the Connected Chef in late 2025 and the absence of current revenue-generating operations, the Company is in a transitional stage as it evaluates and pursues new business opportunities. During this period, the Company’s activities are primarily focused on corporate compliance, maintaining public company infrastructure and business development efforts, including identifying and evaluating potential acquisitions, strategic partnerships, or new business lines.

As a result of these conditions, there is a risk that market participants, regulators, or other stakeholders could perceive the Company as having limited operations. Under SEC Rule 12b-2 under the Exchange Act, a Company may be considered a “shell company” if it has no or nominal assets (other than cash) and no or nominal operations. The determination of whether a company meets this definition is based on specific facts and circumstances and involved judgement.

While the Company continues to maintain organizational infrastructure, management oversight, and active efforts to develop or acquire a new business line, there can be no assurance that these activities will be sufficient to avoid any characterization as a shell company under applicable SEC rules.

If the Company were to be deemed a shell company, it could have significant consequences, including limitations on the availability of Rule 144 for the resale of securities, restrictions on the use of certain registration statements, and increased difficulty in accessing capital markets or completing strategic transactions. In addition, such a characterization could negatively impact investor perception and the market liquidity of the Company’s common stock.

The Company lack of sustained revenue generating operations and tangible assets has hampered efforts to raise working capital for basic corporate overhead and for business development efforts, including funding of any potential acquisitions. Being designated as a ’shell company’ may further complicate or hinder the ability of the Company to secure working capital funding for basic corporate operations, business development efforts, funding for any potential acquisitions or launch of a new business line.

Regulatory and Legal Risks

Our financial results and ability to fund basic corporate overhead and fund business development efforts may be negatively impacted by economic, regulatory and political risks beyond our control.

We are subject to risks associated with securing necessary funding for our basic corporate overhead and business development efforts which risks include:

political or labor unrest, terrorism, public health crises, disease epidemics and economic instability resulting in reduction in potential funding sources for companies like the Company, especially in terms of investors or lenders adopting stricter risk and lending requirements.

the imposition of new laws and regulations that increase the cost of compliance with applicable laws.  The cost of compliance represents a significant burden for the Company and increased compliance costs increases the risk of the Company being unable to fund basic, necessary compliance costs from available funding or to secure additional funding for any increased compliance costs.  Those compliance costs consist primarily of accounting and audit fees, annual fees owed to The OTC Market Group, legal fees and other third party expenses incurred and necessary to fund basic compliance costs or costs associated with business development.

Additional Financial Risk Factors

Our inadequate or expensive funding and financing alternatives.

Our current short-term debt level as of December 31, 2025, and 2024 was $514,320 and $180,760, respectively.

The Company will need additional outside working capital funding in fiscal year 2026 to support the Company’s operations.

Other adverse consequences could include:

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

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

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

As we currently do not have an operating product line, past financial performance is not indicative of any future growth or future financial performance.

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

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

Risk Factors for our Common Stock

Penny Stock and Volatile Market Price.

The Company’s Common Stock is subject to possible volatile trading, including rapid increases and decreases in market price due to trading in the open market. Company’s declining business and financial condition has depressed the already low market price and trading of the Company’s Common Stock in 2025. The Company’s Common Stock lacks the primary market makers and institutional investors who can protect the market price from volatility in trading and market price. Company does not have any research analyst issuing recommendations. The Common Stock is also a “penny stock” under SEC rules and suffers the limitations and burdens in trading of penny stocks. This lack of market support and penny stock status means that trading, especially by day traders, can cause a rapid increase or decrease in market price of the Common Stock and makes any investment in the Common Stock extremely risky and unsuitable for investors who cannot withstand the loss of their entire investment and requires on demand liquidity in the investment. An investment in the Common Stock remains an extremely risky investment that is not suitable for investors who cannot afford the loss of investment and can withstand or tolerate a possible lack of liquidity.

