Capstone Companies Reports Second Quarter 2021 Performance

Rhea-AI Summary

Capstone Companies, Inc. (OTC: CAPC) announced its Q2 2021 financial results, reporting no revenues due to delays in its Smart Mirror product launch caused by COVID outbreaks in Thailand and China. However, for the six months ending June 30, gross profit rose by $59.5K (85.9%) compared to 2020, while operating expenses decreased by $913K (43.3%) to approximately $1.194M. The net loss before tax was $1.074M, down from $2.038M in 2020. The company remains debt-free and increased cash by $580K during this period, indicating resilience amid pandemic challenges.

Positive

• Gross profit increased by $59.5K (85.9%) year-over-year for the first half of 2021.
• Operating expenses decreased by $913K (43.3%) to approximately $1.194M.
• Net loss before tax benefits reduced by $964K (47.3%) to $1.074M compared to 2020.
• The company is debt-free and increased cash reserves by $580K.

Negative

• No revenues generated in Q2 2021 due to delayed product launch.
• COVID-related supply chain and operational disruptions continue to impact business.

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 second quarter 2021 financial results.

Gerry McClinton, Capstone’s Chief Financial Officer, commented, “As a direct result of the continuing outbreaks of COVID throughout Thailand and China, the Company’s planned product launch for Q2 was delayed. As the Company’s entire 2021 focus is on its Smart Mirror campaign, there were no revenues generated in the second quarter. Despite having this unprecedented decline in revenue, for the six months ended June 30, 2021, Gross Profit increased by $59.5 thousand or 85.9% over 2020, total operating expenses of approximately $1.194 million was $913 thousand or 43.3% lower than last year and the net loss before tax benefit was $1.074 million as compared to $2.038 million in 2020, that’s $964 thousand or 47.3% lower than last year. We remained debt free, and we increased cash by $580 thousand during the period. The cost mitigation plan implemented last year has helped us to navigate through this difficult period.”

Stewart Wallach, Capstone’s Chairman & Chief Executive Officer, commented, “The first half of 2021 was unprecedented in many ways. We were faced with factory shutdowns, certification testing delays, supply chain bottlenecks, logistic costs rising which have collectively caused many other companies to cease operations. I am proud of our group that we have not just survived the challenges of the global pandemic, but we will very soon launch the most innovative product in Capstone’s history.”

He added, “I believe the worst is behind us and we are well positioned to maximize the market potential for the Smart Mirror campaign the balance of 2021.”

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.

FINANCIAL TABLES FOLLOW. THE FOLLOWING SUMMARY FINANCIAL STATEMENT SHOULD BE READ ALONG WITH THE FORM 10K FINANCIAL STATEMENT FILED BY THE COMPANY WITH THE SECURITIES AND EXCHANGE COMMISSION. 

CAPSTONE COMPANIES, INC. AND SUBSIDIARIES
CONDENSED CONSOLIDATED BALANCE SHEETS
	June 30,				December 31,
	2021				2020
Assets:	(Unaudited)
Current Assets:
Cash	$	1,804,256			$	1,223,770
Accounts receivable, net		41,692				120,064
Inventories		8,775				8,775
Prepaid expenses		535,631				75,622
Income tax refund		285,673				861,318
Total Current Assets		2,676,027				2,289,549
Property and Equipment, net		118,852				54,852
Operating lease- right of use asset		129,128				158,504
Deposit		11,148				25,560
Goodwill		1,312,482				1,312,482
Total Assets	$	4,247,637			$	3,840,947
Liabilities and Stockholders’ Equity:
Current Liabilities:
Accounts payable and accrued liabilities	$	885,986			$	825,690
Operating lease- current portion		66,659				63,307
Total Current Liabilities		952,645				888,997
Long-Term Liabilities:
Operating lease- long-term portion		73,779				107,690
Deferred tax liabilities -long-term		259,699				259,699
Total Long-Term Liabilities		333,478				367,389
Total Liabilities		1,286,123				1,256,386
Commitments and Contingencies:  ( Note 5 )
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 15,000 shares at June 30, 2021, nil at December 31, 2020 (Liquidation Preference $15,000)		2				-
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 48,793,031  at June 30, 2021 and 46,296,364 at December 31, 2020		4,881				4,630
Additional paid-in capital		8,503,611				7,053,328
Accumulated deficit		(5,546,980	)			(4,473,397	)
Total Stockholders' Equity		2,961,514				2,584,561
Total Liabilities and Stockholders’ Equity	$	4,247,637			$	3,840,947
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								For the  Six Months Ended
	June 30,								June 30,
	2021				2020				2021				2020
Revenues, net	$	-			$	906,558			$	438,423			$	1,055,535
Cost of sales		-				(871,536	)			(309,776	)			(986,357	)
Gross Profit		-				35,022				128,647				69,178
Operating Expenses:
Sales and marketing		7,648				42,954				11,828				254,928
Compensation		350,156				399,727				702,235				776,402
Professional fees		76,317				109,707				203,541				240,237
Product development		52,153				41,573				79,045				93,186
Other general and administrative		94,522				107,548				197,644				251,914
Goodwill impairment charge		-				200,707				-				490,766
Total Operating Expenses		580,796				902,216				1,194,293				2,107,433
Operating Loss		(580,796	)			(867,194	)			(1,065,646	)			(2,038,255	)
Other Income (Expense):
Other income		30,697				-				41,059				-
Other expense		(24,498	)			(133	)			(48,996	)			(133	)
Total Other Income (Expenses)		6,199				(133	)			(7,937	)			(133	)
Loss Before Tax Benefit		(574,597	)			(867,327	)			(1,073,583	)			(2,038,388	)
Benefit for Income Tax		-				(210,253	)			-				(783,938	)
Net Loss	$	(574,597	)		$	(657,074	)		$	(1,073,583	)		$	(1,254,450	)
Net Loss per Common Share
Basic and Diluted	$	(0.01	)		$	(0.01	)		$	(0.02	)		$	(0.03	)
Weighted Average Shares Outstanding
Basic and Diluted		48,655,851				46,296,364				48,150,054				46,378,481
The accompanying notes are an integral part of these condensed consolidated financial statements

