Document and Entity Information
Document and Entity Information - shares | 3 Months Ended | |
Mar. 31, 2019 | Apr. 29, 2019 | |
Document And Entity Information | ||
Entity Registrant Name | CAPSTONE COMPANIES, INC. | |
Entity Central Index Key | 0000814926 | |
Document Type | 10-Q | |
Document Period End Date | Mar. 31, 2019 | |
Amendment Flag | false | |
Current Fiscal Year End Date | --12-31 | |
Is Entity's Reporting Status Current? | Yes | |
Is Entity Emerging Growth Company? | false | |
Elected Not To Use the Extended Transition Period | true | |
Entity Filer Category | Non-accelerated Filer | |
Entity Small Business | true | |
Entity Common Stock, Shares Outstanding | 46,946,364 | |
Document Fiscal Period Focus | Q1 | |
Document Fiscal Year Focus | 2019 |
Condensed Consolidated Balance
Condensed Consolidated Balance Sheets - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 |
Current Assets: | ||
Cash | $ 1,622,844 | $ 3,822,359 |
Accounts receivable, net | 2,376,699 | 64,511 |
Inventories | 17,301 | 27,497 |
Prepaid expenses | 76,724 | 243,876 |
Income tax refundable | 220,207 | 220,207 |
Total Current Assets | 4,313,775 | 4,378,450 |
Property and Equipment: | ||
Computer equipment and software | 51,195 | 51,195 |
Machinery and equipment | 170,567 | 170,567 |
Furniture and fixtures | 6,828 | 6,828 |
Less: Accumulated depreciation | 163,700 | 152,870 |
Total Property & Equipment | 64,890 | 75,720 |
Other Non-current Assets: | ||
Deposit | 103,193 | 102,805 |
Goodwill | 1,936,020 | 1,936,020 |
Total Other Non-current Assets | 2,039,213 | 2,038,825 |
Total Assets | 6,417,878 | 6,492,995 |
Current Liabilities: | ||
Accounts payable and accrued liabilities | 766,276 | 461,446 |
Deferred rent incentive | 83,827 | 108,844 |
Income tax payable | 11,694 | 11,694 |
Total Current Liabilities | 861,797 | 581,984 |
Long Term Liabilities: | ||
Deferred tax liabilities | 12,000 | |
Total Long Term Liabilities | 12,000 | |
Total Liabilities | 861,797 | 593,984 |
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 47,000,894 shares at March 31, 2019 and 47,046,364 shares at December 31, 2018. | 4,701 | 4,704 |
Additional paid-in capital | 7,094,632 | 7,092,219 |
Accumulated deficit | (1,543,252) | (1,197,912) |
Total Stockholders' Equity | 5,556,081 | 5,899,011 |
Total Liabilities and Stockholders' Equity | 6,417,878 | 6,492,995 |
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 |
Condensed Consolidated Balanc_2
Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2019 | Dec. 31, 2018 |
Common stock, par value per share | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 56,666,667 | 56,666,667 |
Common stock, shares issued | 47,000,894 | 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 | $ 1 |
Preferred stock, shares authorized | 67 | 67 |
Preferred stock, shares issued | 0 | 0 |
Condensed Consolidated Statemen
Condensed Consolidated Statements Of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Income Statement [Abstract] | ||
Revenues, net | $ 2,978,802 | $ 4,060,168 |
Cost of sales | 2,352,215 | 3,040,897 |
Gross Profit | 626,587 | 1,019,271 |
Operating Expenses: | ||
Sales and marketing | 191,875 | 363,061 |
Compensation | 374,848 | 375,110 |
Professional fees | 157,803 | 148,887 |
Product development | 85,229 | 166,566 |
Other general and administrative | 163,711 | 174,288 |
Total Operating Expenses | 973,466 | 1,227,912 |
Operating Loss | (346,879) | (208,641) |
Other Expenses, Net | (10,461) | |
Loss Before Tax (Benefit) | (357,340) | (208,641) |
(Benefit) for Income Tax | (12,000) | (18,000) |
Net Loss | $ (345,340) | $ (190,641) |
Net Loss per Common Share | ||
Basic | $ (0.007) | $ (0.004) |
Diluted | $ (0.007) | $ (0.004) |
Weighted Average Shares Outstanding | ||
Basic | 47,033,670 | 47,046,364 |
Diluted | 47,033,670 | 47,046,364 |
Condensed Consolidated Statem_2
Condensed Consolidated Statements Of Stockholders' Equity - USD ($) | Preferred Stock, Series A [Member] | Preferred Stock, Series B [Member] | Preferred Stock, Series C [Member] | Common Stock [Member] | Additional Paid-In Capital [Member] | Accumulated Deficit [Member] | Total |
Balance, shares at Dec. 31, 2017 | 47,046,364 | ||||||
Balance, value at Dec. 31, 2017 | $ 4,704 | $ 7,005,553 | $ (186,854) | $ 6,823,403 | |||
Stock options for compensation | 28,875 | 28,875 | |||||
Net Income (Loss) | (190,641) | (190,641) | |||||
Balance, shares at Mar. 31, 2018 | 47,046,364 | ||||||
Balance, value at Mar. 31, 2018 | $ 4,704 | 7,034,428 | (377,495) | 6,661,637 | |||
Balance, shares at Dec. 31, 2018 | 47,046,364 | ||||||
Balance, value at Dec. 31, 2018 | $ 4,704 | 7,092,219 | (1,197,912) | 5,899,011 | |||
Stock options for compensation | 11,025 | 11,025 | |||||
Repurchase of shares, shares | (45,470) | ||||||
Repurchase of shares, value | $ 3 | 8,612 | 8,615 | ||||
Net Income (Loss) | (345,340) | (345,340) | |||||
Balance, shares at Mar. 31, 2019 | 47,000,894 | ||||||
Balance, value at Mar. 31, 2019 | $ 4,701 | $ 7,094,632 | $ (1,543,252) | $ 5,556,081 |
Condensed Consolidated Statem_3
Condensed Consolidated Statements Of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net loss | $ (345,340) | $ (190,641) |
Adjustments to reconcile net loss to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 10,830 | 9,133 |
Stock based compensation expense | 11,025 | 28,875 |
Provision (benefit) for deferred income tax | (12,000) | 9,000 |
(Decrease) in accrued sales allowance | (191,468) | (20,635) |
(Increase) decrease in accounts receivable, net | 2,093,279 | (1,689,880) |
Decrease in inventories | (10,196) | (77,950) |
Decrease in prepaid expenses | (167,152) | (160,569) |
(Increase) in deposits | (388) | |
Increase (decrease) in accounts payable and accrued liabilities | 277,389 | (843,679) |
(Decrease) in deferred rent incentive | (25,017) | |
(Decrease) in income tax payable | (613,088) | |
(Increase) in income tax refundable | 113,912 | |
Net cash provided by (used in) operating activities | (2,190,900) | 193,452 |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Repurchase of Shares | 8,615 | |
Net cash (used in) financing activities | (8,615) | |
Net Increase (Decrease) in Cash | (2,199,515) | 193,452 |
Cash at Beginning of Period | 3,822,359 | 3,668,196 |
Cash at End of Period | 1,622,844 | 3,861,648 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||
Cash paid during the period for: Interest | ||
Cash paid during the period for: Income taxes | $ 700,000 |
Organization And Summary Of Sig
Organization And Summary Of Significant Accounting Policies | 3 Months Ended |
Mar. 31, 2019 | |
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 March 31, 2019 and results of operations and cash flows for the three months ended March 31, 2019 and 2018. All material 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, 2018 (the “2018 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 have different functionalities to meet consumer’s needs. These products are offered either under the Capstone brand or licensed brands. The Company’s products are typically manufactured in China by contract manufacturing companies. The Company’s operations consist of one reportable segment for financial reporting purposes: Lighting Products. 