We were deemed a former shell company (under current SEC rules and interpretations thereof) because the lack of operations at the time of our initial public offering of shares of Common Stock and during the early 1990’s. As such, our stock transfer agent required a legal opinion as well as other paperwork to lift restrictive legends from stock certificates for non-affiliated as well as affiliated shareholders. As a former shell company during the period when the Company was an operating company, the restrictive legends could only be lifted for at most a 90-day period for sales under Rule 144 for affiliated and non-affiliated shareholders. Further, our stock transfer agent would not permanently remove restrictive legends on stock certificates held by shareholders. absent registration of the shareholder’s shares of common stock under the Securities Act. This status made our common stock even more unappealing to investors and potential purchasers and more difficult to sell or trade.

The Company’s financial and business condition and corporate status, lack of revenue generating operations, Common Stock status as a “penny stock”, low liquidity and market price of the Common Stock make any investment in the Company’s Common Stock a highly risky investment unsuitable for investors who require liquidity in an investment and cannot afford the total loss of investment.

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

No Dividends.

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

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

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

General Risk Factors

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

The Company’s corporate operations, even though reduced to minimal staffing focused on corporate compliance and business development, are subject to disruption from natural or human causes beyond its control, including physical risks from hurricanes, severe storms, floods and other forms of severe weather, accidents, fires, earthquakes, terrorist acts and epidemic or pandemic diseases such as the COVID-19 or variants of that virus, any of which could result in suspension of operations and business development efforts, or harm to people or the environment. Natural or human causes could hinder or prevent the acquisition of or launch of or effective management or funding of any new business line.

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

Our ability to execute on our long-term business development strategies depends, in part, on locating, consummating the acquisition or development of a new business line, which is in turn dependent on securing adequate and affordable funding. If we acquire or develop a new business, and no assurances is given that we can acquire or develop a new business, then our long-term strategy depends on obtaining adequate, affordable working capital, our ability to successfully drive expansion of our gross margins, manage our cost structure and drive return on our investments. If we cannot effectively execute our long-term growth strategies while managing costs effectively, our business could be negatively impacted, and we may not achieve our expected results of operations.

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

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

Item 1B. Unresolved SEC Staff Letters.

None for the fiscal year ended December 31, 2025.

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

This Item 7, “Management’s Discussion and Analysis of Financial Condition and Results of Operations,” and other parts of this Report contain forward-looking statements that involve risks and uncertainties. Forward-looking statements provide current expectations of future events based on certain assumptions and include any statement that does not directly relate to any historical or current fact. Forward-looking statements can also be identified by words such as “future,” “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “will,” “would,” “could,” “can,” “may,” and similar terms. Forward-looking statements are not guarantees of future performance and Company’s actual results may differ significantly from the results discussed in the forward-looking statements. Factors that might cause such differences include, but are not limited to, those discussed in this Report under the heading “Risk Factors,” which are incorporated herein by reference. The following discussion should be read in conjunction with the consolidated financial statements and notes thereto included in this Report. All information presented herein is based on Company’s fiscal year 2025 results. Unless otherwise stated, references to particular years or quarters refer to the Company’s fiscal years ended in December and the associated quarters of those fiscal years. Company assumes no obligation to revise or update any forward-looking statements for any reason, except as required by law.

Executive Summary

In late 2024 and in 2025, the Company turned its focus to a second, newly developed Connected Surface product, the Connected Chef, but the lack of adequate working capital to produce, purchase inventory and market the Connected Chef forced the Company to pursue third party licensing, production and marketing of the Connected Chef. The Company was able to find a licensor to produce and market the Connected Chef product line in 2025, but due to the licensee’s inability to reach acceptable terms for production of the Connected Chef product line with suitable OEMs in China, the licensing arrangement was terminated in late 2025.

In 2025, we preserved cash but we continued to invest where needed to support the relaunch of the Connected Surfaces program. For fiscal year ended 2025, our business efforts were focused on finding a third party to license, produce and market the Connected Surface product and developing a new business line as the Company’s primary business line. The effort to develop a new business line was focused on the HFS industry, but the company also explored and considered other potential opportunities in other industries. The ultimate goal was development of a business line that would provide potential revenues and revenue growth and sustained profitability in order to eliminate the need for third party funding of basic corporate overhead and provide appreciation of shareholders’ investment in the Company.

