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

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)