WEB NEWS Comments & Business Outlook
DEERFIELD BEACH, Fla.--(BUSINESS WIRE )--
Capstone Companies, Inc. (CAPC) (“Capstone” or the “Company”), a designer, manufacturer and marketer of consumer inspired products that bridge technological innovations with today’s lifestyle, reported its financial results for the first quarter 2018.
Stewart Wallach, Capstone’s CEO, commented, “While our first quarter 2018 reflects a decline in topline revenues, our product lines sustained their shelf position and gross margins improved. Our strategy to stay clear of commodity products has proven effective.”
Gerry McClinton, Capstone’s CFO, added, “During the quarter, three new products were introduced and shipped. With the introduction of these new products, the quarter’s blended gross margin of 25.1% improved from 23.4% in same period 2017.” He further added, “Operating Expenses were $1.2 million the same as in 2017 Product Development expenses increased by $95 thousand over the same quarter 2017.” Net loss was $191 thousand for the quarter as compared to a net income of $251 thousand in the prior year period.
Comments & Business Outlook
Third Quarter 2017 Financial Results
Revenue was $ 30,790 vs last years same quarter of $ 22,673 up 35.8%.
Earnings Per Diluted Share was $ .045 vs last years quarter of $ .051
Stewart Wallach, Capstone’s Chairman and CEO, commented, “As evidenced by our third quarter results, the Companies’ branding and product strategies continue to deliver. Our product placement earlier in the year was strong resulting in five additional products finding retail shelves. We have broken our quarterly revenue record for Q3 and have surpassed our record 2016 revenues by over $2 million. Our product development efforts remain laser focused on continuing to deliver new and innovative products for 2018.”
Comments & Business Outlook
DEERFIELD BEACH, Fla.--(BUSINESS WIRE )--
Capstone Companies, Inc. (CAPC) (“Capstone” or the “Company”), a designer of innovative LED lighting solutions including power failure lighting, today raised its revenue guidance for the 2017 first quarter to $5.5 million. The increases in guidance provided today are based on increased presence of the Company’s product on store shelves of its large U.S. retailers, higher customer demand for the Company’s products and strong reorder activity that is driving growing backlog.
Stewart Wallach, Capstone’s CEO, commented, “Our 2017 Q1 revenue expectations further validate the momentum our Company is experiencing. At the close of Q1, we will have had four consecutive record quarters yielding trailing 12 month revenues of an estimated $34.5 million. Importantly, the Company backlog continues to grow and remain strong supporting Q2 and Q3.”
He added, “Sales and marketing have reported strong product placement and Q1 includes the shipments of five new product entries for 2017.”
Additionally Larry Sloven, President of Capstone International Hong Kong reports, “The Company has received orders from two leading home improvement retailers in the Pacific Rim that furthers the Company’s international reach. This new distribution falls on the heels of record international sales in 2016.”
Comments & Business Outlook
Third Quarter 2016 Financial Results
Revenues were $ 11,692,146 vs last years same quarter of $ 7,747,450.
Net income increased to a record $1.5 million, or $0.03 per diluted share, in the third quarter of 2016 unchanged from last years same quarter.
Stewart Wallach, Capstone’s Chairman and CEO, commented, “We believe our performance this year 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 have once again broken our quarterly revenue record on the back of our successful introduction of accent lighting products through the warehouse club channels. Our product innovation, responsive and reliable customer service and strong brands have gained traction resulting in substantial revenue and earnings growth in the first nine months of 2016.
“We will continue to drive growth by developing new lighting products that incorporate previously unmet functionality while utilizing the efficiency of LED lighting. We are starting to see a preliminary picture of what the first part of 2017 may look like for Capstone, and all indications at this point are for a first half of 2017 that outperforms our strong performance in the first half of 2016.”
Comments & Business Outlook
DEERFIELD BEACH, Fla., July 19, 2016 (GLOBE NEWSWIRE ) -- Capstone Companies, Inc. (CAPC) (“Capstone” or the “Company”), a designer of innovative LED lighting solutions including power failure lighting, today announced preliminary second quarter 2016 revenue of approximately $8.6 million. These preliminary results exceed the Company’s second quarter revenue guidance of $8.0 million, provided on May 16, 2016.
Stewart Wallach, President and CEO of Capstone, commented, “These results reflect how strongly end users have responded to our new product designs. We also had some shipments go out earlier than anticipated; however, based on current backlog levels, we still expect our third quarter results to improve over the record revenue of $7.7 million that we reported in the third quarter of last year.”
He added, “Our team’s execution of our growth strategy has been impressive, and I am encouraged by these results, which is driving our expectation for a record 2016.”
The company anticipates reporting its second quarter 2016 financial results on Monday, August 15, 2016, after the market closes.
