UNITED
STATES
SECURITIES
AND EXCHANGE COMMISSION
Washington,
D.C. 20549
SCHEDULE
14C
(Rule
14c-101)
Information
Statement Pursuant to Section 14(c) of the Securities Exchange Act
of 1934
Check
the appropriate box:
[X] |
Preliminary
Information Statement |
[_] |
Confidential,
for Use of the Commission Only (as permitted by Rule
14c-5(d)(2)) |
[_] |
Definitive
Information Statement |
CAPSTONE
COMPANIES, INC.
(Name
of Registrant as Specified In Its Charter)
Payment
of Filing Fee (Check the appropriate box):
[X] |
No
fee required |
[_] |
Fee
paid previously with preliminary materials. |
[_] |
Fee
computed on table in exhibit required by Item 25(b) of Schedule 14A
(17 CFR 240.14a-101) per Item 1 of this Schedule and Exchange Act
Rules 14c-5(g) and 0-11. |
CAPSTONE
COMPANIES, INC.
431
Fairway Drive, Suite 200, Deerfield Beach, Florida 33441
(888)
570-8889, ext. 315
May
10, 2023
IMPORTANT
NOTICE OF INTERNET AVAILABILITY OF INFORMATION STATEMENT AND ANNUAL
REPORT ON FORM 10-K FOR FISCAL YEAR 2022
WE
ENCOURAGE YOU TO ACCESS AND REVIEW ALL OF THE IMPORTANT INFORMATION
CONTAINED IN THE INFORMATION STATEMENT. COPIES OF THE INFORMATION
STATEMENT AND ANNUAL REPORT ON FORM 10-K ARE AVAILABLE AT URL:
https://investors.capstonecompaniesinc.com/CAPC
Dear
holder of shares of Common Stock of Capstone Companies,
Inc.:
As of
May 9, 2023, holders of shares of Common Stock, $0.0001 par value,
(“Common Stock”) of Capstone Companies, Inc., a Florida
corporation, (“Company”) with the requisite votes approved the
following corporate actions by written consent in lieu of
conducting a meeting of shareholders: (1) Election of the incumbent
directors to the Company’s Board of Directors for a term ending in
2024 when successors are elected and assume office; (2)
ratification of Company’s current public auditor, D. Brooks and
Associates, CPAs, P.A., as Company’s public auditor for fiscal year
2023; and (3) 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.
As
permitted by the Federal securities laws, we are making the
Information Statement concerning the election of directors,
increase in the authorized shares of capital stock and ratification
of D. Brooks and Associates, CPAs, P.A., as well as our Annual
Report on Form 10-K for fiscal year ending December 31, 2022,
(“Form 10-K”), available to our Common Stock shareholders via the
Internet instead of mailing printed copies of these materials to
each shareholder. As part of our efforts to conserve environmental
resources and prevent unnecessary corporate expenses, we are
relying on this Notice of Internet Availability rules to provide
required information to our Common Stock shareholders. Shareholders
may request a hardcopy of the Information Statement and Form 10-K
at no charge and as explained below.
In
accordance with this rule, shareholders of record, at the close of
business as of May 8, 2023, were mailed a Notice of Internet
Availability of Information Statement and Form 10-K (“Notice”) on
or about May 19, 2023. The Notice contains instructions on how to
access our Information Statement and Form 10-K online. If you
received this Notice by mail, you will not receive a printed copy
of the Information Statement and Form 10-K by mail, unless you
request printed materials as explained below. If you wish to
receive printed materials, you should follow the instructions for
requesting such materials contained below.
You can request printed materials of Information Statement and Form
10-K by any of following means:
(1)
By Email: Email a request to
gwolf@capstoneindustries.com
(2)
By Telephone: Call Company at 1-(888) 570-8889 extension
315
(3)
By Internet: Send request at Contact at URL:
https://capstonecompaniesinc.com/contact/
If
your shares are held in certificate or book entry form, please
contact our transfer agent:
Equiniti
Trust Company
EQ
Shareowner Services
P.O.
Box 64854
Saint
Paul, MN 55164-0854
Toll
Free: 866-877-6270
Outside
U.S. and Canada: 651-450-4064
shareowneronline.com
If
your shares are held in a brokerage account or trust account,
please contact your broker or trustee for further
assistance.
THIS
NOTICE WILL ENABLE YOU TO ACCESS
MATERIALS
FOR INFORMATIONAL PURPOSES ONLY
CAPSTONE COMPANIES, INC.
