Capstone Companies, Inc. CAPC ("Capstone" or the "Company"), a designer, manufacturer and marketer of consumer inspired products that bridge technological innovations with today's lifestyle, today reported its financial results for the third quarter 2018.
Stewart Wallach, Capstone's CEO, commented, "While revenues disappoint, the Company planned for the decline and effectively controlled operating expenses to minimize the impact. This in conjunction with the Company's strong balance sheet and zero debt position did not impact its efforts to develop its new product portfolio which appeals to today's smart homes and digital lifestyles. The Company is planning its formal launch at the Consumer Electronic Show (CES) in January 2019."
Gerry McClinton, Capstone's CFO, added, "Despite reduced revenues, the Company achieved a Net Income of approximately $172 thousand in the quarter, had zero interest, zero debt, a cash balance of nearly $3.6 million, which positions the Company well to launch the new product line initiative."
Webcast and Teleconference to Review Results and Outlook
The Company will host a live webcast and conference call on Thursday, November 15, 2018 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. The conference call can be accessed by dialing (201) 689-8562. The listen-only audio webcast can be monitored at www.capstonecompaniesinc.com.
A telephonic replay will be available from 1:30 p.m. Eastern Time the day of the teleconference until Thursday, November 22, 2018. To listen to the replay of the call, dial (412) 317-6671 and enter replay pin number 13684744. Alternatively, the archive of the webcast will be available on the Company's website at www.capstonecompaniesinc.com. A transcript will also be posted to the website, 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, Ltd., in the development, manufacturing and marketing of consumer products to retail channels throughout North America and international markets. See www.capstonecompaniesinc.com for more information about the Company and www.capstoneindustries.com for information on our current product offerings.
The Hoover trademark and logo are registered trademarks of Techtronic Floor Care Technology Limited and are used under license by Capstone Industries, Inc. All rights reserved.
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 | ||||||||
| CONSOLIDATED BALANCE SHEETS | ||||||||
| September 30, | December 31, | |||||||
| 2018 | 2017 | |||||||
| Assets: | (Unaudited) | |||||||
| Current Assets: | ||||||||
| Cash | $ | 3,593,296 | $ | 3,668,196 | ||||
| Accounts receivable, net | 2,387,590 | 4,367,721 | ||||||
| Inventories | 8,316 | 140,634 | ||||||
| Prepaid expenses | 164,345 | 239,150 | ||||||
| Income tax refundable | 354,912 | - | ||||||
| Total Current Assets | 6,508,459 | 8,415,701 | ||||||
| Property and Equipment: | ||||||||
| Computer equipment and software | 56,932 | 9,895 | ||||||
| Machinery and equipment | 395,601 | 318,801 | ||||||
| Furniture and fixtures | 12,493 | 5,665 | ||||||
| Less: Accumulated depreciation | (299,454 | ) | (266,997 | ) | ||||
| Total Property & Equipment | 165,572 | 67,364 | ||||||
| Other Non-current Assets: | ||||||||
| Deposit | 14,755 | 13,616 | ||||||
| Goodwill | 1,936,020 | 1,936,020 | ||||||
| Total Other Non-current Assets | 1,950,775 | 1,949,636 | ||||||
| Total Assets | $ | 8,624,806 | $ | 10,432,701 | ||||
| Liabilities and Stockholders' Equity: | ||||||||
| Current Liabilities: | ||||||||
| Accounts payable and accrued liabilities | $ | 1,801,248 | $ | 2,733,516 | ||||
| Income tax payable | 11,694 | 624,782 | ||||||
| Total Current Liabilities | 1,812,942 | 3,358,298 | ||||||
| Long Term Liabilities: | ||||||||
| Deferred tax liabilities | 283,000 | 251,000 | ||||||
| Total Long Term Liabilities | 283,000 | 251,000 | ||||||
| Total Liabilities | 2,095,942 | 3,609,298 | ||||||
| Commitments and Contingencies (Note 4) | ||||||||
| 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 47,046,364 shares | 4,704 | 4,704 | ||||||
| Additional paid-in capital | 7,081,194 | 7,005,553 | ||||||
| Accumulated deficit | (557,034 | ) | (186,854 | ) | ||||
| Total Stockholders' Equity | 6,528,864 | 6,823,403 | ||||||
| Total Liabilities and Stockholders' Equity | $ | 8,624,806 | $ | 10,432,701 | ||||
| CAPSTONE COMPANIES, INC. AND SUBSIDIARIES | |||||||||||||||||
| CONSOLIDATED STATEMENTS OF OPERATIONS | |||||||||||||||||
| (Unaudited) | |||||||||||||||||
| For the Three Months Ended | For the Nine Months Ended | ||||||||||||||||
| September 30, | September 30, | ||||||||||||||||
| 2018 | 2017 | 2018 | 2017 | ||||||||||||||
