- Fourth quarter revenue of $7.2 million exceeded preliminary expectations of $6.9 million, provided on February 17, 2016
- Record 2015 revenue of $15.9 million improved $2.3 million, or 16.9%
DEERFIELD BEACH, Fla., March 23, 2016 (GLOBE NEWSWIRE) -- 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 2015.
Stewart Wallach, Capstone’s CEO, commented, “During 2015 we successfully navigated through several strategic transitions including the introduction of Hoover® HOME LED branded lighting products. As a result, we reported the second consecutive quarter with over $7 million of revenue for the first time in company history.”
Fourth Quarter Highlights
- Revenue of $7.2 million exceeded expectations of $6.9 million, and increased significantly over $0.6 million in the fourth quarter of 2014.
- Strong gross profit of $1.5 million, or 20.7% of sales, reflects leverage on higher sales, resulting in dramatic improvement from 0.8% gross margin in the prior-year period
- Operating income grew to $0.7 million, or 9.3% of sales, compared with a $0.5 million operating loss in fourth quarter 2014
- Strong cash generation with $3.4 million of operating cash flow
Fourth quarter revenue of $7.2 million improved significantly from fourth quarter 2014 revenue of $0.6 million. During the prior-year’s fourth quarter, the Company was undergoing a product branding change and as a result there was a strategic short-term interruption to sales levels to ensure a smooth transition on its customers’ shelves. Gross profit improved from breakeven in the prior-year period to gross profit of $1.5 million, or 20.7% of sales, in the fourth quarter of 2015, demonstrating leverage gained through higher sales volume.
Operating expenses totaled $0.8 million, which was up by 70.8% from the prior-year period due to the significantly higher revenue. As a percent of sales, fourth quarter 2015 operating expenses were only 11.4% compared with 77.6% in the prior year’s fourth quarter.
Operating profit of $0.7 million increased from an operating loss of $0.5 million in the fourth quarter of 2014. Net income was $0.5 million compared with a net loss of $0.6 million in the prior-year period.
Full Year 2015 Highlights
- Record revenue of $15.9 million increased $2.3 million, or 16.9%
- Gross profit grew $1.0 million to $3.8 million, or 24.0% of sales, from $2.8 million or 20.4% of sales in 2014
- Operating income grew to $1.0 million from a $0.1 million operating loss in 2014
- Net income of $0.7 million improved significantly from a $0.4 million net loss in 2014
Mr. Wallach added, “We continue to expect first quarter 2016 revenue of $1.6 million as our end-user demand is building momentum following a very successful 2015 holiday shopping season. The retail industry has always been seasonal with higher sales in the second half related to holiday shopping, but the exposure our new products have gained from our increased presence on store shelves has driven expectations for significantly higher first quarter 2016 sales compared with 2015’s first quarter. While it is still early in the year, the strong finish to 2015 and start to 2016 affirms our belief that we can successfully achieve our 2016 revenue goal of $20 million.”
Webcast and Teleconference to Review Results and Outlook
The Company will host a live webcast and conference call on Thursday, March 24, 2016 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. Eastern Time the day of the teleconference until Thursday, March 31, 2016. To listen to the replay of the call, dial (858) 384-5517 and enter replay pin number 13629868. Alternatively, the archive of the webcast will be available on the Company’s website at www.capstonecompaniesinc.com. A transcript will also be posted to the website, once available.
