This summary of accounting policies for Capstone Companies, Inc. (“CAPC” or the “Company”), a Florida corporation (formerly, “CHDT Corporation”) and its wholly-owned subsidiaries (“Subsidiaries”) is presented to assist in understanding the Company's financial statements. The accounting policies conform to accounting principles generally accepted accounting principlesin the United States of America (“U.S. GAAP”) and have been consistently applied in the preparation of the financial statementsstatements.

The unaudited financial statements as of September 30, 2014 and for the ninethree month period ended September 30,March 31, 2015 and 2014 and 2013 reflect, in the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to fairly state the financial position and results of operations for the three months. Operating results for interim periods are not necessarily indicative of the results which canto be expected for the full years.fiscal year due to the seasonal nature of the Company’s business.  Certain prior amounts have been reclassified in order to conform to the fiscal 2015 presentation.

CAPC was initially incorporated September 18, 1986, under the laws of the State of Delaware under the name "YorkshireYorkshire Leveraged Group, Incorporated",Incorporated, and then changed its domicile to Colorado in 1989 by merging into a Colorado corporation, named "FreedomFreedom Funding, Inc." Freedom Funding, Inc. then changed its name to "CBQ,CBQ, Inc." by amendment of its Articles of Incorporation on November 25, 1998. In May 2004, the Company changed its name from “CBQ,CBQ, Inc.” to “ChinaChina Direct Trading Corporation”Corporation as part of a reincorporation from the State of Colorado to the State of Florida.  On May 7, 2007, the Company amended its charter to change its name from “China Direct Trading Corporation” to “CHDTCHDT Corporation.”  This name change was effective as of July 16, 2007, for purposes of the change of its name on the OTC Bulletin Board.   With the name change, the trading symbol was changed to “CHDO.”CHDO On June 6, 2012, the Company amended its charter to change its name from “CHDT Corporation”CHDT Corporation to “CAPSTONECAPSTONE COMPANIES, INC.”  This name change was effective as of July 6, 2012, for purposes of the change of its name on the OTC Bulletin Board.   With the name change, the trading symbol was changed to “CAPC.”CAPC.

In February 2004, the Company established a new subsidiary, initially named “ChinaChina Pathfinder Fund, L.L.C.”, a Florida limited liability company. During 2005, the name was changed to “OverseasOverseas Building Supply, LLC”LLC (“OBS”) to reflect its shift in business lines from business development consulting services in China for North American companies to trading Chinese-made building supplies in South Florida.  This business line was ended in fiscal year 2007 and the OBS name was changed to “BlackBlack Box Innovations, L.L.C.” (“BBI”) on March 20, 2008. On January 31, 2012, “BBI”the BBI name was changed to “CapstoneCapstone Lighting Technologies, L.L.C”L.L.C (“CLT”).

On September 13, 2006, the Company entered into a Stock Purchase Agreement with Capstone Industries, Inc., a Florida corporation (Capstone)(“Capstone”).  Capstone was incorporated in Florida on May 15, 1996 and is engaged primarily in the business of wholesaling low technology 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 Common Stock, and recorded goodwill of $1,936,020.

On April 13, 2012, , the Company established a wholly owned subsidiary in Hong Kong, named  “ Capstone International Hong Kong Ltd” (CIHK)Ltd (“CIHK”) which will beis engaged in selling the CompaniesCompany’s products Internationallyinternationally and will provideprovides other services such as new product development, product sourcing, quality control, ocean freight logistics, product testing and factory certifications for the CompaniesCompany’s other subsidiaries.

Since the beginning of fiscal year 2007, the Company has been primarily engaged in the business of developing, marketing and selling consumer products through national and regional retailers and distributors in North America.  Capstone currently operates in six primary business segments: Induction Charged Power Failure Lights,Lights; LED Wall Plate Night Lights and Power Failure Lights,Lights; Motion Sensor Lights,Lights; Portable Book and Task Lights,Lights; Door Security MonitorMonitors; and Wireless Remote Control Outlets.  The Company’s products are typically manufactured in the Peoples’ Republic of China by third-party manufacturing companies.

An allowance for doubtful accounts is established as losses are estimated to have occurred through a provision for bad debts charged to earnings.  The allowance for bad debt is evaluated on a regular basis by management and is based upon management’s periodic review of the collectability of the receivables.  This evaluation is inherently subjective and requires estimates that are susceptible to significant revisions as more information becomes available.

