Business Wire | Nov 16, 2021 01:17PM EST

Capstone Companies Reports Third Quarter 2021 Performance

Nov. 16, 2021

DEERFIELD BEACH, Fla.--(BUSINESS WIRE)--Nov. 16, 2021--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 $.001per share, authorized 6,666,667 shares, - - issued -0- shares

Preferred Stock, Series B-1, par value $.0001per share, authorized 3,333,333 shares,issued -15,000- shares at September 30, 2021, 2 - nil at December 31, 2020, (LiquidationPreference $15,000)

Preferred Stock, Series C, par value $1.00per share, authorized 67 shares, issued -0- - shares

Common Stock, par value $.0001 per share,authorized 56,666,667 shares, issued 4,892 4,630 48,893,031 shares at September 30, 2021 and46,296,364 shares at December 31, 2020

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 7,082 22,337 18,910 277,264 marketing

Compensation 314,890 362,706 1,017,125 1,139,107

Professional 80,593 99,579 284,134 339,816 fees

Product 112,887 75,948 191,932 169,133 development

Other generaland 115,497 113,026 313,141 364,941 administrative

Goodwillimpairment - - - 490,766 charge

TotalOperating 630,949 673,596 1,825,242 2,781,027 Expenses

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 OtherIncome - (47 ) (7,937 ) (181 )(Expenses)



Loss Before (618,486 ) (499,259 ) (1,692,069 ) (2,537,647 )Tax Benefit



Benefit for - (21,222 ) - (805,160 )Income Tax



Net Loss $ (618,486 ) $ (478,037 ) (1,692,069 ) $ (1,732,487 )



Net Loss per Common Share

Basic and $ (0.01 ) $ (0.01 ) (0.04 ) $ (0.04 )Diluted



WeightedAverage Shares Outstanding

Basic and 48,878,745 46,296,364 47,962,310 46,350,909 Diluted

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 SEPTEMBER30, 2020

(Unaudited)



Preferred Preferred Preferred Additional Stock Stock Stock

Series A Series B-1 Series C Common Stock Paid-In Accumulated Total

Shares Par Shares Par Shares Par Shares Par Value Capital Deficit Equity Value Value Value



Balance atDecember 31, - $ - - $ - - $ - 46,296,364 $ 4,630 $ 7,053,328 $ (4,473,397 ) $ 2,584,561 2020



Stock optionsfor - - - - - - - - 4,200 - 4,200 compensation

Stocks issuedto Directors - - 15,000 2 - - - - 48,994 - 48,996 for loan

Net Loss - - - - - - - - (498,986 ) (498,986 )

Balance atMarch 31, - - 15,000 2 - - 46,296,364 4,630 7,106,522 (4,972,383 ) 2,138,771 2021



Stock optionsfor - - - - - - - - 4,200 - 4,200 compensation

Common Stockissued for - - - - - - 2,496,667 251 1,392,889 - 1,393,140 cash, net offees

Net Loss - - - - - - - - - (574,597 ) (574,597 )

Balance at - - 15,000 $ 2 - $ - 48,793,031 $ 4,881 $ 8,503,611 $ (5,546,980 ) $ 2,961,514 June 30, 2021



Stock optionsfor - - - - - - - - 1,615 - 1,615 compensation

Common Stockissued for - - - - - - 100,000 11 43,490 - 43,501 cash, net offees

Net Loss - - - - - - - - - (618,486) (618,486)

Balance atSeptember 30, - $ - 15,000 $ 2 - $ - 48,893,031 $ 4,892 $ 8,548,716 $ (6,165,466) $ 2,388,144 2021



Balance atDecember 31, - $ - - $ - - $ - 46,579,747 $ 4,658 $ 7,061,565 $ (2,089,581 ) $ 4,976,642 2019

Stock optionsfor - - - - - - - - 8,925 - 8,925 compensation

Repurchase of - - - - - - (283,383 ) (28 ) (36,305 ) - (36,333 )common stock

Net Loss - - - - - - - - - (597,376 ) (597,376 )

Balance atMarch 31, - - - - - - 46,296,364 4,630 7,034,185 (2,686,957 ) 4,351,858 2020



Stock optionsfor - - - - - - - 8,925 - 8,925 compensation

Net Loss - - - - - - - - - (657,074 ) (657,074 )

Balance at - - - - - - 46,296,364 4,630 7,043,110 (3,344,031 ) 3,703,709 June 30, 2020



Stock optionsfor - - - - - - - - 6,018 - 6,018 compensation

Net Loss - - - - - - - - - (478,037) (478,037)

Balance atSeptember 30, - $ - - $ - - $ - 46,296,364 $ 4,630 $ 7,049,128 $ (3,822,068) $ 3,231,690 2020

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 - 359 protection program loan

Goodwill impairment charge - 490,766

Increase (decrease) in accounts receivable, 76,094 (198,050 )net

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 (7,440 ) (2,843 )liabilities

(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 - 89,600 program

Proceeds from sale of common stock, net of 1,436,641 - fees

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 $ 48,996 $ - fee

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

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CONTACT: Aimee C. Brown Corporate Secretary (954) 252-3440, ext. 313