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, including the Hoover® HOME LED lighting product line, 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 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 | |||||||||||||||||
| For the Three Months Ended | For the Years Ended | ||||||||||||||||
| December 31, | December 31, | ||||||||||||||||
| 2015 | 2014 | 2015 | 2014 | ||||||||||||||
| (unaudited) | (unaudited) | ||||||||||||||||
| Revenues, net | $ | 7,173,214 | $ | 615,886 | $ | 15,924,165 | $ | 13,624,518 | |||||||||
| Cost of sales | (5,690,271 | ) | (610,848 | ) | (12,100,468 | ) | (10,842,813 | ) | |||||||||
| Gross Profit | 1,482,943 | 5,038 | 3,823,697 | 2,781,705 | |||||||||||||
| Gross margin | 20.7 | % | 0.8 | % | 24.0 | % | 20.4 | % | |||||||||
| Operating Expenses: | |||||||||||||||||
| Sales and marketing | 128,782 | (139,516 | ) | 314,011 | 315,566 | ||||||||||||
| Compensation | 325,759 | 360,772 | 1,333,100 | 1,406,709 | |||||||||||||
| Professional fees | 67,209 | 45,053 | 269,720 | 189,734 | |||||||||||||
| Product development | 113,481 | 61,904 | 294,638 | 374,245 | |||||||||||||
| Other general and administrative | 180,750 | 149,580 | 587,864 | 604,823 | |||||||||||||
| Total Operating Expenses | 815,981 | 477,793 | 2,799,333 | 2,891,077 | |||||||||||||
| Net Operating Income (Loss) | 666,962 | (472,755 | ) | 1,024,364 | (109,372 | ) | |||||||||||
| Operating margin | 9.3 | % | -76.8 | % | 6.4 | % | -0.8 | % | |||||||||
| Other Income (Expense): | |||||||||||||||||
| Interest expense | (111,530 | ) | (104,944 | ) | (317,463 | ) | (327,962 | ) | |||||||||
| Total Other Income (Expense) | (111,530 | ) | (104,944 | ) | (317,463 | ) | (327,962 | ) | |||||||||
| Income (Loss) Before Tax Provision | 555,432 | (577,699 | ) | 706,901 | (437,334 | ) | |||||||||||
| Provision for Income Tax | 7,500 | 6,387 | 7,500 | - | |||||||||||||
| Net Income (Loss) | $ | 547,932 | $ | (571,312 | ) | $ | 699,401 | $ | (437,334 | ) | |||||||
| Net Income per Common Share | |||||||||||||||||
| Basic | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | |||||||||
| Diluted | $ | 0.00 | $ | 0.00 | $ | 0.00 | $ | 0.00 | |||||||||
| Weighted Average Shares Outstanding | |||||||||||||||||
| Basic | 698,709,332 | 654,524,231 | 698,709,332 | 654,524,231 | |||||||||||||
| Diluted | 700,742,501 | 654,524,231 | 700,742,501 | 654,524,231 | |||||||||||||
| CAPSTONE COMPANIES, INC. AND SUBSIDIARIES | |||||||||
| CONSOLIDATED BALANCE SHEETS | |||||||||
| December 31, | December 31, | ||||||||
| 2015 | 2014 | ||||||||
| Assets: | |||||||||
| Current Assets: | |||||||||
| Cash | $ | 364,714 | $ | 313,856 | |||||
| Accounts receivable, net | 5,077,182 | 977,597 | |||||||
| Advances | - | 14,456 | |||||||
| Inventory | 205,708 | 128,984 | |||||||
| Prepaid expenses | 566,459 | 358,046 | |||||||
| Total Current Assets | 6,214,063 | 1,792,939 | |||||||
| Fixed Assets: | |||||||||
| Computer equipment and software | 19,767 | 12,272 | |||||||
| Machinery and equipment | 380,633 | 299,693 | |||||||
| Furniture and fixtures | 5,665 | 5,665 | |||||||
| Less: Accumulated depreciation | (295,180 | ) | (223,589 | ) | |||||
| Total Fixed Assets | 110,885 | 94,041 | |||||||
| Other Non-current Assets: | |||||||||
| Deposit | 12,193 | 12,193 | |||||||
| Investment (AC Kinetics) | 500,000 | 500,000 | |||||||
| Goodwill | 1,936,020 | 1,936,020 | |||||||