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 amount expected to be collected 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 March 31, 2019 and December 31, 2018, accounts receivable serves as collateral when the Company borrows against its credit facilities. Allowance for Doubtful Accounts The Company evaluates the collectability of accounts receivable based on a combination of factors. In cases where the Company becomes aware of circumstances that may impair a specific customer’s ability to meet its financial obligations subsequent to the original sale, the Company will recognize an allowance against amounts due, and thereby reduce the net recognized receivable to the amount the Company reasonably believes will be collected. For all other customers, the Company recognizes an allowance for doubtful accounts based on the length of time the receivables are past due and consideration of other factors such as industry conditions, the current business environment and the Company’s historical payment experience. An allowance for doubtful accounts is established as losses are estimated to have occurred through a provision for bad debts charged to earnings. This evaluation is inherently subjective and requires estimates that are susceptible to significant revisions as more information becomes available. As of March 31, 2019 and December 31, 2018, management has determined that accounts receivable are fully collectible. As such, management has not recorded an allowance for doubtful accounts. The following table summarizes the components of Accounts Receivable, net: March 31, December 31, 2019 2018 Trade Accounts Receivables at period end $ 2,550,125 $ 429,405 Reserve for estimated marketing allowances, cash discounts and other incentives (173,426 ) (364,894 ) Total Accounts Receivable, net $ 2,376,699 $ 64,511 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: March 31, December 31, 2019 2018 Balance at beginning of the period $ (364,894 ) $ (194,061 ) Accrued allowances — (191,468 ) Reversal of prior year accrued allowances — 1,749 Expenditures 191,468 18,886 Balance at period-end $ (173,426 ) $ (364,894 ) 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. Prepaid Expenses The Company’s prepaid expenses consist primarily of deposits on inventory purchases for future orders as well as prepaid insurance, trade show and subscription expense. Leases Lease incentives are amortized utilizing the straight-line method over the life of the lease. Earnings Per Common Share Basic earnings per common share are computed by dividing net income(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 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. During the period ended March 31, 2019, 100 thousand stock options expired. At March 31, 2019 and 2018, the total number of potentially dilutive common stock equivalents excluded from the diluted earnings per share calculation was 870,001 and 950,003, respectively. Basic weighted average shares outstanding is reconciled to diluted weighted shares outstanding as follows: 3 months ended 3 months ended March 31, 2019 March 31, 2018 Basic weighted average shares outstanding 47,033,670 47,046,364 Dilutive options — — Diluted weighted average shares outstanding 47,033,670 47,046,364 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 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. A sales contract occurs when the customer-retailer submits a purchase order to buy a specific product, a specific quantity, at an agreed-fixed price, within a ship window, from a specific location and on agreed payment terms. The selling price in all of our customers’ orders has been previously negotiated and agreed to including any applicable discount prior to receiving the customer’s purchase order. The stated unit price in the customer’s order has already been determined and is fixed at the time of invoicing. The Company recognizes product revenue when the Company’s performance obligations as per the terms in the customers purchase order have been fully satisfied, specifically, when the specified product and quantity ordered has been manufactured and shipped pursuant to the customers requested ship window, when the sales price as detailed in the purchase order is fixed, when the product title and risk of loss for that order has passed to the customer, and collection of the invoice is reasonably assured. This means that the product ordered and to be shipped has gone through quality assurance inspection, customs and commercial documentation preparation, the goods have been delivered, title transferred to the customer and confirmed by a signed cargo receipt or bill of lading. Only at the time of shipment when all performance obligations have been satisfied will the judgement be made to invoice the customer and complete the sales contract. The Company may enter into a licensing agreement with globally recognized companies, that allows the Company to market products under a licensed brand to retailers for a designated period of time, and whereby the Company will pay a royalty fee, typically a percentage of licensed product revenue to the licensor in order to market the licensed product. The Company expenses license royalty fees and sales commissions when incurred and these expenses are recognized during the period the related sale is recorded. These costs are recorded within sales and marketing expenses. The following table disaggregates net revenue by major source: For the 3 Months Ended March 31, 2019 For the 3 Months Ended March 31, 2018 Capstone Brand License Brands Total Consolidated Capstone Brand License Brands Total Consolidated Lighting Products- U.S. $ 2,677,627 $ — $ 2,677,627 $ 148,301 $ 3,594,781 $ 3,743,082 Lighting Products-International 301,175 — 301,175 165,894 151,192 317,086 Total Revenue $ 2,978,802 $ — $ 2,978,802 $ 314,195 $ 3,745,973 $ 4,060,168 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. Customer orders received are not long-term orders and are typically shipped within six months of the order receipt, but certainly within a one-year period. Our payment terms may vary by the type of customer, the customer's credit standing, the location where the product will be picked up from and for international customers, which country their corporate office is located. The term between invoicing date and when payment is due may vary between 30 days and 90 days depending on the customer type. In order to ensure there are no payment issues, overseas customers or new customers may be required to provide a deposit or full payment before the order is delivered to the customer. The Company selectively supports retailer's initiatives to maximize sales of the Company's products on the retail floor or to assist in developing consumer awareness of new products launches, by providing marketing fund allowances to the customer. The Company recognizes these incentives at the time they are offered to the customers and records a credit to their account with an offsetting charge as either a reduction to revenue, increase to cost of sales, or marketing expenses depending on the type of sales incentives. Sales reductions for anticipated discounts, allowances and other deductions are recognized during the period the related revenue is recorded. During the three months ended March 31, 2019 and 2018, Capstone determined that $0 and $1,749, respectively of previously accrued allowances were no longer required. 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. Certain retail customers may receive an off-invoice based discount such as a defective/warranty allowance, that will automatically reduce the unit selling price at the time the order is invoiced. This allowance will be used by the retail customer to defray the cost of any returned units from consumers and therefore negate the need to ship defective units back to the Company. Such allowances are charged to cost of sales at the time the order is invoiced. For those customers that do not receive a discount off-invoice, the Company recognizes a charge to cost of sales for anticipated non-conforming returns based upon an analysis of historical product warranty claims and other relevant data. We evaluate our warranty reserves based on various factors including historical warranty claims assumptions about frequency of warranty claims, and assumptions about the frequency of product failures derived from our reliability estimates. Actual product failure rates that materially differ from our estimates could have a significant impact on our operating results. Product warranty reserves are reviewed each quarter and recognized at the time we recognize revenue. 