On March 4, 2026, the Company issued a Lump Sum Payment Promissory Note (“eBliss Note”) for a $250,000 unsecured working capital loan from eBliss Global, Inc., a private Delaware corporation (“eBliss”) that is gearing up for production of e-bikes for personal transportation in Utica, New York in 2026. The Note contains a no shop provision under which Company and eBliss will discuss during a 90-day period the possibility of a mutually beneficial relationship, which relationship could include merger, other business combination, strategic relationship or joint venture to develop a product, or similar relationship (collectively, “Transactions”). The no-shop provision grants exclusivity to eBliss for business development by the Company for the first 60 days of the no-shop 90-day period. If no letter of intent or definitive agreement is signed with eBliss during the first 60 days of the 90-day no shop period, the Company may entertain and pursue any. Third party proposals deemed superior by the Company to any pending proposal, if any, from eBliss. There is no existing legally binding agreement by the Company or eBliss as of the date of the filing of this Form 10-K Report to consummate or enter into an agreement to consummate any Transaction. The Company’s focus is to acquire or start a new business line and during the ‘no shop’ period, the Company’s business development efforts will be focused on exploring mutually beneficial relationships and transactions with eBliss in the e-bike industry. See Note 3 - Notes Payable for further information about the eBliss Note and the no-shop provision.

Total net revenue for the year ended December 31, 2025, decreased 100% from $143,269 to $0 as compared to the same period of last year due to the Company not having an operating product line. The net operating loss was $1,070,894 for the year 2025 compared to $995,815 for the year 2024. The Company had an estimated net tax benefit provision in 2025 and 2024 of $195,958 and $124,370, respectively.

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

Principal Factors Affecting Our Financial Performance

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

Overall Demand for Products and Applications. In terms of our efforts to pursue a business line based on Connected Chef, our potential for growth depends on the successful introduction and consumer acceptance of the Connected Surfaces portfolio by a third party licensee capable of production and marketing of the product. The necessity of a third party licensing effort results from the lack of adequate working capital to internally produce and market the product. We have been unable to establish a third party licensing arrangement for the Connected Chef in 2025.  The Company’s products are characterized as non-essential and economic conditions, especially consumer uncertainty or worries over economic conditions and growth, affect consumer demand. Uncertainty over global economic conditions that may affect the U.S. economy is not conducive to consumer purchases of our category of consumer products. Further, it is in general difficult to obtain third party licensing arrangements for a new product that has no established sales history, especially one that faces competition from other companies as well as technological changes, like AI, changing consumer purchasing preferences and demand. We lack the working capital to re-engineer the Connected Chef to respond to new technologies that may undermine the consumer appeal of the Connected Chef. These uncertainties make demand difficult to forecast demand or future viability of Connected Chef or any other consumer product for us and our customers.

Strong and Constantly Evolving Competitive Environment . While we have demonstrated in the past our abilities to compete successfully in the retail channels since our inception, competition in the marketplace we serve is strong. Many companies have made significant investments in product development, production equipment and product marketing. Product pricing pressures exist as market participants often initiate pricing strategies to gain or protect market share. To remain competitive, market participants must continuously increase product performance or functionality, reduce costs and develop improved ways to support their customers. Further, new consumer products need to incorporate the utility and appeal of new technologies, especially generative AI.  The Connected Chef does not have generative AI beyond Internet-connected applications not tailored to the Connected Chef.  To address these competitive measures, we need to invest in research and development activities to support new product development (either internally or through third party contractors), sustain low product costs and deliver higher levels of performance and product functionality to differentiate our products in the market and attract third party licensees.  We lack the capital to engage in this important product development, marketing and licensing efforts.

Profit Margins . The Company’s product planning strategies are driven by the need to deliver sustainable profit margins. This, in conjunction with close management of related marketing costs, are required to establish any Company’s market presence in the consumer product industry or a new business line.  In 2025 and into 2026, the Company’s primary focus is the need to develop a new business line in an industry with greater growth and profit margin potential than the traditional niche consumer product industry.

Technological Innovation and Advancement . The significant impact of generative AI and other technological developments significantly impact many industries, including consumer product industry.  In 2025 and into 2026, the need to integrate new technologies in consumer products to meet consumer and retailer expectations and preferences is beyond the current financial resources of the Company, which has caused the Company to focus on developing a new business line in a new industry segment.