As of September 30, 2014,March 31, 2015, management has determined that the accounts receivable are fully collectible.  As such, management has not recorded an allowance for doubtful accounts.

As of September 30, 2014,March 31, 2015, 100% of the accounts receivable serve as collateral for the companiesCompany’s notes payable.

The Company's inventory, which is recorded at lower of cost (first-in, first-out) or market, consists of finished goods for resale by Capstone, totaling $213,184$186,455 and $298,099$128,984 at Septemebr30, 2014March 31, 2015 and December 31, 2013,2014, respectively.

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

Long-lived assets to be held and used are reviewed for impairment whenever events or changes in circumstances indicate that the related carrying amount may not be recoverable.  When required, impairment losses on assets to be held and used are recognized based on the fair value of the asset.  Long-lived assets to be disposed of, if any, are reported at the lower of carrying amount or fair value less cost to sell.  No impairmentsimpairment losses were recognized by the Company during 20132014 or through September 30, 2014.during the period ended March 31, 2015.

Upon sale or other disposition of property and equipment, the cost and related accumulated depreciation or amortization are removed from the accounts and any gain or loss is included in the determination of income or loss.

Expenditures for maintenance and repairs are charged to expense as incurred. Major overhauls and betterments are capitalized and depreciated over their estimated economic useful lives.

Depreciation expense was $ 45,81812,687 and $ 47,51814,338 for the periodperiods ended September 30,March 31, 2015 and 2014, and 2013, respectively.

The cost of internally developing, maintaining and restoring intangible assets (including goodwill) that are not specifically identifiable, that have indeterminate lives, or that are inherent in a continuing business and related to an entity as a whole, are recognized as an expense when incurred.

An intangible asset (excluding goodwill) with a definite useful life is amortized; an intangible asset with an indefinite useful life is not amortized until its useful life is determined to be no longer indefinite.  The remaining useful lives of intangible assets not being amortized are evaluated at least annually to determine whether events and circumstances continue to support an indefinite useful life.

If and when an intangible asset is determined to no longer have an indefinite useful life, the asset shall then be amortized prospectively over its estimated remaining useful life and accounted for in the same manner as other intangibles that are subject to amortization.

An intangible asset (including goodwill) that is not subject to amortization shall be tested for impairment annually or more frequently if events or changes in circumstances indicate that the asset might be impaired.  The impairment test consists of a comparison of the fair value of the intangible assets with its carrying amount.  If the carrying amount of an intangible asset exceeds its fair value, an impairment loss shall be recognized in an amount equal to that excess.  Goodwill is not amortized.

It is the Company's policy to test for impairment no less than annually, or when conditions occur that may indicate impairment.  The Company's intangible assets, which consist of goodwill of $1,936,020 recorded in connection with the Capstone acquisition, were tested for impairment and determined that no adjustment for impairment was necessary as of December 31, 2013,2014, whereas the fair value of the intangible asset exceeds its carrying amount.

Basic earnings per common share were computed by dividing net loss by the weighted average number of shares of common stock outstanding during the year.  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.  At September 30,March 31, 2015 and December 31, 2014, and 2013, the total number of potentially dilutive common stock equivalents was 155,061,577158,208,813 and 155,946,577155,058,813, respectively.

The consolidated financial statements as of September 30, 2014 and December 31, 2013 and for the nine monthsperiods ended September 30,March 31, 2015 and 2014 and 2013 include the accounts of the parent entity and its wholly-owned subsidiaries Capstone Lighting Technologies, L.L.C., Capstone Industries, Inc. and Capstone International HK, LTD.  All significant intra-entity transactions and balances have been eliminated in consolidation.

The results of operations attributable to subsidiaries are included in the consolidated results of operations beginning on the date on which the Company’s interest in a subsidiary was acquired.

The carrying value of the Company's financial instruments, including cash, prepaid expenses, accounts receivable, accounts payable and accrued liabilities at September 30,March 31, 2015 and 2014 and 2013 approximates their fair values due to the short-term nature of these financial instruments. The fair value hierarchy under U.S. GAAP distinguishes between assumptions based on market data (observable inputs) and an entity’s own assumptions (unobservable inputs). The hierarchy consists of three levels:

Determining which category an asset or liability falls within the hierarchy requires significant judgment. We evaluate our hierarchy disclosures each quarter.