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 March 31, 2019 and December 31, 2018 balance sheets: March 31, December 31, 2019 2018 Balance at the beginning of the period $ 212,495 $ 328,279 Amount accrued 132,852 59,981 Expenditures (54,395 ) (175,765 ) Balance at period-end $ 290,952 $ 212,495 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 $171,457 and $4,918 for the three months ended March 31, 2019 and 2018, 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. All research and development costs are charged to results of operations as incurred. For the three months ended March 31, 2019 and 2018, research and development expenses were $85,229 and $166,566, 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 $7,866 and $26,353 for the three months ended March 31, 2019 and 2018, respectively. Accounts Payable and Accrued Liabilities The following table summarizes the components of accounts payable and accrued liabilities as of March 31, 2019 and December 31, 2018, respectively: March 31, December 31, 2019 2018 Accounts payable $ 437,082 $ 221,568 Accrued warranty reserve 290,952 212,495 Accrued compensation, benefits, commissions and other expenses 38,242 27,383 Total accrued liabilities 329,194 239,878 Total $ 766,276 $ 461,446 Income Taxes The Company is subject to income taxes in the U.S. federal jurisdiction, various state jurisdictions and certain other jurisdictions. The Company accounts for income taxes under the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 740 Income Taxes The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement. 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 generally for a period of 3 years from the later of each return due date or date filed. 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. 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 condensed consolidated statements of operations. In conjunction with the adoption of ASC 718, the Company adopted the straight-line single option method of attributing the value of stock-based compensation expense. The Company accounts for forfeitures as they occur. 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 warrantyobligations, 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. Historically, past changes to these estimates have not had a material impact on the Company’s financial statements. However, circumstances could change, and actual results could differ materially from those estimates. Recent Accounting Standards To be Adopted in a Future Period In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment, Adoption of New Accounting Standards In March 2016, the FASB issued ASU 2016-02, Leases 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 | 3 Months Ended |
Mar. 31, 2019 | |
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 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 The Company at times has cash with its financial institution in excess of Federal Deposit Insurance Corporation ("FIDC") insurance limits. The Company places its cash 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 one customer who comprised 100% of net revenue during the three months ended March 31, 2019 and two customers who comprised of 26% and 71% of net revenue during the three months ended March 31, 2018. The loss of these customers would adversely impact the business of the Company. For the three months ended March 31, 2019 and 2018, approximately 10% and 8%, respectively, of the Company's net revenue resulted from international sales. Major Customers Net Revenue % Gross Accounts Receivable For the Three Months ended March 31, As of March 31, As of December 31, 2019 2018 2019 2018 Customer A 100 % 26 % $ 2,606,110 $ 402,294 Customer B — % 71 % — — Total 100 % 97 % $ 2,606,110 $ 402,294 Major Vendors The Company had one vendor from which it purchased 100% of merchandise sold during the period ended March 31, 2019, and two vendors from which it purchased 89% and 8% of merchandise sold during the period ended March 31, 2018. The loss of these suppliers could adversely impact the business of the Company. Purchases % Accounts Payable For the Three Months ended March 31, As of March 31, As of December 31, 2019 2018 2019 2018 Vendor A 100 % 89 % $ 333,623 63,594 Vendor B — % 8 % — — Total 100 % 97 % $ 333,623 63,594 |
Notes Payable
Notes Payable | 3 Months Ended |
Mar. 31, 2019 | |
Debt Disclosure [Abstract] | |
Notes Payable | NOTE 3 – NOTES PAYABLE Sterling National Bank On September 8, 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 time of closing was 7%. As of March 31, 2019 and December 31, 2018, the interest rate on the loan was 7.50 % For the three months ended March 31, 2019 and 2018, the processing fees associated with the agreement were $10,494 and $17,529, respectively. As of March 31, 2019 and December 31, 2018, there was no balance due to Sterling National Bank. 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
Commitments And Contingencies | 3 Months Ended |
Mar. 31, 2019 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies | NOTE 4 – COMMITMENTS AND CONTINGENCIES Operating Leases The Company has operating lease agreements for offices and showroom facilities in Fort Lauderdale, Florida and in Hong Kong, expiring at varying dates. The Company’s principal executive offices was located at 350 Jim Moran Blvd., Suite 120, Deerfield Beach, Florida 33442, which is located in Broward County. 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 agreement with the previous landlord to provide for a premises relocation, lease termination and new sublease agreement. Under the agreement the Company relocated its 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, Suite 200, 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. It is not reasonably certain that the Company will be able to exercise the option. 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 $7,312 to January 31, 2019 and then a base rent of $7,514 until January 31, 2020 which includes an estimate for portion of the common area maintenance. For consideration for the lease amendment, the Company received a rate abatement from the landlord, effective May 1, 2018 and for four months to September 1, 2018. The landlord delivered the relocation premises in a “turnkey” condition with requested renovations made at no expense to the Company. As further consideration, the existing landlord agreed to pay the Company $150,000 incentive to vacate the existing premises on completion of the relocation, which was fully paid as of December 31, 2018 and is being amortized over the life of the lease amendment resulting in the recognition of lease incentive income of $870 per month. Capstone International Hong Kong Ltd, (CIHK), entered into a lease agreement for office space at 303 Hennessy Road, Wanchai, Hong Kong. The original agreement which was effective from February 17, 2014 has been extended various times. The lease was renewed for (12) months ending May 16, 2018 with a base annual rate of $54,193 paid in equal monthly installments. On April 24, 2018, the Company further extended the lease for (3) months ending August 16, 2018 with a base rate increase of $225 per month. This agreement has been further extended until August 16, 2019 with a base monthly rate of $5,006. CIHK entered into a six (6) month rental agreement effective from December 1, 2016 for a showroom space at 3F, Wing Kin Industrial Building, 4-6 Wing Kin Road, Kwai Chung, NT, Hong Kong. This agreement has been extended various times. The current lease expires August 16, 2019 with a base monthly rent of $1,290. The Company's rent expense amounted to $21,264 and $41,493 for the periods ended March 31, 2019 and 2018, respectively. The decreased rent in the period resulted from the $8,383 per month office move incentive that has been amortized over the life of the lease that ends January 31, 2020. The Company did not record a right to use asset and liability under ASC 842 due to the short term length of its current leases. 