Capital Financial (CPFH) 10-Q 19 Aug 15 2015 Q2 Quarterly report Financial data

Document and Entity Information

Document and Entity Information - Jun. 30, 2015 - shares	Total
Document And Entity Information
Entity Registrant Name	Capital Financial Holdings, Inc
Entity Central Index Key	944,696
Document Type	10-Q
Document Period End Date	Jun. 30, 2015
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Is Entity a Well-known Seasoned Issuer?	No
Is Entity a Voluntary Filer?	No
Is Entity's Reporting Status Current?	Yes
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding	1,241
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2,015

CONDENSED CONSOLIDATED BALANCE

CONDENSED CONSOLIDATED BALANCE SHEETS - USD ($)	Jun. 30, 2015	Dec. 31, 2014
CURRENT ASSETS
Cash and cash equivalents	$ 1,339,711	$ 1,333,323
Accounts receivable (net of an allowance of $24,000 for 2014 and 2015 respectively)	1,848,108	1,979,530
Prepaids	67,400	76,670
Income taxes receivable	207,321	203,623
Total current assets	3,462,540	3,593,146
Oil & Natural Gas Properties, Full Cost Method of Accounting
Proved	90,000	0
Total oil & natural gas properties	90,000	0
Other property and equipment
Furniture, fixtures & equipment	492,468	482,049
Less accumulated depreciation	(353,608)	(331,723)
Total other property and equipment	138,860	150,326
Net property and equipment	228,860	150,326
Long Term Assets
Real estate held for investment	84,625	0
Total long term assets	84,625	0
OTHER ASSETS
Severance escrow	257,797	257,670
Baron notes receivable	500,000	500,000
Deferred tax asset - non-current	302,597	365,427
Other assets (net of accumulated amortization of $214,444, for 2015 and 2014)	180,772	180,772
Total other assets	1,241,166	1,303,869
TOTAL ASSETS	5,017,191	5,047,341
CURRENT LIABILITIES
Accounts payable	160,336	368,112
Commissions payable	1,923,076	1,903,881
Other current liabilities	388,513	16,620
Line of credit	53,399	200,000
Total current liabilities	2,525,324	2,488,613
TOTAL LIABILITIES	2,525,324	2,488,613
STOCKHOLDERS' EQUITY
Series A preferred stock - 5,000,000 shares authorized, $.0001 par value; 3,050,000 and 3,050,000 shares issued and 0 outstanding, respectively	305	305
Additional paid in capital - series A preferred stock	1,524,695	1,524,695
Common stock - 1,000,000,000 shares authorized, $.0001 par value; 1,241 and 1,446 shares issued and outstanding, respectively	1,241	1,241
Additional paid in capital - common stock	10,221,515	10,221,515
Accumulated deficit	(7,955,889)	(7,889,028)
Less Treasury stock, 3,050,000 preferred shares at $0.4262	(1,300,000)	(1,300,000)
TOTAL STOCKHOLDERS' EQUITY	2,491,867	2,558,728
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY	$ 5,017,191	$ 5,047,341

CONDENSED CONSOLIDATED BALANCE3

CONDENSED CONSOLIDATED BALANCE SHEETS (Parenthetical) - USD ($)	Jun. 30, 2015	Dec. 31, 2014
CURRENT ASSETS
Allowance for doubtful accounts	$ 24,000	$ 24,000
OTHER ASSETS
Accumulated amortization	$ 214,444	$ 214,444
STOCKHOLDERS' EQUITY
Series A Preferred stock, par value	$ .0001	$ .0001
Series A Preferred stock shares authorized	5,000,000	5,000,000
Series A Preferred stock shares issued	3,050,000	3,050,000
Series A Preferred stock shares outstanding	0	0
Common stock, par value	$ .0001	$ .0001
Common stock shares authorized	1,000,000,000	1,000,000,000
Common stock shares issued	1,241	1,241
Common stock shares outstanding	1,446	1,446
Treasury stock	3,050,000	3,050,000

CONDENSED CONSOLIDATED STATEMEN

CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
OPERATING REVENUES
Fee income	$ 301,838	$ 208,570	$ 586,484	$ 574,836
Commissions	4,665,487	4,723,128	9,065,671	9,697,186
Oil lease income	8,672	0	8,672	0
Other operating income	53,847	159,973	134,337	287,607
Total revenue	5,035,075	5,091,671	9,795,164	10,559,629
OPERATING EXPENSES
Compensation and benefits	252,220	344,555	617,529	645,920
Commission expense	4,371,246	4,295,324	8,469,904	9,161,805
General and administrative expenses	477,884	260,889	745,403	591,940
Depreciation	10,242	7,890	21,215	14,839
Total operating expenses	5,111,592	4,908,658	9,854,051	10,414,504
OPERATING INCOME (LOSS)	(76,517)	183,013	(58,887)	145,125
OTHER INCOME (EXPENSES)
Interest expense	(1,248)	(3,013)	(3,451)	(9,287)
Interest income	18,855	102	37,716	196
Other income	11,843	0	27,171	777
Total other income (expenses)	24,219	(2,911)	61,436	(8,314)
INCOME OF CONTINUING OPERATIONS BEFORE INCOME TAX EXPENSE	(52,298)	180,102	2,549	136,811
INCOME TAX EXPENSE	(4,003)	(158,595)	(69,410)	(167,431)
NET INCOME (LOSS)	$ (56,301)	$ 21,507	$ (66,861)	$ (30,620)
NET INCOME (LOSS) PER COMMON SHARE:
Basic	$ (45)	$ 17	$ (54)	$ (25)
Diluted	$ (45)	$ 17	$ (54)	$ (25)
SHARES USED IN COMPUTING NET PER COMMON SHARE:
Basic	1,241	1,241	1,241	1,241
Diluted	1,241	1,241	1,241	1,241

