Capital Art Reports Q1 2018 Results; Revenue up 260%
June 05 2018 - 8:31AM
Capital Art, Inc. (OTC:CAPA), a marketer and distributor of vintage
Iconic Pop Culture images for the art, editorial and commercial
markets, reported results for the first quarter ended March 31,
2018. Financial results are comparisons made to the same year-ago
quarter unless otherwise noted.
Q1 2018 Financial Highlights
- Total revenue up 260% to a record $550,000.
- Reduced total operating expenses by 22% to $169,000.
- Net income totaled $71,000.
Q1 2018 Operational Highlights
- Expanded third-party and reseller programs, doubling number of
third party resellers and using social media more on direct-to
consumer-programs.
- Launched development of a management software system to more
efficiently ingest images and distribute them through retail and
licensing channels.
- Deployed new digital technology to track where and how the
company’s images are used.
Q1 2018 Financial Summary
Revenue totaled $550,000 in the first quarter of 2018, as
compared to $153,000 in the same year ago quarter. The improvement
was primarily due to increased sales from the company’s
collectables division as well as licensing sales.
Operating expenses decreased to $169,000 from $216,000 in the
same year-ago quarter due to lower general and administrative costs
and primarily from lower professional fees.
Net income was $71,000 or $0.00 per share as compared to a loss
of $257,000 or $(0.00) per share in the same year-ago quarter.
Management Commentary“Our first quarter results
were driven by growth in both image and license revenue, following
an extensive period of assets acquisition and channel development,”
said Capital Art CEO, Stuart Scheinman. “The results also reflect a
newly instituted direct-to-consumer marketing campaign, and new
programs with third-party resellers and traditional and online
retailers.
“We have continued to develop our new licensing division, Globe
Photos, and have invested in the development of software and
technology to more efficiently ingest images and distribute them
through our retail and licensing channels. We expect these efforts
to prepare our business to scale as demand increases. We have also
been deploying new methods to protect our rights and ownership,
including adopting new digital technology to track where and how
our images are used.
“This technology will be key as we continue to pursue our
mission of becoming the largest online repository of archival pop
culture photography in the world. We have amassed our current
inventory and rights to photographic images and reproductions from
a series of favorable acquisitions that started in 2011. This
effort has resulted in an expansive collection of more than 10
million rare photos and negatives, including the rights to the
Frank Worth collection, Movie Star News Collection, and Globe
Photos. Our collections include one-of-a kind prints and
memorabilia, as well as rare images of celebrity icons, like Elvis
Presley, James Dean, Marilyn Monroe and many others, most of which
have never been seen by the public.
“In all, the shareholder value we have created is phenomenal by
any measure, particularly when compared to our public peers. As we
continue through the second quarter, we remain focused on
developing our marketing and sales channels, and pursuing the best
avenues for monetizing these tremendous assets. This includes
evaluating a number of acquisition opportunities which would allow
us to accelerate these efforts, as well as provide more steady and
predictable growth in the quarters ahead.”
About Capital Art Founded in 2004, Capital Art,
Inc. acquires and manages Iconic Pop Culture photographic image
libraries. It has one of the largest and most diverse collections
of vintage Pop Culture imagery in the world, with more than 10
million iconic images that feature the most beloved Hollywood
idols, music stars and most iconic figures of the 20th century. The
company markets and distributes images for the art, editorial and
commercial markets. Capital Art also sells limited editions of its
photographs through the company owned gallery and through third
party galleries, art consultants and interior decorators. For
further information, visit www.capitalart.com.
Important Cautions Regarding Forward Looking
Statements
Cautionary statement for purposes of the "Safe Harbor"
provisions of the Private Securities Litigation Reform Act of 1995:
Information in this news release contains forward-looking
statements that involve risks, uncertainties and assumptions. If
such risks or uncertainties materialize or such assumptions prove
incorrect, the results of the Company and its consolidated
subsidiaries could differ materially from those expressed or
implied by such forward-looking statements and assumptions. All
statements other than statements of historical fact are statements
that could be deemed forward-looking statements. Risks,
uncertainties and assumptions include the execution and performance
of contracts by the Company and its customers, suppliers and
partners. The Company disclaims any obligation to update or revise
statements contained in this news release based on new information
or otherwise.
