UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-K

☒

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, ~~2014~~ 2015

☐

TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

Commission file number 000-54905

CAPSTONE FINANCIAL GROUP, INC.

(Exact name of registrant as specified in its charter)

Nevada		46-0684479
(State or other jurisdiction of		(I.R.S. Employer
incorporation or organization)		Identification No.)

8600 Transit Road

East Amherst, NY 14051

(Address of principal executive offices) (Zip Code)

(866) 798-4478

(Registrant's telephone number, including area code)

Copies of Communications to:

Stradling Yocca Carlson & Rauth, P.C.

4365 Executive Drive

Suite 1500

San Diego, CA 92121

(858-) 926-3000

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

None

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

Common Stock, $0.001 par value

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ☐ No ☒

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ☐ No ☒

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes ☒ No ☐

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate ~~Website~~website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ☒ No ☐

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405) is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. ☒

Large accelerated filer

☐

Accelerated filer

☐

Non-accelerated filer

(Do not check if a smaller reporting company)

☐

Smaller reporting company

☒

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

The aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of June 30, ~~2014~~2015 was $6417,~~541~~009,~~448~~495, based on the share price of $41.2510.

The number of shares of Common Stock, $0.001 par value, outstanding as of ~~April~~ March 24, ~~2015~~2016 was 94,~~564~~364,~~648~~148 shares.

No annual report to security holders, proxy or information statement, or prospectus is incorporated by reference into this Annual Report on Form 10-K.

-1-

CAPSTONE FINANCIAL GROUP, INC.

ANNUAL REPORT FOR THE FISCAL YEAR ENDED

DECEMBER 31, ~~2014~~ 2015

Index to Report on Form 10-K

PART I		Page
Item 1.	Business	41
Item 1A.	Risk Factors	78
Item 1B.	Unresolved Staff Comments	1317
Item 2.	Properties	1317
Item 3.	Legal Proceedings	1417
Item 4.	Mine Safety Disclosures	1417

PART II
Item 5.	Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities	1418
Item 6.	Selected Financial Data	1519
Item 7.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	1519
Item 7A.	Quantitative and Qualitative Disclosures About Market Risk	1927
Item 8.	Financial Statements and Supplementary Data	1927
Item 9.	Changes in and Disagreements With Accountants on Accounting and Financial Disclosure	1927
Item 9A.	Controls and Procedures	2029
Item 9B.	Other Information	2130

PART III
Item 10.	Directors, Executive Officers and Corporate Governance	2231
Item 11.	Executive Compensation	2433
Item 12.	Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters	2535
Item 13.	Certain Relationships and Related Transactions, and Director Independence	2636
Item 14.	Principal Accounting Fees and Services	2737

PART IV
Item 15.	Exhibits, Financial Statement Schedules	2938

-2-

FORWARD-LOOKING STATEMENTS

This Annual Report on Form 10-K contains forward-looking statements and involves risks and uncertainties that could materially affect expected results of operations, liquidity, cash flows, and business prospects. Forward-looking statements may appear throughout this report, including without limitation, the following sections: Item 1 “Business,” Item 1A “Risk Factors,” and Item 7 “Management’s Discussion and Analysis of Financial Condition and Results of Operations.” Forward-looking statements generally can be identified by words such as “anticipates,” “believes,” “estimates,” “expects,” “intends,” “plans,” “predicts,” “projects,” “will be,” “will continue,” “will likely result,” and similar expressions. These forward-looking statements are based on current expectations and assumptions that are subject to risks and uncertainties, which could cause our actual results to differ materially from those reflected in the forward-looking statements. Factors that could cause or contribute to such differences include, but are not limited to, those discussed in this Annual Report on Form 10-K, and in particular, the risks discussed under the caption “Risk Factors” in Item 1A and those discussed in other documents we file with the Securities and Exchange Commission (SEC). We undertake no obligation to revise or publicly release the results of any revision to these forward-looking statements, except as required by law. Given these risks and uncertainties, readers are cautioned not to place undue reliance on such forward-looking statements.

-3-

PART I

ITEM 1. BUSINESS

Organization

We (as used herein, “we,” “our,” “Capstone” and “the Company” mean Capstone Financial Group, Inc. unless the context indicates otherwise) were incorporated in Nevada on July 10, 2012 as Creative App Solutions, Inc. On ~~August~~ August 23, 2013, we amended our articles of incorporation and changed our name to Capstone Financial Group, Inc.

In ~~August~~ August and September 2013, Darin Pastor and George Schneider obtained from our then controlling stockholder, for nominal consideration, 80,000,000 (post-split) shares of common stock amounting to approximately 89% of our then outstanding common stock, and they became our two senior officers. Mr. Pastor continues to own a substantial majority of our common stock, is our chief executive officer and chairman, and is the controlling person of the Company.

In ~~September~~ September 2013, we effectuated a 20-for-1 forward split of the Company’s issued and unissued common stock. By virtue of the forward split, the number of shares issued and outstanding increased to 90,200,000, and the number of authorized common shares increased from 100,000,000 to 2,000,000,000.

~~General Business Development~~-1-

~~Our current~~General ~~business~~Business focus is to invest in stock of other companies. We seek to discover, unlock and grow value in privately-held or illiquid companies, including through the exercise of friendly influence at a company in support of operational improvements and strategic initiatives. In some cases we might be one of the largest shareholders of the other company.Development

~~We seek~~Our tocurrent ~~work~~business ~~closely~~focus ~~and~~is ~~constructively~~to ~~with~~invest in ~~the~~stock ~~management and boards~~ of ~~the~~ other companies. ~~While~~We weseek doto ~~not~~discover, ~~manage~~unlock ~~the~~and ~~day~~grow value in privately-~~to-day operations~~held ofor ~~these~~illiquid companies, weincluding ~~seek~~through the toexercise ~~maintain~~of friendly influence at a ~~thorough~~company ~~understanding~~in support of ~~how~~operational ~~they~~improvements ~~operate~~ and ~~evaluate~~strategic ~~their~~initiatives. ~~performance~~In some cases ~~and~~we ~~prospects~~might onbe anone ~~ongoing~~of ~~basis~~the largest shareholders of the other company.

We ~~may~~ ~~also~~ seek to ~~actively~~work ~~trade~~closely inand ~~our~~constructively with ~~strategic~~the ~~investment~~management ~~positions~~ and~~/or~~ ~~enter~~boards ~~into~~of ~~private~~the ~~securities~~other ~~transactions~~companies. ~~with~~While ~~regard~~ we do not manage the day-to-day ~~those~~operations ~~positions~~of these companies, we seek to ~~capitalize~~maintain ona ~~price~~thorough ~~fluctuations~~understanding of how they operate and ~~realize~~evaluate ~~profits~~their orperformance ~~minimize~~and ~~losses~~prospects on an ongoing basis.

We ~~were~~ ~~initially~~may ~~formed~~also seek to ~~design~~actively ~~and~~trade ~~sell~~in our ~~mobile~~strategic ~~apps~~investment ~~for~~positions ~~smart phones~~ and/or ~~other~~enter ~~mobile~~into ~~platforms~~private ~~such~~securities astransactions ~~tablets.~~with Weregard ~~never~~to ~~launched an~~those ~~active~~positions, ~~business~~to ~~based~~ capitalize on ~~this~~price ~~focus.~~fluctuations ~~(Throughout 2012, we had not commenced significant operations~~ and, inrealize ~~accordance~~profits ~~with ASC~~or ~~Topic~~minimize ~~915, we were considered a development stage company~~losses. ~~During 2013, we exited the development stage.)~~

~~During~~We were initially formed to design and ~~the~~sell ~~third~~mobile ~~quarter~~apps offor ~~2013~~smart phones and other mobile platforms such as tablets. We never launched an active business based on this focus. (Throughout 2012, we ~~refocused~~had ~~ourselves~~not ascommenced significant operations and, in accordance with ASC Topic 915, we were considered a ~~financial~~development ~~services~~stage company. During 2013, we exited the development stage.)

~~On January~~During ~~15,~~the ~~2014,~~third inquarter ~~support~~ of ~~our financial services business focus~~2013, we ~~effected a reverse triangular merger whereby Capstone~~ ~~Affluent~~refocused ~~Strategies,~~ourselves ~~Inc.~~as ~~(“Affluent”),~~ a ~~California corporation, became our wholly owned subsidiary. Affluent, a~~ financial services company~~, had been wholly owned by Darin Pastor~~.

~~-4-~~On January 15, 2014, in support of our financial services business focus, we effected a reverse triangular merger whereby Capstone Affluent Strategies, Inc. (“Affluent”), a California corporation, became our wholly owned subsidiary. Affluent, a financial services company, had been wholly owned by Darin Pastor.

In ~~March~~ March 2014, we refocused ourselves again, to our current business model.

On ~~May~~ May 14, 2014, we effectively unwound the Affluent transaction, due to Affluent’s inability to produce audited financial statements as required and the change in our business focus. In October 2014, we acquired from Darin Pastor certain Affluent assets and assumed certain Affluent liabilities. (Affluent had been dissolved earlier in 2014.)

Currently, our primary strategic investment position is in securities of Twinlab Consolidated Holdings, Inc. (“Twinlab”). In ~~August~~ August 2014, we purchased 10,987,500 shares of common stock of Twinlab in private transactions from 25 shareholders, for nominal consideration. Additionally, in August 2014, we purchased options to acquire 8,743,000 currently-outstanding shares of Twinlab’s common stock (collectively, the “Call Options”) from 14 shareholders in a private transaction, for nominal consideration. The Call Options exercise price is $0.0001 per share and the Call Options expire in August 2015. In February 2015, we exercised the Call Options. Optionors honored the exercise as to 7,244,500 Twinlab shares. Other optionors have not yet honored the exercise, as to at least 1,498,500 Twinlab shares.

On September 30, 2014, Twinlab issued to us a Series A Warrant to purchase up to 52,631,579 shares of Twinlab common stock at an exercise price of $0.76 per share (the “First Warrant”), and a Series B Warrant to purchase up to 22,368,421 shares of Twinlab common stock at an exercise price of $0.76 per share (the “Second Warrant”). The First Warrant and the Second Warrant are both exercisable from October 2014 through October 2017.-2-

~~Twinlab and~~On ~~we also entered into a Common Stock Put Agreement, dated as of~~ September 30, 2014, ~~as amended on December 15, 2014 (the “Put~~Twinlab ~~Agreement”).~~issued ~~Pursuant~~ to ~~the~~us ~~Put~~a ~~Agreement,~~Series A ~~if we do not exercise the First~~ Warrant byto ~~February~~purchase ~~16,~~up ~~2015~~to ~~and thereafter at a rate of no less than 1~~52,~~461~~631,~~988~~579 shares of Twinlab common stock ~~(the~~at ~~“Minimum~~an ~~Amount”)~~exercise price of $0.76 per ~~month~~share (the “~~Minimum Rate~~Series A Warrant”), ~~over~~and ~~the~~a ~~term~~Series B ~~of the First~~ Warrant, ~~Twinlab has the right (subject~~ to ~~certain~~purchase ~~conditions)~~up to ~~require~~22,368,421 usshares toof ~~exercise~~Twinlab ~~the~~common ~~First~~stock ~~Warrant~~ at ~~the~~an ~~Minimum Rate for the duration of the First Warrant. In the event Twinlab exercises its right to require us to~~ exercise ~~the First Warrant, the purchase~~ price ~~per share~~ of ~~Twinlab common stock thereunder would be~~ $0.~~775.~~76 Weper ~~have not~~share ~~exercised~~ (the “~~Minimum~~Series B ~~Amount~~Warrant”). ofThe ~~shares~~Series A ~~per~~Warrant ~~the agreement but Twinlab has not yet exercised the put,~~ and ~~we still~~the ~~plan~~Series B toWarrant bewere ~~able~~both toexercisable ~~exercise~~from ~~the~~October 2014 ~~Minimum~~through ~~Amount~~October 2017. ~~In April 2015 we have to date exercised the First Warrant as to 657,895 Twinlab shares.~~

InTwinlab and we also entered into a Common ~~November~~Stock Put Agreement, dated as of September 30, 2014, as amended on December 15, 2014 (the “Put Agreement”). Pursuant to the Put Agreement, if we ~~sold~~did ~~436~~not exercise the Series A Warrant by February 16,~~681~~ 2015 and thereafter at a rate of ~~our~~no ~~Twinlab~~less than 1,461,988 shares ~~for~~of ~~approximately~~Twinlab ~~$1.0~~common ~~million.~~stock We(the ~~have~~“Minimum ~~continued~~Amount”) per month (the “Minimum Rate”) over the term of the Series A Warrant, Twinlab had the right (subject to ~~sell~~certain ~~some~~conditions) to require us to exercise the Series A Warrant at the Minimum Rate for the duration of ~~our~~the Series A Warrant. In the event Twinlab exercised its right ~~shares~~to inrequire ~~2015~~us (2to exercise the Series A Warrant,~~210,736~~ the purchase price per share of Twinlab common stock thereunder would be $0.775. We did not exercise the “Minimum Amount” of shares ~~sold~~per inthe ~~March~~agreement. ~~and~~In April 2015 we exercised the Series A Warrant as to ~~date~~657,895 ~~for~~Twinlab ~~$1,680,159)~~shares.

On ~~October~~ October 28, 2014, we entered into a transaction in which we acquired from Darin Pastor certain assets which had been assets of Affluent and assumed certain liabilities which had been liabilities of Affluent, including liabilities under notes in favor of Darin Pastor. At December 31, ~~2014~~ 2015, the outstanding principal amount of and accrued interest on such assumed notes was $168,~~203,552~~416. In addition, as part of the transaction we forgave the $1,089,617 net receivable from Darin Pastor under the crossing lines of credit entered into between Affluent and us in 2013, and the crossing lines of credit were cancelled. As a result of the October 28, 2014 transactions, we recorded an expense item of $1,089,617 and we were deemed to have paid a dividend to Darin Pastor in the amount of $1,484,204.

~~We continuously~~In ~~investigate possible acquisitions of positions in new businesses~~November 2014, ~~securities~~we ~~and~~sold ~~assets~~436, ~~and evaluate the retention~~681 ~~and disposition~~ of our ~~existing~~Twinlab ~~holdings. Changes~~shares infor ~~the~~approximately ~~mix of our businesses and investments should be expected~~$1. We0 have in the past taken preliminary steps toward acquisitions and investments in various companies, which transactions were never completed, and we have made an unsuccessful investment (in Blackcraft Cult, Incmillion. ~~common stock) which we continue to hold but have written down to a zero valuation.~~

In 2015, we sold an aggregate of 3,976,647 units of Twinlab securities to various unrelated third party accredited investors. Each unit consisted of one share of (unrestricted) Twinlab common stock and a detachable call option (“Third-5Party Call Options”) to purchase from us, for $1.00 per share, one (restricted) share of Twinlab common stock. The term of each such call option was three years from the respective unit sale date. In each case, the sale price per unit was $0.76 and the call option was valued at $0.156 per call option. (Our references to “unrestricted” shares mean free-trading shares, and our references to “restricted” shares mean shares that are not free-trading.)

~~Current Strategic~~In ~~Investment:~~addition, in 2015 we sold 2,078,255 Twinlab ~~Consolidated~~shares ~~Holdings~~(without ~~Inc~~any associated Third-Party Call Options) for $1,579,480.

~~Twinlab Corporation has been the trusted leader for innovative, high performance health and wellness products since 1968.~~ In ~~addition to the extensive line of vitamins~~total, ~~minerals~~during ~~and~~2015 ~~sports~~we ~~nutrition~~sold ~~formulas of its namesake brand,~~ Twinlab ~~Corporation also manufactures~~ ~~and~~securities ~~sells~~for ~~other category leaders~~$4, ~~including the Metabolife line of diet and energy products and Alvita teas. Twinlab Corporation’s plant in American Fork~~601, ~~Utah, is a NSF® GMP registered facility from which it manufactures, packages and distributes over 1,000 premium quality products~~732. ~~Twinlab Corporation also operates a research and development facility in Grand Rapids, Michigan. Twinlab products are currently available in over 55 countries worldwide.~~

Twinlab Consolidated Holdings, Inc., the parent company of Twinlab Corporation, has been established to act as a consolidator in the highly fragmented nutrition segment of the health and wellness industry. Using Twinlab Corporation’s assets and the expertise and experience of its management team, Twinlab intends to capitalize on current market imbalances by combining multiple companies and operations into one larger, cohesive entity. Twinlab believes that the resulting synergies in distribution, manufacturing, advertising and global marketing would increase market share and maximize profitability, establishing Twinlab as a market leader.-3-

~~Competition~~On May 28, 2015, we entered into a Compromise Agreement and Release and an Amendment No. 1 to Series B Warrant, each between Twinlab and us. Pursuant to these two agreements:

- The Put Agreement was terminated. - We surrendered the entire remaining-unexercised portion of the Series A ~~large~~ ~~number~~Warrant (51,973,684 warrants). - We surrendered 4,368,421 of ~~entities~~the ~~compete~~warrants under the Series B Warrant. - The remaining 18,000,000 warrants under the Series B Warrant were deemed divided into four tranches, each with usan associated date beyond which it would no longer be exercisable: one tranche for 2,000,000 warrant shares (no longer exercisable after November 30, 2015); one for 4,000,000 warrant shares (no longer exercisable after March 31, 2016); one for 6,000,000 warrant shares (no longer exercisable after July 31, 2016); and another for 6,000,000 warrant shares (no longer exercisable after November 30, 2016); - We granted Twinlab three contingent call options, at $0.01 per share, to ~~make~~acquire Twinlab shares from us to the ~~types~~extent that upon effective expiration of ~~investments~~the ~~that~~second, third and fourth tranches we ~~target~~had asnot ~~part~~exercised ofthe ~~our~~warrants ~~business~~within ~~focus~~such tranches (the “Contingent Call Options”). ~~We compete~~ ~~for~~The ~~such~~three ~~investments~~Contingent ~~with~~Call aOptions ~~large~~would be for a number of ~~venture~~Twinlab ~~capital~~shares ~~funds~~equal to 25% of such unexercised warrants (i.e., ~~private~~a ~~equity~~maximum ~~firms~~of 1,000,000 ~~mutual~~shares ~~funds~~if we exercised no warrants from the second tranche, ~~pension~~a ~~and~~maximum ~~other institutional~~of ~~investors~~1,500,000 ~~investment~~shares ~~banks~~if we exercised no warrants from the third tranche and ~~advisory~~a ~~firms~~maximum ~~with~~of ~~managed~~1,500,000 ~~assets~~shares if we exercised no warrants from the fourth tranche). ~~Many~~In addition, Twinlab could not exercise a Contingent Call Option unless it had satisfied such option’s “Liquidity Condition,” namely that for each of ~~our~~the ~~competitors~~three ~~are~~or ~~substantially~~four ~~larger than~~months usbefore the tranche’s effective expiration date Twinlab must have a financial position sufficient to show a 1.15x fixed charge coverage ratio for a certain trailing period, all as defined by Twinlab’s Credit and Security Agreement dated January 22, 2015. - Given that we have ~~considerably~~identified, ~~greater~~and ~~financial~~may in the future identify, ~~research~~to Twinlab on a confidential basis persons to whom we might sell our Twinlab shares, ~~technical~~Twinlab agreed that it shall not, ~~marketing~~without our prior written consent, privately place Twinlab equity securities to any persons theretofore or thereafter first introduced to Twinlab by us (the “Noncircumvention Provision”); provided that Twinlab may, without our consent, privately place Twinlab equity securities to such a person at any time after the earlier of (a) the date the entire Series B Warrant has expired and/or ~~reputational~~been ~~resources~~exercised, ~~than~~or we(b) dothe first anniversary of such particular introduction.

There can be no assurance that the competitive pressures we face will not have a material adverse effect on our business, financial condition, and results of operations. Also, as a result of this competition, we may not be able to take advantage of certain attractive investment opportunities, and we can offer no assurance that we will be able to identify and make investments that are consistent with our investment objective.-4-

~~Personnel~~As a result of these two agreements, our investment position in Twinlab as of immediately after the two agreements was as follows:

As - We had no further potential cash obligation to Twinlab under the Put Agreement; an imminent cash obligation to Twinlab of approximately $40.8 million was thereby avoided. - We retained all of our 14,476,567 outstanding Twinlab shares (13,818,672 unrestricted, free-trading Twinlab shares and 657,895 restricted Twinlab shares). - Later in 2015 (i.e., after May 28, 2015) we sold an additional 1,749,307 unrestricted, free-trading Twinlab shares and 328,948 restricted Twinlab shares to accredited investors. - We obtained an additional 526,316 restricted Twinlab shares upon a partial exercise of the ~~date~~Series B Warrant on July 7, 2015. - We obtained an additional 131,579 restricted Twinlab shares upon a partial exercise of ~~this~~the ~~filing~~Series B Warrant on July 23, 2015. - Our obligations to our accredited-investor counterparties under the 3,976,647 Third-Party Call options continued unchanged. - We retained 18,000,000 warrants under the Series B Warrant, at an unchanged $0.76 per share exercise price, with effective expiration dates ranging from November 30, 2015 to November 30, 2016 (and with then at least 14 months of remaining term for 12,000,000 of the warrants). - We exercised 526,316 of such warrants on July 7, 2015. - We exercised 131,579 of such warrants on July 23, 2015. o 1,342,105 of such warrants expired on November 30, 2015. o An additional 4,000,000 of such warrants expired on March 31, 2016. - The Registration Rights Agreement remains in full force and effect to enable the Securities Act registration of all Twinlab shares issued upon exercise of the Series B Warrant. - Under the Contingent Call Options, we undertook a contingent obligation to deliver to Twinlab (at $0.01 per share) up to 4,000,000 Twinlab shares, but the obligation would be reduced or entirely eliminated to the extent we exercise the last three deemed tranches of the Series B Warrant and/or to the extent that Twinlab fails to meet a required fixed charge coverage ratio for certain months. The redelivered Twinlab shares would not have 5to ~~full~~be free-~~time~~trading ~~employees~~Twinlab shares. - As noted below, the Contingent Call Options were eliminated on October 1, 2015.

~~Available Information~~-5-

~~We electronically~~On ~~file~~July 5, ~~annual~~2015, ~~quarterly~~ ~~and~~Twinlab ~~other reports~~ and ~~other~~we entered ~~information~~into ~~with~~an ~~the United~~Agreement ~~States~~for ~~Securities~~Limited ~~and~~Waiver ~~Exchange~~of ~~Commission~~Noncircumvention Provision (the “~~SEC~~Limited Waiver Agreement”)., ~~You can~~pursuant ~~read~~to ~~these~~which ~~SEC~~we ~~filings~~agreed ~~and reports~~to ~~over~~waive the ~~Internet at~~Noncircumvention ~~the~~Provision ~~SEC's website~~as atto ~~www.sec.gov or~~a onparticular ~~our website~~potential atinvestor ~~www~~(B.~~capstonefinancialgroupinc.com. The~~ Thomas ~~public~~Golisano) ~~may~~whom ~~read~~we orhad ~~copy~~introduced to ~~any~~Twinlab ~~materials~~in weJune 2015 ~~file~~and ~~with~~to whom the ~~SEC~~Noncircumvention atProvision ~~the~~would ~~SEC’s~~otherwise ~~Public~~apply, ~~Reference~~in ~~Room~~exchange atfor ~~100~~substantial ~~F Street,~~compensation ~~NE,~~in ~~Washington,~~cash DCand ~~20549.~~Twinlab ~~The~~warrants ~~public~~calculated ~~may obtain information~~ on the ~~operation~~basis of the ~~Public~~size ~~Reference~~and ~~Room~~pricing ~~by calling the SEC at 1-800-SEC-0330. We will provide a copy~~ of ~~our~~ ~~annual~~such ~~report to~~investor’s ~~security~~purchase(s) ~~holders, including audited financial statements, at no charge upon receipt~~ of a ~~written~~Twinlab ~~request to us at Capstone Financial Group, Inc~~securities.~~, 8600 Transit Road, East Amherst, NY 14051.~~

On October 1, 2015, Twinlab and we entered into an Amendment No. 1 to Agreement for Limited Waiver of Non-6-Circumvention Provision and to Compromise Agreement and Release, pursuant to which the Limited Waiver Agreement was amended to remove our right to any compensation for the waiver of the Noncircumvention Provision as to B. Thomas Golisano and his affiliates, and the Compromise Agreement and Release was amended to eliminate the three Contingent Call Options.

~~ITEM~~As of December 31, 2015 our position ~~1A.~~in Twinlab securities was as follows, and we had no contingent liabilities to Twinlab:

~~RISK FACTORS~~- We held 13,056,207 outstanding Twinlab shares (12,069,365 unrestricted, free-trading Twinlab shares and 986,842 restricted Twinlab shares).

~~This item~~- isWe ~~not~~held ~~applicable~~16,000,000 aswarrants weunder ~~are~~the ~~classified~~Series asB aWarrant, ~~smaller~~at ~~reporting~~a ~~company~~$0.76 Toper ~~better~~share ~~inform~~exercise ~~the readers of this Annual Report on Form 10-K~~price, ~~however,~~with wevarious ~~provide~~effective ~~the~~expiration ~~following~~dates ~~limited~~throughout ~~disclosures~~2016.

~~In the~~o ~~course of conducting our business operations~~4,000,000 ~~we are exposed to a variety~~ of ~~risks~~such ~~that~~warrants ~~are~~expired ~~inherent~~on toMarch ~~the business and financial services industry. The following paragraphs discuss some of the key inherent risk factors that could affect our business and operations~~31, as ~~well as other risk factors which are particularly relevant to us~~2016. Other factors besides those discussed below or elsewhere in this report also could adversely affect our business and operations, and these risk factors should not be considered a complete list of potential risks that may affect us.

~~We recently~~- ~~changed~~The ~~our~~Registration ~~business~~Rights ~~focus~~Agreement remains in full force and effect to enable the Securities Act registration of all Twinlab shares issued upon prior or future exercises of our Warrants.

~~Since March~~- ~~2014,~~We ~~our~~have ~~business~~a ~~focus~~claim ~~has~~against ~~been~~third-party optionors for delivery to ~~use~~us ~~our~~of ~~own~~1,498,500 ~~capital~~Twinlab toshares ~~acquire~~against the ~~outstanding~~Call ~~stock~~Options ofwhich ~~other~~they ~~companies~~granted to us and which we have exercised.

~~During the~~- ~~third~~We ~~quarter~~are ofcontingently ~~2013,~~obligated weto ~~had~~our ~~refocused~~accredited-investor ~~ourselves~~counterparties asunder athe ~~financial~~3,976,647 ~~services~~Third-Party ~~company~~Call options.

- We ~~were~~ ~~initially~~have ~~formed~~no toactual ~~design~~or ~~and~~potential ~~sell~~Put ~~mobile~~liability ~~apps~~or ~~for~~Contingent ~~smart~~Call ~~phones~~Option ~~and other mobile platforms such as tablets, but we never launched an active business based on this focus~~liability.

WeAt December 31, 2015, the fair ~~have~~value aof ~~limited~~the ~~business~~liability ~~history~~under the 3,976,647 ~~especially~~Third-Party inCall ~~regard~~Options towas recorded on our ~~current~~balance ~~business~~sheet ~~focus~~at $619,122.

WeIn July 2015, in exchange for $277,500, ~~may~~we ~~need~~acquired ~~additional~~a ~~capital~~20% interest in ~~the~~privately-held ~~future~~Western toNew ~~finance~~York ~~our~~real ~~operations~~estate companies LC Strategic Realty, LLC ~~which~~and weLC ~~may~~Strategic Holdings, LLC, ~~not~~as bewell ~~able~~as toin ~~raise~~all --other orbusiness itconducted ~~may~~by ~~only~~the befirms’ ~~available~~majority holders to the extent such other business has a primary focus on ~~terms~~(a) ~~unfavorable~~real estate (subject to usthe ~~and~~exclusion of certain specified projects), (b) media/entertainment/show business, or ~~our~~(c) ~~stockholders.~~endorsements/advertisements/personal appearances/use of likeness/ monetization of celebrity.

~~We do~~On ~~not~~June 17 ~~have~~and ~~substantial~~18, ~~liquid~~2015, ~~capital~~we ~~resources.~~filed a ~~Additional~~Form ~~financing~~4 ~~might~~and ~~not~~an beamended ~~available~~Schedule on13D ~~terms~~statement ~~favorable~~ to report a June 10, 2015 sale by us of 13,157,895 orshares atof Twinlab common ~~all.~~stock Ifto ~~adequate~~a ~~funds~~third ~~were~~party. ~~not~~The ~~available~~third orparty ~~were~~did not ~~available~~timely onhonor ~~acceptable~~its ~~terms,~~payment ~~our~~obligation ~~ability~~under tothe ~~fund~~sale ~~our~~contract ~~operations,~~and ~~take advantage~~we ofhave ~~unanticipated~~treated the ~~opportunities,~~transaction ~~develop~~as ora ~~enhance~~non-event ~~our~~for ~~business~~financial orreporting ~~otherwise~~purposes. ~~respond~~On toDecember 18, ~~competitive~~2015, ~~pressures~~we ~~would be~~terminated ~~significantly~~the ~~limited~~sale contract.

Our management has concluded that our internal control over financial reporting is not effective. Material weaknesses in our internal control over financial reporting could cause our financial reporting to be unreliable and could lead to misinformation being disseminated to the public. We have had to restate our financial statements and amend certain of our SEC reports.-6-

~~Our~~We ~~management~~currently ~~concluded~~are ~~that~~considering aselecting to ofbecome ~~December~~a ~~31,~~Business ~~2014~~Development ~~our~~Company ~~internal~~and/or ~~control~~filing ~~over~~(or ~~financial~~causing ~~reporting~~an ~~was~~affiliated ~~not~~company ~~effective,~~to ~~and~~file) ~~that~~an ~~material~~application ~~weaknesses~~with ~~existed~~the inUnited States ~~the~~Small ~~following~~Business ~~areas~~Administration asto ofbecome ~~December~~a 31Small Business Investment Company. We can give no assurance that such an application will be filed or that, ~~2014:~~if filed, it will be granted.

~~(1)~~In addition, we doare ~~not~~working ~~employ~~toward ~~full time in~~substantial energy-~~house~~related ~~personnel~~development ~~with~~projects ~~the technical knowledge to identify~~ and ~~address~~substantial ~~some~~international ofminerals ~~the~~trading ~~reporting~~projects. ~~issues~~We ~~surrounding~~can ~~certain~~give ~~complex~~no orassurance ~~non-routine~~that ~~transactions.~~such projects ~~With~~will ~~respect~~come to ~~material,~~fruition ~~complex and non-routine transactions~~or, ~~management~~if ~~has~~any ~~and~~one ~~will~~or ~~continue~~more toof ~~seek~~them ~~guidance~~do ~~from~~come ~~third-party experts and/or consultants~~ to ~~gain~~fruition, athat ~~thorough~~they ~~understanding~~will ofbe ~~these transactions;~~successful.

~~(2)~~We wecontinuously ~~have~~investigate ~~inadequate~~possible acquisitions ~~segregation~~of positions in new businesses, securities and assets, and evaluate the retention and disposition of ~~duties~~our ~~consistent~~existing holdings. Changes ~~with~~in the ~~control~~mix ~~objectives~~of ~~including~~our ~~but~~businesses ~~not~~and ~~limited~~investments toshould be expected. We have in the ~~disbursement~~past ~~process~~taken preliminary steps toward acquisitions and investments in various companies, ~~transaction~~which ortransactions ~~account~~were ~~changes~~never completed, and ~~the~~we ~~performance~~have ofmade ~~account~~an ~~reconciliations~~unsuccessful investment ~~and~~(in ~~approval;~~Blackcraft Cult, Inc. common stock) which we continue to hold but have written down to a zero valuation.

~~(3)~~Current weStrategic ~~have~~Investment: ~~ineffective~~Twinlab Consolidated ~~controls~~Holdings ~~over the period end financial disclosure and reporting process caused by reliance on third-party experts and/or consultants and insufficient accounting staff; and~~Inc.

~~(4)~~Twinlab weCorporation dohas ~~not~~been ~~have~~the atrusted leader ~~functioning~~for ~~audit~~innovative, ~~committee~~high ofperformance health and wellness products since 1968. In addition to the ~~Board~~extensive line of ~~Directors~~vitamins, minerals and ~~our~~sports ~~Board~~nutrition formulas of ~~Directors~~its namesake brand, inTwinlab ~~its~~Corporation ~~performance~~also ofmanufactures and sells other category leaders, including the ~~functions~~Metabolife ~~generally~~line ~~associated~~of ~~with~~diet ~~audit~~and ~~committees~~energy products, ~~lacks~~the aReserveage ~~majority~~Nutrition family of ~~(indeed~~nutritional supplements, ~~lacks~~and ~~any)~~Alvita teas. ~~independent~~Twinlab ~~members~~Corporation’s ~~and~~plant ~~lacks~~in American Fork, Utah, is a ~~majority~~NSF® ofGMP ~~(indeed~~registered facility from which it manufactures, packages ~~lacks~~and ~~any)~~distributes ~~outside~~over ~~directors~~1,000 ~~resulting~~premium inquality ~~ineffective~~products. ~~oversight~~Twinlab inCorporation ~~the~~also ~~establishment~~operates ~~and~~a ~~monitoring~~research ofand ~~required~~development ~~internal~~facility in ~~controls~~Grand Rapids, ~~approvals~~Michigan. ~~and~~Twinlab ~~procedures~~products are currently available in over 55 countries worldwide.

~~-7-~~Twinlab Consolidated Holdings, Inc., the parent company of Twinlab Corporation, has been established to act as a consolidator in the highly fragmented nutrition segment of the health and wellness industry. Using Twinlab Corporation’s assets and the expertise and experience of its management team, Twinlab intends to capitalize on current market imbalances by combining multiple companies and operations into one larger, cohesive entity. Twinlab believes that the resulting synergies in distribution, manufacturing, advertising and global marketing would increase market share and maximize profitability, establishing Twinlab as a market leader.

Ineffectiveness of and material weaknesses in our internal controls could result in our financial reporting being unreliable and lead to misinformation being disseminated to the public. Investors relying upon this misinformation may make an uninformed investment decision. Errors in financial reporting might subject us to lawsuits. Moreover, if investors do not have confidence in our financial reporting, they may be relatively unwilling to buy or hold our stock, which could negatively affect our stock price and our access to capital.Competition

~~Our Board~~A oflarge ~~Directors~~number ~~concluded~~of onentities ~~November~~compete ~~13,~~with us ~~2014~~to ~~that~~make the ~~audited~~types ~~consolidated~~of ~~financial~~investments ~~statements~~that ~~and~~we ~~other~~target ~~financial~~as ~~information contained~~part inof our ~~Annual~~business ~~Report~~focus. We oncompete ~~Form 10-K~~ for ~~the~~such ~~2013~~investments ~~fiscal~~with a ~~year~~large ~~failed~~number toof ~~properly~~venture ~~account~~capital ~~for~~funds, ~~certain~~private ~~financial~~equity ~~information and~~firms, ~~that~~mutual ~~for~~funds, ~~comparative~~pension ~~purposes the previously issued unaudited financial statements~~ and ~~certain~~ other ~~financial~~institutional ~~information~~investors, investment ~~contained~~banks inand ~~certain~~advisory ~~previously-filed~~firms ~~periodic~~with ~~reports~~managed ~~should no longer be relied upon~~assets. WeMany ~~reported~~of ~~this~~our ~~conclusion~~competitors onare asubstantially ~~Form 8-K~~larger ~~filed~~than ~~with~~us ~~the~~and ~~SEC that day. Since then, we~~ have ~~filed~~considerably ~~amended quarterly and annual reports (Forms 10-Q/10-K) with the SEC~~greater ~~for~~financial, ~~the fiscal quarters ended March 31~~research, ~~June 30 and September 30~~technical, ~~2014~~marketing and ~~the~~reputational ~~fiscal~~resources ~~year~~than ~~ended~~we ~~December 31, 2013 including (among other things) restatements of the originally-filed financial statements~~do.

