Capstone Companies Reports First Quarter 2022 Performance

Rhea-AI Summary

Capstone Companies (OTC: CAPC) reported its Q1 2022 financial results on May 16, indicating delays in product launches due to logistical issues. Minimal revenues from mirror sales were noted in the quarter, with significant inventory expected for future shipments. CEO Stewart Wallach announced a new marketing strategy involving digital asset creation and raised non-dilutive working capital. CFO Gerry McClinton confirmed $1.4 million in retail inventory ready for distribution. Company insiders have maintained their shares, supporting Capstone through $1.6 million in working capital over the past nine months.

Positive

• Raised $1.6 million in non-dilutive working capital over 9 months.
• Currently have $1.4 million of retail inventory available for shipment.
• Planned ambitious marketing efforts to enhance brand image.

Negative

• Delayed product launch due to logistical challenges.
• Minimal revenues generated from mirror sales in the quarter.

DEERFIELD BEACH, Fla.--(BUSINESS WIRE)-- Capstone Companies, Inc. (OTC: CAPC) (“Capstone” or the “Company”), a designer, manufacturer and marketer of consumer inspired products that simplify daily living through technology reported its first quarter 2022 financial results on Monday, May 16, 2022.

Stewart Wallach, Chief Executive Officer, and Chairman of Capstone Companies, commented, “As a direct result of ongoing logistical delays brought on by scheduling backlogs and offloading congestion, the Company’s planned product launch for January 2022 was delayed and the inventories required for the launch campaigns were not available in our warehouse facilities until early March. As such, minimal mirror revenues took place in the quarter and our marketing efforts were fragmented.”

Gerry McClinton, Chief Financial Officer, noted, “We currently have an estimated $1.4 million of retail inventory available for customer shipments and additional orders placed to support replenishment. This is a tremendous portfolio, and we are determined to have it grow to its full potential.”

Wallach added, “We are now executing an ambitious marketing effort starting with new digital asset development to include hero video development to support our new messaging and brand image. We have engaged outside talent of the highest creative caliber and have raised additional working capital from inside to support this effort thru year end. I should add the raise is non-dilutive to the shareholders. I will be scheduling a strategic update webcast later in this week with details on our next steps.”

Wallach further commented, “The insiders and directors remain resolute and have continued to support the Company in every way possible. In the past 9 months $1.6 million of working capital was provided with favorable non-dilutive terms. In addition to the funding, the largest insider shareholders have not sold any shares. I realize our shareholder community is anxious and I am hopeful all will attend the strategic update webcast in the days ahead to gain insight into our newly energized marketing efforts going forward.”

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 certain international markets.

Visit our websites; www.capstonecompaniesinc.com for more information about the Company and www.capstoneconnected.com for information on our current product offerings. Contents of referenced URL’s are not incorporated herein.

Forward Looking Statements. This press release contains forward-looking statements that involve substantial risks and uncertainties. All statements, other than statements of historical facts, included in this press release regarding strategy, future operations, and plans, including assumptions underlying such statements, are forward-looking statements, and should not be relied upon as representing Company’s views as of any subsequent date. Such forward-looking statements are based on information available to the Company as of the date of this press release and involve a number of risks and uncertainties, some beyond the Company’s control or ability to foresee, that could cause actual results to differ materially from those anticipated by these forward-looking statements, including, including the impact of Coronavirus/COVID-19 pandemic on the Smart Mirror product line, any difficulty in marketing Company products in its target markets, competition in the market, and impact of evolving technologies in Smart Mirrors on Company’s prospects and products. Additional information that could lead to material changes in Company’s performance is contained in its filings with the Securities and Exchange Commission.

Company is under no obligation to, and expressly disclaims any responsibility to, update or alter forward-looking statements contained in this release, whether as a result of current information, future events or otherwise. Any investment in the Company’s common stock, which is a “penny stock,” is highly risky and not suitable for investors who require liquidity and are unable to withstand the loss of their investment. Investors should only rely on public information in our filings with the SEC, especially disclosures of Risk Factors, as a basis for investment decisions about Company common stock. Company’s SEC filings can be accessed through SEC website: www.sec.gov or the corporate website listed below.

