Document and Entity Information
Document and Entity Information | 9 Months Ended |
Sep. 30, 2017shares | |
Document And Entity Information | |
Entity Registrant Name | CAPSTONE COMPANIES, INC. |
Entity Central Index Key | 814,926 |
Document Type | 10-Q |
Document Period End Date | Sep. 30, 2017 |
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 | Q3 |
Document Fiscal Year Focus | 2,017 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Sep. 30, 2017 | Dec. 31, 2016 |
Current Assets: | ||
Cash | $ 3,240,721 | $ 1,646,128 |
Accounts receivable, net | 4,660,203 | 4,449,179 |
Inventory | 142,065 | 366,330 |
Prepaid expenses | 349,410 | 330,020 |
Total Current Assets | 8,392,399 | 6,791,657 |
Property and Equipment: | ||
Computer equipment and software | 19,767 | 19,767 |
Machinery and equipment | 371,323 | 325,750 |
Furniture and fixtures | 5,665 | 5,665 |
Less: Accumulated depreciation | 304,176 | 250,465 |
Total Property & Equipment | 92,579 | 100,717 |
Other Non-current Assets: | ||
Deposit | 13,616 | 12,193 |
Note receivable | 526,887 | |
Goodwill | 1,936,020 | 1,936,020 |
Total Other Non-current Assets | 1,949,636 | 2,475,100 |
Total Assets | 10,434,614 | 9,367,474 |
Current Liabilities: | ||
Accounts payable and accrued liabilities | 2,122,220 | 2,678,210 |
Income tax payable | 404,088 | 1,588 |
Notes and loans payable to related parties | 688,384 | 1,321,721 |
Total Current Liabilities | 3,214,692 | 4,001,519 |
Long Term Liabilities: | ||
Deferred tax liabilities | 362,000 | 216,000 |
Total Long Term Liabilities | 362,000 | 216,000 |
Total Liabilities | 3,576,692 | 4,217,519 |
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 and 48,132,664 shares | 4,704 | 4,813 |
Additional paid-in capital | 6,976,678 | 7,411,172 |
Accumulated deficit | (123,460) | (2,266,030) |
Total Stockholders' Equity | 6,857,922 | 5,149,955 |
Total Liabilities and Stockholders' Equity | 10,434,614 | 9,367,474 |
Preferred Stock, Series A [Member] | ||
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 | ||
Total Stockholders' Equity | ||
Total Liabilities and Stockholders' Equity | ||
Preferred Stock, Series B-1 [Member] | ||
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 | ||
Total Stockholders' Equity | ||
Total Liabilities and Stockholders' Equity | ||
Preferred Stock, Series C [Member] | ||
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 | ||
Total Stockholders' Equity | ||
Total Liabilities and Stockholders' Equity |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Sep. 30, 2017 | Dec. 31, 2016 |
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 | 48,132,664 |
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 | $ 1 |
Preferred stock, shares authorized | 67 | 67 |
Preferred stock, shares issued | 0 | 0 |
Consolidated Statements Of Inco
Consolidated Statements Of Income (Unaudited) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Income Statement [Abstract] | ||||
Revenues, net | $ 13,817,909 | $ 11,692,146 | $ 30,789,653 | $ 22,672,551 |
Cost of sales | 10,707,657 | 8,841,148 | 23,457,070 | 17,079,271 |
Gross Profit | 3,110,252 | 2,850,998 | 7,332,583 | 5,593,280 |
Operating Expenses: | ||||
Sales and marketing | 928,321 | 488,057 | 1,869,596 | 903,888 |
Compensation | 351,915 | 325,283 | 1,065,621 | 949,753 |
Professional fees | 109,257 | 111,339 | 429,440 | 286,681 |
Product development | 80,991 | 127,367 | 219,464 | 227,552 |
Other general and administrative | 189,780 | 195,046 | 572,461 | 501,458 |
Total Operating Expenses | 1,660,264 | 1,247,092 | 4,156,582 | 2,869,332 |
Net Operating Income | 1,449,988 | 1,603,906 | 3,176,001 | 2,723,948 |
Other Income (Expense): | ||||
Interest income | (12,945) | 13,664 | 13,664 | |
Interest expense | 56,514 | 103,363 | 113,431 | 227,522 |
Total Other Income (Expense) | (69,459) | (89,699) | (113,431) | (213,858) |
Income Before Tax Provision | 1,380,529 | 1,514,207 | 3,062,570 | 2,510,090 |
Provision for Income Tax | 390,000 | 24,412 | 920,000 | 37,012 |
Net Income | $ 990,529 | $ 1,489,795 | $ 2,142,570 | $ 2,473,078 |
Net Income per Common Share | ||||
Basic | $ 0.021 | $ 0.031 | $ 0.046 | $ 0.051 |
Diluted | $ 0.021 | $ 0.031 | $ 0.045 | $ 0.051 |
Weighted Average Common Shares Outstanding | ||||
Basic | 46,660,456 | 48,132,664 | 46,989,940 | 48,132,664 |
Diluted | 47,152,574 | 48,371,158 | 47,462,664 | 48,320,017 |
Consolidated Statements Of Cash
Consolidated Statements Of Cash Flows (Unaudited) - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income | $ 2,142,570 | $ 2,473,078 |
Adjustments necessary to reconcile net income to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 55,725 | 44,400 |
Accrued interest on note receivable | (26,887) | 13,654 |
Stock based compensation expense | 66,594 | 46,581 |
Provision for deferred income tax | 146,000 | |
Accrued sales allowance | (831,731) | (94,203) |
(Increase) decrease in accounts receivable | (731,532) | 6,755,174 |
(Increase) decrease in inventory | (224,265) | 275,049 |
(Increase) decrease in prepaid expenses | 20,813 | (43,764) |
Increase (decrease) in accounts payable and accrued liabilities | (263,912) | 958,580 |
(Decrease) in accrued interest on notes payable | (135,337) | (168,492) |
Net cash provided by (used in) operating activities | 2,141,780 | (3,740,169) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of property and equipment | 47,587 | 15,501 |
Net cash (used in) investing activities | (47,587) | (15,501) |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from notes payable | 30,559,312 | 19,393,834 |
Repayments of notes payable | 30,559,312 | 15,049,345 |
Repurchase of shares from Involve, LLC | 250,000 | |
Proceeds from notes and loans payable to related parties | 7,500 | |
Warrant issued | 860,000 | |
Repayments of notes and loans payable to related parties | 257,100 | 1,453,946 |
Net cash provided by (used in) financing activities | (499,600) | 3,750,543 |
Net Increase (decrease) in Cash and Cash Equivalents | 1,594,593 | (5,127) |
Cash and Cash Equivalents at Beginning of Period | 1,646,128 | 364,714 |
Cash and Cash Equivalents at End of Period | 3,240,721 | 359,587 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||
Cash paid during the period for: Interest | 221,881 | 396,014 |
Cash paid during the period for: Income taxes | 371,500 | 31,912 |
Non-cash financing and investing activities: | ||
Sale of Investment for Note receivable | 500,000 | |
Shares issued in satisfaction of loan payable to related party | $ 240,900 |
Organization And Summary Of Sig
Organization And Summary Of Significant Accounting Policies | 9 Months Ended |
Sep. 30, 2017 | |