Product sales are recognized when an agreement of sale exists, product delivery has occurred, pricing is finalfixed or determinable, and collection is reasonably assured.

Allowances for sales returns, rebates and discounts are recorded as a component of net sales in the period the allowances are recognized.  In addition, accrued liabilities contained in the accompanying balance sheetsheets include accruals for estimated amounts of credits to be issued in future years based on potentially defective product, other product returns and various allowances.  These estimates could change significantly in the near term. During the period ending March 31, 2015, the Company has determined that $181,978 of previously accrued promotional allowances were no longer required. The reduction of promotional allowances is included in revenue for the period ended March 31, 2015.

Advertising and promotion costs, including advertising, public relations, and trade show expenses, are expensed as incurred and included in Salessales and Marketingmarketing expenses.  Advertising and promotion expense was $138,518$3,596   and $59,800$91,204 for the ninethree months ended September 30,March 31, 2015 and 2014, and 2013, respectively.  As of September 30,March 31, 2015 and December 31, 2014, the companyCompany has $275,019 in capitalized advertising costs included in prepaid expenses on the balance sheet.sheets.

The Company’s shipping and handling costs, are included in sales and marketing expenses and amounted to $52,818$14,288 and $91,767$18,981 for the nine monthsperiods ended September 30,March 31, 2015 and 2014, and 2013, respectively.

Accrued liabilities contained in the accompanying balance sheet include accruals for estimated amounts of credits to be issued in future years based on potentially defective products, other product returns and various allowances.  These estimates could change significantly in the near term.

SFAS 123(R) ASC 718 requires companies to estimate the fair value of share-based payment awards on the date of the grant using an option-pricing model.  The value of the portion of the award that is ultimately expected to vest is recognized as expenses over the requisite service periods in the Company’s consolidated statements of income (loss).  Prior to the adoption of ASC 718, the Company accounted for stock-based awards to employees and directors using the intrinsic value method in accordance with APB 25, as allowed under SFAS No. 123, Accounting for Stock-Based Compensation, (SFAS 123).  Under the intrinsic value method, compensation expense under fixed term option plans was recorded at the date of grant only to the extent that the market value of the underlying stock at the date of grant exceeded the exercise price.  Accordingly, for those stock options granted for which the exercise price equaled the fair market value of the underlying stock at the date of grant, no expense was recorded.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.  There was no stock-based compensation expense attributable to options for share-based payment awards granted prior to, but not vested as of December 31, 2005.  Such stock-based compensation is based on the grant date fair value estimated in accordance with the pro forma provisions of SFAS 123.  Compensation expense for share-based payment awards granted subsequent to December 31, 2005, are based on the grant date fair value estimated in accordance with the provisions of ASC 718.

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.  As stock-based compensation expense is recognized during the period is based on awards ultimately expected to vest, it is subject to reduction for estimated forfeitures.  ASC 718 requires forfeitures to be estimated at the time of grant and revised, if necessary, in subsequent periods if actual forfeitures differ from those estimates.  As of and for the periodperiods ended September 30,March 31, 2015 and 2014, there were no material amounts subject to forfeiture.  The Company has not accelerated vesting terms of its out-of-the-money stock options, or made any other significant changes, prior to adopting ASC 718, Share-Based Payments.

On April 27, 2007, the Company granted 130,500,000 stock options to two officers of the Company.  The options vestvested at twenty percent per year beginning April 23, 2007.  For the year ended December 31, 2007, the Company recognized compensation expense of $503,075 related to these options. On May 1, 2008, 850,000 of the above stock options were canceled and on May 23, 2008, 74,666,667 of the above stock options were cancelled leaving 54,983,333 options outstanding.  For year ended December 31, 2008, the Company recognized compensation expense of $405,198 related to these options.  For the year ended December 31, 2009, the Company recognized compensation expense of $156,557 related to these options.  For the year ended December 31, 2010, the Company recognized a compensation expense of $156,558 related to these options. For the year ended December 31, 2011, the Company recognized compensation expense of $52,186 related to these options. As of December 31, 2011, these options were fully vested and compensation expense fully recognized.  No further compensation expense will be recognized for these options.  These 54,983,333 options are set to expire April 27, 2017.