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. On January 1, 2019, the agreement was further amended, whereby Mr. Wolf will be paid $13,750 per month from January 1, 2019 through December 31, 2020. 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 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, 2018, the Company entered into an 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 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 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. On February 5, 2018, the Company entered into an 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. 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, 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 for the periods ended March 31, 2019 and 2018, was $0 and $142,208, respectively. On January 9, 2017, the Company finalized a Licensing Agreement with a globally recognized battery company that allowed the Company to market under the licensed brand, a specific product to a specific retailer in the warehouse club distribution channel. This agreement expired on December 31, 2018. Royalty expense related to this agreement for the period ended March 31, 2019 and 2018, was $0 and $27,054, respectively. Public Relations Agreement and Subsequent Events On September 27, 2018, the Company executed a public relations services agreement with Max Borges Agency, (“MBA”), a full – service public relations and communications agency with offices in Miami and San Francisco. The Company entered into the Agreement to obtain assistance from a nationally recognized firm, specializing in the development of, product branding, marketing and launching of technology products. The agreement was effective on October 1, 2018 with a minimum 180 days term, which either party can cancel with 60 days advanced notice in writing on or after the 120 th On February 25, 2019, the agreement was temporarily paused and on April 17, 2019, both Company’s agreed to restart the engagement effective May 1, 2019 with the same statement of work as originally agreed. Legal Matters Cyberquest, Inc The Company and the claimant in the declaratory action pursued court-sponsored mediation which was held on September 12, 2018 in Dallas, Texas and resulted in a settlement agreement dated September 19, 2018. Under this agreement all parties acknowledged and agreed that this matter was amicably resolved without any admission of liability. On September 27, 2018 both parties to this action filed a Joint Stipulation and Order for Dismissal with Prejudice with the U.S. district Court in Dallas, Texas, thereby ending this dispute. |
Stock Transactions
Stock Transactions | 3 Months Ended |
Mar. 31, 2019 | |
Equity [Abstract] | |
Stock Transactions | NOTE 5 - STOCK TRANSACTIONS 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 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. As of March 31, 2019, there were 870,001 stock options outstanding and 660,001 stock options vested. The stock options have a weighted average expense price of $0.435. For the three-month period ended March 31, 2019 and 2018, the Company recognized stock-based compensation expense of $11,025 and $28,875, respectively. Such amounts are included in compensation expense in the accompanying consolidated statements 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. On August 29, 2018, the Company’s Board of Directors approved a further extension of the Company’s stock repurchase plan through August 31, 2019. The Board of Directors also approved an increase of the maximum amount of aggregate funding available for possible stock repurchases under the stock repurchase program from $750,000 to $1,000,000 during the renewal period. On August 29, 2018, the Company’s Board authorized and directed the Company’s management to establish a trading account at a brokerage firm for the Company to conduct open market purchases of the Company’s Common Stock in accordance with the terms and conditions of the Company’s current stock repurchase program and to fund said account from available cash of the Company but not to exceed such amount that would cause the Company to be unable to pay its bona fide debts. On December 19, 2018, Company entered into a Purchase Plan pursuant to Rule 10b5-1 under the Securities Exchange Act of 1934, with Wilson Davis & Co., Inc., a registered broker-dealer. Under the Purchase Plan, Wilson Davis & Co., Inc will make periodic purchases of up to an aggregate of 750,000 shares at prevailing market prices, subject to the terms of the Purchase Plan. As of March 31, 2019 the Company has repurchased 45,470 of the Company’s Common Stock. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 6 - INCOME TAXES As of December 31, 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. An operating loss carry forward of approximately $861,000 is available to the Company indefinitely and up to 80% of the operating loss can be used against future taxable income. The net deferred tax (liability)benefit as of March 31, 2019 and December 31, 2018 was $0 and $(12,000), respectively, and is reflected in long-term liabilities in the accompanying consolidated balance sheets. The statement of operations shows an effective rate of 3% and 9% at March 31, 2019 and December 31, 2018, respectively. 2019 2018 Current: Federal $ — $ (21,000 ) State — (6,000 ) Deferred: Federal (11,340 ) 8,500 State (660 ) 500 Income Tax (Benefit) $ (12,000 ) $ (18,000 ) |
Organization And Summary Of S_2
Organization And Summary Of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2019 | |
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 March 31, 2019 and results of operations and cash flows for the three months ended March 31, 2019 and 2018. All material 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, 2018 (the “2018 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 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 have different functionalities to meet consumer’s needs. These products are offered either under the Capstone brand or licensed brands. The Company’s products are typically manufactured in China by contract manufacturing companies. The Company’s operations consist of one reportable segment for financial reporting purposes: Lighting Products. |
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 amount expected to be collected 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 March 31, 2019 and December 31, 2018, accounts receivable serves as collateral when the Company borrows against its credit facilities. |
