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
[phone], 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.

 

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