CONDENSED CONSOLIDATED STATEME5

CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014
CASH FLOWS FROM OPERATING ACTIVITIES
Net (loss)	$ (66,861)	$ (30,620)
Adjustments to reconcile net (loss) to net cash (used in) provided by operating activities:
Depreciation	21,885	14,839
Provision for deferred income taxes	62,830	101,064
(Increase) decrease in:
Accounts receivable	131,422	(140,338)
Income taxes receivable	(3,698)	0
Prepaids	9,270	19,491
Severance escrow	(127)	(128)
Accounts Payable	(207,776)	(194,574)
Commissions Payable	19,195	(16,238)
Other liabilities	371,893	4,777
Net cash (used in) provided by operating activities	338,033	(241,727)
CASH FLOWS FROM INVESTING ACTIVITIES
Purchase of property and equipment	(10,419)	(27,093)
Additions to real estate held for investment	(90,000)	0
Additions to proved properties	(84,625)	(125,000)
Net cash used in investing activities	(185,044)	(152,093)
CASH FLOWS FROM FINANCING ACTIVITIES
Repayment of short-term borrowings	(146,601)	(146,646)
Decrease in settlements payable	0	(22,000)
Net cash used in financing activities	(146,601)	(168,646)
NET INCREASE (DECREASE) IN CASH AND CASH EQUIVALENTS	6,388	(562,466)
CASH AND CASH EQUIVALENTS AT BEGINNING OF YEAR	1,333,323	1,665,123
CASH AND CASH EQUIVALENTS AT END OF PERIOD	1,339,711	1,102,657
SUPPLEMENTAL SCHEDULE OF NONCASH INVESTING AND FINANCING ACTIVITIES:
Cash paid for interest	$ 3,451	$ 9,287

1. BASIS OF PRESENTATION

1. BASIS OF PRESENTATION	6 Months Ended
	Jun. 30, 2015
Weighted Average Grant Date Fair Value, Exercised
NOTE 1 - BASIS OF PRESENTATION	The accompanying condensed consolidated financial statements of Capital Financial Holdings, Inc., a North Dakota corporation, and its subsidiaries Capital Financial Services, Inc. (“CFS”) and Capital Natural Resources, Inc. (“CNR”) (collectively, the "Company"), included herein have been prepared by the Company, without audit, pursuant to the rules and regulations of the Securities and Exchange Commission (“SEC”). These unaudited condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and the footnotes thereto contained in the Annual Report on Form 10-K for the year ended December 31, 2014, of Capital Financial Holdings, Inc., as filed with the SEC. The condensed consolidated balance sheet at December 31, 2014, contained herein, was derived from audited financial statements, but does not include all disclosures included in the Form 10-K and applicable under accounting principles generally accepted in the United States of America. Certain information and footnote disclosures normally included in annual financial statements prepared in accordance with accounting principles generally accepted in the United States of America, but not required for interim reporting purposes, have been condensed or omitted. In the opinion of the Company, the accompanying unaudited condensed consolidated financial statements contain all adjustments (which are of a normal, recurring nature) necessary for a fair presentation of the financial statements. The results of operations for the six months ended June 30, 2015, are not necessarily indicative of operating results for the entire year.

2. RECENTLY ADOPTED ACCOUNTING

2. RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS	6 Months Ended
	Jun. 30, 2015
Weighted Average Grant Date Fair Value, Exercised
NOTE 2 - RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS	A summary of our significant accounting policies is included in Note 1 of our 2014 Form 10-K filed on March 25, 2015. Oil and Gas Properties CNR follows the full cost method of accounting for crude oil and natural gas operations whereby all costs related to the exploration and development of crude oil and natural gas properties are capitalized into a single cost center (“full cost pool”). Such costs include land acquisition costs, geological and geophysical expenses, carrying charges on non-producing properties, costs of drilling directly related to acquisition, and exploration activities. As of June 30, 2015, CNR held leasehold interests on acreage located in Taylor County, Texas. Proceeds from property sales will generally be credited to the full cost pool with no gain or loss recognized, unless such a sale would significantly alter the relationship between capitalized costs and the proved reserves attributable to these costs. Capitalized costs are depleted and amortized on the unit-of-production method based on the estimated gross proved reserves as determined by independent petroleum engineers. The costs of unproved properties are withheld from the depletion base until such time as they are either developed or abandoned. When proved reserves are assigned or the property is considered to be impaired, the cost of the property or the amount of the impairment is added to costs subject to depletion and full cost ceiling calculations. For the three and six months ended June 30, 2015, depletion was not material to the financials. The Company assesses all items classified as unproved property on an annual basis, or if certain circumstances exist, more frequently, for possible impairment or reduction in value. As of June 30, 2015 the Company held no unproved properties. Real Estate Held for Investment Real estate held for investment is carried at cost. Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS No. 144”), requires that a property be considered impaired if the sum of the expected future cash flows (undiscounted and without interest charges) is less than the carrying amount of the property. If impairment exists, an impairment loss is recognized, by a charge against earnings, equal to the amount by which the carrying amount of the property exceeds the fair value less cost to sell the property. If impairment of a property is recognized, the carrying amount of the property is reduced by the amount of the impairment, and a new cost for the property is established. Such new cost is depreciated over the property’s remaining useful life. Depreciation is provided by the straight-line method over estimated useful lives, which range from five to 40 years. Asset Retirement Obligations Asset retirement obligation is included in other noncurrent liabilities and relates to future costs associated with the plugging and abandonment of crude oil and natural gas wells, removal of equipment and facilities from leased acreage and returning the land to its original condition. Estimates are based on estimated remaining lives of those wells based on reserve estimates, external estimates to plug and abandon the wells in the future, inflation, credit adjusted discount rates and federal and state regulatory requirements. The liability is accreted to its present value each period, and the capitalized cost is depreciated over the useful life of the related asset. As of June 30, 2015. such amounts are not material to the financial statements. ASU 2015-04— Compensation—Retirement Benefits (Topic 715): Practical Expedient for the Measurement Date of an Employer’s Defined Benefit Obligation and Plan Assets ASU 2015-03— Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs ASU 2015-07— Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent) ASU 2015-10— Technical Corrections and Improvements

