Florida
|
84-1047159
|
(State or other jurisdiction of incorporation or organization)
|
(I.R.S. Employer Identification No.)
|
431 Fairway Drive, Suite 200, Deerfield Beach, Florida 33441
|
(Address of principal executive offices)
|
(954) 570-8889 extension 313
|
(Issuer's Telephone Number)
|
Large accelerated filer [_]
|
Accelerated filer [_]
|
Non-accelerated filer [_]
(Do not check if a smaller reporting company)
|
Smaller reporting company [x]
|
Emerging Growth company [ ]
|
PART 1
|
FINANCIAL INFORMATION
|
3
|
Item 1.
|
Financial Statements (Unaudited)
|
3
|
Item 2.
|
Management's Discussion and Analysis of Financial Condition and Results of Operation
|
21
|
Item 3.
|
Quantitative and Qualitative Disclosures about Market Risk
|
41
|
Item 4.
|
Controls and Procedures
|
41
|
PART II
|
Other Information
|
42
|
Item 1.
|
Legal Proceedings
|
42
|
Item 1A.
|
Risk Factors
|
43
|
Item 2.
|
Unregistered Sale of Equity Securities and Use of Proceeds
|
43
|
Item 3.
|
Defaults of Senior Securities
|
43
|
Item 4.
|
Mine Safety Disclosures
|
43
|
Item 5.
|
Other Information
|
43
|
Item 6.
|
Exhibits
|
43
|
CAPSTONE COMPANIES, INC. AND SUBSIDIARIES
|
||||||||
CONSOLIDATED BALANCE SHEETS
|
||||||||
June 30,
|
December 31,
|
|||||||
2018
|
2017
|
|||||||
Assets:
|
(Unaudited)
|
|||||||
Current Assets:
|
||||||||
Cash
|
$
|
2,760,994
|
$
|
3,668,196
|
||||
Accounts receivable, net
|
2,023,474
|
4,367,721
|
||||||
Other receivables
|
78,250
|
-
|
||||||
Inventories
|
8,316
|
140,634
|
||||||
Prepaid expenses
|
787,165
|
239,150
|
||||||
Income tax refundable
|
346,912
|
-
|
||||||
Total Current Assets
|
6,005,111
|
8,415,701
|
||||||
Property and Equipment:
|
||||||||
Computer equipment and software
|
52,649
|
9,895
|
||||||
Machinery and equipment
|
395,600
|
318,801
|
||||||
Furniture and fixtures
|
11,834
|
5,665
|
||||||
Less: Accumulated depreciation
|
(285,262
|
)
|
(266,997
|
)
|
||||
Total Property & Equipment
|
174,821
|
67,364
|
||||||
Other Non-current Assets:
|
||||||||
Deposit
|
14,312
|
13,616
|
||||||
Goodwill
|
1,936,020
|
1,936,020
|
||||||
Total Other Non-current Assets
|
1,950,332
|
1,949,636
|
||||||
Total Assets
|
$
|
8,130,264
|
$
|
10,432,701
|
||||
Liabilities and Stockholders' Equity:
|
||||||||
Current Liabilities:
|
||||||||
Accounts payable and accrued liabilities
|
$
|
1,510,687
|
$
|
2,733,516
|
||||
Income tax payable
|
11,694
|
624,782
|
||||||
Total Current Liabilities
|
1,522,381
|
3,358,298
|
||||||
Long Term Liabilities:
|
||||||||
Deferred tax liabilities
|
269,000
|
251,000
|
||||||
Total Long Term Liabilities
|
269,000
|
251,000
|
||||||
Total Liabilities
|
1,791,381
|
3,609,298
|
||||||
Commitments and Contingencies (Note 4)
|
||||||||
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 shares
|
4,704
|
4,704
|
||||||
Additional paid-in capital
|
7,063,302
|
7,005,553
|
||||||
Accumulated deficit
|
(729,123
|
)
|
(186,854
|
)
|
||||
Total Stockholders' Equity
|
6,338,883
|
6,823,403
|
||||||
Total Liabilities and Stockholders' Equity
|
$
|
8,130,264
|
$
|
10,432,701
|
||||
The accompanying notes are an integral part of these consolidated financial statements.
|
CAPSTONE COMPANIES, INC. AND SUBSIDIARIES
|
||||||||||||||||
CONSOLIDATED STATEMENTS OF OPERATIONS
|
||||||||||||||||
(Unaudited)
|
||||||||||||||||
For the Three Months Ended
|
For the Six Months Ended
|
|||||||||||||||
June 30,
|
June 30,
|
|||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
Revenues, net
|
$
|
2,103,206
|
$
|
10,219,548
|
$
|
6,163,374
|
$
|
16,971,744
|
||||||||
Cost of sales
|
1,742,486
|
7,576,685
|
4,783,384
|
12,749,413
|
||||||||||||
Gross Profit
|
360,720
|
2,642,863
|
1,379,990
|
4,222,331
|
||||||||||||
Operating Expenses:
|
||||||||||||||||
Sales and marketing
|
115,547
|
564,519
|
478,608
|
941,275
|
||||||||||||
Compensation
|
369,749
|
353,904
|
744,858
|
713,706
|
||||||||||||
Professional fees
|
142,900
|
115,381
|
291,786
|
320,183
|
||||||||||||
Product development
|
123,766
|
66,447
|
290,332
|
138,473
|
||||||||||||
Other general and administrative
|
166,676
|
204,063
|
340,965
|
382,681
|
||||||||||||
Total Operating Expenses
|
918,638
|
1,304,314
|
2,146,549
|
2,496,318
|
||||||||||||
Operating Income (Loss)
|
(557,918
|
)
|
1,338,549
|
(766,559
|
)
|
1,726,013
|
||||||||||
Other Income (Expense):
|
||||||||||||||||
Miscellaneous income
|
147,290
|
-
|
147,290
|
-
|
||||||||||||
Interest income
|
-
|
-
|
-
|
12,945
|
||||||||||||
Interest expense
|
-
|
(35,186
|
)
|
-
|
(56,917
|
)
|
||||||||||
Total Other (Expense)
|
147,290
|
(35,186
|
)
|
147,290
|
(43,972
|
)
|
||||||||||
Income (Loss) Before Tax Provision (Benefit)
|
(410,628
|
)
|
1,303,363
|
(619,269
|
)
|
1,682,041
|
||||||||||
Provision (Benefit) for Income Tax
|
(59,000
|
)
|
402,000
|
(77,000
|
)
|
530,000
|
||||||||||
Net Income (Loss)
|
$
|
(351,628
|
)
|
$
|
901,363
|
$
|
(542,269
|
)
|
$
|
1,152,041
|
||||||
Net Income (Loss) per Common Share
|
||||||||||||||||
Basic
|
$
|
(0.007
|
)
|
$
|
0.019
|
$
|
(0.012
|
)
|
$
|
0.024
|
||||||
Diluted
|
$
|
(0.007
|
)
|
$
|
0.019
|
$
|
(0.012
|
)
|
$
|
0.024
|
||||||
Weighted Average Shares Outstanding
|
||||||||||||||||
Basic
|
47,046,364
|
46,694,058
|
47,046,364
|
47,155,592
|
||||||||||||
Diluted
|
47,046,364
|
47,055,446
|
47,046,364
|
47,473,829
|
||||||||||||
The accompanying notes are an integral part of these consolidated financial statements.
|
CAPSTONE COMPANIES, INC. AND SUBSIDIARIES
|
||||||||
CONSOLIDATED STATEMENTS OF CASH FLOWS
|
||||||||
(Unaudited)
|
||||||||
For the Six Months Ended
|
||||||||
June 30,
|
||||||||
2018
|
2017
|
|||||||
CASH FLOWS FROM OPERATING ACTIVITIES:
|
||||||||
Net income (loss)
|
$
|
(542,269
|
)
|
$
|
1,152,041
|
|||
Adjustments necessary to reconcile net income (loss) to net cash provided by (used in) operating activities:
|
||||||||
Depreciation and amortization
|
18,266
|
35,551
|
||||||
Accrued interest on note receivable
|
-
|
(12,945
|
)
|
|||||
Stock based compensation expense
|
57,750
|
40,950
|
||||||
Provision for deferred income tax
|
18,000
|
138,000
|
||||||
Increase (decrease) in accrued sales allowance
|
41,645
|
(20,848
|
)
|
|||||
(Increase) decrease in accounts receivable, net
|
2,302,602
|
(450,713
|
)
|
|||||
(Increase) other receivables
|
(78,250
|
)
|
-
|
|||||
Decrease in inventories
|
132,318
|
99,064
|
||||||
(Increase) in prepaid expenses
|
(548,017
|
)
|
(1,032,565
|
)
|
||||
(Increase) in deposits
|
(696
|
)
|
-
|
|||||
Increase (decrease) in accounts payable and accrued liabilities
|
(1,222,828
|
)
|
111,954
|
|||||
(Decrease) in income tax payable
|
(613,088
|
)
|
-
|
|||||
(Increase) in income tax refundable
|
(346,912
|
)
|
-
|
|||||
(Decrease) in accrued interest on notes payable
|
-
|
(44,837
|
)
|
|||||
Net cash provided by (used in) operating activities
|
(781,479
|
)
|
15,652
|
|||||
CASH FLOWS FROM INVESTING ACTIVITIES:
|
||||||||
Purchase of property and equipment
|
(125,723
|
)
|
(14,784
|
)
|
||||
Net cash (used in) investing activities
|
(125,723
|
)
|
(14,784
|
)
|
||||
CASH FLOWS FROM FINANCING ACTIVITIES:
|
||||||||
Proceeds from notes payable
|
11,347,367
|
16,566,081
|
||||||
Repayments of notes payable
|
(11,347,367
|
)
|
(16,566,081
|
)
|
||||
Repurchase of shares from Involve, LLC
|
-
|
(250,000
|
)
|
|||||
Repayments of notes and loans payable to related parties
|
-
|
(223,000
|
)
|
|||||
Net cash (used in) financing activities
|
-
|
(473,000
|
)
|
|||||
Net (Decrease) in Cash and Cash Equivalents
|
(907,202
|
)
|
(472,132
|
)
|
||||
Cash and Cash Equivalents at Beginning of Period
|
3,668,196
|
1,646,128
|
||||||
Cash and Cash Equivalents at End of Period
|
$
|
2,760,994
|
$
|
1,173,996
|
||||
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
|
||||||||
Cash paid during the period for:
|
||||||||
Interest
|
$
|
-
|
$
|
101,755
|
||||
Income taxes
|
$
|
865,000
|
$
|
371,500
|
||||
The accompanying notes are an integral part of these consolidated financial statements.
|
June 30,
|
December 31,
|
|||||||
2018
|
2017
|
|||||||
Trade Accounts Receivables at period end
|
$
|
2,259,180
|
$
|
4,561,782
|
||||
Reserve for estimated marketing allowances, cash discounts and other incentives
|
(235,706
|
)
|
(194,061
|
)
|
||||
Total Accounts Receivable, net
|
$
|
2,023,474
|
$
|
4,367,721
|
June 30,
|
December 31,
|
|||||||
2018
|
2017
|
|||||||
Balance at beginning of the period
|
$
|
(194,061
|
)
|
$
|
(1,200,792
|
)
|
||
Accrued allowances
|
(62,280
|
)
|
(921,833
|
)
|
||||
Reversal of prior year accrued allowances
|
1,749
|
58,867
|
||||||
Expenditures
|
18,886
|
1,869,697
|
||||||
Balance at period-end
|
$
|
(235,706
|
)
|
$
|
(194,061
|
)
|
3 months ended
|
3 months ended
|
|||||||
June 30, 2018
|
June 30, 2017
|
|||||||
Basic weighted average shares outstanding
|
47,046,364
|
46,694,058
|
||||||
Dilutive warrants
|
-
|
361,388
|
||||||
Diluted weighted average shares outstanding
|
47,046,364
|
47,055,446
|
6 months ended
|
6 months ended
|
|||||||
June 30, 2018
|
June 30, 2017
|
|||||||
Basic weighted average shares outstanding
|
47,046,364
|
47,155,592
|
||||||
Dilutive warrants
|
-
|
318,237
|
||||||
Diluted weighted average shares outstanding
|
47,046,364
|
47,473,829
|
For the 3 Months Ended June 30, 2018
|
For the 3 Months Ended June 30, 2017
|
|||||||||||||||||||||||
Capstone Brand
|
License Brands
|
Total Consolidated
|
Capstone Brand
|
License Brands
|
Total Consolidated
|
|||||||||||||||||||
Lighting Products- U.S.