Affordable Funding . The Company needs to secure affordable funding resources to support ongoing product development and new market penetration or internally develop a new product line or business line. The Company was unable to secure working capital in 2025 that was sufficient to fund more than basic corporate overhead necessary to sustain the corporate existence of the Company. See Note 3 – Notes Payable “eBliss Note”.

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

Results of operations

Net Revenues

The Company had no revenue for 2025 as it did not have an operating product line. For 2024, revenue was derived from sales of our residential lighting products and Connected Surfaces Smart Mirrors. The residential products were directed towards consumer home LED lighting for both indoor and outdoor applications while the Smart Mirrors were sold directly to consumers and liquidators via e-commerce efforts. We recognized revenue upon shipment of the order to the customer when all performance obligations have been completed, and title has transferred to the customer and in accordance with the respective sale’s contractual arrangements. Each contract on acceptance will have a fixed unit price. All of our sales were to the U.S. market in 2024. All of our revenue is denominated in U.S. dollars.

Cost of Goods Sold

In 2025, we had no cost of goods sold as we have no operating product line. For 2024, our cost of goods sold consisted primarily of purchased products from contract manufacturers and when applicable associated duties and inbound freight. We sourced our manufactured LED lighting products based on customer orders.

Gross Profit

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

Operating Expenses

In 2025, our operating expenses consisted of professional fees, consulting expenses, insurance and compliance expenses. For 2024, operating expenses included sales and marketing expenses, costs related to employee’s compensation, product development, professional fees, and insurance.

CONSOLIDATED RESULTS OF OPERATIONS AND OUTLOOK

December 31, 2025

December 31, 2024

Dollars

% of Revenue

Dollars

% of Revenue

Revenue, Net

Cost of sales

Gross Profit (Loss)

Operating Expenses:

Sales and marketing

Compensation

Professional fees

Product development

Other general and administrative

Goodwill impairment

Total Operating Expenses

Operating Loss

Other Income (Expenses)

Miscellaneous Income, net

Loss on disposal of equipment

Interest expense, net

Total Other Expenses, net

Loss Before Tax Benefit

Income Tax Expense (Benefit)

Net Loss

Net Revenues

The Company had no revenue for 2025 as it did not have an operating product line. For 2024, revenue was derived from sales of our residential lighting products and Connected Surfaces Smart Mirrors.

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

All sales were domestic for 2024.

The following table disaggregates net revenue by major source:

For the Year Ended December 31, 2025

For the Year Ended December 31, 2024

Capstone Brand

% of Revenue

Capstone Brand

% of Revenue

Lighting Products- U.S.

Smart Mirror Products- U.S.

Total Revenue

Gross Profit and Cost of Sales

The Company did not have any gross profit or cost of sales for 2025. Gross profit for the year ended December 31, 2024, was approximately $105,250, or 73.4% of net revenues. For the year ended December 31, 2024, cost of sales was approximately $38,000.

Operating Expenses

Sales and Marketing Expenses

In 2024, sales and marketing expenses were approximately $17,000. In 2025, the Company did not incur sales and marketing expenses as the Company did not have an operating product line. As a percent to revenue, 2024 sales and marketing expenses were 12%.

Compensation Expenses

For the years ended December 31, 2025 and 2024, compensation expenses were approximately $0 and $139,000, respectively, a reduction of $139,000 or 100%. The Company reduced the workforce and the CEO and Directors are not being compensated as a result of not having an active product line during 2025.

Professional Fees

For 2025, professional fees were approximately $197,000 compared to $275,000 in 2024, a decrease of $78,000 or 28%. As a percent of net revenue, 2024 expenses were 192.6%. The decrease was driven by reduction of consulting fees down from $98,000 to zero for 2025 as the Company did not have an operating product line during 2025, offset by a slight increase in legal and accounting fees.

Product Development Expenses

For the years ended December 31, 2025, and 2024, product development expenses were approximately $2,000 and $6,000, respectively, a decrease of $4,000 or 66%, as the Company did not have an operating product line during 2025.

Other General and Administrative Expenses

For 2025 and 2024, other general and administration expenses were approximately $99,000 and $124,000, respectively, a decrease of $25,000 or 21%. As a percent to revenue, other general and administrative expenses were 0% as compared to 86.9% in 2024. The directors and officers insurance decreased $20,000 in 2025 to $49,000 and depreciation expense decreased $5,000 to $11,000 as the Company disposed of the equipment.