3. RECLASSIFICATION

3. RECLASSIFICATION	6 Months Ended
	Jun. 30, 2015
Weighted Average Grant Date Fair Value, Exercised
NOTE 3 - RECLASSIFICATION	Certain amounts in the 2014 condensed consolidated financial statements have been reclassified to conform to the 2015 presentation. These reclassifications had no effect on the Company’s net income (loss).

4. BUSINESS VENTURES

4. BUSINESS VENTURES	6 Months Ended
	Jun. 30, 2015
Weighted Average Grant Date Fair Value, Exercised
4. BUSINESS VENTURES	On June 9, 2014, the Company launched a new wholly-owned operating subsidiary, Capital Natural Resources, Inc., by acquiring 1,000,000 shares, .001 par value common stock of Capital Natural Resources, Inc. (“CNR”) for the amount of $100,000. Capital Natural Resources, Inc. will seek opportunities related to natural resources in the United States, including petroleum, natural gas and/or other minerals, water resources and land. The new subsidiary is expected to diversify the business operations of the Company and is unrelated to any current or past business. On June 17, 2014, the Company acquired an additional 400,000 shares, .001 par value common stock of CNR for the amount of $40,000. On July 21, 2014, the Company acquired an additional 3,750,000 shares, .001 par value of common stock of CNR for the amount of $375,000. As of June 30, 2015, the Company owned 5,150,000 shares of CNR. On April 1, 2015, CNR obtained a non-operating working interest in an oil and gas property consisting of a twenty five percent interest in three oil and gas leases covering approximately 618 acres in Taylor County, Texas for a purchase price of $90,000 paid in cash. This purchase is presented under property and equipment on the balance sheet. As of June 30, 2015, oil lease income earned $8,672. On May 19, 2015, CNR acquired interests in 383 acres of coal rights located in Kanawha County, West Virginia with 1,483,451 recoverable tons for a purchase price of $1,275 paid in cash. This purchase is presented as long term assets on the balance sheet. On June 11, 2015, CNR acquired 724.5 acres of mineral, water rights and surface interests in Hudspeth County, Texas for a purchase price of $83,350 paid in cash. This purchase is presented under long term assets on the balance sheet. The purchase allocation for all three CNR transactions was based on the estimated fair value of the assets acquired.

5. BARON NOTES RECEIVABLE

5. BARON NOTES RECEIVABLE	6 Months Ended
	Jun. 30, 2015
Weighted Average Grant Date Fair Value, Exercised
NOTE 5 - BARON NOTES RECEIVABLE	On June 11, 2014, June 27, 2014, and July 22, 2014, Baron Energy, Inc., issued promissory notes to Capital Natural Resources, Inc. (the “note holder”) in the amounts of $85,000, $40,000 and $375,000 respectively. The three notes carry an interest rate of 15% per annum, payable monthly, and mature on June 12, 2016, June 28, 2016 and July 23, 2016 respectively. As of June 30, 2015, notes held with Baron Energy, Inc. carried a balance of $500,000. At maturity, the notes are convertible at the option of the note holder into specified non-operating minority working interests in Baron Energy, Inc.’s oil and gas operations in Frio County, Texas. As additional compensation to the note holder, at the maturity of the notes, regardless of whether the note holder elects to convert the principal of the notes to non-operating minority working interests, the note holder will be assigned specified non-operating minority working interests in Baron Energy, Inc.’s oil and gas operations in Frio County, Texas. The note holder also has the option to receive additional working interests if it extends the maturity dates of the notes. Interest income earned as of the three months ended June 30, 2015, was $18,750. All payments on the notes are current as of June 30, 2015, and no reduction has been made in the carrying value of the notes as of June 30, 2015.

6. LINE OF CREDIT

6. LINE OF CREDIT	6 Months Ended
	Jun. 30, 2015
Debt Disclosure [Abstract]
NOTE 6. LINE OF CREDIT	On August 9, 2013, the Company signed loan documents for a line of credit with a local bank, American Bank Center, in the amount of $300,000 in order to help fund the cash redemption of less than whole shares which resulted from the 1:10,000 reverse stock split, which occurred on August 14, 2013. The line of credit had a variable interest rate of 1.509 percent above Wall Street Journal U.S. Prime Rate. The Company made monthly interest payments. The loan matured August 8, 2014. The Company set up monthly payments with an automatic payment of $25,000. There are no financial covenants associated with the line of credit. On July 9, 2014, the Company made a monthly payment of $25,000 to the line of credit. On July 17, 2014, the Company made a final payment to the line of credit in the amount of $29,422 closing this line of credit. As of June 30, 2015, there is no longer an outstanding balance on this line of credit. On July 14, 2014, the Company signed new loan documents for a line of credit with American Bank Center in the amount of $300,000.The line of credit has a variable interest rate of 1.509 percent above Wall Street Journal U.S. Prime Rate which was 3.25% as of June 30, 2015. The loan matures with principal due on July 14, 2015. The Company has set up monthly payments with an automatic payment of $25,000. For the period ended June 30, 2015, the Company had $53,399 outstanding against its line of credit. As of June 30, 2015, interest expense on this line of credit was $7,882. There are no financial covenants associated with the line of credit. The Company made two payments in July 2015 bringing the outstanding balance to zero. The total interest expense on this line of credit was $8,061. On July 14, 2015, the Company signed renewal loan documents for the line of credit with American Bank Center in the amount of $500,000. The line of credit has a variable interest rate of 1.509 percent above Wall Street Journal U.S. Prime Rate which was 3.25% as of June 30, 2015. The loan matures with principal due on July 14, 2016. For the period ended June 30, 2015, the Company had $53,399 outstanding against this line of credit before renewal. The Company made a payment of $25,000 on July 6, 2015 and a final payment of $28,578 on July 14, 2015. As of July 31, 2015, the Company had zero outstanding and zero interest expense against its current line of credit. There are no financial covenants associated with the line of credit.

