Capstone Companies Reports 2019 Year-End Performance

  • Transitioning supply chain positions the Company for competitive advantage
  • Capstone Connected Surfaces portfolio finalized

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 full year 2019.

Gerry McClinton, Capstone’s CFO, commented, “in a year of uncertainties compounded by the U.S.- China trade war, the Company accomplished its stated main objectives as it transitioned into a new business model without incurring any debt.”

Stewart Wallach, Capstone’s Chairman and CEO, commented, “our company was tested throughout 2019. I am proud to say management rose to the occasion. While combating the impact and related fallout resulting from the tariff penalties, management repositioned the company with an exciting product portfolio that offers significant growth potential as it enters the 20s.”

Wallach added, “our decision to enter the Smart Home segment with Capstone Connected surfaces was timely as Smart Home products become more mainstream.”

Webcast and Teleconference to Review Results and Outlook

The Company will host a pre-recorded webcast and conference call on Tuesday, March 31, 2020 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. 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 Tuesday, April 7, 2019. To listen to the archived call, dial (412) 317-6671 and enter conference ID number 13699670. 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, Ltd., in the development, manufacturing and marketing of consumer products to retail channels throughout North America and international markets.

Visit our websites; 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.

Important Message Regarding COVID – 19

As the COVID-19 pandemic continues to spread around the world, Capstone is considering all recommended and required steps to ensure its employees’ health and safety in its workplaces.

We are following closely the recommendations of the Center for Disease Control and Prevention, Department of Homeland Security, State Department and local government guidelines and recommendations and the World Health Organization guidelines as applicable to our overseas’ offices.

We are committed to maintaining business reporting; however, we may need to modify the norm in doing so due to employees working remotely and the possibility of temporary office closures.

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

CONSOLIDATED STATEMENTS OF OPERATIONS

 
 

For the Years Ended

December 31,

 

2019

 

 

2018

 

 
Revenues, net

$

12,404,445

 

$

12,830,324

 

Cost of sales

 

(9,972,871

)

 

(9,936,745

)

Gross Profit

 

2,431,574

 

 

2,893,579

 

 
Operating Expenses:
Sales and marketing

 

378,605

 

 

915,205

 

Compensation

 

1,554,286

 

 

1,502,590

 

Professional fees

 

435,143

 

 

510,022

 

Product development

 

348,745

 

 

518,969

 

Other general and administrative

 

647,696

 

 

691,466

 

Total Operating Expenses

 

3,364,475

 

 

4,138,252

 

 
Operating Loss

 

(932,901

)

 

(1,244,673

)

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

 

29,505

 

 

(55,360

)

Interest Expense

 

(3,206

)

 

-

 

Total Other Income (Expenses)

 

26,299

 

 

(55,360

)

 
Loss Before Tax Benefit

 

(906,602

)

 

(1,300,033

)

 
Benefit for Income Tax

 

(14,933

)

 

(288,975

)

 
Net Loss

$

(891,669

)

$

(1,011,058

)

 
Net Loss per Common Share
Basic

($

0.02

)

($

0.02

)

Diluted

($

0.02

)

($

0.02

)

 
Weighted Average Shares Outstanding
Basic

 

46,863,467

 

 

47,046,364

 

Diluted

 

46,863,467

 

 

47,046,364

 

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

CAPSTONE COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
 
 

December 31,

December 31,

 

2019

 

 

2018

 

Assets:
Current Assets:
Cash

$

3,131,249

 

$

3,822,359

 

Accounts receivable, net

 

13,459

 

 

64,511

 

Inventories

 

24,818

 

 

27,497

 

Prepaid expenses

 

182,782

 

 

243,876

 

Income tax refundable

 

220,207

 

 

220,207

 

Total Current Assets

 

3,572,515

 

 

4,378,450

 

 
Property and Equipment, net

 

65,649

 

 

75,720

 

Operating lease- right of use asset

 

214,202

 

 

-

 

Deposit

 

46,021

 

 

102,805

 

Goodwill

 

1,936,020

 

 

1,936,020

 

Total Assets

 

5,834,407

 

 

6,492,995

 

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

$

635,593

 

$

461,446

 

Deferred rent incentive

 

-

 

 

108,844

 

Operating lease- current portion

 

51,174

 

 

-

 

Income tax payable

 

-

 

 

11,694

 

Total Current Liabilities

 

686,767

 

 

581,984

 

 
Long Term Liabilities:
Operating lease- long term portion

 