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" or the "Company" or "Capstone"), 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. 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 September 30, 2017 and results of operations and cash flows for the three months and nine months ended September 30, 2017 and 2016. 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, 2016 (the "2016 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 consumer products through national and regional retailers and distributors in North America. Capstone currently operates in eight primary product categories: Induction Charged Power Failure Lights; LED Night Lights and Power Failure Lights; Motion Sensor Lights; Wireless Remote-Control Outlets; Wireless Remote-Control Accent Lights; Dual Power Solar Lights; Outdoor Light Fixtures and Power Control Light Bulbs. The Company's products are typically manufactured in China by third-party manufacturing companies. Inventory 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 $142,065 and $366,330 at September 30, 2017 and December 31, 2016, respectively. Prepaid Expenses The Company's prepaid expenses consist primarily of deposits on inventory for future orders as well as prepaid advertising. As of September 30, 2017, and December 31, 2016, the Company has $93,010 and $186,019, respectively, in prepaid advertising credits included in prepaid expenses on the consolidated balance sheets. Net Income (Loss) Per Common Share Basic earnings per common share were computed by dividing net income or loss by the weighted average number of shares of common stock outstanding for the reporting period. Diluted earnings per share reflects the potential dilution that could 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 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 September 30, 2017 and 2016, the total number of potentially dilutive common stock equivalents excluded from the diluted earnings per share calculation was 0 and 5,818,700 respectively. Basic weighted average shares outstanding is reconciled to diluted weighted shares outstanding as follows: 3 months ended September 30, 2017 3 months ended September 30, 2016 Basic weighted average shares outstanding 46,660,456 48,132,664 Dilutive warrants 313,211 238,494 Dilutive options 178,907 - Diluted weighted average shares outstanding 47,152,574 48,371,158 9 months ended September 30, 2017 9 months ended September 30, 2016 Basic weighted average shares outstanding 46,989,940 48,132,664 Dilutive warrants 308,219 187,353 Dilutive options 164,505 - Diluted weighted average shares outstanding 47,462,664 48,320,017 Revenue Recognition Product sales are recognized when an agreement of sale exists, product delivery has occurred, pricing is fixed or determinable, and collection is reasonably assured. Allowances for sales returns, rebates and discounts are recorded as a component of net sales in the period the allowances are recognized. In addition, accrued liabilities contained in the accompanying consolidated balance sheets include accruals for estimated amounts of credits to be issued in future years based on potentially defective product, other product returns and various allowances which are based on historical authorized returns. On April 22, 2016, the Company received a credit of approximately $479,000 from its major vendor to cover customer returns of products from sales that occurred in 2015 and promotional allowances for 2016 sales. A credit of $126,000 was applied to invoices due to the vendor during the period ending June 30, 2016 and the remaining credit balance of $353,000 was applied to invoices due to the vendor during the period ended September 30, 2016. During the nine months ended September 30, 2017 and 2016, Capstone determined that $47,741 and $94,203, respectively of previously accrued allowances were no longer required. The reduction of accrued allowances is included in net revenues for the nine-month periods ended September 30, 2017 and 2016. 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 were $67,497 and $65,406 for the three months and $180,743 and $138,846 for the nine months ended September 30, 2017 and 2016, respectively. Shipping and Handling The Company's shipping and handling costs are included in sales and marketing expenses and amounted to $48,952 and $59,604 for the three months and $95,290 and $117,000 for the nine months ended September 30, 2017 and 2016, respectively. Accrued Liabilities Accrued liabilities contained in the accompanying consolidated balance sheets include accruals for estimated amounts of credits to be issued in future years based on potential product returns and various allowances, amounting to $369,061 and $1,200,792 as of September 30, 2017 and December 31, 2016, respectively. These estimates could change significantly in the near term. Income Taxes The Company accounts for income taxes under the provisions of Financial Accounting Standards Board ("FASB") Accounting Standard Codification ("ASC") 740 Income Taxes Stock-Based Compensation The Company accounts for stock-based compensation under the provisions of ASC 718 Compensation- Stock Compensation ASC 718 requires companies to estimate the fair value of share-based payment awards on the date of the grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expenses over the requisite service periods in the Company's consolidated statements of income. Stock-based compensation expense recognized during the period is based on the value of the portion of share-based payment awards that is ultimately expected to vest during the period. 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 and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates, and the differences could be material. Recent Accounting Standards In May 2014, ASU 2014-09 was issued, Revenue from Contracts with Customers In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities , Fair Value Measurements In March 2016, the FASB issued ASU 2016-02, Leases In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments Statement of Cash Flows, In November 2016, the FASB issued ASU 2016-18, Cash Flows: Statement of Cash Flows (Topic 230) - Restricted Cash. The adoption of ASU 2016-18 is not expected to have a material effect on the Company's consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment, In May 2017, the FASB issued ASU No. 2017-09, "Compensation – Stock Compensation (Topic 718) – Scope of Modification Accounting" Adoption of New Accounting Standards In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory The Company adopted ASU 2015-17, Income Taxes (Topic 740): Balance sheet Classification of Deferred Taxes, The Company adopted ASU 2016-09, Compensation - Stock Compensation (Topic 718) The Company continually assesses any new accounting pronouncements to determine their applicability to the Company. Where it is determined that a new accounting pronouncement affects the Company's financial reporting, the Company undertakes a study to determine the consequence of the change to its financial statements and assures that there are proper controls in place to ascertain that the Company's financials properly reflect the change. |