7. STOCK WARRANTS, STOCK SPLITS

7. STOCK WARRANTS, STOCK SPLITS, AND STOCK OPTIONS	6 Months Ended
	Jun. 30, 2015
Stock Warrants Stock Splits And Stock Options
NOTE 7 - STOCK WARRANTS, STOCK SPLITS, AND STOCK OPTIONS	The Company measures and records compensation expense for all share-based payment awards made to employees and directors, including employee stock options, based on estimated fair values. There were no compensation costs or deferred tax benefits recognized for stock-based compensation awards for the six months ended June 30, 2015 and 2014. Changes are due to the stock buyback and reverse stock split. Option activity for the twelve months ended December 31, 2014 and the six months ended June 30, 2015 was as follows: Number of Options Weighted Average Exercise Price per Share Weighted Average Grant Date Fair Value Aggregate Intrinsic Value Outstanding on January 1, 2014 539 $ 5,400 $ 2,800 $ - Granted - - - Exercised - - - Canceled 203 - - Outstanding on December 31, 2014 336 $ 5,400 $ 2,800 $ - Granted - - - Exercised - - - Canceled 70 - - Outstanding on June 30, 2015 266 $ 4,734 $ 4,388 $ - Exercisable options totaled 336 at December 31, 2014 and totaled 266 at June 30, 2015.

8. INCOME TAXES

8. INCOME TAXES	6 Months Ended
	Jun. 30, 2015
Weighted Average Grant Date Fair Value, Exercised
NOTE 8 - INCOME TAXES	Deferred taxes arise because of different tax treatment between financial statement accounting and tax accounting, known as “temporary differences.” The Company records the tax effect of these temporary differences as “deferred tax assets” (generally items that can be used as a tax deduction or credit in future periods) and “deferred tax liabilities” (generally items for which the Company has received a tax deduction and has not yet been recorded in the consolidated statement of operations). Management reviews and adjusts those estimates annually based upon the most current information available. However, because the recoverability of deferred taxes is directly dependent upon the future operating results of the Company, actual recoverability of deferred taxes may differ materially from management’s estimates. Due to stock options forfeited, the deferred tax assets associated with stock compensation valued under the Black Scholes model were reduced. As of June 30, 2015, approximately $20,580 was recorded as tax expense for the quarter and an accumulated amount of approximately $289,617 has been recorded as tax expense since the beginning of stock options being forfeited.

9. EARNINGS PER SHARE

9. EARNINGS PER SHARE	6 Months Ended
	Jun. 30, 2015
Weighted Average Grant Date Fair Value, Exercised
NOTE 9 - EARNINGS PER SHARE	Basic earnings per share are computed by dividing earnings available to common shareholders by the weighted average number of common shares outstanding during the period. Diluted earnings per share reflect per share amounts that would have resulted if dilutive potential common shares had been converted to common shares. The following reconciles amounts reported in the financial statements: Three Months Ended June 30, 2015 Three Months Ended June 30, 2014 Numerator Denominator Per Share Amount Numerator Denominator Per Share Amount Net (Loss) Income $ (56,301 ) 21,507 Less: Preferred Stock Dividends Income Available to Common Shareholders – Basic Earnings per Share $ (56,301 ) 1,241 (45 ) 21,507 1,241 $ 17 Effect of Dilutive Securities: Preferred Stock Dividends Stock Options and Warrants Income Available to Common Shareholders – Diluted Earnings per Share $ (56,301 ) 1,241 (45 ) 21,507 1,241 $ 17 Six Months Ended June 30, 2015 Six Months Ended June 30, 2014 Numerator Denominator Per Share Amount Numerator Denominator Per Share Amount Net Loss $ (66,861 ) (30,620 ) Less: Preferred Stock Dividends Income Available to Common Shareholders – Basic Earnings per Share $ (66,861 ) 1,241 (54 ) (30,620 ) 1,241 $ (25 ) Effect of Dilutive Securities: Preferred Stock Dividends Stock Options and Warrants Income Available to Common Shareholders – Diluted Earnings per Share $ (66,861 ) 1,241 (54 ) (30,620 ) 1,241 $ (25 ) Options and warrants to purchase 476 common shares at exercise prices between $3,500 and $14,300 were outstanding at June 30, 2015, but were not included in the computation of diluted earnings per share for the quarter ending June 30, 2015 and June 30, 2014, because their effect was anti-dilutive.

