Capstone Companies Reports First Quarter 2020
Capstone Companies, Inc. (OTCQB: 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, “Despite being severely impacted by COVID-19, the Company was able to complete major strategic objectives including transitioning manufacturing into Thailand. There may be further disruption resulting from COVID-19 as its impact to the economy remains uncertain. Management will continue to react to the ongoing changes, but our long-term strategies will remain intact.”
Stewart Wallach, Capstone's CEO, added, “As we patiently await retail markets re-opening, we have doubled our efforts on product development initiatives with a primary focus on 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 the impact of COVID-19 subsides.”
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.
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 and the possibility of temporary office closures.
|
CAPSTONE COMPANIES, INC. AND SUBSIDIARIES |
||||||||
|
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS |
||||||||
|
(Unaudited) |
||||||||
|
|
|
|
|
|
||||
|
|
|
For the Three Months Ended |
||||||
|
|
|
March 31, |
||||||
|
|
|
2020 |
|
2019 |
||||
| Revenues, net |
$ |
148,977 |
|
$ |
2,978,802 |
|
||
| Cost of sales |
|
(114,821 |
) |
|
(2,352,215 |
) |
||
| Gross Profit |
|
34,156 |
|
|
626,587 |
|
||
| Operating Expenses: | ||||||||
| Sales and marketing |
|
211,973 |
|
|
191,875 |
|
||
| Compensation |
|
376,675 |
|
|
374,848 |
|
||
| Professional fees |
|
130,530 |
|
|
157,803 |
|
||
| Product development |
|
51,614 |
|
|
85,229 |
|
||
| Other general and administrative |
|
144,366 |
|
|
163,711 |
|
||
| Goodwill impairment charge |
|
290,059 |
|
|
- |
|
||
| Total Operating Expenses |
|
1,205,217 |
|
|
973,466 |
|
||
| Operating Loss |
|
(1,171,061 |
) |
|
(346,879 |
) |
||
| Other Expense, Net |
|
- |
|
|
(10,461 |
) |
||
| Loss Before Tax Benefit |
|
(1,171,061 |
) |
|
(357,340 |
) |
||
| Benefit for Income Tax |
|
(573,685 |
) |
|
(12,000 |
) |
||
| Net Loss |
$ |
(597,376 |
) |
$ |
(345,340 |
) |
||
| Net Loss per Common Share | ||||||||
| Basic & Diluted |
($ |
0.01 |
) |
($ |
0.01 |
) |
||
| Weighted Average Shares Outstanding | ||||||||
| Basic & Diluted |
|
46,462,232 |
|
|
47,033,670 |
|
||
|
CAPSTONE COMPANIES, INC. AND SUBSIDIARIES |
||||||||
|
CONDENSED CONSOLIDATED BALANCE SHEETS |
||||||||
|
|
||||||||
|
|
|
March 31, |
|
December 31, |
||||
|
|
|
2020 |
|
2019 |
||||
|
Assets: |
|
(Unaudited) |
|
|
||||
| Current Assets: | ||||||||
| Cash |
$ |
2,452,652 |
|
$ |
3,131,249 |
|
||
| Accounts receivable, net |
|
69,973 |
|
|
13,459 |
|
||
| Inventories |
|
13,426 |
|
|
24,818 |
|
||
| Prepaid expenses |
|
140,583 |
|
|
182,782 |
|
||
| Income tax refundable |
|
966,179 |
|
|
220,207 |
|
||
| Total Current Assets |
|
3,642,813 |
|
|
3,572,515 |
|
||
| Property and Equipment, net |
|
75,314 |
|
|
65,649 |
|
||
| Operating lease- right of use asset |
|
200,619 |
|
|
214,202 |
|
||
| Deposit |
|
11,147 |
|
|
46,021 |
|
||
| Goodwill |
|
1,645,961 |
|
|
1,936,020 |
|
||
| Total Assets |
$ |
5,575,854 |
|
$ |
5,834,407 |
|
||
| Liabilities and Stockholders’ Equity: | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable and accrued liabilities |
$ |
837,344 |
|
$ |
635,593 |
|
||
| Operating lease- current portion |
|
