Capstone Comp Stock Price, News & Analysis

Capstone Companies, Inc. (OTCQB: CAPC) is a public holding company and SEC-reporting issuer whose common stock is quoted on the OTCQB Venture Market under the symbol CAPC. According to its public disclosures, the company has undergone a significant transition away from its historical consumer products operations and is focused on developing a new business line and establishing revenue-generating operations.

Capstone has stated in multiple releases that it was formerly engaged, through wholly owned subsidiaries such as Capstone Industries, Inc. and Capstone Lighting Technologies, LLC, in the development, manufacturing and marketing of consumer products to retail channels in North America and certain international markets. Those activities included LED products and a Smart Mirror consumer product line. The company ended its consumer product operations due to declining sales and has indicated that it currently has no revenue-generating operations while it pursues new opportunities.

Strategic focus on health, fitness and social activities (HFS business)

Recent company communications describe a strategic focus on a health, fitness and social activities business, often referred to as the "HFS business." Capstone has announced a new strategic plan to develop and operate in-person sports-entertainment recreational centers designed to provide social and health benefits to children, families and adults through sports, exercise and group activities. Under this focus, the company is exploring facilities that would offer competitive sports such as pickleball and padel, combined with food-and-drink and entertainment areas suitable for social events.

The company has described a concept that could include sports courts, social gathering areas and entertainment elements such as live music stages, sports bars with large-screen televisions and interactive sports video gaming areas. It has also discussed the potential addition of fields for sports such as soccer or other competitive activities to host corporate or league-sponsored tournaments. In its strategic statements, Capstone has indicated that these centers are intended to function as social and community activity hubs in their localities and that the initial geographic focus for this plan includes several U.S. states.

Transition from consumer products to new business lines

Historically, Capstone presented itself as a designer, manufacturer and marketer of consumer-inspired products that simplify daily living through technology. Its prior product portfolio included the Capstone Connected Smart Mirror and, later, the Connected Chef kitchen tablet. The company has disclosed that its former consumer product business line was closed due to insufficient sales and that it is seeking to establish a new business line and revenue-generating operations through internal development, merger, acquisition or a combination of these approaches.

As part of this transition, Capstone has highlighted the Connected Chef kitchen tablet as a smart device developed to address the use of personal phones and tablets in kitchen environments. The Connected Chef was described as a purpose-built kitchen tablet with an accessory platform to accommodate food preparation accessories. The company has also noted that the Connected Chef was developed to replace its discontinued Smart Mirror consumer product line.

Connected Chef kitchen tablet and licensing model

Capstone has announced that it entered into a license agreement with T&B Media, Ltd., a United Kingdom company, granting a limited, exclusive, non-transferable, worldwide license to promote, market, sell, distribute, produce and manufacture Capstone’s Connected Chef kitchen tablet. Under this arrangement, Capstone receives a flat dollar license fee for each Connected Chef product sold by T&B and delivered to the buyer. The company has stated that the term of the license is five years, with an additional period to allow sell-off of any remaining inventory.

In describing the Connected Chef, Capstone has emphasized that it is a purpose-built kitchen tablet designed to withstand kitchen conditions. The company has noted design elements such as a reinforced glass display, waterproof seals and a raised base to protect against spills and liquids. Capstone has also stated that the device is intended to address safety and hygiene concerns associated with using personal devices in the kitchen by providing a dedicated tablet for culinary use. In its communications, Capstone has indicated that the Connected Chef includes Google mobile service, allowing for pre-installation of certain Google LLC applications.

Capstone has characterized the license agreement with T&B as the result of efforts to realize value from the development of the Connected Chef through third-party licensing, while its broader strategic focus is on the HFS business. The company has also noted that production of the Connected Chef under the license represents the first commercial exploitation and first production for sale of this product and that, due to limited operational experience and sales history, it cannot predict the financial performance of the license or its impact on the company’s business and financial condition.

