Capstone Companies Revenue Nearly Doubles to a Record $30.6 Million in 2016
March 27 2017 - 4:15PM
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
fourth quarter and full year 2016.
Stewart Wallach, Capstone’s Chairman and CEO,
commented, “2016 was an excellent year for Capstone. We
exceeded $30 million in revenue, a record, measurably expanded our
operating margins and grew our net income more than four times over
last year. Importantly, our compound annual revenue growth
rate was almost 50% over two years. We believe our
performance has clearly substantiated that we have the right
strategy, have successfully established a distinct niche in the
home LED lighting space and have the talent and experience to
execute well.
“We expect that we will have another strong year
of growth in 2017. While doubling the Company might be a
stretch, 25% to 30% growth is not unreasonable to expect. We
will continue to drive growth by developing new lighting products
that incorporate previously unmet functionality while utilizing the
efficiency of LED lighting.”
Fourth Quarter Highlights
- Total revenue of $8.0 million, up 11% over the same period in
2015
- International sales increased 38% to $0.6 million
- Strong gross profit of $1.8 million was up 22%, and gross
margin increased 200 basis points to 22.7%
- The Company fully paid down the $6.6 million Sterling National
Bank note
Total revenue in the quarter was up on momentum
within existing channels as relationships with both domestic and
international retailers continued to deepen and expand.
International sales continued their impressive
quarter-over-quarter increases as a result of strong sell thru of
the Company’s innovative and unique products.
Gross margin expanded 200 basis points due to
increased production efficiencies and favorable strength of the
U.S. dollar.
Effective collection of outstanding accounts
receivables substantially improved the Company’s cash position to
$1.6 million at year-end.
Full Year 2016 Highlights
- Total revenue surged 92% to $30.6 million from $15.9
million
- International revenue showed continued strength, growing 116%
to $2.4 million from $1.1 million
- Gross profit increased 93% to $7.4 million from $3.8 million on
slightly improved margin
- Operating income climbed 226% to $3.3 million from $1.0
million, while operating margin improved 450 basis points to
10.9%
- Net income increased four times to $2.8 million from $0.7
million
Financial results for 2016 were very strong with improvements
across the board. For the year, total revenue improved due to
very strong performance in the Accent Light Category in both the
Capstone Lighting and Hoover® Home LED brands.
The Company continued to build momentum within existing
channels, and an increase in the frequency of product placements
has increased revenue expansion.
Full year SG&A expenses decreased as a percentage of sales
to 13.2% from 17.6% in 2015. This expense reduction of
approximately $1.3 million contributed to the operating income
improvement in 2016.
Webcast and Teleconference to Review Results and
Outlook
The Company will host a live webcast and conference call on
Tuesday, March 28, 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. ET the day
of the call until Tuesday, April 4, 2017. To listen to the
archived call, dial (412) 317-6671 and enter conference ID number
13653298. Alternatively, the archive of the webcast will be
available on the Company’s website
at www.capstonecompaniesinc.com, along with a transcript, once
available.
About Capstone Companies, Inc. Capstone
Companies, Inc. is a designer of innovative LED lighting solutions
including power failure lighting, for consumers and
institutions. The Company’s products are sold under the
Capstone Lighting® and Hoover® HOME LED brands, to big box
retailers, wholesale clubs, and home improvement stores throughout
North America and in international markets. Capstone’s
strategy is to utilize its low-cost manufacturing base to provide
high-quality consumer products to its customers at a reasonable
price, using primarily direct import distribution.
