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Capstone Companies Reports Second Quarter 2021 Performance

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.

 
 

 

Contacts

Aimee C. Brown

Corporate Secretary

(954) 252-3440, ext. 313

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