On May 1, 2007, the Company granted 4,000,000 stock options to five employees of the Company.  The options vestvested over two years.  For the year ended December 31, 2007, the Company recognized compensation expense of $29,214 related to these options.  During 2008 and 2009, 1,500,000 of the above options were cancelledcanceled prior to vesting.  For the year ended December 31, 2008, the Company recognized compensation expense of $25,131 related to these options.  For the year ended December 31, 2009, the Company recognized compensation expense of $10,869 related to these options. As of December 31, 2009, these options were fully vested and compensation expense fully recognized.  No further compensation expense will be recognized for these options. These 4,000,000 options are set to expire May 1, 2018.

On October 22, 2007, the Company granted 700,000 stock options to a business associate of the Company.  The options vestvested over two years.  For the year ended December 31, 2007, the Company recognized compensation expense of $1,330 related to these options.  For the year ended December 31, 2008, the Company recognized compensation expense of $7,978 related to these options.  For the year ended December 31, 2009, the Company recognized compensation expense of $6,648 related to these options. As of December 31, 2009, these options were fully vested and compensation expense fully recognized.  No further compensation expense will be recognized for these options.  Of these 700,000 options, 350,000 are set to expire October 22, 2018, and 350,000 are set to expire October 22, 2019.

On January 10, 2008, the Company granted 1,000,000 stock options to an advisor of the Company.  The options vestvested over one year.  For the year ended December 31, 2008, the Company recognized compensation expense of $19,953 related to these options.  As of December 31, 2008, these options were fully vested and compensation expense fully recognized. No further compensation expense will be recognized for these options.  These 1,000,000 options are set to expire January 10, 2018.

On February 5, 2008, the Company granted 3,650,000 stock options to four directors and one employee of the Company.  The options vestvested over two years.  For the year ended December 31, 2008, the Company recognized compensation expense of $59,619 related to these options.  For the year ended December 31, 2009, the Company recognized compensation expense of $2,603 related to these options. As of December 31, 2009, these options were fully vested and compensation expense fully recognized.  During 2010, 3,500,000 of the above options expired leaving 150,000 options outstanding.  No further compensation expense will be recognized for these options. These 150,000 options are set to expire February 5, 2018.

On May 1, 2008, the Company granted 850,000 stock options to an employee of the Company.  The options vestvested over two years.  For the year ended December 31, 2008, the Company recognized compensation expense of $5,242 related to these options.  For the year ended December 31, 2009, the Company recognized compensation expense of $7,862 related to these options.  For the year ended December 31, 2010, the Company recognized compensation expense of $2,620 related to these options.   As of December 31, 2010, these options were fully vested and compensation expense fully recognized.  No further expense will be recognized for these options.  These 850,000 options are set to expire May 1, 2019.

On April 23, 2010, the Company granted 4,800,000 stock options to four directors of the Company and the Company Secretary. The options vestvested in one year.  For the year ended December 31, 2010, the Company recognized compensation expense of $27,000 related to these options.  For the year ended December 31, 2011 the Company recognized compensation expense of $12,000. As of December 31, 2011, these options were fully vested and compensation expense fully recognized.  No further expense will be recognized for these options.    Of these 4,800,000 options, 4,500,000 are set to expire April 23, 2015 and 300,000 are set to expire June 15, 2020.

On July 1, 2011, the Company granted 4,650,000 stock options to four directors of the Company and the Company Secretary. The options vestvested in one year. For the year ended December 31, 2011 the Company recognized compensation expense of $16,500.  For the six months ended June 30, 2012, the Company recognized an expense of $16,500. As of December 31, 2012, these options were fully vested and compensation expense fully recognized.  No further expense will be recognized for these options.    Of these 4,650,000 options, 4,500,000 are set to expire July 1, 2016, and 150,000 are set to expire July 1, 2021.

On August 6, 2012, the Company granted 4,650,000 stock options to four directors of the Company and the Company Secretary. The options vestvested in one year. Prior to vesting, the Company Secretary left the Company and 150,000 stock options were cancelledcanceled leaving 4,500,000 options outstanding. For the year ended December 31, 2012, the Company recognized compensation expense of $20,250.  For the three months ended June 30, 2013, the Company recognized an expense of $20,250.  As of December 31, 2013, these options were fully vested and compensation expense fully recognized.  No further expense will be recognized for these options.  These 4,500,000 options are set to expire August 6, 2017.

On January 1, 2014, the Company granted 3,150,000 stock options to two directors of the Company and the Company Secretary.  The options vestvested in 8 months. For the nine monthsyear ended September 30,December 31, 2014, the Company recognized compensation expense of $43,500.

