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DEF 14C 1 capc_def14c.htm
https://www.sec.gov/Archives/edgar/data/814926/000190359623000465/capc_def14c.htm
FORM 10-Q - QUARTERLY REPORT UNDER SECTION 13 OR 15(d) For the quarterly period ended March 31, 2023
https://www.sec.gov/ix?doc=/Archives/edgar/data/814926/000190359623000415/capc_10q.htm
FORM 8-K - CURRENT REPORT
https://www.sec.gov/ix?doc=/Archives/edgar/data/814926/000190359623000432/capc_8k.htm
Date of Report: May 16, 2023
Item 5.02 – Departure of Directors or Certain Officers; Election of Directors; Appointment of Certain Officers; Compensatory Arrangements of Certain Officers.
On May 9, 2023, and pursuant to a written consent solicitation to four (4) holders of record of Common Stock, $0.0001, ("Common Stock") of Capstone Companies, Inc., a Florida corporation, ("Company"), the Company received sufficient written consents from those shareholders to approve the following corporate actions, which corporate actions are not effective until: the filing of a Definitive 14C information statement with the Commission and the lapse of twenty days thereafter, and, with respect to the amendment of the Company’s Amended and Restated Articles of Incorporation (“Articles”), the filing of an amendment to the Articles with the Secretary of State of the State of Florida:
1. Election of Directors. The following incumbent directors were re-elected by following written consent of shareholders for a term ending with the election and assumption of office by successors in 2024:
Name of Director Votes FOR Withheld Votes
Stewart Wallach 26,663,665 -0-
George Wolf 26,663,665 -0-
Jeffrey Postal 26,663,665 -0-
Jeffrey Guzy 26,663,665 -0-
Votes FOR represented approximately 55% of issued and outstanding shares eligible to vote or consent as of the record date.
2. Ratification of Public Auditors for Fiscal Year 2023
D. Brooks & Associates, CPAs, PC, current public auditor of the Company, was ratified by following written consent of shares of Common Stock to serve as public auditor of the Company for fiscal year 2023.
VOTES FOR VOTES AGAINTS VOTES ABSTAIN
26,663,665 -0- -0-
Votes FOR represented approximately 55% of issued and outstanding shares eligible to vote or consent as of the record date.
3. Amendment of Amended and Restated Articles of Incorporation. Amendment of Article 1 of the Articles were approved by following written consent of shares of Common Stock:
VOTES FOR VOTES AGAINTS VOTES ABSTAIN
26,663,665 -0- -0-
Votes FOR represented approximately 55% of issued and outstanding shares eligible to vote or consent as of the record date.
No other matters were presented for written consent of the shareholders.
_____________________________________________________________
Item 5.03. Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year.
As reported in Item 5.02 above, the Company received sufficient written consents from holders of shares of Common Stock to approve an amendment to Article 1 of the Articles. The amendment to the Articles restates Article 1 to read as stated below and in order to increase the authorized shares of Common Stock to 300 million from 60 million. The amendment will not be effective until the Company files a Definitive 14C Information Statement with the Commission, twenty days has lapsed from that filing and an amendment to the Articles is filed with the Secretary of State of the State of Florida.
Text of Amendment: Article 1: Authorized Shares. The maximum number of shares which the Corporation is authorized to issue is 300,000,000 shares, of which 295,000,0000 shares shall be Common Stock, par value $0.0001 per share (the "Common Stock"), and 5,000,000 shares of Preferred Stock (the "Preferred Stock").
Reasons for the Proposed Authorized Capital Increase. Purpose of the amendment of Article 1 of the Articles (the “Authorized Capital Increase”) is to provide sufficient shares of Common Stock for equity financing or reserve of shares of Company Common Stock to cover: (1) any merger or other business combination transaction involving the Company and an exchange of shares of Company Common Stock; (2) any funding requiring issuance of or escrow of shares of Company Common Stock in a conversion of a convertible debt instrument, as part of consideration or payment of funding, or other related reasons; or (3) a registered public or private offering of shares of Common Stock to fund a significant corporate action or provide working capital. Company does not have a legally binding agreement to consummate any of the aforementioned corporate actions or transactions, but the Company believes that having the available authorized shares permits the Company to act in the event of any significant corporate action or transaction, especially fundings, without the delay of increasing the authorized number of shares of capital stock.
Company’s traditional business line of LED lighting products has matured and no longer produces revenue to sustain Company operations. Efforts to establish the Company’s Connected Surfaces Smart Mirror as a primary product line that generates sufficient revenues to support operations have not succeeded as of the date of this Information Statement. The Company is exploring third party funding to sustain operations as well as exploring possible new product lines or new primary business lines for the Company. There is no assurance that the Company will be able to consummate any corporate transaction to fund new products, a new business line or new product lines, which failure to consummate may result in the Company being unable to sustain operations. Company relies on funding from directors and affiliates to cover basic overhead.