Concentration Of Credit Risk An
Concentration Of Credit Risk And Economic Dependence | 9 Months Ended |
Sep. 30, 2017 | |
Risks and Uncertainties [Abstract] | |
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 Major Customers The Company had two customers who comprised 55.5% and 43.7% of net revenue during the nine-month period ended September 30, 2017, and 62.8% and 35.8% of net revenue during the nine-month period ended September 30, 2016. The loss of these customers would adversely impact the business of the Company. Approximately 4.3% and 8.1% of the Company's net revenue for the nine-month periods ended September 30, 2017 and 2016, was from international sales. Revenue % Gross Accounts Receivable 9 Month Periods Ended September 30, As of September 30, As of Decemb 31, 2017 2016 2017 2016 Customer A 55.5 % 62.8 % $ 3,563,515 $ 3,760,755 Customer B 43.7 % 35.8 % 1,447,171 1,823,785 99.2 % 98.6 % $ 5,010,686 $ 5,558,540 Major Vendors The Company had one vendor from which it purchased 90.8% of merchandise sold during the nine-month period ended September 30, 2017, and 89.5% of merchandise sold during the nine-month period ended September 30, 2016. The loss of this supplier could adversely impact the business of the Company. Purchases % Accounts Payable 9 Month Periods Ended September 30, As of September 30, As of December 31, 2017 2016 2017 2016 Vendor A 90.8 % 89.5 % $ 1,172,314 $ 1,507,671 |
Note Receivable
Note Receivable | 9 Months Ended |
Sep. 30, 2017 | |
Equity Method Investments and Joint Ventures [Abstract] | |
Note Receivable | NOTE 3 - NOTE RECEIVABLE On January 15, 2013, the Company entered into an agreement with AC Kinetics, Inc. ("AC Kinetics") to purchase 100 shares of AC Kinetics Series A Preferred Stock for $500,000. These shares carried a liquidation preference in the amount of $500,000, were convertible at the Company's demand into 3% of the outstanding shares of AC Kinetics common stock and had anti-dilution protection. On June 8, 2016, the Board of Directors approved a Resolution to accept an offer from AC Kinetics to sell back the 100 shares of AC Kinetics Series A Preferred Stock. For consideration, the Company received a note in the face amount of $1,500,000 that will be immediately paid to the Company on completion and funding of a Securities Purchase Agreement with a national company to purchase AC Kinetics. The note is subject to a Subordination Agreement for loans made to AC Kinetics by the national company involved in the Securities Purchase Agreement. As further consideration, the Company also received an option to repurchase 1,666,667 shares of Company common stock held by Involve L.L.C. at an exercise price of $.15. The Agreements were signed June 27, 2016. As the note is subject to a subordination agreement, and the Securities Purchase Agreement between the national company and AC Kinetics and has not been concluded, the Company has determined that the note fell under the Level three category of the fair value hierarchy and that the fair value of the note was determined to be $500,000 at the date of the transaction. The fair value of the note was determined based on an analysis of AC Kinetics ability to repay the note and the perceived value of the options available under the repurchase agreement. The significant unobservable inputs used in the fair value measurement of the Company's note receivable were the probability of default and the loss severity in the event of the default. 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. With the purchase of all available options under the repurchase agreement, part of the collateral used to substantiate the value of the note receivable was no longer available and, consequently management has determined that the fair value of the note at September 30, 2017 was $0. |
Notes Payable
Notes Payable | 9 Months Ended |
Sep. 30, 2017 | |
Debt Disclosure [Abstract] | |
Notes Payable | NOTE 4 – NOTES PAYABLE Sterling National Bank On September 8, % As of both September 30, 2017 and December 31, 2016, there was no balance due to Sterling National Bank. As of September 30, 2017, the maximum amount that can be borrowed on this credit line is $7,000,000. |
Notes And Loans Payable To Rela
Notes And Loans Payable To Related Parties | 9 Months Ended |
Sep. 30, 2017 | |
Related Party Transactions [Abstract] | |
Notes and Loans Payable to Related Parties | NOTE 5 – NOTES AND LOANS PAYABLE TO RELATED PARTIES As of September 30, 2017, and December 31, 2016, the Company had notes payable due to one officer, director and related party which totaled $688,384 and $1,321,721, respectively. During the quarter ended September 30, 2017, this related party entered into a Conversion and Option Agreement that resulted in $217,500 of outstanding notes payable being satisfied as payment for exercised stock options and a further $23,400 of notes payable being satisfied as payment for the purchase of 50,000 of the Company's common shares. On September 14, 2017, the remaining balance of that note payable, $138,418 was paid to this related party, resulting in the full and final payment of the note outstanding since 2012. The remaining note payable carries an 8% interest rate and matures on of January 2, 2018. |
Commitments And Contingencies
Commitments And Contingencies | 9 Months Ended |
Sep. 30, 2017 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 6 – 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. Capstone entered into a lease agreement for the same office space as currently located. The lease agreement dated January 17, 2014, and effective February 1, 2014, had 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 is responsible for a portion of common area maintenance charges and any other utility consumed in the leased premises. 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. The Company entered into a six (6) month rental agreement from December 1, 2016 until May 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, 2017. The Company's rent expense amounted to $36,757 and $35,610 for the three-month period ended September 30, 2017 and 2016, respectively and $117,266 and $107,245 for the nine-month period ended September 30, 2017 and 2016, 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. 