Capstone Companies, Inc. Reports First Quarter 2016 Revenue of $2.1 million
May 16 2016 - 3:15PM
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 2016.
Stewart Wallach, Capstone’s CEO, commented, “Our ability to
build on the momentum gained from last year’s successful holiday
introduction of several new products, and the introduction of our
new Hoover® Home LED brand, is demonstrated in today’s impressive
top-line growth over last year’s first quarter. Our retail
customers are seeing strong end-user demand for our LED lighting
products and as a result today’s first quarter revenue has
outperformed our expectations.
“The strong interest in our LED lighting products has also
resulted in a record backlog level for the end of the first
quarter. The order activity and backlog level drives our
expectation that the second quarter of 2016 will be the strongest
second quarter in company history, with approximately $8 million of
revenue, and today we are reiterating our expectation for at least
$20 million of revenue for 2016.”
First Quarter Highlights
- Revenue of $2.1 million exceeded guidance of $1.9 million, and
more than tripled from $0.7 million in the prior-year period.
- Gross profit doubled to $0.6 million over the prior-year
period
- Generated $1.8 million of cash from operating activities,
compared with $0.3 million in the prior-year’s first quarter
First quarter revenue of $2.1 million improved $1.4 million over
the first quarter of 2015. The prior year’s first quarter was
negatively impacted by a strategic short-term interruption to sales
related to Company’s transition to the Hoover® HOME LED branded
product lines, and the west coast port labor dispute which was
resolved during the first half of 2015.
Gross profit doubled to $0.6 million over the prior-year
period. Gross margin as a percent of sales was 29.5% compared
with 43.1% in the first quarter of 2015. During the
prior-year period, the Company determined that previously accrued
promotional allowances totaling approximately $182 thousand were
not necessary while the company was undergoing its strategic brand
transition, resulting in an approximately 25 point benefit to first
quarter 2015 gross margin. During the first quarter of 2016,
the Company resumed these promotional allowances in order to more
effectively market its new product offerings.
Operating expenses decreased slightly over the prior-year period
to $0.7 million despite significantly higher sales due to sales
force changes which resulted in lower compensation expense, which
was partially offset by the need for a slight increase in
professional fees under the new structure. Operating expenses
as a percent of sales were 31.5% of sales compared with 92.6% of
sales in the first quarter of 2015, demonstrating the strong
operating leverage that the business is capable of achieving as
revenue grows.
Income from operations was nearly break even, with an operating
loss of $41 thousand, compared with an operating loss of $354
thousand in the prior-year period. Improved operating loss
was due to higher revenue.
Webcast and Teleconference to Review Results and
Outlook
The Company will host a live webcast and conference call on
Tuesday, May 17, 2016 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 24,