10. SEGMENT REPORTING

10. SEGMENT REPORTING	6 Months Ended
	Jun. 30, 2015
Segment Reporting [Abstract]
NOTE 10. SEGMENT REPORTING	The Company organizes its current business units into three reportable segments: broker dealer services, natural resources and holding company. The broker-dealer services segment distributes securities and insurance products to retail investors through a network of registered representatives through its wholly-owned subsidiary, Capital Financial Services, Inc. (“CFS”), a Wisconsin corporation. The natural resources segment seeks opportunities related to natural resources in the United States, including petroleum, natural gas and/or other minerals, water resources and land through its wholly-owned subsidiary, Capital Natural Resources, Inc. (“CNR”), a Colorado corporation. The holding company encompasses cost associated with business development and acquisitions, dispositions of subsidiary entities and results of discontinued operations, dividend income and recognized gains or losses. The Company's reportable segments are strategic business units that offer different products and services. They are managed separately because each business requires different technology and marketing strategies. Holding Natural Broker-Dealer As of, and for the three months ended: Company Resources Services Total June 30, 2015 Revenues from external customers - 8,672 4,967,325 4,975,997 Other operating income - - 53,847 53,847 Other income - - 11,843 11,843 Interest income 45 18,750 60 18,855 Interest expense 1,197 - 52 1,249 Depreciation 965 - 9,277 10,242 Income (loss) before income tax benefit (expense) (8,110 ) (1,223 ) (42,965 ) (52,298 ) Income tax benefit (expense) (21,325 ) 480 16,842 (4,003 ) Net income (loss) (29,435 ) (743 ) (26,123 ) (56,301 ) Holding Natural Broker-Dealer As of, and for the three months ended: Company Resources Services Total June 30, 2014 Revenues from external customers - - 4,931,698 4,931,698 Other operating income - - 159,973 159,973 Other income - - - - Interest income 42 - 60 102 Interest expense 3,013 - - 3,013 Depreciation 1,001 - 6,889 7,890 Income (loss) before income tax benefit (expense) (94,890 ) (11,175 ) 286,167 180,102 Income tax benefit (expense) (44,413 ) 4,381 (118,563 ) (158,595 ) Net income (loss) (139,303 ) (6,794 ) 167,604 21,507 Holding Natural Broker-Dealer As of, and for the six months ended: Company Resources Services Total June 30, 2015 Revenues from external customers - 8,672 9,652,155 9,660,826 Other operating income - - 134,337 134,337 Other income 15,328 - 11,843 27,171 Interest income 96 37,500 119 37,716 Interest expense 3,399 - 52 3,451 Depreciation 1,905 - 19,310 21,215 Income (loss) before income tax benefit (expense) (114,882 ) 5,912 111,519 2,549 Income tax benefit (expense) (23,377 ) (2,318 ) (43,715 ) (69,410 ) Net income (loss) (138,259 ) 3,594 67,804 (66,861 ) Holding Natural Broker-Dealer As of, and for the six months ended: Company Resources Services Total June 30, 2014 Revenues from external customers - - 10,272,022 10,272,022 Other operating income - - 287,606 287,606 Other income 777 - - 777 Interest income 77 - 119 196 Interest expense 9,287 - - 9,287 Depreciation 1,915 - 12,924 14,839 Income (loss) before income tax benefit (expense) (185,252 ) (11,175 ) 333,238 136,811 Income tax benefit (expense) (41,183 ) 4,381 (130,629 ) (167,431 ) Net income (loss) (226,435 ) (6,794 ) 202,609 (30,620 )

