Capstone Companies Reports Second Quarter 2019

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 second quarter 2019.

Stewart Wallach, Capstone’s Chairman and CEO, commented, “as projected at our Q1 conference call, YTD revenues for our core LED business are strong. The new product line has resonated well with consumers and we have invested significantly in marketing support to maintain this momentum through 2019.”

Mr. Wallach added, “the Company continues to advance its initiative for transitioning its supply chain outside of China and expects to be shipping from these new OEM partners in Q4 2019. This will support the Company’s competitiveness and help sustain normal revenue activity.”

Gerry McClinton, Capstone’s CFO, commented further, “in addition to the significant marketing investments mentioned by Mr. Wallach, we have underwritten the development of the Company’s new smart home electronics product portfolio without incurring debt.”

Webcast and Teleconference to Review Results and Outlook

The Company will host a live webcast and conference call on Thursday, August 15, 2019 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, followed by a question-and-answer session. The conference call can be accessed by dialling [phone]. 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 Thursday, August 23, 2019. To listen to the archived call, dial [phone] and enter conference ID number 13692244. 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, 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 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.

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
CONDENSED CONSOLIDATED BALANCE SHEETS
	June 30,		December 31,
	2019		2018
Assets:	(Unaudited)
Current Assets:
Cash	$ 1,232,921		$ 3,822,359
Accounts receivable, net	2,770,235		64,511
Inventories	-		27,497
Prepaid and other	351,678		243,876
Income tax refundable	220,207		220,207
Total Current Assets	4,575,041		4,378,450
Property and Equipment:
Computer equipment and software	53,819		51,195
Machinery and equipment	196,067		170,567
Furniture and fixtures	6,828		6,828
Less: Accumulated depreciation	(174,822)		(152,870)
Total Property & Equipment	81,892		75,720
Other Non-current Assets:
Deposit	62,693		102,805
Goodwill	1,936,020		1,936,020
Total Other Non-current Assets	1,998,713		2,038,825
Total Assets	$ 6,655,646		$ 6,492,995
Liabilities and Stockholders’ Equity:
Current Liabilities:
Accounts payable and accrued liabilities	$ 1,055,935		$ 461,446
Deferred rent incentive	58,678		108,844
Income tax payable	11,694		11,694
Total Current Liabilities	1,126,307		581,984
Long Term Liabilities:
Deferred tax liabilities	-		12,000
Total Long Term Liabilities	-		12,000
Total Liabilities	1,126,307		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 46,832,364 shares at June 30, 2019 and 47,046,364 shares at December 31, 2018	4,684		4,704
Additional paid-in capital	7,078,411		7,092,219
Accumulated deficit	(1,553,756)		(1,197,912)
Total Stockholders' Equity	5,529,339		5,899,011
Total Liabilities and Stockholders’ Equity	$ 6,655,646		$ 6,492,995
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 Six Months Ended
				June 30,				June 30,
				2019		2018		2019		2018
Revenues, net				$ 3,407,822		$ 2,103,206		$ 6,386,624		$ 6,163,374
Cost of sales				(2,673,711)		(1,742,486)		(5,025,926)		(4,783,384)
Gross Profit				734,111		360,720		1,360,698		1,379,990
Operating Expenses:
Sales and marketing				35,395		115,547		227,270		478,608
Compensation				382,317		369,749		757,165		744,858
Professional fees				82,803		142,900		240,606		291,786
Product development				94,534		123,766		179,763		290,332
Other general and administrative				157,552		166,676		321,263		340,965
Total Operating Expenses				752,601		918,638		1,726,067		2,146,549
Operating Loss				(18,490)		(557,918)		(365,369)		(766,559)
Other Income (Expense), Net				7,986		147,290		(2,475)		147,290
Loss Before Tax (Benefit)				(10,504)		(410,628)		(367,844)		(619,269)
(Benefit) for Income Tax				-		(59,000)		(12,000)		(77,000)
Net Loss				$ (10,504)		$ (351,628)		$ (355,844)		$ (542,269)
Net Loss per Common Share
Basic				($0.00)		($0.01)		($0.01)		($0.01)
Diluted				($0.00)		($0.01)		($0.01)		($0.01)
Weighted Average Shares Outstanding
Basic				46,928,935		47,046,364		46,906,092		47,046,364
Diluted				46,928,935		47,046,364		46,906,092		47,046,364
The accompanying notes are an integral part of these condensed consolidated financial statements.

CAPSTONE COMPANIES, INC. AND SUBSIDIARIES
CONDENSED 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, 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
(Unaudited)
Balance at December 31, 2017		-		$ -		-		$ -		-		$ -		47,046,364		$ 4,704		$ 7,005,553		$ (186,854)		$ 6,823,403
Stock options for compensation		-		-		-		-		-		-		-		-		28,875		-		28,875
Net (Loss)		-		-		-		-		-		-		-		-		-		(190,641)		(190,641)
Balance at March 31, 2018		-		-		-		-		-		-		47,046,364		$ 4,704		$ 7,034,428		$ (377,495)		$ 6,661,637
Stock options for compensation		-		-		-		-		-		-		-		-		28,874		-		28,874
Net (Loss)		-		-		-		-		-		-		-		-		-		(351,628)		(351,628)
Balance at June 30, 2018		-		$ -		-		$ -		-		$ -		47,046,364		$ 4,704		$ 7,063,302		$ (729,123)		$ 6,338,883
(Unaudited)
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 Six Months Ended
		June 30,
			2019			2018
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss		$	(355,844)		$	(542,269)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			21,951			18,266
Stock based compensation expense			22,050			57,750
Provision (benefit) for deferred income tax			(12,000)			18,000
Increase (decrease) in accrued sales allowance			(191,468)			41,645
(Increase) decrease in accounts receivable, net			(2,514,256)			2,302,602
(Increase) other receivables			-			(78,250)
Decrease in inventories			27,497			132,318
(Increase) in prepaid and other			(107,802)			(548,017)
(Increase) decrease in deposits			40,112			(696)
Increase (decrease) in accounts payable and accrued liabilities			594,489			(1,222,828)
(Decrease) in deferred rent incentive			(50,166)			-
(Decrease) in income tax payable			-			(613,088)
(Increase) in income tax refundable			-			(346,912)
Net cash used in operating activities			(2,525,437)			(781,479)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment			(28,123)			(125,723)
Net cash used in investing activities			(28,123)			(125,723)
CASH FLOWS FROM FINANCING ACTIVITIES:
Repurchase of Shares			(35,878)			-
Net cash used in financing activities			(35,878)			-
Net Decrease in Cash			(2,589,438)			(907,202)
Cash at Beginning of Period			3,822,359			3,668,196
Cash at End of Period		$	1,232,921		$	2,760,994
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest		$	-		$	-
Income taxes		$	-		$	865,000
The accompanying notes are an integral part of these condensed consolidated financial statements.

 

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