|
$
|
1,693,480
|
$
|
264,472
|
$
|
1,957,952
|
$
|
2,597,529
|
$
|
7,125,295
|
$
|
9,722,824
|
||||||||||||
Lighting Products-International
|
31,080
|
114,174
|
145,254
|
496,724
|
-
|
496,724
|
||||||||||||||||||
Total Revenue
|
$
|
1,724,560
|
$
|
378,646
|
$
|
2,103,206
|
$
|
3,094,253
|
$
|
7,125,295
|
$
|
10,219,548
|
For the 6 Months Ended June 30, 2018
|
For the 6 Months Ended June 30, 2017
|
|||||||||||||||||||||||
Capstone Brand
|
License Brands
|
Total Consolidated
|
Capstone Brand
|
License Brands
|
Total Consolidated
|
|||||||||||||||||||
Lighting Products- U.S.
|
$
|
1,841,781
|
$
|
3,859,253
|
$
|
5,701,034
|
$
|
3,304,724
|
$
|
12,586,213
|
$
|
15,890,937
|
||||||||||||
Lighting Products-International
|
196,974
|
265,366
|
462,340
|
1,080,807
|
-
|
1,080,807
|
||||||||||||||||||
Total Revenue
|
$
|
2,038,755
|
$
|
4,124,619
|
$
|
6,163,374
|
$
|
4,385,531
|
$
|
12,586,213
|
$
|
16,971,744
|
June 30,
|
December 31,
|
|||||||
2018
|
2017
|
|||||||
Balance at the beginning of the period
|
$
|
328,279
|
$
|
294,122
|
||||
Amount accrued
|
41,871
|
940,291
|
||||||
Amount expensed
|
(175,765
|
)
|
(906,134
|
)
|
||||
Balance at period-end
|
$
|
194,385
|
$
|
328,279
|
June 30,
|
December 31,
|
|||||||
2018
|
2017
|
|||||||
Accounts payable
|
$
|
1,186,462
|
$
|
2,132,894
|
||||
Accrued warranty reserve
|
194,385
|
328,279
|
||||||
Accrued compensation, benefits, commissions and other expenses
|
129,840
|
272,343
|
||||||
Total accrued liabilities
|
324,225
|
600,622
|
||||||
Total
|
$
|
1,510,687
|
$
|
2,733,516
|
Net Revenue %
|
Net Accounts Receivable
|
|||||||||||||||
For the Six Months ended
|
As of
|
As of
|
||||||||||||||
June 30,
|
June 30,
|
December 31,
|
||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
Customer A
|
51.6
|
%
|
50.2
|
%
|
$
|
2,232,854
|
$
|
2,259,769
|
||||||||
Customer B
|
44.5
|
%
|
49.1
|
%
|
-
|
2,268,426
|
||||||||||
Total
|
96.1
|
%
|
99.3
|
%
|
$
|
2,232,854
|
$
|
4,528,195
|
Purchases %
|
Accounts Payable
|
|||||||||||||||
For the Six Months ended
|
As of
|
As of
|
||||||||||||||
June 30,
|
June 30,
|
December 31,
|
||||||||||||||
2018
|
2017
|
2018
|
2017
|
|||||||||||||
Vendor A
|
92.3
|
%
|
97.1
|
%
|
$
|
1,115,720
|
$
|
922,310
|
||||||||
Vendor B
|
-
|
%
|
-
|
%
|
-
|
768,164
|
||||||||||
Total
|
92.3
|
%
|
97.1
|
%
|
$
|
1,115,720
|
$
|
1,690,474
|
2018
|
2017
|
|||||||
Current:
|
||||||||
Federal
|
$
|
(53,000
|
)
|
$
|
392,000
|
|||
State
|
(15,000
|
)
|
-
|
|||||
Deferred:
|
||||||||
Federal
|
8,500
|
10,000
|
||||||
State
|
500
|
-
|
||||||
Income Tax Provision (Benefit)
|
$
|
(59,000
|
)
|
$
|
402,000
|
2018
|
2017
|
|||||||
Current:
|
||||||||
Federal
|
$
|
(74,000
|
)
|
$
|
392,000
|
|||
State
|
(21,000
|
)
|
-
|
|||||
Deferred:
|
||||||||
Federal
|
17,000
|
138,000
|
||||||
State
|
1,000
|
-
|
||||||
Income Tax Provision (Benefit)
|
$
|
(77,000
|
)
|
$
|
530,000
|
(1) |
"Capstone Lighting Technologies, L.L.C." or "CLTL" is a Florida limited liability company and a wholly owned subsidiary of Capstone Companies, Inc.
|
(2) |
"Capstone International Hong Kong Ltd" or "CIHK" is a company organized under Hong Kong SAR laws and a wholly owned subsidiary of Capstone Companies, Inc. and a Hong Kong SAR registered Company.
|
(3) |
"Capstone Industries, Inc.", a Florida corporation and a wholly owned subsidiary of CAPC, may also be referred to as "CAPI" or "Capstone".
|
(4) |
"Capstone Companies, Inc.," a Florida corporation, may also be referred to as "we," "us" "our," "Company," or "CAPC." Unless the context indicates otherwise, "Company" includes in its meaning all of Capstone Companies, Inc.'s subsidiaries, unless the context indicates otherwise.
|
(5) |
"China" or "PRC" means People's Republic of China.
|
(6) |
"Commission" or "SEC" means the U.S. Securities and Exchange Commission.
|
(7) |
References to "33 Act" or "Securities Act" means the Securities Act of 1933, as amended.
|
(8) |
References to "34 Act" or "Exchange Act" means the Securities Exchange Act of 1934, as amended.
|
(9) |
"Subsidiaries" means the above wholly owned subsidiaries of the Company.
|
(10) |
"LED" or "LED's" means a light-emitting diode component(s) which can be assembled into light bulbs or can be used in lighting fixtures.
|
·
|
As the LED lighting market begins to show signs of stabilizing and moderate growth, the Company plans to continue to strengthen its relationships and expand into other departments and other channels of distribution through its relationships and product line expansions.
|
·
|
We plan to continue to refine and improve our products portfolio and expand into other product segments through focused investment into the Company's research and development efforts.
|
·
|
By introducing new products and expanding sales of existing products and continuing to increase our sales volumes, we believe that we can continue to improve operational efficiency by further reducing cost of materials, components and manufacturing costs, allowing us to maintain very competitive price points in the market place.
|
·
|
Designed to make everyday tasks or usage simpler and more enjoyable for consumers;
|
·
|
While continuing to focus on increased profit margins, the products must be affordable to win at the point of sale and deliver increased revenues for retail partners;
|
·
|
The products must represent significant value when compared with items produced or marketed by competitive consumer product companies; and
|
·
|
Wherever feasible, the products must be unique to the market whether this be accomplished though design techniques, added functionality or some proprietary innovation.
|
·
|
Wireless Remote-Controlled LED Accent Lights
|
·
|
LED Under Cabinet Lights
|
·
|
LED Vanity Mirror
|
·
|
LED Gooseneck Lantern
|
·
|
LED Dual Mode Security Light
|
·
|
LED Solar Patio Lights
|
·
|
LED Motion Sensor Lights
|
·
|
LED Wall Utility Lights
|
·
|
CPC Power Failure Bulbs
|
·
|
Wireless Remote-Control Outlets
|
·
|
Raw Materials – Components and supplies are subject to sample inspections upon arrival at the contract manufacturer, to ensure the correct specified components are being used in production.
|
·
|
Work in Process – Our quality control team conducts quality control tests at different points during the product stages of our manufacturing process to ensure that quality integrity is maintained.
|
·
|
Finished Goods – Our team performs tests on finished and packaged products to assess product safety, integrity and package compliance.
|
·
|
hurricanes, fire, flood and other natural disasters;
|
·
|
power outages; and
|
·
|
internet, telecommunications or data network failure.
|
Three Months Ended June 30, 2018 Compared to the Three Months Ended June 30, 2017
|
||||||||||||||||
(In Thousands)
|
||||||||||||||||
June 30, 2018
|
June 30, 2017
|
|||||||||||||||
Dollars
|
% of Revenue
|
Dollars
|
% of Revenue
|
|||||||||||||
Revenue, net
|
$
|
2,103.2
|
100.0
|
%
|
$
|
10,219.5
|
100.0
|
%
|
||||||||
Cost of sales
|
1,742.5
|
82.8
|
%
|
7,576.6
|
74.1
|
%
|
||||||||||
Gross Profit
|
360.7
|
17.2
|
%
|
2,642.9
|
25.9
|
%
|
||||||||||
Operating Expenses:
|
||||||||||||||||
Sales and marketing
|
115.5
|
5.5
|
%
|
564.5
|
5.5
|
%
|
||||||||||
Compensation
|
369.7
|
17.6
|
%
|
353.9
|
3.5
|
%
|
||||||||||
Professional fees
|
142.9
|
6.8
|
%
|
115.4
|
1.1
|
%
|
||||||||||
Product development
|
123.8
|
5.9
|
%
|
66.4
|
.6
|
%
|
||||||||||
Other general and administrative
|
166.7
|
7.9
|
%
|
204.1
|
2.0
|
%
|
||||||||||
Total Operating Expenses
|
918.6
|
43.7
|
%
|
1,304.3
|
12.8
|
%
|
||||||||||
Operating Income (Loss)
|
(557.9
|
)
|
(26.5
|
)%
|
1,338.6
|
13.1
|
%
|
|||||||||
Other Income (Expense)
|
||||||||||||||||
Miscellaneous income
|
147.3
|
7.0
|
%
|
-
|
-
|
%
|
||||||||||
Interest expense
|
-
|
-
|
(35.2
|
)
|
(.3
|
)%
|
||||||||||
Total Other Income (Expense)
|
147.3
|
7.0
|
%
|
(35.2
|
)
|
(.3
|
)%
|
|||||||||
Income (Loss) Before Tax Provision (Benefit)
|
(410.6
|
)
|
(19.5
|
)%
|
1,303.4
|
12.8
|
%
|
|||||||||
Provision (Benefit) for Income Tax
|
(59.0
|
)
|
(2.8
|
)%
|
402.0
|
3.9
|
%
|
|||||||||
Net Income (Loss)
|
$
|
(351.6
|
)
|
(16.7
|
)%
|
$
|
901.4
|
8.8
|
%
|
Six Months Ended June 30, 2018 Compared to the Six Months Ended June 30, 2017
|
||||||||||||||||
(In Thousands)
|
||||||||||||||||
June 30, 2018
|
June 30, 2017
|
|||||||||||||||
Dollars
|
% of Revenue
|
Dollars
|
% of Revenue
|
|||||||||||||
Revenue, net
|
$
|
6,163.4
|
100.0
|
%
|
$
|
16,971.7
|
100.0
|
%
|
||||||||
Cost of sales
|
4,783.4
|
77.6
|
%
|
12,749.4
|
75.1
|
%
|
||||||||||
Gross Profit
|
1,380.0
|
22.4
|
%
|
4,222.3
|
24.9
|
%
|
||||||||||
Operating Expenses:
|
||||||||||||||||
Sales and marketing
|
478.6
|
7.8
|
%
|
941.3
|
5.5
|
%
|
||||||||||
Compensation
|
744.9
|
12.1
|
%
|
713.7
|
4.2
|
%
|
||||||||||
Professional fees
|
291.8
|
4.7
|
%
|
320.2
|
1.9
|
%
|
||||||||||
Product development
|
290.3
|
4.7
|
%
|
138.4
|
.8
|
%
|
||||||||||
Other general and administrative
|
341.0
|
5.5
|
%
|
382.7
|
2.3
|
%
|
||||||||||
Total Operating Expenses
|
2,146.6
|
34.8
|
%
|
2,496.3
|
14.7
|
%
|
||||||||||
Operating Income (Loss)
|
(766.6
|
)
|
(12.4
|
)%
|
1,726.0
|
10.2
|
%
|
|||||||||
Other Income (Expense)
|
||||||||||||||||
Miscellaneous income
|
147.3
|
2.4
|
%
|
-
|
-
|
%
|
||||||||||
Interest income
|
-
|
-
|
%
|
12.9
|
.01
|
%
|
||||||||||
Interest expense
|
-
|
-
|
%
|
(56.9
|
)
|
(.3
|
)%
|
|||||||||
Total Other Income (Expense)
|
147.3
|
2.4
|
%
|
(44.0
|
)
|
(.3
|
)%
|
|||||||||
Income (Loss) Before Tax Provision (Benefit)
|
(619.3
|
)
|
(10.0
|
)
%
|
1,682.0
|
9.9
|
%
|
|||||||||
Provision (Benefit) for Income Tax
|
(77.0
|
)
|
(1.2
|
)
%
|
530.0
|
3.1
|
%
|
|||||||||
Net Income (Loss)
|
$
|
(542.3
|
)
|
(8.8
|
)%
|
$
|
1,152.0
|
6.8
|
%
|
For the 3 Months Ended June 30, 2018
|
For the 3 Months Ended June 30, 2017
|
|||||||||||||||||||||||
Capstone Brand
|
License Brands
|
Total Consolidated
|
Capstone Brand
|
License Brands
|
Total Consolidated
|
|||||||||||||||||||
Lighting Products- U.S.
