Business Wire | Nov 16, 2020 04:00PM EST

Capstone Companies Reports Third Quarter 2020

Nov. 16, 2020

DEERFIELD BEACH, Fla.--(BUSINESS WIRE)--Nov. 16, 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 (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 49,971 - portionOperating lease- current portion 61,675 51,174

Total Current Liabilities 744,396 686,767

Long-Term Liabilities:Paycheck protection program loan-long term 39,988 - portionOperating 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-sharesPreferred Stock, Series B-1, par value $.0001 - - per share, authorized 3,333,333 shares, issued-0- sharesPreferred Stock, Series C, par value $1.00 per - - share, authorized 67 shares, issued -0- sharesCommon Stock, par value $.0001 per share,authorized 56,666,667 shares, issued 46,296,364 4,630 4,658 shares at September 30, 2020 and 46,579,747shares at December 31, 2019Additional 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 consolidatedfinancial 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

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 22,337 102,193 277,264 329,463 marketing

Compensation 362,706 381,795 1,139,107 1,138,960

Professional 99,579 112,687 339,816 353,293 fees

Product 75,948 81,060 169,133 260,823 development

Other generaland 113,026 169,572 364,941 490,835 administrative

Goodwillimpairment - - 490,766 - charge

TotalOperating 673,596 847,307 2,781,027 2,573,374 Expenses



Operating (499,212 ) 367,669 (2,537,466 ) 2,300 Income (Loss)



Other Income (Expenses):

Interest (47 ) (3,206 ) (181 ) (3,206 )Expense

Other Income - 2,610 - 135 (Expense), Net

Total OtherIncome (47 ) (596 ) (181 ) (3,071 )(Expenses)



Income (Loss)Before Tax (499,259 ) 367,073 (2,537,647 ) (771 )Benefit



Benefit for (21,222 ) - (805,160 ) (12,000 )Income Tax



Net Income $ (478,037 ) $ 367,073 $ (1,732,487 ) $ 11,229 (Loss)



Net Income(Loss) per Common Share

Basic and $ (0.01 ) $ 0.01 $ (0.04 ) $ 0.00 Diluted



WeightedAverage Shares Outstanding

Basic and 46,296,364 46,882,538 46,350,909 46,874,256 Diluted

The accompanying notes are an integral part of these condensed consolidatedfinancial statements



CAPSTONE COMPANIES, INC. AND SUBSIDIARIESCONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITYFOR 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 SUBSIDIARIESCONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITYFOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2020 AND SEPTEMBER 30,2019 (Unaudited)



Preferred Preferred Preferred Stock Additional Stock Stock

Series A Series B Series C Common Stock Paid-In Accumulated Total

Shares Par Shares Par Shares Par Shares Par Value Capital Deficit Equity Value Value Value

Balance at - $ - - $ - - $ - 46,579,747 $ 4,658 $ 7,061,565 $ (2,089,581 ) $ 4,976,642 December 31,2019 Stock - - - - - - - - 8,925 - 8,925 options forcompensationRepurchase - - - - - - (283,383 ) (28 ) (36,305 ) - (36,333 )of sharesNet Loss - - - - - - - - - (597,376 ) (597,376 )

Balance at - - - - - - 46,296,364 4,630 7,034,185 (2,686,957 ) 4,351,858 March, 31,2020 Stock - - - - - - - - 8,925 - 8,925 options forcompensationNet Loss - - - - - - - - - (657,074 ) (657,074 )

Balance at - - - - - - 46,296,364 4,630 $ 7,043,110 $ (3,344,031 ) $ 3,703,709 June 30,2020 Stock - - - - - - - - 6,018 - 6,018 options forcompensationNet Loss - - - - - - - - - (478,037 ) (478,037 )

Balance at - $ - - $ - - $ - 46,296,364 $ 4,630 $ 7,049,128 $ (3,822,068 ) $ 3,231,690 September30, 2020 Balance at - $ - - $ - - $ - 47,046,364 $ 4,704 $ 7,092,219 $ (1,197,912 ) $ 5,899,011 December 31,2018Stock - - - - - - - - 11,025 - 11,025 options forcompensationRepurchase - - - - - - (45,470 ) (3 ) (8,612 ) - (8,615 )of sharesNet Loss - - - - - - - - - (345,340 ) (345,340 )

Balance at - - - - - - 47,000,894 4,701 7,094,632 (1,543,252 ) 5,556,081 March 31,2019 Stock - - - - - - - - 11,025 - 11,025 options forcompensationRepurchase - - - - - - (168,530 ) (17 ) (27,246 ) - (27,263 )of sharesNet Loss - - - - - - - - - (10,504 ) (10,504 )

Balance at - - - - - - 46,832,364 4,684 7,078,411 (1,553,756 ) 5,529,339 June 30,2019 Stock - - - - - - - - 9,732 - 9,732 options forcompensationRepurchase - - - - - - (79,945 ) (7 ) (11,630 ) - (11,637 )of sharesNet Loss - - - - - - - - - 367,073 367,073

Balance at - $ - - $ - - $ - 46,752,419 $ 4,677 $ 7,076,513 $ (1,186,683 ) $ 5,894,507 September30, 2019 The accompanying notes are an integral part of these condensed consolidatedfinancial 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/

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