As of September 30,December 31, 2014 these options were fully vested and compensation expense fully recognized.  No further expense will be recognized for these options..  Of these 3,150,000 options, 3,000,000 are set to expire July 1, 2019 and 150,000 are set to expire July 1, 2024.

The Company recognizes compensation expense paid with common stock and other equity instruments issued for assets and services received based upon the fair value of the assets/services or the equity instruments issued, whichever is more readily determined.

As of the date of this report the Company has not adopted a method to account for the tax effects of stock-based compensation pursuant to ASC 718 and related interpretations.  However, whereas the Company has substantial net operating losses to offset future taxable income and its current deferred tax asset is completely reduced by the valuation allowance, no material tax effects are anticipated.

Stock-based compensation for the ninethree months ended September 30,March 31, 2015 and 2014 and 2013 was $ 43,50029,433 and $20,250$17,672 respectively.

For a public entity, the amendments in this ASU are effective for annual reporting periods beginning after December 15, 2016, including interim periods within that reporting period. Early application is not permitted. Recent tentative decisions by the FASB may delay the effective date of this ASU and some of its other provisions. The Company does not expect the adoption of ASU 2014-09 to have a material impact on its consolidated financial statements.

requisite service period, the remaining unrecognized compensation cost should be recognized prospectively over the remaining requisite service period. The total amount of compensation cost recognized during and after the requisite service period should reflect the number of awards that are expected to vest and should be adjusted to reflect those awards that ultimately vest. The requisite service period ends when the employee can cease rendering service and still be eligible to vest in the award if the performance target is achieved. The amendments in this ASU are effective for annual periods and interim periods within those annual periods beginning

after December 15, 2015. Earlier adoption is permitted. The effective date is the same for both public business entities and all other entities. Entities may apply the amendments in this ASU either:

If retrospective transition is adopted, the cumulative effect of applying this ASU as of the beginning of the earliest annual period presented in the financial statements should be recognized as an adjustment to the opening retained earnings balance at that date. In addition, if retrospective transition is adopted, an entity may use hindsight in measuring and recognizing the compensation cost. The Company does not expect the adoption of ASU 2014-12 to have a material impact on its consolidated financial statements.

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.

The preparation of financial statements in conformity with generally accepted accounting principlesU.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates, and the differences could be material.

Financial instruments that potentially subject the Company to credit risk consist principally of cash and cash equivalents 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.

The Company at times has cash and cash equivalents with its financial institution in excess of Federal Deposit Insurance Corporation (FDIC)(“FDIC”) insurance limits.  The Company places its cash and cash equivalents with high credit quality financial institutions which minimize these risks.  As of September 30,March 31, 2015 and 2014, the Company had $0no funds in excess of FDIC limits.

The Company grants credit to its customers, substantially all of whom are retail establishments located throughout the United States.  The Company typically does not require collateral from 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.

The Company had threetwo customers who comprised at least ten percent (6%(10%) of gross revenue during the fiscal years ended December 31, 20132014 and 2012.2013.  The loss of these customers would adversely impact the business of the Company.  The percentage of gross revenue and the accounts receivable from each of these customers is as follows:

The Company had two vendorsone vendor from which it purchased at least ten percent (5%(10%) of merchandise during the fiscal yearyears ended December 31, 20132014 and December 31, 2021.2013. The loss of these suppliersthis supplier would adversely impact the business of the Company.  The percentage of purchases, and the related accounts payable from each of these vendors is as follows:

Capstone Companies, Inc., and Howard Ullman, the previous Chairman of the Board of Directors of CHDT, had personally guaranteed Capstone IndustriesCapstone’s obligations under the FinancialFinancing Agreement. As part of the agreement with Sterling National Bank, a

subordination agreement was executed with Howard Ullman, a shareholder and director of the Company at that time.Mr. Ullman. These agreements subordinated the debt of $121,263 (plus future interest) and $81,000 (plus future interest) due to HowardMr. Ullman (or his assigns)assignees), to the Sterling National Bank loan.  No payments will be made on the subordinated debt until the Sterling loan is paid in full.  As of December 31, 2013,2014, the balance due to Sterling was $4,237,144.$286,943.  As of September 30, 2014, the loanMarch 31, 2015, there was no balance due to Sterling and cash due from Sterling was $4,090,093.$355,053.