~~We may not be able to add and retain the key personnel we need to sustain and grow our business.~~-7-

~~We are~~There ~~thinly~~can ~~staffed~~be ~~and~~no weassurance ~~expect~~ that wethe ~~will~~competitive pressures ~~need~~we toface ~~add~~will ~~qualified~~not ~~personnel~~have ina ~~order~~material toadverse ~~expand~~effect on our business., ~~Currently~~financial wecondition, ~~are heavily~~and ~~dependent~~results onof ~~the~~operations. Also, as ~~services~~a result of ~~Darin~~this ~~Pastor~~competition, ~~our~~we ~~Chairman/chief~~may ~~executive~~not ~~officer.~~be Weable ~~face~~to ~~intense~~take ~~competition~~advantage ~~for~~of ~~qualified employees~~certain ~~from~~attractive ~~many~~investment ~~companies~~opportunities, inand ~~our~~we ~~industry~~can offer ~~who~~no ~~have~~assurance ~~greater~~that ~~resources~~we ~~than~~will webe doable to identify, ~~recruit~~ and ~~retain~~make ~~valued~~investments ~~employees~~that are consistent with our investment objective.

Our performance is highly dependent upon our ability to attract, retain, and motivate highly skilled, talented employees. Given our relatively small size, the performance of our business may be especially adversely affected if we cannot do so.Personnel

~~If we~~As doof ~~not~~the ~~(voluntarily)~~date ~~make sufficiently large exercises~~ of ~~our~~this ~~Twinlab warrants~~filing, ~~Twinlab~~we ~~could exercise a right to require us~~have tofour ~~purchase~~full-time ~~large quantities of Twinlab common stock~~employees.

~~Pursuant to~~Available the Put Agreement, we indicated our intent to exercise the First Warrant at a rate of no less than 1,461,988 shares of Common Stock (“the Minimum Amount”) per month over the term of the First Warrant (the “Minimum Rate”). In the event that we do not exercise the First Warrant by February 15, 2015 or any subsequent Periodic Exercise Date (as defined in the Put Agreement) such that as of the applicable Exercise Date, our cumulative purchases of Twinlab common stock pursuant to the First Warrant has not been at a rate that is equal to or in excess of the Minimum Rate, then Twinlab has the right to notify us not earlier than 30 days and not later than 40 days after the applicable Exercise Date of Twinlab’s exercise of its put rights under the Put Agreement (the “Put Notice”). Upon receipt of the Put Notice, we would be required to exercise the First Warrant to (a) purchase the Minimum Amount by a date identified in the Put Notice that is no earlier than 10 days after and no later than 30 days after the date of the Put Notice (the “Put Date”), or if we have previously exercised the First Warrant to purchase shares in excess of the Minimum Rate, then such lesser amount of Twinlab common stock as would, if purchased as of the applicable Exercise Date, have made our purchases of Twinlab common stock pursuant to the First Warrant as of such Exercise Date equal to the Minimum Rate (the “Initial Mandatory Purchase”), and (b) purchase by a date that is no later than each subsequent Periodic Exercise Date an amount of Twinlab common stock such that as of each such Periodic Exercise Date, our cumulative purchases of Twinlab common stock pursuant to the First Warrant through that date has been at a rate that is no less than the Minimum Rate (the “Periodic Mandatory Purchases”). Following delivery of the Put Notice by Twinlab, our failure to make the Initial Mandatory Purchase by the Put Date would be an “Event of Default.” Following the delivery of the Put Notice by Twinlab, our failure to make,Information

We electronically file annual, quarterly and other reports and other information with the United States Securities and Exchange Commission (the “SEC”). You can read these SEC filings and reports over the Internet at the SEC's website at www.sec.gov or on our website at www.capstonefinancialgroupinc.com. The public may read or copy any materials we file with the SEC at the SEC’s Public Reference Room at 100 F Street, NE, Washington, DC 20549. The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-8800-SEC-0330. We will provide a copy of our annual report to security holders, including audited financial statements, at no charge upon receipt of a written request to us at Capstone Financial Group, Inc., 8600 Transit Road, East Amherst, NY 14051.

~~when due,~~ITEM ~~any Periodic Mandatory Purchase is a breach of the Put Agreement, and if such breach is not timely cured by us, such uncured breach shall be deemed an Event of Default~~1A. Upon the occurrence of such an Event of Default, (a) our right to purchase all shares of Twinlab common stock remaining unpurchased under the First Warrant would be converted into an obligation, accelerated and immediately due and (b) the Second Warrant would immediately terminate as to any shares of Twinlab common stock remaining exercisable under the Second Warrant. In the event Twinlab invokes its right pursuant to the Put Notice to require us to exercise the First Warrant, the purchase price per share of Twinlab common stock thereunder would be $0.775. As of this filing date we have not exercised the Minimum Amount per the Put Agreement, but Twinlab has not delivered a Put Notice to us.

~~For Twinlab~~RISK to have and exercise a right pursuant to the Put Agreement to require us to exercise the First Warrant would be materially adverse to us, especially if (as would probably be the case) we did not have funds to comply with such a mandatory purchase obligation.FACTORS

~~Our~~This item is not applicable, ~~common~~as ~~stock~~we ~~currently~~are ~~has~~classified ~~low~~as ~~trading~~a ~~volume~~smaller ~~and~~reporting ~~any~~company. ~~sale~~To ofbetter ainform ~~significant~~the ~~number~~readers of ~~shares~~this isAnnual ~~likely~~Report toon ~~depress~~Form ~~the~~10-K, ~~trading~~however, ~~price~~we provide the following limited disclosures.

~~Our common~~In ~~stock has historically been quoted on~~ the ~~OTCQB~~course ~~marketplace~~of ~~operated~~conducting byour business ~~OTC Markets Group Inc.~~operations, ~~and~~ we ~~believe~~are ~~that~~exposed ~~after the~~to ~~filing~~a ofvariety ~~this Annual Report on Form 10-K quotation~~ of ~~our~~risks ~~common~~that ~~stock~~are oninherent to the ~~OTCQB~~business ~~marketplace~~and ~~will~~financial ~~resume~~services industry. ToThe following ~~date,~~paragraphs ~~the trading~~discuss ~~volume~~some of the ~~common~~key ~~stock~~inherent ~~has~~risk ~~been~~factors ~~limited.~~that ~~Because~~could ofaffect ~~this~~our ~~limited~~business ~~trading~~and ~~volume~~operations, ~~holders~~as ofwell ~~our~~as ~~securities~~other risk ~~may~~factors ~~not be~~which ~~able~~are toparticularly ~~sell~~relevant ~~quickly~~to ~~any~~us. ~~significant~~Other ~~number~~factors ofbesides ~~such~~those ~~shares,~~discussed ~~and~~below ~~any~~or ~~attempted~~elsewhere ~~sale~~in ofthis areport ~~large~~also could ~~number~~adversely ofaffect our ~~shares~~business ~~will~~and ~~likely have~~operations, aand ~~material~~these ~~adverse~~risk ~~impact~~factors onshould ~~the~~not ~~price~~be ofconsidered ~~our~~a ~~common~~complete ~~stock.~~list ~~Because~~ of ~~the limited number of shares being traded, the price~~potential ~~per~~risks ~~share~~that ~~is subject to volatility and~~ may ~~continue~~affect ~~to be subject to rapid price swings in the future~~us.

~~If the~~We ~~trading~~recently ~~price~~changed of our ~~common stock is below $5.00 per share it will be deemed a low-priced “penny” stock and an~~ ~~investment~~business ~~in our common stock should be considered high risk and subject to marketability restrictions~~focus.

~~If our~~Since ~~common stock becomes/remains a penny stock~~March 2014, asour ~~defined~~business focus inhas ~~Rule~~been ~~3a51-1~~to ~~under~~use ~~the~~our ~~Securities~~own ~~Exchange~~capital ~~Act, it will be more difficult for investors~~ to ~~liquidate~~acquire ~~their investment in~~ the ~~common~~outstanding stock. ~~Until the trading price~~ of ~~the~~other ~~common stock rises above $5~~companies.00 per share, if ever, trading in the common stock is subject to the penny stock rules of the Securities Exchange Act specified in Rules 15g-1 through 15g-10. Those rules require broker-dealers, before effecting transactions in any penny stock, to:

·During ~~Deliver to~~ the ~~customer,~~third ~~and~~quarter ~~obtain a written receipt for, a disclosure document; · Disclose certain price information about the stock; · Disclose the amount~~ of compensation received by the broker-dealer or any associated person of the broker-dealer; · Send monthly statements to customers with market and price information about the penny stock; and · In some circumstances2013, ~~approve~~we had ~~the~~refocused ~~purchaser’s~~ourselves ~~account~~as ~~under~~a ~~certain~~financial ~~standards~~services ~~and deliver written statements to the customer with information specified in the rules~~company.

~~Consequently, the~~We ~~penny~~were ~~stock~~initially ~~rules~~formed ~~may restrict the ability or willingness of broker-dealers~~ to ~~sell~~design ~~the common stock~~ and ~~may affect the ability~~ ~~of holders to~~ sell ~~their~~mobile ~~common~~apps ~~stock~~for insmart ~~the~~phones ~~secondary market~~ and ~~the~~other ~~price~~mobile atplatforms ~~which~~ such ~~holders~~as ~~can~~tablets, ~~sell~~but ~~any~~we ~~such~~never ~~securities. These~~launched ~~additional~~an ~~procedures~~active ~~could~~business ~~also~~based ~~limit~~on this ~~our ability to raise additional capital in the future~~focus.

~~-9-~~We have a limited business history, especially in regard to our current business focus.

~~FINRA sales practice requirements may also limit a stockholder’s ability to buy and sell our stock.~~-8-

~~In addition~~It tois ~~the~~possible ~~“penny stock” rules described above, the Financial Industry Regulatory Association (FINRA) has adopted rules~~ that ~~require~~our ~~that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing~~business ~~that~~focus ~~the~~could ~~investment~~widen isor ~~suitable~~change ~~for that customer~~further. ~~Before~~In ~~recommending~~the ~~speculative~~second ~~low~~half ~~priced~~of ~~securities~~2015 toand ~~their~~in ~~non-institutional customers,~~2016 ~~broker-dealers~~we ~~must~~have ~~make~~explored ~~reasonable~~significant ~~efforts~~transactions toin ~~obtain information about~~ the ~~customer’s financial status, tax~~areas ~~status, investment objectives and other information. Under interpretations~~ of ~~these~~energy ~~rules,~~products ~~FINRA~~refining believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and ~~sell~~international ~~our~~minerals ~~stock and have an adverse effect on the market for our shares~~trading.

~~Two~~We may need additional ~~individuals~~capital ~~hold~~in athe ~~majority~~future ofto finance our ~~outstanding~~operations, ~~voting~~which ~~securities~~we ~~and~~may ~~they~~not ~~can,~~be ~~without~~able ~~the~~to ~~votes~~raise of-- ~~any~~or ~~other~~it ~~stockholders,~~may ~~elect all~~only ~~directors~~be ~~who~~available inon ~~turn~~terms ~~elect~~unfavorable to ~~all~~us ~~officers~~and or our stockholders.

~~Our Chief~~We ~~Executive~~do ~~Officer~~not ~~Darin~~have ~~Pastor~~substantial ~~and~~liquid capital ~~our~~resources. ~~President~~Additional ~~George~~financing ~~Schneider~~might ~~collectively~~not ~~own~~be ~~84%~~available ofon ~~our~~terms ~~outstanding~~favorable ~~voting~~to ~~securities and are the only members of our Board of Directors and~~us, ~~accordingly,~~or ~~have~~at ~~effective~~all. ~~control~~If ofadequate usfunds ~~and~~were ~~may have effective control~~not ofavailable usor ~~for~~were ~~the~~not ~~near~~available ~~and~~on ~~long~~acceptable ~~term~~terms, ~~future. Votes~~our ~~and~~ability ~~wishes~~to offund ~~other~~our ~~stockholders~~operations, ~~can~~take ~~have~~advantage ~~little~~of ~~effect~~unanticipated ~~when~~opportunities, develop weor ~~are~~enhance ~~managed by~~ our ~~Board~~business ofor ~~Directors~~otherwise ~~and~~respond ~~operated~~to ~~through~~competitive ~~our~~pressures ~~officers,~~would ~~all of whom can~~ be ~~elected~~significantly ~~by these two individuals~~limited.

~~We have~~Our ~~the~~management ~~ability~~has toconcluded that ~~issue~~our ~~additional~~internal ~~shares~~control ofover ~~our~~financial ~~common~~reporting ~~stock~~is ~~and~~not ~~shares~~effective. ofMaterial ~~preferred~~weaknesses ~~stock~~in ~~without~~our ~~asking~~internal ~~for~~control ~~stockholder~~over ~~approval,~~financial ~~which~~reporting could cause our ~~stockholders’~~financial ~~investment~~reporting to be ~~diluted~~unreliable and could lead to misinformation being disseminated to the public. We have had to restate our financial statements and amend certain of our SEC reports.

Our ~~articles~~ ofmanagement ~~incorporation~~concluded ~~authorize the Board of Directors to issue up to 2,000,000,000 shares of common stock and 10,000,000~~that ~~shares~~as of ~~preferred stock. The power of the Board of Directors to issue shares of common stock~~December 31, ~~preferred~~2015 ~~stock~~our ~~or warrants~~internal orcontrol ~~options~~over tofinancial ~~purchase~~reporting ~~shares~~was ~~of common stock or preferred stock is generally~~ not ~~subject to shareholder approval. Accordingly~~effective, ~~any~~ ~~additional~~and ~~issuance of our common stock, or preferred stock~~ that ~~may~~material beweaknesses ~~convertible~~existed in ~~into~~the ~~common~~following ~~stock,~~areas ~~may~~as ~~have the effect~~ of ~~diluting~~December 31, ~~one’s investment.~~2015:

We do not expect to pay dividends to our stockholders in the near future.

(1)		we do not employ full time in-house personnel with the technical knowledge to identify and address some of the reporting issues surrounding certain complex or non-routine transactions. With respect to material, complex and non-routine transactions, management has and will continue to seek guidance from third-party experts and/or consultants to gain a thorough understanding of these transactions;
(2)		we have inadequate segregation of duties consistent with the control objectives including but not limited to the disbursement process, transaction or account changes, and the performance of account reconciliations and approval;
(3)		we have ineffective controls over the period end financial disclosure and reporting process caused by reliance on third-party experts and/or consultants and insufficient accounting staff; and
(4)		we do not have a functioning audit committee of the Board of Directors and our Board of Directors, in its performance of the functions generally associated with audit committees, lacks a majority of (indeed, lacks any) independent members and lacks a majority of (indeed, lacks any) outside directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls, approvals and procedures.

WeIneffectiveness of and material doweaknesses ~~not~~in ~~expect~~our internal controls could result in our financial reporting being unreliable and lead to ~~declare~~misinformation orbeing ~~pay~~disseminated to ~~any~~the ~~dividends~~public. onInvestors ~~our~~relying ~~common~~upon ~~stock~~this misinformation may make an uninformed investment decision. Errors in ~~the~~financial ~~foreseeable~~reporting might ~~future~~subject us to lawsuits. ~~The~~Moreover, ~~declaration~~if ~~and~~investors ~~payment~~do not have confidence in ~~the future~~our offinancial ~~any~~reporting, ~~cash~~they ormay ~~stock~~be ~~dividends~~relatively unwilling onto ~~the~~buy ~~common~~or hold our stock, ~~will~~which becould atnegatively ~~the~~affect ~~discretion~~our ofstock price and our ~~Board~~access ofto ~~Directors~~capital.

~~We may be subject to additional regulatory requirements.~~-9-

~~We are~~Our ~~not~~Board ~~registered~~of asDirectors anconcluded on ~~investment~~November 13, ~~company~~2014 ~~under~~that the ~~Investment~~audited ~~Company~~financial ~~Act~~statements ofand ~~1940.~~other ~~Although~~financial ~~our~~information ~~management~~contained ~~believes~~in weour ~~are~~Annual ~~not~~Report ~~required~~on Form 10-K for the 2013 fiscal year failed to ~~register~~properly ~~under~~account for certain financial information and that ~~Act,~~for comparative purposes the ~~consequences~~previously ofissued ~~being~~unaudited ~~required~~financial tostatements ~~register~~ and ~~not~~certain ~~having~~other ~~done~~financial soinformation ~~would~~contained bein ~~seriously~~certain previously-filed ~~adverse~~periodic ~~for~~reports ~~our~~should ~~business~~no longer be relied upon. InWe ~~addition,~~reported ifthis weconclusion ~~registered~~on asa anForm ~~investment~~8-K ~~company~~filed ~~under~~with the ~~Investment~~SEC ~~Company~~that ~~Act~~day. ~~of 1940~~Since then, we ~~would~~ behave ~~subject~~filed toamended ~~additional~~quarterly ~~regulatory~~and ~~requirements~~annual ~~thereunder~~reports ~~which~~(Forms ~~would~~10-Q/10-K) ~~impose~~with ~~cost~~the SEC for the fiscal quarters ended March 31, June 30 and September 30, 2014 and the fiscal year ended December 31, 2013 including (among other ~~burdens~~things) onrestatements of ~~our~~the ~~business~~originally-filed financial statements.

~~Our success~~We ~~depends,~~may innot ~~significant~~be ~~part,~~able onto add and retain the ~~results~~key ofpersonnel ~~the~~we ~~companies~~need into ~~which~~sustain weand ~~invest~~grow our business.

~~Our ability~~We toare ~~achieve~~thinly ~~our~~staffed ~~business~~and ~~objectives~~we expect ~~will~~that ~~depend~~we onwill ~~our~~need ~~ability~~ to ~~effectively~~add ~~manage~~qualified ~~and~~personnel ~~deploy~~in ~~our~~order ~~capital,~~to ~~which~~expand ~~will depend,~~our inbusiness. ~~turn,~~Currently onwe ~~our~~are ~~management’s~~heavily ~~ability~~dependent toon ~~identify,~~the services ~~evaluate,~~of ~~invest~~Darin inPastor, ~~and~~our ~~monitor~~Chairman/chief ~~companies~~executive ~~that meet our investment criteria~~officer. IfWe aface ~~major~~intense ~~investment~~competition ~~has~~for ~~business~~qualified ~~setbacks~~employees itfrom ~~would~~many ~~adversely~~companies in ~~affect~~ our ~~financial~~industry ~~results.~~who ~~Currently~~have wegreater ~~depend~~resources ~~heavily on~~than ~~Twinlab.~~we ~~Twinlab,~~do ~~for~~to ~~its part~~identify, isrecruit ~~subject~~and toretain ~~very~~valued ~~significant risks~~employees.

~~Many firms~~Our ~~compete~~performance ~~with~~is ushighly ~~for~~dependent upon ~~investment~~our ~~opportunities~~ability to attract, retain, and ~~they~~motivate ~~may~~highly ~~have~~skilled, talented employees. Given our relatively small size, the ~~ability~~performance toof ~~outcompete~~our usbusiness may be especially adversely affected if we cannot do so.

~~-10-~~Our common stock currently has low trading volume and any sale of a significant number of shares is likely to depress the trading price.

~~A large~~Our ~~number~~common ofstock ~~entities~~is ~~compete~~quoted ~~with~~on the usOTCQB tomarketplace ~~make~~operated ~~the~~by ~~types~~OTC ofMarkets ~~equity~~Group ~~investments~~Inc. ~~that~~To wedate, ~~target~~the astrading ~~part~~volume of ~~our~~the ~~business~~common ~~focus. We~~stock ~~compete~~has ~~for~~been ~~such~~limited. ~~investments~~Because of ~~with~~this alimited ~~large~~trading ~~number~~volume, holders of ~~venture~~our ~~capital~~securities ~~funds,~~may ~~private~~not ~~equity~~be ~~firms,~~able ~~mutual~~to ~~funds,~~sell ~~pension~~quickly ~~and other~~any ~~institutional~~significant ~~investors,~~number ~~investment~~of ~~banks~~such shares, and ~~advisory~~any ~~firms~~attempted ~~with~~sale ~~managed~~of ~~assets.~~a ~~Many~~large number of our ~~competitors~~shares ~~are~~will ~~substantially larger~~likely ~~than us and~~ have ~~considerably~~a ~~greater~~material ~~financial,~~adverse ~~research,~~impact ~~technical,~~on ~~marketing~~the ~~and~~price ~~reputational~~of ~~resources~~our ~~than~~common ~~we do~~stock. AsBecause aof ~~result~~the limited number of ~~this~~shares ~~competition~~being traded, wethe ~~can~~price ~~offer~~per noshare ~~assurance~~is ~~that~~subject weto ~~will~~volatility beand ~~able~~may continue to ~~make~~be ~~investments~~subject to ~~that~~rapid ~~are~~price ~~consistent~~swings ~~with~~in ~~our investment~~the ~~objective~~future.

~~Our stockholders will not necessarily have the opportunity to evaluate our strategic investments or trading positions.~~-10-

~~We have~~If ~~only recently begun to identify potential strategic investments and to trade positions we have acquired. Stockholders will not necessarily be able to evaluate~~ the ~~economic~~trading ~~merits,~~price ~~transaction terms or other financial or operational data concerning~~of our ~~strategic~~common ~~investments~~stock ~~and~~is ~~trading~~below ~~positions;~~$5.00 ~~often~~per ~~these~~share ~~things~~it will ~~not~~ be ~~fully~~deemed ~~available~~a tolow-priced ~~the~~“penny” ~~public. You must~~stock ~~rely on us~~ and ~~our~~an ~~board~~investment ofin ~~directors to implement~~ our ~~trading~~common stock ~~policies,~~should tobe ~~evaluate~~considered ~~our~~high ~~investment~~risk and ~~trading~~subject ~~opportunities and~~ to ~~structure~~marketability ~~the terms of our strategic investments~~restrictions.

~~Our~~If our common stock becomes/remains ~~stockholders~~a ~~must~~penny ~~depend~~stock, onas ~~our~~defined ~~Board~~in ofRule ~~Directors~~3a51-1 under the Securities Exchange Act, it will be more difficult for investors to liquidate their ~~decisions~~investment ~~concerning~~in ~~our~~the ~~strategic~~common ~~investments~~stock. Until the trading price of the common stock rises above $5.00 per share, if ever, trading in the common stock is subject to the penny stock rules of the Securities Exchange Act specified in Rules 15g-1 through 15g-10. Those rules require broker-dealers, before effecting transactions in any penny stock, to:

~~Our Board~~· ofDeliver ~~Directors~~to ~~makes~~the ~~all~~customer, ~~decisions~~and ~~regarding~~obtain ~~the~~a ~~acquiring,~~written ~~holding~~receipt for, ~~and~~a ~~partial~~disclosure document; · Disclose certain price information about the stock; · Disclose the amount of compensation received by the broker-dealer or ~~complete~~any ~~disposition~~associated person of ~~our~~the ~~strategic investments.~~broker-dealer; ~~You~~· ~~may~~Send ~~not~~monthly ~~agree~~statements to customers with market and price information about the ~~decisions~~penny ~~they~~stock; ~~reach~~and · In some circumstances, approve the purchaser’s account under certain standards and deliver written statements to the customer with information specified in the rules.

~~Our due~~Consequently, ~~diligence~~the penny stock rules may ~~fail~~restrict tothe ~~uncover~~ability ~~relevant~~or ~~details~~willingness ~~that~~of ~~lead~~broker-dealers to asell ~~partial~~the orcommon ~~total~~stock ~~loss~~and may affect the ability of holders to sell their common stock in the ~~strategic~~secondary ~~investment~~market and the price at which such holders can sell any such securities. These additional procedures could also limit our ability to raise additional capital in the future.

~~Our access~~FINRA tosales ~~information~~practice ~~about our current and prospective investee companies and their businesses~~ requirements may bealso ~~limited~~limit ora ~~imperfect.~~stockholder’s ~~Even where~~ability ~~issuers~~to ~~file~~buy ~~public~~and ~~reports~~sell ~~with~~our ~~the SEC, such reporting cannot guarantee the identification or accuracy of relevant success factors for a company~~stock.

AIn addition to the “penny ~~significant~~stock” ~~portion~~rules ofdescribed ~~our~~above, ~~trading~~the ~~positions~~Financial ~~will~~Industry beRegulatory ~~recorded~~Association at(FINRA) ~~fair~~has ~~value~~adopted asrules ~~determined~~that require that in recommending ~~good~~an ~~faith~~investment byto ~~our~~a ~~board~~customer, ofa ~~directors~~broker-dealer must have reasonable grounds for believing that the investment is suitable ~~(rather~~for ~~than~~that atcustomer. ~~public~~Before recommending speculative low priced securities to their non-~~trading~~institutional customers, broker-~~market~~dealers ~~value)~~must make ~~and~~reasonable efforts to obtain information about the customer’s financial status, astax astatus, ~~result~~investment objectives and other information. Under interpretations of these rules, FINRA believes that there ~~may~~is a high probability that speculative low priced securities will not be ~~uncertainty~~suitable asfor toat ~~the~~least ~~true~~some ~~value~~customers. ofThe FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our ~~strategic~~common ~~investments~~stock, which may limit your ability to buy and ~~trading~~sell ~~positions~~our stock and have an adverse effect on the market for our shares.

We are required to carry our strategic investments at market value or, if there is no readily available market value, at fair value as determined by our board of directors. Typically, there is not a liquid public market for the securities of the companies in which we intend to invest. As a result, we will value these securities quarterly at fair value as determined in good faith by our board of directors. -11-

~~Because~~Two ~~such~~individuals ~~valuations~~hold ~~are inherently uncertain, may fluctuate over short periods~~a majority of ~~time and may be based on estimates,~~ our ~~determinations~~outstanding ofvoting ~~fair value may differ materially from the values that would have been used if a ready market for these~~ securities ~~existed. Due~~and tothey ~~this uncertainty~~can, ~~our~~without ~~determinations of~~ the ~~fair~~votes ~~value~~ of ~~our~~any ~~trading~~other ~~positions~~stockholders, onelect aall ~~given~~directors ~~date may be materially understated or overstated compared to the value that we may ultimately~~who ~~realize~~in ~~upon~~turn ~~the~~elect ~~sale~~all ~~of those trading positions~~officers. ~~Indeed, our determinations might be inaccurate even as of the determination date.~~

~~There~~Our Chief Executive Officer Darin isPastor noand ~~guarantee~~our ~~that~~President weGeorge ~~will~~Schneider becollectively ~~able~~own toa ~~realize~~substantial ~~the~~majority ~~fair~~of ~~value~~our asoutstanding ~~evaluated~~voting bysecurities and are the only members of our Board of Directors ~~upon~~and, ~~disposition~~accordingly, have effective control of us and may have effective control of us for the near and long term future. Votes and wishes of other stockholders can have little effect when we are managed by our ~~asset~~Board of Directors and operated through our officers, all of whom can be elected by these two individuals.

~~-11-~~We have the ability to issue additional shares of our common stock and shares of preferred stock without asking for stockholder approval, which could cause our stockholders’ investment to be diluted.

~~Given~~Our articles of incorporation ~~that~~authorize athe ~~large~~Board ~~percentage~~of Directors to issue up to 2,000,000,000 shares of ~~our~~common ~~assets~~stock and ~~net~~10,000,000 ~~income~~shares ~~are~~of ~~based~~preferred onstock. The power ~~our~~of ~~fair~~the ~~value~~Board ~~figures~~of ~~for~~Directors ~~Twinlab~~to ~~securities~~issue shares of common stock, ~~readers~~preferred stock or warrants or options to purchase shares of common ~~should~~stock beor ~~especially~~preferred ~~aware~~stock is generally not subject to shareholder approval. Accordingly, any additional issuance of our common stock, or preferred stock that may be convertible into common stock, may have the ~~risk~~effect of diluting one’s investment.

~~Our strategic~~We ~~investments~~do ~~may be subject to practical limitations and/or legal restrictions on resale, and we may~~ not beexpect ~~able~~ to ~~sell~~pay ~~the~~dividends ~~positions we hold when we wish~~ to ~~for~~our ~~amounts~~stockholders ~~equal~~in tothe ~~their~~near ~~recorded value, if at all~~future.

~~Some of~~We ~~our~~do ~~strategic~~not ~~investments~~expect ~~may~~to bedeclare or pay ~~become~~any ~~comprised~~dividends ofon ~~thinly~~our ~~traded~~common ~~public~~stock ~~companies or remain private companies, resulting~~ in ~~their~~the ~~being~~foreseeable ~~illiquid~~future. ~~Also,~~ atThe ~~any~~declaration ~~given~~and ~~time~~payment ain ~~substantial~~the ~~portion~~future of ~~our~~any ~~current~~cash ~~strategic~~or ~~investments and trading~~stock ~~positions~~dividends ~~may be subject to legal restrictions~~ on ~~resale. We~~the ~~cannot~~common ~~assure~~stock ~~you that we~~ will be ~~able to sell our positions for amounts equal to the values that we have ascribed to them or~~ at the ~~time~~discretion weof ~~desire~~our toBoard ~~sell~~of Directors.

~~Our strategic investments~~We inmay ~~private~~be ~~companies~~subject ~~and/or~~to ~~in “thinly traded” public companies are extremely risky, and we could lose~~additional ~~all~~regulatory ~~our part of our investment~~requirements.

~~Many~~We are not registered as an investment ~~uncontrollable~~company ~~factors~~under ~~within~~the ~~such~~Investment ~~companies~~Company ~~and~~Act inof ~~their~~1940. ~~environments,~~Although asour ~~well~~management asbelieves ~~their~~we ~~typically~~are ~~limited~~not ~~resources,~~required ~~result~~to inregister under that Act, ~~stability~~the ~~risk.~~consequences ~~When~~of webeing ~~invest~~required into ~~such~~register ~~companies~~and not having done so would be seriously adverse for our business. In addition, if we ~~inherently~~registered ~~assume~~as aan ~~high~~investment ~~degree~~company under the Investment Company Act of ~~risk~~1940, ~~without~~we ~~the~~would ~~ability~~be subject to ~~mitigate~~additional ~~such~~regulatory ~~risk~~requirements thereunder which would impose cost and other burdens on our business.

Our ~~investments~~ ~~are~~success ~~not~~depends, ~~diversified~~in significant ~~among various asset classes; to date~~part, ~~our~~on ~~strategic~~the ~~investments~~results ~~are in equities~~ of ~~illiquid~~the ~~private and~~companies ~~thinly~~in ~~traded~~which ~~public~~we ~~companies~~invest.

Our ability to achieve our business ~~entire~~objectives ~~portfolio~~will isdepend ~~invested~~on our ability to effectively manage and deploy our capital, which will depend, in ~~this~~turn, ~~extremely~~on ~~risky~~our ~~asset~~management’s ability ~~class.~~to ~~Investing~~identify, evaluate, invest in, ~~any~~and ~~single~~monitor ~~asset~~companies ~~class~~that ~~(let~~meet ~~alone~~our ~~one~~investment ~~which~~criteria. ~~itself~~If a major investment has business issetbacks ~~risky)~~it ~~deprives~~would usadversely ofaffect ~~the~~our ~~risk~~financial ~~mitigation~~results. ~~which~~Currently ~~could~~we bedepend ~~provided~~heavily byon ~~investing~~Twinlab. inTwinlab, afor ~~portfolio~~its ~~which~~part, is ~~diversified~~subject to ~~among~~very ~~several asset~~significant ~~classes~~risks. ~~Some~~Among many other examples of ~~our~~risks, ~~strategic~~on ~~investments~~March ~~may~~16, ~~never~~2016 ~~develop~~Twinlab areplaced ~~liquid~~much ~~public~~of ~~market~~its senior management team, including its chief executive officer.

~~A lack of diversification (even within our single asset class) increases risk of loss.~~-12-

~~We hold~~Many ~~strategic~~firms ~~investments~~compete inwith us ~~only~~for ainvestment ~~few~~opportunities, ~~companies~~ and ~~therefore~~they wemay ~~cannot gain the risk mitigation benefits of portfolio diversification. We do not~~ have the ~~resources~~ability to ~~materially~~outcompete ~~increase the number of our strategic investments~~us. ~~The absence of diversification creates concentration in all risk variables associated with these positions.~~

~~Equity~~A large number of entities compete with ~~positions~~us into ~~strategic~~make the types of equity investments dothat ~~not~~we ~~provide~~target ~~the~~as ~~degree~~part of ~~security~~our ~~associated~~business focus. We compete for such investments with ~~lending~~a large number of venture capital funds, private equity firms, mutual funds, pension and other institutional investors, investment banks and advisory firms with managed assets. Many of our competitors are substantially larger than us and have considerably greater financial, research, technical, marketing and reputational resources than we do. As a result of this competition, we can offer no assurance that we will be able to make investments that are consistent with our investment objective.

~~Equity investments,~~Our ~~particularly~~stockholders inwill ~~illiquid,~~not ~~leveraged~~necessarily have ~~and~~the /opportunity orto ~~untested~~evaluate ~~companies such as~~ our ~~current~~ strategic investments, ~~are~~or ~~very high~~trading ~~risk~~positions. ~~Equity investments have no contractual right of repayment, no guarantees, and no collateral. Our business model is based upon making equity investments.~~

We have only recently begun to identify ~~may~~potential strategic investments and to trade positions we have acquired. Stockholders will not ~~realize~~necessarily ~~any~~be ~~dividend~~able to evaluate the economic merits, transaction terms or ~~capital~~other ~~gain~~financial ~~return~~or ~~from~~operational ~~our~~data ~~individual~~concerning our strategic investments and trading positions; often these things will not be fully available to the public. You must rely on us and our board of directors to implement our trading policies, to evaluate our investment orand trading ~~positions~~opportunities and to structure the terms of our strategic investments.

~~The companies~~Our ~~comprising~~stockholders ~~our~~must ~~trading~~depend ~~positions~~on our ~~may~~Board ~~all~~of ~~fail~~Directors ~~and~~for ~~cause~~their adecisions ~~total~~concerning ~~loss of~~ our ~~investment.~~strategic ~~In addition, our investee companies typically would not be expected to pay dividends to their stockholders~~investments.

WeOur Board of Directors makes all decisions ~~generally~~regarding ~~will~~the ~~not~~acquiring, ~~control~~holding, ~~companies~~and ~~comprising~~partial or complete disposition of our strategic investments. You may not agree with the decisions they reach. In addition, because we have only two Directors, any disagreement between them could result in a deadlock.

~~-12-~~Our due diligence investigation of prospective investee companies may fail to uncover relevant details that lead to a partial or total loss of the strategic investment.