Goodwill Impairment Expense

The Company recognized a goodwill impairment of approximately $773,000 and $539,000 during 2025 and 2024, respectively, as the fair value of the Company was less than the carrying value of the Company.

Total Operating Expenses

For the years ended December 31, 2025, and 2024, total operating expenses were approximately $1,070,000 and $1,100,000, respectively. This represents a $30,000 or 3% increase over fiscal year 2024. The primary driver for the year to year consistency is the impairment expense recorded in both 2025 and 2024.

Operating Loss

For the years ended December 31, 2025, and 2024, total operating expenses were approximately $1,070,000 and $996,000, respectively. This represents a $75,000 or 8% increase over fiscal year 2024, which is driven by no revenues in 2025 compared to $143,000 in 2024 and a $234,000 higher goodwill impairment loss in 2025 compared to 2024.

Other Income (Expense)

Interest expense for 2025 amounted to approximately $27,000 compared to $90,000 in 2024, a decrease of $63,000 or 70%, due to the cancellation of debt and issuance of preferred B-1 stock during 2024. The Company also disposed of its last remaining equipment related to the Connected Chef and recorded a loss on disposal of approximately $18,000.

For the years ended December 31, 2025, the net tax benefit for income tax was estimated at $196,000 compared to a net tax benefit of $125,000 in the same period 2024.

The effective tax rate for the years ended December 31, 2025, and 2024, respectively, was (17.56%) and (10.07%) and the statutory tax rate was 25.5 in 2025 and 23.5% in 2024.

Net Loss Before Income Taxes

For fiscal 2025 and 2024 net loss before taxes was approximately $1,116,000 and $1,087,000, respectively, a net loss increase of approximately $29,000 over the previous year due to the reasons summarized above.

RESULTS OF OPERATIONS AND BUSINESS OUTLOOK

Our goal is to find a strategic partner to assist with a possible business combination as well as to license the Connected Chef kitchen utility device in 2026 through licensing arrangements with an appliance or other consumer product distributors, consumer product manufacturers and possibly other commercial food or kitchen product companies.

The Company will require additional working capital funding until such time as a strategic partner is found. The Company may also require additional funding to cover the costs of manufacturing Connected Chef product if the Company is able to obtain a licensing arrangement in 2026.

Contractual Obligations

The following table represents contractual obligations as of December 31, 2025.

Payments Due by Period

Total

After 2029

Accounts payable and accrued liabilities

Short-Term Debt – related parties

Total Contractual Obligations

Notes to Contractual Obligations Table

Accounts payable and accrued liabilities : Comprised of the   Company’s liability for goods and services in the normal course of business.

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

LIQUIDITY AND CAPITAL RESOURCES

During the year ended December 31, 2025, the Company used cash in operations of approximately $283,000 and generated net operating losses of $1,071,000. As of December 31, 2025, the Company had working capital deficit of $459,069 and an accumulated deficit of $12,679,768. The Company’s cash balance increased by approximately $23,000 from $16,000 as of December 31, 2024, to $39,000 as of December 31, 2025, due to proceeds from related party notes payable for working capital needs. With the reduced revenues in 2024 and no revenues in 2025, the Company reduced non-essential expenses, dissolved the Hong Kong operation, and fully impaired the goodwill of $773,165 during 2025.

In 2025, the Company sought to penetrate the HFS industry that was and continues to enjoy rapid expansion nationwide with many existing and new companies that have established operations and brand recognition. The inability of the Company to secure adequate business development funding hampered efforts in 2025 to either acquire or internally develop a new HFS industry business line. The Company believes that identification of a suitable acquisition target or a strategic alliance with an established HFS industry business may potentially enhance the ability of the Company to attract funding for acquiring or establishing a new HFS business (either internally or through an acquisition). Due to the ‘no shop’ provision in the March 2026 eBliss Note, the HFS industry business development efforts, are suspended for the 90-day ‘no shop’ period.

With the failure of the licensing effort for the Connected Chef product in November 2025, the Company is not actively pursuing product development as of the first fiscal quarter of 2026, but the Company would resume the licensing effort if an alternative business line or product opportunity is not developed by mid-2026. The Company is exploring such an arrangement with a limited number of prospective distributors.