431 Fairway Drive, Suite 200, Deerfield Beach, Florida
33441
Telephone: (954) 570-8889, ext. 315
May 10, 2023
NOTICE OF CORPORATE ACTION TAKEN BY WRITTEN CONSENT OF THE
SHAREHOLDERS
(“NOTICE”)
This Information Statement Is For Informational Purposes Only
And No Action Is Requested On Your Part. We Are Not Asking You For
A Proxy And
You Are Requested Not To Send Us A Proxy.
To
the Common Stock Shareholders of Capstone Companies,
Inc.:
This
Notice and the accompanying Information Statement are being
furnished to the Common Stock shareholders of Capstone Companies,
Inc., a Florida corporation (the “Company,” “we,” “us,” or “our”),
in connection with actions taken pursuant to Florida Statutes and
Article VII of our Amended and Restated Articles of Incorporation
by the written consent of the Common Stock shareholders who have
the authority to vote a majority of the issued and outstanding
shares of the Company’s Common Stock. The actions taken are as
described in, and subject to the conditions set out in, the
Information Statement.
This
Information Statement is being furnished to our Common Stock
shareholders (“Shareholders”) in accordance with Rule 14c-2 under
the Securities Exchange Act of 1934, as amended, and the rules
promulgated by the Securities and Exchange Commission (“SEC”)
thereunder, solely for the purpose of informing Shareholders of the
actions taken by the written consent by Shareholders with the
requisite voting power to approve those actions.
THIS IS NOT A NOTICE OF A MEETING, AND NO SHAREHOLDERS’ MEETING
WILL BE HELD TO CONSIDER THE MATTERS DESCRIBED
HEREIN.
By
Order of the Board of Directors,
/s/
Stewart Wallach
Stewart
Wallach, Chief Executive Officer and Chairman of the Board of
Directors
Date:
May 10, 2023
CAPSTONE COMPANIES, INC.
INFORMATION
STATEMENT
This
Information Statement is for informational purposes only and no
action is requested on your part. We are not asking you for a proxy
and you are requested not to send us a proxy.
GENERAL
INFORMATION
Unless
otherwise noted, references to the “Company,” “we,” “us,” or “our”
mean Capstone Companies, Inc., a Florida corporation. Our principal
executive offices are located at 431 Fairway Drive, Suite 200,
Deerfield beach, Florida 33441, and our telephone number is
(888) 570-8889,
Ext.
315.
This
Information Statement is first being made available by Notice of
Internet Availability or by delivery on or about May 19, 2023, to
the Company’s Common Stock shareholders (“Shareholders”) as of
record as of May 8, 2023 (the “Record Date”). We expect that the
actions set out herein will become effective on or about June 19,
2023.
We
are furnishing this Information Statement in connection with
actions taken by written consent (“Written Consent”) by
Shareholders who have the requisite voting power to approve the
corporate actions described in this Information Statement in lieu
of conducting a shareholders meeting.
By
written consent, dated May 9, 2023, (the “Written Consent”), as
permitted by Florida Statutes and Article VII of the Company’s
Amended and Restated Articles of Incorporation (“Articles”), the
Shareholders who had the authority to vote a majority of the
outstanding shares of Common Stock approved have approved the
following corporate actions:
1.
Election of the following incumbent directors to the Company’s
Board of Directors for a term commencing upon election and
assumption of office and ending upon election of successors in
2024:
a)
Stewart Wallach;
b)
George Wolf;
c)
Jeffrey Postal; and
d)
Jeffrey Guzy.
2.
Approval of an amendment to Article 1 of our Articles to increase
our authorized shares of capital stock as follows: The maximum
number of shares of capital stock which the Company would be
authorized to issue under the amendment of the Articles is
300,000,000 shares, of which 295,000,0000 shares are Common Stock,
par value $0.0001 per share (the "Common Stock"), and 5,000,000
shares are serial Preferred Stock (the "Preferred Stock")(the
increase in number of capital shares being referred to as the
“Authorized Capital Increase”). The existing Articles provide for a
maximum of 60,000,000 authorized shares of capital stock, of which
56,666,667 shares are Common Stock and 3,333,333 shares are
Preferred Stock. The amendment to the Articles set forth in
Attachment One hereto.
3.
Ratify the Company’s current public auditor, D. Brooks and
Associates, CPAs, PA, as Company’s public auditor for the Company
for fiscal year ended 2023. Audit Committee of Company’s Board of
Directors has recommended engagement and ratification by
Shareholders of D. Brooks and Associates, CPAs, PA, as Company’s
public auditors for 2023 fiscal year. Company’s Board of Directors
recommended ratification of D. Brooks CPA, PC, as public auditors
of the Company for 2023 fiscal year.