Notable Share Transactions
5.03 Amendments to Articles of Incorporation or Bylaws; Change in Fiscal Year
Notable Share Transactions
On May 17, 2016, the Board of Directors of Capstone Companies, Inc. , a Florida corporation, (the "Company") adopted and approved a resolution to seek shareholder approval of a proposed 1-for-15 reverse stock split of the Company's Common Stock, $0.0001 par value per share, ("Common Stock") and a corresponding reduction in the number of authorized shares of Company's Common Stock and Preferred Stock. "Proposed reverse stock split" means the proposed reverse stock split and the corresponding reduction in the authorized number of shares of Common Stock and Preferred Stock. The Board of Directors' approval and the consummation of the proposed reverse stock split and corresponding reduction in the authorized number of shares of the Common Stock and Preferred Stock, are subject to the following conditions being satisfied:
1)
A majority of the shares of the holders of the Common Stock as of May 20, 2016, which is the record date for determining shareholders who can vote on the proposed reverse stock split, must approve the proposed reverse stock split by a majority of the shares of Common Stock entitled to vote thereon and cast at either a special shareholders meeting or cast by written consent; and
2)
Financial Industry Regulatory Authority or "FINRA" must approve the Company's Company Issuer Action Notification Form filing for the proposed reverse stock split, which the Company shall file upon receipt of shareholder approval of the proposed reverse stock split; and
3)
Company must file an amendment to its Amended and Restated Articles of Incorporation after shareholder and FINRA approval of the proposed reverse stock split, which is to be filed with the Florida Secretary of State's office; and
4)
The Company must comply with Commission and State of Florida disclosure requirements, including: the filing a proxy statement with the Commission for any shareholder meeting to approve the proposed reverse stock split or the filing of an information statement with the Commission reporting shareholder approval of the proposed reverse stock split by written consent; and the mailing or transmission of the proxy statement or information statement, as the case may be, to shareholders of the Common Stock as of the record date. For federal law purposes, the proposed reverse stock split approved by written consents would not be effective until a minimum of 20 days after the date of mailing of an information statement to all shareholders of the Common Stock as of the record date.
If approved and implemented, the proposed reverse stock split would cause the Company's authorized shares of Common Stock, based on the shares issued and outstanding as of May 17, 2016, to be reduced from 850,000,000 to 56,666,667 shares. If approved and implemented, the proposed reverse stock split would cause the Company's authorized shares of Preferred Stock, based on the shares issued and outstanding as of May 17, 2016, to be reduced from 50,000,000 to 3,333,333 shares.
If approved and implemented, the proposed reverse stock split would cause the Company's issued shares of Common Stock, based on the shares issued and outstanding as of March 31, 2016, to be reduced from 721,989,957 to 48,132,664 shares. There are no issued shares of Preferred Stock.
The Company believes that there is sufficient voting power among shareholders who are members of Company management and associates of those persons to approve the proposed reverse stock split by written consent
Under an approved reverse stock split, the Common Stock will continue to be $0.00 01 par value. The Company will round up to the next full share of the Company's shares of common stock any fractional shares that result from an approved reverse stock split and no fractional shares will be issued in connection with the approved reverse stock split and no cash or other consideration will be paid in connection with any fractional shares that would otherwise have resulted from the approved reverse stock split.
The amendment to the Company's Amended and Restated Articles of Incorporation of the Company takes effect when filed with the Florida Secretary State, which the Company anticipates will be before July 27, 2016.
The Company's post-reverse stock split shares of Common Stock will continue to be quoted on The OTC Markets Group, Inc.'s Pink Tier under the current trading symbol "CAPC". The Company will be required to obtain a new CUSIP number for the post-reverse stock split.
Other Board Actions . At the May 17, 2016 Board of Directors meeting, the following other actions were approved by the Company's Board of Directors:
1)
The Board of Directors approved the following incumbent directors for re-election to the Board of Directors as Company management nominees: Stewart Wallach; James McClinton; Jeffrey Postal; Jeffrey Guzy; and Larry Sloven. If re-elected, the director nominees would serve until their successors are elected and assume office in 2017. The Board of Directors also approved presenting said nominees for election by the shareholders by a vote at a shareholders meeting or by written consent.
2)
The Board of Directors appointed the following incumbent director members to the Compensation/Nomination Committee and the Audit Committee: Jeffrey Postal and Jeffrey Guzy. If re-elected as directors, these director would serve until their successors are appointed and assume committee office in 2017.
3)
The Board of Directors approved an amendment to Article VI of the Amended and Restated Articles of Incorporation to allow the Board of Directors to amend the Amended and Restated Articles of Incorporation to the extent allowed under Florida laws without shareholder approval. The Board of Directors also approved obtaining shareholder approval of the Amendment by a vote at a shareholder meeting or by written consent. If approved by shareholders, this amendment will be effective when filed with the Florida Secretary of State, which filing will be made on or before July 15, 2016.
4)
The Board approved the Audit Committee's appointment of Mayer Hoffman & McCann, P.C. as the public auditor of the Company for fiscal year 2016 and authorized the seeking of shareholder ratification of that appointment by a vote at a shareholder meeting or by written consent.
5)
The Board of Directors approved the presentation for shareholder approval of the 3-year shareholder advisory, non-binding vote on the compensation of named Company executive officer by a vote at a shareholder meeting or by written consent.
Recommendation . The Board of Directors recommended that shareholders elect the five Company management nominees as directors and vote "FOR" all other proposed corporate actions listed above.
Comments & Business Outlook
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months Ended
March 31,
2016
2015
Revenues, net
$
2,078,214
$
713,517
Cost of sales
(1,464,658
)
(406,167
)
Gross Profit
613,556
307,350
Operating Expenses:
Sales and marketing
62,977
36,672
Compensation
308,458
361,108
Professional fees
104,285
96,173
Product development
36,274
45,658
Other general and administrative
142,755
121,355
Total Operating Expenses
654,749
660,966
Net Operating (Loss)
(41,193
)
(353,616
)
Other Income (Expense):
Interest expense
(57,736
)
(37,156
)
Total Other Income (Expense)
(57,736
)
(37,156
)
(Loss) Before Tax Provision
(98,929
)
(390,772
)
Provision for Income Tax
-
-
Net (Loss)
$
(98,929
)
$
(390,772
)
Net Loss per Common Share
Basic
$
0.00
$
0.00
Diluted
$
0.00
$
0.00
Weighted Average Shares Outstanding
Basic
721,989,957
654,010,532
Diluted
721,989,957
654,010,532
Comments & Business Outlook
DEERFIELD BEACH, Fla., Nov. 17, 2015 (GLOBE NEWSWIRE ) -- Capstone Companies, Inc. (CAPC) ("Capstone" or the "Company"), a designer of innovative LED lighting solutions including power failure lighting, today raised its revenue guidance for fourth quarter 2015 to $7.0 million during its third quarter financial results teleconference and webcast.
