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Capstone Companies, Inc. Achieves Gross Margin Expansion on Record Revenue in First Quarter 2014

FOR IMMEDIATE RELEASE        

  • ·       Record first quarter revenue of $4.1 million increased nearly six-fold from $0.7 million in the prior-year period
  • ·       Realized first quarter gross profit margin of 32%; Gross profit up over 6.5 times to $1.3 million 
  • ·       Achieved net income of $0.3 million, a significant improvement over the prior-year period’s loss

DEERFIELD BEACH, FL, May 13, 2014Capstone Companies, Inc. (OTCQB: CAPC) (“Capstone” or the “Company”), a leader in the design and manufacture of specialty power failure lighting solutions and innovator of consumersafety and security products for the Hospitality, Retail and Institutional channels, reported first quarter unaudited financial results.

Stewart Wallach, Capstone’s CEO, commented, “We had a very strong start to 2014 following our record-setting financial performance in 2013 and are now running at a trailing twelve month revenue rate of about $18 million.  The top-line results came in $1 million above our previous expectations as we pulled revenue in from the second quarter to meet customer timing requirements.  Our margin growth illustrates the leverage and scalability of the business as well an improved product mix.  We continue to invest in retail support programs, expand our core product offerings, and leverage Capstone International HK to expand non-core product offerings, and as a result we expect continued top-line growth and the resulting profitability.”

Building on Momentum

Capstone’s financial performance continues to align with the strategic initiatives that have been adopted over the past several years.  Revenue increased six-fold from the prior-year quarter, delivering record first quarter revenue of $4.1 million.  Gross profit improved to $1.3 million, for a record gross profit margin of 32%, driven by the increase in sales volume, efficient product design, strategic procurement practices and product mix.  Operating expenses as a percentage of revenue were down sharply to 23% compared with 77% in the prior-year quarter, driven by higher revenue.

Mr. Wallach added, “Our strategic growth initiatives to deepen market penetration, expand our product portfolio, capitalize on innovative, rapid product development and the rationalization of our distribution channels continue to deliver impressive results.  We are strategically well positioned for further growth, and will continue to execute our long-term plan by creating a strong and well-respected brand to drive shareholder value.

“With the pull-in of about $1 million of revenue from the second quarter, we are still expecting first half 2014 revenue to be between $4.5 million and $5.0 million.”


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 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 URL’s 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.

For more information contact

Company:                                                      Investor Relations:

Aimee Gaudet                                                 Garett Gough, Kei Advisors LLC

Corporate Secretary                                        (716) 846-1352

(954) 252-3440, ext 313                                  ggough@keiadvisors.com

CAPSTONE COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF OPERATIONS

(Unaudited)

For the Three Months Ended

March  31,

2014

 

2013

Revenues

 $        4,088,369

 

 $          659,794

Cost of sales

      (2,781,829)

 

        (465,953)

        Gross profit

       1,306,540

          193,841

        Gross margin  

       32.0%

 

29.4%

Operating expenses:
  Sales and marketing

           300,672

 

            57,314

  Compensation

           295,327

 

          230,092

  Professional fees

             73,781

 

            91,723

  Product development

           132,330

 

            23,619

  Other general and administrative

           142,540

 

          103,369

       Total operating expenses

           944,650

 

          506,117

Net operating income (Loss)

           361,890

 

        (312,276)

       Operating margin  

8.9%

-47.3%

Other income (expense):
  Interest expense

         (101,125)

 

           (73,704)

     Total other income (expense)

         (101,125)

 

           (73,704)

Net income (loss)

 $           260,765

 

 $         (385,980)

Income (loss) per common share

 $                      –

 

 $                     –

Weighted average shares outstanding
Basic

   656,093,865

 

  656,718,865

Diluted

   815,190,442

 

  816,665,442

 


 

CAPSTONE COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

(Unaudited)

March 31,

 

December 31,

2014

 

2013

Assets:
Current assets:
   Cash

 $          451,885

 

 $          436,592

   Accounts receivable – net

          3,949,242

 