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. A bonus compensation of $10,000 was paid in the month of January 2017. The agreement can be terminated upon 30 days' notice by either party. The Company may, in its sole discretion at any time after December 31, 2015 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 will be paid $287,163 per annum. As part of the agreement, the base salary will be 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 new agreement began February 5, 2016 and ends February 5, 2018. 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 will be paid $191,442 per annum. As part of the agreement, the base salary will be 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 new agreement began February 5, 2016 and ends February 5, 2018. 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. There is a common provision in both Mr. Wallach and Mr. McClinton's employment agreements: If the officer's employment is terminated by death or disability or without cause, the Company is obligated to pay to the officer's estate or the officer, as the case may be an amount equal to accrued and unpaid base salary as well as all accrued but unused vacation days through the date of termination. The Company will also pay sum payments equal to (a) the sum of twelve (12) months base salary at the rate the Executive was earning as of the date of termination and (b) the sum of "merit" based bonuses earned by the Executive during the prior calendar year of his termination. Any payments owed by the Company shall be paid from a normal payroll account on a bi-weekly basis in accordance with the normal payroll policies of the Company. The amount owed by the Company to the Executive, from the effective Termination date, will be payout bi-weekly over the course of the year but at no time will be no more than twenty (26) installments. The Company will also continue to pay the Executive's health and dental insurance benefits for 12 months starting at the Executives date of termination. If the Executive had family health coverage at the time of termination, the additional family premium obligation would remain theirs and will be reduced against the Executive's severance package. The employment agreements have an anti-competition provision for 18 months after the end of employment. 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 th term. The agreement was further extended out to a second extended term until February 3, 2022 and further extended out to a third extended term if specified sales goals are achieved. The license was also expanded to add an additional product category. Royalty expense for this agreement was $251,559 and $221,219 for the three-month period ended September 30, 2017 and 2016, respectively, and $630,664 and $406,405 for the nine-month period ended September 30, 2017 and 2016, 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 for this agreement was $262,466 for the three-month period ended September 30, 2017 and $412,589 for the nine-month period ended September 30, 2017. 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 includes mergers and acquisitions, asset acquisition or sales and funding through the issuance of Company securities. The agreement has an initial six-month term and renews for an additional, consecutive six-month term if not terminated prior to the term renewal. Wilmington will receive a cash retainer fee up to $80,000, payable in monthly installments, in the first six-month term, and a reduced retainer fee of $45,000, payable in monthly installments, in the first renewal of the initial six-month term. Wilmington will 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 was $30,000 for the three-month period ended September 30, 2017 and $100,000 for the nine-month period ended September 30, 2017. |
Stock Transactions
Stock Transactions | 9 Months Ended |
Sep. 30, 2017 | |
Equity [Abstract] | |
Stock Transactions | NOTE 7 - 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. A total of 607,062 issued warrants remain outstanding at September 30, 2017. Such warrants expired during October 2017. 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. On August 6, 2017, the Company granted 200,000 stock options to two directors of the Company and 10,000 stock options to the Company Secretary. These options have a strike price of $.435 with an effective date of August 6, 2017 and will vest on August 5, 2018. During the quarter ended September 30, 2017, Jeffrey Postal (Director) entered into a Conversion and Option Agreement with the Company and exercised his option to purchase 500,000 of his vested stock options at the grant price of $.435 per share and with a total value of $217,500. As part of the Agreement, the $217,500 payment for these stock options resulted in the satisfaction of $217,500 of notes payable due Mr. Postal since 2012. As of September 30, 2017, there were 1,026,670 stock options outstanding and 816,670 stock options vested. The stock options have a weighted average expense price of $0.435. For the three-month periods ended September 30, 2017 and 2016, the Company recognized stock based compensation expense of $25,644 and $18,081, respectively, related to these stock options. For the nine-month periods ended September 30, 2017 and 2016, the Company recognized stock based compensation expense of $66,594 and $46,581, respectively, related to these stock options. Such amounts are included in compensation expense in the accompanying consolidated statements of income. A further compensation expense expected to be $28,875 and $68,856 will be recognized for these options in 2017 and 2018 respectively. 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 Purchase During the quarter ended September 30, 2017, Jeffrey Postal entered into a Conversion and Option Agreement with the Company. As part of the Agreement, Jeffrey Postal purchased 50,000 shares of common stock at a price of $.468 per share being the 30-consecutive trading day average price with a 10% discount resulting in a total value of $23,400. 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. |
Income Taxes
Income Taxes | 9 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 8 - INCOME TAXES As of September 30, 2017, 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 September 30, 2017 was $362,000 and is reflected in long-term liabilities in the accompanying balance sheet. 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 2013 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 for income taxes for the nine-months ended September 30, 2017 and 2016 was calculated based on the estimated annual effective rate of 34% for both the full 2017 and 2016 calendar years, adjusted for an income tax benefit from the expected utilization of net operating loss carryforwards. The income tax provision for the three- month period ended September 30, 2017 and 2016 consists of: 3 months ended September 30, 2017 3 months ended September 30, 2016 Current: Federal $ 382,000 $ - Deferred: Federal 8,000 24,412 Income Tax Provision $ 390,000 $ 24,412 The income tax provision for the nine-month period ended September 30, 2017 and 2016 consists of: 9 months ended September 30, 2017 9 months ended September 30, 2016 Current: Federal $ 774,000 $ - Deferred: Federal 146,000 37,012 Income Tax Provision $ 920,000 $ 37,012 |