CAPSTONE COMPANIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
	March 31,				December 31,
	2022				2021
Assets:	(Unaudited)
Current Assets:
Cash	$	623,991			$	1,277,492
Accounts receivable, net		145,013				1,481
Inventories		1,035,196				508,920
Prepaid expenses		212,446				500,748
ERTC- refundable		152,000				-
Income tax refundable		53,718				284,873
Total Current Assets		2,222,364				2,573,514
Property and equipment, net		70,517				76,928
Operating lease- right of use asset, net		82,979				98,651
Deposit		11,148				11,148
Goodwill		1,312,482				1,312,482
Total Assets	$	3,699,490			$	4,072,723
Liabilities and Stockholders’ Equity:
Current Liabilities:
Accounts payable and accrued liabilities	$	627,492			$	538,551
Operating lease- current portion		71,953				70,157
Total Current Liabilities		699,445				608,708
Long-Term Liabilities:
Operating lease- long-term portion		18,930				37,533
Note payable related parties and accrued interest		1,042,915				1,030,340
Deferred tax liabilities -long-term		273,954				273,954
Total Long-Term Liabilities		1,335,799				1,341,827
Total Liabilities		2,035,244				1,950,535
Commitments and Contingencies: ( Note 5 )
Stockholders' Equity:
Preferred Stock, Series A, par value $.001 per share, authorized 6,666,667 shares, issued and outstanding -0- shares		-				-
Preferred Stock, Series B-1, par value $.0001 per share, authorized 3,333,333 shares, issued and outstanding- 15,000 shares at March 31, 2022, and December 31, 2021 (Liquidation Preference $15,000)		2				2
Preferred Stock, Series C, par value $1.00 per share, authorized 67 shares, issued and outstanding -0- shares		-				-
Common Stock, par value $.0001 per share, authorized 56,666,667 shares, issued and outstanding 48,893,031 shares at March 31, 2022 and December 31, 2021.		4,892				4,892
Additional paid-in capital		8,557,682				8,554,320
Accumulated deficit		(6,898,330	)			(6,437,026	)
Total Stockholders' Equity		1,664,246				2,122,188
Total Liabilities and Stockholders’ Equity	$	3,699,490			$	4,072,723
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
	March 31,
	2022				2021
Revenues, net	$	262,979			$	438,423
Cost of sales		(187,063	)			(309,776	)
Gross Profit		75,916				128,647
Operating Expenses:
Sales and marketing		132,930				4,180
Compensation		196,553				352,079
Professional fees		156,462				127,224
Product development		51,560				26,892
Other general and administrative		140,073				103,122
Total Operating Expenses		677,578				613,497
Operating Loss		(601,662	)			(484,850	)
Other Income (Expense):
Other Income, net		152,000				-
Interest expense, net		(11,642	)			(14,136	)
Total Other Income (Expense), net		140,358				(14,136	)
Loss Before Tax		(461,304	)			(498,986	)
Income Tax Expense (Benefit)		-				-
Net Loss	$	(461,304	)		$	(498,986	)
Net Loss per Common Share
Basic and Diluted	$	(0.01	)		$	(0.01	)
Weighted Average Shares Outstanding
Basic and Diluted I owe you the number		48,893,031				46,296,364
The accompanying notes are an integral part of these condensed consolidated financial statements

CAPSTONE COMPANIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2022 AND MARCH 31, 2021
(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, 2021		-		$	-		15,000		$	2		-		$	-		48,893,031		$	4,892		$	8,554,320		$	(6,437,026	)		$	2,122,188
Stock options for compensation		-			-		-			-		-			-		-			-			3,362			-				3,362
Net Loss																										(461,304	)			(461,304	)
Balance at March 31, 2022		-			-		15,000		$	2		-			-		48,893,031		$	4,892		$	8,557,682		$	(6,898,330	)		$	1,664,246
Balance at December 31, 2020		-		$	-		-		$	-		-		$	-		46,296,364		$	4,630		$	7,053,328		$	(4,473,397	)		$	2,584,561
Stock options for compensation		-			-		-			-		-			-		-			-			4,200			-				4,200
Stock issued to Directors for loan							15,000			2													48,994							48,996
Net Loss		-			-		-			-		-			-		-			-			-			(498,986	)			(498,986	)
Balance at March 31, 2021		-		$	-		15,000		$	2		-		$	-		46,296,364		$	4,630		$	7,106,522		$	(4,972,383	)		$	2,138,771
The accompanying notes are an integral part of these condensed consolidated financial statements

CAPSTONE COMPANIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
		For the Three Months Ended
		March 31,
		2022				2021
CASH FLOWS FROM OPERATING ACTIVITIES:
		$	(461,304	)		$	(498,986	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			6,411				2,464
Stock based compensation expense			3,362				4,200
Noncash lease expense			15,672				14,554
Non-cash stock issued to Director's for loan			-				24,498
Accrued interest added to note payable related parties			12,575				-
Increase in accounts receivable, net			(143,532	)			(47,038	)
Increase in inventories			(526,276	)			-
Decrease in prepaid expenses			288,302				32,333
Increase in accounts payable and accrued liabilities			88,941				145,676
Increase employee retention tax refundable			(152,000	)			-
Income tax refundable			231,155				575,645
Decrease in operating lease liabilities			(16,807	)			(15,148	)
Net cash (used) in provided by operating activities			(653,501	)			238,198
Net Increase (Decrease) in Cash			(653,501	)			238,198
Cash at Beginning of Period			1,277,492				1,223,770
Cash at End of Period		$	623,991			$	1,461,968
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Stocks issued to directors for loan fee		$	-			$	24,498
Cash paid for interest		$	-			$	-
Cash paid for income taxes		$	-			$	-
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/20220516005502/en/

Aimee C. Brown

Corporate Secretary of Company

(954) 252-3440, ext. 313

Source: Capstone Companies, Inc.

FAQ

What were Capstone Companies' Q1 2022 financial results?

Capstone reported minimal revenues due to product launch delays and logistical issues.

How much retail inventory does Capstone have for shipment?

Capstone has approximately $1.4 million in retail inventory ready for customer shipments.

What marketing strategy is Capstone implementing following the Q1 2022 results?

Capstone is executing a new marketing strategy with digital asset development to enhance brand messaging.

Has there been any dilution of shares due to recent funding at Capstone?

No, the recent working capital raised is non-dilutive to shareholders.

When will Capstone provide further updates on their business strategy?

Capstone will schedule a strategic update webcast to share details on future steps.