Capstone Companies Inc (CAPC)

[rado]

I listened to the conference call. The management sounded very happy with their performance. The lowered margins had to do with promotions. They said increasing sales requires advertising and giving rebates. They felt the increase in sales was because of their rebates granted and they felt they got a good deal on the increased visibility of their products by giving the rebates. CEO has a personal target of getting the company to $100 Million in sales. CEO said he only wants to compete in niche products and never in commodity products and he said that is what he has been doing at CAPC and all of his prior experience at other companies. He said that using a known brand like Duracell needs to give them at least a 25% lift in sales over selling as the Capstone brand or it is not worth licensing the brand name. He said they were currently evaluating whether they were getting the appropriate lift with using the Duracell name. He was very excited about the new product they have. He wanted to announce the product in this conference call but they have a few things they have to flesh out in the new product before giving it over to robust consumer level testing. He had the new product sitting on his desk during the conference call. The new product has been in development for about a year. It is a more technological lifestyle product. It requires software development. He didn't say what it was, but my impression is that it is some sort of smart home product, possibly something that you access through an app on your phone. It is not a common product but something innovative where there aren't many competitors and they are bringing it mainstream. He said they have been planning this for a year and his research and data gives him the confidence that the new product will do well and he said they are very excited about it. I would guess based on what he said that the new product will be announced during the coming quarter or on next quarters conference call.