Relationship with Coppermine Ventures and working capital funding

Capstone has disclosed a close relationship with Coppermine Ventures, LLC, a private Maryland company that operates year-round health, fitness and social activities facilities. Coppermine has provided working capital funding to Capstone under various unsecured promissory notes and agreements. These arrangements have been described as covering estimated basic corporate maintenance and compliance expenses for specific periods.

In its SEC filings and press releases, Capstone has explained that funding from Coppermine is used to pay expenses necessary to maintain corporate existence and basic corporate compliance costs. The company has also stated that these funding arrangements are not consideration for any equity interest in Capstone and that Coppermine’s financial commitments have defined limits. Capstone has indicated that it seeks additional third-party funding to pursue its strategic plans and to sustain the company as a going concern.

Corporate governance and board composition

As part of its effort to establish a new business line, Capstone has announced changes in its leadership and board composition. The company has appointed a new Chief Executive Officer with experience in developing and operating sports and fitness facilities and has added directors with backgrounds in commercial strategy, government relations, law and business development. In its public statements, Capstone has linked these appointments to its goal of building revenue-generating operations in sectors different from its former consumer products industry.

The company has described the skills of its new directors and executives as including marketing, business development, contract negotiation, government relations, commercial real estate development and public company experience. Capstone has stated that it views these capabilities as important to pursuing new business opportunities, arranging funding and creating sustainable new business lines.

Regulatory status and reporting

Capstone Companies, Inc. identifies itself as an SEC reporting company. Its common stock is quoted on the OTCQB Venture Market under the symbol CAPC. The company files periodic and current reports with the U.S. Securities and Exchange Commission, including Forms 10-K, 10-Q and 8-K, and has disclosed that it engages external accounting firms to assist with financial reporting and liaison with its public auditor.

In an 8-K filing, Capstone reported entering into an unsecured promissory note with Coppermine Ventures to provide working capital funding for essential corporate maintenance expenses. The filing describes the principal amount, interest rate, maturity date and the company’s option to extend the maturity date. The company has also reported engaging a CPA firm to provide financial, accounting and related administrative services for the preparation and filing of its periodic reports.

Business status and risk considerations

Capstone has repeatedly stated that it currently has no revenue-generating operations following the closure of its former consumer product business line. The company has emphasized that developing and pursuing a new business line will require adequate, timely and affordable third-party funding, which it may not be able to secure. It has also noted that there is no assurance it can obtain such funding, enter into a strategic partnership or merger, or implement its strategic plans.

In its communications, Capstone has described its efforts to establish a new business line as including internal development, potential mergers or acquisitions, and licensing of its Connected Chef smart device. The company has also acknowledged that, without revenues, it needs to develop a new business line with revenue-generating operations to sustain itself as a going concern. These statements highlight the early-stage and transitional nature of Capstone’s current business strategy.

Historical context: consumer technology products

For historical context, Capstone’s earlier business activities included the development and marketing of consumer technology products such as the Capstone Connected Smart Mirror and the Connected Chef kitchen tablet. The company described itself as a designer, manufacturer and marketer of consumer-inspired products that simplify daily living through technology and promoted its products through retail channels and online platforms.

The Capstone Connected Smart Mirror was featured in media coverage and promotional campaigns, while the Connected Chef was introduced as a tablet designed specifically for kitchen use. Over time, Capstone has reported that its consumer product operations were discontinued due to declining sales, leading to the current focus on new business lines and licensing arrangements.

Summary

Overall, Capstone Companies, Inc. is a small public company in a transition phase. It has moved away from its prior consumer products business and is seeking to build a new business line centered on health, fitness and social activities, while also pursuing licensing opportunities for its Connected Chef kitchen tablet. The company’s disclosures emphasize its lack of current revenue-generating operations, reliance on working capital funding for corporate maintenance and the need for additional third-party funding to execute its strategic plans.