~~We do~~Our ~~not~~access ~~expect~~ to ~~control~~information ~~most~~about ~~of the companies that will comprise~~ our current ~~future~~and ~~strategic~~prospective ~~investments,~~investee ~~even~~companies inand ~~any~~their ~~cases~~businesses inmay ~~which we~~be ~~have~~limited ~~board representation~~ or ~~board observation rights~~imperfect. As aEven ~~result,~~where weissuers ~~will~~file bepublic ~~subject to the~~reports ~~risk that a company in which we take a position may make business decisions~~ with ~~which we disagree and~~ the ~~management~~SEC, of such ~~company~~ ~~may~~reporting ~~take~~cannot ~~risks~~guarantee orthe ~~otherwise~~identification ~~act~~or inaccuracy ~~ways~~of ~~that~~relevant dosuccess ~~not~~factors ~~serve~~for ~~our interests as investors. As~~ a ~~result, a~~ company ~~in which we take a position may make decisions that could decrease the value of that position~~. ~~Our strategic investments may be relatively illiquid, and we may not be able to dispose of our positions as readily as we would like, at optimal times, or at an appropriate valuation.~~

Our lack of control over the management of a company comprising one of our strategic investments could leave us at risk that the management could make decisions or engage in activities that decrease or destroy the value of that strategic investment.-13-

~~Even though~~A wesignificant ~~hope~~portion ~~to work closely and constructively with management and boards~~ of ~~the companies that comprise~~ our trading ~~positions,~~ ~~there~~positions iswill nobe ~~guarantee~~recorded ~~the~~at ~~management~~fair ~~and~~value ~~boards~~as ofdetermined ~~these~~in ~~companies~~good ~~will~~faith ~~heed~~by our ~~advice~~board orof ~~act~~directors as(rather wethan ~~would~~at ~~wish. Therefore,~~public-trading-market ~~decisions~~value) orand, ~~activities~~as bya ~~the~~result, ~~management~~there ofmay ~~such~~be auncertainty ~~company~~as ~~can~~to ~~adversely affect~~ the true value of our strategic ~~investment~~investments and trading positions.

~~Our~~We carry our strategic investments at ~~decision~~market tovalue ~~file~~or, ~~reports~~if ~~using~~there ~~the~~is ~~reduced~~no ~~disclosure~~readily ~~requirements~~available ~~applicable~~market tovalue, ~~emerging~~at ~~growth~~fair ~~companies~~value as determined by our board of directors in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and~~/or~~ ~~smaller~~the accounting and financial reporting conventions of the investment company industry. Typically, there is not a liquid public market for the securities of the companies ~~may~~in ~~make~~which ~~our~~we ~~common~~intend ~~stock~~to ~~less~~invest. ~~attractive~~Where toa ~~investors~~liquid public market exists we would simply use market value, but where there is no public market or where the public market is illiquid (with the result that the reported public trading is not a reliable indicator of true value), we will value these securities quarterly at fair value as determined in good faith by our board of directors.

~~We qualify~~Because assuch ~~an“emerging~~valuations ~~growth~~are ~~company~~inherently uncertain,” asmay ~~defined~~fluctuate inover ~~the~~short ~~Jumpstart~~periods ~~Our~~of ~~Business~~time ~~Startups~~and ~~Act~~may ofbe ~~2012~~based ~~(“JOBS Act”)~~on estimates, ~~and~~our wedeterminations ~~take~~of ~~advantage~~fair ofvalue ~~certain~~may ~~exemptions~~differ materially from ~~various~~the ~~reporting~~values ~~requirements~~ that ~~are~~would ~~applicable~~have tobeen ~~other~~used ~~public companies~~if ~~that~~a ~~are~~ready ~~not~~market ~~“emerging~~for ~~growth~~these ~~companies”~~securities ~~including,~~existed. ~~but~~Due ~~not~~to ~~limited~~this touncertainty, ~~not~~our determinations ~~being~~of ~~required to comply with~~ the ~~auditor~~fair ~~attestation~~value ~~requirements~~ of ~~Section~~our ~~404~~trading ofpositions ~~the~~on ~~Sarbanes-Oxley~~a ~~Act,~~given ~~reduced~~date ~~disclosure~~may ~~obligations~~be ~~regarding~~materially ~~executive compensation~~understated inor ~~our~~overstated ~~periodic~~compared to ~~reports~~the ~~and~~value ~~proxy~~that ~~statements,~~we ~~and~~may ~~exemptions~~ultimately ~~from~~realize upon the ~~requirements~~sale of ~~holding~~those apositions. ~~nonbinding~~Indeed, ~~advisory vote~~our ondeterminations ~~executive~~might ~~compensation~~be ~~and~~inaccurate ~~shareholder~~even as ~~approval~~ of ~~any~~the ~~golden~~determination ~~parachute payments not previously approved~~date.

~~Many of~~There ~~the~~is ~~exemptions~~no ~~available~~guarantee ~~for~~that ~~emerging~~we ~~growth~~will ~~companies~~be able ~~are also available~~ to ~~smaller~~realize ~~reporting~~the ~~companies~~fair ~~(generally,~~value ~~those having~~as ~~less~~evaluated ~~than~~by ~~$75~~our ~~million~~Board of ~~common~~Directors ~~stock~~upon ~~held~~disposition byof ~~non-affiliates);~~the ~~we qualify as a “smaller reporting company~~asset.”

~~We cannot~~Given ~~predict~~that ifa ~~investors~~large ~~will~~percentage ~~find~~of our assets ~~common~~and ~~stock~~net ~~less~~income ~~attractive~~are ~~because~~based ~~we may rely~~ on ~~these exemptions. If some investors find~~ our ~~common~~fair ~~stock~~value ~~less~~figures ~~attractive~~for asTwinlab ~~a result~~securities, ~~there~~readers ~~may~~should be aespecially ~~less~~aware ~~active~~of ~~trading~~the ~~market for our common stock and our stock price may be reduced and/or be more volatile~~risk.

~~ITEM~~The determination of the fair value 1Bof our Twinlab stock and derivative securities as of December 31, 2015 is highly significant to our balance sheet and our income statement. In determining the fair value, our Board of Directors relied upon a valuation report dated March 2, 2016 by FFG Valuations, Inc. of Costa Mesa, California. This valuation report, which we commissioned, values Twinlab common stock at $0.758 per share as of December 31, 2015. Twinlab stock is essentially illiquid; accordingly, valuations such as FFG’s are opinions, and other observers might have valued Twinlab stock differently if they chose to emphasize other factors than FFG did. For example, Twinlab issued significant numbers of shares in the second half of 2015 at prices well below $0.758 per share. If we used in our 2015 financial statements a valuation of Twinlab stock (as of December 31, 2015) which was well below $0.758 per share, with corresponding valuations for our Twinlab derivative securities, our net assets as of December 31, 2015 would have been significantly reduced and we would have had significantly larger net losses in 2015.

~~UNRESOLVED STAFF COMMENTS~~-14-

~~This~~Our strategic investments may ~~item~~be issubject ~~not~~to ~~applicable~~practical limitations and/or legal restrictions on resale, asand we ~~are~~may ~~classified~~not asbe aable ~~smaller~~to ~~reporting~~sell ~~company~~the positions we hold when we wish to for amounts equal to their recorded value, if at all.

~~ITEM~~Some of our strategic investments may 2be or become comprised of thinly traded public companies or remain private companies, resulting in their being illiquid. Also, at any given time a substantial portion of our current strategic investments and trading positions may be subject to legal restrictions on resale. We cannot assure you that we will be able to sell our positions for amounts equal to the values that we have ascribed to them or at the time we desire to sell.

~~PROPERTIES~~Our strategic investments in private companies and/or in “thinly traded” public companies are extremely risky, and we could lose all our part of our investment.

~~We are~~Many ~~the~~uncontrollable ~~lessee~~factors ofwithin ~~17,335~~such companies ~~square~~and ~~feet of space~~ in antheir ~~office~~environments, ~~building~~as atwell ~~8600~~as ~~Transit Road,~~their ~~East~~typically ~~Amherst,~~limited ~~NY 14051~~resources, ~~our~~result ~~headquarters~~in ~~office.~~stability ~~The lease extends to October 31, 2025~~risk. ~~Base~~When ~~rent~~we isinvest ~~$23,113 per month through~~in ~~April~~such 30companies, ~~2016~~we ~~(following~~inherently assume a ~~free~~high ~~base-rent~~degree ~~period~~of ~~ending~~risk ~~October~~without ~~31, 2015), with annual 3% monthly base rent increases on each April 30 from 2016 through~~ the ~~end~~ability ofto ~~the~~mitigate ~~lease~~such ~~term~~risk.

~~-13-~~Our investments are not diversified among various asset classes; to date, our strategic investments are in equities of illiquid private and thinly traded public companies.

~~ITEM~~Our entire portfolio is invested in 3this extremely risky asset class. Investing in any single asset class (let alone one which itself is risky) deprives us of the risk mitigation which could be provided by investing in a portfolio which is diversified among several asset classes. Some of our strategic investments may never develop a liquid public market.

~~LEGAL~~A lack of diversification (even ~~PROCEEDINGS~~within our single asset class) increases risk of loss.

We hold strategic investments in only ~~are~~a few companies and therefore we cannot gain the risk mitigation benefits of portfolio diversification. We do not ahave ~~party~~the resources to ~~any~~materially ~~material~~increase ~~legal~~the ~~proceedings~~number of our strategic investments. The absence of diversification creates concentration in all risk variables associated with these positions.

~~ITEM~~Equity positions in strategic 4investments do not provide the degree of security associated with lending.

~~MINE~~Equity ~~SAFETY~~investments, ~~DISCLOSURES~~particularly in illiquid, leveraged and/or untested companies such as our current strategic investments, are very high risk. Equity investments have no contractual right of repayment, no guarantees, and no collateral. Our business model is based upon making equity investments.

~~Not~~We may not realize any dividend ~~applicable~~or capital gain return from our individual strategic investment or trading positions.

~~PART~~The companies comprising our trading IIpositions may all fail and cause a total loss of our investment. In addition, our investee companies typically would not be expected to pay dividends to their stockholders.

~~ITEM 5.~~ -15-

~~MARKET FOR~~We ~~REGISTRANT’S~~generally ~~COMMON~~will ~~EQUITY~~not ~~RELATED~~control companies ~~STOCKHOLDER~~comprising ~~MATTERS~~our ~~AND~~strategic ~~ISSUER PURCHASES OF EQUITY SECURITIES~~investments.

~~Market~~We do not expect to control most of ~~Information~~the companies that will comprise our future strategic investments, even in any cases in which we have board representation or board observation rights. As a result, we will be subject to the risk that a company in which we take a position may make business decisions with which we disagree and the management of such company may take risks or otherwise act in ways that do not serve our interests as investors. As a result, a company in which we take a position may make decisions that could decrease the value of that position. Our strategic investments may be relatively illiquid, and we may not be able to dispose of our positions as readily as we would like, at optimal times, or at an appropriate valuation.

Our ~~common~~ ~~stock~~lack ~~has~~of ~~historically~~control ~~been~~over ~~quoted on~~ the ~~OTCQB marketplace operated by OTC Markets Group Inc., under the symbol “CAPP”.~~management ~~(In April 2015 we were moved to the OTC Pink marketplace, but we believe that after the filing~~ of ~~this~~a ~~Annual~~company ~~Report~~comprising onone ~~Form 10-K quotation~~ of our ~~common~~strategic ~~stock~~investments oncould ~~the~~leave ~~OTCQB~~us ~~marketplace~~at ~~will~~risk ~~resume.)~~that ~~The~~the ~~following~~management ~~table~~could ~~lists~~make ~~the~~decisions ~~available~~or ~~quotations for the~~engage ~~high~~in ~~and~~activities ~~low~~that ~~prices~~decrease ~~for~~or ~~each~~destroy ~~quarter within~~ the ~~fiscal~~value ~~years~~of ~~ending~~that ~~December~~strategic ~~31, 2013 and December 31, 2014~~investment. ~~During the periods reported below, our common stock has generally been traded only thinly and sporadically.~~

~~The following~~Even ~~table~~though ~~sets forth~~we ~~the~~hope ~~high~~to work closely and ~~low~~constructively ~~prices for~~with management and boards of the companies that comprise our ~~common stock~~trading aspositions, ~~reported by~~there ~~Yahoo~~is ~~Finance~~no ~~for~~guarantee the ~~applicable~~management ~~quarters.~~and ~~These~~boards ~~quotations~~of ~~reflect inter-dealer~~these ~~prices,~~companies ~~without retail~~will ~~mark-up~~heed our advice or act as we would wish. Therefore, ~~markdown~~ decisions or ~~commission~~activities ~~and~~by the ~~may~~management ~~not~~of ~~necessarily represent~~such ~~actual~~a ~~transactions~~company can adversely affect the value of our strategic investment.

	Period Ended December 31, 2013
	STOCK PRICES
	High		Low
1st Quarter		Not available		Not available
2nd Quarter		Not available		Not available
3rd Quarter	$	1.55	$	1.00
4th Quarter	$	7.00	$	1.60

Our decision to file reports using the reduced disclosure requirements applicable to emerging growth companies and/or smaller reporting companies may make our common stock less attractive to investors.

	Period Ended December 31, 2014
	STOCK PRICES
	High		Low
1st Quarter	$	5.25	$	1.50
2nd Quarter	$	7.00	$	1.00
3rd Quarter	$	4.80	$	4.00
4th Quarter	$	5.00	$	3.50

We qualify as an “emerging growth company,” as defined in the Jumpstart Our Business Startups Act of 2012 (“JOBS Act”), and we take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including, but not limited to, not being required to comply with the auditor attestation requirements of Section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and proxy statements, and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

Many of the exemptions available for emerging growth companies are also available to smaller reporting companies (generally, those having less than $75 million of common stock held by non-~~14-~~affiliates); we qualify as a “smaller reporting company.”

~~Holders~~We cannot predict if investors ofwill ~~Common~~find ~~Stock~~our common stock less attractive because we may rely on these exemptions. If some investors find our common stock less attractive as a result, there may be a less active trading market for our common stock and our stock price may be reduced and/or be more volatile.

~~As of December 31, 2014, we had approximately 70 stockholders of record of our 94,564,648 shares of common stock outstanding.~~ -16-

~~Dividends~~ITEM 1B.

~~Any decisions~~UNRESOLVED ~~regarding dividends will be made by our board of directors. We currently intend to retain and use any future earnings~~STAFF for the development and expansion of our business and do not anticipate paying any cash dividends in the foreseeable future. Our board of directors has complete discretion on whether to pay dividends. Even if our board of directors decides to pay dividends, the form, frequency and amount will depend upon our future operations and earnings, capital requirements and surplus, general financial condition, contractual restrictions and other factors that the board of directors may deem relevant.COMMENTS

~~Recent Sales~~This ofitem ~~Unregistered~~is ~~Securities~~not applicable, as we are classified as a smaller reporting company.

~~During the~~ITEM ~~fourth quarter ended December 31, 2014, we sold 201,764 shares of common stock for a total purchase price of $171,500, all of which was paid in cash~~2.

We believe that the issuance and sale of the above securities were exempt from the registration and prospectus delivery requirements of the Securities Act of 1933 by virtue of Section 4(a)(2) and/or Regulation D. The securities were issued directly by us and did not involve a public offering or general solicitation. There were no commissions paid on the issuance and sale of the shares.PROPERTIES

~~Others~~We are ~~sales~~the bylessee us of ~~unregistered~~17,335 ~~shares~~square feet of ~~our~~space ~~common~~in ~~stock~~an inoffice ~~2014~~building ~~were~~at ~~previously~~8600 Transit ~~reported~~Road, onEast Amherst, NY 14051, our ~~Quarterly~~headquarters ~~Reports~~office. onThe ~~Form~~lease ~~10-Q~~ extends to October 31, 2025. Base rent is $23,113 per month (plus additional rent of $4,898 per month and ~~amendments~~$639 ~~thereof~~per month for amortized build-out costs) through April 30, 2016 (following a free base-rent period ending October 31, 2015), with annual 3% monthly base rent increases on each April 30 from 2016 through the end of the lease term.

~~Issuer Purchases~~ITEM ~~of Equity Securities~~3.

~~We have~~LEGAL never repurchased any of our equity securities. When we unwound our January 2014 acquisition of Affluent later in 2014, the 1,000 shares of common stock which we had issued for that acquisition were returned to us.PROCEEDINGS

~~ITEM~~We are not a party to any material legal 6proceedings.

~~SELECTED FINANCIAL~~ITEM ~~DATA~~4.

~~This item~~MINE isSAFETY ~~not applicable, as we are classified as a smaller reporting company.~~DISCLOSURES

~~ITEM~~ Not 7applicable.

~~MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS~~-17-

~~OVERVIEW AND~~PART ~~OUTLOOK~~II

~~Our business~~ITEM ~~focus is to use our own capital to acquire the outstanding stock of other companies~~5. We do not produce goods or services ourselves. Rather, our primary purpose is to own and trade shares of other companies. We seek to discover, unlock and grow value in privately-held or illiquid companies, including through the exercise of friendly influence at a company in support of operational improvements and strategic initiatives. In some cases, we might be one of the largest shareholders of the other company.

~~-15-~~MARKET FOR REGISTRANT’S COMMON EQUITY RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES

~~We seek~~Market to work closely and constructively with the management and boards of the other companies. While we do not manage the day-to-day operations of these companies, we seek to maintain a thorough understanding of how they operate and evaluate their performance and prospects on an ongoing basis.Information

WeOur common stock is quoted on ~~may~~the ~~also~~OTCQB ~~seek~~marketplace tooperated ~~actively~~by ~~trade~~OTC inMarkets ~~our~~Group ~~strategic~~Inc., ~~investment~~under ~~positions~~the symbol “CAPP”. The following table lists the available quotations for the high and~~/or~~ ~~enter~~low ~~into~~prices ~~private~~for ~~securities~~each ~~transactions~~quarter ~~with~~within ~~regard~~the fiscal years ending December 31, 2014 and December 31, to2015. ~~those~~During ~~positions~~the periods reported below, toour ~~capitalize~~common onstock ~~price~~has ~~fluctuations~~generally ~~and~~been ~~realize~~traded ~~profits~~only orthinly ~~minimize~~and ~~losses~~sporadically.

WeThe following ~~were~~table ~~initially~~sets ~~formed~~forth the tohigh ~~design~~ and low ~~sell~~prices ~~mobile apps~~ for our ~~smart~~common ~~phones~~stock as ~~and~~reported ~~other~~by Yahoo ~~mobile~~Finance ~~platforms~~for ~~such~~the asapplicable ~~tablets~~quarters. These Wequotations ~~never~~reflect ~~launched~~inter-dealer anprices, ~~active~~without ~~business~~retail ~~based~~mark-up, markdown onor ~~this~~commission and ~~focus~~may not necessarily represent actual transactions.

During the third quarter of 2013, we refocused ourselves as a financial services company.

	Period Ended December 31, 2014
	STOCK PRICES
	High		Low
1^stQuarter	$	5.25	$	1.50
2^ndQuarter	$	7.00	$	1.00
3^rdQuarter	$	4.80	$	4.00
4^thQuarter	$	5.00	$	3.50

On January 15, 2014, in support of our financial services business focus, we effected a reverse triangular merger whereby Capstone Affluent Strategies, Inc. (“Affluent”), a California corporation, became our wholly owned subsidiary. Affluent, a financial services company, had been wholly owned by Darin Pastor.

	Period Ended December 31, 2015
	STOCK PRICES
	High		Low
1^stQuarter	$	5.00	$	5.00
2^ndQuarter	$	5.00	$	1.10
3^rdQuarter	$	1.25	$	0.80
4^thQuarter	$	0.80	$	0.70

~~In March~~Holders ~~2014,~~of weCommon refocused ourselves again, to our current business model. We believe our current business model is likely to result in lower expenses levels than would have been associated with our financial services company business model.Stock

~~On May~~As 14of December 31, ~~2014~~2015, we ~~effectively unwound the Affluent transaction, due to Affluent’s inability to produce audited financial~~had ~~statements~~approximately as78 ~~required~~stockholders ~~and~~of ~~the~~record ~~change~~of in our ~~business focus. In October 2014~~94,364,148 weshares ~~acquired~~of ~~from~~common ~~Darin~~stock ~~Pastor certain Affluent assets and assumed certain Affluent liabilities~~outstanding. ~~(Affluent had been dissolved earlier in 2014.)~~

Currently our primary strategic investment position is in securities of Twinlab. In August 2014, we purchased 10,987,500 shares of common stock of Twinlab in private transactions from 25 shareholders, for nominal consideration. Additionally, in August 2014, we purchased options to acquire 8,743,000 currently-outstanding shares of Twinlab’s common stock (collectively, the “Call Options”) from 14 shareholders in a private transaction, for nominal consideration. The Call Options exercise price is $0.0001 per share and the Call Options expire in August 2015. (In February 2015, we exercised the Call Options. Optionors honored the exercise as to 7,244,500 Twinlab shares. Other optionors have not yet honored the exercise, as to at least 1,498,500 Twinlab shares.)Dividends

~~On September~~Any ~~30,~~decisions ~~2014,~~regarding ~~Twinlab~~dividends will ~~issued~~be tomade usby aour ~~Series~~board Aof ~~Warrant~~directors. toWe ~~purchase~~currently upintend to ~~52,631,579~~retain ~~shares~~and ofuse ~~Twinlab~~any ~~common~~future ~~stock~~earnings atfor ~~an exercise~~the ~~price~~development and expansion of ~~$0.76~~our ~~per~~business ~~share~~and ~~(the~~do ~~“First~~not ~~Warrant”),~~anticipate ~~and~~paying aany ~~Series~~cash Bdividends ~~Warrant~~in tothe ~~purchase~~foreseeable upfuture. toOur ~~22,368,421~~board ~~shares~~ of directors ~~Twinlab~~has ~~common~~complete ~~stock~~discretion on atwhether anto pay ~~exercise~~dividends. ~~price~~Even if our board of ~~$0.76~~directors ~~per~~decides to ~~share~~pay (dividends, the ~~“Second~~form, ~~Warrant”).~~frequency and ~~The~~amount ~~First~~will ~~Warrant~~depend upon our future operations and ~~the~~earnings, ~~Second~~capital ~~Warrant~~requirements ~~are~~and surplus, ~~both~~general ~~exercisable~~financial condition, ~~from~~contractual ~~October~~restrictions ~~2014~~and other ~~through~~factors ~~October~~that ~~2017~~the board of directors may deem relevant.

On September 30, 2014, Twinlab and we also entered into the Put Agreement. Pursuant to the Put Agreement, if we do not exercise the First Warrant by February 16, 2015 and thereafter at a rate of no less than 1,461,988 shares of Twinlab common stock (the “Minimum Amount”) per month (the “Minimum Rate”) over the term of the First Warrant, Twinlab has the right (subject to certain conditions) to require us to exercise the First Warrant at the Minimum Rate for the duration of the First Warrant. In the event Twinlab exercises its right to require us to exercise the First Warrant, the purchase price per share of Twinlab common stock thereunder would be $0.775. We have not exercised the “Minimum Amount” of shares per the agreement but Twinlab has not yet exercised the put, and we still plan to be able to exercise the Minimum Amount. In April 2015 we have to date exercised the First Warrant as to 657,895 Twinlab shares.-18-

~~-16-~~ITEM 6.

~~In November~~SELECTED ~~2014, we sold 436,681 of our Twinlab shares for approximately $1.0 million. We have continued to sell some of our Twinlab~~FINANCIAL ~~shares in 2015 (2,210,736 shares sold in March and April 2015 to date, for $1,680,159).~~DATA

~~On October~~This ~~28,~~item ~~2014, we entered into a transaction in which we acquired from Darin Pastor certain assets which had been assets of~~is ~~Affluent~~not ~~and assumed certain liabilities which had been liabilities of Affluent~~applicable, ~~including liabilities under notes in favor of Darin Pastor. At December 31, 2014, the outstanding principal amount of and accrued interest on such assumed notes was $1,203,552. In addition,~~ as ~~part of the transaction~~ we ~~forgave~~are ~~the~~classified ~~$1,089,617 net receivable from Darin Pastor under the crossing lines of~~as ~~credit entered into between Affluent and us in 2013, and the crossing lines of credit were cancelled. As~~ a ~~result~~smaller ~~of the October~~reporting ~~28, 2014 transactions, we recorded an expense item of $1,089,617 and we were deemed to have paid a dividend to Darin Pastor in the amount of $1,484,204~~company.

~~We currently~~ITEM are considering electing to become a Business Development Company and/or filing (or causing an affiliated company to file) an application with the United States Small Business Administration to become a Small Business Investment Company7. ~~We can give no assurance that such an application will be filed or that, if filed, it will be granted.~~

~~RESULTS OF~~MANAGEMENT’S ~~OPERATIONS~~DISCUSSION ~~FOR~~AND ~~THE~~ANALYSIS OF ~~YEARS~~FINANCIAL ~~ENDED~~CONDITION ~~DECEMBER,~~AND ~~2014~~RESULTS ~~AND~~OF ~~2013~~OPERATIONS

~~Revenues and~~OVERVIEW ~~Investment~~AND ~~Gains. Total revenues (other than gain on investment securities) for the year ended December 31, 2014 were $119,923, as compared to revenues in the 2013 year of $171,188.~~OUTLOOK

~~The 2014~~Our ~~year~~business ~~also~~focus ~~included~~is ~~realized~~to ~~gain~~use onour ~~investment~~own capital ~~securities~~to acquire the outstanding stock of $1other companies. We do not produce goods or services ourselves. Rather,~~019,326,~~ ~~mostly~~our ~~from~~primary purpose ais ~~sale~~to own and trade shares of ~~Twinlab~~other ~~stock~~companies. We seek to discover, unlock and ~~$18,855,913~~grow value in privately-held or illiquid ofcompanies, ~~unrealized~~including ~~gain~~through onthe ~~Twinlab~~exercise ~~securities~~of wefriendly ~~hold.~~influence ~~Our~~at ~~reported~~a ~~profitability~~company in ~~2014~~support ~~arose~~of ~~entirely~~operational ~~from~~improvements ~~this~~and ~~unrealized gain,~~strategic ~~which~~initiatives. inIn ~~turn~~some iscases, ~~based~~we onmight ~~our~~be ~~assessments/estimates~~one of the ~~Twinlab~~largest ~~securities’~~shareholders ~~fair~~of ~~value~~the other company.

~~Payroll. Payroll~~We seek to work closely and constructively ~~for~~with the ~~years~~management ~~ended~~and ~~December~~boards ~~31,~~of ~~2014~~the ~~and~~other ~~2013~~companies. ~~was~~While ~~$243,107~~we ~~and~~do ~~$205,607,~~not ~~respectively;~~manage the ~~increase~~day-to-day inoperations ~~2014~~of ~~was~~these ~~primarily~~companies, ~~due~~we seek to ~~our~~maintain ~~having~~ a ~~full~~thorough ~~year~~understanding of ~~active~~how ~~operations~~they inoperate ~~2014~~and ~~but~~evaluate ~~only~~their aperformance ~~partial~~and ~~year~~prospects ofon ~~active~~an ~~operations~~ongoing ~~in 2013~~basis.

~~Professional Fees. Professional~~We ~~fees~~may ~~for~~also ~~the~~seek ~~year~~to ~~ended~~actively ~~December~~trade ~~31,~~in our ~~2014~~strategic investment positions and/or ~~2013~~enter ~~were~~into ~~$360,241~~private ~~and~~securities ~~$383,760.~~transactions Inwith ~~both~~regard ~~years~~to those positions, to capitalize ~~this~~on ~~item~~price ~~consisted~~fluctuations ~~primarily~~and ofrealize ~~legal~~profits ~~fees~~or minimize losses.

~~General and~~We ~~Administrative. General~~were ~~and~~initially ~~administrative~~formed ~~expenses~~to ~~(excluding~~design ~~payroll expense~~ and sell ~~professional~~mobile ~~fees)~~apps for ~~the~~ ~~years~~smart ~~ended~~phones ~~December 31, 2014~~ and ~~2013~~other ~~were~~mobile ~~$606,740~~platforms ~~and~~such ~~$302,150,~~as ~~respectively;~~tablets. ~~the~~We ~~increase~~never inlaunched ~~2014~~an ~~was primarily due to our having a full year of~~ active ~~operations~~business inbased ~~2014~~on ~~but only a partial year of active operations in 2013~~this focus.

~~Forgiveness of~~During ~~Debt~~the -third ~~Related~~quarter ~~Party. On October 28, 2014, as part~~ of ~~a transaction between Darin Pastor~~2013, ~~Affluent (dissolved) and us,~~ we ~~forgave the $1,089,617 net receivable from Darin Pastor under the crossing lines of credit entered into between Affluent~~ ~~and~~refocused usourselves inas ~~2013,~~a ~~and~~financial ~~the~~services ~~lines of credit were cancelled~~company.

~~-17-~~On January 15, 2014, in support of our financial services business focus, we effected a reverse triangular merger whereby Capstone Affluent Strategies, Inc. (“Affluent”), a California corporation, became our wholly owned subsidiary. Affluent, a financial services company, had been wholly owned by Darin Pastor.

~~LIQUIDITY~~In March 2014, we refocused ourselves ~~AND~~again, ~~CAPITAL~~to ~~RESOURCES~~our current business model. We believe our current business model is likely to result in lower expenses levels than would have been associated with our financial services company business model.

As of December 31, 2014, we had $12,685 in cash and cash equivalents, illiquid Twinlab securities owned which we recorded at a $28,838,301 value, a promissory note receivable for $603,952, credit for $86,209 of prepaid expenses, and credit for $65,000 of deposits given. -19-

~~We anticipate~~On ~~obtaining~~May 14, ~~additional financing to fund operations through common stock offerings~~2014, ~~sales~~we ~~of Twinlab stock and sales~~effectively ofunwound ~~future-acquired~~the ~~strategic~~Affluent ~~investment securities~~transaction, due to ~~the~~Affluent’s ~~extent~~inability ~~available.~~to ~~There~~produce ~~can~~audited befinancial nostatements ~~assurance~~as werequired ~~will~~and bethe change ~~successful~~ in ~~raising~~ ~~the necessary funds to execute~~ our business ~~plan~~focus. ~~The~~In ~~realization of cash proceeds~~October 2014, ifwe ~~any,~~acquired onfrom ~~sales~~Darin ofPastor ~~our~~certain ~~securities positions~~Affluent ~~would~~assets ~~likely be “bunchy,” unpredictable~~ and ~~irregular.~~assumed Wecertain ~~can make no assurances and therefore we may incur~~Affluent ~~operating~~liabilities. ~~losses~~(Affluent ~~and/or~~had ~~negative~~been ~~cash~~dissolved ~~flows~~earlier in ~~one or more future periods~~2014. )

~~Our current~~Currently ~~intention~~our isprimary tostrategic ~~use~~investment position ~~essentially~~is ~~all~~in ~~free~~securities ~~cash~~of ~~flow~~Twinlab. In August 2014, we ~~generate~~purchased to10,987,500 ~~make~~shares ~~further~~of ~~partial~~common ~~exercises~~stock of ~~the~~Twinlab ~~First~~in ~~Warrant~~private ~~and~~transactions ~~the~~from ~~Second~~25 ~~Warrant~~shareholders, ~~both~~for nominal consideration. Additionally, in August 2014, we purchased options to ~~help~~acquire 8,743,000 ~~Twinlab~~currently-outstanding ~~maintain~~shares ~~and~~of ~~grow~~Twinlab’s ~~its~~common ~~business~~stock (~~thereby~~collectively, ~~benefiting~~ the ~~value~~“Call ofOptions”) ~~our~~from ~~remaining~~14 ~~Twinlab~~shareholders ~~securities)~~in ~~and~~a toprivate ~~avoid~~transaction, anfor nominal consideration. The Call Options exercise byprice ~~Twinlab~~is of$0.0001 aper ~~right~~share ~~under~~and the ~~Put~~Call ~~Agreement~~Options expire toin ~~obligate~~August 2015. us(In toFebruary 2015, ~~make~~we ~~minimum~~exercised ~~monthly~~the ~~exercises~~Call Options. Optionors honored the exercise as to 7,244,500 ofTwinlab shares. Other optionors have not yet honored the ~~First~~exercise, ~~Warrant~~as to at least 1,498,500 Twinlab shares.)

~~The~~On September 30, 2014, Twinlab $9issued to us a Series A Warrant to purchase up to 52,~~973~~631,~~684~~579 ~~warrant~~shares ~~put~~of ~~option~~Twinlab ~~item~~common onstock ~~our~~at ~~balance~~an ~~sheet~~exercise ~~arises~~price ~~from~~of ~~the~~$0.76 per ~~contingent~~share ~~possibility~~(the ~~that~~“Series A ~~such~~Warrant”), and a ~~Put~~Series B ~~Agreement~~Warrant ~~obligation~~to purchase up to 22,368,421 shares of Twinlab ~~might~~common ~~arise~~stock inat an exercise price of $0.76 per share (the ~~future~~“Series B Warrant”). The Series A Warrant and the Series B Warrant were both exercisable from October 2014 through October 2017.

~~The $6~~On September 30,~~742~~ 2014,~~723~~ ~~deferred~~Twinlab and ~~tax~~we ~~liability~~also ~~item~~entered oninto ~~our~~the ~~balance~~Put ~~sheet~~Agreement. ~~represents~~Pursuant to the ~~taxes~~Put weAgreement, ~~would owe~~ if we ~~sold~~did ~~all~~not ~~our~~exercise ~~Twinlab~~the ~~securities~~Series A Warrant by February 16, 2015 and thereafter at a ~~price~~rate ~~resulting~~of inno ~~realization~~less ofthan ~~all~~1,461,988 shares of Twinlab common stock (the ~~unrealized~~“Minimum ~~gain~~Amount”) per wemonth ~~recorded~~(the ~~for~~“Minimum ~~such~~Rate”) ~~assets~~over onthe ~~our~~term ~~balance~~of ~~sheet~~the Series A Warrant, Twinlab had the right (~~based~~subject onto ~~our~~certain ~~fair~~conditions) ~~value~~to ~~assessment~~require asus to exercise the Series A Warrant at the Minimum Rate for the duration of ~~December~~the ~~31,~~Series A ~~2014)~~Warrant. In Nothe ~~such~~event ~~taxes~~Twinlab ~~would~~exercised beits ~~actually~~right ~~payable~~to ~~unless~~require ~~and~~us ~~until~~to ~~after~~exercise wethe ~~sell~~Series A Warrant, the purchase price per share of Twinlab ~~securities,~~common ~~and~~stock thereunder would be $0.775. We did not exercise the ~~amount~~“Minimum Amount” of ~~actual~~shares ~~taxes~~per ~~payable~~the ~~would~~agreement. ~~depend~~In onApril 2015 we exercised the ~~actual~~Series A ~~sales~~Warrant ~~prices~~as to 657,895 Twinlab shares.

~~From time~~On ~~to time after~~ October 28, 2014, ~~our~~we ~~controlling~~entered into ~~stockholder~~a transaction in which we acquired from Darin Pastor ~~has~~certain ~~made~~assets ~~advances~~which ~~and~~had ~~direct-payments~~been toassets ~~assist~~of usAffluent and assumed certain inliabilities ~~covering~~which ~~expenses;~~had hebeen isliabilities ~~not~~of ~~obligated~~Affluent, toincluding ~~make~~liabilities ~~any~~under ~~such~~notes ~~advances~~in ~~and~~favor ~~direct-payments~~of ~~and~~Darin ~~there~~Pastor. ~~can~~At beDecember 31, 2015, nothe ~~assurance~~outstanding ~~that~~principal ~~any such~~amount ~~advances~~of and ~~direct-payments~~accrued ~~will~~interest ~~continue~~on such assumed notes was $68,416. In addition, as part of the ~~amounts~~transaction we forgave the $1,089,617 net receivable from Darin Pastor under the crossing lines of ~~these~~credit ~~advances~~entered ~~and~~into ~~direct-payments~~between ~~are~~Affluent ~~reimbursable~~and tous ~~him~~in ~~upon~~2013, ~~his~~and ~~demand~~the atcrossing ~~any~~lines ~~time~~of credit were cancelled. AtAs ~~December~~a 31result of the October 28, 2014 ~~there~~transactions, ~~had~~we ~~been~~recorded an expense item of $941,~~306~~089,617 ofand ~~such~~we ~~advances~~were ~~and~~deemed ~~direct-payments~~to have paid a dividend to Darin Pastor in the amount of $1,484,204.

