Market Overview

Capstone Companies Delivers Record 2017 Revenue

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  • Total revenue increased 20% to $36.8 million
  • Gross profits increased 20% to $8.8 million
  • Capstone debt free at year-end

Capstone Companies, Inc. (OTC:CAPC) ("Capstone" or the "Company"), a
designer of innovative LED lighting solutions today reported its
financial results for the fourth quarter and full year 2017.

Stewart Wallach, Capstone's Chairman and CEO, commented, "2017 was an
excellent year for Capstone. We exceeded $36.8 million in revenue, a
record, increased our gross profit, a record. Revenue increased by 20%
over 2016. Management has continued to demonstrate its abilities to
execute the Company's strategy. User demand has expanded and as a result
our revenues increased through our big box channel partners."

"As we enter 2018, the Company is fortifying its resources in R&D and
product development areas. While the Company's focus has been strictly
on LED lighting products, we continue to explore new areas where, like
LED, we can bring a level of innovation and excitement to emerging
categories. We look forward to expanding on our core success as our
increased R&D and product development effort yields results."

Full Year 2017 Highlights

  • Total revenue increased 20% to $36.8 million from $30.6 million in
    2016.
  • Gross profit increased 20% to $8.8 million from $7.4 million in 2016.
  • Operating income remained consistent at $3.2 million.
  • Provision for income tax increased to $1.03 million from $0.3 million
    in 2016.
  • Net income was $2.08 million from $2.82 million in 2016, due to the
    tax provision increase.
  • The Company was debt free year-end, fully paid off old director loans
    and bank line fully paid down.
  • Year-end cash balance increased $2.0 million.

Gross profit was $1.5 million compared to $1.8 million in 2016.
Financial results for 2017 continued to be very strong. For the year,
total revenue improved due to continuing performance in the Accent Light
Category under Capstone Lighting®, Hoover®
Home LED and Duracell® brands.

The Company continued to build momentum within its existing channels.
Increased product assortment generated expanded product placements and
revenue expansion.

Webcast and Teleconference to Review Results and Outlook

The Company will host a live webcast and conference call on Thursday,
March 29, 2018 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. ET the day of the
call until Tuesday, April 5, 2018. To listen to the archived call, dial
(844) 512-2921 and enter conference ID number 13674858. Alternatively,
the archive of the webcast will be available on the Company's website at www.capstonecompaniesinc.com,
along with a transcript, once available.

About Capstone Companies, Inc.

Capstone Companies, Inc. is a designer of innovative LED lighting
solutions including power failure lighting, for consumers and
institutions. The Company's products are sold under the Capstone Lighting®
and Hoover® HOME LED brands, to big box retailers, wholesale
clubs, and home improvement stores throughout North America and in
international markets. Capstone's strategy is to utilize its low-cost
manufacturing base to provide high-quality consumer products to its
customers at a reasonable price, using primarily direct import
distribution.

Visit 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 Years Ended
December 31,
2017     2016
 
Revenues, net $ 36,752,813 $ 30,630,368
Cost of sales   27,910,869     23,232,605  
Gross Profit   8,841,944     7,397,763  
 
Operating Expenses:
Sales and marketing 2,266,601 1,223,798
Compensation 1,612,480 1,434,154
Professional fees 549,844 365,396
Product development 376,981 326,820
Other general and administrative   805,077     704,957  
Total Operating Expenses   5,610,983     4,055,125  
 
Operating Income   3,230,961     3,342,638  
 
Other Income (Expense):
Interest income - 26,897
Interest expense   (122,091 )   (281,447 )
Total Other (Expense)   (122,091 )   (254,550 )
 
Income Before Tax Provision 3,108,870 3,088,088
 
Provision for Income Tax   (1,029,694 )   (267,000 )
 
Net Income $ 2,079,176   $ 2,821,088  
 
Net Income per Common Share
Basic $ 0.044   $ 0.059  
Diluted $ 0.044   $ 0.058  
 
Weighted Average Shares Outstanding
Basic   47,007,296     48,132,664  
Diluted   47,188,450     48,342,030  
 
     

CAPSTONE COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED BALANCE SHEETS

 
December 31, December 31,
2017 2016
Assets:
Current Assets:
Cash $ 3,668,196 $ 1,646,128
Accounts receivable, net 4,367,721 4,449,179
Inventory 140,634 366,330
Prepaid expenses   239,150     330,020  
Total Current Assets   8,415,701     6,791,657  
 