Allowance for Doubtful Accounts | Allowance for Doubtful Accounts The Company evaluates the collectability of accounts receivable based on a combination of factors. In cases where the Company becomes aware of circumstances that may impair a specific customer’s ability to meet its financial obligations subsequent to the original sale, the Company will recognize an allowance against amounts due, and thereby reduce the net recognized receivable to the amount the Company reasonably believes will be collected. For all other customers, the Company recognizes an allowance for doubtful accounts based on the length of time the receivables are past due and consideration of other factors such as industry conditions, the current business environment and the Company’s historical payment experience. An allowance for doubtful accounts is established as losses are estimated to have occurred through a provision for bad debts charged to earnings. This evaluation is inherently subjective and requires estimates that are susceptible to significant revisions as more information becomes available. As of March 31, 2019 and December 31, 2018, management has determined that accounts receivable are fully collectible. As such, management has not recorded an allowance for doubtful accounts. The following table summarizes the components of Accounts Receivable, net: March 31, December 31, 2019 2018 Trade Accounts Receivables at period end $ 2,550,125 $ 429,405 Reserve for estimated marketing allowances, cash discounts and other incentives (173,426 ) (364,894 ) Total Accounts Receivable, net $ 2,376,699 $ 64,511 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: March 31, December 31, 2019 2018 Balance at beginning of the period $ (364,894 ) $ (194,061 ) Accrued allowances — (191,468 ) Reversal of prior year accrued allowances — 1,749 Expenditures 191,468 18,886 Balance at period-end $ (173,426 ) $ (364,894 ) 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 | 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. |
Prepaid Expenses | Prepaid Expenses The Company’s prepaid expenses consist primarily of deposits on inventory purchases for future orders as well as prepaid insurance, trade show and subscription expense. |
Leases | Leases Lease incentives are amortized utilizing the straight-line method over the life of the lease. |
Earnings Per Common Share | Earnings Per Common Share Basic earnings per common share are computed by dividing net income(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 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. During the period ended March 31, 2019, 100 thousand stock options expired. At March 31, 2019 and 2018, the total number of potentially dilutive common stock equivalents excluded from the diluted earnings per share calculation was 870,001 and 950,003, respectively. Basic weighted average shares outstanding is reconciled to diluted weighted shares outstanding as follows: 3 months ended 3 months ended March 31, 2019 March 31, 2018 Basic weighted average shares outstanding 47,033,670 47,046,364 Dilutive options — — Diluted weighted average shares outstanding 47,033,670 47,046,364 |
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 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. A sales contract occurs when the customer-retailer submits a purchase order to buy a specific product, a specific quantity, at an agreed-fixed price, within a ship window, from a specific location and on agreed payment terms. The selling price in all of our customers’ orders has been previously negotiated and agreed to including any applicable discount prior to receiving the customer’s purchase order. The stated unit price in the customer’s order has already been determined and is fixed at the time of invoicing. The Company recognizes product revenue when the Company’s performance obligations as per the terms in the customers purchase order have been fully satisfied, specifically, when the specified product and quantity ordered has been manufactured and shipped pursuant to the customers requested ship window, when the sales price as detailed in the purchase order is fixed, when the product title and risk of loss for that order has passed to the customer, and collection of the invoice is reasonably assured. This means that the product ordered and to be shipped has gone through quality assurance inspection, customs and commercial documentation preparation, the goods have been delivered, title transferred to the customer and confirmed by a signed cargo receipt or bill of lading. Only at the time of shipment when all performance obligations have been satisfied will the judgement be made to invoice the customer and complete the sales contract. The Company may enter into a licensing agreement with globally recognized companies, that allows the Company to market products under a licensed brand to retailers for a designated period of time, and whereby the Company will pay a royalty fee, typically a percentage of licensed product revenue to the licensor in order to market the licensed product. The Company expenses license royalty fees and sales commissions when incurred and these expenses are recognized during the period the related sale is recorded. These costs are recorded within sales and marketing expenses. The following table disaggregates net revenue by major source: For the 3 Months Ended March 31, 2019 For the 3 Months Ended March 31, 2018 Capstone Brand License Brands Total Consolidated Capstone Brand License Brands Total Consolidated Lighting Products- U.S. $ 2,677,627 $ — $ 2,677,627 $ 148,301 $ 3,594,781 $ 3,743,082 Lighting Products-International 301,175 — 301,175 165,894 151,192 317,086 Total Revenue $ 2,978,802 $ — $ 2,978,802 $ 314,195 $ 3,745,973 $ 4,060,168 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. Customer orders received are not long-term orders and are typically shipped within six months of the order receipt, but certainly within a one-year period. Our payment terms may vary by the type of customer, the customer's credit standing, the location where the product will be picked up from and for international customers, which country their corporate office is located. The term between invoicing date and when payment is due may vary between 30 days and 90 days depending on the customer type. In order to ensure there are no payment issues, overseas customers or new customers may be required to provide a deposit or full payment before the order is delivered to the customer. The Company selectively supports retailer's initiatives to maximize sales of the Company's products on the retail floor or to assist in developing consumer awareness of new products launches, by providing marketing fund allowances to the customer. The Company recognizes these incentives at the time they are offered to the customers and records a credit to their account with an offsetting charge as either a reduction to revenue, increase to cost of sales, or marketing expenses depending on the type of sales incentives. Sales reductions for anticipated discounts, allowances and other deductions are recognized during the period the related revenue is recorded. During the three months ended March 31, 2019 and 2018, Capstone determined that $0 and $1,749, respectively of previously accrued allowances were no longer required. |
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. Certain retail customers may receive an off-invoice based discount such as a defective/warranty allowance, that will automatically reduce the unit selling price at the time the order is invoiced. This allowance will be used by the retail customer to defray the cost of any returned units from consumers and therefore negate the need to ship defective units back to the Company. Such allowances are charged to cost of sales at the time the order is invoiced. For those customers that do not receive a discount off-invoice, the Company recognizes a charge to cost of sales for anticipated non-conforming returns based upon an analysis of historical product warranty claims and other relevant data. We evaluate our warranty reserves based on various factors including historical warranty claims assumptions about frequency of warranty claims, and assumptions about the frequency of product failures derived from our reliability estimates. Actual product failure rates that materially differ from our estimates could have a significant impact on our operating results. Product warranty reserves are reviewed each quarter and recognized at the time we recognize revenue. 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 March 31, 2019 and December 31, 2018 balance sheets: March 31, December 31, 2019 2018 Balance at the beginning of the period $ 212,495 $ 328,279 Amount accrued 132,852 59,981 Expenditures (54,395 ) (175,765 ) Balance at period-end $ 290,952 $ 212,495 |