Stewart Wallach, President and CEO of Capstone, commented, "We anticipate closing the year at an estimated $2 million increase over our 2014 revenue of $13.6 million, which translates to about $15.5 million for 2015, and about $7.0 million for the fourth quarter. We are also expecting to enter 2016 with approximately $1 million of order backlog."
Comments & Business Outlook
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the Three Months Ended
For the Nine Months Ended
September 30,
September 30,
2015
2014
2015
2014
Revenues, net
$ 7,747,450 $ 7,738,884 $ 8,750,951 $ 13,008,632
Cost of sales
(5,767,306 ) (6,621,599 ) (6,410,197 ) (10,231,965 )
Gross Profit
1,980,144 1,117,285 2,340,754 2,776,667
Operating Expenses:
Sales and marketing
16,716 81,083 185,229 455,082
Compensation
313,953 375,807 1,007,341 1,045,937
Professional fees
56,947 38,656 202,511 144,681
Product development
74,747 95,410 181,157 312,341
Other general and administrative
158,796 168,260 407,114 455,243
Total Operating Expenses
621,159 759,216 1,983,352 2,413,284
Net Operating Income
1,358,985 358,069 357,402 363,383
Other Income (Expense):
Interest expense
(111,654 ) (69,448 ) (205,933 ) (223,018 )
Total Other Income (Expense)
(111,654 ) (69,448 ) (205,933 ) (223,018 )
Income Before Tax Provision
1,247,331 288,621 151,469 140,365
Provision for Income Tax
- (2,129 ) - (6,387 )
Net Income
$ 1,247,331 $ 286,492 $ 151,469 $ 133,978
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
721,989,957 654,010,532 690,863,847 655,046,444
Diluted
721,989,957 809,072,109 690,863,847 809,758,922
Management Discussion and Analysis
For the 3 months ended September 30, 2015 and 2014, total net sales were approximately $7,747,400 and $7,738,900, respectively, a slight increase from the previous year but this represents a record revenue quarter for the Company.
For the 3 months ended September 30, 2015, the Company had a net income of approximately $1,247,300 as compared to $286,500 in the same period last year for an increased net income of $960,800 or 335%.
Comments & Business Outlook
CONSOLIDATED STATEMENTS OF OPERATIONS
(UNAUDITED)
For the Three Months Ended
For the Six Months Ended
June 30,
June 30,
2015
2014
2015
2014
Revenues, net
$ 289,984 $ 1,181,379 $ 1,003,501 $ 5,269,748
Cost of sales
(236,725 ) (828,537 ) (642,892 ) (3,610,366 )
Gross Profit
53,259 352,842 360,609 1,659,382
Operating Expenses:
Sales and marketing
131,841 73,327 168,512 373,999
Compensation
332,281 374,803 693,390 670,130
Professional fees
49,389 32,244 145,562 106,025
Product development
60,752 84,601 106,409 216,931
Other general and administrative
126,963 144,443 248,319 286,983
Total Operating Expenses
701,226 709,418 1,362,192 1,654,068
Net Operating Income (Loss)
(647,967 ) (356,576 ) (1,001,583 ) 5,314
Other Income (Expense):
Interest expense
(57,123 ) (52,445 ) (94,279 ) (153,570 )
Total Other Income (Expense)
(57,123 ) (52,445 ) (94,279 ) (153,570 )
(Loss) Before Tax Provision
(705,090 ) (409,021 ) (1,095,862 ) (148,256 )
Provision for Income Tax
- (4,258 ) - (4,258 )
Net (Loss)
$ (705,090 ) $ (413,279 ) $ (1,095,862 ) $ (152,514 )
Net (Loss) 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
696,591,051 654,010,532 675,042,840 655,046,444
Diluted
696,591,051 654,010,532 675,042,840 655,046,444
Management Discussion and Analysis
For the 3 months ended June 30, 2015 and 2014, total net sales were approximately $290,000 and $1,181,400, respectively, a reduction of $891,400 from the previous year.
For the 3 months ended June 30, 2015, the Company had a net (loss) of approximately $(705,100) as compared with a net loss in the same period last year of $(413,300), for an increased net loss $(291,800).
Comments & Business Outlook
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months Ended
March 31,
2015
2014
Revenues
$ 713,517 $ 3,962,369
Cost of sales
(406,167 ) (2,781,829 )
Gross Profit
307,350 1,180,540
Operating Expenses:
Sales and marketing
36,672 174,672
Compensation
361,108 295,327
Professional fees
96,173 73,781
Product development
45,658 132,330
Other general and administrative
121,355 142,540
Total Operating Expenses
660,966 818,650
Net Operating Income (Loss)
(353,616 ) 361,890
Other Income (Expense):
Interest expense
(37,156 ) (101,125 )
Total Other Income (Expense)
(37,156 ) (101,125 )
Income (Loss) Before Tax Provision
(390,772 ) 260,765
Provision for Income Tax
- -
Net Income (Loss)
$ (390,772 ) $ 260,765
Net Income (Loss) per Common Share
Basic
$ 0.00 $ 0.00
Diluted
$ 0.00 $ 0.00
Weighted Average Shares Outstanding
Basic
654,010,532 656,093,865
Diluted
654,010,532 815,190,442
Management Discussion and Analysis
Revenue
For the 3 months ended March 31, 2015 and 2014, total net sales were approximately $713,500 and $3,962,400, respectively, a reduction of $3,248,900 from the previous year. In the first quarter 2014, revenues were higher as we completed a large promotional shipment in the period. Revenues in the first quarter 2015 have been impacted by two events and are the reasons for the lower sales volume in the quarter.
