Capstone Companies, Inc. Achieves Gross Margin Expansion on Record Revenue in First Quarter 2014
May 13 2014 - 4:30PM
- 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
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 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.
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 |
|
|
|
CONTACT: 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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