|
$
|
1,693,480
|
$
|
264,472
|
$
|
1,957,952
|
$
|
2,597,529
|
$
|
7,125,295
|
$
|
9,722,824
|
||||||||||||
Lighting Products-International
|
31,080
|
114,174
|
145,254
|
496,724
|
-
|
496,724
|
||||||||||||||||||
Total Revenue
|
$
|
1,724,560
|
$
|
378,646
|
$
|
2,103,206
|
$
|
3,094,253
|
$
|
7,125,295
|
$
|
10,219,548
|
For the 6 Months Ended June 30, 2018
|
For the 6 Months Ended June 30, 2017
|
|||||||||||||||||||||||
Capstone Brand
|
License Brands
|
Total Consolidated
|
Capstone Brand
|
License Brands
|
Total Consolidated
|
|||||||||||||||||||
Lighting Products- U.S.
|
$
|
1,841,781
|
$
|
3,859,253
|
$
|
5,701,034
|
$
|
3,304,724
|
$
|
12,586,213
|
$
|
15,890,937
|
||||||||||||
Lighting Products-International
|
196,974
|
265,366
|
462,340
|
1,080,807
|
-
|
1,080,807
|
||||||||||||||||||
Total Revenue
|
$
|
2,038,755
|
$
|
4,124,619
|
$
|
6,163,374
|
$
|
4,385,531
|
$
|
12,586,213
|
$
|
16,971,744
|
For the Six Months ended June 30,
|
||||||||
Summary of Cash Flows
|
2018
|
2017
|
||||||
(In thousands)
|
||||||||
Net cash provided by (used in):
|
||||||||
Operating Activities
|
$
|
(781
|
)
|
$
|
16
|
|||
Investing Activities
|
(126
|
)
|
(15
|
)
|
||||
Financing Activities
|
-
|
(473
|
)
|
|||||
Net increase (decrease) in cash and cash equivalents
|
$
|
(907
|
)
|
$
|
(472
|
)
|
·
|
The possibility of expropriation, confiscatory taxation or price controls;
|
·
|
Adverse changes in local investment or exchange control regulations;
|
·
|
Political or economic instability, government nationalization of business or industries, government corruption, and civil unrest;
|
·
|
Legal and regulatory constraints;
|
·
|
Tariffs and other trade barriers, including trade disputes between the U.S. and China;
|
·
|
Political or military conflict between the U.S. and China, or between U.S. and North Korea, resulting in adverse or restricted access by U.S.-based companies to Chinese manufacturing and markets.
|
·
|
Pertain to the maintenance of records that in reasonable detail accurately and fairly reflect the transactions and dispositions of the assets of the Company.
|
·
|
Provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management and directors of the Company; and
|
·
|
Provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of the Company's assets that could have a material effect on the financial statements.
|
·
|
Because of its inherent limitations, internal control over financial reporting may not prevent or detect misstatements. Projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.
|
EXHIBIT #
|
EXHIBIT TITLE
|
/s/ Stewart Wallach
|
|
Stewart Wallach
|
Chief Executive Officer
|
Principal Executive Officer
|
|
/s/James G. McClinton
|
|
James G. McClinton
|
Chief Financial Officer and Chief Operating Officer
|
Principal Financial
Executive and Accounting Officer
|
a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c) |
Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d) |
Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and
|
a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and
|
b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.
|
a) |
Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the small business issuer, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;
|
b) |
Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in accordance with generally accepted accounting principles;
|
c) |
Evaluated the effectiveness of the small business issuer's disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and
|
d) |
Disclosed in this report any change in the small business issuer's internal control over financial reporting that occurred during the small business issuer's most recent fiscal quarter (the small business issuer's fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the small business issuer's internal control over financial reporting; and
|
a) |
All significant deficiencies and material weaknesses in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the small business issuer's ability to record, process, summarize and report financial information; and
|
b) |
Any fraud, whether or not material, that involves management or other employees who have a significant role in the small business issuer's internal control over financial reporting.
|
(1) |
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2) |
the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
|
(1) |
the Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and
|
(2) |
the information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.
|
Document and Entity Information - shares |
6 Months Ended | |
---|---|---|
Jun. 30, 2018 |
Aug. 03, 2018 |
|
Document And Entity Information | ||
Entity Registrant Name | CAPSTONE COMPANIES, INC. | |
Entity Central Index Key | 0000814926 | |
Document Type | 10-Q | |
Document Period End Date | Jun. 30, 2018 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity a Well-known Seasoned Issuer? | No | |
Is Entity a Voluntary Filer? | No | |
Is Entity's Reporting Status Current? | Yes | |
Entity Filer Category | Smaller Reporting Company | |
Entity Common Stock, Shares Outstanding | 47,046,364 | |
Document Fiscal Period Focus | Q2 | |
Document Fiscal Year Focus | 2018 |
Consolidated Balance Sheets (Parenthetical) - $ / shares |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|
Common stock, par value per share | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 56,666,667 | 56,666,667 |
Common stock, shares issued | 47,046,364 | 47,046,364 |
Preferred Stock, Series A [Member] | ||
Preferred stock, par value per share | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 6,666,667 | 6,666,667 |
Preferred stock, shares issued | 0 | 0 |
Preferred Stock, Series B-1 [Member] | ||
Preferred stock, par value per share | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 3,333,333 | 3,333,333 |
Preferred stock, shares issued | 0 | 0 |
Preferred Stock, Series C [Member] | ||
Preferred stock, par value per share | $ 1.00 | $ 1.00 |
Preferred stock, shares authorized | 67 | 67 |
Preferred stock, shares issued | 0 | 0 |
Consolidated Statements Of Operations (Unaudited) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Income Statement [Abstract] | ||||
Revenues, net | $ 2,103,206 | $ 10,219,548 | $ 6,163,374 | $ 16,971,744 |
Cost of sales | 1,742,486 | 7,576,685 | 4,783,384 | 12,749,413 |
Gross Profit | 360,720 | 2,642,863 | 1,379,990 | 4,222,331 |
Operating Expenses: | ||||
Sales and marketing | 115,547 | 564,519 | 478,608 | 941,275 |
Compensation | 369,749 | 353,904 | 744,858 | 713,706 |
Professional fees | 142,900 | 115,381 | 291,786 | 320,183 |
Product development | 123,766 | 66,447 | 290,332 | 138,473 |
Other general and administrative | 166,676 | 204,063 | 340,965 | 382,681 |
Total Operating Expenses | 918,638 | 1,304,314 | 2,146,549 | 2,496,318 |
Operating Income (Loss) | (557,918) | 1,338,549 | (766,559) | 1,726,013 |
Other Income (Expense): | ||||
Miscellaneous income | 147,290 | 147,290 | ||
Interest income | 12,945 | |||
Interest expense | 35,186 | 56,917 | ||
Total Other (Expense) | 147,290 | (35,186) | 147,290 | (43,972) |
Income (Loss) Before Tax Provision (Benefit) | (410,628) | 1,303,363 | (619,269) | 1,682,041 |
Provision (Benefit) for Income Tax | (59,000) | 402,000 | (77,000) | 530,000 |
Net Income (Loss) | $ (351,628) | $ 901,363 | $ (542,269) | $ 1,152,041 |
Net Income (Loss) per Common Share | ||||
Basic | $ (0.007) | $ 0.019 | $ (0.012) | $ 0.024 |
Diluted | $ (0.007) | $ 0.019 | $ (0.012) | $ 0.024 |
Weighted Average Shares Outstanding | ||||
Basic | 47,046,364 | 46,694,058 | 47,046,364 | 47,155,592 |
Diluted | 47,046,364 | 47,055,446 | 47,046,364 | 47,473,829 |
Organization And Summary Of Significant Accounting Policies |
6 Months Ended | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Organization, Consolidation and Presentation of Financial Statements [Abstract] | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization and Summary of Significant Accounting Policies | NOTE 1 - ORGANIZATION AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES This summary of accounting policies for Capstone Companies, Inc. ("CAPC", "Capstone" or the "Company"), a Florida corporation (formerly, "CHDT Corporation") and its wholly-owned subsidiaries is presented to assist in understanding the Company's consolidated financial statements. The accounting policies conform to accounting principles generally accepted in the United States of America ("U.S. GAAP") and have been consistently applied in the preparation of the consolidated financial statements. Organization and Basis of Presentation The condensed consolidated financial statements contained in this report are unaudited. In the opinion of management, the condensed consolidated financial statements include all adjustments, which are of a normal recurring nature, necessary to present fairly the Company's financial position as of June 30, 2018 and results of operations and cash flows for the three months and six months ended June 30, 2018 and 2017. All significant intercompany accounts and transactions are eliminated in consolidation. These condensed consolidated financial statements and notes are presented in accordance with the rules and regulations of the United States Securities and Exchange Commission ("SEC") relating to interim financial statements and in conformity with U.S. GAAP. Certain information and note disclosures have been condensed or omitted in the condensed financial statements pursuant to SEC rules and regulations, although the Company believes that the disclosures made herein are adequate to make the information not misleading. The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes in the Company's Annual Report on Form 10-K for the year ended December 31, 2017 (the "2017 Annual Report"). The operating results for any interim period are not necessarily indicative of the operating results to be expected for any other interim period or the full fiscal year. Nature of Business Since the beginning of fiscal year 2007, the Company
has been primarily engaged in the business of developing, marketing and selling home LED products through national and regional
retailers in North America and in certain overseas markets. The Company's products are targeted for applications such as home
indoor and outdoor lighting and will have different functionalities to meet consumer's needs. These products may be offered
either under the Capstone brand or licensed brands. Accounts Receivable
For product revenue, the Company invoices its customers at the time of shipment for the sales value of the product shipped. Accounts receivable are recognized at the invoiced amount and are not subject to any interest or finance charges. The Company does not have any off-balance sheet credit exposure related to any of its customers. As of June 30, 2018 and December 31, 2017, accounts receivable serves as collateral for the Company's note payable.