- As referenced in our Annual Report on Form 10-K for the year ended December 31, 2014, the Company has continued to feel the impact of the West Coast ports dispute which resulted in container delays from 6 to 8 weeks. The impact of these delays combined with the fact that the dispute wasn’t resolved until February 20, 2015 created uncertainty with retailers as there were no assurances that arriving containers would be offloaded in the West Coast ports. This resulted in many retailers deciding to cancel or postpone their promotions entirely which has impacted our first half shipments. With the dispute now ended and the vessel backlog being reduced, we fully expect retailers to resume their promotional activities in the coming quarters.
- As a result of the introduction of our new branded program in May, 2015, a strategic decision was made that the Company would support the Capstone brand where the program was currently placed, but would limit new offers so as to reduce the exposure to markdown allowances or inventory returns by retailers whom would want to move into the new branded product lines. This also has resulted in revenue reductions in the first quarter 2015.
For the 3 months ended March 31, 2015, the Company had a net (loss) of approximately $(390,800) as compared with a net income in the same period last year of $260,800, for a net income reduction of $651,600. The net loss was the result of the lower sales volume in the quarter.
Deal Flow
Item 3.02 Unregistered Sales of Equity Securities.
Comments & Business Outlook
CAPSTONE COMPANIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended
December 31,
2014
2013
Revenues
$ 13,624,518 $ 14,593,826
Cost of Sales
(10,842,813 ) (10,983,364 )
Gross Profit
2,781,705 3,610,462
Operating Expenses:
Sales and marketing
315,566 489,791
Compensation
1,406,709 972,922
Professional fees
189,734 326,077
Product Development
374,245 225,754
Other general and administrative
604,823 479,298
Total Operating Expenses
2,891,077 2,493,842
Net Operating Income (Loss)
(109,372 ) 1,116,620
Other Income (Expense):
Interest expense
(327,962 ) (389,486 )
Total Other Income (Expense)
(327,962 ) (389,486 )
Income (Loss) Before Tax Provision
(437,334 ) 727,134
Provision for Income Tax
- -
Net Income (Loss)
$ (437,334 ) $ 727,134
Net Income (Loss) per Common Share
Basic
$ 0.00 $ 0.00
Diluted
$ 0.00 $ 0.00
Weighted Average Shares Outstanding
Basic
654,524,231 657,503,683
Diluted
654,524,231 813,450,260
Management Discussion and Analysis
Net Revenues for the year ended December 31, 2014 were $13.6 million, compared to $14.6 million in 2013. That is a reduction of $1.0 million or (approximately 6.8%) from 2013.
As has been stated in previous quarterly reports, revenue can fluctuate greatly between quarters, because of the demands by retailers. The overall net revenue reduction between 2014 and 2013 was the result of several factors namely:
- As referenced in the third quarter 2014 financial report on Form 10-Q, part of the increased revenue in the third quarter was the result of retailers advancing approximately $2.0 million of shipments from the fourth quarter into the third quarter, to ensure the stores had inventories for the holiday season.
- All of our goods are received into West Coast ports. With the continuing port slowdown and the protracted contract dispute between the Unions and the West Coast Port authorities, it resulted in containers being substantially delayed and product being available in the stores from 3 to 6 weeks later than required by retailers.
- The impact of these delays combined with the fact that there were no indications that the dispute was ending, created a lot of uncertainty with retailers, as there were no assurances that arriving containers would be offloaded in the West Coast ports and merchandise arrive in the stores for the promotional period. As a result many retailers decided to cancel or postponed their promotions entirely. The impact of this dispute has been felt throughout the retail industry. A new agreement was finalized on February 20, 2015 but there remains a tremendous backlog of vessels to be off loaded that has been estimated will take another two months before the backlog is cleared up. With the ending of the dispute, we fully expect retailers to resume their promotional activities.
- As we already had significant Capstone branded inventories in the Market Place for the holiday season, a strategic decision was made that with the introduction of our new branded program in 2015, that the Company would support the Capstone brand where the program was currently placed, but would limit new offers so as to reduce the exposure to markdown allowances or inventory returns by retailers whom would want to move into the new branded product lines. This also resulted in revenue reductions in the fourth quarter 2014.
During 2014 the Company launched a new product line, the Remote Control Outlet Program and expanded the Wireless Motion Sensor Light program. Both of these programs were well received by retailers and consumers and accounted for most of the revenue growth in these product categories.
Net Income (Loss) for the year ended December 31, 2014; the Company had an overall net loss of $(437,000). For the year ended December 31, 2013, the Company had a net income of $727,000 .The reasons for the $1.164 net income decrease from 2013, were; the overall revenue reduction in the 2014 compared to 2013. Included in the $437,000 loss, we incurred $564,000 of required infrastructure expense with the expanding of the Hong Kong operation, $316,000 expense in direct promotional advertising activities and $374,000 in product development in new technology and for future product launches. This represents a total of $1.254 million of expenses incurred to support the Company’s overall strategic plan.