170,998

 

 

-

 

Deferred tax liabilities

 

-

 

 

12,000

 

Total Long Term Liabilities

 

170,998

 

 

12,000

 

Total Liabilities

 

857,765

 

 

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 46,579,747 shares at December 31, 2019 and 47,046,364 shares at December 31, 2018

 

4,658

 

 

4,704

 

Additional paid-in capital

 

7,061,565

 

 

7,092,219

 

Accumulated deficit

 

(2,089,581

)

 

(1,197,912

)

Total Stockholders' Equity

 

4,976,642

 

 

5,899,011

 

Total Liabilities and Stockholders’ Equity

$

5,834,407

 

$

6,492,995

 

 
The accompanying notes are an integral part of these condensed consolidated financial statements.
CAPSTONE COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
 
 

For the Twelve Months Ended

December 31,

 

2019

 

 

 

2018

 

CASH FLOWS FROM OPERATING ACTIVITIES:
 
Net Loss

$

(891,669

)

$

(1,011,058

)

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

 

44,194

 

 

45,510

 

Stock based compensation expense

 

40,707

 

 

86,666

 

Non cash lease expense

 

20,248

 

 

-

 

(Benefit) for deferred income tax

 

(12,000

)

 

(239,000

)

Increase (decrease) in accrued sales allowance

 

(101,802

)

 

170,833

 

Decrease in accounts receivable, net

 

152,854

 

 

4,132,377

 

Decrease in inventories

 

2,679

 

 

113,177

 

Increase (decrease) in prepaid expenses

 

61,094

 

 

(4,726

)

(Increase) decrease in deposits

 

56,784

 

 

(89,189

)

Increase (decrease) in accounts payable and accrued liabilities

 

174,147

 

 

(2,272,070

)

Increase (decrease) in deferred rent incentive

 

(108,844

)

 

108,844

 

(Decrease) in income tax payable

 

(11,694

)

 

(613,088

)

(Increase) in income tax refundable

 

-

 

 

(220,207

)

(Decrease) in operating lease liabilities

 

(12,278

)

 

-

 

Net cash provided by (used in) operating activities

 

(585,580

)

 

208,069

 

 
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment

 

(34,123

)

 

(53,866

)

Net cash used in investing activities

 

(34,123

)

 

(53,866

)

 
CASH FLOWS FROM FINANCING ACTIVITIES:
Repurchase of Shares

 

(71,407

)

 

-

 

Net cash used in financing activities

 

(71,407

)

 

-

 

 
Net Increase (Decrease) in Cash

 

(691,110

)

 

154,203

 

Cash at Beginning of Period

 

3,822,359

 

 

3,668,196

 

Cash at End of Period

$

3,131,249

 

$

3,822,399

 

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

$

3,206

 

$

-

 

Income taxes

$

-

 

$

865,000

 

Operating lease right of use at commencement

$

224,550

 

$

-

 

Operating lease liabilities at commencement

$

234,450

 

$

-

 

 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
CAPSTONE COMPANIES, INC. AND SUBSIDIARIES
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, 2017

-

$

-

-

$

-

-

$

-

47,046,364

 

 

4,704

 

 

7,005,553

 

 

(186,854

)

 

6,823,403

 

 
Stock options for compensation

-

 

-

-

 

-

-

 

-

-

 

 

-

 

 

86,666

 

 

-

 

 

86,666

 

Net Loss

-

 

-

-

 

-

-

 

-

-

 

 

-

 

 

-

 

 

(1,011,058

)

 

(1,011,058

)

Balance at December 31, 2018

-

 

-

-

 

-

-

 

-

47,046,364

 

 

4,704

 

 

7,092,219

 

 

(1,197,912

)

 

5,899,011

 

 
 
Stock options for compensation

-

 

-

-

 

-

-

 

-

-

 

 

-

 

 

40,707

 

 

-

 

 

40,707

 

Repurchase of shares

-

 

-

-

 

-

-

 

-

(466,617

)

 

(46

)

 

(71,361

)

 

-

 

 

(71,407

)

Net Loss

-

 

-

-

 

-

-

 

-

-

 

 

-

 

 

-

 

 

(891,669

)

 

(891,669

)

Balance at December 31, 2019

-

$

-

-

$

-

-

$

-

46,579,747

 

$

4,658

 

$

7,061,565

 

$

(2,089,581

)

$

4,976,642

 

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

 

Contacts

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

Contacts

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