The
above corporate actions are referred to as the “Corporate Actions”
below. As of the Record Date, 48,826,864 shares of Common Stock
were outstanding.
Under
Florida law and our Articles, the votes represented by the holders
signing the Written Consent are sufficient in number to authorize
the matters set forth in the Written Consent, without the vote or
consent of any of our other shareholders. Florida statutes provide
that any action that is required to be taken, or that may be taken,
at any annual or special meeting of shareholders of a Florida
corporation may be taken, without a meeting, without prior notice
and without a vote, if a written consent, setting forth the actions
taken, is signed by the holders of outstanding capital stock having
not less than the minimum number of votes necessary to authorize
such action.
This
Information Statement is being provided to shareholders on or
about May 19, 2023. We will bear all expenses incurred in
connection with the distribution of this Information Statement. We
will reimburse brokers or other nominees for reasonable expenses
they incur in forwarding this material to beneficial
owners.
No
action is required by you. The accompanying Information Statement
is furnished only to inform you of the above actions before such
actions take effect, in accordance with Rule 14c-2 promulgated
under the Securities Exchange Act of 1934, as amended, (“Exchange
Act”).
Shareholders
owning 26,663,665 shares of our issued and outstanding shares of
Common Stock consented in writing on May 9, 2023, to the Authorized
Capital Increase, election of directors and ratification of public
auditors. The shares that consented to these corporate
actions represent 55% of the issued and outstanding shares of
Common Stock as of the Record Date. As such, no vote or further
action of the shareholders of the Company is required to approve or
adopt those actions. Under federal law, however, such
approval by written consent may not become effective until at least
twenty (20) days after this Information Statement has first been
provided to Shareholders and these actions shall become effective
immediately thereon or, with respect to the Authorized Capital
Increase, when the appropriate filing has been made with the
Florida Secretary of State after the 20 day period.
DISSENTER’S
RIGHT OF APPRAISAL
The
Florida Statutes do not provide for dissenter's rights of appraisal
in connection with the Authorized Capital Increase.
VOTING
SECURITIES AND PRINCIPAL HOLDERS THEREOF
The
voting power of the Company is vested in its Common Stock, with one
vote per share. At the Record Date, 48,826,864 shares of
Common Stock were outstanding.
FORWARD-LOOKING
STATEMENTS
This
Information Statement and Annual Report may contain
“forward-looking statements.” These statements are based on our
current expectations and involve risks and uncertainties which may
cause results to differ materially from those set forth in the
statements. The forward-looking statements may include statements
regarding actions to be taken in the future. Actual results may
differ from those set forth in the forward-looking statements. We
undertake no obligation to publicly update any forward-looking
statement, whether as a result of new information, future events or
otherwise. Forward-looking statements should be evaluated together
with the many uncertainties that affect our business, particularly
those set forth in the section on forward-looking statements and in
the risk factors in Item 1A of the Form 10-K, as filed with the
Securities and Exchange Commission on March 31, 2023.
FREQUENTLY
ASKED QUESTIONS
Why
am I receiving these materials? The Company is sending you this
Information Statement to inform you of corporate actions approved
by the Board and approved by the written consent of holders of the
shares of Common Stock representing more than 50% of the issued and
outstanding shares of the Common Stock. Shareholders do not need to
take any actions in respect of the Corporate Actions.
Is
this a Proxy Statement? No. This is not a proxy statement.
Company is not asking Shareholders for a proxy and Shareholders are
requested not to send us a proxy or take any other
action.
What
vote is required to approve each proposed corporate action?
Each of the corporate actions requires the approval of Shareholders
representing more than 50% of the issued and outstanding shares of
Common Stock as of the Record Date. Written consents representing
26,663,665 shares of Common Stock, or 55% of the issued and
outstanding shares of Common Stock eligible to vote on or consent
to the corporate actions were received by the Company and approved
all Corporate Actions - without a vote against and without an
abstention. As such, no shareholders meeting is required to approve
the Corporate Actions.
What
is the purpose of the proposals? Under its by-laws and Florida
law, the Company has to periodically elect directors. We also
routinely seek shareholder ratification of the appointment of a
public auditor as part of our policy of seeking qualified and
independent public auditors. The purpose of the Authorized Capital
Increase is described in “Reasons for the Proposed Authorized
Capital Increase” below.
Why
is there no Annual Meeting of Shareholders? Fewer than five
Shareholders have sufficient votes to approve or reject any of the
Corporate Actions by written consent. Florida law allows the
Company to approve these proposals by written consent. As such,
holding an annual or special meeting of shareholders, while
meetings have certain ancillary benefits, is not necessary to
approve or reject the Corporate Actions. A written consent avoids
the cost of holding a shareholders’ meeting, which cost is
significant for a smaller reporting company like the Company,
especially due to the current financial condition of the
Company.