| Revenues, net | $ | 5,726,145 | $ | 13,817,909 | $ | 11,889,520 | $ | 30,789,653 | |||||||||
| Cost of sales | (4,395,761 | ) | (10,707,657 | ) | (9,179,145 | ) | (23,457,070 | ) | |||||||||
| Gross Profit | 1,330,384 | 3,110,252 | 2,710,375 | 7,332,583 | |||||||||||||
| Operating Expenses: | |||||||||||||||||
| Sales and marketing | 359,715 | 928,321 | 838,323 | 1,869,596 | |||||||||||||
| Compensation | 359,539 | 351,915 | 1,104,396 | 1,065,621 | |||||||||||||
| Professional fees | 102,532 | 109,257 | 394,320 | 429,440 | |||||||||||||
| Product development | 95,661 | 80,991 | 385,994 | 219,464 | |||||||||||||
| Other general and administrative | 232,888 | 189,780 | 573,852 | 572,461 | |||||||||||||
| Total Operating Expenses | 1,150,335 | 1,660,264 | 3,296,885 | 4,156,582 | |||||||||||||
| Operating Income (Loss) | 180,049 | 1,449,988 | (586,510 | ) | 3,176,001 | ||||||||||||
| Other Income (Expense): | |||||||||||||||||
| Miscellaneous income (expense) | (1,960 | ) | - | 145,330 | - | ||||||||||||
| Interest expense | - | (69,459 | ) | - | (113,431 | ) | |||||||||||
| Total Other Income (Expense) | (1,960 | ) | (69,459 | ) | 145,330 | (113,431 | ) | ||||||||||
| Income (Loss) Before Tax Provision (Benefit) | 178,089 | 1,380,529 | (441,180 | ) | 3,062,570 | ||||||||||||
| Provision (Benefit) for Income Tax | 6,000 | 390,000 | (71,000 | ) | 920,000 | ||||||||||||
| Net Income (Loss) | $ | 172,089 | $ | 990,529 | $ | (370,180 | ) | $ | 2,142,570 | ||||||||
| Net Income (Loss) per Common Share | |||||||||||||||||
| Basic | $ | 0.004 | $ | 0.021 | ($0.008 | ) | $ | 0.046 | |||||||||
| Diluted | $ | 0.004 | $ | 0.021 | ($0.008 | ) | $ | 0.045 | |||||||||
| Weighted Average Shares Outstanding | |||||||||||||||||
| Basic | 47,046,364 | 46,660,456 | 47,046,364 | 46,989,940 | |||||||||||||
| Diluted | 47,046,364 | 47,152,574 | 47,046,364 | 47,462,664 | |||||||||||||
| CAPSTONE COMPANIES, INC. AND SUBSIDIARIES | ||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||
| (Unaudited) | ||||||||
| For the Nine Months Ended | ||||||||
| September 30, | ||||||||
| 2018 | 2017 | |||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||
| Net income (loss) | $ | (370,180 | ) | $ | 2,142,570 | |||
| Adjustments necessary to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||
| Depreciation and amortization | 32,457 | 55,725 | ||||||
| Accrued interest on note receivable | - | 26,887 | ||||||
| Stock based compensation expense | 75,641 | 66,594 | ||||||
| Provision for deferred income tax | 32,000 | 146,000 | ||||||
| Increase (decrease) in accrued sales allowance | 153,025 | (831,731 | ) | |||||
| Decrease in accounts receivable, net | 1,827,100 | 731,532 | ||||||
| Decrease in inventories | 132,318 | 224,265 | ||||||
| (Increase) decrease in prepaid expenses | 74,805 | (20,813 | ) | |||||
| (Increase) in deposits | (1,139 | ) | - | |||||
| (Decrease) in accounts payable and accrued liabilities | (932,262 | ) | (263,912 | ) | ||||
| (Decrease) in income tax payable | (613,088 | ) | - | |||||
| (Increase) in income tax refundable | (354,912 | ) | - | |||||
| (Decrease) in accrued interest on notes payable | - | (135,337 | ) | |||||
| Net cash provided by operating activities | 55,765 | 2,141,780 | ||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||
| Purchase of property and equipment | (130,665 | ) | (47,587 | ) | ||||
| Net cash (used in) investing activities | (130,665 | ) | (47,587 | ) | ||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||
| Proceeds from notes payable | 18,352,018 | 30,559,312 | ||||||
| Repayments of notes payable | (18,352,018 | ) | (30,559,312 | ) | ||||
| Repurchase of shares from Involve, LLC | - | (250,000 | ) | |||||
| Warrant issued | - | 7,500 | ||||||
| Repayments of notes and loans payable to related parties | - | (257,100 | ) | |||||
| Net cash (used in) financing activities | - | (499,600 | ) | |||||
| Net Increase (decrease) in Cash and Cash Equivalents | (74,900 | ) | 1,594,593 | |||||
| Cash and Cash Equivalents at Beginning of Period | 3,668,196 | 1,646,128 | ||||||
| Cash and Cash Equivalents at End of Period | $ | 3,593,296 | $ | 3,240,721 | ||||
| SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||||||||
| Cash paid during the period for: | ||||||||
| Interest | $ | - | $ | 221,881 | ||||
| Income taxes | $ | 865,000 | $ | 371,500 | ||||
| Non-cash financing and investing activities: | ||||||||
| Shares issued in satisfaction of loan payable to related party | $ | - | $ | 240,900 | ||||
View source version on businesswire.com: https://www.businesswire.com/news/home/20181114005051/en/
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