Capstone Companies, Inc. Reports First Quarter 2017 Revenue of $6.8 Million

  • First quarter revenue of $6.8 million more than tripled over the 2016 first quarter, and exceeded guidance of $5.5 million provided on April 25, 2017
  • Strong backlog drives expectation for another record setting second quarter
  • Growth resulting from five new product launches

DEERFIELD BEACH, Fla.--()--Capstone Companies, Inc. (OTC: CAPC) (“Capstone” or the “Company”), a designer of innovative LED lighting solutions including power failure lighting, today reported its financial results for the first quarter 2017.

Stewart Wallach, Capstone’s CEO, commented, “Our brand strategy is working and has created differentiation for retailers in competing channels enabling the Company to expand penetration in the channel for long term growth.

“The continued strong interest in our LED lighting products produced another record backlog level at the end of the first quarter. The order activity and backlog level drives our expectation that the second quarter of 2017 will exceed the same prior-year period and be the strongest second quarter in company’s history.”

First Quarter Highlights

  • Revenue of $6.8 million exceeded guidance of $5.5 million, and more than tripled from
    $2.1 million in the prior-year period.
  • Gross profit more than doubled to $1.6 million over the prior-year period

First quarter revenue of $6.8 million improved $4.7 million over the first quarter of 2016. With this record quarter behind us, the trailing 12 performance puts the revenue at $35 million which would be an increase of 15% compared to 2016 year-end.

During the quarter, 5 new products were shipped which represented 64% of revenue. With the introduction of these new products, the quarter’s gross margin of 23.4% is a blended rate which reflects introductory promotional pricing to introduce the new items. Gross profit doubled to $1.6 million over the prior-year period.

Total Operating Expenses were $1.2 million up from $655 thousand in 2016. The operating expense increases were mainly the result of increased royalty payments due to higher revenues.

The Company repurchased and retired $150 thousand of company stock and paid down $137 thousand of old director loans during the quarter. Income from operations increased to $387 thousand as compared from a loss of $41 thousand in 2016. That is an operating improvement of $428 thousand from the prior year period.

Webcast and Teleconference to Review Results and Outlook

The Company will host a live webcast and conference call on Tuesday, May 16, 2017 at 10:30 a.m. Eastern Time. During the call, management will review the financial and operating results and discuss the Company’s corporate strategy and outlook, followed by a question-and-answer session. The conference call can be accessed by dialing (201) 689-8562. The listen-only audio webcast can be monitored at www.capstonecompaniesinc.com.

A telephonic replay will be available from 1:30 p.m. Eastern Time the day of the teleconference until Tuesday, May 23, 2017. To listen to the replay of the call, dial (412) 317-6671 and enter replay pin number 13659059. Alternatively, the archive of the webcast will be available on the Company’s website at www.capstonecompaniesinc.com. A transcript will also be posted to the website, once available.

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, logistics, and distribution of consumer and institutional products, including the Hoover® HOME LED lighting product line, to accounts throughout North America and in international markets. See www.capstonecompaniesinc.com for more information about the Company and www.capstoneindustries.com for information on our current product offerings.

FORWARD-LOOKING STATEMENTS:

This news release contains "forward-looking statements" as that term is defined in the Private Securities Litigation Reform Act of 1995, as amended. Such statements consist of words like “anticipate,” “expect,” “project,” “continue” and similar words. These statements are based on the Company’s and its subsidiaries’ current expectations and involve risks and uncertainties, which may cause results to differ materially from those set forth in the forward-looking statements. Factors that may cause actual results to differ materially from those contemplated by such forward-looking statements, include consumer acceptance of the Company’s products, its ability to deliver new products, the success of its strategy to broaden market channels and the relationships it has with retailers and distributors. Prior success in operations does not necessarily mean success in future operations. The ability of the Company to adequately and affordably fund operations and any growth will be critical to achieving and sustaining any expansion of markets and revenue. The introduction of new products or the expanded availability of products does not mean that the Company will enjoy better financial or business performance. The risks associated with any investment in Capstone Companies, Inc., which is a small business concern and a "penny-stock Company” and, as such, a highly risky investment suitable for only those who can afford to lose such investment, should be evaluated together with the risks and uncertainties more fully described in the Company’s Annual and Quarterly Reports filed with the Securities and Exchange Commission. Capstone Companies, Inc. undertakes no obligation to publicly update or revise any forward-looking statement, whether as a result of new information, future events, or otherwise. Contents of referenced URLs are not incorporated into this press release.

FINANCIAL TABLES FOLLOW. THE FOLLOWING SUMMARY FINANCIAL STATEMENT SHOULD BE READ ALONG WITH THE FORM 10-K FINANCIAL STATEMENT FILED BY THE COMPANY WITH THE SECURITIES AND EXCHANGE COMMISSION.