Future Dilution; Anti-Takeover Effects. SEC requires disclosure and discussion of the effects of any action, including the proposals discussed herein, that may be used as an anti-takeover mechanism. Since the amendment to our Articles will provide that the number of authorized shares of Common Stock will be Three Hundred Million (300,000,000), once effected, the increase in the number of shares authorized for issuance will result in an increase in the number of authorized but unissued shares of our Common Stock which could, under certain circumstances, have an anti-takeover effect, although this is not the purpose or intent of the Company in respect of the Authorized Capital Increase. Company has not proposed the Authorized Capital Increase with the intention of using the additional authorized shares for anti-takeover purposes. An increase in the number of authorized shares of Common Stock could have other effects on shareholders, depending upon the exact nature and circumstances of any actual issuances of authorized but unissued shares. An increase in our authorized shares could potentially deter takeovers, including takeovers that the Board has determined are not in the best interest of shareholders, in that additional shares could be issued (within the limits imposed by applicable law) in one or more transactions that could make a change in control or takeover more difficult or too expensive to pursue. For example, we could issue additional shares so as to dilute the stock ownership or voting rights of persons seeking to obtain voting control of the Company without our agreement. Similarly, the issuance of additional shares to certain persons allied with our management could have the effect of making it more difficult to remove our current management by diluting the stock ownership or voting rights of persons seeking to cause such removal. The increase in the number of shares authorized for issuance may therefore have the effect of discouraging unsolicited takeover attempts. By potentially discouraging initiation of any such unsolicited takeover attempts, the increase in the number of shares authorized for issuance may limit the opportunity for our shareholders to dispose of their shares at the higher price generally available in takeover attempts or that may be available under a merger proposal that is favorable to public shareholders.
There may be certain other disadvantages suffered by shareholders as a result of the Authorized Capital Increase. These disadvantages include an increase in possible dilution to present shareholders' percentage ownership of the Common Stock because of the additional authorized shares of Common Stock which would be available for future issuance by us. Current shareholders, in the aggregate, own approximately 81.37% of current authorized and issued shares of Common Stock under our present capital structure but would own only 16.27% of the authorized and issued shares of Common Stock under our capital structure after the Authorized Capital Increase. The decision to issue shares of Common Stock that could dilute the position of current shareholders can be made by our Board alone, and no further shareholder vote or consultation would be required for such an issuance.
Under the current capitalization of the Company, two shareholders, who are a director and a director-senior officer of the Company, and one public shareholder have sufficient shares of Common Stock to approve or block any proposed corporate action requiring shareholder approval. There is no known agreement among these shareholders to act as a group in voting their shares.
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, as amended, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
CAPSTONE COMPANIES, INC., A FLORIDA CORPORATION
By: /s/ Stewart Wallach
Stewart Wallach, Chief Executive Officer
Dated: May 16, 2023
It's going to be tougher to sell shares than mirrors.
oh and btw, CAPC TO DA MOON!
Increase the authorized shares of capital stock from 60 million to 300 million
Amendment of Article 1 of the Amended and Restated Articles of Incorporation of the Company (“Articles”) to increase the authorized shares of capital stock from 60 million to 300 million, specifically, to increase the authorized shares of Common Stock to 295 million and the authorized shares of serial Preferred Stock to 5 million. The increase in authorized shares of capital stock was deemed necessary by the Company to allow sufficient shares of Common Stock for any future corporate funding or significant corporate transactions requiring issuance of shares of Common Stock. The Company has 48,826,864 of Common Stock issued as of May 8, 2023. With respect to the 60 million shares of authorized capital stock authorized under the existing Articles, there are 56,666,667 shares Common Stock authorized and 3,333,333 shares of Preferred Stock.
Fourth OTCQB disclosure up. Temp CFO added to list of officers/directors. Only change I see.
https://www.otcmarkets.com/otcapi/company/financial-report/366812/content
Public Float math still wrong.
Third OTCQB disclosure, still wrong
https://www.otcmarkets.com/otcapi/company/financial-report/365944/content
Math does not check out for 'Public Float'. Fourth time's the Charm? Or, is this close enough for CAPC and OTCQB?
Still listing all their debt as Convertible.
Well, they updated the OTCQB disclosure; it's still riddled with errors.
https://www.otcmarkets.com/otcapi/company/financial-report/364966/content
Can't find good CFO help these days, I guess.