We also provided $915,000 of product promotional allowances to retailers as a reduction to Gross Sales, to aggressively support retail sales movement during the third and fourth quarter holiday period, so that we didn’t have larger inventories on retailers’ shelves after the winter holiday period.
If we had not incurred the $1.254 million of strategic expenses then our net income would have been very similar to last year’s results. However without those expenditures we would not be in a position structurally to pursue the new revenue opportunities that we now have in place.
The effective tax (benefit) rate was 0% in both 2014 and 2013.
Auditor trail
ITEM 4.01. CHANGES IN REGISTRANT'S CERTIFYING ACCOUNTANT
The reports of RHC on the Company’s financial statements for each of the two fiscal years ended December 31, 2013 and 2012 did not contain an adverse opinion or a disclaimer of opinion, nor were they qualified or modified as to uncertainty, audit scope or accounting principles.
During the fiscal years ended December 31, 2013 and 2012 and in the subsequent interim period through September 30, 2014, there were no “disagreements” (as defined in Item 304(a)(1)(iv) of Regulation S-K and the related instructions) with RHC on any matter of accounting principles or practices, financial statement disclosure, or auditing scope or procedure which, if not resolved to the satisfaction of RHC, would have caused RHC to make reference to the subject matter of such disagreements in their reports on the financial statements for such years.
During the fiscal years ended December 31, 2013 and 2012 and in the subsequent interim period through September 30, 2014, there were no “reportable events” as defined in Item 304(a)(1)(v) of Regulation S-K of the rules and regulations of the Securities and Exchange Commission.
The Company provided RHC with a copy of the disclosures it is making in this Current Report on Form 8-K and requested that RHC furnish a letter addressed to the Securities and Exchange Commission stating whether or not it agrees with the statements made herein. A copy of RHC’s letter dated December 9, 2014, is attached as Exhibit 16.1 hereto.
On December 9, 2014, the Audit Committee approved the appointment of Mayer Hoffman McCann, P.C. of Boca Raton, Florida (“MHM”) as the Company’s new independent registered public accounting firm, effective immediately.
Comments & Business Outlook
Third Quarter 2014 Financial Results
Revenue of $7.7 million increased $2.1 million, or 36.9%, from the prior-year period. Gross profit was $1.1 million compared to $1.5 million in the third quarter of 2013.
Basic and Diluted EPS were flat
Stewart Wallach, Capstone's CEO, commented, "Our top-line results for the third quarter and year-to-date periods are encouraging. Our existing product lines have yielded strong sales as our retail partners continue to support the programs. We anticipated completing numerous product launches incorporating new power failure technologies by the end of the third quarter; however those introductions were slightly delayed due to the complexities of integrating the technologies into our product designs. Therefore it is important to note that the year-to-date results are independent of 2014 new product launches which further substantiates the strength of our existing lines and provides the catalyst for continued growth during 2015.
"Having completed record shipments of an estimated $7.7 million in the third quarter, Capstone's products have a very strong retail presence. We have made considerable investments through promotional allowances to support retail sales during the fourth quarter holiday period, and these investments are reflected in our third quarter results."
Stewart Wallach added, "I encourage you to join us on Monday morning's teleconference in which Gerry McClinton and I will review these results and provide greater detail."
Comments & Business Outlook
Second Quarter 2014 Financial Results:
Revenue of $1.2 million increased 15% from $1.0 million in the prior-year period.
Net loss was $0.36 million, or EPS of -$0.00, vs loss of 0.42 million, or EPS of -$0.00, from the last year.
Gerry McClinton, Capstone's CFO noted, "Our improved distribution strategy and operations, and the associated production efficiencies have driven significant margin improvement. We expect to see greater leverage as we continue to grow our top-line."
Comments & Business Outlook
CONSOLIDATED STATEMENTS OF OPERATIONS
For the Years Ended
December 31,
2013
2012
Revenues
$ 14,593,826 $ 8,362,964
Cost of Sales
(10,983,364 ) (6,574,912 )
Gross Profit
3,610,462 1,788,052
Operating Expenses:
Sales and marketing
489,791 364,263
Compensation
972,922 900,628
Professional fees
326,077 269,335
Product Development
225,754 227,087
Other general and administrative
479,298 359,795
Total Operating Expenses
2,493,842 2,121,108
Net Operating Income (Loss)
1,116,620 (333,056 )
Other Income (Expense):
Interest expense
(389,486 ) (274,127 )
Total Other Income (Expense)
(389,486 ) (274,127 )
Net Income (Loss)
$ 727,134 $ (607,183 )
Income (Loss) per Common Share
$ - $ -
Weighted Average Shares Outstanding
Basic
657,503,683 650,724,916
Diluted
813,450,260 810,671,493
Management Discussion and Analysis
Results of Operations
Revenue
Net Revenue for the year ended December 31, 2013 and 2012 were approximately $14,594,000 and $8,363,000, respectively, an increase of $6,231,000 or 74.5% increase over 2012 revenue. For the 4th quarter 2013 net revenues were approximately $7,253,000 as compared to $2,512,000, in the 4th quarter 2012. This was an increase of $4,741,000 or 188.7% over the same quarter last year. We would also note that gross revenue for 2013 was $15,844,000 but we provided more than $1,250,000 of allowances to retailers to promote our existing and new product launches.
The increased net revenue during 2013 was impacted by two situations.
2. The Company also launched two new product lines, the 10 LED Wallplate Night Light and the Wireless Motion Sensor Light. Both of these exciting new programs have been well received by Retailers and consumers in 2013.