Chairman of the Board, and former Chief Executive Officer, Stewart Wallach, funded working capital from 2022 through 2025 as the Company navigated these challenges. Total working capital note proceeds received through 2024 were $672,500 and were settled for conversion of debt into Preferred Stock, Series B-1.    Coppermine has funding working capital since 2024. Total working capital note proceeds received as of the date of this filing of the Form 10-K report from Coppermine are $530,000. Coppermine has committed to lending a total of $558,191 in working capital funding through December 31, 2026. However, there is no assurance that level of funding provided by Coppermine will be adequate to meet the operating needs, licensing expenses and operating expenses of a potential business combination during 2026.

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

Summary of Cash Flows

Years ended December 31,

(In thousands)

Net cash provided by (used in):

Operating Activities

Investing Activities

Financing Activities

Net increase (decrease) in cash

As of December 31, 2025, the Company’s working capital deficit was approximately $459,000 of which $39,000 was cash. Current liabilities were $518,000 and include:

Accounts payable of approximately $3,854 for amounts due vendors and service providers.

Notes payable – related parties - current portion of debt included accrued interest of approximately $514,320.

Cash Flows provided by (used in) Operating Activities

Cash used in operating activities was approximately $283,000 in 2025 compared with approximately $290,000 in 2024. The cash used in operating activities in 2025 were related to essential operating expenses as the Company reduced operating costs as much as possible during 2025.

Cash Flows used in Investing Activities

There was no cash provided by investing activities for 2025 or 2024.

Cash Flows used in Financing Activities

Cash received by financing activities for the years ended December 31, 2025, and 2024, was approximately $306,000 and $269,000, respectively, and related to working capital proceeds from related parties.

Exchange Rates

We have historically sold all of our products in U.S. dollars and pay for all of our manufacturing costs in U.S. dollars.

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

Off Balance Sheet Arrangements

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

DIVIDENDS

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

RECENT ACCOUNTING PRONOUNCEMENTS

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

CRITICAL ACCOUNTING POLICIES

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

Revenue Recognition

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

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

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

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

Goodwill

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

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

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

Goodwill is tested for impairment on December 31 of each year or more frequently if events or changes in circumstances indicate that the asset might be impaired. If the carrying amount exceeds its fair value, an impairment loss is recognized. Goodwill is not amortized. The Company estimates the fair value of its single reporting unit relative to the Company’s market capitalization. There was an impairment expense of $773,165 and $539,317, respectively, for the year ended December 31, 2025 and 2024, for a balance of goodwill of $0 and $773,165, respectively as of December 31, 2025, and 2024.

Accrued Liabilities

Accrued liabilities contained in the accompanying consolidated balance sheets has historically included accruals for estimated amounts of credits to be issued in future years based on operating expenses and other liabilities.

Income Taxes

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

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

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

As of December 31, 2025, the Company had federal and state net operating loss carry forwards of approximately $4,587,000 and $6,540,000 respectively. The federal net operating loss is available to the Company indefinitely and available to offset up to 80% of future taxable income each year. The net deferred tax liability as of December 31, 2025, and 2024 was $0 and $320,000, respectively, and is reflected in long-term liabilities in the accompanying consolidated balance sheets.

The effective tax rate for the years ended December 31, 2025, and 2024, respectively, was 17.56% and 11.44% and the statutory tax rate was 25.3% in 2025 and 23.5% in 2024.

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

Deferred tax assets are to be reduced by a valuation allowance if it is more likely than not that some portion or all of the deferred assets will not be realized. The Company has evaluated the positive and negative evidence bearing upon its ability to realize the deferred tax assets. Management has considered the Company’s history of cumulative net losses incurred and has concluded that it is more likely than not that the Company will not realize the benefits of the deferred tax assets. Accordingly, a full valuation allowance has been established against the deferred tax assets as of December 31, 2025, and 2024. Since indefinite-lived assets cannot be used as a source of taxable income to support the realization of deferred tax asset, a valuation allowance was recorded against the deferred tax assets, and a net deferred tax liability or naked credit of approximately $0 and $320,000 is presented on the company’s balance sheet, respectively. The Company’s valuation allowance decreased by $567,000 in 2025.

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