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 $171,457 and $4,918 for the three months ended March 31, 2019 and 2018, respectively. |
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. All research and development costs are charged to results of operations as incurred. For the three months ended March 31, 2019 and 2018, research and development expenses were $85,229 and $166,566, respectively. |
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 $7,866 and $26,353 for the three months ended March 31, 2019 and 2018, respectively. |
Accounts Payable and Accrued Liabilities | Accounts Payable and Accrued Liabilities The following table summarizes the components of accounts payable and accrued liabilities as of March 31, 2019 and December 31, 2018, respectively: March 31, December 31, 2019 2018 Accounts payable $ 437,082 $ 221,568 Accrued warranty reserve 290,952 212,495 Accrued compensation, benefits, commissions and other expenses 38,242 27,383 Total accrued liabilities 329,194 239,878 Total $ 766,276 $ 461,446 |
Income Taxes | Income Taxes The Company is subject to income taxes in the U.S. federal jurisdiction, various state jurisdictions and certain other jurisdictions. The Company accounts for income taxes under the provisions of Financial Accounting Standards Board (“FASB”) Accounting Standard Codification (“ASC”) 740 Income Taxes The Company recognizes the tax benefit from an uncertain tax position only if it is more likely than not the tax position will be sustained on examination by the taxing authorities, based on the technical merits of the position. The tax benefits recognized in the financial statements from such positions are then measured based on the largest benefit that has a greater than 50% likelihood of being realized upon settlement. 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 generally for a period of 3 years from the later of each return due date or date filed. 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. |
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 condensed consolidated statements of operations. 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. In conjunction with the adoption of ASC 718, the Company adopted the straight-line single option method of attributing the value of stock-based compensation expense. The Company accounts for forfeitures as they occur. |
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 warrantyobligations, 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. Historically, past changes to these estimates have not had a material impact on the Company’s financial statements. However, circumstances could change, and actual results could differ materially from those estimates. |
Recent Accounting Standards | Recent Accounting Standards To be Adopted in a Future Period In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment, |
Adoption of New Accounting Standards | Adoption of New Accounting Standards In March 2016, the FASB issued ASU 2016-02, Leases 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 S_3
Organization And Summary Of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Organization And Summary Of Significant Accounting Policies | |
Schedule of Components of Accounts Receivable, net | The following table summarizes the components of Accounts Receivable, net: March 31, December 31, 2019 2018 Trade Accounts Receivables at period end $ 2,550,125 $ 429,405 Reserve for estimated marketing allowances, cash discounts and other incentives (173,426 ) (364,894 ) Total Accounts Receivable, net $ 2,376,699 $ 64,511 |
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: March 31, December 31, 2019 2018 Balance at beginning of the period $ (364,894 ) $ (194,061 ) Accrued allowances — (191,468 ) Reversal of prior year accrued allowances — 1,749 Expenditures 191,468 18,886 Balance at period-end $ (173,426 ) $ (364,894 ) |
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 3 months ended March 31, 2019 March 31, 2018 Basic weighted average shares outstanding 47,033,670 47,046,364 Dilutive options — — Diluted weighted average shares outstanding 47,033,670 47,046,364 |
Schedule of Net Revenue by Major Source | The following table disaggregates net revenue by major source: For the 3 Months Ended March 31, 2019 For the 3 Months Ended March 31, 2018 Capstone Brand License Brands Total Consolidated Capstone Brand License Brands Total Consolidated Lighting Products- U.S. $ 2,677,627 $ — $ 2,677,627 $ 148,301 $ 3,594,781 $ 3,743,082 Lighting Products-International 301,175 — 301,175 165,894 151,192 317,086 Total Revenue $ 2,978,802 $ — $ 2,978,802 $ 314,195 $ 3,745,973 $ 4,060,168 |
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 March 31, 2019 and December 31, 2018 balance sheets: March 31, December 31, 2019 2018 Balance at the beginning of the period $ 212,495 $ 328,279 Amount accrued 132,852 59,981 Expenditures (54,395 ) (175,765 ) Balance at period-end $ 290,952 $ 212,495 |
Schedule of Components of Accounts Payable and Accrued Liabilities | The following table summarizes the components of accounts payable and accrued liabilities as of March 31, 2019 and December 31, 2018, respectively: March 31, December 31, 2019 2018 Accounts payable $ 437,082 $ 221,568 Accrued warranty reserve 290,952 212,495 Accrued compensation, benefits, commissions and other expenses 38,242 27,383 Total accrued liabilities 329,194 239,878 Total $ 766,276 $ 461,446 |
Concentration Of Credit Risk _2
Concentration Of Credit Risk And Economic Dependence (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Concentration Of Credit Risk And Economic Dependence | |
Schedule of Concentration of Credit Risk of Major Customers And Major Vendors | For the three months ended March 31, 2019 and 2018, approximately 10% and 8%, respectively, of the Company's net revenue resulted from international sales. Major Customers Net Revenue % Gross Accounts Receivable For the Three Months ended March 31, As of March 31, As of December 31, 2019 2018 2019 2018 Customer A 100 % 26 % $ 2,606,110 $ 402,294 Customer B — % 71 % — — Total 100 % 97 % $ 2,606,110 $ 402,294 Major Vendors The Company had one vendor from which it purchased 100% of merchandise sold during the period ended March 31, 2019, and two vendors from which it purchased 89% and 8% of merchandise sold during the period ended March 31, 2018. The loss of these suppliers could adversely impact the business of the Company. Purchases % Accounts Payable For the Three Months ended March 31, As of March 31, As of December 31, 2019 2018 2019 2018 Vendor A 100 % 89 % $ 333,623 63,594 Vendor B — % 8 % — — Total 100 % 97 % $ 333,623 63,594 |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended |
Mar. 31, 2019 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income Tax Provision (Benefit) | The income tax provision (benefit) for the three months ended March 31, 2019 and 2018 consists of: 2019 2018 Current: Federal $ — $ (21,000 ) State — (6,000 ) Deferred: Federal (11,340 ) 8,500 State (660 ) 500 Income Tax (Benefit) $ (12,000 ) $ (18,000 ) |
Organization And Summary Of S_4
Organization And Summary Of Significant Accounting Policies (Components Of Accounts Receivable, Net) (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Organization And Summary Of Significant Accounting Policies Components Of Accounts Receivable Net | |||
Trade Accounts Receivables at period end | $ 2,550,125 | $ 429,405 | |
Reserve for estimated marketing allowances, cash discounts and other incentives | 173,426 | 364,894 | $ 194,061 |
Total Accounts Receivable, net | $ 2,376,699 | $ 64,511 |
Organization And Summary Of S_5