That OTCQB disclosure will need to be amended and refiled; several obvious errors
The new CFO has also listed all the debt as convertible, with out disclosing details. This is most likely an error, but if it's not, the way forward includes converting the debt into shares. This would severely dilute current shareholders - the most obvious debt to share swap would be for Preferred B-1 shares.
CAPC had $61K cash at end of 2022, down considerably from end of 2021.
Management Effectiveness
In Nov. 2017, Stewart talked about a new product (he was holding the prototype as he talked), the Connected Surfaces product, which became the Capstone Connected mirrors. At the time, he was announcing record sales and profits from the LED lighting business. CAPC was rich with assets. CAPC was a growth stock. It was decided to move away from the LED lighting business, and focus on the new Smart Mirror products. Here's how that went over the next 5 years:
A closer look at the time period of 3Q2021-4Q2022, by quarter, roughly the time the Smart Mirror products have been available:
Well it's 3 PM---Stewie has finished supper, filed fins and is
ready for his nap. See ya again in 3 months.
oh and btw, CAPC TO DA MOON!
Capstone Companies sunbiz.org annual report just posted
Still using 431 Fairway Dr. Suite 200 as the address.
I have no idea why the 1/4/2023 filing was delayed until today.
Surprise! sunbiz.org was updated on 1/4/23 for Capstone Industries.
McClinton was deleted as an officer, and Stewart still claims to be using 431 Fairway Dr. Suite 200 as an address.
Not sure why the office has been advertised for lease since 11/14/2022. Maybe someone could do a drive-by and see who exactly is in that office.
Still no update for Capstone Companies, Inc. That's the one with the 49M CAPC shares outstanding.
Before he breaks out the abacus,
he should break out his checkbook, spend $150, and file the annual report for Capstone Companies at sunbiz.org
https://search.sunbiz.org/Inquiry/CorporationSearch/SearchResults/OfficerRegisteredAgentName/wallach%20stewart/Page1
He did it already for Group Nexus LLC, his private company, back on Jan. 30th.
He also needs to do it for Capstone Lighting Technologies LLC and Capstone Industries Inc., unless he wants those subsidiaries to fade away.
Failure to file by May 1st incurs a $400 late fee, and failing to file by the 3rd Friday in September sends the corporation into Administrative Dissolution.
Okay Stewie, time to break out the abacus and get fins done. After that you need to come up with a new idea on how to save the company. Perhaps a Mirror Fun House! Will patiently await the next great product.
oh and btw, CAPC TO DA MOON!!
I wanted custom sized mirrors. Would have been cool to have the CAPC mirror I guess.
There are a bit less than 2,000 Home Depot stores in the US
CAPC raised a bit over $3 million to build mirrors and keep the lights on at HQ ($1.5 million in April 2021, $1 million in October 2021, and $600,000 in May 2022).
They ultimately put about 1500 mirrors into their US warehouse.
Can you see how the Brick&Mortar approach would not work for the mirrors? They didn't even have enough stock for one display unit per store, just for Home Depot. Now add in Costco stores.
Can I ask why you did not buy Capstone's mirrors for your bath and wardrobe?
I bought a mirror for the bath and wardrobe. Neither of the mirrors were a Capstone product. Both of my mirrors were close to that original price of a Capstones mirror. Selling these mirror needed to be sold visual (brick & mortar). I think the price is not high. Even at the original sale price.
Indiegogo Campaign seems to be gone
3 weeks, and they sold zero mirrors. Now what? A 50% discount wasn't enough to entice sales.
Oh man, the share structure is absolutely LOCKED up. It’s clear to see !
They each put up 200K last year alone, did you miss that?
Short selling back on CAPC
After back to back (Jan. 15th, Jan 30th) Short Interest = Zero for CAPC, the shorts are back in force.
Short interest as of Feb. 15th: 200 shares.
Oh, the huge manatee!
Postal, and Postal only put up $50K on Oct. 13, 2022
That didn't even allow them to keep their offices. That $50K is long gone, my guess. Probably covered the expenses for the Kelly Clarkson show give-away, and maybe the early termination of their lease at 431 Fairway Dr. Suite 200.
If it goes Chapter 11, I figure the DIP lender will have to cough up at least $3 million to keep the company from liquidation.
$50K shows confidence? I don't think so. They need millions in new financing.
LOL! I’m guessing they put up the $$$ like they have been since they are clearly confident about the future. But what do I know !!
My guess is they knew it was a Stock Promotion, and selling any of their personal shares would have brought unwanted SEC attention.
Still, the Company did cash in on the promotion by selling 2.5 million shares at 60 cents. That $1.5 million was about a year's worth of cash burn.
If it comes down to Insolvency, do you think it will be an Involuntary or Voluntary petition for Bankruptcy? Chapter 7 liquidation, or Chapter 11 reorganization?