Organization And Summary Of S14
Organization And Summary Of Significant Accounting Policies (Policies) | 9 Months Ended |
Sep. 30, 2017 | |
Accounting Policies [Abstract] | |
Basis of Presentation | 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 September 30, 2017 and results of operations and cash flows for the three months and nine months ended September 30, 2017 and 2016. 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, 2016 (the "2016 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 | Nature of Business Since the beginning of fiscal year 2007, the Company has been primarily engaged in the business of developing, marketing and selling consumer products through national and regional retailers and distributors in North America. Capstone currently operates in eight primary product categories: Induction Charged Power Failure Lights; LED Night Lights and Power Failure Lights; Motion Sensor Lights; Wireless Remote-Control Outlets; Wireless Remote-Control Accent Lights; Dual Power Solar Lights; Outdoor Light Fixtures and Power Control Light Bulbs. The Company's products are typically manufactured in China by third-party manufacturing companies. |
Inventory | Inventory 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 $142,065 and $366,330 at September 30, 2017 and December 31, 2016, respectively. |
Prepaid Expenses | Prepaid Expenses The Company's prepaid expenses consist primarily of deposits on inventory for future orders as well as prepaid advertising. As of September 30, 2017, and December 31, 2016, the Company has $93,010 and $186,019, respectively, in prepaid advertising credits included in prepaid expenses on the consolidated balance sheets. |
Net Income (Loss) Per Common Share | Net Income (Loss) Per Common Share Basic earnings per common share were computed by dividing net income or loss by the weighted average number of shares of common stock outstanding for the reporting period. Diluted earnings per share reflects the potential dilution that could 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 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 September 30, 2017 and 2016, the total number of potentially dilutive common stock equivalents excluded from the diluted earnings per share calculation was 0 and 5,818,700 respectively. Basic weighted average shares outstanding is reconciled to diluted weighted shares outstanding as follows: 3 months ended September 30, 2017 3 months ended September 30, 2016 Basic weighted average shares outstanding 46,660,456 48,132,664 Dilutive warrants 313,211 238,494 Dilutive options 178,907 - Diluted weighted average shares outstanding 47,152,574 48,371,158 9 months ended September 30, 2017 9 months ended September 30, 2016 Basic weighted average shares outstanding 46,989,940 48,132,664 Dilutive warrants 308,219 187,353 Dilutive options 164,505 - Diluted weighted average shares outstanding 47,462,664 48,320,017 |
Revenue Recognition | Revenue Recognition Product sales are recognized when an agreement of sale exists, product delivery has occurred, pricing is fixed or determinable, and collection is reasonably assured. Allowances for sales returns, rebates and discounts are recorded as a component of net sales in the period the allowances are recognized. In addition, accrued liabilities contained in the accompanying consolidated balance sheets include accruals for estimated amounts of credits to be issued in future years based on potentially defective product, other product returns and various allowances which are based on historical authorized returns. On April 22, 2016, the Company received a credit of approximately $479,000 from its major vendor to cover customer returns of products from sales that occurred in 2015 and promotional allowances for 2016 sales. A credit of $126,000 was applied to invoices due to the vendor during the period ending June 30, 2016 and the remaining credit balance of $353,000 was applied to invoices due to the vendor during the period ended September 30, 2016. During the nine months ended September 30, 2017 and 2016, Capstone determined that $47,741 and $94,203, respectively of previously accrued allowances were no longer required. The reduction of accrued allowances is included in net revenues for the nine-month periods ended September 30, 2017 and 2016. |
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 were $67,497 and $65,406 for the three months and $180,743 and $138,846 for the nine months ended September 30, 2017 and 2016, respectively. |
Shipping and Handling | Shipping and Handling The Company's shipping and handling costs are included in sales and marketing expenses and amounted to $48,952 and $59,604 for the three months and $95,290 and $117,000 for the nine months ended September 30, 2017 and 2016, respectively. |
Accrued Liabilities | Accrued Liabilities Accrued liabilities contained in the accompanying consolidated balance sheets include accruals for estimated amounts of credits to be issued in future years based on potential product returns and various allowances, amounting to $369,061 and $1,200,792 as of September 30, 2017 and December 31, 2016, respectively. These estimates could change significantly in the near term. |
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 |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for stock-based compensation under the provisions of ASC 718 Compensation- Stock Compensation ASC 718 requires companies to estimate the fair value of share-based payment awards on the date of the grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expenses over the requisite service periods in the Company's consolidated statements of income. Stock-based compensation expense recognized during the period is based on the value of the portion of share-based payment awards that is ultimately expected to vest during the period. |
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 and liabilities and disclosure of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ from those estimates, and the differences could be material. |