11. LEGAL PROCEEDINGS

11. LEGAL PROCEEDINGS	6 Months Ended
	Jun. 30, 2015
Weighted Average Grant Date Fair Value, Exercised
NOTE 11. LEGAL PROCEEDINGS	The Company operates in a legal and regulatory environment that exposes it to potentially significant litigation risks. Issuers of certain alternative products sold by the Company are in Bankruptcy or may have other financial difficulties. As a result of such alleged failings of alternative products and the uncertainty of client recovery from the various product issuers, the Company is subject to several legal and/or arbitration proceedings. These proceedings include customer suits and arbitrations related to the failure of Medical Capital, other alternative investments alleged to be unsuitable, the bankruptcy proceedings of the various DBSI entities and the bankruptcy of other various entities. The Company vigorously contests the allegations of the various proceedings and believes that there are multiple meritorious legal and fact based defenses in these matters. Such cases are subject to many uncertainties, and their outcome is often difficult to predict, including the impact on operations or on the financial statements, particularly in the earlier stages of a case. The Company makes provisions for cases brought against it when, in the opinion of management after seeking legal advice, it is probable that a liability exists, and the amount can be reasonably estimated. The current proceedings are subject to uncertainties and, as such, the Company is unable to estimate the possible loss or range of loss that may result from the outcome of these cases; however, results in these cases that are against the interests of the Company could have a severe negative impact on the financial position of the Company. As of June 30, 2015, the Company is a defendant in four on-going suits or arbitrations as discussed above. The Company expects to vigorously defend and ultimately prevail in these cases. On August 7, 2015, the Company, without admitting any liability and to avoid further litigation costs, entered into a Confidential Settlement Agreement and Mutual Release (the “Settlement Agreement”) to resolve one of the four lawsuits mentioned above in the amount of $190,000. In addition, under the Settlement Agreement the parties entered into mutual releases of all claims. The settlement was recorded as of June 30, 2015 and is reflected within current liabilities on the balance sheet. Payment is due in full by September 6, 2015. On April 5, 2011, several broker-dealers and their principals/officers, including the Company and John Carlson, President and Chief Compliance Officer, filed a lawsuit in the Superior Court of California for Orange County against Mayer Hoffman McCann, P.C. (“Mayer Hoffman”) captioned Signature Financial Group, Inc., et al, (“Signature”) v. Mayer Hoffman McCann, P.C., et al). The lawsuit arose out of reviews of the financial statements of Medical Capital Holdings, Inc. (“Medical Capital”) by Mayer Hoffman. In June 2009, Medical Capital was sued by the U.S. Securities and Exchange Commission (“SEC” or “Commission”), a finding was made that Medical Capital was conducting a “Ponzi scheme” and a receiver was appointed to liquidate Medical Capital. The plaintiffs in the Signature lawsuit are broker-dealers and principals of broker-dealers that sold Medical Capital investments to their clients. These plaintiffs sought to recover damages from Mayer Hoffman for the losses and expenses they incurred as a result of the Medical Capital financial deceptions and resulting expenses and losses to the plaintiffs. Specific claims asserted and relief requested included fraud-intentional misrepresentation of fact/concealment of fact, negligent misrepresentation, equitable indemnity, and declaratory relief. On September 23, 2014, the Plaintiffs entered into a Confidential Settlement and Mutual Release Agreement (the “Settlement Agreement”) with Mayer Hoffman and entities affiliated with Mayer Hoffman to settle the Plaintiffs’ claims against Mayer Hoffman and all affiliated parties of Mayer Hoffman with no admission of liability or fault by any defendant. The settlement proceeds were received on December 4, 2014 and recorded as other income on the consolidated financial statements of Capital Financial Holdings, Inc. In a matter related to the Settlement Agreement, on or about October 6, 2014, the Company filed a lawsuit seeking declaratory judgment against its former errors and omission insurance carrier - Arch Specialty Insurance Company (“Arch”) - in the Circuit Court of Wisconsin for Milwaukee County (Capital Financial Services, Inc. v. Arch Specialty Insurance Company). On or about November 24, 2014, Arch filed counterclaims against the Company. These actions are for declaratory relief in connection with a dispute over whether Arch is entitled to any portion of the settlement proceeds that the Company received in exchange for dismissing the lawsuit with Mayer Hoffman. The Company cannot predict the outcome of the above matters or estimate the possible loss or range of loss, if any. Although the proceedings are subject to uncertainties inherent in the litigation process and the ultimate disposition of these proceedings is not presently determinable, management believes that the allegations by Arch in its counterclaims are without merit and that the ultimate resolution of these matters will not have a material adverse effect on the consolidated financial condition, results of operations or cash flows of the Company.

12. SUBSEQUENT EVENTS

12. SUBSEQUENT EVENTS	6 Months Ended
	Jun. 30, 2015
Weighted Average Grant Date Fair Value, Exercised
NOTE 12. SUBSEQUENT EVENTS	On July 28, 2015, Capital Natural Resources, Inc. was the successful high bidder and is now in the process of obtaining five year oil and gas leases on one 80 acre tract located in Williams County, North Dakota and two 80 acre tracts located in Divide County, North Dakota for a combined acquisition cost of $7,676, including lease bonus and prepaid annual rentals. The oil and gas leases were obtained from the State of North Dakota Department of Trust Lands. The leases grant the right to conduct oil and gas operations and extract oil and gas from the property with payment of royalty to the lessor of 3/16 of oil and gas produced on the Williams County lease and 1/6 of oil and gas produced from the Divide County leases. The leases will expire August 3, 2020 unless held by production, meaning oil and gas is being produced from the properties. The leases are currently non-producing properties and non-operating leases. The leases are currently non-producing properties and non-operating leases.

2. RECENTLY ADOPTED ACCOUNTIN18

2. RECENTLY ADOPTED ACCOUNTING PRONOUNCEMENTS (Policies)	6 Months Ended
	Jun. 30, 2015
Recently Adopted Accounting Pronouncements Policies
Oil and Gas Properties	CNR follows the full cost method of accounting for crude oil and natural gas operations whereby all costs related to the exploration and development of crude oil and natural gas properties are capitalized into a single cost center (“full cost pool”). Such costs include land acquisition costs, geological and geophysical expenses, carrying charges on non-producing properties, costs of drilling directly related to acquisition, and exploration activities. As of June 30, 2015, CNR held leasehold interests on acreage located in Taylor County, Texas. Proceeds from property sales will generally be credited to the full cost pool with no gain or loss recognized, unless such a sale would significantly alter the relationship between capitalized costs and the proved reserves attributable to these costs. Capitalized costs are depleted and amortized on the unit-of-production method based on the estimated gross proved reserves as determined by independent petroleum engineers. The costs of unproved properties are withheld from the depletion base until such time as they are either developed or abandoned. When proved reserves are assigned or the property is considered to be impaired, the cost of the property or the amount of the impairment is added to costs subject to depletion and full cost ceiling calculations. For the three and six months ended June 30, 2015, depletion was not material to the financials. The Company assesses all items classified as unproved property on an annual basis, or if certain circumstances exist, more frequently, for possible impairment or reduction in value. As of June 30, 2015 the Company held no unproved properties.
Real Estate Held for Investment	Real estate held for investment is carried at cost. Statement of Financial Accounting Standards No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets” (“SFAS No. 144”), requires that a property be considered impaired if the sum of the expected future cash flows (undiscounted and without interest charges) is less than the carrying amount of the property. If impairment exists, an impairment loss is recognized, by a charge against earnings, equal to the amount by which the carrying amount of the property exceeds the fair value less cost to sell the property. If impairment of a property is recognized, the carrying amount of the property is reduced by the amount of the impairment, and a new cost for the property is established. Such new cost is depreciated over the property’s remaining useful life. Depreciation is provided by the straight-line method over estimated useful lives, which range from five to 40 years.
Asset Retirement Obligations	Asset retirement obligation is included in other noncurrent liabilities and relates to future costs associated with the plugging and abandonment of crude oil and natural gas wells, removal of equipment and facilities from leased acreage and returning the land to its original condition. Estimates are based on estimated remaining lives of those wells based on reserve estimates, external estimates to plug and abandon the wells in the future, inflation, credit adjusted discount rates and federal and state regulatory requirements. The liability is accreted to its present value each period, and the capitalized cost is depreciated over the useful life of the related asset. As of June 30, 2015. such amounts are not material to the financial statements. ASU 2015-04— Compensation—Retirement Benefits (Topic 715): Practical Expedient for the Measurement Date of an Employer’s Defined Benefit Obligation and Plan Assets ASU 2015-03— Interest—Imputation of Interest (Subtopic 835-30): Simplifying the Presentation of Debt Issuance Costs ASU 2015-07— Fair Value Measurement (Topic 820): Disclosures for Investments in Certain Entities That Calculate Net Asset Value per Share (or Its Equivalent) ASU 2015-10— Technical Corrections and Improvements