58,514 |
|
|
51,174 |
|
||
| Total Current Liabilities |
|
895,858 |
|
|
686,767 |
|
||
| Long-Term Liabilities: | ||||||||
| Operating lease - long-term portion |
|
155,851 |
|
|
170,998 |
|
||
| Deferred tax liabilities |
|
172,287 |
|
|
- |
|
||
| Total Long-Term Liabilities |
|
328,138 |
|
|
170,998 |
|
||
| Total Liabilities |
|
1,223,996 |
|
|
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 March 31, 2020 and 46,579,747 shares at December 31, 2019 |
|
4,630 |
|
|
4,658 |
|
||
| Additional paid-in capital |
|
7,034,185 |
|
|
7,061,565 |
|
||
| Accumulated deficit |
|
(2,686,957 |
) |
|
(2,089,581 |
) |
||
| Total Stockholders' Equity |
|
4,351,858 |
|
|
4,976,642 |
|
||
| Total Liabilities and Stockholders’ Equity |
$ |
5,575,854 |
|
$ |
5,834,407 |
|
||
| CAPSTONE COMPANIES, INC. AND SUBSIDIARIES | ||||||||
| CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (Unaudited) | ||||||||
|
For the Three Months Ended |
||||||||
|
March 31, |
||||||||
|
2020 |
|
2019 |
||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net Loss |
$ |
(597,376 |
) |
$ |
(345,340 |
) |
||
| Adjustments to reconcile net loss to net cash used in operating activities: | ||||||||
| Depreciation and amortization |
|
6,074 |
|
|
10,830 |
|
||
| Stock based compensation expense |
|
8,925 |
|
|
11,025 |
|
||
| Non cash lease expense |
|
13,583 |
|
|
- |
|
||
| Goodwill impairment charge |
|
290,059 |
|
|
- |
|
||
| Provision (Benefit) for deferred income tax |
|
172,287 |
|
|
(12,000 |
) |
||
| (Increase) in accounts receivable, net |
|
(56,515 |
) |
|
(2,284,747 |
) |
||
| Decrease in inventories |
|
11,392 |
|
|
10,196 |
|
||
| Decrease in prepaid expenses |
|
42,199 |
|
|
167,152 |
|
||
| (Increase) decrease in deposits |
|
34,874 |
|
|
(388 |
) |
||
| Increase in accounts payable and accrued liabilities |
|
201,752 |
|
|
277,389 |
|
||
| (Decrease) in deferred rent incentive |
|
- |
|
|
(25,017 |
) |
||
| (Increase) in income tax refundable |
|
(745,972 |
) |
|
- |
|
||
| (Decrease) in operating lease liabilities |
|
(7,807 |
) |
|
- |
|
||
| Net cash used in operating activities |
|
(626,525 |
) |
|
(2,190,900 |
) |
||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of property and equipment |
|
(15,739 |
) |
|
- |
|
||
| Net cash used in investing activities |
|
(15,739 |
) |
|
- |
|
||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Repurchase of Shares |
|
(36,333 |
) |
|
(8,615 |
) |
||
| Net cash used in financing activities |
|
(36,333 |
) |
|
(8,615 |
) |
||
| Net Decrease in Cash |
|
(678,597 |
) |
|
(2,199,515 |
) |
||
| Cash at Beginning of Period |
|
3,131,249 |
|
|
3,822,359 |
|
||
| Cash at End of Period |
$ |
2,452,652 |
|
$ |
1,622,844 |
|
||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
| Cash paid during the period for: | ||||||||
| Interest |
$ |
- |
|
|
- |
|
||
| Income taxes |
$ |
- |
|
$ |
- |
|
||
|
CAPSTONE COMPANIES, INC. AND SUBSIDIARIES |
||||||||||||||||||||||||||||||||||
|
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY |
||||||||||||||||||||||||||||||||||
|
(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 |
|
|||||||||||
| ( Unaudited) | ||||||||||||||||||||||||||||||||||
| 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) | ||||||||||||||||||||||||||||||||||
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