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8-K - CAPSTONE COMPANIES, INC.form8k092217.htm
 MICROCAP LEADERSHIP SUMMITInvestor PresentationFriday, September 22, 2017    OTCQB: CAPC  Stewart WallachPresident & CEOAimee GaudetCorporate Secretary 
 

 This presentation 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 risk that the audit could cause results to differ materially from what is presented within and 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 presentation.  SAFE HARBOR 
 

 Creating and Delivering LED Lighting for Consumers Worldwide  Recent Price  $0.495  Shares outstanding (millions)  47.0  Market Capitalization (millions)  $23.3  Float (millions)  24.0  Avg. daily volume (3 mo., thousands)  25.2  Insider ownership  41.2%  Book value per share  $0.129  2016 Revenue (millions)  $30.6  2014 – 2016 revenue CAGR* 50.0%        CAPC INVESTMENT OPPORTUNITY SUMMARY  Market data is as of 09/13/2017; ownership is as of latest filing; book value per share is as of 06/30/2017* Compound Annual Growth Rate  All 2017 financial data in this presentation is preliminary and unaudited. 
 

 Decorative & AestheticAccent LightingBath Vanity LightingSconcesUnder Cabinet LightingOutdoor FixturesPower FailureTurns on when the power goes outSafety & SecurityMotion Sensor LightingNight Lights  DIVERSE CONSUMER LED LIGHTING PRODUCTS 
 

 POWER FAILURE TECHNOLOGY  Capstone Power Control (“CPC”) technology makes solid state lighting “Power Failure” readyLED bulb with patented technology (Patent Number – 9,425,649 / Issued August 23, 2016)CPC is a proprietary detection solution and on/off and switchable back-up battery lighting technologyConserves power during prolonged outagesNo impact on aesthetic of lighting fixture   Turns on whenthe power goes out 
 

   BUILDING A LEADER IN LED LIGHTING  Growing Global LED lighting market Expected to grow to ~$42 billion by 2020*Annual growth rate of approximately 13.5%*Expanding offerings into all categories of LED home lightingFocused on product opportunities where Capstone provides a perceptible differenceLeveraging product successes & momentumOngoing development of innovative and advanced ideas and conceptsBranding Strategy: Establishing multiple trusted brandsCapstone LightingDuracellHoover Home LED   * Source: Allied Market Research, September 2014 Global Light Emitting Diode Market Report  13.5% Annual Growth*  GLOBALLED LIGHTINGMARKET  By 2020$42 BILLION 
 

 EXPANDING RETAIL POSITION THROUGH BRANDING STRATEGY 
 

 Low cost offshore manufacturingManufacturing partners held to compliance, security and equipment evaluation auditsCapstone Hong Kong based team manages and oversees all QA/QC testingOn demand manufacturing and importingBenefits working capitalU.S. warehouse provides capacity for minimal onshore stocking and service as required  DIRECT IMPORT BUSINESS MODEL 
 

 GLOBAL CUSTOMERS & END MARKETS  International MarketsAustraliaFranceIcelandJapanMexicoNew ZealandNorth AmericaSouth KoreaSpainTaiwanThailandUnited Kingdom 
 

 Exceeded $30 million in revenue for 2016Expanded product placementAccent LightingCPC BulbGooseneck Lighting FixtureMotion Sensor LightingMulti-Function Bath Vanity Lighting FixtureProduct roadmap looking forward to 2018-2019 Gross margin defined by cost of manufacturing and promotional allowances  RAPID GROWTH  Annual Revenue   Annual Gross Profit & Margin  ($ in thousands) 
 

 SIGNIFICANT OPERATING LEVERAGE  Annual Operating Profit & Margin  ($ in thousands)  Annual Net (Loss) Income  Strong operating leverage on higher salesInterest expense impact:2014: $328 thousand2015: $317 thousand2016: $281 thousand 
 