Organization And Summary Of Significant Accounting Policies (Schedule Of Changes In Reserve) (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019 | Dec. 31, 2018 | |
Organization And Summary Of Significant Accounting Policies Schedule Of Changes In Reserve | ||
Balance at beginning of the period | $ 364,894 | $ 194,061 |
Accrued allowances | 191,468 | |
Reversal of prior year accrued allowances | 1,749 | |
Expenditures | 191,468 | 18,886 |
Balance at period-end | $ 173,426 | $ 364,894 |
Organization And Summary Of S_6
Organization And Summary Of Significant Accounting Policies (Schedule Of Basic Weighted Average Shares) (Details) - shares | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Organization And Summary Of Significant Accounting Policies Schedule Of Basic Weighted Average Shares | ||
Basic weighted average shares outstanding | 47,033,670 | 47,046,364 |
Dilutive options | ||
Diluted weighted average shares outstanding | 47,033,670 | 47,046,364 |
Organization And Summary Of S_7
Organization And Summary Of Significant Accounting Policies (Schedule Of Net Revenue By Major Source) (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Total Revenue | $ 2,978,802 | $ 4,060,168 |
Capstone Brand [Member] | ||
Total Revenue | 2,978,802 | 314,195 |
License Brands [Member] | ||
Total Revenue | 3,745,973 | |
Total Consolidated [Member] | ||
Total Revenue | 2,978,802 | 4,060,168 |
Lighting Products - U.S. [Member] | Capstone Brand [Member] | ||
Total Revenue | 2,677,627 | 148,301 |
Lighting Products - U.S. [Member] | License Brands [Member] | ||
Total Revenue | 3,594,781 | |
Lighting Products - U.S. [Member] | Total Consolidated [Member] | ||
Total Revenue | 2,677,627 | 3,743,082 |
Lighting Products-International [Member] | Capstone Brand [Member] | ||
Total Revenue | 301,175 | 165,894 |
Lighting Products-International [Member] | License Brands [Member] | ||
Total Revenue | 151,192 | |
Lighting Products-International [Member] | Total Consolidated [Member] | ||
Total Revenue | $ 301,175 | $ 317,086 |
Organization And Summary Of S_8
Organization And Summary Of Significant Accounting Policies (Schedule Of Product Warranty Liabilities) (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019 | Dec. 31, 2018 | |
Organization And Summary Of Significant Accounting Policies Schedule Of Product Warranty Liabilities | ||
Balance at the beginning of the period | $ 212,495 | $ 328,279 |
Amount accrued | 132,852 | 59,981 |
Expenditures | 54,395 | 175,765 |
Balance at period-end | $ 290,952 | $ 212,495 |
Organization And Summary Of S_9
Organization And Summary Of Significant Accounting Policies (Components Of Accounts Payable) (Details) - USD ($) | Mar. 31, 2019 | Dec. 31, 2018 | Dec. 31, 2017 |
Organization And Summary Of Significant Accounting Policies Components Of Accounts Payable | |||
Accounts payable | $ 437,082 | $ 221,568 | |
Accrued warranty reserve | 290,952 | 212,495 | $ 328,279 |
Accrued compensation, benefits, commissions and other expenses | 38,242 | 27,383 | |
Total accrued liabilities | 329,194 | 239,878 | |
Total | $ 766,276 | $ 461,446 |
Concentration Of Credit Risk _3
Concentration Of Credit Risk And Economic Dependence (Major Customers) (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Concentration Risk [Line Items] | |||
Gross Accounts Receivable | $ 2,376,699 | $ 64,511 | |
Customer A [Member] | |||
Concentration Risk [Line Items] | |||
Gross Accounts Receivable | 2,606,110 | 402,294 | |
Customer B [Member] | |||
Concentration Risk [Line Items] | |||
Gross Accounts Receivable | |||
Major Customers [Member] | |||
Concentration Risk [Line Items] | |||
Gross Accounts Receivable | $ 2,606,110 | $ 402,294 | |
Net Revenue [Member] | Customer A [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 100.00% | 26.00% | |
Net Revenue [Member] | Customer B [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 71.00% | ||
Net Revenue [Member] | Major Customers [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 100.00% | 97.00% |
Concentration Of Credit Risk _4
Concentration Of Credit Risk And Economic Dependence (Major Vendors) (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | |
Concentration Risk [Line Items] | |||
Accounts Payable | $ 437,082 | $ 221,568 | |
Vendor A [Member] | |||
Concentration Risk [Line Items] | |||
Accounts Payable | 333,623 | 63,594 | |
Vendor B [Member] | |||
Concentration Risk [Line Items] | |||
Accounts Payable | |||
Major Vendor [Member] | |||
Concentration Risk [Line Items] | |||
Accounts Payable | $ 333,623 | $ 63,594 | |
Purchases [Member] | Vendor A [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 100.00% | 89.00% | |
Purchases [Member] | Vendor B [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 8.00% | ||
Purchases [Member] | Major Vendor [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 100.00% | 97.00% |
Income Taxes (Details)
Income Taxes (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Current: | ||
Federal | $ (21,000) | |
State | (6,000) | |
Deferred: | ||
Federal | (11,340) | 8,500 |
State | (660) | 500 |
Income Tax (Benefit) | $ (12,000) | $ (18,000) |
Organization And Summary Of _10
Organization And Summary Of Significant Accounting Policies (Narrative) (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Potentially dilutive common stock equivalents excluded from diluted earnings per share | 870,001 | 950,003 |
Accrued sales allowances recovered | $ 0 | $ 1,749 |
Sales and Marketing Expenses [Member] | ||
Advertising and promotion expense | 171,457 | 4,918 |
Shipping and handling costs | $ 7,866 | $ 26,353 |
Options [Member] | ||
Stock option expired | 100 thousand stock options expired. |
Concentrations Of Credit Risk A
Concentrations Of Credit Risk And Economic Dependence (Narrative) (Details) | 3 Months Ended | |
Mar. 31, 2019 | Mar. 31, 2018 | |
Net Revenue [Member] | International Sales [Member] | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 10.00% | 8.00% |
Notes Payable (Narrative) (Deta
Notes Payable (Narrative) (Details) - Financing Agreement With Sterling National Bank [Member] - Line Of Credit [Member] - USD ($) | Sep. 08, 2010 | Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 | Jul. 20, 2018 |
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 time of closing was 7%. | ||||
Line of credit interest rate | 7.50% | 7.25% | |||
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 processing fees | $ 10,494 | $ 17,529 | |||
Line of credit, outstanding amount | |||||
Line of credit current maximum borrowing capacity | $ 10,000,000 | $ 10,000,000 | |||
Additional expansion of working capital line of credit | $ 2,000,000 |
Commitments And Contingencies (
Commitments And Contingencies (Operating Leases) (Narrative) (Details) - USD ($) | Aug. 16, 2018 | May 15, 2018 | Apr. 24, 2018 | Feb. 01, 2017 | Dec. 01, 2016 | Feb. 17, 2014 | Mar. 31, 2019 | Mar. 31, 2018 | Dec. 31, 2018 |
Operating Leased Assets [Line Items] | |||||||||
Rent expenses | $ 21,264 | $ 41,493 | |||||||
Operating Lease Agreement - Office Space [Member] | |||||||||
Operating Leased Assets [Line Items] | |||||||||
Base annual / monthly rent payable | $ 92,256 | $ 8,383 | |||||||
Operating lease description | Effective February 1, 2017, the Company renewed the lease for 3 years ending January 31, 2020. | Lease that ends January 31, 2020 | |||||||
Operating lease renewal term | 3 years | ||||||||
Total rental expenses | $ 281,711 | ||||||||
Operating Lease Agreement - Office Space [Member] | Capstone International Hong Kong Ltd (CIHK) [Member] | |||||||||
Operating Leased Assets [Line Items] | |||||||||
Base annual / monthly rent payable | $ 5,006 | $ 54,193 | |||||||
Operating lease description | This agreement has been further extended until August 16, 2019 | The Company further extended the lease for (3) months ending August 16, 2018 | The original agreement which was effective from February 17, 2014 has been extended various times. The lease was renewed for (12) months ending May 16, 2018. | ||||||
