UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
------------------------------------------------------------------------
FORM 8-K
------------------------------------------------------------------------
CURRENT REPORT
PURSUANT TO SECTION 13 OR 15(D) OF
THE SECURITIES EXCHANGE ACT OF 1934
DATE OF REPORT (DATE OF EARLIEST EVENT REPORTED)
Earliest Event Date requiring this Report: August 12, 2014
------------------------------------------------------------------------
CAPSTONE COMPANIES, INC.
(EXACT NAME OF REGISTRANT AS SPECIFIED IN ITS CHARTER)
------------------------------------------------------------------------
FLORIDA
|
0-28331
|
84-1047159
|
(State of Incorporation or
|
(Commission File Number)
|
(I.R.S. Employer
|
Organization)
|
Identification No.)
|
|
350 Jim Moran Blvd.
Suite 120
Deerfield Beach, Florida 33442
(Address of principal executive offices)
(954) 252-3440
(Registrant's telephone number, including area code)
Item 2.02 Results of Operations and Financial Condition.
On August 12, 2014, Capstone Companies, Inc. (Company) issued a press release regarding Company’s financial results for its second fiscal quarter ended June 30, 2014. A copy of Company’s press release is attached hereto as Exhibit 99.1.
The information contained in this Current Report shall not be deemed “filed” for purposes of Section 18 of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), or incorporated by reference in any filing under the Securities Act of 1933, as amended, or the Exchange Act, except as shall be expressly set forth by specific reference in such a filing.
Item 8.01 Other Matters. As previously reported by Amendment Number One to the Form 8-K Report, dated August 5, 2014 and filed with the Commission on August 5, 2014, Capstone Companies, Inc., a Florida corporation, (“Company”) had reached an agreement in principle in early August 2014, with Light Engine Limited, a Hong Kong company and strategic partner of the Company, to work on bringing to market power failure consumer products. The Company currently anticipates a possible product launch in the first six months of fiscal year 2015. The Company had invested $500,000 in AC Kinetics, Inc., a Massachusetts company, in 2013 as part of its previously announced effort to expand the Company’s product and technology offerings. AC Kinetics, Inc. will work with Light Engine Limited on the new power failure product development effort for the Company.
AC Kinetics, Inc. is a privately held, U.S. based developer of induction motor control algorithm that seeks to reduce electric motor energy consumption while seeking to simultaneously improve performance. On July 14, 2014, AC Kinetics, Inc. issued a press release announcing a $1.25 million investment by AC Kinetics, Inc. by Juridica ORD NPV. The Juridica ORD NPV investment did not alter the terms of the Company’s 2013 investment in AC Kinetics, Inc.
As of the date of this Report, the Company cannot project the initial products that may result from the cooperative effort with Light Engine Limited and AC Kinetics, Inc., or the potential impact on fiscal year sales as well as the impact of development costs for such products on Company financial results in fiscal year 2014 and fiscal year 2015.
This Report contains statements that may be considered forward-looking statements within the meaning of the Private Securities Litigation Reform Act of 1995, as amended. These forward-looking statements are largely based on Company expectations, which reflect estimates and assumptions made by our management. These estimates and assumptions reflect our best judgment based on currently known market conditions and other factors. Although the Company believes such estimates and assumptions to be reasonable, they are inherently uncertain and involve a number of risks and uncertainties that are beyond Company control. Company’s assumptions about future events may prove to be inaccurate. Company cautions all readers that the forward-looking statements contained in this Report are not guarantees of future performance, and Company cannot assure you that such statements will be realized or the forward-looking events and circumstances will occur. Actual results may differ materially from those anticipated or implied in the forward-looking statements due to factors listed in the "Risk Factors" section in our SEC filings and elsewhere in those filings. All forward-looking statements speak only as of the date of this Report. We do not intend to publicly update or revise any forward-looking statements as a result of new information, future events or otherwise, unless required otherwise by applicable laws and regulations
Item 9.01 Exhibits.
Exhibit Number
|
Description of Exhibit
|
|
|
99.1
|
August 12, 2014 Press Release by Capstone Companies, Inc. about its Second Quarter in Fiscal Year 2014 Financial Results
|
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned hereunto duly authorized.