The following table summarizes the changes in the Company's reserve for marketing allowances, cash discounts and other incentives which is included in net accounts receivable:
Marketing allowances include the cost of underwriting an in store instant rebate coupon or a target markdown allowance on a specific product. Cash discounts represent discounts offered to the retailer off outstanding accounts receivable in order to initiate early payment. Inventories The Company's inventory, recorded at lower of cost (first-in, first-out) or net realizable value, consists of finished goods for resale by Capstone, totaling $8,316 and $140,634 at June 30, 2018 and December 31, 2017, respectively. Prepaid Expenses The Company's prepaid expenses consist primarily of deposits on inventory purchases for future orders as well as prepaid insurance and trade show expense. Net Income Per Common Share Basic earnings per common share are computed by dividing net income by the weighted average number of shares of common stock outstanding for the reporting period. Diluted earnings per share reflects the potential dilution that would occur if securities or other contracts to issue common stock were exercised or converted into common stock. For calculation of the diluted net income per share, the basic weighted average number of shares is increased by the dilutive effect of stock options and warrants using the treasury stock method. In periods where losses are reported, the weighted average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive. At June 30, 2018 and 2017, the total number of potentially dilutive common stock equivalents excluded from the diluted earnings per share calculation was 783,335 and 1,516,670, respectively. Basic weighted average shares outstanding is reconciled to diluted weighted shares outstanding as follows:
Revenue Recognition The Company generates revenue from developing,
marketing and selling consumer lighting products through national and regional retailers. The Company's products are targeted
for applications such as home indoor and outdoor lighting and will have different functionalities. Capstone currently operates
in the consumer lighting products category in the Unites States and in certain overseas markets. These products may be offered
either under the Capstone brand or licensed brands. The following table disaggregates net revenue by major source:
We provide our customers with limited rights of
return for non-conforming product warranty claims. As a policy, the Company does not accept product returns from customers, however
occasionally as part of a customer's in store test for new product, we may receive back residual inventory.
The Company provides the end user
with limited rights of return as a consumer assurance warranty on all products sold, stipulating that the product will function
properly for the warranty period. The warranty period for all products is one year from the date of consumer purchase.
Advertising and Promotion Advertising and promotion costs, including advertising, public relations, and trade show expenses, are expensed as incurred and included in sales and marketing expenses. Advertising and promotion expense was $72,732 and $92,584 for the three months and $77,650 and $113,247 for the six months ended June 30, 2018 and 2017, respectively. Product Development Our research and development team located in Hong Kong working with our designated factories, are responsible for the design, development, testing, and certification of new product releases. Our engineering efforts support product development across all products, as well as product testing for specific overseas markets Product development expenses were $123,766 and $66,447 for the three months and $290,332 and $ 138,473 for the six months ended June 30, 2018 and 2017, respectively. Shipping and Handling The Company's shipping and handling costs are included in sales and marketing expenses and are recognized as an expense during the period in which they are incurred and amounted to $7,505 and $29,866 for the three months and $ 33,856 and $46,786 for the six months ended June 30, 2018 and 2017, respectively. Accounts Payable and Accrued Liabilities Accounts payable and accrued liabilities
contained in the accompanying consolidated balance sheets include accruals for estimated amounts of credits to be issued in future
years for potential warranty claims and various other expenses. As of June 30, 2018, and December 31, 2017, the Company has $324,225
and $600,622, respectively, in accrued liabilities.
Income Taxes
The Company accounts for income taxes under the provisions of Financial Accounting Standards Board ("FASB") Accounting Standard Codification ("ASC") 740 Income Taxes. ASC 740 requires recognition of deferred income tax assets and liabilities for the expected future income tax consequences, based on enacted tax laws, of temporary differences between the financial reporting and tax bases of assets and liabilities. The Company and its U.S. subsidiaries file consolidated income tax returns. On December 22, 2017, President
Trump signed into law the legislation generally known as Tax Cut and Jobs Act of 2017. The tax law includes significant changes
to the U.S. corporate tax systems including a rate reduction from 35% to 21% beginning in January of 2018, a change in the treatment
of foreign earnings going forward and a deemed repatriation transition tax. Refer to Note 6 for additional information on income
taxes. Stock-Based Compensation
The Company accounts for stock-based compensation
under the provisions of ASC 718 Compensation- Stock Compensation, which requires the measurement and recognition of compensation
expense for all share-based payment awards made to employees and directors, including employee stock options, based on estimated
fair values.
The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and the disclosure of contingent assets and liabilities. The Company evaluates its estimates on an ongoing basis, including those related to revenue recognition, product warranty obligations, valuation of inventories, tax related contingencies, valuation of stock-based compensation, other contingencies and litigation, among others. The Company generally bases its estimates on historical experience, agreed obligations, and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results could differ materially from those estimates.
Recent Accounting Standards To be Adopted in a Future Period
In February 2016, the FASB issued
ASU 2016-02, Leases ("ASU 2016-02"), which provides guidance for accounting for leases. ASU 2016-02 requires
lessees to classify leases as either finance or operating leases and to record a right-of-use asset and a lease liability for
all leases with a term greater than 12 months regardless of the lease classification. The lease classification will determine
whether the lease expense is recognized based on effective interest rate method or a straight-line basis over the term of the
lease. Accounting for lessors remains largely unchanged from current GAAP. ASU 2016-02 will be effective for the Company's fiscal
year beginning after December 15, 2018 and subsequent interim periods. The Company is currently evaluating the impact of the adoption
of ASU 2016-02 will have on the Company's consolidated financial statements. Adoption of New Accounting Standards
In May 2014, the FASB issued Accounting
Standards Update ("ASU") 2014-09, which provided guidance for revenue recognition. The standard's core principle was
that a company would recognize revenue when it transferred promised goods or services to customers in an amount that reflected
the consideration to which the company expected to be entitled in exchange for those goods or services. In doing so, companies
needed to use more judgment and make more estimates than under previous guidance. In August 2015, the FASB issued ASU 2015-14,
which deferred the effective date of ASU 2014-09 for all entities by one year. Accordingly, public business entities applied the
guidance in ASU 2014-09 to annual reporting periods (including interim periods within those periods) beginning after December
15, 2017.
The
adoption of ASC 606 did not have any impact on our operating cash flows. |
Concentration Of Credit Risk And Economic Dependence |
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Concentration of Credit Risk and Economic Dependence | NOTE 2 - CONCENTRATIONS OF CREDIT RISK AND ECONOMIC DEPENDENCE Financial instruments that potentially subject the Company to credit risk consist principally of cash and cash equivalents and accounts receivable. The Company has no significant off-balance-sheet concentrations of credit risk such as foreign exchange contracts, options contracts or other foreign hedging arrangements. Cash and Cash Equivalents The Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents, to the extent the funds are not being held for investment purposes. The Company at times has cash and cash equivalents with its financial institution in excess of Federal Deposit Insurance Corporation ("FIDC") insurance limits. The Company places its cash and cash equivalents with high credit quality financial institutions which minimize these risks. Accounts Receivable The Company grants credit to its customers, substantially all of whom are retail establishments located throughout the United States and their international locations. The Company typically does not require collateral from customers. Credit risk is limited due to the financial strength of the customers comprising the Company's customer base and their dispersion across different geographical regions. The Company monitors exposure of credit losses and maintains allowances for anticipated losses considered necessary under the circumstances. These various anticipated allowances are accrued for but would be deducted from open invoices by the customer. Major Customers The Company had two customers who comprised 51.6% and 44.5% of net revenue during the six months ended June 30, 2018 and 50.2% and 49.1% of net revenue during the six months ended June 30, 2017. The loss of these customers would adversely impact the business of the Company. For the six months ended June 30, 2018 and 2017, approximately 7.5% and 6.4%, respectively, of the Company's net revenue resulted from international sales. Major Customers
Major Vendors The Company had one vendor from which it purchased 92.3% and 97.1% of merchandise sold during the six months ended June 30, 2018 and 2017, respectively. The loss of this supplier could adversely impact the business of the Company. As of June 30, 2018 approximately 94.0 % of accounts payable was due to one vendor. As of December 31, 2017 approximately 79.3% was due to two vendors.