I guess: Voluntary Chapter 11, with a DIP lender getting the bulk of the new equity.
Regardless of how they were acquired, they have NEVER sold a share!! I wonder why they didn’t sell when it was over a dollar? My guess is they expect it to be much much higher.
What does any of this have to do with whether the Company is Insolvent or not?
If Fleisig notified the Company of an Event of Default, and the Company can't cure that default, his whole loan plus interest is due 7 weeks early. If the Company can't pay back the loan and interest, they are Insolvent.
I wonder what Mouhaned Khoury thinks about the chances of getting his loan repaid when it comes due in November. That's another $200K plus Interest.
20 days into the Indiegogo campaign and no sales. Where's the money to cover debts as they come due?
Mirrors gone from Amazon (remember what a Big Deal that was?).
Office vacated.
No CFO since 11/30/22.
Still no Annual Report on sunbiz.org (even though Stewart updated his private LLC on Jan. 30th).
Have the directors ever bought any shares on the open market? Or, did they only get shares as debt settlement, or in lieu of Director compensation? Thanks in advance !!
Did you know Stewart bought a whole bunch of shares from the previous CEO for 0.0025 per share (0.0375 per share post reverse split)?
Have the directors ever sold any of their shares? Or have they only been accumulating? Thanks in advance !!
I think it possible that the whole Indiegogo thing was precipitated
by Everett Fleisig notifying the Company of an Event of Default, specifically,
Strange how even when the company directors (who already own nearly half of all shares) decide to step up and invest hundreds of thousands in to the company instead of taking on toxic debt, that’s some how a bad thing. I don’t get it. Lol
Has any investor heard from Wallach at all in the last 6 months?
Lol, that’s coming filing language. I think it’s in almost every OTV stock. Look at the actions. Directors are paying from their own pockets. ZERO dilution !!
Have you read the filings?
From the last 10Q:
Um, how about the directors repeatedly putting in their own money not to dilute? They each just fished out 200K each just months ago to avoid taking on toxic debt. Have you read the filings ?
Where did they commit to that? That's not what it says in their SEC filings.
But at least they are committed to not diluting or selling shares. Isn’t that a good thing?
For Free? They're selling them for less than their costs.
Yes, they'll lose money on every 'sale'. They're trying to turn a current asset into quick cash by selling under cost.
They've sold Zero in about 10 days that the campaign has been active.
Should they manage to move all 900 mirrors they have in inventory, they'll raise about $330K after Indiegogo's fees (no, selling stuff on Indiegogo is not Free).
They owe $1.1 million due in April, and another $645K due in November.
This is a company liquidating as they go out of business. It's not a good thing. If the company survives, it'll be because they diluted more shares. It's the only thing they have left to sell, after the mirrors.
Only on iHub you can find people who think a company who wants to raise funds for free rather than take on toxic debt is a bad thing.. LOL
Kelly clarkson audience sure seemed impressed! It’s great how the mirror could be showcased at a national TV show of that magnitude, wouldn’t you agree ? Producers must have saw something there…? Lol
The shares they own only goes up not down. Gotta be a reason for that :)
They have never personally sold a single share. Check the filings. Lol
Wallach and Postal made no loans under that deal
And got 15,000 Preferred shares (999,900 shares when converted to common) for their trouble.
Three months later, they sold 2.5 million shares for 60 cents per share when the stock price was above 2 dollars.
So, to recap, Wallach and Postal dished out Zero dollars of their own money, got a million shares as thanks, and then diluted 2.5 million shares.
It WAS easy for them to sell shares. Not so much anymore. They'll need to reverse split to make room if they plan on selling more shares to stave off Insolvency.
The fact that directors own NEARLY half of all shares and don’t want to dilute so they are trying g to raise funds cause they are committed to no toxic debt now? You see that as a negative? Hmmm
To me, it sounds like a company you can trust. Would’ve been very easy to sell shares. Instead, they dish out their own money just to avoid dilution:
“
On January 4, 2021, the Company entered a $750,000 working capital loan agreement with Directors, Stewart Wallach and Jeffrey Postal (“Lenders”). In consideration for the Lenders allowing for loan advances under the loan agreement, a below market rate of interest and the loan made on an unsecured basis, as payment of a finance fee for the loan, the Company issued a total of seven thousand five hundred shares of Company’s Series B-1 Convertible Preferred Stock, $0.0001 par value per share, (“Preferred Shares”) to each of the Lenders. Each preferred share converts into 66.66 shares of common stock at option of Lender. The Preferred Shares and any shares of common stock issued under the loan agreement are “restricted securities under Rule 144 of the Securities Act of 1933, as amended (See Note 4).”
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