7 - STOCK WARRANTS, STOCK SPLIT

7 - STOCK WARRANTS, STOCK SPLITS, AND STOCK OPTIONS (Tables)	6 Months Ended
	Jun. 30, 2015
Stock Warrants Stock Splits And Stock Options
Option activity	Number of Options Weighted Average Exercise Price per Share Weighted Average Grant Date Fair Value Aggregate Intrinsic Value Outstanding on January 1, 2014 539 $ 5,400 $ 2,800 $ - Granted - - - Exercised - - - Canceled 203 - - Outstanding on December 31, 2014 336 $ 5,400 $ 2,800 $ - Granted - - - Exercised - - - Canceled 70 - - Outstanding on June 30, 2015 266 $ 4,734 $ 4,388 $ -

9. EARNINGS PER SHARE (Tables)

9. EARNINGS PER SHARE (Tables)	6 Months Ended
	Jun. 30, 2015
Weighted Average Grant Date Fair Value, Exercised
Schedule of Earnings Per Share	Three Months Ended June 30, 2015 Three Months Ended June 30, 2014 Numerator Denominator Per Share Amount Numerator Denominator Per Share Amount Net (Loss) Income $ (56,301 ) 21,507 Less: Preferred Stock Dividends Income Available to Common Shareholders – Basic Earnings per Share $ (56,301 ) 1,241 (45 ) 21,507 1,241 $ 17 Effect of Dilutive Securities: Preferred Stock Dividends Stock Options and Warrants Income Available to Common Shareholders – Diluted Earnings per Share $ (56,301 ) 1,241 (45 ) 21,507 1,241 $ 17 Six Months Ended June 30, 2015 Six Months Ended June 30, 2014 Numerator Denominator Per Share Amount Numerator Denominator Per Share Amount Net Loss $ (66,861 ) (30,620 ) Less: Preferred Stock Dividends Income Available to Common Shareholders – Basic Earnings per Share $ (66,861 ) 1,241 (54 ) (30,620 ) 1,241 $ (25 ) Effect of Dilutive Securities: Preferred Stock Dividends Stock Options and Warrants Income Available to Common Shareholders – Diluted Earnings per Share $ (66,861 ) 1,241 (54 ) (30,620 ) 1,241 $ (25 )

10. SEGMENT REPORTING (Tables)

10. SEGMENT REPORTING (Tables)	6 Months Ended
	Jun. 30, 2015
Segment Reporting [Abstract]
Schedule of Segment Reporting	Holding Natural Broker-Dealer As of, and for the three months ended: Company Resources Services Total June 30, 2015 Revenues from external customers - 8,672 4,967,325 4,975,997 Other operating income - - 53,847 53,847 Other income - - 11,843 11 ,843 Interest income 45 18,750 60 18,855 Interest expense 1,197 - 52 1,249 Depreciation 965 - 9,277 10,242 Income (loss) before income tax benefit (expense) (8,110 ) (1,223 ) (42,965 ) (52,298 ) Income tax benefit (expense) (21,325 ) 480 16,842 (4,003 ) Net income (loss) (29,435 ) (743 ) (26,123 ) (56,301 ) Holding Natural Broker-Dealer As of, and for the three months ended: Company Resources Services Total June 30, 2014 Revenues from external customers - - 4,931,698 4,931,698 Other operating income - - 159,973 159,973 Other income - - - - Interest income 42 - 60 102 Interest expense 3,013 - - 3,013 Depreciation 1,001 - 6,889 7,890 Income (loss) before income tax benefit (expense) (94,890 ) (11,175 ) 286,167 180,102 Income tax benefit (expense) (44,413 ) 4,381 (118,563 ) (158,595 ) Net income (loss) (139,303 ) (6,794 ) 167,604 21,507 Holding Natural Broker-Dealer As of, and for the six months ended: Company Resources Services Total June 30, 2015 Revenues from external customers - 8,672 9,652,155 9,660,826 Other operating income - - 134,337 134,337 Other income 15,328 - 11,843 27,171 Interest income 96 37,500 119 37,716 Interest expense 3,399 - 52 3,451 Depreciation 1,905 - 19,310 21,215 Income (loss) before income tax benefit (expense) (114,882 ) 5,912 111,519 2,549 Income tax benefit (expense) (23,377 ) (2,318 ) (43,715 ) (69,410 ) Net income (loss) (138,259 ) 3,594 67,804 (66,861 ) Holding Natural Broker-Dealer As of, and for the six months ended: Company Resources Services Total June 30, 2014 Revenues from external customers - - 10,272,022 10,272,022 Other operating income - - 287,606 287,606 Other income 777 - - 777 Interest income 77 - 119 196 Interest expense 9,287 - - 9,287 Depreciation 1,915 - 12,924 14,839 Income (loss) before income tax benefit (expense) (185,252 ) (11,175 ) 333,238 136,811 Income tax benefit (expense) (41,183 ) 4,381 (130,629 ) (167,431 ) Net income (loss) (226,435 ) (6,794 ) 202,609 (30,620 )

