- 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
DEERFIELD BEACH, Fla., May 13, 2014 (GLOBE NEWSWIRE) -- 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 |
For more information contact Company: Aimee Gaudet Corporate Secretary (954) 252-3440, ext 313 Investor Relations: Garett Gough, Kei Advisors LLC (716) 846-1352