CAPSTONE COMPANIES, INC., A FLORIDA CORPORATION
Date: August 13, 2014
By: /s/ James McClinton
Chief Financial Officer
|
News
Release
|
Capstone Companies, Inc. 350 Jim Moran Blvd, Suite 120 Deerfield Beach, FL 33442
FOR IMMEDIATE RELEASE
Capstone Companies, Inc. Achieves Significant Gross Margin Expansion in Second Quarter 2014
·
|
Revenue of $1.2 million increased 15% in the second quarter; Record first-half revenue of $5.3 million exceeded expectations
|
·
|
Second quarter gross margin expanded 1,070 basis points to 29.9%
|
·
|
Record backlog level entering second half of 2014
|
·
|
Partnership with Light Engine Ltd. to accelerate product line expansion efforts, bringing new innovations to market faster
|
DEERFIELD BEACH, FL, August 12, 2014 – Capstone Companies, Inc. (OTCQB: CAPC) (“Capstone” or the “Company”), a leader in the design and manufacture of specialty power failure lighting solutions and innovator of consumer safety and security products for the Hospitality, Retail and Institutional channels, reported unaudited financial results for the three- and six-month period ended June 30, 2014.
Stewart Wallach, Capstone’s CEO, commented, “The second quarter results came in above our expectations, driving our record top-line results for the first half with $5.3 million in revenue. Our strategic investments, including the enhancements to our distribution model, continuous product development and geographic diversification of our sales base, have driven consistent revenue improvement.”
Increases in Volume and Efficiencies Driving Margin Expansion
Capstone’s financial performance continues to align with the strategic initiatives that have been adopted over the past several years. Revenue of $1.2 million increased $0.2 million, or 15%, from the prior-year period. Gross profit improved 79% to $0.4 million and gross margin as a percent of sales increased measurably to 29.9% from 19.2% in the second quarter of 2013. Operating loss was $0.4 million for the second quarter. Net loss was $0.4 million and improved by $0.1 million from the prior year’s second quarter.
Gerry McClinton, Capstone’s CFO noted, “Our improved distribution strategy and operations, and the associated production efficiencies have driven significant margin improvement. We expect to see greater leverage as we continue to grow our top-line.”
First Half 2014 Review
For the first six months of 2014, revenue more than tripled to a record $5.3 million, an increase of $3.6 million over the prior-year period. Gross profit increased to $1.7 million, or 31.5% of sales, reflecting productivity improvements associated with product development, manufacturing efficiencies, and distribution channel efforts as well as leverage on higher revenue.
Operating income was breakeven for the first half of 2014 compared with an operating loss of $0.7 million in the prior-year period. Net loss of $0.2 million improved significantly from a loss of $0.9 million in the first half of 2013, and included $596 thousand of investments for growth consisting of $240 thousand for the establishment of the Company’s new office in Hong Kong,
$224 thousand in product marketing expenses and $132 thousand in new product development costs.
Mr. Wallach added, “We have been making consistent strides toward our strategic plan and this quarter was no different. In addition to financial results for the first half that exceeded the expectations we provided during our last financial report, we have made another important strategic alliance with Light Engine Ltd. in China, a recognized global leader in the development, engineering and manufacturing of LED technology. This alliance will help Capstone bring new innovative products from concept design to the store shelves much faster.
“During the second half of 2014 we will be introducing the transformational new power failure lighting products that we have developed with AC Kinetics, and expect shipments to commence in early 2015. Additionally, as we enter the 2014 holiday season we are prepared to continue to deliver revenue growth as we have a record level of backlog in place for shipment during the third and fourth quarters.”