Property and Equipment:
Computer equipment and software 9,895 19,767
Machinery and equipment 318,801 325,750
Furniture and fixtures 5,665 5,665
Less: Accumulated depreciation   (266,997 )   (250,465 )
Total Property & Equipment   67,364     100,717  
 
Other Non-current Assets:
Deposit 13,616 12,193
Note receivable - 526,887
Goodwill   1,936,020     1,936,020  
Total Other Non-current Assets   1,949,636     2,475,100  
Total Assets $ 10,432,701   $ 9,367,474  
 
Liabilities and Stockholders' Equity:
Current Liabilities:
Accounts payable and accrued liabilities $ 2,733,516 $ 2,678,210
Income tax payable 624,782 1,588
Notes and loans payable to related parties   -     1,321,721  
Total Current Liabilities   3,358,298     4,001,519  
 
Long Term Liabilities:
Deferred tax liabilities   251,000     216,000  
Total Long Term Liabilities   251,000     216,000  
Total Liabilities   3,609,298     4,217,519  
 
Commitments and Contingencies (Note 6)
 
Stockholders' Equity:
Preferred Stock, Series A, par value $.001 per share, authorized
6,666,667 shares, issued -0- shares
- -
Preferred Stock, Series B-1, par value $.0001 per share, authorized
3,333,333 shares, issued -0- shares
- -
Preferred Stock, Series C, par value $1.00 per share, authorized 67
shares, issued -0- shares
- -
Common Stock, par value $.0001 per share, authorized 56,666,667
shares, issued 47,046,364 and 48,132,664 shares
4,704 4,813
Additional paid-in capital 7,005,553 7,411,172
Accumulated deficit   (186,854 )   (2,266,030 )
Total Stockholders' Equity   6,823,403     5,149,955  
Total Liabilities and Stockholders' Equity $ 10,432,701   $ 9,367,474  
 
   

CAPSTONE COMPANIES, INC. AND SUBSIDIARIES

CONSOLIDATED STATEMENTS OF CASH FLOWS

 
For the Years Ended
December 31,
2017     2016
CASH FLOWS FROM OPERATING ACTIVITIES:
 
Net income $ 2,079,176 $ 2,821,088
Adjustments necessary to reconcile net income to net cash provided
by (used in) operating activities:
Depreciation and amortization 80,940 63,678
Accrued interest on note receivable 26,887 (26,887 )
Stock based compensation expense 95,469 67,057
Provision for deferred income tax 35,000 216,000
Increase (decrease) in accrued sales allowance (1,006,731 ) 527,502
Decrease in accounts receivable 1,090,898 100,501
(Increase) decrease in inventory 225,696 (160,623 )
Decrease in prepaid expenses 90,869 236,441
(Increase) in other assets (1,423 ) -
Increase in accounts payable and accrued liabilities 55,306 513,926
Increase (decrease) in accrued income tax payable 623,194 (5,912 )
Increase (decrease) in accrued interest on notes payable   56,554     (148,367 )
Net cash provided by operating activities   3,451,835     4,204,404  
 
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment   (47,587 )   (53,510 )
Net cash (used in) investing activities   (47,587 )   (53,510 )
 
CASH FLOWS FROM FINANCING ACTIVITIES:
Proceeds from notes payable 30,559,312 27,856,207
Repayments of notes payable (30,559,312 ) (30,131,741 )
Repurchase of shares from Involve, LLC (250,000 ) -
Warrants issued 7,500 -
Proceeds from notes and loans payable to related parties - 860,000
Repayments of notes and loans payable to related parties   (1,139,680 )   (1,453,946 )
Net cash (used in) financing activities   (1,382,180 )   (2,869,480 )
 
Net increase in Cash and Cash Equivalents 2,022,068 1,281,414
Cash and Cash Equivalents at Beginning of Year   1,646,128     364,714  
Cash and Cash Equivalents at End of Year $ 3,668,196   $ 1,646,128  
 
 
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
Cash paid during the year for:
Interest $ 418,925   $ 429,814  
Income taxes $ 371,500   $ 56,912  
 
Non-cash financing activities:
Sale of Investment for Note receivable $ -   $ 500,000  
 
Shares issued in satisfaction of loan payable to related party $ 240,900   $ -  
 
Note receivable used to repurchase shares from Involve L.L.C. $ 500,000   $ -  
 

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