Capstone Companies (CAPC) Risk Analysis

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.