Capstone Companies Reports Third Quarter 2020

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 first quarter 2020.

Gerry McClinton, Capstone’s CFO, commented, “While the Company continues to navigate its way through the COVID-19 pandemic, management remains focused on its year-end and 2021 strategic initiatives. Management will continue to react to the ongoing changes, but our long-term strategies will remain intact.”

Mr. Wallach added, “we are patiently awaiting retail markets to re-open to full capacity. Our primary focus has been on the re-launch of the Capstone Connected Smart Mirror campaign. We believe we are well positioned to make an impact on the Smart Home Market through this introduction as we approach 2021.”

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 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.

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

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.

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.

 

CAPSTONE COMPANIES, INC. AND SUBSIDIARIES

CONDENSED CONSOLIDATED BALANCE SHEETS
 

September 30,

 

December 31,

 

2020

 

 

 

2019

 

Assets:

(Unaudited)

 

 

Current Assets:
Cash

$

1,314,508

 

$

3,131,249

 

Accounts receivable, net

 

211,509

 

 

13,459

 

Inventories

 

13,426

 

 

24,818

 

Prepaid expenses

 

113,636

 

 

182,782

 

Income tax refundable

 

794,838

 

 

220,207

 

Total Current Assets

 

2,447,917

 

 

3,572,515

 

 
Property and equipment, net

 

63,166

 

 

65,649

 

Operating lease- right of use asset

 

172,796

 

 

214,202

 

Deposit

 

11,148

 

 

46,021

 

Goodwill

 

1,445,254

 

 

1,936,020

 

Total Assets

$

4,140,281

 

$

5,834,407

 

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

$

632,750

 

$

635,593

 

Paycheck protection program loan-current portion

 

49,971

 

 

-

 

Operating lease- current portion

 

61,675

 

 

51,174

 

Total Current Liabilities

 

744,396

 

 

686,767

 

 
Long-Term Liabilities:
Paycheck protection program loan-long term portion

 

39,988

 

 

-

 

Operating lease- long-term portion

 

124,207

 

 

170,998

 

Total Long-Term Liabilities

 

164,195

 

 

170,998

 

Total Liabilities

 

908,591

 

 

857,765

 

 
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 46,296,364 shares at September 30, 2020 and 46,579,747 shares at December 31, 2019

 

4,630

 

 

4,658

 

Additional paid-in capital

 

7,049,128

 

 

7,061,565

 

Accumulated deficit

 

(3,822,068

)

 

(2,089,581

)

Total Stockholders' Equity

 

3,231,690

 

 

4,976,642

 

Total Liabilities and Stockholders’ Equity

$

4,140,281

 

$

5,834,407

 

 
 
 
 
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,

 

2020

 

 

 

2019

 

 

 

2020

 

 

 

2019

 

 

Revenues, net

$

709,654

 

$

5,354,190

 

$

1,765,189

 

 

$

11,740,814

 

Cost of sales

 

(535,270

)

 

(4,139,214

)

 

(1,521,628

)

 

 

(9,165,140

)

Gross Profit

 

174,384

 

 

1,214,976

 

 

243,561

 

 

 

2,575,674

 

 

 

 

 

 

Operating Expenses:

 

 

 

 

 

Sales and marketing

 

22,337

 

 

102,193

 

 

277,264

 

 

 

329,463

 

Compensation

 

362,706

 

 

381,795

 

 

1,139,107

 

 

 

1,138,960

 

Professional fees

 

99,579

 

 

112,687

 

 

339,816

 

 

 

353,293

 

Product development

 

75,948

 

 

81,060

 

 

169,133

 

 

 

260,823

 

Other general and administrative

 

113,026

 

 

169,572

 

 

364,941

 

 

 

490,835

 

Goodwill impairment charge

 

-

 

 

-

 

 

490,766

 

 

 

-

 

Total Operating Expenses

 

673,596

 

 

847,307

 

 

2,781,027

 

 

 

2,573,374

 

 

 

 

 

 

Operating Income (Loss)

 

(499,212

)

 

367,669

 

 

(2,537,466

)

 

 

2,300

 

 

 

 

 

 

Other Income (Expenses):

 

 

 

 

 

Interest Expense

 

(47

)

 

(3,206

)

 

(181

)

 

 

(3,206

)

Other Income (Expense), Net

 

-

 

 

2,610

 

 

-

 

 

 

135

 

Total Other Income (Expenses)

 

(47

)

 

(596

)

 

(181

)

 

 

(3,071

)

 

 

 

 

 

Income (Loss) Before Tax Benefit

 

(499,259

)

 

367,073

 

 

(2,537,647

)

 

 

(771

)

 

 

 

 

 

Benefit for Income Tax

 

(21,222

)

 

-

 

 

(805,160

)

 

 

(12,000

)

 

 

 

 

 

Net Income (Loss)

$

(478,037

)

$

367,073

 

$

(1,732,487

)

 

$

11,229

 

 

 

 

 

 

Net Income (Loss) per Common Share

 

 

 

 

 

Basic and Diluted

$

(0.01

)

$

0.01

 