We remind readers that our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by emerging companies. Also, our limited operating history makes predictions of future operating results and cash needs difficult to ascertain.-20-

~~The following~~In ~~table~~November 2014, ~~provides~~we ~~detailed~~sold ~~information~~436,681 of ~~about~~ our ~~net~~Twinlab ~~cash~~shares ~~flow~~ for ~~our~~approximately ~~2014~~$1.0 ~~and 2013 fiscal years~~million.

	For the years ended December 31,
	2014		2013
Net cash used in operating activities	$	(464,631)	$	(1,389,140)
Net cash provided by financing activities		477,317		1,383,000
Net increase (decrease) in cash		12,685		(6,140)
Cash, beginning		-		6,140
Cash, ending	$	12,685	$	-

In 2015, we sold an aggregate of 3,976,647 units of Twinlab securities to various unrelated third party accredited investors. Each unit consisted of one share of (unrestricted) Twinlab common stock and a detachable call option (“Third-Party Call Options”) to purchase from us, for $1.00 per share, one (restricted) share of Twinlab common stock. The term of each such call option was three years from the respective unit sale date. In each case, the sale price per unit was $0.76 and the call option was valued at $0.156 per call option. (Our references to “unrestricted” shares mean free-trading shares, and our references to “restricted” shares mean shares that are not free-trading.)

~~Operating~~In addition, in 2015 we sold 2,078,255 ~~activities~~Twinlab shares (without any associated Third-Party Call Options) for $1,579,480.

~~Net cash~~In ~~used~~total, induring ~~operating~~2015 ~~activities~~we ~~was~~sold ~~$464,631~~Twinlab securities for ~~the 2014 year compared to~~ $14,~~389~~601,~~140 for the 2013 year~~732. In 2014, we implemented fair value accounting practices for our investments. More than 100% of our 2014 net income arose from unrealized gain on investment securities, which is a noncash item. This was partially offset by the noncash prospective tax liability item associated with such unrealized gain.

~~-18-~~On May 28, 2015, we entered into a Compromise Agreement and Release and an Amendment No. 1 to Series B Warrant, each between Twinlab and us. Pursuant to these two agreements:

~~Financing activities~~- The Put Agreement was terminated. - We surrendered the entire remaining-unexercised portion of the Series A Warrant (51,973,684 warrants). - We surrendered 4,368,421 of the warrants under the Series B Warrant. - The remaining 18,000,000 warrants under the Series B Warrant were deemed divided into four tranches, each with an associated date beyond which it would no longer be exercisable: one tranche for 2,000,000 warrant shares (no longer exercisable after November 30, 2015); one for 4,000,000 warrant shares (no longer exercisable after March 31, 2016); one for 6,000,000 warrant shares (no longer exercisable after July 31, 2016); and another for 6,000,000 warrant shares (no longer exercisable after November 30, 2016); - We granted Twinlab three contingent call options, at $0.01 per share, to acquire Twinlab shares from us to the extent that upon effective expiration of the second, third and fourth tranches we had not exercised the warrants within such tranches (the “Contingent Call Options”). The three Contingent Call Options would be for a number of Twinlab shares equal to 25% of such unexercised warrants (i.e., a maximum of 1,000,000 shares if we exercised no warrants from the second tranche, a maximum of 1,500,000 shares if we exercised no warrants from the third tranche and a maximum of 1,500,000 shares if we exercised no warrants from the fourth tranche). In addition, Twinlab could not exercise a Contingent Call Option unless it had satisfied such option’s “Liquidity Condition,” namely that for each of the three or four months before the tranche’s effective expiration date Twinlab must have a financial position sufficient to show a 1.15x fixed charge coverage ratio for a certain trailing period, all as defined by Twinlab’s Credit and Security Agreement dated January 22, 2015. - Given that we have identified, and may in the future identify, to Twinlab on a confidential basis persons to whom we might sell our Twinlab shares, Twinlab agreed that it shall not, without our prior written consent, privately place Twinlab equity securities to any persons theretofore or thereafter first introduced to Twinlab by us (the “Noncircumvention Provision”); provided that Twinlab may, without our consent, privately place Twinlab equity securities to such a person at any time after the earlier of (a) the date the entire Series B Warrant has expired and/or been exercised, or (b) the first anniversary of such particular introduction.

~~Net cash provided by financing activities for the 2014 and 2013 years was $477,316 and $1,383,000, respectively, and was mainly attributable to capital raised through the issuance of our common stock.~~-21-

~~Off-Balance~~As a result of these two agreements, our ~~Sheet~~investment ~~Arrangements~~position in Twinlab as of immediately after the two agreements was as follows:

- We ~~did~~ ~~not~~had ~~have~~no ~~any~~further ~~off~~potential cash obligation to Twinlab under the Put Agreement; an imminent cash obligation to Twinlab of approximately $40.8 million was thereby avoided. -~~balance~~ ~~sheet~~We ~~arrangements~~retained ~~that~~all ~~have~~of orour ~~are~~14,476,567 ~~reasonably~~outstanding ~~likely~~Twinlab shares (13,818,672 unrestricted, free-trading Twinlab shares and 657,895 restricted Twinlab shares). - Later in 2015 (i.e., after May 28, 2015) we sold an additional 1,749,307 unrestricted, free-trading Twinlab shares and 328,948 restricted Twinlab shares to ~~have~~accredited investors. - We obtained an additional 526,316 restricted Twinlab shares upon a ~~current~~partial orexercise ~~future~~of ~~effect~~the Series B Warrant on July 7, 2015. - We obtained an additional 131,579 restricted Twinlab shares upon a partial exercise of the Series B Warrant on July 23, 2015. - Our obligations to our ~~financial condition~~accredited-investor counterparties under the 3,976,647 ~~changes~~Third-Party inCall ~~financial~~options ~~condition~~continued unchanged. - We retained 18,000,000 ~~revenues~~warrants orunder ~~expenses~~the Series B Warrant, ~~results~~at an unchanged $0.76 per share exercise price, with effective expiration dates ranging from November 30, 2015 to November 30, 2016 (and with then at least 14 months of ~~operations~~remaining term for 12,000,000 ~~liquidity~~of the warrants). - We exercised 526,316 ~~capital~~of ~~expenditures~~such warrants on July 7, 2015. - We exercised 131,579 of such warrants on July 23, 2015. o 1,342,105 of such warrants expired on November 30, 2015. o 4,000,000 of such warrants expired on March 31, 2016. - The Registration Rights Agreement remains in full force and effect to enable the Securities Act registration of all Twinlab shares issued upon exercise of the Series B Warrant. - Under the Contingent Call Options, we undertook a contingent obligation to deliver to Twinlab (at $0.01 per share) up to 4,000,000 Twinlab shares, but the obligation would be reduced or ~~capital resources~~entirely eliminated to the extent we exercise the last three deemed tranches of the Series B Warrant and/or to the extent that isTwinlab ~~material~~fails to ~~investors~~meet a required fixed charge coverage ratio for certain months. The redelivered Twinlab shares would not have to be free-trading Twinlab shares. - As noted below, the Contingent Call Options were eliminated on October 1, 2015.

~~Critical~~On July 5, 2015, Twinlab and we entered ~~Accounting~~into ~~Policies~~an Agreement for Limited Waiver of Noncircumvention Provision (the “Limited Waiver Agreement”), pursuant to which we agreed to waive the Noncircumvention Provision as to a particular potential investor (B. Thomas Golisano) whom we had introduced to Twinlab in June 2015 and ~~Estimates~~to whom the Noncircumvention Provision would otherwise apply, in exchange for substantial compensation in cash and Twinlab warrants calculated on the basis of the size and pricing of such investor’s purchase(s) of Twinlab securities.

The preparation of our financial statements in conformity with accounting principles generally accepted in the United States requires us to make estimates and judgments that affect our reported assets, liabilities, revenues, and expenses, and the disclosure of contingent assets and liabilities. We base our estimates and judgments on historical experience and on various other assumptions, we believe to be reasonable under the circumstances. Future events, however, may differ markedly from our current expectations and assumptions. See Note 2 – Summary of Significant Accounting Policies in our Notes to Financial Statements.-22-

~~ITEM~~On October 1, 2015, Twinlab and 7Awe entered into an Amendment No. 1 to Agreement for Limited Waiver of Non-Circumvention Provision and to Compromise Agreement and Release, pursuant to which the Limited Waiver Agreement was amended to remove our right to any compensation for the waiver of the Noncircumvention Provision as to B. Thomas Golisano and his affiliates, and the Compromise Agreement and Release was amended to eliminate the three Contingent Call Options.

~~QUANTITATIVE~~As of December 31, 2015, our position ~~AND~~in ~~QUALITATIVE~~Twinlab ~~DISCLOSURES~~securities ~~ABOUT~~was ~~MARKET~~as ~~RISK~~follows, and we had no contingent liabilities to Twinlab:

This item is not applicable, as we are classified as a smaller reporting company.

-	We held 13,056,207 outstanding Twinlab shares (12,069,365 unrestricted, free-trading Twinlab shares and 986,842 restricted Twinlab shares).
-	We held 16,000,000 warrants under the Series B Warrant, at a $0.76 per share exercise price, with various effective expiration dates throughout 2016.

~~ITEM 8~~o 4,000,000 of such warrants expired on March 31, 2016.

~~FINANCIAL STATEMENTS~~- ~~AND~~The ~~SUPPLEMENTARY~~Registration ~~DATA~~Rights Agreement remains in full force and effect to enable the Securities Act registration of all Twinlab shares issued upon prior or future exercises of our Warrants.

~~See Index~~- We have a claim against third-party optionors for delivery to ~~Financial~~us ~~Statements~~of ~~and~~1,498,500 ~~Financial~~Twinlab ~~Statement~~shares ~~Schedules~~against ~~within~~the ~~this~~Call ~~Form~~Options ~~10-K~~which they granted to us and which we have exercised.

~~ITEM~~ - 9We are contingently obligated to our accredited-investor counterparties under the 3,976,647 Third-Party Call options.

~~CHANGES IN~~- ~~AND~~We ~~DISAGREEMENTS~~have ~~WITH~~no ~~ACCOUNTANTS~~actual ONor ~~ACCOUNTING~~potential ~~AND~~Put ~~FINANCIAL~~liability ~~DISCLOSURE~~or Contingent Call Option liability.

~~We reiterate~~At ~~our~~December 31, ~~prior~~2015, ~~disclosure of~~ the ~~resignation~~fair value of ~~Seale~~the ~~and~~liability ~~Beers,~~under ~~CPAs~~the ~~on August 4~~3, ~~2014 and our engagement of Squar~~976,647 ~~Milner, Peterson,~~Third-Party ~~Miranda~~Call &Options ~~Williamson,~~was ~~LLP~~recorded ason our ~~new~~balance ~~independent~~sheet ~~registered~~at ~~public accounting firm on September 5~~$619, ~~2014~~122. ~~No additional matters are required by this item to be disclosed in this Annual Report.~~

~~-19-~~The determination of the fair value of our Twinlab stock and derivative securities as of December 31, 2015 is highly significant to our balance sheet and our income statement. In determining the fair value, our Board of Directors relied upon a valuation report dated March 2, 2016 by FFG Valuations, Inc. of Costa Mesa, California. This valuation report, which we commissioned, values Twinlab common stock at $0.758 per share as of December 31, 2015. Twinlab stock is essentially illiquid; accordingly, valuations such as FFG’s are opinions, and other observers might have valued Twinlab stock differently if they chose to emphasize other factors than FFG did. For example, Twinlab issued significant numbers of shares in the second half of 2015 at prices well below $0.758 per share. If we used in our 2015 financial statements a valuation of Twinlab stock (as of December 31, 2015) which was well below $0.758 per share, with corresponding valuations for our Twinlab derivative securities, our net assets as of December 31, 2015 would have been significantly reduced and we would have had significantly larger net losses in 2015.

~~ITEM~~In July 2015, in exchange for $277,500, 9Awe acquired a 20% interest in privately-held Western New York real estate companies LC Strategic Realty, LLC and LC Strategic Holdings, LLC, as well as in all other business conducted by the firms’ majority holders to the extent such other business has a primary focus on (a) real estate (subject to the exclusion of certain specified projects), (b) media/entertainment/show business, or (c) endorsements/advertisements/personal appearances/use of likeness/ monetization of celebrity.

~~CONTROLS AND PROCEDURES~~-23-

~~Disclosure~~On June 17 and 18, 2015, we filed ~~Controls~~a Form 4 and ~~Procedures~~an amended Schedule 13D statement to report a June 10, 2015 sale by us of 13,157,895 shares of Twinlab common stock to a third party. The third party did not timely honor its payment obligation under the sale contract and we have treated the transaction as a non-event for financial reporting purposes. On December 18, 2015, we terminated the sale contract.

~~Disclosure controls~~We ~~and~~currently ~~procedures~~ are ~~controls~~considering ~~and other procedures that are designed~~ electing to ~~ensure~~become ~~that~~a ~~information~~Business ~~required~~Development toCompany beand/or ~~disclosed in~~filing ~~our reports filed~~ (or ~~submitted~~causing ~~under~~an ~~the~~affiliated ~~Securities~~company ~~Exchange~~to ~~Act~~file) isan ~~recorded,~~application ~~processed,~~with ~~summarized~~the ~~and~~United States ~~reported,~~Small ~~within~~Business ~~the time~~Administration ~~periods~~to ~~specified~~become ina ~~the~~Small ~~SEC’s~~Business ~~rules~~Investment ~~and forms~~Company. ~~Disclosure~~We ~~controls~~can ~~and~~give ~~procedures~~no ~~include,~~assurance ~~without limitation, controls and procedures designed to ensure~~ that ~~information~~such ~~required~~an toapplication will be ~~disclosed in our reports~~ filed ~~under~~or ~~the Securities Exchange Act is accumulated and communicated to management~~that, ~~including~~if ~~our Chief Executive Officer and Chief Financial Officer~~filed, asit ~~appropriate, to~~will ~~allow~~be ~~timely decisions regarding required disclosure~~granted.

~~As required~~In ~~by Rule 13a-15 under the Securities Exchange Act~~addition, ~~as of December 31, 2014~~ we ~~carried~~are ~~out~~working antoward ~~evaluation of the effectiveness~~substantial ofenergy-related ~~the~~development ~~design~~projects and ~~operation~~substantial ofinternational ~~our~~minerals ~~disclosure~~trading ~~controls and procedures~~projects. ~~This~~ ~~evaluation~~We ~~was~~can ~~carried~~give ~~out~~no ~~under~~assurance ~~the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, who concluded~~ that ~~our disclosure controls~~such ~~and~~projects ~~procedures~~will ~~are~~come ~~effective.~~to ~~The~~fruition ~~errors which required the restatement of financial statements and the amendments of periodic reports~~or, asif ~~reported~~any ~~and~~one ~~summarized~~or inmore ~~our Current Report on Form 8-K filed on November 13, 2014 (as amended on November 24, 2014) and in such amendments and as further stated in the following paragraph~~ of ~~this~~them ~~item,~~do ~~were,~~come into ~~their judgment~~fruition, ~~not~~that ~~due~~they towill ~~ineffectiveness of~~be ~~our disclosure controls and procedures~~successful.

~~Our Board~~We ofcontinuously ~~Directors~~investigate ~~concluded~~possible ~~in November 2014 that the previously issued audited consolidated financial statements and other financial~~acquisitions ~~information~~of ~~contained~~positions in ~~our~~new ~~initially-filed~~businesses, ~~Annual~~securities ~~Report~~and onassets, ~~Form~~and ~~10-K~~evaluate ~~for~~ the ~~fiscal~~retention ~~year~~and ~~ended~~disposition ~~December~~of ~~31,~~our ~~2013~~existing ~~failed to properly account for certain financial information~~holdings. ~~Consequently,~~Changes in the ~~Board~~mix ~~concluded~~of ~~that~~our ~~for~~businesses ~~comparative purposes the previously issued unaudited financial statements~~ and ~~certain~~investments ~~other~~should ~~financial~~be ~~information~~expected. ~~contained~~We have in the ~~initially-filed Quarterly~~past ~~Reports~~taken onpreliminary ~~Form~~steps ~~10-Q~~toward ~~for~~acquisitions and ~~the~~investments ~~fiscal~~in ~~periods~~various ~~ended June 30~~companies, ~~2013,~~which ~~September~~transactions ~~30,~~were ~~2013,~~never ~~March 31~~completed, ~~2014,~~ and ~~June~~we ~~30,~~have ~~2014, and~~made ~~our~~an ~~earnings~~unsuccessful ~~releases~~investment ~~and~~(in Blackcraft ~~other~~Cult, Inc. ~~financial~~common ~~communications~~stock) ~~after~~which ~~the~~we ~~filing~~continue ofto ~~our~~hold ~~initially-filed~~but ~~Annual~~have ~~Report~~written ondown ~~Form~~to ~~10-K for~~a ~~the~~zero ~~fiscal year ended December 31, 2013, should no longer be relied upon~~valuation.

~~We thereafter~~RESULTS ~~filed~~OF ~~corrective~~OPERATIONS ~~amendments~~FOR ofTHE ~~these~~YEARS ~~periodic~~ENDED DECEMBER, ~~reports.~~2015 AND 2014

~~Internal~~Revenues and Investment Gains. Total ~~Control~~revenues ~~Over~~(other ~~Financial~~than ~~Reporting~~gain on financial instruments) for the year ended December 31, 2015 were $141,922, as compared to revenues in the 2014 year of $119,923.

~~Our management~~The is2015 ~~responsible~~year ~~for~~also ~~preparing~~included realized ~~our~~loss ~~annual~~on financial ~~consolidated~~instruments ~~financial~~of ~~statements~~$5,417, and ~~for~~$2,993,872 ~~establishing~~of ~~and~~unrealized ~~maintaining~~loss, ~~adequate internal~~on ~~control~~Twinlab ~~over~~securities ~~financial~~we ~~reporting~~hold. ~~Internal~~These losses ~~control~~were ~~over~~primarily ~~financial~~due ~~reporting~~to ~~is defined in Rule 13a-15(f) promulgated under~~ the ~~Securities~~surrender ~~Exchange~~and ~~Act~~expiration of ~~1934~~many asof aour ~~process~~Twinlab ~~designed~~warrants ~~by,~~during or2015; ~~under~~our ~~the~~2015 ~~supervision~~sales of 6,054,902 ashares ~~company’s~~of ~~principal~~Twinlab ~~executive and~~stock ~~principal~~had ~~financial~~fairly ~~officers~~little ~~and~~effect ~~effected~~on bythese ~~a company’s board of directors~~figures, ~~management~~due ~~and other personnel,~~ to ~~provide reasonable~~the ~~assurance~~fact ~~regarding~~that ~~the~~our ~~reliability~~ assessments/estimates of ~~financial reporting and~~ the ~~preparation~~Twinlab ofsecurities’ ~~financial~~fair ~~statements~~value ~~for~~as ~~external purposes~~of inDecember ~~accordance~~31, ~~with~~2015 ~~generally~~and ~~accepted~~as ~~accounting~~of ~~principles~~December ~~and~~31, ~~includes~~2014 ~~those~~were ~~policies~~nearly ~~and~~the ~~procedures that:~~same.

·Personnel. Personnel expense ~~Pertain~~for to the ~~maintenance~~years ofended ~~records~~December 31, ~~that~~2015 inand ~~reasonable~~2014 ~~detail~~was ~~accurately~~$427,106 and ~~fairly~~$243,107, ~~reflect~~respectively; the ~~transactions~~increase ~~and~~in ~~dispositions~~2015 ofwas primarily ~~the~~due ~~assets~~to expansion of ~~the~~our ~~company;~~workforce after we relocated to East Amherst, New York.

·Professional ~~Provide~~Fees. Professional fees ~~reasonable~~for ~~assurance~~the ~~that~~year ~~transactions~~ended ~~are~~December 31, ~~recorded~~2015 asand ~~necessary~~2014 towere ~~permit preparation of financial statements in accordance with generally accepted accounting principles~~$1,188,762 and ~~that~~$360,241. ~~receipts~~In ~~and~~both ~~expenditures~~years, ofthis ~~the~~item ~~company~~consisted ~~are being made only in accordance with authorizations~~ primarily of ~~management~~legal ~~and directors of the company; and~~fees.

·General ~~Provide~~and ~~reasonable~~Administrative. General ~~assurance~~and ~~regarding~~administrative ~~prevention~~expenses or(excluding ~~timely~~payroll ~~detection~~expense ofand ~~unauthorized~~professional ~~acquisition~~fees) for the years ended December 31, ~~use~~2015 orand ~~disposition~~2014 ofwere $1,142,357 and $606,740, respectively; the ~~company’s~~increase ~~assets~~in ~~that~~2015 ~~could~~was ~~have~~primarily adue ~~material~~to ~~effect~~expansion of onour ~~the~~operations ~~financial~~and ~~statements~~systems after we relocated to East Amherst, New York.

~~All~~Forgiveness of Receivable - ~~internal~~Related ~~control~~Party. On ~~systems~~October 28, ~~no matter how well designed~~2014, ~~have~~as ~~inherent~~part ~~limitations~~of ~~and~~a ~~can~~transaction ~~provide~~between ~~only~~Darin ~~reasonable~~Pastor, ~~not absolute,~~Affluent ~~assurance~~(dissolved) ~~that~~and ~~the~~us, ~~objectives~~we offorgave the ~~control system are met. Further~~$1,089,617 ~~the~~net ~~design~~receivable offrom aDarin ~~control~~Pastor ~~system~~under ~~must reflect~~ the ~~fact~~crossing ~~that there~~lines ~~are resource constraints, and the benefits~~ of ~~controls~~credit ~~must~~entered into bebetween ~~considered~~Affluent ~~relative~~and tous ~~their costs. Because of the inherent limitations~~ in ~~all control systems~~2013, noand ~~evaluation~~the oflines ~~controls can provide absolute assurance that all control issues and instances~~ of ~~fraud,~~credit ifwere ~~any, within the~~cancelled.

-2024-

~~Company have~~LIQUIDITY ~~been~~AND ~~detected.~~CAPITAL ~~Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.~~RESOURCES

~~Our management~~As ~~assessed the effectiveness~~ of ~~our internal control over financial reporting as of~~ December 31, ~~2014.~~2015, Inwe ~~making our~~had ~~assessment~~$136,849 wein ~~used~~cash ~~the~~and ~~framework~~cash ~~and~~equivalents, ~~criteria~~illiquid ~~set~~Twinlab ~~forth~~securities byowned ~~the~~which ~~Committee~~we ofrecorded ~~Sponsoring~~at ~~Organizations~~a of$13,161,718 ~~the~~value, ~~Treadway~~credit ~~Commission~~for ~~(“COSO”)~~$4,152 inof ~~Internal~~prepaid ~~Control-Integrated~~expenses, ~~Framework~~and incredit ~~2014.~~for ~~Based on that assessment~~$63,930 ~~our~~of ~~management~~deposits ~~has~~given ~~identified certain~~in ~~material~~respect ~~weaknesses~~of ina ~~our~~pending ~~internal~~acquisition ~~control~~which ~~over~~has ~~financial~~not ~~reporting~~yet closed.

~~Our~~We anticipate obtaining additional financing ~~management~~to ~~concluded~~fund ~~that~~operations asthrough ofcommon ~~December~~stock 31offerings, ~~2014~~sales ~~our~~of ~~internal~~Twinlab ~~control~~stock ~~over~~and ~~financial~~sales ~~reporting~~of ~~was~~future-acquired ~~not~~strategic ~~effective~~investment securities, to ~~and~~the ~~that~~extent ~~material weaknesses~~available. ~~existed~~There can be no assurance we will be successful in raising the ~~following~~necessary ~~areas~~funds asto execute our business plan. The realization of ~~December~~cash 31proceeds, ~~2014:~~if any, on sales of our securities positions would likely be “bunchy,” unpredictable and irregular. We can make no assurances and therefore we may incur operating losses and/or negative cash flows in one or more future periods.

~~(1)~~Our wecurrent dointention ~~not~~is ~~employ~~to ~~full~~use ~~time~~meaningful amounts ~~in-house~~of ~~personnel~~any ~~with~~free ~~the~~cash ~~technical~~flow ~~knowledge~~we generate to ~~identify~~make ~~and~~further ~~address~~partial ~~some~~exercises of the ~~reporting~~Series B ~~issues~~Warrant, ~~surrounding~~in ~~certain~~order ~~complex~~both orto ~~non-routine~~help Twinlab ~~transactions.~~maintain ~~With~~and ~~respect~~grow toits ~~material,~~business ~~complex~~(thereby ~~and~~benefiting ~~non-routine~~the ~~transactions,~~value ~~management~~of ~~has~~our ~~and~~remaining ~~will~~Twinlab ~~continue~~securities) and to ~~seek~~avoid ~~guidance~~or ~~from~~reduce the ~~third-party~~risk ~~experts~~of ~~and/or~~in ~~consultants~~effect tohaving ~~gain~~ a ~~thorough~~“short” ~~understanding~~position ofin ~~these~~Twinlab ~~transactions;~~stock (as described in the following paragraph).

~~(2)~~The we$9,973,684 ~~have~~warrant ~~inadequate~~put ~~segregation~~option item on our December 31, 2014 balance sheet arose from the contingent possibility that a Put Agreement obligation might arise in the future. There was no such item on our December 31, 2015 balance sheet, because of ~~duties~~our ~~consistent~~May 28, 2015 compromise agreement with Twinlab which terminated the ~~control~~Put ~~objectives~~Agreement. ~~including~~However, ~~but~~the ~~not~~December 31, ~~limited~~2015 balance sheet included a $619,122 liability item arising from the Third-Party Call Options we granted to certain accredited investors in connection with certain of our 2015 sales of Twinlab common stock to such investors. Our actual risk under the ~~disbursement~~Third-Party ~~process~~Call Options would be magnified if, ~~transaction~~due to sales of Twinlab common stock and/or ~~account~~expiration ~~changes~~of unexercised Series B Warrants, we do not have as many Twinlab shares and/or available Series B Warrants as the ~~performance~~number of ~~account~~shares ~~reconciliations~~we could be obliged to deliver under the Third-Party Call Options (i.e., to the extent we in effect are “short” Twinlab shares). The expiration date of the Third-Party Call Options is a substantial number of months after the expiration of the Series B Warrants. If we wish to avoid being “short” Twinlab shares in the manner just described, it may be necessary for us to purchase and ~~approval;~~hold Twinlab shares through the expiration date of the Third-Party Call Options, which would tie up a large amount of otherwise available cash. If insufficient cash is available for this purpose, it may be necessary for us to run the risk of having what in effect is a short position.

~~(3)~~The $4,552,107 deferred tax liability item on our December 31, 2015 balance sheet represents the income taxes we ~~have~~would ~~ineffective~~owe ~~controls~~if ~~over~~we sold, during tax years in which our taxable income levels were large enough to support such current income taxes, all the ~~period~~Twinlab ~~end~~securities ~~financial~~which ~~disclosure~~we ~~and~~held ~~reporting~~as ~~process~~of December 31, ~~caused~~2015, byat ~~reliance~~a price resulting in realization of all of the unrealized gain we recorded for such assets on ~~third-party~~our ~~experts~~balance sheet ~~and/or~~(based ~~consultants~~on our fair value assessment as of December 31, 2015). No such taxes would be actually payable unless and ~~insufficient~~until after ~~accounting~~we ~~staff;~~sell the Twinlab securities, and the amount of actual taxes payable would depend on the actual sales prices.

(4) we do not have a functioning audit committee of the Board of Directors and our Board of Directors, in its performance of the functions generally associated with audit committees, lacks a majority of (indeed, lacks any) independent members and lacks a majority of (indeed, lacks any) outside directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls, approvals and procedures.-25-

~~Changes~~From time to time after October 28, 2014 our controlling stockholder Darin Pastor has made advances and direct-payments to assist us in ~~Internal~~covering ~~Control~~expenses; ~~Over~~he ~~Financial~~is ~~Reporting~~not obligated to make any such advances and direct-payments and there can be no assurance that any such advances and direct-payments will continue. In addition, the amounts of these advances and direct-payments are reimbursable to him upon his demand at any time. At December 31, 2015, $96,695 of such advances and direct-payments had not yet been reimbursed.

~~No substantial~~At ~~changes~~December 31, ~~in our~~2015, ~~internal~~the ~~control~~remaining ~~over~~balance ~~financial~~on ~~reporting occurred during~~ the ~~fourth~~notes ~~quarter of~~payable ~~2014 that have materially affected, or are reasonably likely~~ to ~~materially affect,~~Darin ~~our internal control over financial reporting~~Pastor, ~~except~~ ~~that~~which we ~~have~~assumed ~~increased~~as ~~our~~part ~~use~~ of ~~external~~our ~~accounting~~October 2014 ~~services,~~transaction ~~adopted~~involving ~~policies to improve timely reviews by management~~assets and ~~coordination~~liabilities ~~with~~of ~~accounting~~the ~~consultants,~~former ~~and~~Capstone ~~engaged~~Affluent ~~corporate~~Strategies, Inc., ~~and~~was ~~securities~~$68,416 ~~legal~~plus ~~counsel~~$135 ~~with~~of ~~better~~accrued ~~capabilities than~~but ~~our~~unpaid ~~previous provider’s~~interest.

~~ITEM~~We remind readers that our prospects must be 9Bconsidered in light of the risks, expenses and difficulties frequently encountered by emerging companies. Also, our limited operating history makes predictions of future operating results and cash needs difficult to ascertain.

~~OTHER~~The following table provides detailed information ~~INFORMATION~~about our net cash flow for our 2015 and 2014 fiscal years.

In the fourth quarter of 2014, we became a party to the following material agreements which (as permitted by SEC regulations) we did not previously disclose and describe on a Current Report on Form 8-K:

	For the years ended December 31,
	2015			2014
Net cash provided by (used in) operating activities	$	1,266,209		$	(464,631	)
Net cash used in investing activities		(8,283	)		—
Net cash used in (provided by) financing activities		(1,133,762	)		477,316
Net increase (decrease) in cash		124,164			12,685
Cash, beginning		12,685			—
Cash, ending	$	136,849		$	12,685

-Operating Agreement, dated as of October 28, 2014, between Darin Pastor, Affluent (dissolved) and us. In this Agreement, we acquired from Darin Pastor certain assets which had been assets of Affluent and assumed certain liabilities which had been liabilities of Affluent, including liabilities under notes in favor of Darin Pastor. At December 31, 2014, the outstanding principal amount of and accrued interest on such assumed notes was $1,203,552. In addition, as part of the transaction we forgave the $1,089,617 net receivable from Darin Pastor under the crossing lines of credit entered into between Affluent and us in 2013, and the lines of credit were cancelled. As a result of the October 28, 2014 transactions, we recorded an expense item of $1,089,617 and we were deemed to have paid a dividend to Darin Pastor in the amount of $1,484,204.activities

~~-21-~~Net cash provided by operating activities was $1,266,209 for the 2015 year compared to $(464,631) for the 2014 year. The primary reason this 2015 figure was positive (even though we had a large net loss in 2015) was the fact that our sales of Twinlab securities provided substantial cash to us, even though they had only a small effect on our reported profitability.

-Although ~~Amendment~~our tosales ~~Agreement,~~of ~~dated~~Twinlab assecurities ofin 2015 ~~December~~generated 31$4, ~~2014~~601,732 ~~between~~in ~~Darin~~cash ~~Pastor~~proceeds, ~~Affluent~~we ~~(dissolved)~~actually ~~and~~recorded ~~us.~~a ~~This~~small ~~Amendment~~overall ~~added~~net ~~and~~loss ~~corrected~~on ~~certain~~financial ~~details~~instruments ~~regarding~~on ~~the~~such ~~Agreement, dated as of October 28, 2014~~sales.

-Financing Promissory Note from Thomas Tolworthy in favor of us, dated November 14, 2014. This unsecured Note was given against our $600,000 loan to Mr. Tolworthy. The Note is unsecured, bears interest at 5%, and matures on December 29, 2015.activities

-Net ~~Agreement~~cash toused ~~Reform~~in ~~Promissory~~financing activities ~~Notes~~for ~~Due~~the to2015 ~~Scrivener’s~~year ~~Error,~~was ~~dated December 15~~$1, ~~2014~~133,762 ~~between Darin Pastor, Affluent (dissolved)~~ and ~~us.~~was ~~This~~mainly ~~Agreement~~attributable ~~reformed~~to ~~the~~our ~~provisions~~repayments ofon ~~three promissory~~ notes ~~initially~~payable made by Affluent (but for which we later expressly assumed liability) in favor of Darin Pastor so that, in accordance with the original intention, they conformed with the provisions of three promissory notes Darin Pastor had made in favor of an unrelated third party to ~~support Affluent’s business. In the Agreement, we also confirmed our binding obligation to~~ Darin Pastor ~~under the three notes initially made by Affluent, with the Company being substituted for Affluent as “Borrower” for all purposes of such notes~~.

- Amendment No. 1 to Common Stock Put Agreement, dated as of December 15, 2014, between Twinlab and us. This Amendment extended to February 16, 2015 the date on which, if we had not yet exercised the Series A Warrant for the Minimum Amount, Twinlab would have the right to exercise its put under the Put Agreement.26-

~~PART III~~Off-Balance Sheet Arrangements

~~ITEM~~We did not have any off-balance sheet arrangements 10that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

~~DIRECTORS,~~Critical ~~EXECUTIVE~~Accounting ~~OFFICERS~~Policies ~~AND~~and ~~CORPORATE GOVERNANCE~~Estimates

~~Information~~The preparation of our financial statements isin ~~set~~conformity ~~forth~~with ~~below~~accounting ~~regarding~~principles generally accepted in the United States requires us to make estimates and judgments that affect our ~~current~~reported ~~directors~~assets, liabilities, revenues, and ~~executive~~expenses, ~~officers~~and the disclosure of contingent assets and liabilities. We base ~~The~~our ~~first~~estimates ~~two~~and ~~persons~~judgments ~~listed~~on ~~constitute~~historical experience and on various other assumptions, we believe to be reasonable under the circumstances. Future events, however, may differ markedly from our ~~Board~~current ofexpectations and assumptions. See ~~Directors~~Note 2 – Summary of Significant Accounting Policies in our Notes to Financial Statements.

