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Capstone Companies Reports Third Quarter 2020

·9 min read

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/

Contacts

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