 SETTING NEW RECORDS  20.0%  29.5%  23.9%  12.7%  7.6%  12.2%  Expanded product portfolio drives record setting revenue and gross profitSeasonality: Promotional scheduling typically dampens Q1 results and drives stronger Q2 and Q3  ($ in thousands)  All 2017 financial data in this presentation is preliminary and unaudited.     Q1 2016  Q2 2016  Q3 2016  Q4 2016  Q1 2017  Q2 2017  Quarterly Revenue  $2,078  $8,902  $11,692  $7,958  $6,752  $10,220                       Quarterly Gross Profit   $ 614    $ 2,129    $ 2,851    $ 1,804    $ 1,579    $ 2,643   % to Revenue  29.5%  23.9%  24.4%  22.7%  23.4%  25.9%  Quarterly Income Before Taxes   $ (99)   $ 1,095    $ 1,514    $ 578    $ 379    $ 1,303   % to Revenue  -4.8%  12.3%  12.9%  7.3%  5.6%  12.7%  Quarterly Net Income   $ (99)   $ 1,082    $ 1,490    $ 348    $ 251    $ 901   % to Revenue  -4.76%  12.15%  12.74%  4.37%  3.72%  8.82% 
 

 Net working capital = (current assets – cash) – (current liabilities – short term debt). Average net working capital is used in calculations.EBITDA is a non-GAAP financial measure. Please see supplemental slides for a reconciliation of GAAP Net Income to EBITDA and other important disclosures regarding the company’s use of EBITDAAs of June 30, 2017  BALANCE SHEET  Strong cash generation and financial flexibilityLow working capital requirementsInitiated stock buy back program in 2016Authorized $750kExtended through 2017Repurchased 1.667 mm shares through April 2017  Net Working Capital as a % of Sales(1)   Total Debt & Stockholders’ Equity  Total Debt to EBITDA(2)  ($ in thousands)  All 2017 financial data in this presentation is preliminary and unaudited.  (3) 
 

 Rapidly growing LED lighting companyDesigns and engineers unique productswith broad consumer appealUntapped intellectual property andlicensing opportunitiesHoover® license agreement and partnerships accelerate end-user adoption Industry leaders with over 100 yearsof combined experience in internationalbusiness and offshore manufacturingEstablished relationships with large retailersLow cost manufacturing → Strong margin profile Direct import distribution → Low working capital  KEY TAKEAWAYS 
 

 MICROCAP LEADERSHIP SUMMITInvestor PresentationFriday, September 22, 2017    OTCQB: CAPC 
 

 SUPPLEMENTAL SLIDES 
 

 COMPETITIVE LANDSCAPE  Highly competitive LED lighting market with several large global manufacturers specifically bulb manufacturersRecognized CompetitionAmertacFeitInternational Development GroupJascoPrivate-label lighting offered by large retailers impacts market in some geographic regions 
 

 The Company believes EBITDA, a non-GAAP financial measure, is often a useful measure of a Company’s operating performance and is a significant basis used by the Company’s management to measure the operating performance of the Company’s business because EBITDA excludes charges for depreciation and amortization, and interest expense resulting from our debt financings, as well as our provision for income tax expense. EBITDA does not represent and should not be considered as an alternative to net income, operating income, net cash provided by operating activities or any other measure for determining operating performance or liquidity that is calculated in accordance with generally accepted accounting principles.   EBITDA RECONCILIATION  ($ in thousands)    Twelve Months Ended            Dec. 31, 2015    Dec. 31, 2016    6 Months Ended 06/30/17  Net Income   $ 699       $ 2,821      $ 1,152   Interest expense, net  317    255    44  Provision for income taxes  8    267    530  Depreciation and amortization  72    64    36  EBITDA   $ 1,096      $ 3,407      $ 1,762  
 

 350 Jim Moran Blvd. Suite 120Deerfield Beach, FL 33442T: 954.570.8889 x 313 F: 954.570.6678www.capstonecompaniesinc.com  CONTACT  Stewart WallachPresident & CEO  The attached designs and marketing information are the property of Capstone Industries, Inc.  Disclosure of the following confidential information, not for the intended recipients, is strictly prohibited without prior approval.