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
|
|
|
For the Six Months Ended
|
|
|
|
June 30,
|
|
|
June 30,
|
|
|
|
2014
|
|
|
2013
|
|
|
2014
|
|
|
2013
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Revenues
|
|
$ |
1,181,379 |
|
|
$ |
1,027,121 |
|
|
$ |
5,269,748 |
|
|
$ |
1,686,916 |
|
Cost of sales
|
|
|
(828,537 |
) |
|
|
(830,174 |
) |
|
|
(3,610,366 |
) |
|
|
(1,296,127 |
) |
Gross profit
|
|
|
352,842 |
|
|
|
196,947 |
|
|
|
1,659,382 |
|
|
|
390,789 |
|
Gross margin
|
|
|
29.9 |
% |
|
|
19.2 |
% |
|
|
31.5 |
% |
|
|
23.2 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Operating expenses:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Sales and marketing
|
|
|
73,327 |
|
|
|
109,297 |
|
|
|
373,999 |
|
|
|
166,610 |
|
Compensation
|
|
|
374,803 |
|
|
|
238,693 |
|
|
|
670,130 |
|
|
|
468,787 |
|
Professional fees
|
|
|
32,244 |
|
|
|
113,733 |
|
|
|
106,025 |
|
|
|
205,457 |
|
Product development
|
|
|
84,601 |
|
|
|
60,387 |
|
|
|
216,931 |
|
|
|
84,006 |
|
Other general and administrative
|
|
|
144,443 |
|
|
|
92,207 |
|
|
|
286,983 |
|
|
|
195,575 |
|
Total operating expenses
|
|
|
709,418 |
|
|
|
614,317 |
|
|
|
1,654,068 |
|
|
|
1,120,435 |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net operating (loss) income
|
|
|
(356,576 |
) |
|
|
(417,370 |
) |
|
|
5,314 |
|
|
|
(729,646 |
) |
Operating margin
|
|
|
-30.2 |
% |
|
|
-40.6 |
% |
|
|
0.1 |
% |
|
|
-43.3 |
% |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Other expense:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Interest expense
|
|
|
(52,445 |
) |
|
|
(81,381 |
) |
|
|
(153,570 |
) |
|
|
(155,085 |
) |
Estimated income tax paid current
|
|
|
(4,258 |
) |
|
|
- |
|
|
|
(4,258 |
) |
|
|
- |
|
Total other expense
|
|
|
(56,703 |
) |
|
|
(81,381 |
) |
|
|
(157,828 |
) |
|
|
(155,085 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Net loss
|
|
$ |
(413,279 |
) |
|
$ |
(498,751 |
) |
|
$ |
(152,514 |
) |
|
$ |
(884,731 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Loss per common share
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Weighted average shares outstanding
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Basic
|
|
|
654,010,532 |
|
|
|
657,760,532 |
|
|
|
655,046,444 |
|
|
|
657,242,576 |
|
CAPSTONE COMPANIES, INC. AND SUBSIDIARIES
|
|
CONSOLIDATED BALANCE SHEETS
|
|
|
|
|
|
(Unaudited)
|
|
|
|
|
|
|
June 30,
|
|
|
December 31,
|
|
|
|
2014
|
|
|
2013
|
|
Assets:
|
|
|
|
|
|
|
Current assets:
|
|
|
|
|
|
|
Cash
|
|
$ |
455,964 |
|
|
$ |
436,592 |
|
Accounts receivable - net
|
|
|
846,429 |
|
|
|
6,927,238 |
|
Inventory
|
|
|
279,773 |
|
|
|
298,099 |
|
Deposit
|
|
|
97,910 |
|
|
|
- |
|
Prepaid expense
|
|
|
738,666 |
|
|
|
1,082,784 |
|
Total current assets
|
|
|
2,418,742 |
|
|
|
8,744,713 |
|
|
|
|
|
|
|
|
|
|
Fixed assets:
|
|
|
|
|
|
|
|
|
Computer equipment & software
|
|
|
12,272 |
|
|
|
66,448 |
|
Machinery and equipment
|
|
|
245,123 |
|
|
|
667,096 |
|
Furniture and fixtures
|
|
|
5,665 |
|
|
|
5,665 |
|
Less: accumulated depreciation
|
|
|
(192,111 |
) |
|
|
(661,210 |
) |
Total fixed assets
|
|
|
70,949 |
|
|
|
77,999 |
|
|
|
|
|
|
|
|
|
|
Other non-current assets:
|
|
|
|
|
|
|
|
|
Product development costs - net
|
|
|
9,832 |
|
|
|
19,664 |
|
Investment (AC Kinetics)
|
|
|
500,000 |
|
|
|
500,000 |
|
Goodwill
|
|
|
1,936,020 |
|
|
|
1,936,020 |
|
Total other non-current assets
|
|
|
2,445,852 |
|
|
|
2,455,684 |
|
Total assets
|
|
$ |
4,935,543 |
