Capstone Companies Reports Third Quarter 2021 Performance

Rhea-AI Summary

Capstone Companies, Inc. (OTC: CAPC) reported no revenue for Q3 2021 due to delays in product certification and testing. The company plans to produce 3,000 mirrors in 2021, but increased costs and transport issues may delay availability. Despite these challenges, a $1.5 million private equity placement in April 2021 has helped sustain operations. Management is addressing certification delays aggressively. Additionally, $700,000 has been pre-paid for components, and insiders have committed another $1 million to support inventory.

Positive

• Plans to produce 3,000 mirrors in 2021 remains intact.
• Pre-paid $700,000 for initial components to avoid further delays.
• Insiders committed $1 million in additional inventory funding.

Negative

• No revenues generated in Q3 2021 due to certification delays.
• Increased costs and limited transport availability may impact future production.

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 third quarter 2021 financial results on Monday, November 15, 2021. As a direct result of ongoing delays of certification and testing, the Company’s planned product launch for Q3 2021 was delayed and no revenues were generated in the third quarter accordingly.

The Company’s plan to produce an estimated 3,000 mirrors in 2021 remains intact. The remarkable increase in costs and limited availability of transport as widely reported in daily news coverage will impact the stateside availability dates for the second production run of 2,000 mirrors. The cost mitigation plan implemented in 2020 and the $1.5 million private equity placement in April 2021 has enabled the Company to sustain operations during these unprecedented times.

Stewart Wallach, Capstone’s Chairman & Chief Executive Officer, commented, “While the outbreaks of COVID have minimally effected the workforce in China and Thai factories in Q3, the certifications and testing, specifically FCC EMC, remain pending precluding the Company from shipping mirrors in Q3 as anticipated."

He added, "Management continues to exhaust every effort in addressing the delays which frankly are inexplicable. We have confirmed (as per my October 11^th PR) that the FCC EMC product testing was completed and that the certification is forthcoming. We are aggressively following up daily to bring this matter to a close. In the thirty-five years that your management team has been creating and bringing new consumer products to market, we have never experienced anything like this before.”

Wallach further commented, “On a positive note, to avoid any further delays, we have pre-paid an estimated $700 thousand for components and production for the first 1,000 mirrors are scheduled at the factory pending the publication of the FCC certification. We are standing ready for initial product release. The insiders and directors remain resolute, and have continued to support the Company with an additional $1 million in inventory funding made available on October 18^th. In addition to the funding, the largest insider shareholders have not sold any shares. I realize the shareholder community is anxious as communications have been limited since mid-October and accordingly, I will be scheduling a webcast prior to Thanksgiving to share material updates on the Smart Mirror program.”

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
(Unaudited)
		September 30,				December 31,
		2021				2020
Assets:
Current Assets:
Cash		$	932,599			$	1,223,770
Accounts receivable, net			43,970				120,064
Inventories			25,441				8,775
Prepaid expenses			748,566				75,622
Income tax refund			285,673				861,318
Total Current Assets			2,036,249				2,289,549
Property and Equipment, net			116,388				54,852
Operating lease - right of use asset			114,032				158,504
Deposit			11,148				25,560
Goodwill			1,312,482				1,312,482
Total Assets		$	3,590,299			$	3,840,947
Liabilities and Stockholders’ Equity:
Current Liabilities:
Accounts payable and accrued liabilities		$	818,250			$	825,690
Operating lease - current portion			68,392				63,307
Total Current Liabilities			886,642				888,997
Long-Term Liabilities:
Operating lease - long-term portion			55,814				107,690
Deferred tax liabilities-long-term			259,699				259,699
Total Long-Term Liabilities			315,513				367,389
Total Liabilities			1,202,155				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 September 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 48,893,031 shares at September 30, 2021 and 46,296,364 shares at December 31, 2020			4,892				4,630
Additional paid-in capital			8,548,716				7,053,328
Accumulated deficit			(6,165,466	)			(4,473,397	)
Total Stockholders’ Equity			2,388,144				2,584,561
Total Liabilities and Stockholders’ Equity		$	3,590,299			$	3,840,947

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

CAPSTONE COMPANIES, INC., AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
		For the Three Months Ended								For the Nine Months Ended
		September 30,								September 30,
		2021				2020				2021				2020
Revenues, net		$	44,640			$	709,654				483,063			$	1,765,189
Cost of sales			(32,177	)			(535,270	)			(341,953	)			(1,521,628	)
Gross Profit			12,463				174,384				141,110				243,561
Operating Expenses:
Sales and marketing			7,082				22,337				18,910				277,264
Compensation			314,890				362,706				1,017,125				1,139,107
Professional fees			80,593				99,579				284,134				339,816
Product development			112,887				75,948				191,932				169,133
Other general and administrative			115,497				113,026				313,141				364,941
Goodwill impairment charge			—				—				—				490,766
Total Operating Expenses			630,949				673,596				1,825,242				2,781,027
Operating Loss			(618,486	)			(499,212	)			(1,684,132	)			(2,537,466	)
Other Income (Expenses):
Other income			—				—				41,059				—
Other expense			—				(47	)			(48,996	)			(181	)
Total Other Income (Expenses)			—				(47	)			(7,937	)			(181	)
Loss Before Tax Benefit			(618,486	)			(499,259	)			(1,692,069	)			(2,537,647	)
Benefit for Income Tax			—				(21,222	)			—				(805,160	)
Net Loss		$	(618,486	)		$	(478,037	)			(1,692,069	)		$	(1,732,487	)
Net Loss per Common Share
Basic and Diluted		$	(0.01	)		$	(0.01	)			(0.04	)		$	(0.04	)
Weighted Average Shares Outstanding
Basic and Diluted			48,878,745				46,296,364				47,962,310				46,350,909

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements

CAPSTONE COMPANIES, INC., AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF STOCKHOLDERS’ EQUITY
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2021, AND SEPTEMBER 30, 2020
(Unaudited)
		Preferred Stock								Preferred Stock								Preferred Stock																Additional
		Series A								Series B-1								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
Stocks 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 issued 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
Stock options for compensation			-				-				-				-				-				-				-				-				1,615				-				1,615
Common Stock issued for cash, net of fees			-				-				-				-				-				-				100,000				11				43,490				-				43,501
Net Loss			-				-				-				-				-				-				-				-				-				(618,486)				(618,486)
Balance at September 30, 2021			-			$	-				15,000			$	2				-			$	-				48,893,031			$	4,892			$	8,548,716			$	(6,165,466)			$	2,388,144
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 common stock			-				-				-				-				-				-				(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
Stock options for compensation			-				-				-				-				-				-				-				-				6,018				-				6,018
Net Loss			-				-				-				-				-				-				-				-				-				(478,037)				(478,037)
Balance at September 30, 2020			-			$	-				-			$	-				-			$	-				46,296,364			$	4,630			$	7,049,128			$	(3,822,068)			$	3,231,690

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

CAPSTONE COMPANIES, INC., AND SUBSIDIARIES
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
		For the Nine Months Ended
		September 30,
		2021				2020
CASH FLOWS FROM OPERATING ACTIVITIES:
Net Loss		$	(1,692,069	)		$	(1,732,487	)
Adjustments to reconcile net loss to net cash used in operating activities:
Depreciation and amortization			7,392				18,222
Stock based compensation expense			10,015				23,868
Stock issued to Director’s for loan			48,996				—
Noncash lease expense			44,472				41,406
Unpaid accrued interest on paycheck protection program loan			—				359
Goodwill impairment charge			—				490,766
Increase (decrease) in accounts receivable, net			76,094				(198,050	)
Increase in inventories			(16,666	)			11,392
(Increase) decrease in prepaid expenses			(672,944	)			69,146
Decrease in deposits			14,412				34,873
Decrease in accounts payable and accrued liabilities			(7,440	)			(2,843	)
(Increase) decrease in income tax refund-			575,645				(574,631	)
Decrease in operating lease liabilities			(46,791	)			(36,290	)
Net cash used in operating activities			(1,658,884	)			(1,854,269	)
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchases 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 fees			1,436,641				—
Repurchase of common stock			—				(36,333	)
Net cash provided by financing activities			1,436,641				53,267
Net Increase (Decrease) in Cash			(291,171	)			(1,816,741	)
Cash at Beginning of Period			1,223,770				3,131,249
Cash at End of Period		$	932,599			$	1,314,508
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Preferred stocks issued to Directors for loan fee		$	48,996			$	—

The accompanying notes are an integral part of these unaudited condensed consolidated financial statements.

View source version on businesswire.com: https://www.businesswire.com/news/home/20211116006239/en/

Aimee C. Brown

Corporate Secretary

(954) 252-3440, ext. 313

Source: Capstone Companies, Inc.

FAQ

What were Capstone Companies' Q3 2021 financial results?

Capstone reported no revenues in Q3 2021 due to delays in product certification.

What is the production plan for Capstone's Smart Mirror?

Capstone plans to produce 3,000 mirrors in 2021 but is facing delays.

How has COVID affected Capstone's manufacturing operations?

COVID has minimally affected the workforce in China and Thailand, but certification delays persist.

What financial steps has Capstone taken to sustain operations during delays?

Capstone implemented a cost mitigation plan and secured a $1.5 million private equity placement.

When will Capstone's Smart Mirror be available for sale?

Availability dates are uncertain due to ongoing certification and transport issues.