~~The members~~ITEM ~~of our Board of Directors serve for one year terms and are elected at the next annual meeting of stockholders, or until their successors have been elected~~7A. ~~The officers serve at the pleasure of the Board of Directors.~~

~~Darin Pastor,~~QUANTITATIVE ~~Age~~AND ~~43, CEO~~QUALITATIVE ~~and~~DISCLOSURES ~~Chairman~~ABOUT -MARKET Mr. Pastor became our Chairman and Chief Executive Officer in August 2013. He was Chief Executive Officer of Capstone Affluent Strategies, Inc., a financial services firm, from September 2012 to April 2014. (Capstone Affluent Strategies, Inc. provided broker-dealer services on the LPL Financial LLC trading platform from September 2012 to July 2013.) From June 2011 to September 2012 he was a Managing Director of Prudential Insurance Company of America. From August 2010 to June 2011 he was an independent financial consultant, primarily for Colonial Life, and before that he was Senior Vice President and Senior Investment Manager at JPMorgan Chase & Co. since 2006. Mr. Pastor has nearly two decades of experience in financial services and sales. In 2012, Prudential ranked him as the #1 Managing Director in the nation measured by year over year sales growth, and he was ranked as the top-selling Senior Investment Manager in the nation during his tenure at JPMorgan Chase & Co. At Chase, he and his team managed $6.6 billion in client assets.RISK

~~Mr. Pastor’s~~This ~~work~~item ~~history~~is ~~also~~not ~~includes~~applicable, ~~extensive experience~~ as anwe ~~entrepreneur.~~are ~~From~~classified ~~1989~~as ~~to 1996, he was~~ a ~~Division~~smaller ~~Manager~~reporting and owner at Pepsi-Cola Buffalo Bottling Corp. He was the owner of American Mortgage Affiliates from 1996 to 2004, opening seven retail financial center locations throughout New York before selling the company ~~to his partner~~.

~~-22-~~ITEM 8.

~~Our conclusion~~FINANCIAL ~~that~~STATEMENTS ~~Mr.~~AND ~~Pastor should be elected as a Director was based on his experience as set forth above.~~SUPPLEMENTARY DATA

~~George Schneider,~~See ~~Age~~Index ~~60, President,~~to ~~Chief~~Financial ~~Investment Officer~~Statements and a Director - Mr. Schneider became our President and Chief Investment Officer, and joined our Board of Directors, in August 2013. Before that, Mr. Schneider was since 2007 a Managing Member of Cove Partners, LLC, a specialty investment banking and financial advisory firm that focuses on the alternative energy (including renewable energy) and resource recovery related industries. Before Cove Partners, Mr. Schneider was a Managing Member at Red River Capital Partners, LLC, an investment banking and financial advisory firm specializing in the alternative energy, resource recovery, technology and telecommunications industries. Before that, Mr. Schneider served as Head of Investment Banking and Special Advisor to the Board of Directors for Crown Financial ~~Group,~~Statement ~~Inc., a publicly traded~~Schedules ~~broker-dealer~~within ~~and~~this ~~market~~Form ~~maker~~10-K.

~~Mr. Schneider's~~ITEM investment banking experience includes public and private corporate debt, municipal debt and equity capital raises, merger, acquisition and divestiture transactions, structured finance transactions, valuation analyses, fairness opinions, tender and exchange offers and corporate and financial restructurings9. In addition to his investment banking and sales and trading experiences, Mr. Schneider has senior investment management qualification and experience, serving as a senior portfolio manager and Director of Bond Management for Prudential Insurance Company and a portfolio manager for General Reinsurance Corporation where his work concerned a wide range of debt and equity securities. Mr. Schneider received a Bachelor of Science in Economics degree from the University of Pennsylvania's Wharton School of Business.

~~Our conclusion~~CHANGES ~~that~~IN ~~Mr.~~AND ~~Schneider~~DISAGREEMENTS ~~should~~WITH beACCOUNTANTS ~~elected~~ON asACCOUNTING aAND FINANCIAL ~~Director was based on his experience as set forth above.~~DISCLOSURE

~~Halford W.~~We ~~Johnson,~~reiterate ~~Age 51, Chief Financial Officer – Mr. Johnson became~~ our ~~Chief~~prior ~~Financial~~disclosure ~~Officer~~of ~~in September 2013. From October 2012 to April 2014, Mr. Johnson was~~ the ~~Chief~~resignation ~~Financial Officer~~ of ~~Capstone~~Seale ~~Affluent Strategies,~~and ~~Inc.~~Beers, aCPAs ~~wealth~~on ~~management~~August 4, ~~firm~~2014 inand ~~Irvine,~~our ~~California.~~engagement ~~Mr.~~of ~~Johnson~~Squar ~~worked~~Milner ~~for~~LLP ~~JPMorgan~~as ~~Chase-Chase~~our ~~Investment~~new ~~Services~~independent ~~Corp~~registered ~~from~~public ~~2000~~accounting tofirm ~~2012~~on ~~as an Administrative Officer. In all~~September 5, Mr2014. ~~Johnson~~No ~~has~~additional 29matters ~~years~~are ~~of experience~~required inby ~~financial~~this ~~services, with~~item ~~emphasis~~to ~~on the~~be ~~areas of~~disclosed ~~investment,~~in ~~business~~this ~~and estate~~Annual ~~planning, as well as compliance supervision~~Report.

~~Code of Ethics~~-27-

~~In 2013,~~ITEM ~~we adopted a corporate code of ethics that applies to our principal executive officer, principal financial officer, principal accounting officer or controller, and persons performing similar functions~~9A. ~~As required by SEC regulations, this code of ethics constitutes and relates to written standards that are reasonably designed to deter wrongdoing and to promote:~~

~~(1)~~CONTROLS ~~Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;~~AND PROCEDURES

~~(2)~~Disclosure ~~Full,~~Controls ~~fair, accurate, timely~~ and ~~understandable disclosure in reports and documents that are filed with, or submitted to, the SEC and in other public communications made by an issuer;~~Procedures

~~(3)~~Disclosure ~~Compliance~~controls ~~with~~and ~~applicable~~procedures ~~governmental~~are ~~laws~~controls and other procedures that are designed to ensure that information required to be disclosed in our reports filed or submitted under the Securities Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and ~~regulations;~~forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act is accumulated and communicated to management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

~~(4)~~As ~~The~~required ~~prompt~~by ~~internal~~Rule 13a-15 ~~reporting~~under the Securities Exchange Act, as of ~~violations~~December 31, 2015 we carried out an evaluation of the ~~code~~effectiveness toof anthe ~~appropriate~~design ~~person~~and oroperation ~~persons~~of ~~identified~~our disclosure controls and procedures. This evaluation was carried out under the supervision and with the participation of our Chief Executive Officer and Chief Financial Officer, who concluded that our disclosure controls and procedures are effective. The errors which required the restatement of financial statements and the amendments of periodic reports, as reported and summarized in our Current Report on Form 8-K filed on November 13, 2014 (as amended on November 24, 2014) and in such amendments and as further stated in the ~~code;~~following paragraph of this item, were, in their judgment, not due to ineffectiveness of our disclosure controls and procedures.

~~(5)~~Our ~~Accountability~~Board of Directors concluded in November 2014 that the previously issued audited consolidated financial statements and other financial information contained in our initially-filed Annual Report on Form 10-K for ~~adherence~~the fiscal year ended December 31, 2013 failed to properly account for certain financial information. Consequently, the ~~code~~Board concluded that for comparative purposes the previously issued unaudited financial statements and certain other financial information contained in the initially-filed Quarterly Reports on Form 10-Q for the fiscal periods ended June 30, 2013, September 30, 2013, March 31, 2014, and June 30, 2014, and our earnings releases and other financial communications after the filing of our initially-filed Annual Report on Form 10-K for the fiscal year ended December 31, 2013, should no longer be relied upon.

~~-23-~~We thereafter filed corrective amendments of these periodic reports.

~~We will provide a copy of this code of ethics at no charge upon receipt of a written request to us at Capstone Financial Group, Inc., 8600 Transit Road, East Amherst, NY 14051.~~-28-

~~Corporate Governance~~Internal /Control ~~Board~~Over ofFinancial ~~Directors Committees~~Reporting

WeOur management is responsible for preparing ~~currently~~our doannual ~~not~~consolidated ~~have~~financial ~~standing~~statements ~~audit,~~and ~~nominating~~for establishing and ~~compensation~~maintaining ~~committees~~adequate ofinternal control over financial reporting. Internal control over financial reporting is defined in Rule 13a-15(f) promulgated under the ~~Board~~Securities Exchange Act of ~~Directors~~1934 as a process designed by, or ~~any~~under ~~other~~the ~~Board~~supervision of, a company’s principal executive and principal financial officers and ~~Directors~~effected ~~committees~~by ~~performing~~a ~~similar~~company’s ~~functions.~~board ~~Until~~of ~~formal~~directors, ~~committees~~management ~~are~~and ~~established~~other personnel, ~~our~~to ~~entire~~provide ~~Board~~reasonable ofassurance ~~Directors~~regarding ~~performs~~the reliability of financial reporting and the ~~same~~preparation ~~functions~~of asfinancial anstatements ~~audit,~~for ~~nominating~~external ~~and~~purposes ~~compensation~~in accordance with generally ~~committee.~~accepted accounting principles and includes those policies and procedures that:

~~Changes~~ · Pertain to the maintenance of records that in ~~Director~~reasonable ~~Nomination~~detail ~~Procedures~~accurately and fairly reflect the transactions and dispositions of the assets of the company; · Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the company are being made only in accordance with authorizations of management and directors of the company; and · Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the company’s assets that could have a material effect on the financial statements.

~~There was~~All internal control systems, no ~~change~~matter inhow well ~~2014~~designed, inhave inherent limitations and can provide only reasonable, not absolute, assurance that the ~~procedures~~objectives byof ~~which~~the ~~stockholders~~control system ~~might~~are ~~nominate~~met. orFurther, ~~propose~~the ~~candidates~~design toof ~~serve~~a oncontrol system must reflect the ~~Board~~fact that there are resource constraints, and the benefits of ~~Directors~~controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation ~~Stockholders~~of ~~wishing~~controls tocan ~~propose~~provide ~~director~~absolute ~~candidates~~assurance ~~should~~that ~~direct~~all ~~the~~control ~~proposal~~issues toand ~~our~~instances ~~Chairman~~of fraud, ~~Darin~~if ~~Pastor~~any, bywithin ~~letter~~the Company have been detected. Therefore, even those systems determined to be effective can provide only reasonable assurance with respect to financial statement preparation and presentation.

~~Audit~~Our management assessed the effectiveness of our internal control over financial reporting as of December 31, 2015. In making our assessment, we used the framework and criteria set forth by the Committee ~~Financial~~of ~~Expert~~Sponsoring Organizations of the Treadway Commission (“COSO”) in Internal Control-Integrated Framework in 2014. Based on that assessment, our management has identified certain material weaknesses in our internal control over financial reporting.

We currently do not have an audit committee of the Board of Directors. We consider that neither of the persons on our Board of Directors currently qualifies as an “audit committee financial expert,” as defined in SEC regulations. We believe it is unnecessary for our Board of Directors currently to have a member who so qualifies, in view of the facts that our current directors own a substantial majority of our outstanding stock, none of our current directors is “independent” anyway, and recruiting and compensating a director qualifying as an “audit committee financial expert” would place an undue burden on our limited resources.-29-

~~Section~~Our management concluded that as of December 31, ~~16(a)~~2015 ~~Beneficial~~our ~~Ownership~~internal ~~Reporting~~control ~~Compliance~~over financial reporting was not effective, and that material weaknesses existed in the following areas as of December 31, 2015:

Section 16(a) of the Securities Exchange Act of 1934 requires our executive officers and directors, and persons who own more than 10% of a registered class of our equity securities, to file reports of ownership and changes in ownership with the SEC. Executive officers, directors and greater than 10% stockholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file.

(1)		we do not employ full time in-house personnel with the technical knowledge to identify and address some of the reporting issues surrounding certain complex or non-routine transactions. With respect to material, complex and non-routine transactions, management has and will continue to seek guidance from third-party experts and/or consultants to gain a thorough understanding of these transactions;
(2)		we have inadequate segregation of duties consistent with the control objectives including but not limited to the disbursement process, transaction or account changes, and the performance of account reconciliations and approval;
(3)		we have ineffective controls over the period end financial disclosure and reporting process caused by reliance on third-party experts and/or consultants and insufficient accounting staff; and
(4)		we do not have a functioning audit committee of the Board of Directors and our Board of Directors, in its performance of the functions generally associated with audit committees, lacks a majority of (indeed, lacks any) independent members and lacks a majority of (indeed, lacks any) outside directors, resulting in ineffective oversight in the establishment and monitoring of required internal controls, approvals and procedures.

~~Based~~To attempt to remediate these material weaknesses, ~~solely~~we onhave ~~review~~increased of(and ~~the~~plan ~~copies~~to enhance) our use of ~~such~~external ~~forms~~accounting ~~furnished~~services, adopted policies to ~~us,~~improve ortimely ~~written~~reviews ~~representations~~by management ~~from~~and ~~certain~~coordination ~~reporting~~with ~~persons~~accounting consultants, weand ~~have determined~~engaged ~~that~~corporate ~~all~~and ~~Section~~securities ~~16(a)~~legal ~~filing~~counsel ~~requirements~~with ~~applicable~~better tocapabilities than our ~~officers~~previous provider’s, ~~directors~~ and ~~greater~~we ~~than~~plan ~~10%~~to ~~beneficial~~add ~~owners as~~financial todepartment employees as our ~~equity~~resource ~~securities~~priorities ~~were~~allow. ~~satisfied~~We ~~during~~believe these ~~the~~actions ~~fiscal~~will ~~year~~continue ~~ended~~to ~~December~~improve 31items (1), ~~2014~~(2) and (3) noted above.

~~ITEM~~Changes in Internal Control Over Financial ~~11.~~Reporting

~~EXECUTIVE~~No substantial changes ~~COMPENSATION~~in our internal control over financial reporting occurred during the fourth quarter of 2015 that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting, except that we have increased our use of external accounting services, adopted policies to improve timely reviews by management and coordination with accounting consultants, and engaged corporate and securities legal counsel with better capabilities than our previous provider’s.

~~Summary Compensation~~ITEM ~~Table~~9B.

~~The following~~OTHER ~~table details compensation paid to our (2014) executive officers for the years ended December 31, 2013 and December 31, 2014.~~INFORMATION

~~-24-~~Not applicable.

Name	Position	2013 Salary	2014 Salary
Darin R. Pastor	Chief Executive Officer, Chairman & Director	$0	$4,897
George L. Schneider	President, Chief Investment Officer & Director	$13,000	$44,575
Halford W. Johnson	Chief Financial Officer	$0	$79,966

-30-

~~None of~~PART our (2014) executive officers received any compensation in 2013 or 2014 other than in the form of salary (i.e., no bonuses, stock awards, option awards, nonequity incentive plan compensation, nonqualified deferred compensation earnings, or other compensation).III

~~Mr. Pastor~~ITEM ~~and Mr~~10. ~~Schneider became Company employees in August 2013. Mr. Johnson became a Company employee in September 2013.~~

~~Stock Options~~DIRECTORS, ~~and~~EXECUTIVE ~~Other~~OFFICERS ~~Equity~~AND ~~Compensation~~CORPORATE GOVERNANCE

~~We have~~Information ~~not~~is ~~adopted~~set anforth ~~equity~~below ~~incentive~~regarding ~~plan~~our current directors and weexecutive ~~have~~officers. ~~never~~The ~~granted~~first ~~any~~two ~~restricted~~persons ~~stock~~listed ~~awards,~~constitute ~~stock~~our ~~options,~~Board ~~restricted~~of ~~stock units or other equity-based compensation to any service provider~~Directors.

~~Overview~~The members of our Board of Directors serve for one year terms and are elected at the next annual meeting of ~~Compensation~~stockholders, ~~Program~~or until their successors have been elected. The officers serve at the pleasure of the Board of Directors.

~~Our~~Darin Pastor, Age 44, CEO ~~Board~~and ofChairman ~~Directors~~- ~~does~~Mr. ~~not~~Pastor ~~currently have~~became aour ~~compensation~~Chairman ~~committee~~and Chief Executive Officer in August 2013. He was Chief Executive ~~Until~~Officer of Capstone Affluent Strategies, Inc., a ~~formal~~financial ~~compensation~~services firm, from September 2012 to ~~committee~~April 2014. is(Capstone ~~established~~Affluent Strategies, Inc. ~~our~~provided ~~entire~~broker-dealer ~~Board~~services ofon ~~Directors~~the ~~has~~LPL ~~responsibility~~Financial ~~for~~LLC ~~compensation~~trading ~~matters~~platform from September 2012 to July 2013.) AsFrom June 2011 to September 2012 he was a ~~result~~Managing Director of ~~the~~Prudential ~~size~~Insurance Company of ~~the~~America. ~~Company~~From ~~and~~August 2010 ~~only~~to ~~having~~June 2011 ~~three~~he ~~executive officers,~~was Territory Sales Manager for the Los ~~Board~~Angeles territory of ~~Directors~~Colonial ~~evaluates~~Life ~~both~~& ~~performance~~Accident Insurance Company, and ~~compensation~~before onthat anhe ~~informal~~was Senior Vice President and ~~basis~~Senior Investment Manager at JPMorgan Chase & Co. since 2006.

~~In view~~Mr. ofPastor ~~our~~has ~~limited~~two ~~cash~~decades ~~resources~~of experience in financial services and sales. In 2012, Prudential ranked him as the ~~substantial~~#1 ~~equity~~Managing ~~positions~~Director ~~held~~in the nation measured by ~~our~~year ~~senior~~over ~~officers~~year sales growth, and he was ranked as the ~~Board~~top-selling ofSenior ~~Directors~~Investment ~~has maintained~~Manager ~~salaries~~in atthe anation ~~quite~~during ~~low~~his ~~level~~tenure ~~for~~at ~~persons~~JPMorgan ~~who~~Chase & ~~are~~Co. ~~adequately~~At ~~incentivized~~Chase, byhe ~~holding~~and ~~large~~his ~~positions~~team managed $6.6 billion in ~~Company~~client ~~stock~~assets.

WeMr. Pastor’s work history also includes doextensive ~~not~~experience ~~currently~~as ~~have~~an ~~any~~entrepreneur. ~~equity~~From ~~incentive~~1989 ~~program~~to ~~for~~1996, ~~our~~he ~~personnel~~was a Division Manager and owner at Pepsi-Cola Buffalo Bottling Corp. He was the owner of American Mortgage Affiliates from 1996 to 2004, opening seven retail financial center locations throughout New York before selling the company to his partner.

~~Upon hiring~~Our ~~additional~~conclusion ~~executives~~that ~~(whose~~Mr. ~~positions in Company stock are not as large as Darin~~ Pastor’s ~~and~~should ~~George~~be ~~Schneider’s),~~elected ~~the~~as ~~Board of Directors intends to establish~~ a ~~Compensation~~Director ~~Committee~~was to evaluate both performance and compensation to ensure that we achieve and maintain the ability to attract and retain superior employees in key positions and that compensation provided to key employees remains competitive relative to the compensation paid to similarly-situated executives of our peer companies. To that end, the Board believes executive compensation packages provided by the Company to its executives, including the named executive officers, may need to include both customary cash compensation and stock-based ~~compensation~~on ~~that~~his ~~rewards~~experience ~~performance~~ as ~~measured~~set ~~against~~forth ~~established goals~~above.

~~Director Compensation~~Mr. Pastor is married to Tracy Pastor.

~~Our~~George ~~directors~~Schneider, ~~also~~Age ~~serve~~61, asPresident, Chief ~~executive~~Investment ~~officers~~Officer and ofa ~~the~~Director - ~~Company~~Mr. Schneider became our President and Chief Investment Officer, and ~~they~~joined ~~receive~~our noBoard ~~additional~~of ~~compensation~~Directors, ~~for~~in ~~their~~August 2013. Before ~~service~~that, Mr. Schneider was since 2007 a Managing Member of Cove Partners, LLC, a specialty investment banking and financial advisory firm that focuses on the ~~Board~~alternative energy (including renewable energy) and resource recovery related industries. Before Cove Partners, Mr. Schneider was a Managing Member at Red River Capital Partners, LLC, an investment banking and financial advisory firm specializing in the alternative energy, resource recovery, technology and telecommunications industries. Before that, Mr. Schneider served as Head of Investment Banking and Special Advisor to the Board of Directors for Crown Financial Group, Inc., a publicly traded broker-dealer and market maker.

~~ITEM 12.~~-31-

~~SECURITY~~Mr. Schneider's ~~OWNERSHIP~~investment OFbanking ~~CERTAIN~~experience ~~BENEFICIAL~~includes ~~OWNERS~~public ~~AND~~and ~~MANAGEMENT~~private ~~AND~~corporate ~~RELATED~~debt, ~~STOCKHOLDER~~municipal ~~MATTERS~~debt and equity capital raises, merger, acquisition and divestiture transactions, structured finance transactions, valuation analyses, fairness opinions, tender and exchange offers and corporate and financial restructurings. In addition to his investment banking and sales and trading experiences, Mr. Schneider has senior investment management qualification and experience, serving as a senior portfolio manager and Director of Bond Management for Prudential Insurance Company and a portfolio manager for General Reinsurance Corporation where his work concerned a wide range of debt and equity securities. Mr. Schneider received a Bachelor of Science in Economics degree from the University of Pennsylvania's Wharton School of Business.

~~-25-~~Our conclusion that Mr. Schneider should be elected as a Director was based on his experience as set forth above.

~~The~~Halford W. ~~following~~Johnson, ~~table~~Age ~~sets forth information~~52, Chief toFinancial ~~the~~Officer – ~~best~~Mr. ofJohnson became our ~~knowledge~~Chief Financial Officer in September 2013. From October 2012 to April 2014, ~~about~~Mr. Johnson was the ~~beneficial~~Chief ~~ownership~~Financial Officer of ~~our~~Capstone ~~common~~Affluent ~~stock on~~Strategies, Inc., ~~April~~a ~~24,~~wealth ~~2015~~management firm in Irvine, ~~relating to~~California. ~~the~~Mr. ~~beneficial ownership~~Johnson ofworked ~~our common~~for ~~stock~~JPMorgan ~~by those~~Chase-Chase ~~persons~~Investment ~~known~~Services Corp from 2000 to ~~beneficially~~2012 ~~own more~~as ~~than~~an ~~5% of~~Administrative ~~our~~Officer. ~~capital~~In ~~stock~~all, ~~and~~Mr. byJohnson ~~our~~has ~~directors~~30 ~~and~~years ~~executive~~of ~~officers.~~experience ~~The~~in ~~percentage of~~financial ~~beneficial~~services, ~~ownership~~with ~~for~~emphasis on the areas ~~following~~of ~~table~~investment, isbusiness ~~based~~and onestate 94planning,~~564,648~~ ~~shares~~as ofwell ~~common stock~~as ~~outstanding~~compliance supervision.

~~Beneficial ownership~~Tracy isAnne ~~determined in~~Pastor, ~~accordance~~Age ~~with~~34, ~~the~~Chief ~~rules~~Brand ~~of the~~Officer ~~SEC~~– ~~and does~~Mrs. ~~not~~Pastor ~~necessarily~~became ~~indicate~~our ~~beneficial ownership~~Chief ~~for~~Brand ~~any~~Officer ~~other~~in ~~purpose~~March 2014. ~~Under~~From ~~these~~October ~~rules~~2012 to April 2014, ~~beneficial~~Mrs. ~~ownership~~Pastor ~~includes~~was ~~those~~the ~~shares~~Investment Manager of ~~common~~Capstone ~~stock~~Affluent ~~over which~~Strategies, ~~the~~Inc., ~~stockholder~~a ~~has sole~~wealth ormanagement ~~shared voting~~firm orin ~~investment~~Irvine, ~~power~~California. ItMrs. ~~also includes~~Pastor ~~shares~~has ~~of common~~worked ~~stock~~at ~~that the~~Prudential ~~stockholder~~as ~~has~~ a ~~right~~Manager toof ~~acquire~~Financial ~~within 60~~Services, ~~days~~US ~~after April~~Bank ~~24,~~Investments ~~2015 pursuant~~and toJP ~~options,~~Morgan Chase ~~warrants,~~as ~~conversion~~a ~~privileges or~~Financial ~~other~~Advisor ~~rights~~from 2000 to 2012. ~~The~~ ~~percentage~~Mrs. ~~ownership~~ Pastor has over 16 years of ~~the~~experience ~~outstanding~~in ~~common stock,~~financial ~~however,~~services iswith ~~based~~emphasis on the ~~assumption,~~areas ~~expressly required~~of byfinancial ~~the rules~~planning, ofwealth ~~the SEC~~preservation, ~~that~~estate ~~only~~planning ~~the~~and ~~person or~~wealth ~~entity~~transfer. ~~whose ownership~~Mrs. isPastor ~~being~~received her ~~reported~~International ~~has~~MBA ~~exercised/converted options,~~from ~~warrants,~~the ~~etc.~~Thunderbird ~~for/into shares~~Global School of ~~our common stock~~Management.

~~None of~~Mrs. ~~the~~Pastor ~~persons~~is inmarried ~~the following table beneficially owns any shares by virtue of having a right~~ to ~~acquire~~Darin ~~such shares within 60 days after April 24, 2015 pursuant to options, warrants, conversion privileges or other rights~~Pastor.

Class	Name of Beneficial Owner	Amount and Nature of Beneficial Ownership	Percent of Class
Common	Darin R. Pastor, Chief Executive Officer and Director	69,702,777	73.7%
Common	George L. Schneider, President and Director	9,036,000	9.6%
Common	Halford W. Johnson, Chief Financial Officer	119,497	*
Common	All Directors and Executive Officers as a Group	78,858,274	83.4%
(1) Each person has sole voting power and sole investment power with respect to the shares set forth next to his name in this table. Each person’s address is in care of the Company at 8600 Transit Road, East Amherst, NY 14051. Refers to beneficial ownership of less than 1%.

Code of Ethics

~~Changes~~In 2013, we adopted a corporate code of ethics inthat ~~Control~~applies to our principal executive officer, principal financial officer, principal accounting officer or controller, and persons performing similar functions. As required by SEC regulations, this code of ethics constitutes and relates to written standards that are reasonably designed to deter wrongdoing and to promote:

There are no arrangements, known to us, including any pledge by any person of securities of the Company, the operation of which may at a later date result in a change in control of the Company.

(1)		Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
(2)		Full, fair, accurate, timely and understandable disclosure in reports and documents that are filed with, or submitted to, the SEC and in other public communications made by an issuer;
(3)		Compliance with applicable governmental laws, rules and regulations;

~~ITEM 13.~~-32-

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

(4)		The prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and
(5)		Accountability for adherence to the code.

~~Transactions~~We will ~~with~~provide ~~Related~~a ~~Persons~~copy of this code of ethics at no charge upon receipt of a written request to us at Capstone Financial Group, Inc., 8600 Transit Road, East Amherst, NY 14051.

~~On July~~Corporate ~~12,~~Governance ~~2012,~~/ weBoard ~~executed a promissory note in favor~~ of ~~Ryan Faught, who was then our chief executive officer, for $10,000. The~~Directors unsecured loan bore interest at 6% per annum with principal and interest due on July 13, 2015. In 2013, Ryan Faught loaned us an additional $3,500 with the same terms as the previous promissory note for $10,000. During 2013, Ryan Faught forgave the entire balance of principal of $13,500 and accrued interest of $702.Committees

~~-26-~~We currently do not have standing audit, nominating and compensation committees of the Board of Directors, or any other Board of Directors committees performing similar functions. Until formal committees are established, our entire Board of Directors performs the same functions as an audit, nominating and compensation committee.

~~On August~~Changes 8,in ~~2013,~~Director weNomination entered into (as borrower) an unsecured $500,000 revolving line of credit with Capstone Affluent Strategies, Inc., which was owned and controlled by Darin Pastor. The line of credit bore interest at 2% per annum with principal and interest due on August 8, 2015.Procedures

~~On September~~There ~~13,~~was ~~2013,~~no wechange ~~entered~~in ~~into~~2015 ~~(as~~in ~~lender) an unsecured $500,000 revolving line of credit with Capstone Affluent Strategies,~~the ~~Inc.,~~procedures by which ~~was~~stockholders ~~owned~~might ~~and~~nominate ~~controlled~~or bypropose ~~Darin~~candidates ~~Pastor.~~to Inserve ~~October~~on ~~2013,~~ the ~~maximum~~Board ~~amount available under this line~~ of ~~credit was~~Directors. ~~increased~~Stockholders wishing to ~~$2,000,000.~~propose ~~The~~director ~~line~~candidates ofshould ~~credit~~direct ~~bore~~the ~~interest~~proposal atto 2%our ~~per~~Chairman, ~~annum~~Darin ~~with~~Pastor, ~~principal~~by ~~and interest due on September 13, 2015~~letter.

~~On October~~Audit ~~28,~~Committee ~~2014,~~Financial we entered into a transaction in which we acquired from Darin Pastor certain assets which had been assets of Affluent and assumed certain liabilities which had been liabilities of Affluent, including liabilities under notes in favor of Darin Pastor. At December 31, 2014, the outstanding principal amount of and accrued interest on such assumed notes was $1,203,552. In addition, as part of the transaction we forgave the $1,089,617 net receivable from Darin Pastor under the lines of credit described above, and the crossing lines of credit were cancelled. As a result of the October 28, 2014 transactions, we recorded an expense item of $1,089,617 and we were deemed to have paid a dividend to Darin Pastor in the amount of $1,484,204.Expert

~~From~~We currently do not have an audit ~~time~~committee toof ~~time~~the ~~after~~Board ~~October~~of ~~28,~~Directors. ~~2014,~~We ~~our~~consider ~~controlling~~that ~~stockholder~~neither ~~Darin~~of ~~Pastor~~the ~~has~~persons ~~made~~on ~~advances~~our ~~and~~Board ~~direct-payments~~of toDirectors ~~assist~~currently qualifies as an us“audit committee financial expert,” as defined in ~~covering~~SEC ~~expenses;~~regulations. heWe believe it is ~~not~~unnecessary ~~obligated~~for toour ~~make~~Board ~~any~~of ~~such~~Directors currently ~~advances~~to ~~and~~have ~~direct-payments~~a ~~and~~member ~~there~~who ~~can~~so bequalifies, noin ~~assurance~~view of the facts that ~~any~~ ~~such~~our ~~advances~~current ~~and~~directors ~~direct-payments~~own ~~will~~a ~~continue.~~substantial Inmajority ~~addition,~~of ~~the~~our outstanding ~~amounts~~stock, none of ~~these~~our ~~advances~~current ~~and~~directors ~~direct-payments~~is ~~are~~“independent” ~~reimbursable to~~anyway, ~~him~~and ~~upon~~recruiting ~~his~~and ~~demand~~compensating ata ~~any~~director qualifying ~~time.~~as Atan ~~December~~“audit ~~31,~~committee ~~2014,~~financial ~~there~~expert” ~~had~~would ~~been~~place ~~$94,306~~an ofundue ~~such~~burden ~~advances~~on ~~and~~our ~~direct-payments~~limited resources.

We subleased an executive office at 2600 Michelson Drive, Suite 700, Irvine, California 92612 from Affluent and from our chief executive officer Darin Pastor, the successor of Affluent, from September 2013 through March 2015. Our occupancy right, on Section 16(a) ~~prepaid~~Beneficial ~~basis,~~Ownership ~~was~~Reporting ~~one of the Affluent assets we obtained from Darin Pastor in the October 28, 2014 transaction. The value of the occupancy right was $28,736 per month.~~Compliance

~~Certain~~Section 16(a) of the Securities ~~Control~~Exchange ~~Persons~~Act of 1934 requires our executive officers and directors, and persons who own more than 10% of a registered class of our equity securities, to file reports of ownership and changes in ownership with the SEC. Executive officers, directors and greater than 10% stockholders are required by SEC regulation to furnish us with copies of all Section 16(a) forms they file.

OnBased solely on review of the copies ~~September~~of 6such forms furnished to us, ~~2013~~or written representations from certain reporting persons, ~~Ryan~~ ~~Faught~~we ~~sold~~have determined that all Section 16(a) 70filing requirements applicable to our officers,~~964,000~~ ~~(as~~directors ~~adjusted~~and ~~for~~greater athan ~~later~~10% ~~stock~~beneficial ~~split)~~owners ~~shares~~as ofto our equity securities were satisfied during the ~~Company’s~~fiscal ~~common~~year ~~stock to~~ended ~~Darin~~December 31, ~~Pastor~~2015, ~~for~~ anexcept ~~aggregate purchase~~that ~~price~~Tracy ~~of $1,774~~Pastor did not timely file her Form 3.

Additionally, on September 6, 2013, Ryan Faught sold 9,036,000 (as adjusted for a later stock split) shares of the Company’s common stock to George Schneider, for an aggregate purchase price of $226.-33-

~~By these~~ITEM ~~transactions, Darin Pastor and George Schneider obtained 88~~11.~~6% of the then outstanding shares of common stock of the Company.~~

~~Director Independence~~EXECUTIVE COMPENSATION

~~We currently~~Summary doCompensation ~~not have any independent directors, as the term “independent” is defined in Section 803A of the NYSE Amex LLC Company Guide.~~Table

~~ITEM~~The following table details compensation 14paid to our (2015) executive officers for the years ended December 31, 2014 and December 31, 2015.

PRINCIPAL ACCOUNTING FEES AND SERVICES

Name	Position	2014 Salary	2015 Salary
Darin R. Pastor	Chief Executive Officer, Chairman & Director	$4,897	$2,789
George L. Schneider	President, Chief Investment Officer & Director	$44,575	$22,300
Halford W. Johnson	Chief Financial Officer	$79,966	$83,077
Tracy Anne Pastor	Chief Brand Officer	$10,526	$139,191

~~AUDIT~~None of our (2015) executive officers ~~FEES~~received any compensation in 2014 or 2015 other than in the form of salary (i.e., no bonuses, stock awards, option awards, nonequity incentive plan compensation, nonqualified deferred compensation earnings, or other compensation).

~~The following~~Stock ~~table~~Options ~~sets forth the fees billed for professional services provided in connection with the audit of our annual financial statements~~ and ~~review~~Other ofEquity ~~our quarterly financial statements, etc., for the years ended December 31, 2014 and December 31, 2013:~~Compensation

We have not adopted an equity incentive plan and we have never granted any restricted stock awards, stock options, restricted stock units or other equity-~~27-~~based compensation to any service provider.

Audit Fees	Period Ended December 31,
	2014		2013
Seale and Beers, CPAs	$	10,500	$	13,000
Squar, Milner, Peterson, Miranda & Williamson, LLP		34,000		—
	$	44,500	$	13,000

Overview of Compensation Program

~~AUDIT-RELATED~~Our Board of Directors does not currently ~~FEES~~have a compensation committee. Until a formal compensation committee is established, our entire Board of Directors has responsibility for compensation matters. As a result of the size of the Company and only having three executive officers, the Board of Directors evaluates both performance and compensation on an informal basis.

~~None,~~In view of our limited cash resources ~~for~~and the ~~years~~substantial ~~ended~~equity ~~December~~positions ~~31,~~held ~~2013~~by ~~and~~our ~~December~~senior 31officers, ~~2014~~the Board of Directors has maintained salaries at a quite low level for persons who are adequately incentivized by holding large positions in Company stock.

~~TAX~~We do not currently have any equity ~~FEES~~incentive program for our personnel.

~~None, for the years ended December 31, 2013 and December 31, 2014.~~ -34-

~~ALL~~Upon hiring additional executives (whose ~~OTHER~~positions ~~FEES~~in Company stock are not as large as Darin Pastor’s and George Schneider’s), the Board of Directors intends to establish a Compensation Committee to evaluate both performance and compensation to ensure that we achieve and maintain the ability to attract and retain superior employees in key positions and that compensation provided to key employees remains competitive relative to the compensation paid to similarly-situated executives of our peer companies. To that end, the Board believes executive compensation packages provided by the Company to its executives, including the named executive officers, may need to include both customary cash compensation and stock-based compensation that rewards performance as measured against established goals.

