CAPC Capstone Companies Inc (QB)

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