For the year ended December 31, 2013, the Company had net income of approximately $727,000. For the year ended December 31, 2012 the Company had a net loss of approximately $607,000. For the 4th quarter ended December 31, 2013, the Company had a net income of approximately $683,000 as compared to a net loss of $236,000 in the 4th quarter, 2012. For the year 2013 that is a net profit improvement of $1,334,000 as compared to 2012. For the 4th quarter 2013, the net profit improvement was $919,000 compared to the 4th quarter in 2012.
The effective tax (benefit) rate was 0% in 2013 compared with 0% in 2012.
Comments & Business Outlook
(Formerly CHDT Corporation)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months Ended
Sept 30th,
Sept 30th,
2013
2012
2013
2012
Revenues
$ 5,653,873 $ 4,663,259 $ 7,340,789 $ 5,850,919
Cost of Sales
(4,102,814 ) (3,632,232 ) (5,398,941 ) (4,524,893 )
Gross Profit
1,551,059 1,031,027 1,941,848 1,326,026
Operating Expenses:
Sales and marketing
43,609 97,270 210,219 217,043
Compensation
221,913 226,635 690,700 671,137
Professional fees
64,218 73,970 269,675 174,848
Product Development
73,583 100,173 157,589 192,054
Other general and administrative
108,039 102,215 303,614 259,944
Total Operating Expenses
511,362 600,263 1,631,797 1,515,026
Net Operating Income (Loss)
1,039,697 430,764 310,051 (189,000 )
Other Income (Expense):
Interest expense
(110,625 ) (93,461 ) (265,710 ) (182,450 )
Total Other Income (Expense)
(110,625 ) (93,461 ) (265,710 ) (182,450 )
Net Income (Loss)
$ 929,072 $ 337,303 $ 44,341 $ (371,450 )
Income (Loss) per Common Share
$ - $ - $ - $ -
Weighted Average Shares Outstanding
Basic
657,760,532 650,847,489 657,417,125 649,847,518
Diluted
813,707,109 810,944,066 813,363,702 809,944,095
The accompanying notes are an integral part of these financial statements.
Comments & Business Outlook
CAPSTONE COMPANIES, INC. AND SUBSIDIARIES
(Formerly CHDT Corporation)
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months Ended
June 30th,
June 30th,
2013
2012
2013
2012
Revenues
$ 1,027,121 $ 848,990 $ 1,686,916 $ 1,187,660
Cost of Sales
(830,174 ) (661,873 ) (1,296,127 ) (892,660 )
Gross Profit
196,947 187,117 390,789 295,000
Operating Expenses:
Sales and marketing
109,297 70,586 166,610 119,774
Compensation
238,693 224,424 468,787 444,504
Professional fees
113,733 53,555 205,457 100,878
Product Development
60,387 64,778 84,006 91,880
Other general and administrative
92,207 77,295 195,575 157,729
Total Operating Expenses
614,317 490,638 1,120,435 914,765
Net Operating Income (Loss)
(417,370 ) (303,521 ) (729,646 ) (619,765 )
Other Income (Expense):
Interest expense
(81,381 ) (57,058 ) (155,085 ) (88,989 )
Total Other Income (Expense)
(81,381 ) (57,058 ) (155,085 ) (88,989 )
Net Income (Loss)
$ (498,751 ) $ (360,579 ) $ (884,731 ) $ (708,754 )
Income (Loss) per Common Share
$ - $ - $ - $ -
Weighted Average Shares Outstanding
Basic
657,760,532 649,510,532 657,242,576 649,510,532
The accompanying notes are an integral part of these financial statements.
Notable Share Transactions
Capstone Companies, Inc. announced today that it has been notified by Dr. Jeffrey Postal, a member of its Board of Directors, of his intent to be actively purchasing Capstone shares of common stock on the open market or in privately negotiated transactions. Dr. Postal indicated his intentions to purchase up to 50,000,000 shares of stock over a period of 6 months, excluding restricted periods in which insiders are not allowed to be trading the Company’s Common Stock as in accordance with Company insider trading policies.
As of Dr. Postal's most recent Form 4 filed on July 29, 2011, he held 62,413,177 shares of Common Stock, or 9.6% of total shares of Common Stock issued and outstanding as of June 30, 2012.
Deal Flow
On April 1, 2012, CHDT Corporation, a Florida corporation, (“CHDT”) entered into a one year
Working Capital Loan Agreement with Postal Capital Funding, LLC (“Lender”) to provide CHDT with a unsecured $1,000,000 revolving line of credit at 8% annual interest (default rate of 10% per annum). The revolving line of credit will be used for operating costs, including inventory purchases for resale to customers. Lender is owned by, among others, Jeffrey Postal and James McClinton, who are a director and director and senior officer of CHDT, respectively. The Agreement was reviewed for fairness to CHDT and its public shareholders and approved by Jeffrey Guzy, an independent director of CHDT. As previously reported, and from time to time, CHDT has received short term loans from members of management to finance business development or operating costs. CHDT has been unable to develop alternative, readily available, short term and comparable funding sources.
Comments & Business Outlook
Fourth Quarter 2011 Results
Revenue increased $782 thousand, or 59% , in the fourth quarter of 2011, compared with the prior-year period
Net income for the fourth quarter improved measurably to $27 thousand from a net l oss of $43 thousand in the 2010 fourth quarter.
Stewart Wallach, CHDT's President and CEO, commented, “We believe our 2011 results demonstrate the effective execution of our strategy to develop and maintain positions of innovative and technical leadership in consumer lighting products. We nearly doubled sales last year and demonstrated the leverage potential of our business model with an 8.5% operating margin. This past year was the culmination of several years’ work to completely overhaul the organization to focus on our core competencies and create a sustainable growth model through the creation of new products, development of a competent and cost-effective logistics structure and establishment of our channels to market. We believe we have gained the respect of leading national retailers throughout the U.S. which we plan to leverage through new product introductions.”