2016. To listen to the replay of the call, dial (858)
384-5517 and enter replay pin number 13636062. 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 STATEMENTS OF
OPERATIONS |
(Unaudited) |
|
|
|
|
|
|
|
|
|
For the Three Months Ended |
|
|
|
March 31, |
|
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
|
|
Revenues, net |
|
|
$ |
2,078,214 |
|
|
$ |
713,517 |
|
Cost of sales |
|
|
|
(1,464,658 |
) |
|
|
(406,167 |
) |
Gross Profit |
|
|
|
613,556 |
|
|
|
307,350 |
|
Gross margin |
|
|
|
29.5 |
% |
|
|
43.1 |
% |
|
|
|
|
|
|
Operating
Expenses: |
|
|
|
|
|
Sales and marketing |
|
|
|
62,977 |
|
|
|
36,672 |
|
Compensation |
|
|
|
308,458 |
|
|
|
361,108 |
|
Professional fees |
|
|
|
104,285 |
|
|
|
96,173 |
|
Product development |
|
|
|
36,274 |
|
|
|
45,658 |
|
Other general and
administrative |
|
|
|
142,755 |
|
|
|
121,355 |
|
Total Operating Expenses |
|
|
|
654,749 |
|
|
|
660,966 |
|
|
|
|
|
|
|
Net Operating
(Loss) |
|
|
|
(41,193 |
) |
|
|
(353,616 |
) |
Operating margin |
|
|
|
-2.0 |
% |
|
|
-49.6 |
% |
|
|
|
|
|
|
Other Income
(Expense): |
|
|
|
|
|
Interest expense |
|
|
|
(57,736 |
) |
|
|
(37,156 |
) |
Total Other Income (Expense) |
|
|
|
(57,736 |
) |
|
|
(37,156 |
) |
|
|
|
|
|
|
(Loss) Before Tax
Provision |
|
|
|
(98,929 |
) |
|
|
(390,772 |
) |
|
|
|
|
|
|
Provision for Income Tax |
|
|
|
- |
|
|
|
- |
|
Net (Loss) |
|
|
$ |
(98,929 |
) |
|
$ |
(390,772 |
) |
|
|
|
|
|
|
Net Loss per Common
Share |
|
|
|
|
|
Basic |
|
|
$ |
0.00 |
|
|
$ |
0.00 |
|
Diluted |
|
|
$ |
0.00 |
|
|
$ |
0.00 |
|
|
|
|
|
|
|
Weighted
Average Shares Outstanding |
|
|
|
Basic |
|
|
|
721,989,957 |
|
|
|
654,010,532 |
|
Diluted |
|
|
|
721,989,957 |
|
|
|
654,010,532 |
|
|
|
|
|
|
|
CAPSTONE COMPANIES, INC. AND
SUBSIDIARIES |
CONSOLIDATED BALANCE SHEETS |
|
|
March 31, |
|
December 31, |
|
|
2016 |
|
|
|
2015 |
|
|
(Unaudited) |
|
|
Assets: |
|
|
|
Current Assets: |
|
|
|
Cash |
$ |
463,615 |
|
|
$ |
364,714 |
|
Accounts receivable, net |
|
1,391,497 |
|
|
|
5,077,182 |
|
Inventory |
|
232,384 |
|
|
|
205,708 |
|
Prepaid expenses |
|
604,517 |
|
|
|
566,459 |
|
Total Current
Assets |
|
2,692,013 |
|
|
|
6,214,063 |
|
|
|
|
|
Fixed Assets: |
|
|
|
Computer equipment and
software |
|
19,767 |
|
|
|
19,767 |
|
Machinery and equipment |
|
385,333 |
|
|
|
380,633 |
|
Furniture and fixtures |
|
5,665 |
|
|
|
5,665 |
|
Less: Accumulated depreciation |
|
(309,241 |
) |
|
|
(295,180 |
) |
Total Fixed Assets |
|
101,524 |
|
|
|
110,885 |
|
|
|
|
|
Other Non-current
Assets: |
|
|
|
Deposit |
|
12,193 |
|
|
|
12,193 |
|
Investment (AC Kinetics) |
|
500,000 |
|
|
|
500,000 |
|
Goodwill |
|
1,936,020 |
|
|
|
1,936,020 |
|
Total Other Non-current Assets |
|
2,448,213 |
|
|
|
2,448,213 |
|
Total Assets |
$ |
5,241,750 |
|
|
$ |
8,773,161 |
|
|
|
|
|
Liabilities and
Stockholders’ Equity: |
|
|
|
Current
Liabilities: |
|
|
|
Accounts payable and accrued
liabilities |
$ |
363,452 |
|
|
$ |
2,164,283 |
|
Income tax payable |
|
- |
|
|
|
7,500 |
|
Note payable - Sterling
National |
|
354,697 |
|
|
|
2,275,534 |
|
Notes and loans payable to related
parties - current maturities |
|
2,346,469 |
|
|
|
2,064,034 |
|
Total Current
Liabilities |
|
3,064,618 |
|
|
|
6,511,351 |
|
|
|
|