6. LINE OF CREDIT (Details Narr

6. LINE OF CREDIT (Details Narrative) - Jun. 30, 2015 - USD ($)	Total
Debt Disclosure [Abstract]
Variable interest rate	1.509%
Prime Rate	3.25%
Interest expense	$ 8,061
Outstanding line of credit	$ 0

7. STOCK WARRANTS, STOCK SPLI23

7. STOCK WARRANTS, STOCK SPLITS, AND STOCK OPTIONS (Details) - USD ($)	6 Months Ended	12 Months Ended
	Jun. 30, 2015	Dec. 31, 2014
Summary of option activity
Number of options, Outstanding Beginning	336	539
Number of options, Canceled	70	203
Number of options, Outstanding Ending	266	336
Weighted Average Exercise Price per Share, Beginning	$ 5,400	$ 5,400
Weighted Average Exercise Price per Share, Ending	4,734	5,400
Weighted Average Grant Date Fair Value, Beginning	2,800	2,800
Weighted Average Grant Date Fair Value, Ending	$ 4,388	$ 2,800
Aggregate Intrinsic Value, Beginning	$ 0	$ 0
Aggregate Intrinsic Value, Ending	$ 0	$ 0

7. STOCK WARRANTS, STOCK SPLI24

7. STOCK WARRANTS, STOCK SPLITS, AND STOCK OPTIONS (Details Narrative) - shares	Jun. 30, 2015	Dec. 31, 2014
Stock Warrants Stock Splits And Stock Options Details Narrative
Exercisable options	266	336

8. INCOME TAXES (Details Narrat

8. INCOME TAXES (Details Narrative)	6 Months Ended
	Jun. 30, 2015USD ($)
Income Taxes Details Narrative
Stock compensation recorded through tax expense	$ 20,580

9. EARNINGS PER SHARE (Details)

9. EARNINGS PER SHARE (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Earnings Per Share Details
Net (Loss) Income	$ (56,301)	$ 21,507	$ (66,861)	$ (30,620)
Income Available to Common Shareholders - Basic Earnings per Share	$ (56,301)	$ 21,507	$ (66,861)	$ (30,620)
Basic shares (Denominator)	1,241	1,241	1,241	1,241
Per Share Amount, Basic	$ (45)	$ 17	$ (54)	$ (25)
Effect of Dilutive Securities:
Preferred Stock Dividends	$ 0	$ 0	$ 0	$ 0
Stock Options and Warrants	0	0	0	0
Income Available to Common Shareholders - Diluted Earnings per Share	$ (56,301)	$ 21,507	$ (66,861)	$ (30,620)
Diluted shares (Denominator)	1,241	1,241	1,241	1,241
Diluted, per share amount	$ (45)	$ 17	$ (54)	$ (25)

10. SEGMENT REPORTING (Details)

10. SEGMENT REPORTING (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2015	Jun. 30, 2014	Jun. 30, 2015	Jun. 30, 2014
Revenues from external customers	$ 4,975,997	$ 4,931,698	$ 9,660,826	$ 10,272,022
Other operating income	53,847	159,973	134,337	287,607
Other income	11,843	0	27,171	777
Interest income	18,855	102	37,716	196
Interest expense	1,248	3,013	3,451	9,287
Depreciation	10,242	7,890	21,215	14,839
Income (loss) before income tax benefit (expense)	(52,298)	180,102	2,549	136,811
Income tax benefit (expense)	(4,003)	(158,595)	(69,410)	(167,431)
Net income (loss)	(56,301)	21,507	(66,861)	(30,620)
Holding Company
Revenues from external customers	0	0	0	0
Other operating income	0	0	0	0
Other income	0	0	15,328	777
Interest income	45	42	96	77
Interest expense	1,197	3,013	3,399	9,287
Depreciation	965	1,001	1,905	1,915
Income (loss) before income tax benefit (expense)	(8,110)	(94,890)	(114,882)	(185,252)
Income tax benefit (expense)	(21,325)	(44,413)	(23,377)	(41,183)
Net income (loss)	(29,435)	(139,303)	(138,259)	(226,435)
Natural Resources
Revenues from external customers	8,672	0	8,672	0
Other operating income	0	0	0	0
Other income	0	0	0	0
Interest income	18,750	0	37,500	0
Interest expense	0	0	0	0
Depreciation	0	0	0	0
Income (loss) before income tax benefit (expense)	(1,223)	(11,175)	5,912	(11,175)
Income tax benefit (expense)	480	4,381	(2,318)	4,381
Net income (loss)	(743)	(6,794)	3,594	(6,794)
Broker-Dealer Services
Revenues from external customers	4,967,325	4,931,698	9,652,155	10,272,022
Other operating income	53,847	159,973	134,337	287,606
Other income	11,843	0	11,843	0
Interest income	60	60	119	119
Interest expense	52	0	52	0
Depreciation	9,277	6,889	19,310	12,924
Income (loss) before income tax benefit (expense)	(42,965)	286,167	111,519	333,238
Income tax benefit (expense)	16,842	(118,563)	(43,715)	(130,629)
Net income (loss)	$ (26,123)	$ 167,604	$ 67,804	$ 202,609