~~None, for~~Director ~~the years ended December 31, 2013 and December 31, 2014.~~Compensation

~~AUDIT~~Our current directors also serve as executive officers of ~~COMMITTEE~~the ~~POLICIES~~Company, ~~AND~~and ~~PROCEDURES~~they receive no additional compensation for their service on the Board of Directors.

~~Our Board~~ITEM ~~of Directors does not have an audit committee~~12. ~~The entire Board of Directors fulfills the function of an audit committee. The Board of Directors does not have formal preapproval policies and procedures of the type contemplated by this item.~~

~~-28-~~SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS

~~ITEM~~The following table sets forth 15information, to the best of our knowledge, about the beneficial ownership of our common stock on March 24, 2016, relating to the beneficial ownership of our common stock by those persons known to beneficially own more than 5% of our capital stock and by our directors and executive officers. The percentage of beneficial ownership for the following table is based on 94,364,148 shares of common stock outstanding.

~~EXHIBITS~~Beneficial ownership ~~AND~~is ~~FINANCIAL~~determined ~~STATEMENT~~in accordance ~~SCHEDULES~~with the rules of the SEC and does not necessarily indicate beneficial ownership for any other purpose. Under these rules, beneficial ownership includes those shares of common stock over which the stockholder has sole or shared voting or investment power. It also includes shares of common stock that the stockholder has a right to acquire within 60 days after March 24, 2016 pursuant to options, warrants, conversion privileges or other rights. The percentage ownership of the outstanding common stock, however, is based on the assumption, expressly required by the rules of the SEC, that only the person or entity whose ownership is being reported has exercised/converted options, warrants, etc. for/into shares of our common stock.

~~The financial~~None ~~statements~~of ~~listed~~the persons in the ~~"Index~~following table tobeneficially ~~Financial~~owns ~~Statements"~~any onshares ~~page~~by 32virtue ~~are~~of ~~filed~~having asa ~~part~~right ofto ~~this~~acquire such shares within 60 days after March 24, 2016 ~~report~~pursuant to options, warrants, conversion privileges or other rights.

~~Financial statement schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.~~-35-

Exhibits included or incorporated herein: See index to Exhibits.

Class	Name of Beneficial Owner	Amount and Nature of Beneficial Ownership	Percent of Class
Common	Darin R. Pastor, Chief Executive Officer and Director	69,626,777	73.8%
Common	George L. Schneider, President and Director	9,036,000	9.6%
Common	Halford W. Johnson, Chief Financial Officer	126,197	*
Common	Tracy Pastor, Chief Brand Officer	114,497	*
Common	All Directors and Executive Officers as a Group	78,903,471	83.6%
Mr. Pastor’s beneficial ownership is deemed to continue to include 9,436,414 shares which he agreed to sell under an agreement with Aaron Pierce dated October 21, 2015; the counterparty has not yet paid the full purchase price and the shares remain in Mr. Pastor’s name. Mr. Schneider’s beneficial ownership is deemed to continue to include 4,518,000 shares which he gifted to an individual on November 30, 2015, because we consider that he retains indirect beneficial ownership of the gifted shares. The figures for Mr. Pastor in the table do not include shares owned by Mrs. Pastor; Mr. Pastor disclaims beneficial ownership of Mrs. Pastors’s shares. The figures for Mrs. Pastor in the table do not include shares owned by Mr. Pastor; Mrs. Pastor disclaims beneficial ownership of Mr. Pastor’s shares. Mr. Pastor and Mrs. Pastor are married to each other. Except as specified in this paragraph, each person has sole voting power and sole investment power with respect to the shares set forth next to his or her name in this table. The address of Mr. Pastor, Mr. Johnson and Mrs. Pastor is in care of the Company at 8600 Transit Road, East Amherst, NY 14051. The address of Mr. Schneider is 425 North Sycamore Avenue, Los Angeles, CA 90036. * Refers to beneficial ownership of less than 1%.

~~Exhibit Index~~Changes in Control

			Incorporated by reference
Exhibit		Filed			Filing
Number	Exhibit Description	herewith	Form	Exhibit	date
2.1	Stock Purchase Agreement dated September 6, 2013 between Ryan Faught and Darin Pastor		10-K	2.1	2/18/2015
2.2	Stock Purchase Agreement dated September 6, 2013 between Ryan Faught and George L. Schneider		10-K	2.2	2/18/2015
2.3	Agreement and Plan of Merger among the Company, Capstone Sub Co. and Capstone Affluent Strategies, Inc., dated December 13, 2013		8-K	2.1	12/13/2013
2.3.1	Articles of Merger filed January 15, 2014, between Capstone Sub Co. and Capstone Affluent Strategies, Inc.		8-K	3(i)(d)	1/16/2014
2.3.2	Rescission of Agreement and Plan of Merger among the Company, Capstone Sub Co. and Capstone Affluent Strategies, Inc.		8-K	10.1	5/1/2014
3.1	Articles of Incorporation of Creative App Solutions Inc. dated July 10, 2012		S-1	3(i)(a)	10/17/2012
3.1.1	Certificate of Amendment to Articles of Incorporation filed August 26, 2013		8-K	3(i)(a)	8/29/2013
3.1.2	Certificate of Change filed September 6, 2013		8-K	3(i)(c)	9/12/2013
3.2	Bylaws		S-1	3(ii)	10/17/2012
3.2.1	Amended Bylaws, adopted August 26, 2013		10-K	3.2.1	2/18/2015
10.1	Promissory Note from Capstone Affluent Strategies, Inc. in favor of Darin Pastor, dated October 4, 2012		10-K	10.1	2/18/2015
10.2	Promissory Note from Capstone Affluent Strategies, Inc. in favor of Darin Pastor, dated October 22, 2012		10-K	10.2	2/18/2015
10.3	Promissory Note from Capstone Affluent Strategies, Inc. in favor of Darin Pastor, dated December 31, 2012		10-K	10.3	2/18/2015
10.4	Agreements dated August 26, 2013	X
10.5	Revolving Credit Grid Note dated August 8, 2013 between the Company (as “Maker”) and Capstone Affluent Strategies, Inc.		10-Q	10.1	11/19/2013
10.6	Revolving Credit Grid Note dated September 13, 2013 between the Company and Capstone Affluent Strategies, Inc. (as “Maker”)		10-Q	10.2	11/19/2013
10.6.1	Amendment No. 1 to Revolving Credit Grid Note, dated Oct. 7, 2013		10-Q	10.3	11/19/2013
10.7	Call Options, dated August 1, 2014, from respective holders of common stock of Twinlab Consolidated Holdings, Inc. to the Company		13D	2	12/17/2014

There are no arrangements, known to us, including any pledge by any person of securities of the Company, the operation of which may at a later date result in a change in control of the Company.

~~-29-~~ITEM 13.

~~Exhibit~~CERTAIN RELATIONSHIPS ~~Index~~AND ~~(continued)~~RELATED TRANSACTIONS, AND DIRECTOR INDEPENDENCE

~~Incorporated~~Transactions bywith ~~reference Exhibit Filed Filing Number Exhibit Description herewith Form Exhibit date~~Related Persons

10.8	Series A Warrant, dated as of September 30, 2014, issued by Twinlab Consolidated Holdings, Inc. to the Company		8-K	10.1		10/6/2014
10.9	Series B Warrant, dated as of September 30, 2014, issued by Twinlab Consolidated Holdings, Inc. to the Company		8-K	10.2		10/6/2014
10.10	Common Stock Put Agreement, dated as of September 30, 2014, between Twinlab Consolidated Holdings, Inc. and the Company		8-K	10.3		10/6/2014
10.10.1	Amendment No. 1 to Common Stock Put Agreement, dated as of December 15, 2014, between Twinlab Consolidated Holdings, Inc. and the Company		10-K	10.11.1		2/18/2015
10.11	Registration Rights Agreement, dated as of September 30, 2014, between Twinlab Consolidated Holdings, Inc. and the Company		8-K	10.	4	10/6/2014
10.12	Agreement, dated as of October 28, 2014, between Darin Pastor, Capstone Affluent Strategies, Inc. (dissolved) and the Company	X
10.12.1	Amendment to Agreement, dated as of December 31, 2014, between Darin Pastor, Capstone Affluent Strategies, Inc. (dissolved) and the Company	X
10.13	Promissory Note from Thomas Tolworthy in favor of the Company, dated November 14, 2014	X
10.14	Agreement to Reform Promissory Notes Due to Scrivener’s Error, dated December 15, 2014, between Darin Pastor, Capstone Affluent Strategies, Inc. (dissolved) and the Company		10-K	10.14		2/18/2015
10.15	Lease Agreement, dated as of April 29, 2015, between Iskalo 8600 Transit LLC and the Company	X
14.1	Code of Ethics	X
31.1	Certification pursuant to Securities Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 – CEO	X
31.2	Certification pursuant to Securities Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 – CFO	X
32.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 – CEO	X
32.2	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 – CFO	X

On October 28, 2014, we entered into a transaction in which we acquired from Darin Pastor certain assets which had been assets of Affluent and assumed certain liabilities which had been liabilities of Affluent, including liabilities under notes in favor of Darin Pastor. At December 31, 2015, the outstanding principal amount of and accrued interest on such assumed notes was $68,416. In addition, as part of the transaction we forgave the $1,089,617 net receivable from Darin Pastor under the lines of credit described above, and the crossing lines of credit were cancelled. As a result of the October 28, 2014 transactions, we recorded an expense item of $1,089,617 and we were deemed to have paid a dividend to Darin Pastor in the amount of $1,484,204.

-3036-

~~SIGNATURES~~From time to time after October 28, 2014, our controlling stockholder Darin Pastor has made advances and direct-payments to assist us in covering expenses; he is not obligated to make any such advances and direct-payments and there can be no assurance that any such advances and direct-payments will continue. In addition, the amounts of these advances and direct-payments are reimbursable to him upon his demand at any time. At December 31, 2015, there were outstanding $96,695 of such advances and direct-payments.

~~Pursuant~~We subleased an executive office at to2600 ~~the~~Michelson ~~requirements~~Drive, ofSuite ~~Section~~700, 13Irvine, orCalifornia ~~15(d)~~92612 offrom ~~the~~Affluent ~~Securities~~and ~~Exchange~~from ~~Act~~our ofchief ~~1934~~executive officer Darin Pastor, the successor ~~registrant~~of ~~has~~Affluent, ~~duly~~from ~~caused~~September 2013 ~~this~~through ~~report to~~March 2015. beOur ~~signed~~occupancy right, on ~~its~~a ~~behalf~~prepaid bybasis, was one of the Affluent ~~undersigned~~assets we obtained from Darin Pastor in the October 28, ~~thereunto~~2014 ~~duly~~transaction. ~~authorized~~The value of the occupancy right was $28,736 per month.

~~CAPSTONE FINANCIAL~~Director ~~GROUP, INC.~~Independence

~~By:~~We currently ~~/S/~~do ~~Darin~~not R.have any ~~Pastor~~ independent directors, as the term “independent” is defined in Section 803A of the NYSE Amex LLC Company Guide.

~~Darin~~ITEM R14. ~~Pastor, Chief Executive Officer~~

~~Date: April~~PRINCIPAL ~~29,~~ACCOUNTING ~~2015~~FEES AND SERVICES

~~Pursuant to~~AUDIT ~~the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.~~FEES

Signature	Title	Date
/s/ Darin R. Pastor	Chairman of the Board of Directors,	April 29, 2015
Darin R. Pastor	Chief Executive Officer (Principal Executive Officer)
/s/ Halford W. Johnson	Chief Financial Officer	April 29, 2015
Halford W. Johnson	(Principal Financial Officer)
/s/ George L. Schneider	Director	April 29, 2015
George L. Schneider

The following table sets forth the fees billed for professional services provided in connection with the audit of our annual financial statements and review of our quarterly financial statements, etc., for the years ended December 31, 2015 and December 31, 2014:

-31-

Audit Fees	Period Ended December 31,
	2015		2014
Seale and Beers, CPAs	$	---	$	10,500
Squar Milner LLP		123,126		106,025
	$	123,126	$	116,525

~~CAPSTONE FINANCIAL~~AUDIT-RELATED ~~GROUP, INC.~~FEES

~~INDEX TO~~None, ~~FINANCIAL~~for ~~STATEMENTS~~the years ended December 31, 2014 and December 31, 2015.

~~FOR THE~~TAX ~~YEARS ENDED DECEMBER 31, 2014 AND 2013~~FEES

	PAGES
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	33
STATEMENTS OF FINANCIAL CONDITION	34
STATEMENTS OF OPERATIONS	35
STATEMENT OF STOCKHOLDERS' EQUITY	36
STATEMENTS OF CASH FLOWS	37
NOTES TO FINANCIAL STATEMENTS	38

None, for the years ended December 31, 2014 and December 31, 2015.

~~-32-~~ALL OTHER FEES

~~REPORT OF~~None, ~~INDEPENDENT~~for ~~REGISTERED~~the ~~PUBLIC~~years ~~ACCOUNTING~~ended ~~FIRM~~December 31, 2014 and December 31, 2015.

~~To the Board of Directors and Stockholders of~~-37-

~~Capstone Financial~~AUDIT ~~Group,~~COMMITTEE ~~Inc.:~~POLICIES AND PROCEDURES

~~Report~~Our Board of Directors does not have onan ~~Financial~~audit ~~Statements~~ committee. The entire Board of Directors fulfills the function of an audit committee. The Board of Directors does not have formal preapproval policies and procedures of the type contemplated by this item.

~~We have~~ITEM ~~audited the accompanying statements of financial condition of Capstone Financial Group, Inc~~15. as of December 31, 2014 and 2013, and the related statements of operations, stockholders’ equity and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audits.

~~We conducted~~EXHIBITS ~~our~~AND ~~audits~~FINANCIAL ~~in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those~~STATEMENT standards require that we plan and perform the audits to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.SCHEDULES

~~In our~~The ~~opinion, the~~ financial statements ~~referred~~listed ~~to above present fairly,~~ in ~~all material respects,~~ the ~~financial position of Capstone~~"Index to Financial ~~Group,~~Statements" ~~Inc.~~on aspage of43 are ~~December~~filed ~~31,~~as ~~2014~~part ~~and 2013, and the results~~ of ~~its operations and its cash flows for the years then~~ ~~ended,~~this ~~in accordance with accounting principles generally accepted in the United States of America~~report.

~~Emphasis~~Financial ofstatement ~~Matter~~schedules are omitted because they are not applicable or the required information is shown in the financial statements or notes thereto.

~~As discussed~~Exhibits inincluded Notes 1 and 3, essentially 100% of the Company’s investments are in common stock, call options, warrants and put obligations with respect to one company, whose common stock is thinly traded. The Company’s call and put contracts require the Company to purchase at a rate of no less than 1,461,988 shares per month of Twinlab common stock through October 2017. The expected cash obligation from the options are expected to be approximately $2.9 million for the year ended December 31, 2015. At December 31, 2014, the Company has approximately $12 thousand in cash. Management plans to fund the Twinlab warrant/shares acquisition through the sales of Twinlab common stock and/or ~~capital~~incorporated ~~raises.~~herein: ~~There~~See ~~can be no~~index ~~assurances that management will be able~~ to ~~continue to sell its shares of Twinlab common stock for cash or that the Company will be able to successfully raise sufficient capital to fund the required warrant exercises~~Exhibits. Also as discussed in Note 3, 100% of the Company’s investments (including common stock and call option assets and put option liabilities) are classified as Level 3 Fair Value Measurements at December 31, 2014 which have been valued by the Company’s Board of Directors. We have reviewed the procedures applied by the Company in valuing such investment securities and inspected underlying documentation; while in the circumstances, the procedures appear to be reasonable and the documentation appropriate, determination of fair values involves subjective judgment and ultimate amounts realized may significantly vary from values presently estimated. Our opinion is not modified with respect to these matters.

~~SQUAR, MILNER,~~Exhibit ~~PETERSON, MIRANDA & WILLIAMSON, LLP~~Index

San Diego, California

			Incorporated by reference
Exhibit		Filed			Filing
Number	Exhibit Description	herewith	Form	Exhibit	date
2.1	Stock Purchase Agreement dated September 6, 2013 between Ryan Faught and Darin Pastor		10-K	2.1	2/18/2015
2.2	Stock Purchase Agreement dated September 6, 2013 between Ryan Faught and George L. Schneider		10-K	2.2	2/18/2015
2.3	Agreement and Plan of Merger among the Company, Capstone Sub Co. and Capstone Affluent Strategies, Inc., dated December 13, 2013		8-K	2.1	12/13/2013
2.3.1	Articles of Merger filed January 15, 2014, between Capstone Sub Co. and Capstone Affluent Strategies, Inc.		8-K	3(i)(d)	1/16/2014
2.3.2	Rescission of Agreement and Plan of Merger among the Company, Capstone Sub Co. and Capstone Affluent Strategies, Inc.		8-K	10.1	5/1/2014
3.1	Articles of Incorporation of Creative App Solutions Inc. dated July 10, 2012		S-1	3(i)(a)	10/17/2012
3.1.1	Certificate of Amendment to Articles of Incorporation filed August 26, 2013		8-K	3(i)(a)	8/29/2013
3.1.2	Certificate of Change filed September 6, 2013		8-K	3(i)(c)	9/12/2013
3.2	Bylaws		S-1	3(ii)	10/17/2012
3.2.1	Amended Bylaws, adopted August 26, 2013		10-K	3.2.1	2/18/2015
10.1	Promissory Note from Capstone Affluent Strategies, Inc. in favor of Darin Pastor, dated October 4, 2012		10-K	10.1	2/18/2015
10.2	Promissory Note from Capstone Affluent Strategies, Inc. in favor of Darin Pastor, dated October 22, 2012		10-K	10.2	2/18/2015

~~April 29, 2015~~-38-

-33-

			Incorporated by reference
Exhibit		Filed			Filing
Number	Exhibit Description	herewith	Form	Exhibit	date
10.3	Promissory Note from Capstone Affluent Strategies, Inc. in favor of Darin Pastor, dated December 31, 2012		10-K	10.3	2/18/2015
10.4	Call Options, dated August 1, 2014, from respective holders of common stock of Twinlab Consolidated Holdings, Inc. to the Company		13D	2	12/17/2014
10.5	Series A Warrant, dated as of September 30, 2014, issued by Twinlab Consolidated Holdings, Inc. to the Company		8-K	10.1	10/6/2014
10.6	Series B Warrant, dated as of September 30, 2014, issued by Twinlab Consolidated Holdings, Inc. to the Company		8-K	10.2	10/6/2014
10.7	Common Stock Put Agreement, dated as of September 30, 2014, between Twinlab Consolidated Holdings, Inc. and the Company		8-K	10.3	10/6/2014
10.7.1	Amendment No. 1 to Common Stock Put Agreement, dated as of December 15, 2014, between Twinlab Consolidated Holdings, Inc. and the Company		10-K	10.11.1	2/18/2015
10.8	Registration Rights Agreement, dated as of September 30, 2014, between Twinlab Consolidated Holdings, Inc. and the Company		8-K	10.4	10/6/2014
10.9	Agreement, dated as of October 28, 2014, between Darin Pastor, Capstone Affluent Strategies, Inc. (dissolved) and the Company		10-K	10.12	4/30/2015
10.9.1	Amendment to Agreement, dated as of December 31, 2014, between Darin Pastor, Capstone Affluent Strategies, Inc. (dissolved) and the Company		10-K	10.12.1	4/30/2015
10.1	Promissory Note from Thomas Tolworthy in favor of the Company, dated November 14, 2014		10-K	10.13	4/30/2015
10.11	Agreement to Reform Promissory Notes Due to Scrivener’s Error, dated December 15, 2014, between Darin Pastor, Capstone Affluent Strategies, Inc. (dissolved) and the Company		10-K	10.14	2/18/2015

~~CAPSTONE FINANCIAL GROUP, INC.~~-39-

(FORMERLY CREATIVE APP SOLUTIONS, INC.)

			Incorporated by reference
Exhibit		Filed			Filing
Number	Exhibit Description	herewith	Form	Exhibit	date
10.12	Form of Third-Party Investment Units Purchase Agreement (used from March 25, 2015 through May 28, 2015)		10-Q	10.1	8/13/2015
10.13	Lease Agreement, dated as of April 29, 2015, between Iskalo 8600 Transit LLC and the Company		10-K	10.15	4/30/2015
10.14	Compromise Agreement and Release, dated May 28, 2015, between Twinlab Consolidated Holdings, Inc. and the Company		8-K	10.1	5/29/2015
10.15	Amendment No. 1 to Series B Warrant, dated May 28, 2015, between Twinlab Consolidated Holdings, Inc. and the Company		8-K	10.2	5/29/2015
10.16	Prepayment and Repurchase Agreement, dated as of June 26, 2015, between Thomas A. Tolworthy and the Company		10-Q	10.5	8/13/2015
10.17	Securities Purchase Agreement dated July 24, 2015 among the Company, LC Strategic Realty, LLC, Christopher Naugle and Lorissa Naugle		10-Q	10.1	11/20/2015
10.18	Members Agreement dated July 24, 2015 among the Company, LC Strategic Realty, LLC, Christopher Naugle and Lorissa Naugle		10-Q	10.2	11/20/2015
10.19	Non-Competition Agreement dated July 24, 2015 among the Company, LC Strategic Realty, LLC and Christopher Naugle		10-Q	10.3	11/20/2015
10.2	Non-Competition Agreement dated July 24, 2015 among the Company, LC Strategic Realty, LLC and Lorissa Naugle		10-Q	10.4	11/20/2015
10.21	Securities Purchase Agreement dated July 24, 2015 among the Company, LC Strategic Holdings, LLC, Christopher Naugle and Lorissa Naugle		10-Q	10.5	11/20/2015
10.22	Members Agreement dated July 24, 2015 among the Company, LC Strategic Holdings, LLC, Christopher Naugle and Lorissa Naugle		10-Q	10.6	11/20/2015
10.23	Non-Competition Agreement dated July 24, 2015 among the Company, LC Strategic Holdings, LLC and Christopher Naugle		10-Q	10.7	11/20/2015
10.24	Non-Competition Agreement dated July 24, 2015 among the Company, LC Strategic Holdings, LLC and Lorissa Naugle		10-Q	10.8	11/20/2015
10.25	Agreement for Limited Waiver of Noncircumvention Provision, between the Company and Twinlab Consolidated Holdings, Inc., dated July 5, 2015		8-K	10.1	10/8/2015

~~STATEMENTS OF FINANCIAL CONDITION~~-40-

	December 31, 2014			December 31, 2013
				Incorporated by reference
ASSETS
Exhibit			Filed				Filing
Financial instruments, at fair value	$	28,838,301		$	—
Number	Exhibit Description		herewith	Form		Exhibit	date
Cash		12,685			—
10.26	Amendment No. 1 to Agreement for Limited Waiver of Non-Circumvention Provision and to Compromise Agreement and Release, between the Company and Twinlab Consolidated Holdings, Inc., dated October 1, 2015			8-K		10.2	10/8/2015
Note receivable		603,952			—
31.1	Certification pursuant to Securities Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 – CEO		X
Line of credit receivable, net - related party		—			580,043
31.2	Certification pursuant to Securities Exchange Act Rule 13a-14(a), as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 – CFO		X
Accrued interest receivable - related party		—			6,542
32.1	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 – CEO		X
Prepaid expense		86,209			16,895
32.2	Certification pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 – CFO		X
Furniture and equipment, net		6,500			—
Deposits		65,000			100,000
Total assets	$	29,612,647		$	703,480
LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Accounts payable	$	—		$	12,973
Accrued taxes payable		1,600			800
Accrued expenses		45,524			—
Accrued payroll liabilities		1,423			11,960
Accrued interest payable - related party		4,431			4,519
Short term advances payable - related party		94,306			—
Note payable - related party		1,203,552			—
Deferred revenue		116,662			—
Warrant put option		9,973,684			—
Deferred tax liability		6,742,723			—
Total liabilities		18,183,905			30,252
STOCKHOLDERS' EQUITY
Preferred stock, $0.001 par value, 10,000,000 shares
authorized, no shares issued and outstanding		—			—
Common stock, $0.001 par value, 2,000,000,000 shares
authorized; 94,564,648 and 93,025,000 issued and outstanding
as of December 31, 2014 and 2013, respectively		94,565			93,025
Additional paid-in capital		1,176,633			1,353,677
Retained earnings (deficit)		10,157,544			(773,474	)
Total stockholders' equity		11,428,742			673,228
Total liabilities and stockholders' equity	$	29,612,647		$	703,480

~~See Accompanying Notes to Financial Statements.~~-41-

~~-34-~~SIGNATURES

~~CAPSTONE~~Pursuant to the requirements of Section 13 ~~FINANCIAL~~or ~~GROUP~~15(d) of the Securities Exchange Act of 1934, ~~INC~~the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

~~(FORMERLY CREATIVE~~CAPSTONE ~~APP~~FINANCIAL ~~SOLUTIONS~~GROUP, INC.)

~~STATEMENTS OF~~By: ~~OPERATIONS~~/s/ Darin R. Pastor

	For the year ended
	December 31,
	2014		2013
Revenues
Services income	$	83,338	$	171,188
Interest - related party		36,585		—
		119,923		171,188
Expenses
Payroll		243,107		205,607
Professional fees		360,241		383,760
General and administrative		606,740		302,150
Forgiveness of debt - related party		1,089,617		—
Interest expense		—		2,963
Interest expense - related party		20,916		4,938
		2,320,621		899,418
Realized and Unrealized Gain on Investments
Realized gain on investment securities, net		1,019,326		—
Unrealized gain on investment securities, net		18,855,913		—
Gain on investments, net		19,875,239		—
Net income (loss) before taxes		17,674,541		(728,230	)
Provision for income taxes		6,743,523		800
Net income (loss)	$	10,931,018	$	(729,030	)
Net income (loss) per share - basic and diluted	$	0.12	$	(0.01	)
Weighted average shares outstanding -
basic and diluted		93,890,264		83,387,110

Darin R. Pastor, Chief Executive Officer

~~See~~Date: ~~Accompanying~~May ~~Notes~~2, ~~to Financial Statements.~~2016

~~-35-~~Pursuant to the requirements of the Securities Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

CAPSTONE FINANCIAL GROUP, INC.

Signature	Title	Date
/s/ Darin R. Pastor	Chairman of the Board of Directors,	May 2, 2016
Darin R. Pastor	Chief Executive Officer (Principal Executive Officer)
/s/ Halford W. Johnson	Chief Financial Officer	May 2, 2016
Halford W. Johnson	(Principal Financial Officer)

~~(FORMERLY CREATIVE APP SOLUTIONS, INC.)~~-42-

~~STATEMENTS OF~~CAPSTONE ~~STOCKHOLDERS’~~FINANCIAL ~~EQUITY~~GROUP, INC.

							Additional			Retained			Total
	Common Shares						Paid-In			Earnings			Stockholders’
	Shares			Amount			Capital			(Deficit)			Equity
Balance, December 31, 2012		80,200,000		$	80,200		$	(75,700	)	$	(44,444	)	$	(39,944	)
February 25, 2013 Issuance of common stock for cash		10,000,000			10,000			40,000			—			50,000
April 16, 2013 Issuance of common stock for services		1,000,000			1,000			4,000			—			5,000
June 6, 2013 Cancellation of common stock for services		(1,000,000	)		(1,000	)		(4,000	)		—			(5,000	)
September 30, 2013 Issuance of common stock for cash		1,470,000			1,470			306,732			—			308,202
December 31, 2013 Issuance of common stock for cash		1,355,000			1,355			1,082,645			—			1,084,000
Net loss		—			—			—			(729,030	)		(729,030	)
Balance, December 31, 2013		93,025,000			93,025			1,353,677			(773,474	)		673,228
February 25, 2014 Issuance of common stock for cash		488,237			488			414,512			—			415,000
May 8, 2014 Issuance of common stock for cash		412,000			412			349,788			—			350,200
August 29, 2014 Issuance of common stock for cash		437,647			438			371,562			—			372,000
Fourth quarter 2014 Issuance of common stock for cash		201,764			202			171,298			—			171,500
October 28, 2014 Deemed dividend		—			—			(1,484,204	)		—			(1,484,204	)
Net income		—			—			—			10,931,018			10,931,018
Balance, December 31, 2014		94,564,648		$	94,565		$	1,176,633		$	10,157,544		$	11,428,742

INDEX TO FINANCIAL STATEMENTS

~~See~~FOR ~~Accompanying~~THE ~~Notes~~YEARS toENDED ~~Financial~~DECEMBER 31, 2015 ~~Statements.~~AND 2014

-36-

	PAGES
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM	44

STATEMENTS OF FINANCIAL CONDITION	45

STATEMENTS OF OPERATIONS	46

STATEMENTS OF STOCKHOLDERS' EQUITY	47

STATEMENTS OF CASH FLOWS	48

NOTES TO FINANCIAL STATEMENTS	49

~~CAPSTONE FINANCIAL GROUP, INC.~~-43-

~~(FORMERLY~~REPORT OF INDEPENDENT ~~CREATIVE~~REGISTERED ~~APP~~PUBLIC ~~SOLUTIONS,~~ACCOUNTING ~~INC.)~~FIRM

~~STATEMENTS OF~~To ~~CASH~~the ~~FLOWS~~Board of Directors and Stockholders

	For the year ended
	December 31,
	2014			2013
CASH FLOWS FROM OPERATING ACTIVITIES
Net income (loss)	$	10,931,018		$	(729,030	)
Adjustments to reconcile net income (loss) to net
cash used in operating activities:
Purchases of investments		(8,704	)		—
Net change in unrealized (gain) on investment securities, net		(18,855,913	)		—
Forgiveness of debt - related party		1,089,617			14,202
Depreciation		333			—
(Increase) decrease in assets:
Note receivable		(603,952	)		—
Receivable line of credit, net - related party		—			(580,043	)
Accrued interest receivable - related party		(32,633	)		(6,542	)
Prepaid expense		76,282			(16,895	)
Deposits		35,000			(100,000	)
Increase (decrease) in liabilities:
Accounts payable		(12,973	)		12,673
Accrued taxes payable		800			800
Accrued expenses		45,524			—
Accrued payroll liabilities		(10,537	)		11,960
Accrued interest payable - related party		22,122			4,236
Payables interest		—			(501	)
Deferred revenue		116,662			—
Deferred tax liability		6,742,723			—
Net cash used in operating activities		(464,631	)		(1,389,140	)
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of common stock, net of offering costs		1,308,700			1,428,000
Net proceeds of line of credit - related party		(925,690	)		(45,000	)
Short term advances payable - related party		94,306			—
Net cash provided by financing activities		477,316			1,383,000
Increase (decrease) in cash		12,685			(6,140	)
Cash at beginning of period		—			6,140
Cash at end of period	$	12,685		$	—
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Assets acquired in acquisition	$	(152,429	)	$	—
Liabilities assumed in acquisition	$	1,636,633		$	—
Deemed dividend	$	(1,484,204	)	$	—

Capstone Financial Group, Inc.

We have audited the accompanying statements of financial condition of Capstone Financial Group, ~~See~~Inc. ~~Accompanying~~as ~~Notes~~of December 31, 2015 and 2014, and the related statements of operations, stockholders’ equity and cash flows for the years then ended. These financial statements are the responsibility of the Company’s management. Our responsibility is to ~~Financial~~express ~~Statements~~an opinion on these financial statements based on our audits.

~~-37-~~We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

~~CAPSTONE~~In ~~FINANCIAL~~our ~~GROUP~~opinion, ~~INC~~the financial statements referred to above present fairly, in all material respects, the financial position of Capstone Financial Group, Inc. as of December 31, 2015 and 2014, and the results of its operations and its cash flows for the years then ended, in conformity with U.S. generally accepted accounting principles.

~~NOTES~~As TOdiscussed ~~FINANCIAL~~in ~~STATEMENTS~~Notes 1 and 3, substantially all of the Company’s investments are in common stock, call options and common stock warrants of one company, whose common stock is not actively traded. Also as discussed in Note 3, 100% of the Company’s investments are classified as Level 3 Fair Value Measurements at December 31, 2015 which have been valued by the Company’s Board of Directors in the absence of an active market. We have reviewed the procedures applied by the Company in valuing such investments and inspected underlying documentation; while in the circumstances, the procedures appear to be reasonable and the documentation appropriate, determination of fair values involves subjective judgment and ultimate amounts realized may significantly vary from values presently estimated. Our opinion is not modified with respect to this matter.

~~NOTE 1~~/s/ –SQUAR ~~ORGANIZATION~~MILNER ~~AND DESCRIPTION OF BUSINESS~~LLP

~~Organization~~(formerly Squar, Milner, Peterson, Miranda & Williamson, LLP)

~~The business~~San ~~focus of Capstone Financial Group~~Diego, Inc. (the "Company") is to invest in stock of other companies. The Company seeks to discover, unlock and grow value in privately-held or illiquid companies, including through the exercise of friendly influence at a company in support of operational improvements and strategic initiatives. In some cases, the Company might be one of the largest shareholders of the other company.California

~~The Company~~May ~~seeks to work closely and constructively with the management and boards of the other companies. While the Company does not manage the day-to-day operations of these companies~~2, ~~the Company seeks to maintain a thorough understanding of how they operate and evaluate their performance and prospects on an ongoing basis.~~2016

The Company may also seek to actively trade in its strategic investment positions and/or enter into private securities transactions with regard to those positions, to capitalize on price fluctuations and realize profits or minimize losses.-44-

~~The Company~~CAPSTONE ~~was~~FINANCIAL ~~incorporated on July 10~~GROUP, ~~2012 under the laws of the State of Nevada, as Creative App Solutions, Inc~~ INC. ~~On August 23, 2013, the Company amended its articles of incorporation and changed its name to Capstone Financial Group, Inc.~~

~~Through December 31, 2012, the Company had not commenced significant operations and, in accordance with Financial Accounting Standards Board~~ (~~“FASB”)~~FORMERLY ~~Accounting~~CREATIVE ~~Standards~~APP ~~Codification (“ASC”) Topic 915~~SOLUTIONS, ~~the Company was considered a development stage company~~ INC. ~~During the year ended December 31, 2013, the Company exited the development stage. Effective in 2014, the Company transitioned its business plan to its current business focus.~~)

~~At December~~STATEMENTS ~~31,~~OF ~~2014~~FINANCIAL the Company’s investments are entirely focused in one entity, Twinlab. Twinlab also holds a put to require the Company to exercise minimum monthly warrant amounts. The Company is currently selling a portion of its investment in Twinlab to fund this put obligation. Management believes that it will be able to liquidate a sufficient portion of its investment and/or raise additional capital to fund its put obligation as and when it becomes due. However, no assurance can be given that market conditions in the future will continue to allow the Company to sell its investments in sufficient quantities to fund its put obligation or to raise additional capital to do so. (See Note 3)CONDITION

NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

	December 31, 2015			December 31, 2014
ASSETS
Financial instruments, at fair value	$	13,161,718		$	28,838,301
Cash		136,849			12,685
Note receivable		—			603,952
Prepaid expense		4,152			86,209
Furniture and equipment, net		12,645			6,500
Deposits		63,930			65,000
Total assets	$	13,379,294		$	29,612,647

LIABILITIES AND STOCKHOLDERS’ EQUITY
LIABILITIES
Accrued expenses	$	267,735		$	48,547
Accrued interest payable - related party		135			4,431
Short term advances payable - related party		96,695			94,306
Note payable - related party		68,416			1,203,552
Deferred revenue		—			116,662
Put and call option liability		619,122			9,973,684
Income taxes payable		2,400			—
Deferred tax liability		4,552,107			6,742,723
Total liabilities		5,606,610			18,183,905

STOCKHOLDERS' EQUITY
Preferred stock, $0.001 par value, 10,000,000 shares
authorized, no shares issued and outstanding		—			—
Common stock, $0.001 par value, 2,000,000,000 shares
authorized; 94,364,148 and 94,564,648 issued and outstanding as of December 31, 2015 and 2014, respectively		94,565			94,565
Treasury stock (500 shares of common stock at $2.03 per share, and
200,000 shares of common stock at $1.09 per share), at December 31, 2015		(219,426	)		—
Additional paid-in capital		1,176,633			1,176,633
Retained earnings		6,720,912			10,157,544
Total stockholders' equity		7,772,684			11,428,742
Total liabilities and stockholders' equity	$	13,379,294		$	29,612,647

~~Basis of~~See ~~Presentation~~Accompanying Notes to Financial Statements.