Capturing market share for growth in 2012 and beyond; expanding margin potential
The Company’s recently announced domestic distribution strategy is expected to drive sales growth as it enables the Company to serve a larger group of potential retailers. In addition, the anticipated shift of sales from direct import to domestic programming over the course of 2012 is expected to deliver stronger margins.
Mr. Wallach noted, “We are expanding our lighting product lines to add features and aesthetics that we believe will be well received by a broader audience of consumers interested in the functionality of power failure lights, but requiring a more decorative appeal. Many of our new innovations were previewed at the International Housewares Show and reception by our current and prospective retail store customers was strong.”
Mr. Wallach concluded, “Competition is expected to be more intense as we expand our market share. We believe focusing on innovative niche products that may have been overlooked or underexploited by our competitors provides us a measurable competitive advantage so we can deepen our market penetration in the consumer lighting space. Our ongoing product developments in conjunction with our domestic distribution strategy should bode well for another year of growth both organically and through the addition of second-tier retail accounts."
Comments & Business Outlook
CHDT CORPORATION AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the Three Months Ended
For the Nine Months Ended
Sept 30,
Sept 30,
2011
2010
2011
2010
Revenues
$ 4,631,930 $ 3,013,975 $ 8,149,171 $ 3,969,550
Cost of Sales
(3,579,048 ) (2,126,383 ) (6,195,735 ) (2,777,802 )
Gross Profit
1,052,882 887,592 1,953,436 1,191,748
Operating Expenses:
Sales and marketing
44,449 192,393 117,057 379,110
Compensation
208,887 247,629 585,630 755,039
Professional fees
22,041 43,502 66,268 109,541
Product Development
57,714 44,587 140,473 115,266
Other general and administrative
98,107 127,581 253,140 344,889
Total Operating Expenses
431,198 655,692 1,162,568 1,703,845
Net Operating Income (Loss)
621,684 231,900 790,868 (512,097 )
Other Income (Expense):
Interest expense
(87,872 ) (101,724 ) (242,342 ) (183,765 )
Total Other Income (Expense)
(87,872 ) (101,724 ) (242,342 ) (183,765 )
Net Income (Loss)
$ 533,812 $ 130,176 $ 548,526 $ (695,862 )
Income (Loss) per Common Share
Basic
$ - $ - $ - $ -
Diluted
$ - $ - $ - $ -
Weighted Average Shares Outstanding
Basic
649,510,532 649,357,786 649,510,532 649,357,786
Diluted
806,932,109 806,629,363 806,932,109 806,629,363
Press Release:
“As I mentioned at our 2010 year-end conference call, we believed the Company had never been in a better position as revenues were continuing to grow through expanded product placement at both new and existing customers. We were confident 2011 would be a turning point for the Company as our strategy was to contain costs while introducing relevant products that were useful and affordable,” said Stewart Wallach, CEO of CHDT Corp. “The retail buying community has acknowledged our subsidiary’s efforts and today it is easier to name the few companies we don’t sell than the extensive list of those we do. We still temper our growth initiatives by being selective and focusing on doing business with retailers best suited to succeed in today’s challenging market conditions. I look forward to addressing our shareholders on Wednesday to elaborate on our continuing progress,” he added.
Comments & Business Outlook
RFIELD BEACH, FL, October 12 ,2011 : CHDT Corporation, a Florida corporation (OTCBB: CHDO), (“Company”), with operating subsidiaries focused on designing and manufacturing consumer lighting products for the North American and Latin American retail markets and Capstone Industries, a wholly owned subsidiary of CHDT Corp.,
confirms the Company’s reorder activity has been strong through Q3 and the resulting order backlog is currently ahead of Q4, 2010 .
While CHDT Corporation’s Q3 results will not be formally confirmed until the Q3 audit is completed, the Company expects gross revenue of approximately $4,786,534 with net revenue of approximately $4,500,542 in the quarter. This brings our year-to-date gross revenue to approximately $8,492,901 and net revenue to approximately $7,966,239. More importantly, the Company expects record net income through Q3 to be approximately $400,000 as compared to a same period net loss of $695,862 in 2010. This translates to an expected improvement of more than $1,000,000 in the Company’s year-to-date performance. “It is hard to explain the sense of pride our team is feeling as we prepare to deliver these great results to our shareholders,” said Gerry McClinton, CFO. “We remained focused on our core lighting products and the product innovations have been recognized by the major retailers across the country,” he added.
“These results are really not surprising when one considers the great products being provided at such affordable pricing levels,” said Stewart Wallach, CEO of CHDT Corp. “What is surprising however is that our stock value has yet to reflect these achievements. I receive numerous shareholder calls daily, inquiring why the stock is so undervalued.
We obviously remain under the radar, but we firmly believe continuing to post strong results will cause trading volumes to rise and stock prices to more accurately reflect the Company’s results . ” he added.
Comments & Business Outlook
DEERFIELD BEACH, FL -- (Marketwire) -- 08/12/11 -- CHDT Corporation, a Florida corporation (OTCBB: CHDO) ("Company"), with operating subsidiaries focused on designing and manufacturing consumer products for the North American and Latin American retail markets, reported today that the Company, during the first half of 2011, delivered record revenue of approximately $3,465,700, an increase or 262.7% compared to $955,600 for the first half of 2010 and a first half net income of $14,700 compared to a net loss of approximately $826,000 for the first half 2010, a net improvement of approximately $840,700 over the same period 2010.