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Notes Payable And Subsequent Events |
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Jun. 30, 2018 | |
Debt Disclosure [Abstract] | |
Notes Payable and Subsequent Events | NOTE 3 – NOTES PAYABLE AND SUBSEQUENT EVENTS Sterling National Bank On September 8, 2010, in order to fund increasing accounts receivables and support working capital needs, Capstone secured a Financing Agreement from Sterling Capital Funding (now called Sterling National Bank), located in New York, whereby Capstone receives funds for assigned retailer shipments. The assignments provide funding for an amount up to 85% of net invoices submitted and 50% of inventory value. There is a base management fee equal to .30% of the gross invoice amount. The interest rate of the loan advance is .25% above Sterling National Bank's Base Rate which at the time of closing was 6.00%. As of June 30, 2018 and December 31, 2017, the interest rate on the loan was 6.25%. The amounts borrowed under this agreement are due on demand and collateralized by substantially all the assets of Capstone. As of both June 30, 2018 and December 31, 2017, there was no balance due to Sterling National Bank. As of June 30, 2018, the maximum amount that can be borrowed on this credit line is $7,000,000. On July 20, 2018, to support the Company's future needs, Sterling National Bank expanded the credit line up to $10,000,000 of which $2,000,000 has been allocated as a Capstone expansion working capital line. |
Commitments And Contingencies |
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Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 4 – COMMITMENTS AND CONTINGENCIES Operating Leases On June 29, 2007, the Company relocated its principal executive offices and sole operations facility to 350 Jim Moran Blvd., Suite 120, Deerfield Beach, Florida 33442, which is located in Broward County. This space consists of 4,000 square rentable feet and was leased on a month to month basis. On January 17, 2014, and effective February 1, 2014, Capstone entered into a lease agreement for the same office space having a 3-year term with a base annual rent of $87,678 paid in equal monthly installments. The Company had the one-time option to renew the lease for three (3) years subject to a 3% increase per each year of the renewal term. Effective February 1, 2017, the Company renewed the lease for 3 years ending January 31, 2020, with a base annual rent of $92,256 and with a total rent expense of $281,711 through the term of the agreement. Under the lease agreement, Capstone was responsible for a portion of common area maintenance charges and any other utility consumed in the leased premises. On May 15, 2018, the Company entered into a lease amendment with the existing landlord to provide for a premises relocation, lease termination and new sublease agreement. Under the agreement the Company relocated its current principal executive offices located at 350 Jim Moran Blvd., Suite 120, Deerfield Beach, Florida 33442 to 4,694 square feet of office space on the second floor of 431 Fairway Drive, Deerfield Beach, Florida 33441. The original lease terminated on the relocation date and the parties proceeded under the terms of the new sublease which expires on January 31, 2020. The base annual rent in the new sublease remains at the same rate as the previous agreement until January 31, 2020. At the expiration of the new sublease, the Company has the option to accept the prime lease with another 3 years renewal and with an option to renew for an additional 5-year period. If the Company decides to further extend the sublease after January 31, 2020, the Company will be subject to the terms and conditions of the prime lease. The base monthly rent will be $4,390 to January 31, 2019 and then a base rent of $4,522 until January 31, 2020. The Company is also responsible for portion of the common area maintenance, estimated to be $2,992 per month. For consideration for the lease amendment, the Company received a rate abatement from the landlord, effective May 1, 2018 and for four months until September 1, 2018. The landlord also delivered the relocation premises in a "turn key" condition with requested renovations made at no expense to the Company. As an incentive to vacate the existing premises, the existing landlord agreed to pay a total of $150,000 on completion of the relocation of which $78,250 was outstanding as other receivables as of June 30, 2018. Capstone International Hong Kong Ltd, (CIHK), entered into a lease agreement for office space at 303 Hennessy Road, Wanchai, Hong Kong. The original agreement was for the period from February 17, 2014, to February 16, 2016, with a base annual rent of $48,000 (HK$ 372,000) paid in equal monthly installments. The lease was extended for three (3) months until May 16, 2016. The lease was renewed for (12) months ending May 16, 2017 with a base annual rate of $48,775 and was further extended for (12) months ending May 16, 2018 with a base annual rate of $54,193 paid in equal monthly installments. Effective April 24, 2018, the Company has further extended the lease for (3) months ending August 16, 2018 with a base rate increase of $225 per month. The Company entered into a six (6) month rental agreement from December 1, 2016 until May 31, 2017 and was extended until December 31, 2017 for showroom space at 3F, Wing Kin Industrial Building, 4-6 Wing Kin Road, Kwai Chung, NT, Hong Kong. This agreement has been further extended until December 31, 2018. The Company's rent expense for the three months ended June 30, 2018 and 2017 was $34,273 and $40,756, respectively and $75,767 and $80,509 for the six months ended June 30, 2018 and 2017, respectively Consulting Agreements On July 1, 2015, the Company entered into a consulting agreement with George Wolf, whereby Mr. Wolf was paid $10,500 per month through December 31, 2015 increasing to $12,500 per month from January 1, 2016 through December 31, 2017. A bonus compensation of $10,000 was paid in the month of January 2017 related to 2016 sales performance. On January 1, 2017, the agreement was amended, whereby Mr. Wolf was paid $13,750 per month from January 1, 2017 through December 31, 2017. Bonus compensation of $15,000 was paid on December 22, 2017 related to 2017 sales performance. On January 1, 2018, the agreement was further amended, whereby Mr. Wolf will be paid $13,750 per month from January 1, 2018 through December 31, 2018. The agreement can be terminated upon 30 days' notice by either party. The Company may, in its sole discretion at any time convert Mr. Wolf to a full-time Executive status. The annual salary and term of employment would be equal to that outlined in the consulting agreement. Employment Agreements On February 5, 2016, the Company entered into an Employment Agreement with Stewart Wallach, whereby Mr. Wallach was paid $287,163 per annum. As part of the agreement, the base salary was reviewed annually by the Compensation Committee for a potential increase, to at least reflect increases in the cost of living, but only if the Company shows a net profit for the year. The initial term of this agreement began February 5, 2016 and ended February 5, 2018. On February 5, 2018, the Company renewed the Employment Agreement with Stewart Wallach, whereby Mr. Wallach will be paid $301,521 per annum. The initial term of this new agreement began February 5, 2018 and ends February 5, 2020. The parties may extend the employment period of this agreement by mutual consent with approval of the Company's Board of Directors, but the extension may not exceed two years in length. On February 5, 2016, the Company entered into an Employment Agreement with James McClinton, whereby Mr. McClinton was paid $191,442 per annum. As part of the agreement, the base salary was reviewed annually by the Compensation Committee for a potential increase, to at least reflect increases in the cost of living, but only if the Company shows a net profit for the year. The initial term of this agreement began February 5, 2016 and ended February 5, 2018. On February 5, 2018, the Company renewed the Employment Agreement with James McClinton, whereby Mr. McClinton will be paid $191,442 per annum. The initial term of this new agreement began February 5, 2018 and ends February 5, 2020. The parties may extend the employment period of this agreement by mutual consent with approval of the Company's Board of Directors, but the extension may not exceed one year in length. Licensing Agreements On February 4, 2015, the Company finalized a Licensing Agreement with a globally recognized floorcare company that allows the Company to market home lighting products under the licensed brand, to discount retailers, warehouse clubs, home centers, on-line retailers and other retail distribution channels in the U.S., Canada and Mexico. The initial term of the agreement is for 3 years. The agreement does not have a guaranteed royalty stipulation. On December 29, 2016, the Company finalized the first amendment to the February 4, 2015 Licensing Agreement with the floorcare company in which the initial term was extended through February 3, 2020 and additional renewal terms and periods were also finalized. During this initial extended period through February 3, 2020, if the Company achieves net sales of $5,000,000, then the agreement would automatically be extended 2 years until February 3, 2022 and if during this second extended period the Company achieves net sales of $5,000,000, then the agreement would automatically be further extended 2 years until February 3, 2024. The license also added an additional product category. On April 12, 2018, the Company finalized the second amendment to the February 4, 2015 Licensing Agreement in which the license was further expanded to add an additional product category. Royalty expense related to this agreement was $14,288 and $206,141, for the three month period ended June 30, 2018 and 2017, respectively, and $156,496 and $379,105 for the six month period ended June 30, 2018 and 2017, respectively. On January 9, 2017, the Company finalized a Licensing Agreement with a globally recognized battery company that will allow the Company to market under the licensed brand, a specific product to a specific retailer in the warehouse club distribution channel. This agreement will be effective until December 31, 2018. The agreement does not have a guaranteed royalty stipulation, but the Company must meet minimum net sales requirements of $5,000,000 for contract year 1 and $7,000,000 for contract year 2. Royalty expense related to this agreement was $2,786 and $90,074, for the three month period ended June 30, 2018 and 2017, respectively, and $29,841 and $150,123 for the six month period ended June 30, 2018 and 2017, respectively. Investment Banking Agreement On March 1, 2017, the Company executed an Investment Banking Agreement with Wilmington Capital Securities, LLC, ("Wilmington"), a registered broker-dealer under the Securities Exchange Act of 1934. The Company entered into the Agreement in order to obtain outside assistance in finding and considering possible opportunities to enhance Company shareholder value through significant corporate transactions or through funding expansion and/or diversification of the Company's primary business lines. The scope of such possible strategic transactions included mergers and acquisitions, asset acquisition or sales and funding through the issuance of Company securities. The agreement had an initial six-month term and renewed for an additional, consecutive six-month term. Wilmington received a cash retainer fee of $80,000, paid in monthly installments, in the first six-month term, and a reduced retainer fee of $45,000, paid in monthly installments, in the first renewal of the initial six-month term. Wilmington would also receive a transaction fee for any consummated strategic transaction introduced by Wilmington under the Agreement. The transaction fees are based on the Lehman Scale starting at 8% fee reducing to 4% on transactions from $5,000,000 to in excess of $20,000,000. The retainer fee paid for this agreement for the year ended December 31, 2017 was $120,000. A further retainer fee of $5,000 that remained on the agreement was paid in January 2018. The agreement has now expired. Legal Matters Cyberquest, Inc. Capstone received a letter in July 2017 from a purported holder of 70,000 shares of a series of preferred stock issued by CBQ, Inc., a predecessor of the Company, in the 1998 acquisition of Cyberquest, Inc., a company that ceased operations by 2002. The letter was a request to inspect Capstone corporate records. Capstone investigated these claims and, due to perceived deficiencies in the stock certificate, our inability to substantiate the purported ownership of said preferred stock to date and absence of validation that shares of the series of preferred stock are still outstanding, Capstone refused the purported holder's request to inspect corporate records per a September 1, 2017 letter to the purported holder. Capstone did not receive any responsive communications from the purported holder after September 1, 2017, until the purported holder filed a declaratory judgement action in Dallas County, Texas state court on March 21, 2018 seeking validation of purported holder's ownership of the preferred stock and to compel inspection of Capstone corporate records. Capstone received notice of the state declaratory action on April 3, 2018. The Company has retained local Dallas, Texas legal counsel and has answered the suit, filed a counter claim to recover attorney's fees, and removed litigation to the U.S. District Court in Texas. The Company intends to contest this declaratory judgment action for the reasons stated above for denial of the July 2017 request to inspect corporate records. The Company and the claimant in the declaratory action agreed to pursue court-sponsored mediation as a possible resolution of this dispute. The mediation may not result in a resolution of the dispute. The mediation has not commenced as of the date of this quarterly report on Form 10-Q but should be conducted in 2018. |
Stock Transactions |
6 Months Ended |
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Jun. 30, 2018 | |
Equity [Abstract] | |
Stock Transactions | NOTE 5 - STOCK TRANSACTIONS Warrants During September and October 2007, the Company issued 2,121,569 shares of common stock for cash at $0.255 per share, or $541,000 total as part of a Private Placement under Rule 506 of Regulation D. Along with the stock, each investor also received a warrant to purchase 30% of the shares purchased in the Private Placement. In September 2017, an investor exercised a warrant option for 29,412 shares at the exercise price of $.255 per share. During October 2017 the remaining 607,062 outstanding warrants expired. Options In 2005, the Company authorized the 2005 Equity Plan that made available shares of common stock for issuance through awards of options, restricted stock, stock bonuses, stock appreciation rights and restricted stock units. There were no stock options issued during the period ended June 30, 2018. As of June 30, 2018, there were 783,335 stock options outstanding and 573,335 stock options vested. The stock options have a weighted average expense price of $0.435. For the three-month period ended June 30, 2018 and 2017, the Company recognized stock-based compensation expense of $28,875 and $20,475, respectively and $57,750 and $40,950 for the six-month period ended June 30, 2018 and 2017, respectively. Such amounts are included in compensation expense in the accompanying consolidated statements of operations. A further compensation expense expected to be $11,106 will be recognized for these options in 2018. On May 2, 2017, the Company's Board of Directors amended the Company's 2005 Equity Incentive Plan to extend the Plan's expiration date from December 31, 2016 to December 31, 2021. Adoption of Stock Repurchase Plan On August 23, 2016, the Company's Board of Directors authorized the Company to implement a stock repurchase plan for up to $750,000 worth of shares of the Company's outstanding common stock. The stock purchases can be made in the open market, structured repurchase programs, or in privately negotiated transactions. The Company has no obligation to repurchase shares under the authorization, and the timing, actual number and value of the shares which are repurchased will be at the discretion of management and will depend on a number of factors including the price of the Company's common stock, market conditions, corporate developments and the Company's financial condition. The repurchase plan may be discontinued at any time at the Company's discretion. On December 21, 2016, the Company's Board of Directors approved an extension of the Company's stock repurchase plan through December 31, 2017, subject to an earlier termination at the discretion of the Company's Board of Directors. On February 13, 2017, as authorized under the Company's stock repurchase plan, the Company repurchased 1,000,000 shares of Company common stock from Involve, LLC., under the Option Agreement dated June 27, 2016, at an exercise price of $.15 per share. On May 1, 2017, as authorized under the Company's stock repurchase plan, the Company repurchased 666,667 shares of Company common stock from Involve, LLC., under the Option Agreement dated June 27, 2016, at an exercise price of $.15 per share. On May 2, 2017, the Company's Board of Directors authorized at the Company's discretion to either retain repurchased shares in the treasury or to retire the repurchased shares and these shares were retired on June 1, 2017. On December 15, 2017, the Company's Board of Directors approved an extension of the Company's stock repurchase plan for up to $750,000 through June 30, 2018. |
Income Taxes |
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Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Taxes | NOTE 6 - INCOME TAXES As of June 30, 2018, the Company had utilized all net operating loss carry forwards for income tax reporting purposes that were previously available to be offset against future taxable income through 2034. The net deferred tax liability as of June 30, 2018 and December 31, 2017 was $269,000 and $251,000, respectively, and is reflected in long-term liabilities in the accompanying consolidated balance sheets. The Company is subject to income taxes in the U.S. federal jurisdiction, various state jurisdictions and certain other jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the relaxed tax laws and regulations and require significant judgement to apply. The Company is not subject to U.S. federal, state and local tax examinations by tax authorities for the years 2014 and prior. If the Company were to subsequently record an unrecognized tax benefit, associated penalties and tax related interest expense would be recorded as a component of income tax expense. The provision (benefit) for income taxes for the six months ended June 30, 2018 and 2017 was calculated based on the estimated annual effective rate of 25.35% and 34%, respectively for both the full 2018 and 2017 calendar years. On December 22, 2017, President Trump signed into law the legislation generally known as Tax Cut and Jobs Act of 2017. The tax law includes significant changes to the U.S. corporate tax systems including a rate reduction from 35% to 21% beginning in January of 2018, a change in the treatment of foreign earnings going forward and a deemed repatriation transition tax. In accordance with ASC 740, the impact of a change in tax law is recorded in the period of enactment. During the fourth quarter of 2017, the Company recorded a non-cash, change in its net deferred income tax balances of approximately $120,000 related to the tax rate change. The income tax provision (benefit) for the three months ended June 30, 2018 and 2017 consists of:
The income tax provision (benefit) for the six months ended June 30, 2018 and 2017 consists of:
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Organization And Summary Of Significant Accounting Policies (Policies) |
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Accounting Policies [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Organization and Basis of Presentation | Organization and Basis of Presentation The condensed consolidated financial statements contained in this report are unaudited. In the opinion of management, the condensed consolidated financial statements include all adjustments, which are of a normal recurring nature, necessary to present fairly the Company's financial position as of June 30, 2018 and results of operations and cash flows for the three months and six months ended June 30, 2018 and 2017. All significant intercompany accounts and transactions are eliminated in consolidation. These condensed consolidated financial statements and notes are presented in accordance with the rules and regulations of the United States Securities and Exchange Commission ("SEC") relating to interim financial statements and in conformity with U.S. GAAP. Certain information and note disclosures have been condensed or omitted in the condensed financial statements pursuant to SEC rules and regulations, although the Company believes that the disclosures made herein are adequate to make the information not misleading. The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes in the Company's Annual Report on Form 10-K for the year ended December 31, 2017 (the "2017 Annual Report"). The operating results for any interim period are not necessarily indicative of the operating results to be expected for any other interim period or the full fiscal year. |
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Nature of Business | Nature of Business Since the beginning of fiscal year
2007, the Company has been primarily engaged in the business of developing, marketing and selling home LED products through national
and regional retailers in North America and in certain overseas markets. The Company's products are targeted for applications
such as home indoor and outdoor lighting and will have different functionalities to meet consumer's needs. These products
may be offered either under the Capstone brand or licensed brands. |
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Accounts Receivable | Accounts Receivable For product revenue, the Company invoices its customers at the time of shipment for the sales value of the product shipped. Accounts receivable are recognized at the invoiced amount and are not subject to any interest or finance charges. The Company does not have any off-balance sheet credit exposure related to any of its customers. As of June 30, 2018 and December 31, 2017, accounts receivable serves as collateral for the Company's note payable.