Who
is paying for the preparation and mailing of the Information
Statement? The cost of preparing and mailing the Information
Statement will be borne entirely by the Company. Banks, brokerage
houses and other nominees or fiduciaries will be requested to
forward the material to their principals, and the Company will,
upon request, reimburse them for their expenses in so doing. The
Company estimates the cost of preparing and mailing the Information
Statement to be $8,500.
What
was the recommendation of the Board of Directors on each of the
corporate actions? THE BOARD OF DIRECTORS APPROVED AND
RECOMMENDED SHAREHOLDER APPROVAL OF ALL CORPORATE
ACTIONS.
What
is being delivered to Shareholders (Householding)? If hard
copies of the materials are requested, we will send only one
Information Statement and Form 10-K to Shareholders who share a
single address unless we received contrary instructions from any
Shareholder at that address. This practice, known as
“householding,” is designed to reduce our printing and postage
costs. However, the Company will deliver promptly upon written or
oral request a separate copy of the Information Statement and Form
10-K to a Shareholder at a shared address to which a single copy of
the Information Statement and Form 10-K was delivered. If multiple
Shareholders sharing an address have received one copy of this
Information Statement and Form 10-K or any other corporate mailing
and would prefer the Company to mail each Shareholder a separate
copy of future mailings, you may mail notification to, or call the
Company at, its principal executive offices. Additionally, if
current Shareholders with a shared address received multiple copies
of this Information Statement and Form 10-K or other corporate
mailings and would prefer the Company to mail one copy of future
corporate mailings to Shareholders at the shared address,
notification of such request may also be made by mail or telephone
to the Company’s principal executive offices. Notification of these
requests may also be made by mail, email, or telephone call to our
principal executive offices as follows: George Wolf, Corporate
Assistant Secretary, Capstone Companies, Inc., 431 Fairway Drive,
Suite 200, Deerfield Beach, Florida 33441, or by sending an email
to him at gwolf@capstonecompanies.com, Telephone: (888) 570-8889,
Ext 315.
E-Mail
Transmission of Documents. If Shareholders wish to reduce the
Company’s cost of sending materials to Shareholders, please contact
George Wolf at the above email or telephone number for a consent
form to receive corporate documents and mailings by email.
Shareholders’ emails are only used to send corporate materials and
mailings and not for any other purposes. Company does noy share
Shareholders’ emails with others, excepting for successors to the
Company.
What
do I need to do now? Nothing. These materials are provided to
inform you and do not require or request you to do
anything.
CORPORATE
ACTIONS
Item
1. Election of Directors. The Board nominated the four
directors profiled below to stand for election to the Board until
their successors are elected and assume office in 2024. The Company
received sufficient written consents to elect the four nominees.
Shareholders with requisite voting power (“Majority Shareholders”)
cast all of their aggregate of 26,663,665 shares of the
Common Stock, which represents 55% of the issued and outstanding
shares of Common Stock as of Record Date, for election of each of
the four nominees. The profiles of the directors, who are incumbent
directors, nominated by the Company’s Board of Directors and
elected by Written Consent are:
DIRECTOR
PROFILES. Stewart Wallach, Age 71, Chief Executive
Officer and Chairman of the Board of Directors since April 23,
2007, a director of the Company since September 22, 2006, and the
founder and Chief Executive Officer and Chairman of the Board of
Directors of Capstone Industries, Inc., a wholly owned subsidiary,
and principal operating subsidiary of the Company, since September
20, 2006. Mr. Wallach is an American entrepreneur and has founded
and operated a number of successful businesses over his 35-year
career. Over the past 15 years, Mr. Wallach has been focused on
technology-based companies in addition to consumer product
businesses, the field in which he has spent most of his career.
Prior to founding Capstone Industries, Inc., he sold Systematic
Marketing, Inc., which designed, manufactured, and marketed
automotive consumer products to mass markets, to Sagaz Industries,
Inc., a leader in these categories. He served as President of Sagaz
Industries, Inc. for 10 years before forming Capstone Industries,
Inc. In 1998, Mr. Wallach co-founded Examsoft Worldwide, Inc.
(“Examsoft”), which developed and delivered software technology
solving security challenges of laptop-based examinations for major
educational institutions and state bar examiners. Mr. Wallach
remained chairman of Examsoft until it was acquired in late 2009.