| Total Other Non-current Assets | 2,448,213 | 2,448,213 | |||||||
| Total Assets | $ | 8,773,161 | $ | 4,335,193 | |||||
| Liabilities and Stockholders’ Equity: | |||||||||
| Current Liabilities: | |||||||||
| Accounts payable and accrued liabilities | $ | 2,164,283 | $ | 644,629 | |||||
| Income tax payable | 7,500 | - | |||||||
| Note payable - Sterling Factors | 2,275,534 | 286,945 | |||||||
| Notes and loans payable to related parties - current maturities | 2,064,034 | 1,936,679 | |||||||
| Total Current Liabilities | 6,511,351 | 2,868,253 | |||||||
| 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 -0- shares at December 31, 2015 and 1,000 shares at December 31, 2014 | - | 1,000 | |||||||
| Common Stock, par value $.0001 per share, authorized 850,000,000 shares, issued 721,989,957 shares at December 31, 2015 and 654,010,532 at December 31, 2014 | 72,199 | 65,401 | |||||||
| Additional paid-in capital | 7,276,729 | 7,187,058 | |||||||
| Accumulated deficit | (5,087,118 | ) | (5,786,519 | ) | |||||
| Total Stockholders' Equity | 2,261,810 | 1,466,940 | |||||||
| Total Liabilities and Stockholders’ Equity | $ | 8,773,161 | $ | 4,335,193 | |||||
| CAPSTONE COMPANIES, INC. AND SUBSIDIARIES | ||||||||||
| CONSOLIDATED STATEMENTS OF CASH FLOWS | ||||||||||
| For the Years Ended | ||||||||||
| December 31, | ||||||||||
| 2015 | 2014 | |||||||||
| CASH FLOWS FROM OPERATING ACTIVITIES: | ||||||||||
| Net Income (Loss) | $ | 699,401 | $ | (437,334 | ) | |||||
| Adjustments necessary to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||||||||||
| Stock cancellation | - | (28,877 | ) | |||||||
| Depreciation and amortization | 71,590 | 81,220 | ||||||||
| Compensation expense from stock options | 95,469 | 43,500 | ||||||||
| Accrued sales allowance | 476,312 | 155,346 | ||||||||
| (Increase) decrease in accounts receivable | (4,575,897 | ) | 5,794,295 | |||||||
| (Increase) decrease in inventory | (76,722 | ) | 169,115 | |||||||
| (Increase) decrease in prepaid expenses | (208,418 | ) | 724,738 | |||||||
| (Increase) decrease in other assets | 14,456 | (14,456 | ) | |||||||
| Increase (decrease) in accounts payable and accrued liabilities | 1,527,156 | (1,286,898 | ) | |||||||
| Increase (decrease) in accrued interest on notes payable | 127,355 | (63,395 | ) | |||||||
| Net cash provided by (used in) operating activities | (1,849,298 | ) | 5,137,254 | |||||||
| CASH FLOWS FROM INVESTING ACTIVITIES: | ||||||||||
| Deposits | - | (12,193 | ) | |||||||
| Purchase of property and equipment | (88,434 | ) | (77,598 | ) | ||||||
| Net cash (used in) investing activities | (88,434 | ) | (89,791 | ) | ||||||
| CASH FLOWS FROM FINANCING ACTIVITIES: | ||||||||||
| Proceeds from notes payable | 13,379,664 | 14,700,000 | ||||||||
| Repayments of notes payable | (11,391,074 | ) | (18,650,199 | ) | ||||||
| Proceeds from notes and loans payable to related parties | 3,200,000 | 950,000 | ||||||||
| Repayments of notes and loans payable to related parties | (3,200,000 | ) | (2,170,000 | ) | ||||||
| Net cash provided by (used in) financing activities | 1,988,590 | (5,170,199 | ) | |||||||
| Net Increase (Decrease) in Cash and Cash Equivalents | 50,858 | (122,736 | ) | |||||||
| Cash and Cash Equivalents at Beginning of Year | 313,856 | 436,592 | ||||||||
| Cash and Cash Equivalents at End of Year | $ | 364,714 | $ | 313,856 | ||||||