|
|
$ |
11,278,396 |
|
|
|
|
|
|
|
|
|
|
Liabilities and stockholders’ equity:
|
|
|
|
|
|
|
|
|
Current liabilities:
|
|
|
|
|
|
|
|
|
Accounts payable and accrued expenses
|
|
$ |
363,189 |
|
|
$ |
1,931,527 |
|
Note payable - Sterling Factors
|
|
|
- |
|
|
|
4,237,144 |
|
Notes and loans payable to related parties - current maturities
|
|
|
2,828,749 |
|
|
|
3,220,074 |
|
Total current liabilities
|
|
|
3,191,938 |
|
|
|
9,388,745 |
|
|
|
|
|
|
|
|
|
|
Long term liabilities
|
|
|
|
|
|
|
|
|
Notes and loans payable to related parties - Long Term
|
|
|
- |
|
|
|
- |
|
Total liabilities
|
|
|
3,191,938 |
|
|
|
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 June 30 , 2014 & December 31, 2013
|
|
|
65,401 |
|
|
|
65,777 |
|
Additional paid-in capital
|
|
|
7,178,902 |
|
|
|
7,172,059 |
|
Accumulated deficit
|
|
|
(5,501,698 |
) |
|
|
(5,349,185 |
) |
Total stockholders' equity
|
|
|
1,743,605 |
|
|
|
1,889,651 |
|
Total liabilities and stockholders’ equity
|
|
$ |
4,935,543 |
|
|
$ |
11,278,396 |
|
CAPSTONE COMPANIES, INC. AND SUBSIDIARIES
|
|
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
|
(Unaudited)
|
|
|
|
|
|
|
|
|
|
|
For the Six Months Ended
|
|
|
|
June 30,
|
|
|
|
2014
|
|
|
2013
|
|
CASH FLOWS FROM OPERATING ACTIVITIES:
|
|
|
|
|
|
|
Continuing operations:
|
|
|
|
|
|
|
Net loss
|
|
$ |
(152,514 |
) |
|
$ |
(884,731 |
) |
Adjustments necessary to reconcile net loss to net cash used in
operating activities:
|
|
|
|
|
|
|
|
|
Stock issued for Director’s Compensation
|
|
|
(28,876 |
) |
|
|
14,064 |
|
Depreciation and amortization
|
|
|
39,910 |
|
|
|
45,407 |
|
Compensation expense from stock options
|
|
|
35,344 |
|
|
|
20,250 |
|
Decrease in accounts receivable
|
|
|
6,080,809 |
|
|
|
1,626,275 |
|
Decrease in inventory
|
|
|
18,326 |
|
|
|
37,665 |
|
Decrease (increase) in prepaid expenses
|
|
|
344,118 |
|
|
|
(614,655 |
) |
(Increase) in other assets
|
|
|
(97,910 |
) |
|
|
(23,372 |
) |
Decrease in accounts payable and accrued expenses
|
|
|
(1,568,338 |
) |
|
|
(598,114 |
) |
Increase in accrued interest on notes payable
|
|
|
98,035 |
|
|
|
96,333 |
|
Net cash provided by (used in) operating activities
|
|
|
4,768,904 |
|
|
|
(280,878 |
) |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM INVESTING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Investment
|
|
|
- |
|
|
|
(500,000 |
) |
Purchase of property and equipment
|
|
|
(23,028 |
) |
|
|
(7,195 |
) |
Net cash used in investing activities
|
|
|
(23,028 |
) |
|
|
(507,195 |
) |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM FINANCING ACTIVITIES:
|
|
|
|
|
|
|
|
|
Proceeds from notes payable
|
|
|
6,385,914 |
|
|
|
2,203,298 |
|
Repayments of notes payable
|
|
|
(10,623,058 |
) |
|
|
(3,151,222 |
) |
Proceeds from notes and loans payable to related parties
|
|
|
950,000 |
|
|
|
2,528,000 |
|
Repayments of notes and loans payable to related parties
|
|
|
(1,439,360 |
) |
|
|
(575,000 |
) |
Net cash (used in) provided by financing activities
|
|
|
(4,726,504 |
) |
|
|
1,005,076 |
|
|
|
|
|
|
|
|
|
|
Net increase in cash and cash equivalents
|
|
|
19,372 |
|
|
|
217,003 |
|
Cash and cash equivalents at beginning of period
|
|
|
436,592 |
|
|
|
411,259 |
|
Cash and cash equivalents at end of period
|
|
$ |
455,964 |
|
|
$ |
628,262 |
|
6
Capstone Companies (QB) (USOTC:CAPC)
Historical Stock Chart
From Aug 2024 to Sep 2024
Capstone Companies (QB) (USOTC:CAPC)
Historical Stock Chart
From Sep 2023 to Sep 2024