Mr. Wallach has designed and patented a number of innovations over
the span of his career and has been traveling to China establishing
manufacturing and joint venture relationships since the early
1980s.
Dr.
Jeffrey Postal, Age 65. Director. He has served as a director
of the Company since January of 2004. Dr. Postal presently is a
businessman and entrepreneur in the Miami, Florida region. Dr.
Postal owns, founded or funded numerous successful businesses over
the last few years, including but not limited to: Sportacular Art,
a company that was licensed by the National Football League, Major
League Baseball and National Hockey League to design and
manufacture sports memorabilia for retail distribution in the U.S;
Co-Owner of Natures Sleep, LLC, a major distributor of Visco Memory
Foam mattresses, both nationally and internationally; Dr. Postal is
a Partner in Social Extract, LLC, a Social Media company offering
consulting services to many major companies in the U.S.; Dr. Postal
is the principal investor of Postal Capital Funding, LLC, a private
investment fund whose mission is to find undervalued/under
capitalized companies and extend funding to them in exchange for
equity and/or capital consideration; and Dr. Postal is the founder
of Datastream Card Services, a company that provides innovative
billing solutions to companies conducting business on the
internet.
Jeffrey
Guzy, Age 70. Director. He was appointed to the Company’s Board
of Directors on May 3, 2007. He serves as Chairman and Chief
Executive Officer of CoJax Oil and Gas Corporation, an SEC
reporting company. Mr. Guzy is an outside director of Leatt
Corporation, an SEC reporting company (OTCQB: LEAT). Mr. Guzy
served, from October 2007 to August 2010 as President of Leatt
Corporation. Mr. Guzy has a MBA in Strategic Planning and
Management from The Wharton School of the University of
Pennsylvania; a M.S. in Systems Engineering from the University of
Pennsylvania; a B.S. in Electrical Engineering from Penn State
University; and a Certificate in Theology from Georgetown
University. Mr. Guzy has served as an executive manager or
consultant for business development, sales, customer service and
management in the telecommunications industry, specifically, with
IBM Corp., Sprint International, Bell Atlantic Video Services,
Loral CyberStar and FaciliCom International. Mr. Guzy has also
started his own telecommunications company providing Internet
services in Western Africa. He serves as an independent director
and chairman of the audit committee of Purebase Corporation (OTC:
PUBC) a public company.
George
Wolf, Age 72. Mr. Wolf has provided sales and business
development consulting services to the Company since 2014. Prior to
Mr. Wolf providing these consulting services, he served as
President and Chief Executive Officer of Systematic Development
Group, LLC from 2010 into 2014, President and Chief Executive
Officer of ExamSoft Worldwide, Inc. (1998 – 2009) and as Executive
Vice President of Sagaz Industries, Inc. (1986 – 1997).
There
are no agreements or understandings for any of our executive
officers, directors, or significant employees to resign at the
request of another person and no officer or director is acting on
behalf of nor will any of them act at the direction of any other
person.
Qualifications,
Attributes, Skills and Experience Represented on the Board. The
Board has identified qualifications, attributes, skills and
experience that are important to be represented on the board as a
whole, in light of our current needs and business priorities. The
Board believes that each director is a recognized person of high
integrity with a proven record of success in his field. Each
director demonstrates innovative thinking, familiarity with and
respect for corporate governance requirements and practices, an
appreciation of multiple cultures and a commitment to the business
and operations of the Company. The Board has assessed the
intangible qualities including the director’s ability to ask
difficult questions and, simultaneously, to work collegially. The
Board also considers diversity of age, cultural background, and
professional experiences in evaluating candidates for Board
membership. Diversity is important because a variety of points of
view contribute to a more effective decision-making
process.
Set
forth below is a tabular disclosure summarizing some of the
specific qualifications, attributes, skills and experiences of our
directors.
NAME |
TITLE |
QUALIFICATIONS |
Stewart
Wallach |
Chairman
of the Board and Chief Executive Officer |
He
has extensive experience in executive management of companies. He
has experience in growing operations and merger and acquisition
transactions. He has extensive experience in arranging the design,
development and production of products in foreign nations for
shipment and sale in the U.S. and conducting business abroad. His
experience provides insight for the implementation of effective
operational, financial and strategic leadership of the
Company. |
Jeffrey
Postal |
Director |
He
has extensive experience in investing in companies. He has
extensive experience in management and business. He has experience
growing a company and mergers and acquisitions. |
Jeffrey
Guzy |
Director |
Through
his MBA in Strategic Planning & Management and his knowledge of
U.S. capital markets, Mr. Guzy provides invaluable guidance and
perspective to the Board. He serves and has served as an officer
and director of public companies and worked for large corporations
in business development. He brings this public company and
management experience to the Board. |
George
Wolf |
Director
and Assistant Secretary |
He
has extensive experience in sales and business development and has
prior management experience. He is familiar with the Company’s
sales and business development strategies and operations and has
worked closely with executive officers of the Company in sales and
business development. |
There
is no family relationship between any directors or senior officers
of the Company.