The accompanying financial statements have been prepared using the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and the accounting and financial reporting conventions of the investment company industry.-45-

~~Reclassifications~~CAPSTONE FINANCIAL GROUP, INC.

~~Certain reclassifications~~(FORMERLY ~~have~~CREATIVE ~~been~~APP ~~made to the prior year financial statements to conform to the current year presentation~~SOLUTIONS, INC. ~~The reclassification had no effect on the previous reported results of operations or stockholders’ equity.~~)

~~-38-~~STATEMENTS OF OPERATIONS

CAPSTONE FINANCIAL GROUP, INC.

	For the year ended
	December 31,
	2015			2014
Revenues
Services income	$	116,662		$	83,338
Other income		10,800			—
Interest income		14,460			36,585
		141,922			119,923
Expenses
Personnel		427,106			243,107
Professional fees		1,188,762			360,241
General and administrative		1,142,357			606,740
Forgiveness of receivable - related party		—			1,089,617
Interest expense - related party		10,859			20,916
		2,769,084			2,320,621

Realized and Unrealized (Loss) Gain on Financial Instruments
Realized (loss) gain on financial instruments, net		(5,417	)		1,019,326
Unrealized (loss) gain on financial instruments, net		(2,993,872	)		18,855,913
(Loss) gain on financial instruments, net		(2,999,289	)		19,875,239

Net (loss) income before income taxes		(5,626,451	)		17,674,541
(Benefit) provision for income taxes		(2,189,819	)		6,743,523
Net (loss) income	$	(3,436,632	)	$	10,931,018
Net (loss) income per share - basic and diluted	$	(0.04	)	$	0.12
Weighted average shares outstanding -
basic and diluted		94,471,801			93,890,264

~~NOTES~~See TOAccompanying ~~FINANCIAL~~Notes ~~STATEMENTS~~to Financial Statements.

~~NOTE 2 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)~~-46-

~~Use of~~CAPSTONE ~~Estimates~~FINANCIAL GROUP, INC.

~~The preparation~~(FORMERLY ofCREATIVE ~~financial~~APP statements in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting periodSOLUTIONS, INC. ~~Actual results could differ from those estimates.~~)

~~Cash Equivalents~~STATEMENTS OF STOCKHOLDERS’ EQUITY

The Company considers any investments in short-term money market funds with original maturities of three months or less to be cash equivalents.

									Additional			Retained			Total
	Common Shares					Treasury			Paid-In			Earnings			Stockholders’
	Shares			Amount		Stock			Capital			(Deficit)			Equity

Balance, December 31, 2013		93,025,000		$	93,025	$	—		$	1,353,677		$	(773,474	)	$	673,228

February 25, 2014 Issuance of common stock for cash		488,237			488		—			414,512			—			415,000

May 8, 2014 Issuance of common stock for cash		412,000			412		—			349,788			—			350,200

August 29, 2014 Issuance of common stock for cash		437,647			438		—			371,562			—			372,000

Fourth quarter 2014 Issuance of common stock for cash		201,764			202		—			171,298			—			171,500

October 28, 2014 Deemed dividend		—			—		—			(1,484,204	)		—			(1,484,204	)

Net income		—			—		—			—			10,931,018			10,931,018

Balance, December 31, 2014		94,564,648			94,565		—			1,176,633			10,157,544			11,428,742

Treasury stock, at cost (200,000 shares at $1.09)		(200,000	)		—		(218,411	)		—			—			(218,411	)

Treasury stock, at cost (500 shares at $2.03)		(500	)		—		(1,015	)		—			—			(1,015	)

Net loss		—			—		—			—			(3,436,632	)		(3,436,632	)

Balance, December 31, 2015		94,364,148		$	94,565	$	(219,426	)	$	1,176,633		$	6,720,912		$	7,772,684

~~Investments~~See Accompanying Notes to Financial Statements.

~~Investments primarily comprise strategic, non~~-controlling equity ownership interests in privately held or illiquid businesses. The Company currently values its investments at fair value as determined by internal valuation guidelines as well as outside appraisals.47-

~~Strategic investments~~CAPSTONE ~~are~~FINANCIAL reviewed on an ongoing basis to ensure that the carrying values of the investments have not been impaired. If the Company determines that an impairment loss on a strategic investment has occurred due to a decline in fair value or other market conditionsGROUP, ~~the investment is written down to its estimated fair value~~ INC.

~~Fair Value~~(FORMERLY ~~Measurements~~CREATIVE APP SOLUTIONS, INC.)

~~GAAP defines~~STATEMENTS ~~fair~~OF ~~value~~CASH as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. GAAP establishes a fair value hierarchy that prioritizes the use of inputs used in valuation methodologies into the following three levels:FLOWS

• Level 1: Inputs to the valuation methodology are quoted prices, unadjusted, for identical assets or liabilities in active markets. A quoted price in an active market provides the most reliable evidence of fair value and shall be used to measure fair value whenever available.

	For the year ended
	December 31,
	2015			2014
CASH FLOWS FROM OPERATING ACTIVITIES
Net loss	$	(3,436,632	)	$	10,931,018
Adjustments to reconcile net (loss) income to net
cash used in operating activities:
Sale (purchase) of investments, net		3,322,732			(8,704	)
Net change in unrealized loss (gain) on investment securities, net		2,993,872			(18,855,913	)
Net change in realized (gain) on investment securities, net		5,417			—
Forgiveness of receivable - related party		—			1,089,617
Depreciation		2,138			333
(Increase) decrease in assets:
Note receivable		400,000			(600,000	)
Accrued interest receivable - related party		—			(32,633	)
Accrued interest receivable		(14,460	)		(3,952	)
Prepaid expense		82,057			76,282
Deposits		1,070			35,000
Increase (decrease) in liabilities:
Accounts payable		—			(12,973	)
Income taxes payable		2,400			800
Accrued expenses		219,189			45,524
Accrued payroll liabilities		—			(10,537	)
Accrued interest payable - related party		(4,296	)		22,122
Deferred revenue		(116,662	)		116,662
Deferred tax liability		(2,190,616	)		6,742,723
Net cash provided by (used in) operating activities		1,266,209			(464,631	)

CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of furniture and equipment		(8,283	)		—
Net cash used in investing activities		(8,283	)		—
CASH FLOWS FROM FINANCING ACTIVITIES
Proceeds from sale of common stock, net of offering costs		—			1,308,700
Short term advances payable - related party		2,389			94,306
Net repayments on notes payable – related party		(1,135,136	)		(925,690	)
Purchase of treasury stock		(1,015	)		—
Net cash (used in) provided by financing activities		(1,133,762	)		477,316
Increase in cash		124,164			12,685
Cash at beginning of period		12,685			—
Cash at end of period	$	136,849		$	12,685

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION
Noncash purchase of treasury stock in satisfaction of note receivable	$	218,411		$	—
Assets acquired in acquisition	$	—		$	(152,429	)
Liabilities assumed in acquisition	$	—		$	1,636,633
Deemed dividend	$	—		$	(1,484,204	)
Interest paid	$	10,761		$	43,534

•See ~~Level~~Accompanying 2:Notes ~~Inputs~~ to ~~the~~Financial valuation methodology include quoted prices for similar assets or liabilities in active markets; inputs to the valuation methodology include quoted prices for identical or similar assets or liabilities in markets that are not active; or inputs to the valuation methodology that are derived principally from or can be corroborated by observable market data by correlation or other meansStatements.

• Level 3: Inputs to the valuation methodology are unobservable and significant to the fair value measurement. Level 3 assets and liabilities include financial instruments whose value is determined using discounted cash flow methodologies, as well as instruments for which the determination of fair value requires significant management judgment or estimation.-48-

~~The Company’s~~CAPSTONE ~~investments~~FINANCIAL ~~are valued by level within the fair value hierarchy~~GROUP, INC. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The valuation methodology for each investment type and discussion of key unobservable inputs is described below.

~~-39-~~NOTES TO FINANCIAL STATEMENTS

~~CAPSTONE~~NOTE ~~FINANCIAL~~1 ~~GROUP,~~– ~~INC.~~ORGANIZATION AND DESCRIPTION OF BUSINESS

~~NOTES TO FINANCIAL STATEMENTS~~Organization

~~NOTE 2~~The –business ~~SUMMARY~~focus OFof ~~SIGNIFICANT~~Capstone ~~ACCOUNTING~~Financial Group, Inc. ~~POLICIES~~ (~~CONTINUED~~the "Company") is to invest in stock of other companies. The Company seeks to discover, unlock and grow value in privately-held or illiquid companies, including through the exercise of influence at a company in support of operational improvements and strategic initiatives. In some cases, the Company might be one of the largest shareholders of the other company.

~~Common~~The Company seeks to work with the ~~Stocks~~management and boards of the other companies. While the Company does not manage the day-to-day operations of these companies, the Company seeks to maintain a thorough understanding of operations and perform continual evaluations of performance and prospects on an ongoing basis.

~~Generally, when~~The ~~the~~ Company ~~invests~~may inalso ~~common~~seek ~~stocks~~to ~~that are traded on the NASDAQ Markets or over-the-counter markets (such as the OTCBB,~~actively ~~OTCQB or OTC Pink marketplaces), such common stocks are valued at the last traded price. If there is no~~ trade onin aits ~~measurement~~strategic ~~date,~~investment ~~the~~positions ~~Company~~and/or ~~will~~enter ~~typically~~into ~~value~~private ~~the~~securities ~~common~~transactions ~~stock~~with atregard ~~the closing bid price. However, in certain circumstances, the closing trading price is not considered~~ to bethose ~~a fair indication of the value for which the Company can sell the common stock. In such cases~~positions, ~~the common stock must be analyzed~~ to ~~determine~~capitalize ~~what~~on ~~exit~~ price ~~the~~fluctuations ~~Company~~and ~~would~~realize ~~receive~~profits ~~when~~or ~~liquidating~~minimize ~~the position~~losses. Investments in non-marketable common stocks at December 31, 2014 were valued based on subsequent transactions with unrelated third parties. These positions are classified as Level 3 securities by the Company.

~~Derivative~~The Company was incorporated on July 10, 2012 under the laws of the State of Nevada, as Creative App Solutions, Inc. On August 23, 2013, the Company amended its articles of incorporation and changed its name to Capstone Financial ~~Instruments~~Group, Inc.

~~Derivative financial instruments include stock options and call and put warrants at December 31~~Market, ~~2014.~~Credit Derivatives are accounted for at fair value with changes in fair value reported in operations. The significant unobservable inputs used in the fair value measurement of the Company’s derivative financial instruments include the underlying common stock, duration, volatility and ~~discount rate,~~Liquidity ~~which are used in the Black-Scholes model. Changes to any of those inputs in isolation would result in fluctuations in the fair value measurement.~~Risk

~~Investment~~At December 31, 2015 and 2014 the ~~Transaction~~majority of Company’s investments are focused in one entity, ~~Related~~Twinlab ~~Income~~Consolidated Holdings, Inc. Management believes that it will be able to liquidate a sufficient portion of its investment and/or ~~Expenses~~raise additional capital to fund its obligations as and when they become due. However, no assurance can be given that market conditions in the future will continue to allow the Company to sell its investments in sufficient quantities to fund its obligations or to raise additional capital to do so.

~~Purchases~~Market ~~and~~risk ~~sales~~is ofthe ~~investments~~potential loss the ~~are~~Company ~~recorded~~may onincur as a ~~trade-date~~result ~~basis.~~of ~~Realized~~changes ~~gains~~in ~~and~~the ~~losses~~market onor ~~investments~~fair ~~are~~value ~~recognized~~of ona ~~the~~particular ~~first-in,~~financial ~~first-out method~~instrument. ~~Dividend~~Risks ~~income~~arise onin ~~investments~~options and ~~owned~~warrant iscontracts ~~recognized~~from onchanges in the ~~exdividend~~market ~~date,~~or ~~net~~fair value of ~~applicable~~their ~~withholding~~underlying ~~taxes~~financial instruments.

~~Revenue~~Credit risk is the potential loss the ~~Recognition~~Company may incur as a result of the failure of a counterparty or an issuer to make payments according to the terms of a contract. Credit risk can arise from investment activities in financially distressed issuers. To manage this risk, the Company may seek to diversify its investment portfolio with respect to specific credits, sectors and asset classes.

The Company ~~recognizes~~is ~~revenue~~also ~~for~~subject ~~services~~to ~~when~~market concentration ~~all~~risk ofsince ~~the~~a ~~following~~significant ~~conditions~~portion ~~are satisfied: (1) there is persuasive evidence~~ of anits ~~arrangement; (2) the~~ investment ~~banking~~portfolio ~~service~~ has ~~been~~similar ~~provided~~characteristics, toand ~~the~~is ~~customer;~~therefore ~~(3) the amount of fees to be~~affected ~~paid~~similarly by ~~the~~changes ~~customer~~in iseconomic ~~fixed or determinable; and (4) the collection of fees is probable~~conditions.

~~Earnings per Share~~-49-

~~The Company~~CAPSTONE ~~follows~~FINANCIAL ASC Topic 260 to account for the earnings per share. Basic earnings per common share calculations are determined by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per common share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding. During periods when common stock equivalentsGROUP, ~~if any, are anti-dilutive they are not considered in the computation~~ INC. ~~As of December 31, 2014 and 2013, there were no dilutive common shares equivalents outstanding.~~

~~Concentration Risks~~NOTES TO FINANCIAL STATEMENTS

~~During the~~NOTE ~~year~~2 ~~ended~~– ~~December~~SUMMARY ~~31,~~OF ~~2014, the Company had $83,338 in revenue generated from two customers for consulting services and~~SIGNIFICANT ~~had~~ACCOUNTING ~~interest~~POLICIES ~~income from a related party of $36,585. During the year ended December 31, 2013, the Company had $164,593 in revenue generated from two customers.~~

~~-40-~~Investments of the Company trade in thin markets and throughout the year, depending upon market conditions, may be considered inactive. As a result, the market values can be more volatile and difficult to determine relative to other securities. In addition, if the Company is required to liquidate all or a portion of its portfolio quickly, it may realize significantly less than the value at which it previously recorded its investments.

~~CAPSTONE~~Basis ~~FINANCIAL~~of ~~GROUP, INC.~~Presentation

~~NOTES~~The TOaccompanying ~~FINANCIAL~~financial ~~STATEMENTS~~statements have been prepared using the accrual basis of accounting in conformity with accounting principles generally accepted in the United States of America (“GAAP”) and the accounting and financial reporting conventions of the investment company industry.

~~NOTE 2~~Use –of ~~SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)~~Estimates

~~Income~~The preparation of financial statements ~~Taxes~~in conformity with GAAP requires the Company’s management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities as of the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

~~The Company~~Cash follows ASC Topic 740 for recording the provision for income taxes. Deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled. Deferred income tax expenses or benefits are based on the changes in the asset or liability each period. If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized. Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change.Equivalents

~~Deferred income~~The ~~taxes~~Company ~~may~~considers ~~arise~~any ~~from temporary differences resulting from income and expense items reported for financial accounting and~~investments ~~tax purposes~~ in ~~different~~short-term ~~periods.~~money ~~Deferred~~market ~~taxes~~funds ~~are~~with ~~classified~~original asmaturities ~~current or non-current, depending on the classification~~ of ~~assets~~ ~~and~~three ~~liabilities~~months toor ~~which~~less ~~they relate. Deferred taxes arising from temporary differences that are not related~~ to anbe ~~asset or~~cash ~~liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse~~equivalents.

The Company applies a more-likely-than-not recognition threshold for all tax uncertainties. ASC Topic 740 only allows the recognition of those tax benefits that have a greater than 50% likelihood of being sustained upon examination by the taxing authorities. As of December 31, 2014 the Company reviewed its tax positions and determined there were no outstanding or retroactive tax positions with less than a 50% likelihood of being sustained upon examination by the taxing authorities; therefore, this standard has not had a material effect on the Company.Investments

~~Advertising~~Investments primarily ~~costs~~comprise strategic, non-controlling equity ownership interests in privately held businesses or public companies with very illiquid trading markets. These strategic investments are accounted for at fair value as determined by internal valuation guidelines and/or outside appraisals as there are no readily ascertainable fair market value prices in accordance with the Financial Accounting Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 946-10 and FASB ASC 820-10. Because the Company follows the financial accounting and reporting conventions of the investment company industry, it reports investments at estimated fair value.

~~Advertising~~FASB ASC 820-10-65-4 provides additional ~~costs~~guidance ~~are~~for ~~expensed~~estimating asfair ~~incurred~~value in accordance with FASB ASC 820-10 when the volume and level of market activity for the asset or liability have significantly decreased. ~~For~~FASB ASC 820-10-65-4 also includes guidance on identifying circumstances that indicate a transaction is not orderly. It acknowledges that in these circumstances quoted prices may not be determinative of fair value. FASB ASC 820-10-65-4 emphasizes that even if there has been a significant decrease in the volume ~~years~~and ~~ended~~level ~~December~~of ~~31,~~market ~~2014~~activity for the asset or liability and ~~2013~~regardless of the valuation technique(s) used, ~~advertising~~the objective ~~costs~~of a fair value measurement remains the same. Fair value is the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction (that is, not a forced liquidation or distressed sale) between market participants at the measurement date under current market conditions. Under FASB ASC 820-10-65-4, quoted prices for assets or liabilities in inactive markets may require adjustment due to uncertainty as to whether the underlying transactions are orderly. There is little information, if any, to evaluate if individual transactions are orderly in an inactive market. Accordingly, the Company is required to evaluate the facts and circumstances to determine whether the transaction is orderly based on the weight of ~~$62~~the evidence. FASB ASC 820-10-65-4 does not designate a specific method for adjusting a transaction or quoted price; however,~~816~~ it does provide guidance for determining how much weight to give a transaction or quoted price. Price quotes derived from transactions that are not orderly are not considered to be determinative of fair value and ~~$44~~should be given less weight,~~173~~ if any, ~~respectively~~when estimating fair value. In the absence of observable market data at December 31, 2015, the ~~were~~Company's fair value measurements included inassumptions ~~general~~about future cash flow and ~~administrative~~appropriately ~~expenses~~risk-adjusted discount rates that it believes market participants would make in orderly market transactions.

~~Recent Accounting Pronouncements~~-50-

~~The Company~~CAPSTONE ~~has~~FINANCIAL ~~evaluated the recent accounting pronouncements through the date of this filing~~GROUP, ~~and management does not expect adoption of such pronouncements to have an impact on the Company’s financial statements~~ INC.

~~NOTE 3~~NOTES –TO ~~INVESTMENTS,~~FINANCIAL ~~AT FAIR VALUE~~STATEMENTS

~~Investments in~~NOTE ~~securities~~2 ~~and~~– ~~unrealized~~SUMMARY ~~gain,~~OF ~~net~~SIGNIFICANT ACCOUNTING ~~are~~POLICIES ~~comprised of the following at December 31, 2014.~~(CONTINUED)

		Cost		Estimated Fair Value		Unrealized Gain (Loss)
ASSETS
Common Stocks	$	6,215	$	8,350,500	$	8,344,288
Unlisted Call Options		2,492		6,312,801		6,310,309
Warrants - "A" (the First Warrant)		---		9,947,368		9,947,368
Warrants - "B" (the Second Warrant)		---		4,227,632		4,227,632
	$	8,707	$	28,838,301	$	28,829,597
LIABILITIES
Warrant put option	$	---	$	(9,973,684)	$	(9,973,684)

Fair Value Measurements and Valuation Methodologies

~~For~~ GAAP defines fair value as the ~~year~~price that ~~ended~~would ~~December~~be ~~31,~~received ~~2014,~~to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the ~~Company~~measurement ~~recorded~~date. GAAP establishes a ~~net~~fair ~~unrealized~~value ~~gain~~hierarchy onthat ~~investment~~prioritizes ~~securities~~the use of ~~$18,855,913.~~inputs used in valuation methodologies into the following three levels:

~~-41-~~• Level 1: Inputs to the valuation methodology are quoted prices, unadjusted, for identical assets or liabilities in active markets. A quoted price in an active market provides the most reliable evidence of fair value and shall be used to measure fair value whenever available.

~~CAPSTONE~~• ~~FINANCIAL~~Level ~~GROUP,~~2: ~~INC~~Inputs to the valuation methodology include quoted prices for similar assets or liabilities in active markets; inputs to the valuation methodology include quoted prices for identical or similar assets or liabilities in markets that are not active; or inputs to the valuation methodology that are derived principally from or can be corroborated by observable market data by correlation or other means.

~~NOTES~~• TOLevel ~~FINANCIAL~~3: ~~STATEMENTS~~Inputs to the valuation methodology are unobservable and significant to the fair value measurement. Level 3 assets and liabilities include financial instruments whose value is determined using discounted cash flow methodologies, as well as instruments for which the determination of fair value requires significant management judgment or estimation.

~~NOTE~~The Company’s financial instruments are 3valued –by ~~INVESTMENTS,~~level ATwithin ~~FAIR~~the ~~VALUE~~fair ~~(CONTINUED)~~value hierarchy. Assets and liabilities are classified in their entirety based on the lowest level of input that is significant to the fair value measurement. The valuation methodology for each investment type and discussion of key unobservable inputs is described below.

~~During~~The Company often invests in common stocks that are thinly traded where the ~~first~~closing ~~quarter~~trading price is not considered to be a fair indication of ~~2014,~~the value for which the Company can ~~purchased~~sell ~~shares~~or inbuy athe ~~company~~common ~~traded~~stock. onIn ~~the~~such ~~OTC~~cases, ~~Markets~~as ~~for~~in athe ~~total~~case of ~~$2,919.~~private-company ~~The~~limited ~~Company~~liability company membership interests ~~currently~~held ~~categorizes~~by ~~these~~the ~~holdings~~Company, asthe ~~Level~~common 3stock ~~assets.~~must Asbe ofanalyzed ~~December~~to ~~31,~~determine ~~2014,~~what ~~this~~exit ~~investment~~price isthe ~~carried~~Company atwould $0receive ~~value~~when ~~under~~liquidating ~~management’s~~the ~~valuation~~position. ~~guidelines~~These positions are classified as Level 3 securities.

InThe significant unobservable inputs ~~August~~used ~~2014,~~in the ~~Company~~fair ~~purchased~~value ~~10,987,500~~measurement ~~split-adjusted~~of ~~shares~~the ofCompany’s Level 3 common ~~stock~~stocks ofare ~~Twinlab~~recent ~~Consolidated~~open ~~Holdings,~~market ~~Inc.~~and ~~(“Twinlab”)~~non inopen-market ~~private~~ transactions ~~from~~with 25unrelated ~~shareholders~~parties. ~~for~~Increases ~~total~~or ~~consideration~~decreases in any of ~~$3,296. In~~those ~~November~~inputs ~~2014,~~in ~~the~~isolation ~~Company~~would ~~sold~~result ~~436,681~~in a lower ofor ~~these~~higher ~~shares~~fair value measurement, respectively.

In August 2014, the Company purchased options to acquire 8,743,000 outstanding shares of Twinlab’s Common Stock (collectively, the “Call Options”) in a private transaction from 14 stockholders, for total consideration of $2,623. The Call Options exercise price is $0.0001 per share and the Call Options expire in August 2015. Such options are immediately exercisable and in February 2015, the Company exercised 7,244,500 of those options.-51-

~~In September~~CAPSTONE ~~2014,~~FINANCIAL ~~Twinlab issued to the Company a Series A Warrant to purchase up to 52~~GROUP,~~631,579 shares of Twinlab’s Common Stock at an exercise price of $0~~ INC.76 per share (the “First Warrant”) and a Series B Warrant to purchase up to 22,368,421 shares of Twinlab’s Common Stock at an exercise price of $0.76 per share (the “Second Warrant”). Both the First Warrant and the Second Warrant are exercisable from October 2014 through October 2017.

~~Twinlab and~~NOTES ~~the~~TO ~~Company~~FINANCIAL also entered into a Common Stock Put Agreement, dated as of September 30, 2014, as amended on December 15, 2014 (the “Put Agreement”). Pursuant to the Put Agreement, if the Company does not exercise the First Warrant by February 16, 2015 and thereafter at a rate of no less than 1,461,988 shares of Common Stock (“the Minimum Amount”) per month (the “Minimum Rate”) over the term of the First Warrant, Twinlab has the right (subject to certain conditions) to require the Company to exercise the First Warrant at the Minimum Rate for the duration of the First Warrant.STATEMENTS

~~Fair Value~~NOTE of2 ~~Financial~~– ~~Instruments~~ SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

The Company's ~~financial~~has ~~instruments~~warrants ~~recorded~~and atcall ~~fair~~options ~~value~~to purchase ~~have~~common ~~been~~stock ~~categorized~~in ~~based~~illiquid ~~upon~~public acompanies. ~~fair~~Generally, ~~value~~there ~~hierarchy~~is inno ~~accordance~~established ~~with accounting~~market ~~guidance~~for these investments. The ~~following~~Company values ~~fair~~these ~~value~~warrants ~~hierarchy~~and ~~table~~call ~~presents~~options ~~information~~by ~~about~~using a model that takes into consideration the ~~Company's~~exercise ~~financial~~or ~~instruments~~call ~~measured~~price of the warrant ator ~~fair~~call ~~value~~option, the price of the underlying common stock and the expiration date of the warrant or call option.

	Assets and Liabilities Measured at
	Fair Value on a Recurring Basis
	December 31, 2014						December 31, 2013
	Level 2		Level 3		Total		Total
Assets
Financial instruments, at fair value:
Common Stocks	$	—	$	8,350,500	$	8,350,500	$	—
Unlisted Call Options		—		6,312,801		6,312,801		—
Warrants - "A" (the First Warrant)		—		9,947,368		9,947,368		—
Warrants - "B" (the Second Warrant)		—		4,227,632		4,227,632		—
Total Financial instruments, at fair value		—		28,838,301		28,838,301		—
Total assets held at fair value	$	—	$	28,838,301	$	28,838,301	$	—
Liabilities
Financial instruments, at fair value:
Warrant put option		—		9,973,684		9,973,684		—
Total liabilities held at fair value	$	—	$	9,973,684	$	9,973,684	$	—

The significant unobservable inputs used in the fair value measurement of the Company’s warrants and call options includes the price of the underlying thinly traded common stock, duration and discount rate and volatility. Increases or decreases in the premium-to-parity would result in a higher or lower fair value measurement, respectively.

Generally, when the Company invests in common stocks that are traded on the NASDAQ Markets or over-42the-counter markets (such as the OTCBB, OTCQB or OTC Pink marketplaces), such common stocks are valued at the last traded price. If there is no trade on a measurement date, the Company will typically value the common stock at the closing bid price. However, in certain circumstances, the closing trading price is not considered to be a fair indication of the value for which the Company can sell the common stock. In such cases, the common stock must be analyzed to determine what exit price the Company would receive when liquidating the position. Investments in non-marketable common stocks at December 31, 2015 and December 31, 2014 were valued based, in part, on subsequent transactions with unrelated third parties and at December 31, 2015 were valued by the Company with the assistance of an independent valuation consultant. These positions are classified as Level 3 securities by the Company.

~~CAPSTONE~~From ~~FINANCIAL~~time ~~GROUP~~to time, ~~INC~~the Company has investments in private limited liability companies. Generally, there is no established market for these investments. The Company values these interests by means of both quantitative and qualitative measures, generally including the financial stability of the company, the economic rights of the interests and the economic prospects of the company.

~~NOTES~~The TOsignificant ~~FINANCIAL~~unobservable ~~STATEMENTS~~input used in the fair value measurement of the Company’s limited liability company investments is the expected recovery of contributed capital. Increases or decreases in the expected recovery would result in a higher or lower fair value measurement, respectively.

~~NOTE 3 – INVESTMENTS, AT FAIR VALUE (CONTINUED)~~-52-

~~This hierarchy~~CAPSTONE ~~requires~~FINANCIAL ~~the Company to use observable market data~~GROUP, ~~when available, and to minimize the use of unobservable inputs when determining fair value~~ INC. For some products or in certain market conditions, observable inputs used in valuing certain financial assets and liabilities were unavailable. In situations where there is little, if any, market activity for an asset or liability at the measurement date, the fair value measurement objective remains to measure the financial asset at the price that would be received by the holder of the financial asset (or liability) in an orderly transaction that is not a forced liquidation or distressed sale at the measurement date.

~~At December~~NOTES ~~31,~~TO ~~2014,~~FINANCIAL the Company recorded its investment in Twinlab common stock at $0.76 per share which is management's estimate of the fair market value and is based, in part, on the subsequent sale of Twinlab common shares to unrelated parties in 2015 (see Note 11). STATEMENTS

~~At December~~NOTE ~~31,~~2 ~~2014,~~– ~~the~~SUMMARY ~~Company~~OF ~~recorded its investment in the Call Options at the estimated fair market value of $0.76 per option~~SIGNIFICANT ~~share,~~ACCOUNTING ~~which~~POLICIES ~~reflects management’s estimate of the fair market value of the underlying common stock of Twinlab.~~(CONTINUED)

~~At December~~Derivative ~~31,~~Financial 2014, the Company recorded its investment in the First Warrant and the Second Warrant and its liability under the Put Agreement at management's estimate of the fair market value using the Black-Scholes option pricing model with the following weighted-average assumptions:Instruments

	For the year ended
	December 31, 2014
Volatility	44%
Risk - free interest rate	0.58%
Dividend yield	-
Expected life in years	2

Derivative financial instruments include call options and warrants at December 31, 2015 and December 31, 2014. Derivatives are accounted for at fair value with changes in fair value reported in operations. The significant unobservable inputs used in the fair value measurement of the Company’s derivative financial instruments include the underlying common stock, duration, volatility and discount rate, which are used in the option pricing model. Changes to any of those inputs in isolation would result in fluctuations in the fair value measurement.

~~NOTE 4~~Investment ~~– LINES OF CREDIT~~Transaction, ~~NET~~Related Income –and ~~RELATED PARTY~~Expenses

~~On August~~Purchases 8,and ~~2013,~~sales ~~the Company entered into (as borrower) an unsecured $500,000 revolving line~~ of ~~credit~~investments ~~with Capstone Affluent Strategies,~~are ~~Inc.~~recorded ~~(“Affluent”),~~on ~~which~~a ~~was~~trade-date ~~owned and controlled by Darin Pastor~~basis. ~~The~~Realized ~~line~~gains ofand ~~credit~~losses ~~bore~~on ~~interest~~investments atare 2%recognized ~~per annum with principal and interest due~~ on ~~August~~the 8first-in, ~~2015~~first-out method. AtDividend income ~~December~~on ~~31,~~investments ~~2013,~~owned ~~the~~is ~~balance~~recognized ~~payable~~ on the ~~line~~ex-dividend date, net of ~~credit~~applicable ~~was~~withholding ~~$892,093~~taxes.

~~On September~~Treasury ~~13,~~Stock 2013, the Company entered into (as lender) an unsecured $500,000 revolving line of credit with Capstone Affluent Strategies, Inc., which was owned and controlled by Darin Pastor. In October 2013, the maximum amount available under this line of credit was increased to $2,000,000. The line of credit bore interest at 2% per annum with principal and interest due on September 13, 2015. At December 31, 2013, the balance receivable on the line of credit was $1,472,136.Purchases

~~Due~~The Company is authorized to arepurchase ~~right~~shares of ~~offset,~~ the ~~receivable~~Company’s ~~and~~common ~~payable~~stock ~~under~~in ~~the~~private ~~crossing~~transactions ~~revolving~~from ~~lines~~time ofto ~~credit~~time. ~~with~~During ~~Affluent~~2015, ~~had~~the Company ~~been~~repurchased ~~presented in~~200,500 ~~the~~shares ~~accompanying~~at ~~balance~~an ~~sheet~~aggregate ascost aof approximately $~~580~~220,~~043~~000, ~~net~~which ~~receivable~~included atapproximately ~~December 31~~$218,000 ~~2013~~in satisfaction of an outstanding note receivable.

~~As part~~Revenue ~~of an October 28, 2014 transaction, the crossing revolving lines of credit with Affluent were cancelled, and the Company forgave its $1,089,617 net receivable thereunder. (See Note 8.)~~Recognition

~~-43-~~The Company recognizes revenue for services when all of the following conditions are satisfied: (1) there is persuasive evidence of an arrangement; (2) the related service has been provided to the customer; (3) the amount of fees to be paid by the customer is fixed or determinable; and (4) the collection of fees is probable.

~~CAPSTONE~~Earnings ~~FINANCIAL~~per ~~GROUP, INC.~~Share

~~NOTES~~The TOCompany ~~FINANCIAL~~follows ~~STATEMENTS~~FASB ASC 260 for earnings per share. Basic earnings per common share calculations are determined by dividing net income by the weighted average number of shares of common stock outstanding during the year. Diluted earnings per common share calculations are determined by dividing net income by the weighted average number of common shares and dilutive common share equivalents outstanding. During periods when common stock equivalents, if any, are anti-dilutive they are not considered in the computation. As of December 31, 2015 and 2014, there were no dilutive common shares equivalents outstanding.

~~NOTE 5 – NOTE RECEIVABLE~~-53-

~~On November~~CAPSTONE ~~14,~~FINANCIAL ~~2014 the Company loaned $600~~GROUP,~~000 to Twinlab’s chief executive officer/controlling shareholder under an unsecured note due December 29, 2015 bearing interest at 5%~~ INC. ~~At December 31, 2014 the balance receivable on the note is $603,952.~~

~~NOTE 6~~NOTES –TO ~~DEPOSIT~~FINANCIAL STATEMENTS

~~At December~~NOTE ~~31,~~2 ~~2013,~~– ~~the~~SUMMARY ~~Company~~OF ~~had made a $100,000 deposit related to an anticipated purchase transaction. In February 2014, the~~SIGNIFICANT ~~transaction~~ACCOUNTING ~~was~~POLICIES ~~cancelled and the $100,000 was repaid to the Company. In 2014, the Company made a deposit of $65,000 toward an anticipated purchase transaction.~~(CONTINUED)

~~NOTE 7~~Concentration ~~– STOCKHOLDERS’ EQUITY~~Risks

~~On September~~During 6the year ended December 31, ~~2013~~2015, the Company ~~effected~~had a$116,662 ~~20-~~in revenue generated from one customer for-1 ~~forward~~consulting ~~stock~~services ~~split~~and ofhad interest ~~its~~income from one debtor of $014,460.~~001~~ ~~par~~During ~~value~~the ~~common~~year ~~stock~~ended ~~and~~December 31, ~~increased~~2014, ~~its authorized~~the ~~common~~Company ~~stock~~had ~~to 2~~$83,~~000,000,000~~338 ~~shares.~~in ~~All~~revenue generated ~~shares~~from ~~and~~one customer ~~per~~for ~~share~~consulting ~~amounts~~services ~~have~~and ~~been~~had ~~retroactively~~interest ~~restated~~income tofrom ~~reflect this~~a ~~forward~~related ~~stock~~party ~~split~~of $36,585.