CAPSTONE COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
FOR THE THREE MONTHS  AND SIX MONTHS ENDED JUNE 30, 2021 AND JUNE 30, 2020
(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, 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
Stock options for compensation		-			-		-			-		-			-		-				-				4,200				-				4,200
Common stock for cash, net of fees																	2,496,667				251				1,392,889								1,393,140
Net Loss		-			-		-			-		-			-		-				-				-				(574,597	)			(574,597	)
Balance at June 30, 2021		-		$	-		15,000		$	2		-		$	-		48,793,031			$	4,881			$	8,503,611			$	(5,546,980	)		$	2,961,514
Balance at December 31, 2019		-		$	-		-		$	-		-		$	-		46,579,747			$	4,658			$	7,061,565			$	(2,089,581	)		$	4,976,642
Stock options for compensation		-			-		-			-		-			-		-				-				8,925				-				8,925
Repurchase of shares		-			-		-			-		-			-		(283,383	)			(28	)			(36,305	)			-				(36,333	)
Net Loss		-			-		-			-		-			-		-				-				-				(597,376	)			(597,376	)
Balance at March 31, 2020		-			-		-			-		-			-		46,296,364				4,630				7,034,185				(2,686,957	)			4,351,858
Stock options for compensation		-			-		-			-		-			-		-				-				8,925				-				8,925
Net Loss		-			-		-			-		-			-		-				-				-				(657,074	)			(657,074	)
Balance at June 30, 2020		-		$	-		-		$	-		-		$	-		46,296,364			$	4,630			$	7,043,110			$	(3,344,031	)		$	3,703,709
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 Six Months Ended
		June 30,
		2021				2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss		$	(1,073,583	)		$	(1,254,450	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			4,928				12,148
Stock based compensation expense			8,400				17,850
Noncash stock issued to Director's for loan			48,996				-
Noncash lease expense			29,376				27,371
Unpaid accrued interest on paycheck protection program loan			-				133
Goodwill impairment charge			-				490,766
Provision for deferred income tax			-				22,022
Increase (decrease) in accounts receivable, net			155,474				(55,812	)
Decrease in inventories			-				11,392
(Increase) decrease  in prepaid expenses			(460,009	)			93,292
Decrease in deposits			14,412				34,873
Increase (decrease) in accounts payable and accrued liabilities			(16,806	)			382,829
Increase (decrease) in income tax refundable			575,645				(806,800	)
Decrease in operating lease liabilities			(30,559	)			(21,662	)
Net cash used in operating activities			(743,726	)			(1,046,048	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment			(68,928	)			(15,739	)
Net cash used in investing activities			(68,928	)			(15,739	)
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from loan under paycheck protection program			-				89,600
Proceeds from sale of common stock, net of costs			1,393,140				-
Repurchase of common stock			-				(36,333	)
Net cash provided by financing activities			1,393,140				53,267
Net Increase (Decrease) in Cash			580,486				(1,008,520	)
Cash at Beginning of Period			1,223,770				3,131,249
Cash at End of Period		$	1,804,256			$	2,122,729
		$	-
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Stocks issued to directors for prepaid loan fee		$	48,996			$	-
The accompanying notes are an integral part of these condensed consolidated financial statements.

 

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FAQ

What were Capstone Companies' Q2 2021 financial results?

Capstone reported no revenues in Q2 2021 due to delays in product launch, but gross profit increased by 85.9% year-over-year.

How did Capstone's operating expenses change in Q2 2021?

Operating expenses decreased by 43.3%, totaling approximately $1.194 million.

What was Capstone's net loss before tax benefit for the first half of 2021?

The net loss before tax benefit was $1.074 million, down from $2.038 million in 2020.

Is Capstone Companies in debt as of Q2 2021?

No, Capstone remains debt-free as of Q2 2021.

What challenges did Capstone face in Q2 2021?

The company faced factory shutdowns, certification testing delays, and rising logistic costs due to COVID-19.