Director
Nomination Process. The process that the Compensation and
Nominating Committee of the Company’s Board of Directors (“CNC”)
follows when it identifies and evaluates individuals to be
nominated for election to the Board of Directors of the Company
(“Board”) is as follows:
For
purposes of identifying nominees for the Board, the CNC relies on
personal contacts of the committee members and other members of the
Board but will consider director candidates recommended by
Shareholders in writing. The CNC does not use an independent search
firm to identify nominees.
In
evaluating potential nominees, the CNC determines whether the
candidate is eligible and qualified for service on the Board by
evaluating the candidate under certain selection criteria, which
are discussed in more detail below. If such individual fulfills
these criteria, the CNC will conduct a check of the individual’s
background and interview the candidate to further assess the
qualities of the prospective nominee and the contributions he or
she would make to the Board.
Criteria
for director nominees are: (1) business and financial experience of
nominee, especially in respect of public companies; (2) prior
experience as a director or senior officer; (3) understanding of
the Company’s business lines and industry; (4) understanding of
requirements applicable to the Company under federal and state laws
and regulations and regulations of The OTC Market Group, Inc. for
QB Venture Market qouted companies; (5) moral character and absence
of disqualifying events, including Bad Actor disqualification under
SEC rules; (6) whether the director nominee would be an independent
director or financial expert under SEC rules; and (7) ability and
qualifications to serve on board committees.
Independent
Directors. The Board is typically comprised four to five
directors, one of whom is an independent director under the listing
standards of quotation systems like The NASDAQ Stock Market. The
Company has sought unsuccessfully to recruit additionally qualified
independent directors. Although we have directors’ and officers’
insurance, we believe that past operating losses, our status as a
OTC QB Venture Market quoted company and low public stock market
price (as well as our Common Stock being deemed a “penny stock”
under SEC rules) discourages qualified candidates from serving as
independent directors. This is a problem commonly faced by
micro-cap, “penny stock” companies like our Company. Director
Jeffrey Guzy is considered to be an “independent director” under
NASDAQ Stock Market standards.
Management
Structure. Our senior officers are responsible for the
day-to-day management of risks the Company faces, while the Board,
as a whole and through its committees, has responsibility for the
oversight of risk management. In its risk oversight role, the Board
has the responsibility to satisfy itself that the risk management
processes designed and implemented by management are adequate and
functioning as designed. To do this, the Chairman of the Board and
other non-officer directors met quarterly on average with
management to discuss strategy and the risks facing the Company.
Senior management attends the Board meetings and is available to
address any questions or concerns raised by the Board on risk
management and any other matters. The Chairman of the Board and
members of the Board work together to provide strong, independent
oversight of the Company’s management and affairs through its
standing committees and, when necessary, special meetings of
directors. Informal meetings between directors and officers also
occur to discuss business risks or developments and appropriate
corporate responses.
Board
Committees. The Company has an Audit Committee and the CNC.
Jeffrey Guzy and Jeffrey Postal are committee members of both board
committees. Mr. Guzy is deemed a “financial expert” for purposes of
Audit Committee work and an independent director under NASDAQ Stock
Market rules.
Indemnification.
The Company maintains directors and officer’s liability insurance
or “D&O insurance” coverage to reduce its exposure to such
obligations, and payments made under this coverage historically
have not been material. Further, the Articles and Bylaws of the
Company provide for indemnification of directors and
officers.
Compensation
of Directors. The following table sets forth the total director
compensation earned by our directors during our fiscal years ended
December 31, 2021 and 2022. Directors Stewart Wallach and George
Wolf do not receive compensation as directors.
Name |
Fees earned or paid in cash. ($) |
Stock Awards |
Option awards ($) |
All other compensation ($) |
Total Compensation ($) |
2021: |
|
|
|
|
|
Jeffrey
Postal |
$13,365 |
- |
$7,501 |
- |
$20,866 |
Jeffrey
Guzy |
$13,365 |
- |
$7,501 |
- |
$20,866 |
2022: |
|
|
|
|
|
Jeffrey
Postal |
$4,500 |
- |
- |
- |
$4,500 |
Jeffrey
Guzy |
$4,500 |
- |
- |
- |
$4,500 |
Item
2. Authorized Capital Increase. Approved the Authorized Capital
Increase, which will increase the maximum number of shares which
the Company is authorized to issue is increased to 300,000,000
shares of capital stock, of which 295,000,0000 shares are Common
Stock and 5,000,000 shares are serial Preferred Stock. The existing
Articles provide for a maximum of 60,000,000 authorized shares of
capital stock, of which 56,666,667 shares are Common Stock and
3,333,333 shares are Preferred Stock.