Recent Accounting Standards | Recent Accounting Standards In May 2014, ASU 2014-09 was issued, Revenue from Contracts with Customers In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities , Fair Value Measurements In March 2016, the FASB issued ASU 2016-02, Leases In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments Statement of Cash Flows, In November 2016, the FASB issued ASU 2016-18, Cash Flows: Statement of Cash Flows (Topic 230) - Restricted Cash. The adoption of ASU 2016-18 is not expected to have a material effect on the Company's consolidated financial statements. In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment, In May 2017, the FASB issued ASU No. 2017-09, "Compensation – Stock Compensation (Topic 718) – Scope of Modification Accounting" |
Adoption of New Accounting Standards | Adoption of New Accounting Standards In July 2015, the FASB issued ASU 2015-11, Simplifying the Measurement of Inventory The Company adopted ASU 2015-17, Income Taxes (Topic 740): Balance sheet Classification of Deferred Taxes, The Company adopted ASU 2016-09, Compensation - Stock Compensation (Topic 718) The Company continually assesses any new accounting pronouncements to determine their applicability to the Company. Where it is determined that a new accounting pronouncement affects the Company's financial reporting, the Company undertakes a study to determine the consequence of the change to its financial statements and assures that there are proper controls in place to ascertain that the Company's financials properly reflect the change. |
Organization And Summary Of S15
Organization And Summary Of Significant Accounting Policies (Net Income (Loss) Per Common Share) (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Organization And Summary Of Significant Accounting Policies Net Income Loss Per Common Share Tables | |
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: 3 months ended September 30, 2017 3 months ended September 30, 2016 Basic weighted average shares outstanding 46,660,456 48,132,664 Dilutive warrants 313,211 238,494 Dilutive options 178,907 - Diluted weighted average shares outstanding 47,152,574 48,371,158 9 months ended September 30, 2017 9 months ended September 30, 2016 Basic weighted average shares outstanding 46,989,940 48,132,664 Dilutive warrants 308,219 187,353 Dilutive options 164,505 - Diluted weighted average shares outstanding 47,462,664 48,320,017 |
Concentration Of Credit Risk 16
Concentration Of Credit Risk And Economic Dependence (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Concentration Of Credit Risk And Economic Dependence Tables | |
Schedule of Concentration of Credit Risk of Major Customers And Major Vendors | Major Customers Revenue % Gross Accounts Receivable 9 Month Periods Ended September 30, As of September 30, As of Decemb 31, 2017 2016 2017 2016 Customer A 55.5 % 62.8 % $ 3,563,515 $ 3,760,755 Customer B 43.7 % 35.8 % 1,447,171 1,823,785 99.2 % 98.6 % $ 5,010,686 $ 5,558,540 Major Vendors Purchases % Accounts Payable 9 Month Periods Ended September 30, As of September 30, As of December 31, 2017 2016 2017 2016 Vendor A 90.8 % 89.5 % $ 1,172,314 $ 1,507,671 |
Income Taxes (Tables)
Income Taxes (Tables) | 9 Months Ended |
Sep. 30, 2017 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income Tax Provision | The income tax provision for the three- month period ended September 30, 2017 and 2016 consists of: 3 months ended September 30, 2017 3 months ended September 30, 2016 Current: Federal $ 382,000 $ - Deferred: Federal 8,000 24,412 Income Tax Provision $ 390,000 $ 24,412 The income tax provision for the nine-month period ended September 30, 2017 and 2016 consists of: 9 months ended September 30, 2017 9 months ended September 30, 2016 Current: Federal $ 774,000 $ - Deferred: Federal 146,000 37,012 Income Tax Provision $ 920,000 $ 37,012 |
Organization And Summary Of S18
Organization And Summary Of Significant Accounting Policies (Net Income (Loss) Per Common Share) (Details) - shares | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Organization And Summary Of Significant Accounting Policies Net Income Loss Per Common Share Details | ||||
Basic weighted average shares outstanding | 46,660,456 | 48,132,664 | 46,989,940 | 48,132,664 |
Dilutive warrants | 313,211 | 238,494 | 308,219 | 187,353 |
Dilutive options | 178,907 | 164,505 | ||
Diluted weighted average shares outstanding | 47,152,574 | 48,371,158 | 47,462,664 | 48,320,017 |
Concentration Of Credit Risk 19
Concentration Of Credit Risk And Economic Dependence (Major Customers) (Details) - USD ($) | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Customer A [Member] | |||
Concentration Risk [Line Items] | |||
Gross Accounts Receivable | $ 3,563,515 | $ 3,760,755 | |
Customer B [Member] | |||
Concentration Risk [Line Items] | |||
Gross Accounts Receivable | $ 1,447,171 | 1,823,785 | |
Major Customers [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 99.20% | 98.60% | |
Gross Accounts Receivable | $ 5,010,686 | $ 5,558,540 | |
Revenue [Member] | Customer A [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 55.50% | 62.80% | |
Revenue [Member] | Customer B [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 43.70% | 35.80% |
Concentration Of Credit Risk 20
Concentration Of Credit Risk And Economic Dependence (Major Vendors) (Details) - Vendor A [Member] - USD ($) | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 | |
Concentration Risk [Line Items] | |||
Accounts Payable | $ 1,172,314 | $ 1,507,671 | |
Purchases [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 90.80% | 89.50% |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | 9 Months Ended | ||
Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | |
Current: | ||||
Federal | $ 382,000 | $ 774,000 | ||
Deferred: | ||||
Federal | 8,000 | 24,412 | 146,000 | 37,012 |
Income Tax Provision | $ 390,000 | $ 24,412 | $ 920,000 | $ 37,012 |
Organization And Summary Of S22
Organization And Summary Of Significant Accounting Policies (Narrative) (Details) - USD ($) | Apr. 22, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Jun. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 |
Potentially dilutive common stock equivalents excluded from diluted earnings per share | 0 | 5,818,700 | |||||
Credit received from Vendor to cover customer sales return | $ 479,000 | ||||||
Credit adjusted to invoice of vendor | $ 126,000 | ||||||
Balance amount yet to adjust to vendor | $ 353,000 | $ 353,000 | |||||
Sales and Marketing Expenses [Member] | |||||||
Advertising and promotion expense | $ 67,497 | 65,406 | $ 180,743 | 138,846 | |||
Shipping and handling costs | 48,952 | $ 59,604 | 95,290 | 117,000 | |||
Allowance for Sales Returns, Rebates And Discounts [Member] | |||||||
Accrued sales allowances recovered | 47,741 | $ 94,203 | |||||
Inventory [Member] | |||||||
Inventory, finished goods | 142,065 | 142,065 | $ 366,330 | ||||
Prepaid Expenses [Member] | |||||||
Prepaid advertising | 93,010 | 93,010 | 186,019 | ||||
Accrued Liabilities [Member] | |||||||
Accrual of credits on account of pontential product returns and various allowances | $ 369,061 | $ 369,061 | $ 1,200,792 |