The following table summarizes the changes in the Company's reserve for marketing allowances, cash discounts and other incentives which is included in net accounts receivable:
Marketing allowances include the cost of underwriting an in store instant rebate coupon or a target markdown allowance on a specific product. Cash discounts represent discounts offered to the retailer off outstanding accounts receivable in order to initiate early payment. |
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Inventories | Inventories The Company's inventory, recorded at lower of cost (first-in, first-out) or net realizable value, consists of finished goods for resale by Capstone, totaling $8,316 and $140,634 at June 30, 2018 and December 31, 2017, respectively. |
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Prepaid Expenses | Prepaid Expenses The Company's prepaid expenses consist primarily of deposits on inventory purchases for future orders as well as prepaid insurance and trade show expense. |
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Net Income Per Common Share | Net Income Per Common Share Basic earnings per common share are computed by dividing net income by the weighted average number of shares of common stock outstanding for the reporting period. Diluted earnings per share reflects the potential dilution that would occur if securities or other contracts to issue common stock were exercised or converted into common stock. For calculation of the diluted net income per share, the basic weighted average number of shares is increased by the dilutive effect of stock options and warrants using the treasury stock method. In periods where losses are reported, the weighted average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive. At June 30, 2018 and 2017, the total number of potentially dilutive common stock equivalents excluded from the diluted earnings per share calculation was 783,335 and 1,516,670, respectively. Basic weighted average shares outstanding is reconciled to diluted weighted shares outstanding as follows:
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Revenue Recognition | Revenue Recognition The Company generates revenue from developing,
marketing and selling consumer lighting products through national and regional retailers. The Company's products are targeted
for applications such as home indoor and outdoor lighting and will have different functionalities. Capstone currently operates
in the consumer lighting products category in the Unites States and in certain overseas markets. These products may be offered
either under the Capstone brand or licensed brands. The following table disaggregates net revenue by major source:
We provide our customers with limited rights of return
for non-conforming product warranty claims. As a policy, the Company does not accept product returns from customers, however occasionally
as part of a customer's in store test for new product, we may receive back residual inventory. |
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Warranties | Warranties The Company provides the end user with limited
rights of return as a consumer assurance warranty on all products sold, stipulating that the product will function properly for
the warranty period. The warranty period for all products is one year from the date of consumer purchase.
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Advertising and Promotion | Advertising and Promotion Advertising and promotion costs, including advertising, public relations, and trade show expenses, are expensed as incurred and included in sales and marketing expenses. Advertising and promotion expense was $72,732 and $92,584 for the three months and $77,650 and $113,247 for the six months ended June 30, 2018 and 2017, respectively. |
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Product Development | Product Development Our research and development team located in Hong Kong working with our designated factories, are responsible for the design, development, testing, and certification of new product releases. Our engineering efforts support product development across all products, as well as product testing for specific overseas markets Product development expenses were $123,766 and $66,447 for the three months and $290,332 and $ 138,473 for the six months ended June 30, 2018 and 2017, respectively. |
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Shipping and Handling | Shipping and Handling The Company's shipping and handling costs are included in sales and marketing expenses and are recognized as an expense during the period in which they are incurred and amounted to $7,505 and $29,866 for the three months and $ 33,856 and $46,786 for the six months ended June 30, 2018 and 2017, respectively. |
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Accounts Payable and Accrued Liabilities | Accounts Payable and Accrued Liabilities Accounts payable and accrued liabilities
contained in the accompanying consolidated balance sheets include accruals for estimated amounts of credits to be issued in future
years for potential warranty claims and various other expenses. As of June 30, 2018, and December 31, 2017, the Company has $324,225
and $600,622, respectively, in accrued liabilities.
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Income Taxes | Income Taxes The Company accounts for income taxes under the provisions of Financial Accounting Standards Board ("FASB") Accounting Standard Codification ("ASC") 740 Income Taxes. ASC 740 requires recognition of deferred income tax assets and liabilities for the expected future income tax consequences, based on enacted tax laws, of temporary differences between the financial reporting and tax bases of assets and liabilities. The Company and its U.S. subsidiaries file consolidated income tax returns. On December 22, 2017, President Trump signed into law the legislation generally known as Tax Cut and Jobs Act of 2017. The tax law includes significant changes to the U.S. corporate tax systems including a rate reduction from 35% to 21% beginning in January of 2018, a change in the treatment of foreign earnings going forward and a deemed repatriation transition tax. Refer to Note 6 for additional information on income taxes. |
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Stock-Based Compensation | Stock-Based Compensation The Company accounts for stock-based
compensation under the provisions of ASC 718 Compensation- Stock Compensation, which requires the measurement and recognition
of compensation expense for all share-based payment awards made to employees and directors, including employee stock options,
based on estimated fair values. |
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Use of Estimates | Use of Estimates The preparation of consolidated financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue and expenses and the disclosure of contingent assets and liabilities. The Company evaluates its estimates on an ongoing basis, including those related to revenue recognition, product warranty obligations, valuation of inventories, tax related contingencies, valuation of stock-based compensation, other contingencies and litigation, among others. The Company generally bases its estimates on historical experience, agreed obligations, and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results could differ materially from those estimates. |
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Recent Accounting Standards | Recent Accounting Standards To be Adopted in a Future Period In February 2016, the FASB issued
ASU 2016-02, Leases ("ASU 2016-02"), which provides guidance for accounting for leases. ASU 2016-02 requires
lessees to classify leases as either finance or operating leases and to record a right-of-use asset and a lease liability for
all leases with a term greater than 12 months regardless of the lease classification. The lease classification will determine
whether the lease expense is recognized based on effective interest rate method or a straight-line basis over the term of the
lease. Accounting for lessors remains largely unchanged from current GAAP. ASU 2016-02 will be effective for the Company's fiscal
year beginning after December 15, 2018 and subsequent interim periods. The Company is currently evaluating the impact of the adoption
of ASU 2016-02 will have on the Company's consolidated financial statements. |
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Adoption of New Accounting Standards | Adoption of New Accounting Standards
In May 2014, the FASB issued Accounting Standards
Update ("ASU") 2014-09, which provided guidance for revenue recognition. The standard's core principle was that a company
would recognize revenue when it transferred promised goods or services to customers in an amount that reflected the consideration
to which the company expected to be entitled in exchange for those goods or services. In doing so, companies needed to use more
judgment and make more estimates than under previous guidance. In August 2015, the FASB issued ASU 2015-14, which deferred the
effective date of ASU 2014-09 for all entities by one year. Accordingly, public business entities applied the guidance in ASU
2014-09 to annual reporting periods (including interim periods within those periods) beginning after December 15, 2017. The
adoption of ASC 606 did not have any impact on our operating cash flows. |
Organization And Summary Of Significant Accounting Policies (Tables) |
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Organization And Summary Of Significant Accounting Policies | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Components of Accounts Receivable, net | The following table summarizes the components of Accounts Receivable, net:
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Schedule of Changes in Reserve Included in Net Accounts Receivable | The following table summarizes the changes in the Company's reserve for marketing allowances, cash discounts and other incentives which is included in net accounts receivable:
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Schedule of Basic Weighted Average Shares Outstanding is Reconciled to Diluted | Basic weighted average shares outstanding is reconciled to diluted weighted shares outstanding as follows:
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Schedule of Net Revenue by Major Source | The following table disaggregates net revenue by major source:
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Schedule of Changes in Product Warranty Liabilities Included in Accounts Payable and Accrued Liabilities | The following table summarizes the changes in the Company's product warranty liabilities which are included in accounts payable and accrued liabilities in the accompanying June 30, 2018 and December 31, 2017 consolidated balance sheets:
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Schedule of Components of Accounts Payable and Accrued Liabilities | The following table summarizes the components of accounts payable and accrued liabilities as of June 30, 2018 and December 31, 2017, respectively:
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Concentration Of Credit Risk And Economic Dependence (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Concentration Of Credit Risk And Economic Dependence | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Concentration of Credit Risk of Major Customers And Major Vendors | Major Customers
Major Vendors
|
Income Taxes (Tables) |
6 Months Ended | ||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