 
CAPSTONE COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
   
March 31, December 31,
2017 2016
(Unaudited)
Assets:
Current Assets:
Cash $ 1,176,440 $ 1,646,128
Accounts receivable, net 5,732,730 4,449,179
Inventory 514,198 366,330
Prepaid expenses   544,381     330,020  
Total Current Assets   7,967,749     6,791,657  
 
Property and Equipment:
Computer equipment and software 19,767 19,767
Machinery and equipment 339,184 325,750
Furniture and fixtures 5,665 5,665
Less: Accumulated depreciation   (267,961 )   (250,465 )
Total Property & Equipment   96,655     100,717  
 
Other Non-current Assets:
Deposit 12,193 12,193
Note receivable 539,832 526,887
Goodwill   1,936,020     1,936,020  
Total Other Non-current Assets   2,488,045     2,475,100  
Total Assets $ 10,552,449   $ 9,367,474  
 
Liabilities and Stockholders’ Equity:
Current Liabilities:
Accounts payable and accrued liabilities $ 3,732,285 $ 2,678,210
Income tax payable 1,588 1,588
Notes and loans payable to related parties   1,203,468     1,321,721  
Total Current Liabilities   4,937,341     4,001,519  
 
Long Term Liabilities:
Deferred tax liabilities   344,000     216,000  
Total Long Term Liabilities   344,000     216,000  
Total Liabilities   5,281,341     4,217,519  
 
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 -0- shares - -
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 47,132,664 shares and 48,132,664 shares 4,713 4,813
Additional paid-in capital 7,281,747 7,411,172
Accumulated deficit   (2,015,352 )   (2,266,030 )
Total Stockholders' Equity   5,271,108     5,149,955  
Total Liabilities and Stockholders’ Equity $ 10,552,449   $ 9,367,474  
 
   
CAPSTONE COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF CASH FLOWS
(Unaudited)
 
For the Three Months Ended
March 31,
2017 2016
CASH FLOWS FROM OPERATING ACTIVITIES:
 
Net income (loss) $ 250,678 $ (98,929 )
Adjustments necessary to reconcile net income (loss) to net cash provided by (used in) operating activities:
Depreciation and amortization 17,495 14,061
Accrued interest on note receivable (12,945 ) -
Stock based compensation expense 20,475 14,250
Provision for deferred income tax 128,000 -
Accrued sales allowance 206,995 (94,203 )
(Increase) decrease in accounts receivable (1,539,687 ) 3,835,576
(Increase) in inventory (147,868 ) (26,674 )
(Increase) in prepaid expenses (214,361 ) (38,057 )
Increase (decrease) in accounts payable and accrued liabilities 1,103,216 (1,864,020 )
Increase in accrued interest on notes payable   (18,253 )   31,282  
Net cash provided by (used in) operating activities   (206,255 )   1,773,286  
 
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment   (13,433 )   (4,700 )
Net cash (used in) investing activities   (13,433 )   (4,700 )
 
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable 5,280,373 3,643,356
Repayments of notes payable (5,280,373 ) (5,564,194 )
Repurchase of shares from Involve, LLC (150,000 ) -
Proceeds from notes and loans payable to related parties - 360,000
Repayments of notes and loans payable to related parties   (100,000 )   (108,847 )
Net cash (used in) financing activities   (250,000 )   (1,669,685 )
 
Net (Decrease) Increase in Cash and Cash Equivalents (469,688 ) 98,901
Cash and Cash Equivalents at Beginning of Period   1,646,128     364,714  
Cash and Cash Equivalents at End of Period $ 1,176,440   $ 463,615  
 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ 39,983   $ 60,301  
Income taxes $ -   $ 7,500  
 
 
CAPSTONE COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
   
For the Three Months Ended
March 31,
2017 2016
 
Revenues, net $ 6,752,196 $ 2,078,214
Cost of sales   (5,172,729 )   (1,464,658 )
Gross Profit   1,579,467     613,556  
 
Operating Expenses:
Sales and marketing 376,756 62,977
Compensation 359,802 308,458
Professional fees 204,802 104,285
Product development 72,025 36,274
Other general and administrative   178,619     142,755  
Total Operating Expenses   1,192,004     654,749  
 
Operating Income (Loss)   387,463     (41,193 )
 
Other Income (Expense):
Interest income 12,945 -
Interest expense   (21,730 )   (57,736 )
Total Other Income (Expense)   (8,785 )   (57,736 )
 
Income (Loss) Before Tax Provision 378,678 (98,929 )
 
Provision for Income Tax   128,000     -  
 
Net Income (Loss) $ 250,678   $ (98,929 )
 
Net Income (Loss) per Common Share
Basic $ 0.005     ($0.002 )
Diluted $ 0.005     ($0.002 )
 
Weighted Average Shares Outstanding
Basic   47,621,553     48,132,664  
Diluted   47,883,977     48,132,664  
 

Contacts

Capstone Companies, Inc.
Aimee C. Gaudet, 954-252-3440, ext. 313
Corporate Secretary
aimee@capstonecompaniesinc.com

Contacts

Capstone Companies, Inc.
Aimee C. Gaudet, 954-252-3440, ext. 313
Corporate Secretary
aimee@capstonecompaniesinc.com