Concentrations Of Credit Risk A
Concentrations Of Credit Risk And Economic Dependence (Narrative) (Details) | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Net Revenue [Member] | International Sales [Member] | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 4.30% | 8.10% |
Note Receivable (Narrative) (De
Note Receivable (Narrative) (Details) - USD ($) | Jun. 08, 2016 | Jan. 15, 2013 | Sep. 30, 2017 |
Fair value of notes receivable | $ 0 | ||
Agreement With AC Kinetics, Inc [Member] | Preferred Stock, Series A [Member] | |||
Preferred stock purchased, shares | 100 | ||
Preferred stock purchased, value | $ 500,000 | ||
Preferred stock liquidation preference value | $ 500,000 | ||
Preferred stock conversion rights | Were convertible at the Company's demand into 3% of the outstanding shares of AC Kinetics common stock and had anti-dilution protection. | ||
Securities Purchase Agreement With AC Kinetics, Inc [Member] | |||
No of shares sold back | 100 | ||
Description of consideration received under the agreement | As further consideration, the Company also received an option to repurchase 1,666,667 shares of Company common stock held by Involve L.L.C. at an exercise price of $.15. The Agreements were signed June 27, 2016. | ||
Securities Purchase Agreement With AC Kinetics, Inc [Member] | Notes Receivable [Member] | |||
Consideration received as notes receivable | $ 1,500,000 | ||
Fair value of notes receivable | $ 500,000 |
Notes Payable (Narrative) (Deta
Notes Payable (Narrative) (Details) - Financing Agreement With Sterling National Bank [Member] - Line of Credit [Member] - USD ($) | Sep. 08, 2010 | Sep. 30, 2017 | Dec. 31, 2016 |
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. | ||
Percentage of base management fee | 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 time of closing was 5%. | ||
Line of credit interest rate | 5.25% | 5.25% | |
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 |
Notes And Loans Payable To Re26
Notes And Loans Payable To Related Parties (Narrative) (Details) - USD ($) | Sep. 14, 2017 | Sep. 30, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Dec. 31, 2016 |
Related Party Transaction [Line Items] | |||||
Notes and loans payable to related parties | $ 688,384 | $ 688,384 | $ 1,321,721 | ||
Repayment of notes payable | 257,100 | $ 1,453,946 | |||
Notes And Loans Payable [Member] | One Officer, Director And Related Party [Member] | |||||
Related Party Transaction [Line Items] | |||||
Notes and loans payable to related parties | $ 1,053,883 | $ 1,053,883 | $ 1,321,721 | ||
Debt instrument interest rate | 8.00% | 8.00% | 8.00% | ||
Debt instrument maturity date | Jan. 2, 2018 | Jan. 2, 2018 | |||
Repayment of notes payable | $ 138,418 | ||||
Notes And Loans Payable [Member] | One Officer, Director And Related Party [Member] | Common Stock [Member] | |||||
Related Party Transaction [Line Items] | |||||
Value of note payable satisfied as payment for purchase of common stock | $ 23,400 | ||||
No of shares issued for payment of notes payable | 50,000 | ||||
Notes And Loans Payable [Member] | One Officer, Director And Related Party [Member] | Stock Options [Member] | |||||
Related Party Transaction [Line Items] | |||||
Value of note satisfied as payment for exercised stock options | $ 217,500 |
Commitments And Contingencies (
Commitments And Contingencies (Operating Leases) (Narrative) (Details) | May 16, 2017USD ($) | Feb. 01, 2017USD ($) | Dec. 01, 2016 | May 16, 2016USD ($) | Feb. 16, 2016 | Feb. 17, 2014USD ($) | Feb. 01, 2014USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Sep. 30, 2017USD ($) | Sep. 30, 2016USD ($) | Feb. 17, 2014HKD | Jun. 29, 2007ft² |
Operating Leased Assets [Line Items] | |||||||||||||
Rent expenses | $ 36,757 | $ 35,610 | $ 117,266 | $ 107,245 | |||||||||
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 | ||||||||||||
Operating Lease Agreement - Office Space [Member] | CIHK [Member] | |||||||||||||
Operating Leased Assets [Line Items] | |||||||||||||
Base annual rent payable | $ 54,193 | $ 48,775 | $ 48,000 | ||||||||||
Operating lease description | 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 | 12 months | 12 months | 3 months | ||||||||||
Operating Lease Agreement - Office Space [Member] | CIHK [Member] | Hong Kong, Dollars | |||||||||||||
Operating Leased Assets [Line Items] | |||||||||||||
Base annual rent payable | HKD | HKD 372,000 | ||||||||||||
Operating Lease Agreement - Showroom Space [Member] | 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 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, 2017. | ||||||||||||
Operating lease term | 6 months |
Commitments And Contingencies28
Commitments And Contingencies (Consulting Agreements) (Narrative) (Details) - Consulting Agreement With George Wolf [Member] - USD ($) | Jan. 02, 2017 | Jan. 02, 2016 | Jul. 01, 2015 | Jan. 31, 2017 | Sep. 30, 2017 |
Amount payable per month under the agreement | $ 13,750 | $ 12,500 | $ 10,500 | ||
Agreement description | 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 after December 31, 2015 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 | $ 10,000 |
Commitments And Contingencies29
Commitments And Contingencies (Employment Agreements) (Narrative) (Details) | Feb. 05, 2016USD ($) |
Employment Agreement With Stewart Wallach [Member] | |
Amount payable per annum under the agreement | $ 287,163 |
Agreement description | As part of the agreement, the base salary will be 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 new agreement began February 5, 2016 and ends February 5, 2018. 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. If the officer's employment is terminated by death or disability or without cause, the Company is obligated to pay to the officer's estate or the officer, as the case may be an amount equal to accrued and unpaid base salary as well as all accrued but unused vacation days through the date of termination. The Company will also pay sum payments equal to (a) the sum of twelve (12) months base salary at the rate the Executive was earning as of the date of termination and (b) the sum of "merit" based bonuses earned by the Executive during the prior calendar year of his termination. Any payments owed by the Company shall be paid from a normal payroll account on a bi- weekly basis in accordance with the normal payroll policies of the Company. The amount owed by the Company to the Executive, from the effective Termination date, will be payout bi-weekly over the course of the year but at no time will be no more than twenty (26) installments. The Company will also continue to pay the Executive's health and dental insurance benefits for 12 months starting at the Executives date of termination. If the Executive had family health coverage at the time of termination, the additional family premium obligation would remain theirs and will be reduced against the Executive's severance package. The employment agreements have an anti-competition provision for 18 months after the end of employment. |