~~NOTE 8~~Income ~~– DEEMED DIVIDEND TO RELATED PARTY; FORGIVENESS OF DEBT - RELATED PARTY~~ Taxes

~~On October~~The ~~28,~~Company ~~2014,~~follows ASC Topic 740 for recording the ~~Company~~provision ~~entered~~for ~~into~~income ataxes. ~~transaction~~Deferred intax ~~which~~assets itand ~~acquired~~liabilities ~~directly~~are ~~from~~computed ~~Darin~~based ~~Pastor~~upon (the ~~former~~difference ~~sole~~between ~~shareholder~~the offinancial ~~Affluent)~~statement ~~certain~~and ~~fixed~~income tax basis of assets and ~~prepaid~~liabilities ~~expenses~~using ofthe ~~Affluent~~enacted ~~amounting~~marginal totax ~~$152,429~~rate ~~and~~applicable ~~assumed~~when ~~certain~~the ~~promissory notes~~related ofasset ~~Affluent~~or ~~(which~~liability ~~had~~is ~~been~~expected ~~dissolved~~to inbe ~~April~~realized ~~2014)~~or insettled. ~~favor~~Deferred ofincome ~~Darin~~tax ~~Pastor~~expenses ~~with~~or anbenefits ~~aggregate~~are ~~outstanding~~based ~~principal~~on ~~balance of~~the ~~$1,636,633.~~changes In in the ~~transaction,~~asset ~~liabilities~~or ~~exceeded~~liability ~~assets~~each ~~transferred~~period. ~~and~~If aavailable ~~deemed~~evidence ~~dividend~~suggests ofthat ~~$1,484,204~~it ~~was~~is ~~recorded~~more ~~in additional~~likely ~~paid-in~~than ~~capital.~~not Asthat ~~the~~some ~~transaction~~portion ~~was~~or ~~between~~all ~~related~~of the ~~parties,~~deferred ~~the~~tax assets ~~and~~will ~~liabilities~~not ~~transferred~~be ~~were~~realized, ~~recorded at~~a ~~their~~valuation ~~carryover~~allowance ~~bases.~~is Inrequired ~~connection~~to ~~with~~reduce ~~such~~the ~~transaction,~~deferred tax assets to the ~~crossing~~amount that ~~revolving~~is ~~lines~~more oflikely ~~credit~~than ~~between~~not ~~the~~to ~~Company~~be ~~and Affluent~~realized. ~~(see~~Future ~~Note~~changes 4)in ~~were~~such ~~cancelled;~~valuation ~~the~~allowance ~~Company~~are ~~forgave~~included ~~its~~in ~~$1,089,617~~the ~~net~~provision ~~receivable~~for ~~thereunder~~deferred income ~~and~~taxes ~~recorded~~in athe ~~$1,089,617~~period ~~loss~~of change.

~~NOTE~~Deferred income taxes may arise from 9temporary –differences ~~INCOME~~resulting ~~TAXES~~from income and expense items reported for financial accounting and tax purposes in different periods. Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities to which they relate. Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse.

The Company ~~accounts~~applies a ~~for~~more-likely-than-not ~~income~~recognition ~~taxes~~threshold ~~under~~for ~~the~~all ~~asset~~tax ~~and~~uncertainties. ~~liability~~ASC ~~method,~~Topic ~~which~~740 allows ~~requires~~ the recognition of ~~deferred~~ those tax ~~assets and~~benefits ~~liabilities~~that ~~for~~have ~~the~~a ~~expected~~greater ~~future~~than ~~tax~~50% ~~consequences~~likelihood of ~~events~~being ~~that~~sustained ~~have~~upon ~~been~~examination ~~included~~by in the ~~financial~~taxing ~~statements~~authorities. ~~Under~~As ~~this~~of ~~method~~December 31, ~~deferred~~2015 ~~tax~~the ~~assets~~Company ~~and~~reviewed ~~liabilities~~its ~~are~~tax ~~determined~~positions onand ~~the~~determined ~~basis~~there ofwere ~~the~~no ~~differences~~outstanding ~~between~~or ~~the financial statement~~retroactive ~~and~~ tax ~~bases~~provisions ofwith ~~assets~~less ~~and~~than ~~liabilities~~a ~~using~~50% ~~enacted~~likelihood ~~tax~~of ~~rates~~being insustained ~~effect~~upon ~~for~~examination ~~the~~by ~~year in which~~ the ~~differences~~taxing ~~are expected to reverse~~authorities.

~~At December~~The ~~31,~~Company ~~2014~~is required to file Federal and ~~2013,~~New ~~the~~York ~~Company~~and ~~had~~California ~~cumulative~~state ~~federal~~income ~~operating~~tax ~~loss~~returns. ~~carryforwards~~The ofCompany’s ~~$1,905,580~~tax ~~and~~return ~~$735,653,~~status will remain ~~respectively,~~open ~~which~~until ~~begin~~a totax ~~expire~~return inhas ~~2032~~been filed.

~~The Company~~Advertising recognizes deferred tax assets to the extent that the Company believes these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income and tax-planning.costs

~~Components of~~Advertising ~~net~~costs ~~deferred taxes~~ are expensed as ~~follows~~incurred. For atthe ~~December~~years ended December 31, 2015 and 2014, advertising costs of $53,051 and ~~2013:~~$62,816, respectively, were included in general and administrative expenses.

-4454-

CAPSTONE FINANCIAL GROUP, INC.

NOTES TO FINANCIAL STATEMENTS

NOTE 9 2 – ~~INCOME~~SUMMARY ~~TAXES~~OF SIGNIFICANT ACCOUNTING POLICIES (CONTINUED)

		2014		2013
Deferred tax assets:
Net operating loss carryforward	$	768,417	$	302,397
Total deferred tax assets		768,417		302,397
Less: Valuation allowance		—		(302,397	)
Net deferred tax assets	$	768,417	$	—

Recent Accounting Pronouncements

		2014		2013
Deferred tax liabilities:
Unrealized gains	$	7,511,140	$	—
Net deferred tax liabilities		7,511,140		—
Total deferred taxes	$	6,742,723	$	—

In May 2014, the FASB issued Accounting Standards update 2014-09, Revenue from Contracts with Customers ("ASU 2014-09"). ASU 2014-09 specifies a comprehensive model to be used in accounting for revenue arising from contracts with customers, and supersedes most of the current revenue recognition guidance, including industry specific guidance. It applies to all contracts with customers except those that are specifically within the scope of other FASB topics, and certain of its provisions also apply to transfers of nonfinancial assets, including in-substance nonfinancial assets that are not an output of an entity's ordinary activities. The core principal of the model is that revenue is recognized to depict the transfer of goods or services to customers in an amount that reflects the consideration to which the transferring entity expects to be entitled in exchange. To apply the revenue model, an entity will: 1) identify the contract(s) with a customer, 2) identify the performance obligations in the contract, 3) determine the transaction price, 4) allocate the transaction price to the performance obligations in the contract, and 5) recognize revenue when (or as) the entity satisfies a performance obligation. For public companies, ASU 2014-09 is effective for annual reporting periods (including interim reporting periods within those periods) beginning after December 15, 2016. Early adoption is not permitted. Upon adoption, entities can choose to use either a full retrospective or modified approach, as outlined in ASU 2014-09. As compared with current GAAP, ASU 2014-09 requires significantly more disclosures about revenue recognition. The Company has not yet assessed the potential impact of ASU 2014-09 on the financial statements.

~~The~~In May 2015, the FASB issued ~~valuation~~amended ~~allowance~~guidance ~~for~~on ~~deferred~~the ~~tax~~disclosures ~~assets~~for asinvestments ofin ~~December~~certain ~~31,~~equities ~~2014~~that ~~and~~calculate ~~2013~~NAV ~~was~~per $0share ~~and~~(or ~~$302,397,~~its ~~respectively~~equivalent). The ~~net operating~~ ~~losses~~amendments ~~will~~remove ~~begin~~the requirement to ~~expire~~categorize inwithin ~~2032. In assessing~~ the ~~recovery~~fair ofvalue ~~the~~hierarchy ~~deferred~~all ~~tax~~investments ~~assets,~~for ~~management~~which ~~considers~~fair ~~whether it~~value is measured ~~more~~using ~~likely~~the ~~than~~NAV ~~not~~per ~~that~~share ~~some~~practical ~~portion~~expedient. orThe ~~all~~amendments ofalso remove the ~~deferred~~requirement ~~tax~~to ~~assets~~make ~~will~~certain ~~not~~disclosures for beall ~~realized. The~~investments ~~ultimate~~that ~~realization of~~are ~~deferred~~eligible ~~tax~~to ~~assets~~be ismeasured ~~dependent~~at ~~upon~~fair value using the ~~generation~~NAV ofper ~~future~~share ~~taxable~~practical ~~income~~expedient. inRather, ~~the~~those disclosures ~~periods~~are inlimited to investments for which ~~those~~the ~~temporary~~entity ~~differences become~~has ~~deductible. Management~~elected ~~considers~~to measure the ~~scheduled~~fair ~~reversals~~value ofusing ~~future~~that ~~deferred~~practical expedient. ~~tax~~The ~~assets,~~guidance ~~projected~~is ~~future~~effective ~~taxable income,~~for ~~and~~fiscal ~~tax~~years ~~planning~~beginning ~~strategies~~after inDecember ~~making~~15, ~~this~~2015 ~~assessment~~and for interim periods within those years.

~~Reconciliation~~In February 2016, the FASB issued Accounting ~~between~~Standards update 2016-02, Leases ("ASU 2016-02"). ASU 2016-02 requires a lessee to recognize a lease asset representing its right to use the ~~statutory~~underlying ~~rate~~asset for the lease term, and a lease liability for the payments to be made to lessor, on its balance sheet for all operating leases greater than 12 months. ASU 2016-02 will be effective ~~tax~~for ~~rate~~fiscal isyears, asand ~~follows~~interim atperiods within those fiscal years, beginning after December 3115, ~~2014~~2018. ~~and~~The ~~2013:~~Company has not yet adopted ASU 2016-02 nor assessed its potential impact on the financial statements.

	2014		2013
Federal statutory rate	34.0	%	(35.0	)%
State taxes, net of federal benefit	4.15	%	(0.00	)%
Change in valuation allowance	0	%	35	%
Effective tax rate	38.15	%	0	%

-55-

~~The components~~CAPSTONE ofFINANCIAL ~~income tax expense (benefit) for the years ended December 31~~GROUP, ~~2014 and 2013 are as follows:~~ INC.

		2014		2013
Current tax expense (benefit)	$	800	$	800
Deferred tax expense (benefit)		6,742,723		—
Total income tax expense (benefit)	$	6,743,523	$	800

NOTES TO FINANCIAL STATEMENTS

~~-45-~~NOTE 3 – FAIR VALUE MEASUREMENTS

~~CAPSTONE~~The ~~FINANCIAL~~Company's ~~GROUP~~financial instruments recorded at fair value have been categorized based upon a fair value hierarchy in accordance with accounting guidance. The following fair value hierarchy tables set forth the Company’s recurring fair value measurements at December 31, ~~INC~~2015 and December 31, 2014.

NOTES TO FINANCIAL STATEMENTS

	Assets and Liabilities Measured at
	Fair Value on a Recurring Basis
	December 31, 2015
	Level 1		Level 2		Level 3		Total
Assets
Financial instruments, at fair value:
Common Stocks	$	—	$	—	$	9,896,605	$	9,896,605
Real Estate Company Investments		—		—		277,500		277,500
2014 Call Options		—		—		1,135,863		1,135,863
Series B Warrants		—		—		1,851,750		1,851,750
Total Financial instruments, at fair value		—		—		13,161,718		13,161,718
Total assets held at fair value	$	—	$	—	$	13,161,718	$	13,161,718

Liabilities
Financial instruments, at fair value:
Third Party Call Options		—		—		619,122		619,122
Total liabilities held at fair value	$	—	$	—	$	619,122	$	619,122

NOTE 10 – MARKET, CREDIT AND LIQUIDITY RISK

	Assets and Liabilities Measured at
	Fair Value on a Recurring Basis
	December 31, 2014
	Level 1		Level 2		Level 3		Total
Assets
Financial instruments, at fair value:
Common Stocks	$	—	$	—	$	8,350,500	$	8,350,500
2014 Call Options		—		—		6,312,801		6,312,801
Series A Warrants		—		—		9,947,368		9,947,368
Series B Warrants		—		—		4,227,632		4,227,632
Total Financial instruments owned, at fair value		—		—		28,838,301		28,838,301
Total assets held at fair value	$	—	$	—	$	28,838,301	$	28,838,301

Liabilities
Financial instruments, at fair value:
Warrant put option		—		—		9,973,684		9,973,684
Total liabilities held at fair value	$	—	$	—	$	9,973,684	$	9,973,684

Market risk is the potential loss the Company may incur as a result of changes in the market or fair value of a particular financial instrument. Risks arise in options and warrant contracts from changes in the market or fair value of their underlying financial instruments.-56-

~~Credit~~CAPSTONE ~~risk~~FINANCIAL is the potential loss the Company may incur as a result of the failure of a counterparty or an issuer to make payments according to the terms of a contract. Credit risk can arise from investment activities in financially distressed issuers. To manage this riskGROUP, ~~the Company may seek to diversify its investment portfolio with respect to specific credits, sectors and asset classes~~ INC.

~~The~~NOTES ~~Company~~TO isFINANCIAL ~~also subject to market concentration risk since a significant portion of its investment portfolio has similar characteristics, and is therefore affected similarly by changes in economic conditions.~~STATEMENTS

~~Investments~~NOTE of3 ~~the~~– ~~Company~~FAIR ~~trade~~VALUE inMEASUREMENTS relatively thin markets and throughout the year, depending upon market conditions, may be considered illiquid. As a result, the market values can be more volatile and difficult to determine relative to other securities. In addition, if the Company is required to liquidate all or a portion of its portfolio quickly, it may realize significantly less than the value at which it previously recorded its investments.(CONTINUED)

~~-46-~~This hierarchy requires the Company to use observable market data, when available, and to minimize the use of unobservable inputs when determining fair value. For some products or in certain market conditions, observable inputs used in valuing certain financial assets and liabilities were unavailable. In situations where there is little, if any, market activity for an asset or liability at the measurement date, the fair value measurement objective remains to measure the financial asset at the price that would be received by the holder of the financial asset (or liability) in an orderly transaction that is not a forced liquidation or distressed sale at the measurement date.

~~CAPSTONE FINANCIAL GROUP, INC.~~-57-

~~NOTES~~CAPSTONE TO FINANCIAL ~~STATEMENTS~~GROUP, INC.

~~NOTE 11~~NOTES –TO ~~SUBSEQUENT~~FINANCIAL ~~EVENTS~~STATEMENTS

~~The Company~~NOTE ~~has~~3 ~~evaluated~~– ~~subsequent~~FAIR ~~events through the date the financial statements were available to be issued.~~VALUE ~~Except~~MEASUREMENTS ~~as noted below, there are no events which require adjustments to, or disclosure in, the financial statements for the period ended December 31, 2014.~~(CONTINUED)

~~In February~~Details ~~2015,~~of the Company ~~exercised the Call Options. Optionors honored the exercise as to 7,244,500 Twinlab shares, and the~~’s ~~acquisition~~recurring offair ~~the~~value ~~7,244,500~~measurements ~~Twinlab~~are ~~shares has been completed. Other optionors have not yet honored the exercise,~~ as ~~to at least 1,498,500 Twinlab shares.~~follow:

In March and April 2015, the Company sold 2,210,756 Twinlab shares to unrelated third parties for approximately $1,680,159.

December 31, 2015	Cost		Estimated Fair Value			Unrealized Gain (Loss)
ASSETS
Common Stocks	$	1,004,992	$	9,896,605		$	8,891,613
Real Estate Company Investments		277,500		277,500			—
2014 Call Options		450		1,135,863			1,135,413
Series B Warrants		—		1,851,750			1,851,750
	$	1,282,942	$	13,161,718		$	11,878,776

LIABILITIES
Third-Party Call Options	$	—	$	(619,122	)	$	(619,122	)

In April 2015, the Company partially exercised the First Warrant and received 657,895 Twinlab shares in exchange for an aggregate exercise price of approximately $500,000.

December 31, 2014	Cost		Estimated Fair Value			Unrealized Gain (Loss)
ASSETS
Common Stocks	$	6,215	$	8,350,500		$	8,344,285
2014 Call Options		2,492		6,312,801			6,310,309
Series A Warrants		—		9,947,368			9,947,368
Series B Warrants		—		4,227,632			4,227,632
	$	8,707	$	28,838,301		$	28,829,594

LIABILITIES
Warrant put options	$	—	$	(9,973,684	)	$	(9,973,684	)

~~In April 2015, the Company entered into a 126~~-month Lease Agreement for 17,335 square feet of space in an office building at 8600 Transit Road, East Amherst, NY 14051, for the Company headquarters office. The lease extends to October 31, 2025. Base rent is $23,113 per month through April 30, 2016 (following a free base58-~~rent period ending October 31, 2015), with annual 3% monthly base rent increases on each April 30 from 2016 through the end of the lease term.~~

~~-47-~~CAPSTONE FINANCIAL GROUP, INC.

NOTES TO FINANCIAL STATEMENTS

NOTE 3 – FAIR VALUE MEASUREMENTS (CONTINUED)

For the year ended December 31, 2015, the Company recorded a net unrealized loss on financial instruments of $2,993,872 and a net realized loss on financial instruments of $5,417. For the year ended December 31, 2014, the Company recorded a net unrealized gain on financial instruments of $18,855,913 and a net realized gain on financial instruments of $1,019,326.

During the first quarter of 2014, the Company purchased shares in a company traded on the OTC Markets for a total of $2,919. The Company currently categorizes these holdings as Level 3 assets. As of December 31, 2015, this investment is carried at $0 value under management’s valuation guidelines.

In August 2014, the Company purchased 10,987,500 split-adjusted shares of common stock of Twinlab Consolidated Holdings, Inc. (“Twinlab”) in private transactions from 25 shareholders for total consideration of $3,296. In November 2014, the Company sold 436,681 of these shares.

In September 2014, Twinlab issued to the Company a Series A Warrant to purchase up to 52,631,579 shares of Twinlab’s Common Stock at an exercise price of $0.76 per share (the “Series A Warrant”) and a Series B Warrant to purchase up to 22,368,421 shares of Twinlab’s Common Stock at an exercise price of $0.76 per share (the “Series B Warrant”). Both the Series A Warrant and the Series B Warrant were exercisable from October 2014 through October 2017.

Twinlab and the Company also entered into a Common Stock Put Agreement, dated as of September 30, 2014, as amended on December 15, 2014 (the “Put Agreement”). Pursuant to the Put Agreement, if the Company did not exercise the Series A Warrant by February 16, 2015 and thereafter at a rate of no less than 1,461,988 shares of Common Stock (“the Minimum Amount”) per month (the “Minimum Rate”) over the term of the Series A Warrant, Twinlab had the right (subject to certain conditions) to require the Company to exercise the Series A Warrant at the Minimum Rate for the duration of the Series A Warrant.

In 2015, the Company sold an aggregate of 3,976,647 units of Twinlab securities to various unrelated third party accredited investors. Each unit consisted of one share of (unrestricted) Twinlab common stock and a detachable call option to purchase from the Company, for $1.00 per share, one (restricted) share of Twinlab common stock. The term of each such call option was three years from the respective unit sale date and the call option was valued at $0.156 per call option.

-59-

CAPSTONE FINANCIAL GROUP, INC.

NOTES TO FINANCIAL STATEMENTS

NOTE 3 – FAIR VALUE MEASUREMENTS (CONTINUED)

In addition, in 2015, the Company sold an aggregate of 2,078,255 shares of Twinlab common stock (without any associated detachable call options) to various unrelated third party accredited investors, for $0.76 per share.

Twinlab and the Company entered into a Compromise Agreement and Release and an Amendment No. 1 to Series B Warrant, each dated as of May 28, 2015, pursuant to which, among other things: (a) the Company surrendered the entire remaining-unexercised portion of the Series A Warrant (51,973,684 warrants) and 4,368,421 of the warrants under the Series B Warrant; (b) the Put Agreement was terminated; (c) the remaining 18,000,000 warrants under the Series B Warrant were deemed divided into four tranches, each with an associated date beyond which it would no longer be exercisable: one tranche for 2,000,000 warrant shares (no longer exercisable after November 30, 2015; such tranche of warrants expired mostly unexercised), one for 4,000,000 warrant shares (no longer exercisable after March 31, 2016; see Note 8), one for 6,000,000 warrant shares (no longer exercisable after July 31, 2016) and another for 6,000,000 warrant shares (no longer exercisable after November 30, 2016); and (d) the Company granted Twinlab three contingent call options, at $0.01 per share, to acquire Twinlab shares from the Company to the extent that upon effective expiration of the second, third and fourth tranches the Company had not exercised the warrants within such tranches (the “Contingent Call Options”). The three Contingent Call Options would be for a number of Twinlab shares equal to 25% of such unexercised warrants (i.e., a maximum of 1,000,000 shares if the Company exercised no warrants from the second tranche, a maximum of 1,500,000 shares if the Company exercised no warrants from the third tranche and a maximum of 1,500,000 shares if the Company exercised no warrants from the fourth tranche). In addition, Twinlab could not exercise a Contingent Call Option unless it had satisfied such option’s “Liquidity Condition,” namely that for each of the three or four months before the tranche’s effective expiration date Twinlab must have a financial position sufficient to show a 1.15x fixed charge coverage ratio for a certain trailing period, all as defined by Twinlab’s Credit and Security Agreement dated January 22, 2015. Twinlab also agreed in the Compromise Agreement and Release that, given that the Company has identified, and may in the future identify, to Twinlab on a confidential basis persons to whom the Company might sell the Company’s Twinlab shares, Twinlab shall not, without the Company’s prior written consent, privately place Twinlab equity securities to any persons theretofore or thereafter first introduced to Twinlab by the Company; provided that Twinlab may, without the Company’s consent, privately place Twinlab equity securities to such a person at any time after the earlier of (a) the date the entire Series B Warrant has expired and/or been exercised, or (b) the first anniversary of such particular introduction.

-60-

CAPSTONE FINANCIAL GROUP, INC.

NOTES TO FINANCIAL STATEMENTS

NOTE 3 – FAIR VALUE MEASUREMENTS (CONTINUED)

On October 1, 2015, Twinlab and the Company entered into Amendment No. 1 to Agreement for Limited Waiver of Non-Circumvention Provision and to Compromise Agreement and Release, pursuant to which a prior agreement calling for contingent payments of cash and equity to the Company was amended to remove the Company’s right to any such contingent payments of cash and equity compensation, and in return the three Contingent Call Options were immediately cancelled.

As of December 31, 2015, the Company owned less than 10% of Twinlab’s outstanding common stock.

In July 2015, in exchange for $277,500, the Company acquired a 20% interest in privately-held Western New York real estate companies LC Strategic Realty, LLC and LC Strategic Holdings, LLC, as well as in all other business conducted or to be conducted by the firms’ majority holders to the extent such other business has a primary focus on (a) real estate (subject to the exclusion of certain specified projects), (b) media/entertainment/show business, or (c) endorsements/advertisements/personal appearances/use of likeness/monetization of celebrity.

-61-

CAPSTONE FINANCIAL GROUP, INC.

NOTES TO FINANCIAL STATEMENTS

NOTE 3 – FAIR VALUE MEASUREMENTS (CONTINUED)

The following tables include a roll forward of the amounts for the year ended December 31, 2015 and for the year ended December 31, 2014 for financial instruments classified within Level 3.

Level 3 Recurring Fair Value Measurements

For the Twelve Months Ended December 31, 2015

																		Third-Party
				Real Estate														Call
	Common			Company		2014 Call			Series A			Series B			Put Option			Option
	Stock			Investments		Options			Warrants			Warrants			Liability			Liability			Total
Fair value, net, December 31, 2014	$	8,350,500		$	—	$	6,312,801		$	9,947,368		$	4,227,632		$	(9,973,684	)	$	—		$	18,864,617
Total gains (losses) included in earnings:
Unrealized losses		(981,132	)		—		(5,176,938	)		—			(4,242,666	)		—			—			(10,400,736	)
Unrealized gains		—			—		—			—			2,366,784			—			2,855			2,369,639
Realized gains (losses)		—			—		—			(9,823,026	)		—			9,849,013			—			25,987
Exercises		—			—		—			(124,342	)		—			124,671			—			329
Purchases (1)		6,505,820			277,500		—			—			—			—			—			6,783,320
Sales		(3,978,583	)		—		—			—			(500,000	)		—			(621,977	)		(5,100,560	)
Fair value, net, December 31, 2015	$	9,896,605		$	277,500	$	1,135,863		$	—		$	1,851,750		$	—		$	(619,122	)	$	12,542,596
Unrealized gains (losses) still held, December 31, 2015	$	8,891,613		$	—	$	1,135,413		$	—		$	1,851,750		$	—		$	(619,122	)		11,259,654

Purchases of 1,315,790 shares of Twinlab common stock were made at various dates in 2015 at $0.76 per share (upon warrant exercises) and purchases of 7,244,500 shares of Twinlab common stock were made at various dates in 2015 for nominal consideration (upon call option exercises).

-62-

CAPSTONE FINANCIAL GROUP, INC.

NOTES TO FINANCIAL STATEMENTS

NOTE 3 – FAIR VALUE MEASUREMENTS (CONTINUED)

Level 3 Recurring Fair Value Measurements

For the Twelve Months Ended December 31, 2014

															Third-Party
				Real Estate								Put			Call
	Common			Company		2014 Call		Series A		Series B		Option			Option
	Stock			Investments		Options		Warrants		Warrants		Liability			Liability		Total
Fair value, net, December 31, 2013	$	—		$	—	$	—	$	—	$	—	$	—		$	—	$	—
Total gains (losses) included in earnings:
Unrealized losses		—			—		—		—		—		(9,973,684	)		—		(9,973,684	)
Unrealized gains		7,327,142			—		6,310,178		9,947,368		4,227,632		—			—		27,812,320
Realized gains		1,019,326			—		—		—		—		—			—		1,019,326
Exercises		—			—		—		—		—		—			—		—
Purchases (1)		6,215			—		2,623		—		—		—			—		8,838
Sales		(2,183	)		—		—		—		—		—			—		(2,183	)
Fair value, net, December 31, 2014	$	8,350,500		$	—	$	6,312,801	$	9,947,368	$	4,227,632	$	(9,973,684	)	$	—	$	18,864,617
Unrealized gains (losses) still held, December 31, 2014	$	8,344,285		$	—	$	6,310,309	$	9,947,638	$	4,227,632	$	(9,973,684	)	$	—	$	18,855,910

Purchases of Twinlab common stock were made at various dates at $0.76 per share.

Quantitative information about the valuation techniques and unobservable inputs is required to be disclosed for certain recurring and nonrecurring fair value measurements.

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CAPSTONE FINANCIAL GROUP, INC.

NOTES TO FINANCIAL STATEMENTS

NOTE 3 – FAIR VALUE MEASUREMENTS (CONTINUED)

The following tables present quantitative information about the valuation techniques and unobservable inputs applied to Level 3 fair value measurements for financial instruments measured at fair value on a recurring and nonrecurring basis at December 31, 2015 and 2014.

		Quantitative Information about Level 3
		Fair Value Measurements at December 31, 2015
		Fair	Valuation	Unobservable	Range
		Value	Technique	Inputs
Assets
Common Stock	$	9,896,605	Discounted cash flow Guideline company transactions method Guideline publicly-traded company method	Growth rate Risk premium factors Revenue multiple EBITDA multiple	13.00%-15.20% (2.50%)-7.00% 1.10-2.10 9.30-13.80
2014 Call Options		1,135,863	Discounted cash flow Guideline company transactions method Guideline publicly-traded company method	Growth rate Risk premium factors Revenue multiple EBITDA multiple	13.00%-15.20% (2.50%)-7.00% 1.10-2.10 9.30-13.80
Series B Warrants		1,851,750	Option pricing model	Duration Risk-free interest rate Volatility	0.25-0.92 years 0.16 – 0.62% 50%
Investment in Real Estate Companies		277,500	Recent transaction
Total assets held at fair value	$	13,161,718

Liabilities
Call option liability	$	619,122	Option pricing model	Duration Risk-free interest rate Volatility	2.23-2.40 years 1.12 – 1.16% 50%

Total liabilities held at fair value	$	619,122

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CAPSTONE FINANCIAL GROUP, INC.

NOTES TO FINANCIAL STATEMENTS

NOTE 3 – FAIR VALUE MEASUREMENTS (CONTINUED)

		Quantitative Information about Level 3
		Fair Value Measurements at December 31, 2014
		Fair	Valuation	Unobservable	Range
		Value	Technique	Inputs
Assets
Common Stock	$	8,350,500	Recent transactions	Price per share	$0.76
2014 Call Options		6,312,801	Recent transactions	Price per share	$0.76
Series A Warrants		9,947,368	Option pricing model
Series B Warrants		4,227,632	Option pricing model	Duration Risk-free interest rate Volatility	2 years 0.58% 44%
Total assets held at fair value	$	28,838,301

Liabilities
Put and call option liability	$	9,973,684	Option pricing model	Duration Risk-free interest rate Volatility	1.2 years 0.58% 44%

Total liabilities held at fair value	$	9,973,684

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CAPSTONE FINANCIAL GROUP, INC.

NOTES TO FINANCIAL STATEMENTS

NOTE 4 – NOTE RECEIVABLE

On November 14, 2014 the Company loaned $600,000 to Twinlab’s chief executive officer/controlling shareholder under an unsecured note due December 29, 2015 bearing interest at 5%. On June 26, 2015 the balance of the receivable on the note of $618,411 was repaid in the form of $400,000 cash and the surrender of 200,000 shares of Company common stock owned by the noteholder.

NOTE 5 – DEPOSITS

In 2015, the Company made a deposit of $63,930 toward an anticipated purchase transaction, which has not closed.

NOTE 6 – RELATED PARTY TRANSACTIONS

Deemed Dividend to Related Party; Forgiveness of Receivable - Related Party

On October 28, 2014, the Company entered into a transaction in which it acquired directly from Darin Pastor (the former sole shareholder of Affluent) certain fixed assets and prepaid expenses of Affluent amounting to $152,429 and assumed certain promissory notes of Affluent (which had been dissolved in April 2014) in favor of Darin Pastor with an aggregate outstanding principal balance of $1,636,633. In the transaction, liabilities exceeded assets transferred and a deemed dividend of $1,484,204 was recorded in additional paid-in capital. As the transaction was between related parties, the assets and liabilities transferred were recorded at their historical cost basis. In connection with such transaction, the crossing revolving lines of credit between the Company and Affluent were cancelled; the Company forgave its $1,089,617 net receivable thereunder and recorded a $1,089,617 loss.

Short-Term Advances from Related Party

After October 28, 2014 the Company’s controlling stockholder Darin Pastor made advances and direct-payments to assist the Company in covering expenses. In addition, the amounts of these advances and direct-payments are reimbursable to him upon his demand at any time. At December 31, 2015 and 2014, the unrepaid balance of such advances and direct-payments was $96,695 and $94,306, respectively.

Notes Payable to Related Party

On October 28, 2014, the Company entered into a transaction in which the Company acquired from Darin Pastor certain assets which had been assets of Affluent and assumed certain liabilities which had been liabilities of Affluent, including liabilities under demand notes in favor of Darin Pastor. At December 31, 2015 and 2014, the outstanding obligation (inclusive of accrued interest) on such assumed notes was $68,416 and $1,203,552, respectively. The interest rate on the demand notes is 2% per annum.

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CAPSTONE FINANCIAL GROUP, INC.

NOTES TO FINANCIAL STATEMENTS

NOTE 7 – INCOME TAXES

The Company accounts for income taxes under the asset and liability method, which requires the recognition of deferred tax assets and liabilities for the expected future tax consequences of events that have been included in the financial statements. Under this method, deferred tax assets and liabilities are determined on the basis of the differences between the financial statement and tax bases of assets and liabilities using enacted tax rates in effect for the year in which the differences are expected to reverse.

At December 31, 2015 and 2014, the Company had cumulative federal operating loss carryforwards of $2,504,525 and $1,905,580, respectively, which begin to expire in 2032. Utilization of the net operating loss carryforwards may be subject to a substantial annual limitation due to ownership change limitations provided by the Internal Revenue Code under section 382. The annual limitation may result in the expiration of net operating loss carryforwards before utilization.

The Company recognizes deferred tax assets to the extent that the Company believes these assets are more likely than not to be realized. In making such a determination, the Company considers all available positive and negative evidence, including future reversals of existing taxable temporary differences, projected future taxable income and tax-planning.

Components of net deferred taxes are as follows at December 31, 2015 and 2014:

		2015		2014
Deferred tax assets:
Net operating loss carryforward	$	1,766,444	$	768,417
Net deferred tax assets		1,766,444		768,417

Deferred tax liabilities:
Unrealized gains		6,318,548		7,511,140
Net deferred tax liabilities		6,318,548		7,511,140
Total deferred tax liability, net	$	4,552,105	$	6,742,723

In assessing the recovery of the deferred tax assets, management considers whether it is more likely than not that some portion or all of the deferred tax assets will not be realized. The ultimate realization of deferred tax assets is dependent upon the generation of future taxable income in the periods in which those temporary differences become deductible. Management considers the scheduled reversals of future deferred tax assets, projected future taxable income, and tax planning strategies in making this assessment.

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CAPSTONE FINANCIAL GROUP, INC.

NOTES TO FINANCIAL STATEMENTS

NOTE 7 – INCOME TAXES (CONTINUED)

A reconciliation between the statutory income tax rate and the effective income tax rate is as follows at December 31, 2015 and 2014:

	2015		2014
Federal statutory rate	34.0	%	34.0	%
State taxes, net of federal benefit	5.81	%	4.15	%
Change in valuation allowance	(0.09)	%	0	%
Effective tax rate	39.72	%	38.15	%

The components of income tax expense (benefit) for the years ended December 31, 2015 and 2014 are as follows:

		2015			2014
Current tax expense (benefit)	$	800		$	800
Deferred tax expense (benefit)		(2,190,619	)		6,742,723
Total income tax expense (benefit)	$	(2,189,819	)	$	6,743,523

NOTE 8 – SUBSEQUENT EVENTS

The Company has evaluated subsequent events through the date the financial statements were available to be issued. Except as noted below, there are no events which require adjustments to, or disclosure in, the financial statements for the period ended December 31, 2015.

In February 2016, the Company sold 1,713,159 Twinlab shares to unrelated third parties for $1,302,000.

On March 31, 2016, a 4,000,000-warrants tranche of the Company’s Twinlab Series B Warrant expired unexercised.

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Filing Compare · CAPSTONE FINANCIAL GROUP, INC.