The Company also reported a record order backlog in excess of $5,000,000, moving into the second half of the year. "We are posting strong revenue growth in both quarters and we have a record backlog that should serve to yield a record Q3 as well, and it was achieved in a very challenging retail environment," said CFO Gerry McClinton.
Total Net Revenues : For the three months ended June 30, 2011, the Company posted net sales of approximately $1,048,200 compared to net revenues for the same period in 2010 of approximately $602,500, an increase of approximately $455,700. This represents a 75.6% increase from 2010 results. For the six months ended June 30, 2011, the Company posted net sales of approximately $3,465,700 as compared to net revenues for the same period in 2010 of approximately $955,600, an increase of approximately $2,510,100. This represents a 262.7% increase from 2010 results. All of the revenue was generated by Capstone.
Cost of Sales : For the three months ended June 30, 2011 and 2010, costs of sales were approximately $738,900 and $413,200 respectively. For the six months ended June 30, 2011 and 2010, costs of sales were approximately $2,565,100 and $651,400 respectively.
Gross Profit : For the three months ended June 30, 2011, gross profit was approximately $309,300, an increase of approximately $119,900 or 63.3% from $189,400 for the three months ended June 30 2010. For the six months ended June 30, 2011, gross profit was approximately $900,600, an increase of approximately $596,400 or 196% from $304,200 for the six months ended June 30 2010. The large gross profit increase is attributed to increased shipments in the quarters as compared to the same periods last year.
Total Operating Expenses : For the three months ended June 30, 2011, expenses were approximately $322,900, as compared to approximately $459,400 for the three months ended June 30, 2010, a net reduction of approximately $136,500 or 29.7%. For the six months ended June 30, 2011, expenses were approximately $731,400 as compared to approximately $1,048,100 for the six months ended June 30, 2010, a net reduction of approximately $316,700 or 30.2%.
Net Income (Loss): For the three months ended June 30, 2011, the net loss was approximately ($92,400), as compared to a net loss of approximately ($318,200) for the three months ended June 30, 2010. The Company improved its net results in the quarter by approximately $225,800 from the same period in 2010. For the six months ended June, 2011, net income was approximately $14,700, as compared to a net loss of approximately ($826,000) for the six months ended June 30, 2010. The Company improved its net results by approximately $840,700 from the same period in 2010. This substantial net results improvement was the result of increased revenues and the ongoing effort to contain expenses.
"While I was hopeful we would also be reporting a profitable Q2, the results on a year-to-date basis are very strong and validate the expectations we had at 2010 year-end. Considering the backlog taking us into Q3, we are clearly on course to have a record Q3 and we anticipate the results through Q3 will be record setting as well. Strong, steady performance has been our goal and the management has delivered. I look forward to addressing our shareholders on Monday, August 15, 2011 to discuss our progress further," said Stewart Wallach, CEO of CHDT Corp
Investor Alert
As a small reporting company with
limited resources , we do not have the resources to compete head-to-head with larger, more established competitors for any of the products. We face many national or regional brand-named competitors in all of our product lines. However we attempt to compete by leveraging the design, innovation, engineering and manufacturing capabilities of our Chinese contract manufacturers in order to provide quality products with more functions at what we deem to be a value price. Prior History. Since the start of the 1990’s, the history of CHDT has been a series of failed operating subsidiaries engaged in various business lines.
With each failed business , we usually experienced a change in management and business focus.
Liquidity Requirements
The failure of CHDT to achieve sustained profitability in its operations continues to hamper our efforts to establish and sustain a profitable, growing business or cause any appreciation in our Common Stock market price. In fiscal year 2010 and through 2011 to date, we continued our
historical reliance on raising working capital for operations, business and product development, by receiving loans or investments from members of management or their affiliates. During 2010 we were able to transfer our conventional asset based bank loan to a factor based line that would better support Capstone operations and working capital needs, however we may have to continue to raise working capital for CHDT and working capital for Capstone business and product development (as well as any possible mergers and acquisitions of other companies or their products) by selling our securities in private placements to investors and/or loans or investments by our management and their affiliates. This reliance on private placements of securities and insider loans or investments adds to the already significant number of outstanding shares of Common Stock, significantly dilutes our shareholders and further weakens our ability to attract primary market makers and institutional investor support for our Common Stock as a publicly traded security and also adversely impacts on our ability to do mergers and acquisitions, attract traditional bank funding or raise working capital by public offerings of our securities
Comments & Business Outlook
Our growth strategy has six main elements :
2. Continue to expand retail distribution and move into new distribution channels; and
3. Develop new innovative products in order to expand existing categories and launch new categories; and
4. Through acquiring businesses that have innovative products that would complement our existing marketing strategies; provided, however, we have not consummated any such acquisitions during the fiscal year and the low price of our Common Stock may discourage or prevent future acquisitions; and
6. Seek to expand retail distribution into overseas distribution channels, particularly in South America, Western Europe and Asia.
Investor Presentations
Howard Ullman, a director, will conduct
investors meetings during the week of March 27, 2011.
Reverse Merger Activity
We are speculating that CHDO may pursue a reverse merger transaction:
From time to time, CHDT Corporation Board of Directors explores options to enhance shareholder value, including, without limitations, starting new business lines, the sale of existing business lines and other merger and acquisition opportunities. Such a review, with the assistance of outside investment banking counsel, was commenced in the fourth quarter of fiscal year 2010.
Please note that the stock has over 600 million shares outstanding.