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Jun. 30, 2018 | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Income Tax Disclosure [Abstract] | |||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||||
Schedule of Income Tax Provision (benefit) | The income tax provision (benefit) for the three months ended June 30, 2018 and 2017 consists of:
The income tax provision (benefit) for the six months ended June 30, 2018 and 2017 consists of:
|
Organization And Summary Of Significant Accounting Policies (Components Of Accounts Receivable, Net) (Details) - USD ($) |
Jun. 30, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|---|
Organization And Summary Of Significant Accounting Policies Components Of Accounts Receivable Net | |||
Trade Accounts Receivables at period end | $ 2,259,180 | $ 4,561,782 | |
Reserve for estimated marketing allowances, cash discounts and other incentives | 235,706 | 194,061 | $ 1,200,792 |
Total Accounts Receivable, net | $ 2,023,474 | $ 4,367,721 |
Organization And Summary Of Significant Accounting Policies (Schedule Of Changes In Reserve) (Details) - USD ($) |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2018 |
Dec. 31, 2017 |
|
Organization And Summary Of Significant Accounting Policies Schedule Of Changes In Reserve | ||
Balance at beginning of the period | $ 194,061 | $ 1,200,792 |
Accrued allowances | 62,280 | 921,833 |
Reversal of prior year accrued allowances | 1,749 | 58,867 |
Expenditures | (18,886) | (1,869,697) |
Balance at period-end | $ 235,706 | $ 194,061 |
Organization And Summary Of Significant Accounting Policies (Schedule Of Basic Weighted Average Shares) (Details) - shares |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Organization And Summary Of Significant Accounting Policies Schedule Of Basic Weighted Average Shares | ||||
Basic weighted average shares outstanding | 47,046,364 | 46,694,058 | 47,046,364 | 47,155,592 |
Dilutive warrants | 361,388 | |||
Diluted weighted average shares outstanding | 47,046,364 | 47,055,446 | 47,046,364 | 47,473,829 |
Organization And Summary Of Significant Accounting Policies (Schedule Of Net Revenue By Major Source) (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Total Revenue | $ 2,103,206 | $ 10,219,548 | $ 6,163,374 | $ 16,971,744 |
Capstone Brand [Member] | ||||
Total Revenue | 1,724,560 | 3,094,253 | 2,038,755 | 4,385,531 |
License Brands [Member] | ||||
Total Revenue | 378,646 | 7,125,295 | 4,124,619 | 12,586,213 |
Total Consolidated [Member] | ||||
Total Revenue | 2,103,206 | 10,219,548 | 6,163,374 | 16,971,744 |
Lighting Products - U.S. [Member] | Capstone Brand [Member] | ||||
Total Revenue | 1,693,480 | 2,597,529 | 1,841,781 | 3,304,724 |
Lighting Products - U.S. [Member] | License Brands [Member] | ||||
Total Revenue | 264,472 | 7,125,295 | 3,859,253 | 12,586,213 |
Lighting Products - U.S. [Member] | Total Consolidated [Member] | ||||
Total Revenue | 1,957,952 | 9,722,824 | 5,701,034 | 15,890,937 |
Lighting Products-International [Member] | Capstone Brand [Member] | ||||
Total Revenue | 31,080 | 496,724 | 196,974 | 1,080,807 |
Lighting Products-International [Member] | License Brands [Member] | ||||
Total Revenue | 114,174 | 265,366 | ||
Lighting Products-International [Member] | Total Consolidated [Member] | ||||
Total Revenue | $ 145,254 | $ 496,724 | $ 462,340 | $ 1,080,807 |
Organization And Summary Of Significant Accounting Policies (Schedule Of Product Warranty Liabilities) (Details) - USD ($) |
6 Months Ended | 12 Months Ended |
---|---|---|
Jun. 30, 2018 |
Dec. 31, 2017 |
|
Organization And Summary Of Significant Accounting Policies Schedule Of Product Warranty Liabilities | ||
Balance at the beginning of the period | $ 328,279 | $ 294,122 |
Amount accrued | 41,871 | 940,291 |
Amount expensed | 175,765 | 906,134 |
Balance at period-end | $ 194,385 | $ 328,279 |
Organization And Summary Of Significant Accounting Policies (Components Of Accounts Payable) (Details) - USD ($) |
Jun. 30, 2018 |
Dec. 31, 2017 |
Dec. 31, 2016 |
---|---|---|---|
Organization And Summary Of Significant Accounting Policies Components Of Accounts Payable | |||
Accounts payable | $ 1,186,462 | $ 2,132,894 | |
Accrued warranty reserve | 194,385 | 328,279 | $ 294,122 |
Accrued compensation, benefits, commissions and other expenses | 129,840 | 272,343 | |
Total accrued liabilities | 324,225 | 600,622 | |
Total | $ 1,510,687 | $ 2,733,516 |
Concentration Of Credit Risk And Economic Dependence (Major Customers) (Details) - USD ($) |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Dec. 31, 2017 |
|
Concentration Risk [Line Items] | |||
Gross Accounts Receivable | $ 2,259,180 | $ 4,561,782 | |
Customer A [Member] | |||
Concentration Risk [Line Items] | |||
Gross Accounts Receivable | 2,232,854 | 2,259,769 | |
Customer B [Member] | |||
Concentration Risk [Line Items] | |||
Gross Accounts Receivable | 2,268,426 | ||
Major Customers [Member] | |||
Concentration Risk [Line Items] | |||
Gross Accounts Receivable | $ 2,232,854 | $ 4,528,195 | |
Net Revenue [Member] | Customer A [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 51.60% | 50.20% | |
Net Revenue [Member] | Customer B [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 44.50% | 49.10% | |
Net Revenue [Member] | Major Customers [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 96.10% | 99.30% |
Concentration Of Credit Risk And Economic Dependence (Major Vendors) (Details) - USD ($) |
6 Months Ended | ||
---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Dec. 31, 2017 |
|
Concentration Risk [Line Items] | |||
Accounts Payable | $ 1,186,462 | $ 2,132,894 | |
Vendor A [Member] | |||
Concentration Risk [Line Items] | |||
Accounts Payable | 1,115,720 | 922,310 | |
Vendor B [Member] | |||
Concentration Risk [Line Items] | |||
Accounts Payable | 768,164 | ||
Major Vendor [Member] | |||
Concentration Risk [Line Items] | |||
Accounts Payable | $ 1,115,720 | $ 1,690,474 | |
Purchases [Member] | Vendor A [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 92.30% | 97.10% | |
Purchases [Member] | Vendor B [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | |||
Purchases [Member] | Major Vendor [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 92.30% | 97.10% |
Income Taxes (Schedule Of Income Tax Provision (Benefit)) (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||
---|---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Current: | ||||
Federal | $ (53,000) | $ 392,000 | $ (74,000) | $ 392,000 |
State | (15,000) | (21,000) | ||
Deferred: | ||||
Federal | 8,500 | 10,000 | 17,000 | 138,000 |
State | 500 | 1,000 | ||
Income Tax Provision (Benefit) | $ (59,000) | $ 402,000 | $ (77,000) | $ 530,000 |
Organization And Summary Of Significant Accounting Policies (Narrative) (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||||
---|---|---|---|---|---|---|
Dec. 22, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
Dec. 31, 2017 |
|
Potentially dilutive common stock equivalents excluded from diluted earnings per share | 783,335 | 1,516,670 | ||||
Accrued sales allowances recovered | $ 1,749 | $ 47,741 | ||||
Changes in income tax rate description | On December 22, 2017, President Trump signed into law the legislation generally known as Tax Cut and Jobs Act of 2017. The tax law includes significant changes to the U.S. corporate tax systems including a rate reduction from 35% to 21% beginning in January of 2018, a change in the treatment of foreign earnings going forward and a deemed repatriation transition tax. |
|||||
Accounts Payable And Accrued Liabilities [Member] | ||||||
Accrual of credits on account of pontential warranty claims and various other expenses | $ 324,225 | 324,225 | $ 600,622 | |||
Sales and Marketing Expenses [Member] | ||||||
Advertising and promotion expense | 72,732 | $ 92,584 | 77,650 | 113,247 | ||
Shipping and handling costs | $ 7,505 | $ 29,866 | $ 33,856 | $ 46,786 |
Concentrations Of Credit Risk And Economic Dependence (Narrative) (Details) |
6 Months Ended | 12 Months Ended | |
---|---|---|---|
Jun. 30, 2018 |
Jun. 30, 2017 |
Dec. 31, 2017 |
|
Net Revenue [Member] | International Sales [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 7.50% | 6.40% | |
Accounts Payable [Member] | Two Vendors [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 94.00% | 79.30% |
Notes Payable (Narrative) (Details) - Financing Agreement With Sterling National Bank [Member] - Line Of Credit [Member] - USD ($) |
Sep. 08, 2010 |
Jul. 20, 2018 |
Jun. 30, 2018 |
Dec. 31, 2017 |
---|---|---|---|---|
Line of Credit Facility [Line Items] | ||||
Line of credit funding description | The assignments provide funding for an amount up to 85% of net invoices submitted and 50% of inventory value. |
|||
Percentage of base management fee of the gross invoice amount | 0.30% | |||
Line of credit interest rate description | The interest rate of the loan advance is .25% above Sterling National Bank's Base Rate which at the time of closing was 6.00%. |
|||
Line of credit interest rate | 6.25% | 6.25% | ||
Line of credit collateral description | The amounts borrowed under this agreement are due on demand and collateralized by substantially all the assets of Capstone. |
|||
Line of credit, outstanding amount | ||||
Line of credit current maximum borrowing capacity | $ 7,000,000 | |||
Subsequent Event [Member] | ||||
Line of Credit Facility [Line Items] | ||||
Line of credit current maximum borrowing capacity | $ 10,000,000 | |||
Additional expansion of working capital line of credit | $ 2,000,000 |
Commitments And Contingencies (Operating Leases) (Narrative) (Details) |
3 Months Ended | 6 Months Ended | ||||||||||||||
---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|---|
May 15, 2018
USD ($)
|
Apr. 24, 2018
USD ($)
|
May 16, 2017
USD ($)
|
Feb. 01, 2017
USD ($)
|
Dec. 01, 2016 |
May 16, 2016
USD ($)
|
Feb. 16, 2016 |
Feb. 17, 2014
USD ($)
|
Feb. 01, 2014
USD ($)
|
Jun. 30, 2018
USD ($)
|
Jun. 30, 2017
USD ($)
|
Jun. 30, 2018
USD ($)
|
Jun. 30, 2017
USD ($)
|
Dec. 31, 2017
USD ($)
|
Feb. 17, 2014
HKD ($)
|
Jun. 29, 2007
ft²
|
|
Operating Leased Assets [Line Items] | ||||||||||||||||
Rent expenses | $ 34,273 | $ 40,756 | $ 75,767 | $ 80,509 | ||||||||||||
Other receivables | 78,250 | 78,250 | ||||||||||||||
Operating Lease Agreement - Office Space [Member] | ||||||||||||||||
Operating Leased Assets [Line Items] | ||||||||||||||||
Area of rental space | ft² | 4,000 | |||||||||||||||
Base annual rent payable | $ 92,256 | $ 87,678 | ||||||||||||||
Operating lease description | Effective February 1, 2017, the Company renewed the lease for 3 years ending January 31, 2020. |
The Company had the one-time option to renew the lease for three (3) years subject to a 3% increase per each year of the renewal term. |
||||||||||||||
Operating lease term | 3 years | |||||||||||||||
Operating lease renewal term | 3 years | |||||||||||||||
Total rental expenses | $ 281,711 | |||||||||||||||
Amount agreed to pay by Landlord on completion of relocation | 150,000 | 150,000 | ||||||||||||||
Other receivables | $ 78,250 | $ 78,250 | ||||||||||||||
Operating Lease Agreement - Office Space [Member] | Capstone International Hong Kong Ltd (CIHK) [Member] | ||||||||||||||||
Operating Leased Assets [Line Items] | ||||||||||||||||
Base annual rent payable | $ 54,193 | $ 48,775 | $ 48,000 | |||||||||||||
Operating lease description | The Company has further extended the lease for (3) months ending August 16, 2018 |
Further extended for (12) months ending May 16, 2018 |
The lease was renewed for (12) months ending May 16, 2017 |
The lease was extended for three (3) months until May 16, 2016. |
The original agreement was for the period from February 17, 2014, to February 16, 2016. |