Visit 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 Years Ended |
|
|
|
|
|
December
31, |
|
|
|
|
|
|
2016 |
|
|
|
2015 |
|
|
|
|
|
|
|
|
|
|
Revenues, net |
|
|
|
$ |
30,630,368 |
|
|
$ |
15,924,165 |
|
|
Cost of sales |
|
|
|
|
23,232,605 |
|
|
|
12,100,468 |
|
|
Gross
Profit |
|
|
|
|
7,397,763 |
|
|
|
3,823,697 |
|
|
|
|
|
|
|
|
|
|
Operating
Expenses: |
|
|
|
|
|
|
|
Sales and
marketing |
|
|
|
|
1,223,798 |
|
|
|
314,011 |
|
|
Compensation |
|
|
|
|
1,434,154 |
|
|
|
1,333,100 |
|
|
Professional
fees |
|
|
|
|
365,396 |
|
|
|
269,720 |
|
|
Product
development |
|
|
|
|
326,820 |
|
|
|
294,638 |
|
|
Other general
and administrative |
|
|
|
|
704,957 |
|
|
|
587,864 |
|
|
Total
Operating Expenses |
|
|
|
|
4,055,125 |
|
|
|
2,799,333 |
|
|
|
|
|
|
|
|
|
|
Operating
Income |
|
|
|
|
3,342,638 |
|
|
|
1,024,364 |
|
|
|
|
|
|
|
|
|
|
Other Income
(Expense): |
|
|
|
|
|
|
|
Interest
income |
|
|
|
|
26,897 |
|
|
|
- |
|
|
Interest
expense |
|
|
|
|
(281,447 |
) |
|
|
(317,463 |
) |
|
Total
Other Income (Expense) |
|
|
|
|
(254,550 |
) |
|
|
(317,463 |
) |
|
|
|
|
|
|
|
|
|
Income Before Tax
Provision |
|
|
|
|
3,088,088 |
|
|
|
706,901 |
|
|
|
|
|
|
|
|
|
|
Provision for
Income Tax |
|
|
|
|
267,000 |
|
|
|
7,500 |
|
|
|
|
|
|
|
|
|
|
Net Income |
|
|
|
$ |
2,821,088 |
|
|
$ |
699,401 |
|
|
|
|
|
|
|
|
|
|
Net Income per Common
Share |
|
|
|
|
|
|
|
Basic |
|
|
|
$ |
0.059 |
|
|
$ |
0.015 |
|
|
Diluted |
|
|
|
$ |
0.058 |
|
|
$ |
0.015 |
|
|
|
|
|
|
|
|
|
|
Weighted Average Shares
Outstanding |
|
|
|
|
|
|
|
Basic |
|
|
|
|
48,132,664 |
|
|
|
46,580,622 |
|
|
Diluted |
|
|
|
|
48,342,030 |
|
|
|
46,716,167 |
|
|
|
|
|
|
|
|
|
|
CAPSTONE COMPANIES, INC. AND
SUBSIDIARIES |
|
CONSOLIDATED BALANCE SHEETS |
|
|
|
|
December
31, |
|
December 31, |
|
|
|
2016 |
|
|
|
2015 |
|
|
Assets: |
|
|
|
|
Current Assets: |
|
|
|
|
Cash |
$ |
1,646,128 |
|
|
$ |
364,714 |
|
|
Accounts
receivable, net |
|
4,449,179 |
|
|
|
5,077,182 |
|
|
Inventory |
|
366,330 |
|
|
|
205,708 |
|
|
Deferred tax
asset |
|
209,000 |
|
|
|
- |
|
|
Prepaid
expenses |
|
330,020 |
|
|
|
566,459 |
|
|
Total Current Assets |
|
7,000,657 |
|
|
|
6,214,063 |
|
|
|
|
|
|
|
Property and
Equipment: |
|
|
|
|
Computer
equipment and software |
|
19,767 |
|
|
|
19,767 |
|
|
Machinery and
equipment |
|
325,750 |
|
|
|
380,633 |
|
|
Furniture and
fixtures |
|
5,665 |
|
|
|
5,665 |
|
|
Less:
Accumulated depreciation |
|
(250,465 |
) |
|
|
(295,180 |
) |
|
Total Property & Equipment |
|
100,717 |
|
|
|
110,885 |
|
|
|
|
|
|
|
Other Non-current
Assets: |
|
|
|
|
Deposit |
|
12,193 |
|
|
|
12,193 |
|
|
Investment (AC
Kinetics) |
|
- |
|
|
|
500,000 |
|
|
Note
receivable |
|
526,887 |
|
|
|
- |
|
|
Goodwill |
|
1,936,020 |
|
|
|
1,936,020 |
|
|
Total Other Non-current Assets |
|
2,475,100 |
|
|
|
2,448,213 |
|
|
Total Assets |
$ |
9,576,474 |
|
|
$ |
8,773,161 |
|
|
|
|
|
|
|
Liabilities and
Stockholders’ Equity: |
|
|
|
|
Current
Liabilities: |
|
|
|
|
Accounts payable
and accrued liabilities |
$ |
2,678,210 |
|
|
$ |
2,164,283 |
|
|
Income tax
payable |
|
1,588 |
|
|
|
7,500 |
|
|
Note
payable |
|
- |
|
|
|
2,275,534 |
|
|
Notes and loans
payable to related parties |
|
1,321,721 |
|
|
|
2,064,034 |
|
|
Total Current
Liabilities |
|
4,001,519 |
|
|
|
6,511,351 |
|
|
|
|
|
|
|
Long Term
Liabilities: |
|
|
|
|
Deferred tax
liabilities |
|
425,000 |
|
|
|
- |
|
|
Total Long Term
Liabilities |
|
425,000 |
|
|
|
- |
|
|
|
|
|
|
|
Total Liabilities |
|
4,426,519 |
|
|
|
6,511,351 |
|
|
|
|
|
|
|
Commitments and
