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News analysis

Capstone Companies Reports Third Quarter 2021 Performance

by

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 11th 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 18th. 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.

Contacts

Aimee C. Brown

Corporate Secretary

(954) 252-3440, ext. 313

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News analysis

by

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 11th 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 18th. 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.

Contacts

Aimee C. Brown

Corporate Secretary

(954) 252-3440, ext. 313

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