Capstone Companies, Inc. (CAPC) reported significant financial challenges in its 10-Q filing for the three and nine months ended September 30, 2024. The company experienced a dramatic decline in revenue, with no sales recorded for the third quarter of 2024, compared to $63,771 in the same period of 2023. However, for the nine months ended September 30, 2024, revenues increased to $143,268, up 49% from $95,968 in the prior year, primarily due to a liquidation sale of Smart Mirrors generating $80,000.

Despite the revenue increase for the nine-month period, the company reported a net loss of $481,807, a decrease from a net loss of $1,215,375 in the same period of 2023. The operating loss for the nine months was $391,863, significantly improved from $1,204,348 in the previous year. The reduction in losses was attributed to decreased operating expenses, which fell to $497,000 from $1,101,000 in 2023, reflecting cuts in sales and marketing, product development, and general administrative costs.

As of September 30, 2024, Capstone's total assets were $1,378,848, down from $1,423,608 at the end of 2023. Current assets plummeted to $34,138, with cash reserves dwindling to $1,895 from $36,466. Total liabilities increased to $4,102,475, resulting in a total stockholders’ deficit of $(2,723,627), compared to $(2,241,820) at the end of 2023.

The company has expressed substantial doubt about its ability to continue as a going concern, primarily due to negative working capital of approximately $3,748,000 and an accumulated deficit of $11,279,023. Capstone has relied heavily on loans from its CEO and other financing arrangements, including a recent unsecured promissory note for $125,914 with Coppermine Ventures, LLC, to support essential working capital needs.

Strategically, Capstone is shifting its focus from its previous LED product lines to developing a new product, the Connected Chef, a kitchen appliance integrated with a tablet. However, as of the filing date, this product has not entered production, and the company lacks the necessary funding to market or purchase inventory for it. The management transition agreement with Coppermine includes provisions for appointing new board members and a CEO, indicating a potential shift in leadership to address ongoing operational challenges.