$

(0.04

)

 

$

0.00

 

 

 

 

 

 

Weighted Average Shares Outstanding

 

 

 

 

 

Basic and Diluted

 

46,296,364

 

 

46,882,538

 

 

46,350,909

 

 

 

46,874,256

 

 

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

 

 

 

 

 

 

 

 

CAPSTONE COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2020 AND SEPTEMBER 30, 2019

 

 

 

 

 

 

 

 

(Unaudited)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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, 2019

-

$

-

-

$

-

-

$

-

46,579,747

 

$

4,658

 

$

7,061,565

 

$

(2,089,581

)

$

4,976,642

 

 
Stock options for compensation

-

 

-

-

 

-

-

 

-

-

 

 

-

 

 

8,925

 

 

-

 

 

8,925

 

Repurchase of shares

-

 

-

-

 

-

-

 

-

(283,383

)

 

(28

)

 

(36,305

)

 

-

 

 

(36,333

)

Net Loss

-

 

-

-

 

-

-

 

-

-

 

 

-

 

 

-

 

 

(597,376

)

 

(597,376

)

Balance at March, 31, 2020

-

 

-

-

 

-

-

 

-

46,296,364

 

 

4,630

 

 

7,034,185

 

 

(2,686,957

)

 

4,351,858

 

 
 
Stock options for compensation

-

 

-

-

 

-

-

 

-

-

 

 

-

 

 

8,925

 

 

-

 

 

8,925

 

Net Loss

-

 

-

-

 

-

-

 

-

-

 

 

-

 

 

-

 

 

(657,074

)

 

(657,074

)

Balance at June 30, 2020

-

 

-

-

 

-

-

 

-

46,296,364

 

 

4,630

 

$

7,043,110

 

$

(3,344,031

)

$

3,703,709

 

 
Stock options for compensation

-

 

-

-

 

-

-

 

-

-

 

 

-

 

 

6,018

 

 

-

 

 

6,018

 

Net Loss

-

 

-

-

 

-

-

 

-

-

 

 

-

 

 

-

 

 

(478,037

)

 

(478,037

)

Balance at September 30, 2020

-

$

-

-

$

-

-

$

-

46,296,364

 

$

4,630

 

$

7,049,128

 

$

(3,822,068

)

$

3,231,690

 

 
 
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

 

 
 
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

 

 
Stock options for compensation

-

 

-

-

 

-

-

 

-

-

 

 

-

 

 

9,732

 

 

-

 

 

9,732

 

Repurchase of shares

-

 

-

-

 

-

-

 

-

(79,945

)

 

(7

)

 

(11,630

)

 

-

 

 

(11,637

)

Net Loss

-

 

-

-

 

-

-

 

-

-

 

 

-

 

 

-

 

 

367,073

 

 

367,073

 

Balance at September 30, 2019

-

$

-

-

$

-

-

$

-

46,752,419

 

$

4,677

 

$

7,076,513

 

$

(1,186,683

)

$

5,894,507

 

 
 
 
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,

 

2020

 

 

 

2019

 

CASH FLOWS FROM OPERATING ACTIVITIES:

Net Income (Loss)

$

(1,732,487

)

$

11,229

 

Adjustments to reconcile net income (loss) to net cash used in

operating activities:

 

 

Depreciation and amortization

 

18,222

 

 

33,072

 

Stock based compensation expense

 

23,868

 

 

31,782

 

Noncash lease expense

 

41,406

 

 

-

 

Unpaid accrued interest on paycheck protection program loan

 

359

 

 

-

 

Goodwill impairment charge

 

490,766

 

 

-

 

Benefit for deferred income tax

 

-

 

 

(12,000

)

Increase in accounts receivable, net

 

(198,050

)

 

(2,087,830

)

Decrease in inventories

 

11,392

 

 

27,497

 

Decrease in prepaid expense

 

69,146

 

 

107,359

 

Decrease in deposits

 

34,873

 

 

75,912

 

Increase (decrease) in accounts payable and accrued liabilities

 

(2,843

)

 

454,004

 

Decrease in deferred rent incentive

 

 

-

 

 

 

(75,315

)

Increase in income tax refundable

 

(574,631

)

 

-

 

Decrease in operating lease liabilities

 

 

(36,290

)

 

 

-

 

Net cash used in operating activities

 

(1,854,269

)

 

(1,434,290

)

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

Purchase of property and equipment

 

(15,739

)

 

(34,123

)

Net cash used in investing activities

 

(15,739

)

 

(34,123

)

 

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

 

Proceeds from loan under paycheck protection program

 

89,600

 

 

-

 

Repurchase of Shares

 

(36,333

)

 

(47,515

)

Net cash provided by (used in) financing activities

 

53,267

 

 

(47,515

)

 

 

Net Decrease in Cash

 

(1,816,741

)

 

(1,515,928

)

Cash at Beginning of Period

 

3,131,249

 

 

3,822,359

 

Cash at End of Period

$

1,314,508

 

$

2,306,431

 

 

 

SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:

Cash paid during the period for:

Interest

$

-

$

3,206

 

 

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