Capstone Companies Reports Third Quarter 2019

DEERFIELD BEACH, Fla.--()--Capstone Companies, Inc. (OTC: CAPC) (“Capstone” or the “Company”), a designer, manufacturer and marketer of consumer inspired products that bridge technological innovations with today’s lifestyle reported its financial results for the third quarter 2019.

Stewart Wallach, Capstone’s Chairman and CEO, commented, “our year-to-date numbers are indicative of management’s commitment to containing costs and sustaining revenues while addressing supply chain challenges resulting from China trade disputes.”

Mr. Wallach added, “concurrently the Company has developed and recently released its Smart Mirror program that will drive growth in 2020.”

Gerry McClinton, Capstone’s CFO, commented further, “We would note, these achievements have been financed through operating cash flow and did not result in the incurrence of any debt or interest.”

Webcast and Teleconference to Review Results and Outlook

The Company will host a live webcast and conference call on Monday, November 18, 2019, at 10:30 a.m. Eastern Time. During the call, management will review the financial and operating results and discuss the Company’s corporate strategy and outlook, followed by a question-and-answer session. The conference call can be accessed by dialling (201) 689-8562. The listen-only audio webcast can be monitored at www.capstonecompaniesinc.com.

A telephonic replay will be available from 1:30 p.m. ET the day of the call until Monday, November 25, 2019. To listen to the archived call, dial (412) 317-6671 and enter conference ID number 13696116. Alternatively, the archive of the webcast will be available on the Company’s website at www.capstonecompaniesinc.com, along with a transcript, once available.

About Capstone Companies, Inc.

Capstone Companies, Inc. is a public holding company that engages, through its wholly owned subsidiaries, Capstone Industries, Inc., Capstone Lighting Technologies, LLC, and Capstone International HK, Limited, in the development, manufacturing and marketing of consumer product to retail channels throughout North America and international markets.

Visit www.capstonecompaniesinc.com for more information about the Company and www.capstoneindustries.com and www.capstoneconnectedhome.com for information on our current product offerings.

FORWARD-LOOKING STATEMENTS:

This news release contains "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995, as amended. Such statements consist of words like “anticipate,” “expect,” “project,” “continue” and similar words. These statements are based on the Company’s and its subsidiaries’ current expectations and involve risks and uncertainties, which may cause results to differ materially from those set forth in the forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements, include consumer acceptance of the Company’s products, its ability to deliver new products, the success of its strategy to broaden market channels and the relationships it has with retailers and distributors. Prior success in operations does not necessarily mean success in future operations. The ability of the Company to adequately and affordably fund operations and any growth will be critical to achieving and sustaining any expansion of markets and revenue. The introduction of new products or the expanded availability of products does not mean that the Company will enjoy better financial or business performance. The risks associated with any investment in Capstone Companies, Inc., which is a small business concern and a "penny-stock Company” and, as such, a highly risky investment suitable for only those who can afford to lose such investment, should be evaluated together with the risks and uncertainties more fully described in the Company’s Annual and Quarterly Reports filed with the Securities and Exchange Commission. Capstone Companies, Inc. undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise. Contents of referenced URLs are not incorporated into this press release.

FINANCIAL TABLES FOLLOW. THE FOLLOWING SUMMARY FINANCIAL STATEMENT SHOULD BE READ ALONG WITH THE FORM 10-K FINANCIAL STATEMENT FILED BY THE COMPANY WITH THE SECURITIES AND EXCHANGE COMMISSION.

CAPSTONE COMPANIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
 
September 30, December 31,

2019

2018

Assets: (Unaudited)
Current Assets:
Cash

$

2,306,431

$

3,822,359

Accounts receivable, net

 

2,152,341

 

64,511

Inventories

 

-

 

27,497

Prepaid and other

 

136,517

 

243,876

Income tax refundable

 

220,207

 

220,207

Total Current Assets

 

4,815,496

 

4,378,450

 
Property and Equipment:
Computer equipment and software

 

53,819

 

51,195

Machinery and equipment

 

202,067

 

170,567

Furniture and fixtures

 

6,828

 

6,828

Less: Accumulated depreciation

 

(185,943)

 

(152,870)

Total Property & Equipment

 

76,771

 

75,720

 
Other Non-current Assets:
Deposit

 

26,893

 

102,805

Goodwill

 

1,936,020

 

1,936,020

Total Other Non-current Assets

 

1,962,913

 

2,038,825

Total Assets

$

6,855,180

$

6,492,995

 
Liabilities and Stockholders’ Equity:
Current Liabilities:
Accounts payable and accrued liabilities

$

915,450

$

461,446

Deferred rent incentive

 

33,529

 

108,844

Income tax payable

 

11,694

 

11,694

Total Current Liabilities

 

960,673

 

581,984

 
Long Term Liabilities:
Deferred tax liabilities

 

-

 

12,000

Total Long Term Liabilities

 