Employment Agreement With James McClinton [Member] | |
Amount payable per annum under the agreement | $ 191,442 |
Agreement description | As part of the agreement, the base salary will be 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 new agreement began February 5, 2016 and ends February 5, 2018. 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. If the officer's employment is terminated by death or disability or without cause, the Company is obligated to pay to the officer's estate or the officer, as the case may be an amount equal to accrued and unpaid base salary as well as all accrued but unused vacation days through the date of termination. The Company will also pay sum payments equal to (a) the sum of twelve (12) months base salary at the rate the Executive was earning as of the date of termination and (b) the sum of "merit" based bonuses earned by the Executive during the prior calendar year of his termination. Any payments owed by the Company shall be paid from a normal payroll account on a bi- weekly basis in accordance with the normal payroll policies of the Company. The amount owed by the Company to the Executive, from the effective Termination date, will be payout bi-weekly over the course of the year but at no time will be no more than twenty (26) installments. The Company will also continue to pay the Executive's health and dental insurance benefits for 12 months starting at the Executives date of termination. If the Executive had family health coverage at the time of termination, the additional family premium obligation would remain theirs and will be reduced against the Executive's severance package. The employment agreements have an anti-competition provision for 18 months after the end of employment. |
Commitments And Contingencies30
Commitments And Contingencies (Licensing Agreements) (Narrative) (Details) - USD ($) | Jan. 09, 2017 | Dec. 29, 2016 | Feb. 04, 2015 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 |
Licensing Agreement With Floorcare Company | |||||||
Agreement description | On December 29, 2016, the Company finalized the first amendment to the February 4 th | 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 | $ 251,559 | $ 221,219 | $ 630,664 | $ 406,405 | |||
Licensing Agreement With Battery Company | |||||||
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 | $ 262,466 | $ 412,589 |
Commitments And Contingencies31
Commitments And Contingencies (Investment Banking Agreement) (Narrative) (Details) - Investment Banking Agreement With Wilmington Capital Securities, LLC [Member] - USD ($) | Mar. 01, 2017 | Sep. 30, 2017 | Sep. 30, 2017 |
Cash retainer fee payable | $ 80,000 | ||
Agreement description | The agreement has an initial six-month term and renews for an additional, consecutive six-month term if not terminated prior to the term renewal. Wilmington will receive a cash retainer fee up to $80,000, payable in monthly installments, in the first six-month term, and a reduced retainer fee of $45,000, payable in monthly installments, in the first renewal of the initial six-month term. Wilmington will 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. | ||
Retainer fees | $ 30,000 | $ 100,000 |
Stock Transactions (Warrants) (
Stock Transactions (Warrants) (Narrative) (Details) - Private Placement [Member] - USD ($) | 1 Months Ended | 2 Months Ended |
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 warrants outstanding | 607,062 |
Stock Transactions (Options) (N
Stock Transactions (Options) (Narrative) (Details) - USD ($) | Aug. 06, 2017 | May 02, 2017 | Sep. 30, 2017 | Sep. 30, 2016 | Sep. 30, 2017 | Sep. 30, 2016 | Nov. 14, 2017 |
Stock based compensation expense | $ 66,594 | $ 46,581 | |||||
Stock Options [Member] | 2005 Equity Plan [Member] | |||||||
Stock options outstanding | 1,026,670 | 1,026,670 | |||||
Stock options vested | 816,670 | ||||||
Weighted average exercise price of options | $ 0.435 | $ 0.435 | |||||
Stock based compensation expense | $ 25,644 | $ 18,081 | $ 66,594 | $ 46,581 | |||
Unrecognized stock based compensation expense | $ 28,875 | $ 28,875 | |||||
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 Options [Member] | 2005 Equity Plan [Member] | Subsequent Event [Member] | |||||||
Unrecognized stock based compensation expense | $ 68,856 | ||||||
Stock Options [Member] | Conversion And Option Agreement [Member] | Jeffrey Postal, Director [Member] | |||||||
Stock options exercised | 500,000 | ||||||
Value of stock options exercised | $ 217,500 | ||||||
Stock Options [Member] | Two Directors [Member] | |||||||
Stock options granted | 200,000 | ||||||
Strike price | $ 0.435 | ||||||
Stock options terms | These options have a strike price of $.435 with an effective date of August 6, 2017 and will vest on August 5, 2018. | ||||||
Stock Options [Member] | Company Secretary [Member] | |||||||
Stock options granted | 10,000 | ||||||
Strike price | $ 0.435 | ||||||
Stock options terms | These options have a strike price of $.435 with an effective date of August 6, 2017 and will vest on August 5, 2018. |
Stock Transactions (Stock Purch
Stock Transactions (Stock Purchase) (Narrative) (Details) - Conversion And Option Agreement [Member] - Jeffrey Postal, Director [Member] - Common Stock [Member] | 3 Months Ended |
Sep. 30, 2017USD ($)$ / sharesshares | |
No of shares issued for payment of notes payable | shares | 50,000 |
Value of note payable satisfied as payment for purchase of common stock | $ | $ 23,400 |
Sale of stock price per share | $ / shares | $ 0.468 |
Sale of stock description | As part of the Agreement, Jeffrey Postal purchased 50,000 shares of common stock at a price of $.468 per share being the 30-consecutive trading day average price with a 10% discount resulting in a total value of $23,400. |
Stock Transactions (Adoption Of
Stock Transactions (Adoption Of Stock Repurchase Plan) (Narrative) (Details) - Stock Repurchase Plan [Member] - Common Stock [Member] - USD ($) | May 01, 2017 | Feb. 13, 2017 | Aug. 23, 2016 |
Value of shares authorized to be repurchased | $ 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) (Detai
Income Taxes (Narrative) (Details) - USD ($) | 9 Months Ended | |
Sep. 30, 2017 | Sep. 30, 2016 | |
Income Taxes Narrative Details | ||
Operating loss carryforward limitations on use | Offset against future taxable income through 2034. | |
Net deferred tax liability | $ 362,000 | |
Estimated effective annual income tax rate | 34.00% | 34.00% |