Reasons
for the Proposed Authorized Capital Increase. Purpose of the
proposed 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 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.
Item
3. Ratification of D. Brooks & Associates, CPAs, as Public
Auditors. The Audit Committee of the Board recommended
appointment of D. Brooks & Associates, CPAs, as public auditors
for the fiscal year end as of December 31, 2023 and the Board
approved that appointment and recommended Shareholder ratification
of that appointment.
The
appointment of D. Brooks & Associates, CPAs, as the public
auditors of the Company for fiscal year 2023 was ratified
unanimously by the Written Consent. D. Brooks & Associates,
CPAs, has been the public auditor of the Company since November 23,
2020. There are no pending disputes between the Company and D.
Brooks & Associates, CPAs. D. Brooks & Associates, CPAs, is
a Florida public audit and accounting firm. The audit office of D.
Brooks & Associates, CPAs, is located at 4440 PGA Boulevard,
Suite 104, Palm Beach Gardens, Florida 33410, Phone: (561)
426-6225, web site: http://www.dbrookscpa.com/.
The
following is a summary of the fees billed to date by D. Brooks
& Associates CPA’s, P.A., for professional services rendered
for the years ended December 31, 2022 and 2021:
|
|
2022 |
|
2021 |
Audit Fees |
|
$ |
85,000 |
|
|
$ |
64,700 |
|
Tax Fees |
|
|
— |
|
|
|
— |
|
Total |
|
$ |
85,000 |
|
|
$ |
64,700 |
|
Audit
Fees. Consists of fees billed for professional services
rendered for the audits of our consolidated financial statements,
reviews of our interim consolidated financial statements included
in quarterly reports, services performed in connection with filings
with the SEC and related comfort letters and other services that
are normally provided by the audit firm in connection with
statutory and regulatory filings or engagements.
Tax
Fees. Consists of fees billed for professional services for tax
compliance, tax advice and tax planning. These services include
assistance regarding federal, state and local tax compliance and
consultation in connection with various transactions and
acquisitions.
Audit
Committee Pre-Approval of Audit and Permissible Non-Audit Services
of Independent Auditors. The Audit Committee is to pre-approve
all audit and non-audit services provided by the independent
auditors. These services may include audit services, audit-related
services, tax services and other services as allowed by law or
regulation. Pre-approval is generally provided for up to one year
and any pre-approval is detailed as to the particular service or
category of services and is generally subject to a specifically
approved amount. The independent auditors and management are
required to periodically report to the Audit Committee regarding
the extent of services provided by the independent auditors in
accordance with this pre-approval and the fees incurred to date.
The Audit Committee may also pre-approve particular services on a
case-by-case basis. The Audit Committee pre-approved 100% of the
Company’s 2022 audit fees.
SECURITY
OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND
MANAGEMENT
The
following table sets forth certain information with respect to the
beneficial ownership of our Common Stock as of May 10, 2023,
for:
|
· |
each
of our named executive officers; |
|
· |
all
of our executive officers and directors as a group; and |
|
· |
each
stockholder known by us to be the beneficial owner of more than 5%
of our outstanding Common Stock based on shareholder
list. |
NAME, ADDRESS & TITLE |
|
STOCK OWNERSHIP |
|
% OF STOCK OWNERSHIP |
|
SHARES - COMMON STOCK ISSUABLE UPON CONVERSION |
|
STOCK OWNERSHIP AFTER CONVERSION -ALL OPTIONS, WARRANTS & THOSE
EXERCISEABLE WITHIN NEXT 60 DAYS |
|
% OF STOCK OWNED AFTER CONVERSION – OPTIONS, WARRANTS INCLUDES
EXERCISEABLE WITHIN THE 60 DAYS |
|
OPTIONS & WARRANTS VESTED |
|
OPTIONS & WARRANTS EXPIRED |
|
OPTIONS & WARRANTS NOT VESTED |
Stewart Wallach, CEO, 431
Fairway Drive, Suite 200, Deerfield Beach, FL 33441 |
|
|
9,831,745 |
|
|
|
20.1 |
% |
|
|
|
|
499,950 |
|
|
|
9,831,745 |
|
|
|
19.9 |
% |
|
|
— |
|
|
|
1,515,556 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Dana Eschenburg Perez, Interim CFO,
431 Fairway Drive Suite 200, Deerfield Beach, FL 33441 |
|
|
— |
|
|
|
0 |
% |
|
|
|
|
— |
|