-

 

12,000

Total Liabilities

 

960,673

 

593,984

 
Commitments and Contingencies
 
Stockholders' Equity:
Preferred Stock, Series A, par value $.001 per share, authorized 6,666,667 shares, issued -0- shares

 

-

 

-

Preferred Stock, Series B-1, par value $.0001 per share, authorized 3,333,333 shares, issued -0- shares

 

-

 

-

Preferred Stock, Series C, par value $1.00 per share, authorized 67 shares, issued -0- shares

 

-

 

-

Common Stock, par value $.0001 per share, authorized 56,666,667 shares, issued 46,752,419 shares at September 30, 2019 and 47,046,364 shares at December 31, 2018

 

4,677

 

4,704

Additional paid-in capital

 

7,076,513

 

7,092,219

Accumulated deficit

 

(1,186,683)

 

(1,197,912)

Total Stockholders' Equity

 

5,894,507

 

5,899,011

Total Liabilities and Stockholders’ Equity

$

6,855,180

$

6,492,995

 
The accompanying notes are an integral part of these condensed consolidated financial statements.

CAPSTONE COMPANIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

 

For the Three Months Ended

For the Nine Months Ended

September 30,

September 30,

2019

2018

2019

2018

 
Revenues, net

$

 

5,354,190

$

 

5,726,145

$

 

11,740,814

$

 

11,889,520

Cost of sales

 

(4,139,214)

 

(4,395,761)

 

(9,165,140)

 

(9,179,145)

Gross Profit

 

1,214,976

 

1,330,384

 

2,575,674

 

2,710,375

 
Operating Expenses:
Sales and marketing

 

102,193

 

359,715

 

329,463

 

838,323

Compensation

 

381,795

 

359,539

 

1,138,960

 

1,104,396

Professional fees

 

112,687

 

102,532

 

353,293

 

394,320

Product development

 

81,060

 

95,661

 

260,823

 

385,994

Other general and administrative

 

169,572

 

232,888

 

490,835

 

573,852

Total Operating Expenses

 

847,307

 

1,150,335

 

2,573,374

 

3,296,885

 
Operating Income (Loss)

 

367,669

 

180,049

 

2,300

 

(586,510)

 
Other Income (Expenses):
Other Income (Expense), Net

 

2,610

 

(1,960)

 

135

 

145,330

Interest Expense

 

(3,206)

 

-

 

(3,206)

 

-

Total Other Income (Expenses)

 

(596)

 

(1,960)

 

(3,071)

 

145,330

 
Income (Loss) Before Tax Benefit

 

367,073

 

178,089

 

(771)

 

(441,180)

 
Provision (Benefit) for Income Tax

 

-

 

6,000

 

(12,000)

 

(71,000)

 
Net Income (Loss)

$

 

367,073

$

 

172,089

$

 

11,229

$

 

(370,180)

 
Net Income (Loss) per Common Share
Basic

$

 

0.01

$

 

0.00

$

 

0.00

($

 

0.01)

Diluted

$

 

0.01

$

 

0.00

$

 

0.00

($

 

0.01)

 
Weighted Average Shares Outstanding
Basic

 

46,882,538

 

47,046,364

 

46,874,256

 

47,046,364

Diluted

 

46,882,538

 

47,046,364

 

46,874,256

 

47,046,364

 
 

The accompanying notes are an integral part of these condensed consolidated financial statements.

CAPSTONE COMPANIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
 
     
     
Preferred Stock Preferred Stock Preferred Stock     Additional
Series A Series B Series C     Common Stock Paid-In Accumulated Total
Shares Par Value Shares Par Value Shares Par Value     Shares Par Value Capital Deficit Equity
     
Balance at December 31, 2018

-

$

-

-

$

-

-

$

-

   

47,046,364

 

$

4,704

 

$

7,092,219

 

$

(1,197,912

)

$

5,899,011

 

Stock options for compensation

-

 

-

-

 

-

-

 

-

   

-

 

 

-

 

 

11,025

 

 

-

 

 

11,025

 

Repurchase of shares

-

 

-

-

 

-

-

 

-

   

(45,470

)

 

(3

)

 

(8,612

)

 

-

 

 

(8,615

)

Net (Loss)

-

 

-

-

 

-

-

 

-

   

-

 

 

-

 

 

-

 

 

(345,340

)

 

(345,340

)

Balance at March 31, 2019

-

 

-

-

 

-

-

 

-

   

47,000,894

 

 

4,701

 

 

7,094,632

 

 

(1,543,252

)

 

5,556,081

 

(Unaudited)    
     
Stock options for compensation

-

 

-

-

 

-

-

 

-

   

-

 

 

-

 

 

11,025

 

 

-

 

 

11,025

 

Repurchase of shares

-

 

-

-

 

-

-

 

-

   

(168,530

)

 

(17

)

 

(27,246

)

 