|||||||||||
Operating lease renewal term | 3 months | 12 months | 12 months | 3 months | ||||||||||||
Increase in base rent payable per month | $ 225 | |||||||||||||||
Operating Lease Agreement - Office Space [Member] | Capstone International Hong Kong Ltd (CIHK) [Member] | Hong Kong, Dollars | ||||||||||||||||
Operating Leased Assets [Line Items] | ||||||||||||||||
Base annual rent payable | $ 372,000 | |||||||||||||||
Operating Lease Agreement - Showroom Space [Member] | Capstone International Hong Kong Ltd (CIHK) [Member] | ||||||||||||||||
Operating Leased Assets [Line Items] | ||||||||||||||||
Operating lease description | The Company entered into a six (6) month rental agreement from December 1, 2016 until May 31, 2017 and was extended until December 31, 2017 for showroom space at 3F, Wing Kin Industrial Building, 4-6 Wing Kin Road, Kwai Chung, NT, Hong Kong. This agreement has been further extended until December 31, 2018. |
|||||||||||||||
Operating lease term | 6 months | |||||||||||||||
Operating Lease Agreement - Office Space [Member] | ||||||||||||||||
Operating Leased Assets [Line Items] | ||||||||||||||||
Operating lease description | On May 15, 2018, the Company entered into a lease amendment with the existing landlord to provide for a premises relocation, lease termination and new sublease agreement. Under the agreement the Company relocated its current principal executive offices located at 350 Jim Moran Blvd., Suite 120, Deerfield Beach, Florida 33442 to 4,694 square feet of office space on the second floor of 431 Fairway Drive, Deerfield Beach, Florida 33441. The original lease terminated on the relocation date and the parties proceeded under the terms of the new sublease which expires on January 31, 2020. The base annual rent in the new sublease remains at the same rate as the previous agreement until January 31, 2020. At the expiration of the new sublease, the Company has the option to accept the prime lease with another 3 years renewal and with an option to renew for an additional 5-year period. If the Company decides to further extend the sublease after January 31, 2020, the Company will be subject to the terms and conditions of the prime lease. The base monthly rent will be $4,390 to January 31, 2019 and then a base rent of $4,522 until January 31, 2020. |
|||||||||||||||
Total rental expenses | $ 2,992 |
Commitments And Contingencies (Consulting Agreements) (Narrative) (Details) - Consulting Agreement With George Wolf [Member] - USD ($) |
1 Months Ended | 6 Months Ended | |||||
---|---|---|---|---|---|---|---|
Jan. 02, 2018 |
Dec. 22, 2017 |
Jan. 02, 2017 |
Jan. 02, 2016 |
Jul. 01, 2015 |
Jan. 31, 2017 |
Jun. 30, 2018 |
|
Other Commitments [Line Items] | |||||||
Amount payable per month under the agreement | $ 13,750 | $ 13,750 | $ 12,500 | $ 10,500 | |||
Agreement description | On January 1, 2018, the agreement was further amended, whereby Mr. Wolf will be paid $13,750 per month from January 1, 2018 through December 31, 2018. |
On January 1, 2017, the agreement was amended, whereby Mr. Wolf will be paid $13,750 per month from January 1, 2017 through December 31, 2017. |
Increasing to $12,500 per month from January 1, 2016 through December 31, 2017 |
Mr. Wolf will be paid $10,500 per month through December 31, 2015 |
The agreement can be terminated upon 30 days' notice by either party. The Company may, in its sole discretion at any time convert Mr. Wolf to a full-time Executive status. The annual salary and term of employment would be equal to that outlined in the consulting agreement. |
||
Compensation bonus | $ 15,000 | $ 10,000 |
Commitments And Contingencies (Employment Agreements) (Narrative) (Details) - USD ($) |
Feb. 05, 2018 |
Feb. 05, 2016 |
---|---|---|
Employment Agreement With Stewart Wallach [Member] | ||
Other Commitments [Line Items] | ||
Amount payable per annum under the agreement | $ 301,521 | $ 287,163 |
Agreement description | The initial term of this new agreement began February 5, 2018 and ends February 5, 2020. The parties may extend the employment period of this agreement by mutual consent with approval of the Company's Board of Directors, but the extension may not exceed two years in length. |
As part of the agreement, the base salary was reviewed annually by the Compensation Committee for a potential increase, to at least reflect increases in the cost of living, but only if the Company shows a net profit for the year. The initial term of this agreement began February 5, 2016 and ended February 5, 2018. |
Employment Agreement With James McClinton [Member] | ||
Other Commitments [Line Items] | ||
Amount payable per annum under the agreement | $ 191,442 | $ 191,442 |
Agreement description | The initial term of this new agreement began February 5, 2018 and ends February 5, 2020. The parties may extend the employment period of this agreement by mutual consent with approval of the Company's Board of Directors, but the extension may not exceed one year in length. |
As part of the agreement, the base salary was reviewed annually by the Compensation Committee for a potential increase, to at least reflect increases in the cost of living, but only if the Company shows a net profit for the year. The initial term of this agreement began February 5, 2016 and ended February 5, 2018. |
Commitments And Contingencies(Licensing Agreements) (Narrative) (Details) - USD ($) |
3 Months Ended | 6 Months Ended | ||||||
---|---|---|---|---|---|---|---|---|
Apr. 12, 2018 |
Jan. 09, 2017 |
Dec. 29, 2016 |
Feb. 04, 2015 |
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Licensing Agreement With Floorcare Company | ||||||||
Other Commitments [Line Items] | ||||||||
Agreement description | On April 12, 2018, the Company finalized the second amendment to the February 4, 2015 Licensing Agreement in which the license was further expanded to add an additional product category. |
On December 29, 2016, the Company finalized the first amendment to the February 4th, 2015 Licensing Agreement with the floorcare company in which the initial term was extended through February 3, 2020 and additional renewal terms and periods were also finalized. During this initial extended period through February 3, 2020, if the Company achieves net sales of $5,000,000, then the agreement would automatically be extended 2 years until February 3, 2022 and if during this second extended period the Company achieves net sales of $5,000,000, then the agreement would automatically be further extended 2 years until February 3, 2024. The license also added an additional product category. |
On February 4, 2015, the Company finalized a Licensing Agreement with a globally recognized floorcare company that allows the Company to market home lighting products under the licensed brand, to discount retailers, warehouse clubs, home centers, on-line retailers and other retail distribution channels in the U.S., Canada and Mexico. The initial term of the agreement is for 3 years. The agreement does not have a guaranteed royalty stipulation. |
|||||
Royalty expense | $ 14,288 | $ 206,141 | $ 156,496 | $ 379,105 | ||||
Licensing Agreement With Battery Company | ||||||||
Other Commitments [Line Items] | ||||||||
Agreement description | This agreement will be effective until December 31, 2018. The agreement does not have a guaranteed royalty stipulation, but the Company must meet minimum net sales requirements of $5,000,000 for contract year 1 and $7,000,000 for contract year 2. |
|||||||
Royalty expense | $ 2,786 | $ 90,074 | $ 29,841 | $ 150,123 |
Commitments And Contingencies (Investment Banking Agreement) (Narrative) (Details) - Investment Banking Agreement With Wilmington Capital Securities, LLC [Member] - USD ($) |
1 Months Ended | 12 Months Ended | |
---|---|---|---|
Mar. 01, 2017 |
Jan. 31, 2018 |
Dec. 31, 2017 |
|
Other Commitments [Line Items] | |||
Cash retainer fee payable | $ 80,000 | ||
Agreement description | The agreement had an initial six-month term and renewed for an additional, consecutive six-month term. Wilmington received a cash retainer fee of $80,000, paid in monthly installments, in the first six-month term, and a reduced retainer fee of $45,000, paid in monthly installments, in the first renewal of the initial six-month term. Wilmington would also receive a transaction fee for any consummated strategic transaction introduced by Wilmington under the Agreement. The transaction fees are based on the Lehman Scale starting at 8% fee reducing to 4% on transactions from $5,000,000 to in excess of $20,000,000. |
The agreement has now expired. |
|
Retainer fees | $ 5,000 | $ 120,000 |
Commitments And Contingencies (Legal Matters) (Narrative) (Details) |
1 Months Ended |
---|---|
Jul. 31, 2017 | |
Commitments And Contingencies Legal Matters Narrative | |
Legal matters settlement description | Cyberquest, Inc. Capstone received a letter in July 2017 from a purported holder of 70,000 shares of a series of preferred stock issued by CBQ, Inc., a predecessor of the Company, in the 1998 acquisition of Cyberquest, Inc., a company that ceased operations by 2002. |
Stock Transactions (Warrants) (Narrative) (Details) - Private Placement [Member] - USD ($) |
1 Months Ended | 2 Months Ended | |
---|---|---|---|
Oct. 31, 2017 |
Sep. 30, 2017 |
Oct. 31, 2007 |
|
Common Stock [Member] | |||
Stock issued for cash, shares | 2,121,569 | ||
Stock issued for cash, value | $ 541,000 | ||
Sale of stock price per share | $ 0.255 | ||
Warrant [Member] | |||
Sale of stock description | Along with the stock, each investor also received a warrant to purchase 30% of the shares purchased in the Private Placement. |
||
Warrants exercised | 29,412 | ||
Exercise price of warrants | $ 0.255 | ||
No of outstanding warrants expired | 607,062 |
Stock Transactions (Options) (Narrative) (Details) - USD ($) |
3 Months Ended | 6 Months Ended | |||
---|---|---|---|---|---|
May 02, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock based compensation expense | $ 57,750 | $ 40,950 | |||
2005 Equity Plan [Member] | Stock Options [Member] | |||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||||
Stock options outstanding | 783,335 | 783,335 | |||
Stock options vested | 573,335 | ||||
Weighted average exercise price of options | $ 0.435 | $ 0.435 | |||
Stock based compensation expense | $ 28,875 | $ 20,475 | $ 57,750 | $ 40,950 | |
Unrecognized stock based compensation expense | $ 11,106 | $ 11,106 | |||
Stock options amendment terms | On May 2, 2017, the Company's Board of Directors amended the Company's 2005 Equity Incentive Plan to extend the Plan's expiration date from December 31, 2016 to December 31, 2021. |
||||
Stock options expiration date | Dec. 31, 2021 |
Stock Transactions (Adoption Of Stock Repurchase Plan) (Narrative) (Details) - Stock Repurchase Plan [Member] - Common Stock [Member] - USD ($) |
Dec. 15, 2017 |
May 01, 2017 |
Feb. 13, 2017 |
Aug. 23, 2016 |
---|---|---|---|---|
Value of shares authorized to be repurchased | $ 750,000 | $ 750,000 | ||
No of shares repurchased from Involve, LLC | 666,667 | 1,000,000 | ||
Exercise price of shares repurchased | $ 0.15 | $ 0.15 |
Income Taxes (Narrative) (Details) - USD ($) |
3 Months Ended | 6 Months Ended | |
---|---|---|---|
Dec. 31, 2017 |
Jun. 30, 2018 |
Jun. 30, 2017 |
|
Income Taxes Narrative | |||
Operating loss carryforward limitations on use | Offset against future taxable income through 2034. |
||
Estimated effective annual income tax rate | 25.35% | 34.00% | |
Change in net deferred income tax balances related to tax rate change | $ 120,000 |
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