On July 21, 2011, Stewart Wallach, the Chief Executive Officer and Director of Capstone Companies, Inc. and JWTR Holdings, LLC owned by a Director, Jeffrey Postal entered into a Securities and Notes Purchase Agreement with Howard Ullman, the previous Chairman of the Board of CHDT, whereby they would purchase equally all of Howard UllmansMr. Ullman’s notes including the notes subordinated to Sterling National Bank.

On July 15, 2011, Stewart Wallach individually and accepted by Sterling National Bank, agreed to replace Howard Ullman as the sole personal guarantor to Sterling National Bank for all of Capstone Industries, Inc.Capstone’s loans previously guaranteed by Howard Ullman.

Effective July 12, 2011, Capstone Industries, Inc.,Capstone’s credit line with Sterling National Bank was increased from $2,000,000 up to $4,000,000 to provide additional funding for increased revenue growth.

During the period from July 2013 through February 2014, the Company’s credit line with Sterling National Bank was temporarily increased from $4,000,000 up to $6,000,000 to provide additional funding to cover the increased sales volume during the holiday season.

During the period from July 2014 through March 2015, the Company’s credit line with Sterling National Bank was temporarily increased from $4,000,000 to $7,000,000 to provide additional funding to cover the increased sales volume during the holiday season. As of February 28, 2014,March 31, 2015, the maximum amount that can be borrowed on this credit line is $4,000,000.$7,000,000.

On May 30, 2007, the Company executed a $575,000 promissory note payable to a director of the Company.  This note was amended on July 1, 2009 and again on January 2, 2010. As amended, the note carries an interest rate of 8% per annum.  All principal iswas payable in full, with accrued interest, on January 2, 2014.  On November 2, 2007, the Company issued 12,074 shares of its Series B Preferred stock valued at $28,975 as payment towards this loan.  The loan grants to the holder a security interest in the accounts receivable of the Company up to the amount of the unpaid Principal.principal.  On July 12, 2011, Stewart Wallach, the Chief Executive Officer and Director of CHDT and JWTR Holdings, LLC owned by a Director, Jeffrey Postal entered into a Securities and Notes Purchase Agreement with Howard Ullman, the previous Chairman of the Board of CHDT, whereby they would purchase equally all of Howard UllmansMr. Ullman’s notes including the subordinated notes net of any offsets, monies due by Howardfrom Mr. Ullman to the Company. The original terms of all notes would remain the same. On July 12, 2011, this note payable was reassigned by Howard Ullman, equally split between Stewart Wallach, Director, and JWTR Holdings LLC. The note balance of $466,886 was reduced by $47,940 for offsets due by Howard Ullman. The revised loan balance of $418,946 was reassigned equally $209,473 to Stewart Wallach and $209,473 to JWTR Holdings LLC. As amended the note is due on or before January 2,July 1, 2015.  At December 31, 2011, the total amount payable on the reassigned notes to Stewart Wallach was $216,498 which includes accrued interest of $7025 and JWTR Holdings, LLC was $216,498 which includes accrued interest of $7,025.  At December 31, 2012, the total amount payable on the reassigned notes to Stewart Wallach was $233,256 which includes accrued interest of $23,783 and JWTR Holdings; LLC was $233,256 which includes accrued interest of $23,783.  For the revised notes the interest payments are being accrued monthly to the note holders. As of September 30, 2014March 31, 2015 the total combined balance due on these two notes was $525,096$541,808, which includes accrued interest of $106,150 ..

On July 11, 2008, the Company received a loan from a director in the amount of $250,000.  As amended, the note iswas due on or before April 1, 2014 and carriescarried an interest rate of 8% per annum.  As part of this note payable, the Company also issued a warrant to the loan holder to purchase 4,000,000 shares of common stock at a price of $.025 per share.  At the date of issuance, the stock price was $.021 per share.  The Company accounted for the debt and warrants using APB 14, whereby the proceeds of $250,000 were allocated between the debt and warrants.  This resulted in the warrants being valued at $56,375, which was recorded as additional paid-in capital, and a discount on the note of $56,375 being recognized.  The discount was amortized over the term of the note (6 months) to interest expense.  At December 31, 2008, the discount had been fully amortized resulting in interest expense of $56,375 being recognized.  The warrants expired July 10, 2013.  At December 31, 2013, the total amount payable on this note was $330,000 including interest of $80,000.  This note along with accrued interest was paid in full on April 23, 2014.