|
|
|
|
|
Stockholders'
Equity: |
|
|
|
Preferred Stock, Series A, par
value $.001 per share, authorized 100,000,000 shares, issued -0-
shares |
|
- |
|
|
|
- |
|
Preferred Stock, Series B-1, par
value $.0001 per share, authorized 50,000,000 shares, issued -0-
shares |
|
- |
|
|
|
- |
|
Preferred Stock, Series C, par
value $1.00 per share, authorized 1,000 shares, issued -0- shares
at March 31, 2016 and at December 31, 2015 |
|
- |
|
|
|
- |
|
Common Stock, par value $.0001 per
share, authorized 850,000,000 shares, issued 721,989,957 shares at
March 31, 2016 and at December 31, 2015 |
|
72,199 |
|
|
|
72,199 |
|
Additional paid-in capital |
|
7,290,980 |
|
|
|
7,276,729 |
|
Accumulated deficit |
|
(5,186,047 |
) |
|
|
(5,087,118 |
) |
Total Stockholders' Equity |
|
2,177,132 |
|
|
|
2,261,810 |
|
Total Liabilities and
Stockholders’ Equity |
$ |
5,241,750 |
|
|
$ |
8,773,161 |
|
|
|
|
|
CAPSTONE COMPANIES, INC. AND
SUBSIDIARIES |
CONSOLIDATED STATEMENTS OF CASH
FLOWS |
(Unaudited) |
|
|
|
|
|
|
|
For the
Three Months Ended |
|
|
March 31, |
|
|
|
2016 |
|
|
|
2015 |
|
CASH FLOWS FROM
OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
Net (Loss) |
|
$ |
(98,929 |
) |
|
$ |
(390,772 |
) |
Adjustments necessary to reconcile net (loss) to net cash provided
by operating activities: |
|
|
|
|
Depreciation and amortization |
|
|
14,061 |
|
|
|
12,687 |
|
Stock based compensation
expense |
|
|
14,250 |
|
|
|
29,433 |
|
Accrued sales allowance |
|
|
(94,203 |
) |
|
|
(181,978 |
) |
(Increase) decrease in accounts
receivable |
|
|
3,835,576 |
|
|
|
747,014 |
|
(Increase) decrease in
inventory |
|
|
(26,674 |
) |
|
|
(57,470 |
) |
(Increase) decrease in prepaid
expenses |
|
|
(38,057 |
) |
|
|
(12,083 |
) |
(Increase) decrease in other
assets |
|
|
- |
|
|
|
14,456 |
|
Increase (decrease) in accounts
payable and accrued liabilities |
|
|
(1,864,020 |
) |
|
|
82,314 |
|
Increase (decrease) in accrued
interest on notes payable |
|
|
31,282 |
|
|
|
34,692 |
|
Net cash provided
by operating activities |
|
|
1,773,286 |
|
|
|
278,293 |
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES: |
|
|
|
|
Purchase of property
and equipment |
|
|
(4,700 |
) |
|
|
(2,284 |
) |
Net cash (used in)
investing activities |
|
|
(4,700 |
) |
|
|
(2,284 |
) |
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES: |
|
|
|
|
Proceeds from notes
payable |
|
|
3,643,356 |
|
|
|
607,276 |
|
Repayments of notes
payable |
|
|
(5,564,194 |
) |
|
|
(1,249,273 |
) |
Proceeds from notes and
loans payable to related parties |
|
|
360,000 |
|
|
|
200,000 |
|
Repayments of notes and
loans payable to related parties |
|
|
(108,847 |
) |
|
|
- |
|
Net cash (used in)
financing activities |
|
|
(1,669,685 |
) |
|
|
(441,997 |
) |
|
|
|
|
|
Net Increase (Decrease)
in Cash and Cash Equivalents |
|
|
98,901 |
|
|
|
(165,988 |
) |
Cash and Cash
Equivalents at Beginning of Period |
|
|
364,714 |
|
|
|
313,856 |
|
Cash and Cash
Equivalents at End of Period |
|
$ |
463,615 |
|
|
$ |
147,868 |
|
|
|
|
|
|
For more information, contact
Company:
Aimee Gaudet
Corporate Secretary
(954) 252-3440, ext 313
Investor Relations:
Garett Gough, Kei Advisors LLC
(716) 846-1352
ggough@keiadvisors.com
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