|
|
— |
|
|
|
0 |
% |
|
|
— |
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeff Postal, Director, 431 Fairway
Drive, Suite 200, Deerfield Beach, FL 33441 |
|
|
9,034,120 |
|
|
|
18.5 |
% |
|
|
|
|
499,950 |
|
|
|
9,338,264 |
|
|
|
18.9 |
% |
|
|
304,144 |
|
|
|
600,000 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Jeff Guzy, Director, 3130 19th Street
North, Arlington, VA 22201 |
|
|
52,800 |
|
|
|
0.1 |
% |
|
|
|
|
— |
|
|
|
356,944 |
|
|
|
0.7 |
% |
|
|
304,144 |
|
|
|
600,000 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
George Wolf Director, 431 Fairway
Drive Suite 200, Deerfield Beach, FL 33441 |
|
|
— |
|
|
|
|
|
|
|
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
— |
|
|
|
66,667 |
|
|
|
— |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
ALL
OFFICERS & DIRECTORS AS A GROUP |
|
|
18,918,665 |
|
|
|
39 |
% |
|
|
|
|
999,900 |
|
|
|
19,526,953 |
|
|
|
40 |
% |
|
|
608,288 |
|
|
|
4,932,223 |
|
|
|
— |
|
Unless
otherwise indicated below, the address for each beneficial owner
listed is c/o Capstone Companies, Inc., 431 Fairway Drive, Suite
200, Deerfield Beach, Florida 34441.
INTEREST
OF CERTAIN PERSONS IN OR OPPOSITION TO MATTERS TO BE ACTED
UPON
The
Corporate Actions were approved by the Shareholders and unanimously
by the Board, except each director recused himself from voting on
his nomination to stand for election to the Board. We are not aware
of any substantial interest, direct or indirect, by shareholders or
otherwise, that is in opposition to the corporate actions taken.
Our officers and directors, since the beginning of the last fiscal
year, do not have any substantial interest in the matters acted
upon pursuant to the written consent, other than in their
respective roles as officers or directors of the Company and to the
extent affected by the terms of the Authorized Capital Increase as
holders of shares, or securities exercisable for shares, of our
Common Stock.
PROPOSALS
BY SECURITY HOLDERS
The
Board knows of no other matters or proposals other than the actions
described in this Information Statement which have been approved or
considered by the holders of a majority of the shares of the
Company’s Common Stock.
SHAREHOLDER
COMMUNICATIONS
Any
shareholder or any other interested party who desires to
communicate with our Board of Directors, our non-management
directors or any specified individual director, may do so by
directing such correspondence to the attention of the Corporate
Secretary at our offices at c/o Capstone Companies, Inc., 431
Fairway Drive, Suite 200, Deerfield Beach, Florida 33441. The
Corporate Secretary will forward the communication to the
appropriate director or directors as appropriate.
ADDITIONAL
INFORMATION
The
Company files annual, quarterly and current reports and other
information with the SEC under the Exchange Act. You may obtain
copies of this information by mail from the Public Reference Room
of the SEC at 100 F Street, N.E., Room 1580, Washington, D.C.
20549. You may obtain information on the operation of the public
reference rooms by calling the SEC at 1-800-SEC-0330. The SEC also
maintains a public website that contains reports and other
information about issuers that file electronically with the SEC.
The address of that website is www.sec.gov.
Annual
Report on Form 10-K
Company’s
Annual Report on Form 10-K, including financial statements for the
fiscal year ended December 31, 2022, is available on:
(1)
SEC’s website at URL:
https://www.sec.gov/ix?doc=/Archives/edgar/data/814926/000190359623000255/capc_10-k.htm
(2)
Company’s website at URL:
https://investors.capstonecompaniesinc.com/CAPC/corporate_document/4957
OTHER
MATTERS
You
should not assume that the information contained in this
Information Statement is accurate as of any date other than the
date first written above, unless expressly provided, and the
mailing of this Information Statement to shareholders on or about
May 19, 2023, or on any date thereafter, does not create any
implication to the contrary.
By
Order of the Board of Directors,
/s/
Stewart Wallach
Stewart
Wallach, Chief Executive Officer and Chairman of the Board of
Directors
May
10, 2023
ATTACHMENT
ONE: Text of Amendment to Article 1 of the Articles
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").
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