-

 

 

(27,263

)

Net (Loss)

-

 

-

-

 

-

-

 

-

   

-

 

 

-

 

 

-

 

 

(10,504

)

 

(10,504

)

Balance at June 30, 2019

-

 

-

-

 

-

-

 

-

   

46,832,364

 

$

4,684

 

$

7,078,411

 

$

(1,553,756

)

$

5,529,339

 

(Unaudited)    
     
Stock options for compensation

-

 

-

-

 

-

-

 

-

   

-

 

 

-

 

 

9,732

 

 

-

 

 

9,732

 

Repurchase of shares

-

 

-

-

 

-

-

 

-

   

(79,945

)

 

(7

)

 

(11,630

)

 

-

 

 

(11,637

)

Net Income

-

 

-

-

 

-

-

 

-

   

-

 

 

-

 

 

-

 

 

367,073

 

 

367,073

 

Balance at September 30, 2019

-

$

-

-

$

-

-

$

-

   

46,752,419

 

$

4,677

 

$

7,076,513

 

$

(1,186,683

)

$

5,894,507

 

(Unaudited)    
     
     
Balance at December 31, 2017

-

$

-

-

$

-

-

$

-

   

47,046,364

 

$

4,704

 

$

7,005,553

 

$

(186,854

)

$

6,823,403

 

Stock options for compensation

-

 

-

-

 

-

-

 

-

   

-

 

 

-

 

 

28,875

 

 

-

 

 

28,875

 

Net (Loss)

-

 

-

-

 

-

-

 

-

   

-

 

 

-

 

 

-

 

 

(190,641

)

 

(190,641

)

Balance at March 31, 2018

-

 

-

-

 

-

-

 

-

   

47,046,364

 

 

4,704

 

 

7,034,428

 

 

(377,495

)

 

6,661,637

 

(Unaudited)    
     
Stock options for compensation

-

 

-

-

 

-

-

 

-

   

-

 

 

-

 

 

28,874

 

 

-

 

 

28,874

 

Net (Loss)

-

 

-

-

 

-

-

 

-

   

-

 

 

-

 

 

-

 

 

(351,628

)

 

(351,628

)

Balance at June 30, 2018

-

 

-

-

 

-

-

 

-

   

47,046,364

 

$

4,704

 

$

7,063,302

 

$

(729,123

)

$

6,338,883

 

(Unaudited)    
     
Stock options for compensation

-

 

-

-

 

-

-

 

-

   

-

 

 

-

 

 

17,892

 

 

-

 

 

17,892

 

Net Income

-

 

-

-

 

-

-

 

-

   

-

 

 

-

 

 

-

 

 

172,089

 

 

172,089

 

Balance at September 30, 2018

-

$

-

-

$

-

-

$

-

   

47,046,364

 

$

4,704

 

$

7,081,194

 

$

(557,034

)

$

6,528,864

 

(Unaudited)    

The accompanying notes are an integral part of these condensed consolidated financial statements.

CAPSTONE COMPANIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
For the Nine Months Ended
September 30,

2019

2018

CASH FLOWS FROM OPERATING ACTIVITIES:
 
Net Income (Loss)

$

11,229

$

(370,180)

Adjustments to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization

 

33,072

 

32,457

Stock based compensation expense

 

31,782

 

75,641

Provision (benefit) for deferred income tax

 

(12,000)

 

32,000

Increase (decrease) in accrued sales allowance

 

(106,448)

 

153,025

(Increase) decrease in accounts receivable, net

 

(1,981,382)

 

1,827,100

Decrease in inventories

 

27,497

 

132,318

Decrease in prepaid and other

 

107,359

 

74,805

(Increase) decrease in deposits

 

75,912

 

(1,139)

Increase (decrease) in accounts payable and accrued liabilities

 

454,004

 

(932,262)

Decrease in deferred rent incentive

 

(75,315)

 

-

Decrease in income tax payable

 

-

 

(613,088)

Increase in income tax refundable

 

-

 

(354,912)

Net cash provided by (used in) operating activities

 

(1,434,290)

 

55,765

 
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment

 

(34,123)

 

(130,665)

Net cash used in investing activities

 

(34,123)

 

(130,665)

 
CASH FLOWS FROM FINANCING ACTIVITIES:
Repurchase of Shares

 

(47,515)

 

-

Net cash used in financing activities

 

(47,515)

 

-

 
Net Decrease in Cash

 

(1,515,928)

 

(74,900)

Cash at Beginning of Period

 

3,822,359

 

3,668,196

Cash at End of Period

$

2,306,431

$

3,593,296

 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest

$

3,206

$

-

Income taxes

$

-

$

865,000

 
 
 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.

 

Contacts

Aimee Gaudet
Corporate Secretary
(954) 252-3440, ext. 313

Contacts

Aimee Gaudet
Corporate Secretary
(954) 252-3440, ext. 313