On March 11, 2010, the Company received a loan from a directorDirector in the amount of $100,000. As amended, the note is due on or before January 2,July 1, 2015 and carries an interest rate of 8% per annum.  At DecemberMarch 31, 20132015, the total amount payable on this note was $130,466$140,438 including interest of $30,466.  At September 30, 2014 the total amount payable on this note was $136,450 including interest of $36,450.$40,438.

On May 11, 2010, the Company received a loan from a directorDirector in the amount of $75,000. As amended, the note is due on or before January 2,July 1, 2015 and carries an interest rate of 8% per annum.  The loan grants to the holder a security interest in the accounts receivable of the Company up to the amount of the unpaid Principal.principal. At DecemberMarch 31, 20132015, the total amount payable on this note was $96,847$104,327 including interest of $21,847.  At September 30, 2014 the total amount payable on this note was $101,335 including interest of $26,335.

On January 15, 2013, the companyCompany received a new loan in the amount of $250,000 from Stewart Wallach, the Chief Executive Officer and Director of Capstone Companies, Inc. with due date on or before January 2, 2015 andThe loan carries an interest rate of 8% per annum. This loan was amended and the due date has been extended until July 1, 2015. This loan grants to the holder a security interest in the accounts receivable of the Company up to the amount of the unpaid Principal.principal.  At September 30, 2014March 31, 2015, the total amount payable on this note was $284,137$294,110 including interest of $34,137.$44,110.

On January 15, 2013, the companyCompany received a new loan in the amount of $250,000 from a directorDirector of Capstone Companies, Inc. with due date on or before January 2, 2015 andThe loan carries an interest rate of 8% per annum. This loan was amended and the due date has been extended until July 1, 2015.

This loan grants to the holder a security interest in the accounts receivable of the Company up to the amount of the unpaid Principal.principal. At September 30, 2014March 31, 2015, the total amount payable on this note was $ 284,137$294,110 including interest of $.34,137.$44,110.

On June 14, 2014, Capstone Industries, Inc. received a $125,000 loan from George Wolf.Wolf, a consultant. This loan iswas due on or before December 31, 2014 and carriescarried an interest rate of 1.0% simple interest per month.  The loan balance at September 30, 2014 is $129,356 including accrued interestwas paid in full as of $4,356.December 31, 2014.

On June 9, 2014, Capstone Industries, Inc. received $825,000 against two new notes from Jeffrey Postal a director of the Company.Postal.  The notes are due on or before December 31, 2014, and carrycarried an interest rate of 1.0% simple interest per month (12% annul).month.  As of September 30,December 31, 2014, these notes were paid in full.

The total amount payable to officers, directors and related parties as of September 30, 2014March 31, 2015, was 2,033,934$2,171,371 including accrued interest of $316,988.$379,425. The maturities under the notes and loan payable to related parties for the next five years are:mature during 2015.

On June 29, 2007, the Company relocated its principal executive offices and sole operations facility to 350 Jim Moran Blvd., Suite 120, Deerfield Beach, Florida 33442, which is located in Broward County.  This space consists of 4,000 square rentable feet and was leased on a month to month basis.

Capstone Industries entered into a new lease agreement for the same office space as currently located. The new lease agreement dated January 17, 2014, and effective February 1, 2014, has a 3 year leaseterm with a base annual rent of $46,810$87,678 paid in equal monthly installments. The companyCompany has the one time option to renew the lease for three (3) years subject to a 3% increase per each year of the renewal term. Under the new lease agreement, Additionally, Capstone is responsible for a portion of Camcommon area maintenance charges  and any other utility consumed in the leased premises.

Capstone International Hong Kong Ltd. Entered inentered into a two year lease agreement for office space at 303 Hennessy Road, Wanchai, Hong Kong.  The agreement is for the period from February 17, 2014, to February 16, 2016.  This lease has a base annual rent of $48,000 (HK$ 372,000) paid in equal monthly installments.

RentalRent expense for the period ending September 30, 2014 under above two lease agreements was $86,359amounted to $35,021 and $41,903$24,874 for the periods ending September 30,ended March 31, 2015 and 2014, for Deerfield Beach, Florida & Wanchai, Hong Kong location.respectively.

The lease obligations under these agreements for the next five years are as follows: