CAPC - Capstone Companies Reports Third Quarter 2020
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. |
|
|
View source version on businesswire.com: https://www.businesswire.com/news/home/20201116005881/en/
Aimee C. Brown
Corporate Secretary
(954) 252-3440, ext. 313