CAPITAL ART,
INC.CONSOLIDATED STATEMENTS OF
OPERATIONS(Unaudited)
|
|
For the quarter ended |
|
|
March 31, 2018 |
|
March 31, 2017 |
|
|
|
|
|
License revenue |
|
$ |
230,775 |
|
|
$ |
46,477 |
|
Image revenue |
|
|
319,046 |
|
|
|
106,088 |
|
Total revenue |
|
|
549,821 |
|
|
|
152,565 |
|
|
|
|
|
|
|
|
|
Cost of revenue |
|
|
296,143 |
|
|
|
145,673 |
|
|
|
|
|
|
|
|
|
Gross margin |
|
|
253,678 |
|
|
|
6,892 |
|
|
|
|
|
|
|
|
|
Operating expenses |
|
|
|
|
|
|
|
Product
development, sales and marketing |
|
|
4,532 |
|
|
|
41,838 |
|
General
and administrative |
|
|
157,447 |
|
|
|
166,311 |
|
Depreciation and amortization |
|
|
6,714 |
|
|
|
7,578 |
|
|
|
|
|
|
|
|
|
Total
operating expenses |
|
|
168,693 |
|
|
|
215,727 |
|
|
|
|
|
|
|
|
|
Income (loss) from
operations |
|
|
84,985 |
|
|
|
(208,835 |
) |
|
|
|
|
|
|
|
|
Other income
(expenses) |
|
|
|
|
|
|
|
Interest
expense |
|
|
(18,364 |
) |
|
|
(38,738 |
) |
Change in
fair value of derivative liabilities |
|
|
4,385 |
|
|
|
(9,767 |
) |
Other
income (expenses) |
|
|
(13,979 |
) |
|
|
(48,505 |
) |
|
|
|
|
|
|
|
|
Net income (loss) |
|
$ |
71,006 |
|
|
$ |
(257,340 |
) |
|
|
|
|
|
|
|
|
Per-share data |
|
|
|
|
|
|
|
Basic and
diluted income (loss) per share |
|
$ |
0.00 |
|
|
$ |
(0.00 |
) |
|
|
|
|
|
|
|
|
Weighted average number of common shares outstanding -
Basic |
|
|
325,355,361 |
|
|
|
325,523,466 |
|
Weighted average number of common shares outstanding -
Diluted |
|
|
325,451,145 |
|
|
|
325,523,466 |
|
CAPITAL ART,
INC.CONSOLIDATED BALANCE
SHEETS(Unaudited)
|
|
|
March 31, 2018 |
|
December 31, 2017 |
Assets |
|
|
|
|
|
|
|
|
|
Current Assets |
|
|
|
|
|
|
|
Cash |
|
$ |
7,490 |
|
|
$ |
1,297 |
|
Accounts
receivable, net |
|
|
24,883 |
|
|
|
44,548 |
|
Inventory, net |
|
|
56,500 |
|
|
|
56,500 |
|
Prepaid
expenses |
|
|
35,741 |
|
|
|
12,765 |
|
Total Current Assets |
|
|
124,614 |
|
|
|
115,110 |
|
|
|
|
|
|
|
|
|
Property and equipment,
net |
|
|
2,390,231 |
|
|
|
2,493,224 |
|
Security deposit |
|
|
6,356 |
|
|
|
6,356 |
|
Intangible Assets,
net |
|
|
315,375 |
|
|
|
326,250 |
|
|
|
|
|
|
|
|
|
Total Assets |
|
$ |
2,836,576 |
|
|
$ |
2,940,940 |
|
|
|
|
|
|
|
|
|
Liabilities and
Stockholders' Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Current
Liabilities |
|
|
|
|
|
|
|
Accounts
payable and accrued liabilities |
|
$ |
500,777 |
|
|
$ |
540,947 |
|
Payable
to Globe Photo, Inc. |
|
|
10,000 |
|
|
|
10,000 |
|
Due to
related parties |
|
|
294,435 |
|
|
|
147,113 |
|
Notes
payable - related parties |
|
|
664,995 |
|
|
|
456,235 |
|
Notes
payable, net of debt discount |
|
|
205,000 |
|
|
|
417,500 |
|
Deferred
revenue |
|
|
— |
|
|
|
75,000 |
|
Derivative liability |
|
|
4,810 |
|
|
|
9,195 |
|
Loans
payable, net of unamortized discounts |
|
|
563,408 |
|
|
|
738,805 |
|
Total
Current Liabilities |
|
|
2,243,425 |
|
|
|
2,394,795 |
|
|
|
|
|
|
|
|
|
Total Liabilities |
|
|
2,243,425 |
|
|
|
2,394,795 |
|
|
|
|
|
|
|
|
|
Stockholders'
Equity |
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Preferred
stock, $0.0001 par value, 50,000,000 shares authorized; none issued
and outstanding at March 31, 2018 and December 31, 2017. |
|
|
— |
|
|
|
— |
|
|
|
|
|
|
|
|
|
Common
stock par value $0.0001: 450,000,000 shares authorized; 325,241,112
and 325,570,524 issued and 325,241,112 and 325,570,524 outstanding
as of March 31, 2018 and December 31, 2017 |
|
|
32,524 |
|
|
|
32,557 |
|
Additional paid in capital |
|
|
4,012,276 |
|
|
|
4,124,243 |
|
Treasury
stock; 0 and 258,823 shares as of March 31, 2018 and December 31,
2017. |
|
|
— |
|
|
|
(88,000 |
) |
Accumulated deficit |
|
|
(3,451,649 |
) |
|
|
(3,522,655 |
) |
Stockholders' Equity |
|
|
593,151 |
|
|
|
546,145 |
|
|
|
|
|
|
|
|
|
Total Liabilities and
Stockholders' Equity |
|
$ |
2,836,576 |
|
|
$ |
2,940,940 |
|
Company ContactStuart Scheinman President &
Co-CEOCapital Art, Inc.Tel (702)
722-6113info@capitalart.com
Investor Relations: Ronald BothCMA Investor
Relations Tel (949) 432-7566 CAPA@cma.team