Contingencies (Note 6) |
|
|
|
|
|
|
|
|
|
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
48,132,664 shares |
|
4,813 |
|
|
|
4,813 |
|
|
Additional
paid-in capital |
|
7,411,172 |
|
|
|
7,344,115 |
|
|
Accumulated
deficit |
|
(2,266,030 |
) |
|
|
(5,087,118 |
) |
|
Total Stockholders' Equity |
|
5,149,955 |
|
|
|
2,261,810 |
|
|
Total Liabilities and Stockholders’
Equity |
$ |
9,576,474 |
|
|
$ |
8,773,161 |
|
|
|
|
|
|
|
CAPSTONE COMPANIES, INC. AND
SUBSIDIARIES |
|
|
CONSOLIDATED STATEMENTS OF CASH
FLOWS |
|
|
(Unaudited) |
|
|
|
|
|
|
|
|
|
|
|
For the
Years Ended |
|
|
|
|
December
31, |
|
|
|
|
|
2016 |
|
|
|
2015 |
|
|
|
CASH FLOWS FROM
OPERATING ACTIVITIES: |
|
|
|
|
|
|
|
|
|
|
|
|
|
Net
income |
|
$ |
2,821,088 |
|
|
$ |
699,401 |
|
|
|
Adjustments necessary to reconcile net income to net cash provided
by (used in) operating activities: |
|
|
|
|
|
|
Depreciation and amortization |
|
|
63,678 |
|
|
|
71,590 |
|
|
|
Accrued interest on note receivable |
|
|
(26,887 |
) |
|
|
- |
|
|
|
Stock based compensation expense |
|
|
67,057 |
|
|
|
95,469 |
|
|
|
Provision for deferred income tax |
|
|
216,000 |
|
|
|
- |
|
|
|
Accrued sales allowance |
|
|
527,502 |
|
|
|
476,312 |
|
|
|
(Increase) decrease in accounts receivable |
|
|
100,501 |
|
|
|
(4,575,897 |
) |
|
|
(Increase) in inventory |
|
|
(160,623 |
) |
|
|
(76,722 |
) |
|
|
(Increase) decrease in prepaid expenses |
|
|
236,441 |
|
|
|
(208,418 |
) |
|
|
(Increase) decrease in other assets |
|
|
- |
|
|
|
14,456 |
|
|
|
Increase in accounts payable and accrued liabilities |
|
|
508,014 |
|
|
|
1,527,156 |
|
|
|
Increase (decrease) in accrued interest on notes payable |
|
|
(148,367 |
) |
|
|
127,355 |
|
|
|
Net cash
provided by (used in) operating activities |
|
|
4,204,404 |
|
|
|
(1,849,298 |
) |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
INVESTING ACTIVITIES: |
|
|
|
|
|
|
Purchase of property
and equipment |
|
|
(53,510 |
) |
|
|
(88,434 |
) |
|
|
Net cash (used in)
investing activities |
|
|
(53,510 |
) |
|
|
(88,434 |
) |
|
|
|
|
|
|
|
|
|
CASH FLOWS FROM
FINANCING ACTIVITIES: |
|
|
|
|
|
|
Proceeds from notes
payable |
|
|
27,856,207 |
|
|
|
13,379,664 |
|
|
|
Repayments of notes
payable |
|
|
(30,131,741 |
) |
|
|
(11,391,074 |
) |
|
|
Proceeds from notes and
loans payable to related parties |
|
|
860,000 |
|
|
|
3,200,000 |
|
|
|
Repayments of notes and
loans payable to related parties |
|
|
(1,453,946 |
) |
|
|
(3,200,000 |
) |
|
|
Net cash provided by
(used in) financing activities |
|
|
(2,869,480 |
) |
|
|
1,988,590 |
|
|
|
|
|
|
|
|
|
|
Net Increase in Cash
and Cash Equivalents |
|
|
1,281,414 |
|
|
|
50,858 |
|
|
|
Cash and Cash
Equivalents at Beginning of Year |
|
|
364,714 |
|
|
|
313,856 |
|
|
|
Cash and Cash
Equivalents at End of Year |
|
$ |
1,646,128 |
|
|
$ |
364,714 |
|
|
|
|
|
|
|
|
|
|
SUPPLEMENTAL DISCLOSURE
OF CASH FLOW INFORMATION: |
|
|
|
|
|
|
Cash paid during the
year for: |
|
|
|
|
|
|
Interest |
|
$ |
429,814 |
|
|
$ |
190,108 |
|
|
|
Income
taxes |
|
$ |
56,912 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
|
Non-cash financing
activities: |
|
|
|
|
|
|
Conversion of Series C Preferred Stock to Common Stock |
|
$ |
- |
|
|
$ |
67 |
|
|
|
|
|
|
|
|
|
|
Sale of
Investment for Note receivable |
|
$ |
500,000 |
|
|
$ |
- |
|
|
|
|
|
|
|
|
|
Company:
Aimee Gaudet
Corporate Secretary
(954) 252-3440, ext. 313
Investor Relations:
Kei Advisors LLC
Deborah K. Pawlowski
(716) 843-3908
dpawlowski@keiadvisors.com
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