Operating lease renewal term | 3 months | 12 months | |||||||
Increase in base rent payable per month | $ 225 | ||||||||
Operating Lease Agreement - Office Space [Member] | |||||||||
Operating Leased Assets [Line Items] | |||||||||
Operating lease description | On May 15, 2018, the Company entered into a lease agreement with the previous landlord to provide for a premises relocation, lease termination and new sublease agreement. Under the agreement the Company relocated its 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, Suite 200, 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. It is not reasonably certain that the Company will be able to exercise the option. 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 $7,312 to January 31, 2019 and then a base rent of $7,514 until January 31, 2020 which includes an estimate for portion of the common area maintenance. | ||||||||
Amount agreed to pay by Landlord on completion of relocation | $ 150,000 | ||||||||
Lease incentive income per month | $ 870 | ||||||||
Operating Lease Agreement - Showroom Space [Member] | Capstone International Hong Kong Ltd (CIHK) [Member] | |||||||||
Operating Leased Assets [Line Items] | |||||||||
Base annual / monthly rent payable | $ 1,290 | ||||||||
Operating lease description | CIHK entered into a six (6) month rental agreement effective from December 1, 2016 for a showroom space at 3F, Wing Kin Industrial Building, 4-6 Wing Kin Road, Kwai Chung, NT, Hong Kong. This agreement has been extended various times. The current lease expires August 16, 2019 | ||||||||
Operating lease term | 6 months |
Commitments And Contingencies_2
Commitments And Contingencies (Consulting Agreements) (Narrative) (Details) - Consulting Agreement With George Wolf [Member] - USD ($) | Jan. 02, 2019 | Jan. 02, 2018 | Dec. 22, 2017 | Jan. 02, 2017 | Jan. 02, 2016 | Jul. 01, 2015 | Jan. 31, 2017 | Mar. 31, 2019 |
Other Commitments [Line Items] | ||||||||
Amount payable per month under the agreement | $ 13,750 | $ 13,750 | $ 13,750 | $ 12,500 | $ 10,500 | |||
Agreement description | On January 1, 2019, the agreement was further amended, whereby Mr. Wolf will be paid $13,750 per month from January 1, 2019 through December 31, 2020. | 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 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 | $ 15,000 | $ 10,000 |
Commitments And Contingencies_3
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 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 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. |
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 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 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. |
Commitments And Contingencies(L
Commitments And Contingencies(Licensing Agreements) (Narrative) (Details) - USD ($) | Apr. 12, 2018 | Jan. 09, 2017 | Dec. 29, 2016 | Feb. 04, 2015 | Mar. 31, 2019 | Mar. 31, 2018 |
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 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 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 | $ 0 | $ 142,208 | ||||
Licensing Agreement With Battery Company | ||||||
Other Commitments [Line Items] | ||||||
Agreement description | On January 9, 2017, the Company finalized a Licensing Agreement with a globally recognized battery company that allowed the Company to market under the licensed brand, a specific product to a specific retailer in the warehouse club distribution channel. This agreement expired on December 31, 2018 | |||||
Royalty expense | $ 0 | $ 27,054 |
Commitments And Contingencies_4
Commitments And Contingencies (Public Relations Agreement) (Narrative) (Details) - Public Relations Services Agreement With Max Borges Agency (MBA) [Member] | Sep. 27, 2018USD ($) |
Other Commitments [Line Items] | |
Agreement description | On September 27, 2018, the Company executed a public relations services agreement with Max Borges Agency, (“MBA”), a full – service public relations and communications agency with offices in Miami and San Francisco. The Company entered into the Agreement to obtain assistance from a nationally recognized firm, specializing in the development of, product branding, marketing and launching of technology products. The agreement was effective on October 1, 2018 with a minimum 180 days term, which either party can cancel with 60 days advanced notice in writing on or after the 120th day of the effective date. |
Amount payable per month under the agreement | $ 11,250 |
Subscription fee due on the first of each month | $ 476 |
Stock Transactions (Options) (N
Stock Transactions (Options) (Narrative) (Details) - USD ($) | Aug. 29, 2018 | May 02, 2017 | Mar. 31, 2019 | Mar. 31, 2018 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock based compensation expense | $ 11,025 | $ 28,875 | ||
2005 Equity Plan [Member] | Stock Options [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
Stock options amendment terms | 2005 Equity Incentive Plan to extend the Plan’s expiration date from December 31, 2016 to December 31, 2021. | |||
Stock options outstanding | 870,001 | |||
Stock options vested | 660,001 | |||
Weighted average exercise price of options | $ 0.435 | |||
Stock based compensation expense | $ 11,025 | $ 28,875 | ||
Unrecognized stock based compensation expense to be recognized in 2019 | $ 15,265 | |||
2005 Equity Plan [Member] | Stock Options [Member] | Director One [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
No of options granted | 100,000 | |||
Options description | The Director options have a strike price of $.435 with an effective date of August 6, 2018 | |||
Strike price of options | $ 0.435 | |||
Vesting date of options | Will vest on August 5, 2019 | |||
Term of options | 5 years | |||
2005 Equity Plan [Member] | Stock Options [Member] | Director Two [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
No of options granted | 100,000 | |||
Options description | The Director options have an exercise price of $.435 with an effective date of August 6, 2018 | |||
Strike price of options | $ 0.435 | |||
Vesting date of options | Will vest on August 5, 2019 | |||
Term of options | 5 years | |||
2005 Equity Plan [Member] | Stock Options [Member] | Company Secretary [Member] | ||||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | ||||
No of options granted | 10,000 | |||
Options description | The Company Secretary options have an exercise price of $.435 with an effective date of August 6, 2018 | |||
Strike price of options | $ 0.435 | |||
Vesting date of options | Will vest on August 5, 2019 | |||
Term of options | 10 years |
Stock Transactions (Adoption Of
Stock Transactions (Adoption Of Stock Repurchase Plan) (Narrative) (Details) - Common Stock [Member] - USD ($) | Mar. 31, 2019 | Aug. 29, 2018 | Dec. 15, 2017 | May 01, 2017 | Feb. 13, 2017 | Aug. 23, 2016 | Mar. 31, 2019 |
No of shares repurchased | (45,470) | ||||||
Stock Repurchase Plan [Member] | |||||||
Value of shares authorized to be repurchased | $ 1,000,000 | $ 750,000 | $ 750,000 | ||||
No of shares repurchased | 666,667 | 1,000,000 | |||||
Exercise price of shares repurchased | $ 0.15 | $ 0.15 | |||||
Purchase Plan - Wilson Davis & Co Inc [Member] | |||||||
No of shares repurchased | 45,470 |
Income Taxes (Narrative) (Detai
Income Taxes (Narrative) (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2019 | Dec. 31, 2018 | |
Income Taxes Narrative | ||
Operating loss carryforward limitations on use | Offset against future taxable income through 2034. | |
Operating loss carryforward | $ 861,000 | |
Net deferred tax (liability)benefit | $ 0 | $ 12,000 |
Effective income tax rate | 3.00% | 9.00% |