          6,927,238

   Inventory

             301,827

 

             298,099

   Deposit

               33,831

 

                         –

   Prepaid expense

             351,648

 

          1,082,784

     Total current assets

          5,088,433

 

          8,744,713

Fixed Assets:
   Computer equipment & software

               12,272

 

               66,448

   Machinery and equipment

             232,501

 

             667,096

   Furniture and fixtures

                 5,665

 

                 5,665

   Less: accumulated depreciation

          (176,371)

 

          (661,210)

     Total fixed assets

               74,067

 

               77,999

Other non-current assets:
   Product development costs – net

               14,748

 

               19,664

   Investment (AC Kinetics)

             500,000

 

             500,000

   Goodwill

          1,936,020

 

          1,936,020

      Total other non-current assets

          2,450,768

 

          2,455,684

         Total assets

 $       7,613,268

 

 $     11,278,396

Liabilities and stockholders’ equity:
Current liabilities:
   Accounts payable and accrued expenses

 $       1,092,161

 

 $       1,931,527

   Note payable – Sterling Factors

1,742,659

 

4,237,144

   Notes and loans payable to related parties – current maturities

          2,639,237

 

          3,220,074

     Total current liabilities

5,474,057

 

9,388,745

Long-term liabilities
   Notes and loans payable to related parties – long term

                         –

 

                         –

     Total liabilities

5,474,057

 

9,388,745

 

Commitments and contingent liabilities

 

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
1,000 shares

1,000

 

1,000

   Common stock, par value $.0001 per share, authorized 850,000,000 shares,
654,010,532 & 657,760,532 shares issued at  March 31, 2014 & December 31, 2012

65,401

 

65,777

   Additional paid-in capital

7,161,230

 

7,172,059

   Accumulated deficit

(5,088,420)

 

(5,349,185)

     Total stockholders’ equity

          2,139,211

 

          1,889,651

     Total liabilities and stockholders’ equity

 $       7,613,268

 

 $     11,278,396

 

 

CAPSTONE COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

(Unaudited)

 

For the  Three Months Ended

March 31,

2014

 

2013

CASH FLOWS FROM OPERATING ACTIVITIES:

 

Continuing operations:

 

   Net Income (Loss)

 $   260,765

 

 $  (385,980)

  Adjustments necessary to reconcile net loss to net cash used in operating activities:

 

      Stock issued for expenses

       (28,875)

 

         14,064

      Depreciation and amortization

         19,254

 

         21,148

      Compensation expense from stock options

         17,672

 

         10,125

     (Increase) decrease in accounts receivable

   2,977,996

 

   1,996,932

     (Increase) decrease in inventory

          (3,728)

 

         87,102

     (Increase) decrease in prepaid expenses

       731,136

 

       (25,955)

     (Increase) decrease in other assets

       (33,831)

 

       (10,108)

      Increase (decrease) in accounts payable and accrued expenses

     (839,367)

 

     (838,143)

      Increase (decrease) in accrued interest on notes payable  

         43,239

 

         20,127

  Net cash provided by (used in) operating activities

3,144,261

889,312

 

CASH FLOWS FROM INVESTING ACTIVITIES:

 

Investment

                  –

 

     (500,000)

Purchase of property and equipment

(10,406)

 

(5,528)

Net cash provided by (used in) investing activities

(10,406)

 

(505,528)

 

CASH FLOWS FROM FINANCING ACTIVITIES:

 

Proceeds from notes payable

   4,012,828

 

   1,694,673

Repayments of notes payable

  (6,507,313)

 

  (2,537,156)

Proceeds from notes and loans payable to related parties

                    –

 

       865,000

Repayments of notes and loans payable to related parties

     (624,077)

 

     (575,000)

Net cash provided by financing activities

(3,118,562)

 

(552,483)

 

Net (decrease) increase in cash and cash equivalents

15,293

 

(168,699)

Cash and cash equivalents at beginning of period

436,592

 

411,259

Cash and cash equivalents at end of period

 $   451,885

 

 $   242,560

 

 

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