Document and Entity Information
Document and Entity Information | 3 Months Ended |
Mar. 31, 2018shares | |
Document And Entity Information | |
Entity Registrant Name | CAPSTONE COMPANIES, INC. |
Entity Central Index Key | 814,926 |
Document Type | 10-Q |
Document Period End Date | Mar. 31, 2018 |
Amendment Flag | false |
Current Fiscal Year End Date | --12-31 |
Is Entity a Well-known Seasoned Issuer? | No |
Is Entity a Voluntary Filer? | No |
Is Entity's Reporting Status Current? | Yes |
Entity Filer Category | Smaller Reporting Company |
Entity Common Stock, Shares Outstanding | 47,046,364 |
Document Fiscal Period Focus | Q1 |
Document Fiscal Year Focus | 2,018 |
Consolidated Balance Sheets
Consolidated Balance Sheets - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 |
Current Assets: | ||
Cash | $ 3,861,648 | $ 3,668,196 |
Accounts receivable, net | 2,698,476 | 4,367,721 |
Inventories | 62,684 | 140,634 |
Prepaid expenses | 78,581 | 239,150 |
Income tax refundable | 113,912 | |
Total Current Assets | 6,815,301 | 8,415,701 |
Property and Equipment: | ||
Computer equipment and software | 9,895 | 9,895 |
Machinery and equipment | 318,801 | 318,801 |
Furniture and fixtures | 5,665 | 5,665 |
Less: Accumulated depreciation | 276,130 | 266,997 |
Total Property & Equipment | 58,231 | 67,364 |
Other Non-current Assets: | ||
Deposit | 13,616 | 13,616 |
Goodwill | 1,936,020 | 1,936,020 |
Total Other Non-current Assets | 1,949,636 | 1,949,636 |
Total Assets | 8,823,168 | 10,432,701 |
Current Liabilities: | ||
Accounts payable and accrued liabilities | 1,889,837 | 2,733,516 |
Income tax payable | 11,694 | 624,782 |
Total Current Liabilities | 1,901,531 | 3,358,298 |
Long Term Liabilities: | ||
Deferred tax liabilities | 260,000 | 251,000 |
Total Long Term Liabilities | 260,000 | 251,000 |
Total Liabilities | 2,161,531 | 3,609,298 |
Stockholders' Equity: | ||
Preferred Stock, Series A, par value $.001 per share, authorized 6,666,667 shares, issued -0- shares; Preferred Stock, Series B-1, par value $.0001 per share, authorized 3,333,333 shares, issued -0- shares; Preferred Stock, Series C, par value $1.00 per share, authorized 67 shares, issued -0- shares | ||
Common Stock, par value $.0001 per share, authorized 56,666,667 shares, issued 47,046,364 shares | 4,704 | 4,704 |
Additional paid-in capital | 7,034,428 | 7,005,553 |
Accumulated deficit | (377,495) | (186,854) |
Total Stockholders' Equity | 6,661,637 | 6,823,403 |
Total Liabilities and Stockholders' Equity | 8,823,168 | 10,432,701 |
Preferred Stock, Series A [Member] | ||
Stockholders' Equity: | ||
Preferred Stock, Series A, par value $.001 per share, authorized 6,666,667 shares, issued -0- shares; Preferred Stock, Series B-1, par value $.0001 per share, authorized 3,333,333 shares, issued -0- shares; Preferred Stock, Series C, par value $1.00 per share, authorized 67 shares, issued -0- shares | ||
Total Stockholders' Equity | ||
Total Liabilities and Stockholders' Equity | ||
Preferred Stock, Series B-1 [Member] | ||
Stockholders' Equity: | ||
Preferred Stock, Series A, par value $.001 per share, authorized 6,666,667 shares, issued -0- shares; Preferred Stock, Series B-1, par value $.0001 per share, authorized 3,333,333 shares, issued -0- shares; Preferred Stock, Series C, par value $1.00 per share, authorized 67 shares, issued -0- shares | ||
Total Stockholders' Equity | ||
Total Liabilities and Stockholders' Equity | ||
Preferred Stock, Series C [Member] | ||
Stockholders' Equity: | ||
Preferred Stock, Series A, par value $.001 per share, authorized 6,666,667 shares, issued -0- shares; Preferred Stock, Series B-1, par value $.0001 per share, authorized 3,333,333 shares, issued -0- shares; Preferred Stock, Series C, par value $1.00 per share, authorized 67 shares, issued -0- shares | ||
Total Stockholders' Equity | ||
Total Liabilities and Stockholders' Equity |
Consolidated Balance Sheets (Pa
Consolidated Balance Sheets (Parenthetical) - $ / shares | Mar. 31, 2018 | Dec. 31, 2017 |
Common stock, par value per share | $ 0.0001 | $ 0.0001 |
Common stock, shares authorized | 56,666,667 | 56,666,667 |
Common stock, shares issued | 47,046,364 | 47,046,364 |
Preferred Stock, Series A [Member] | ||
Preferred stock, par value per share | $ 0.001 | $ 0.001 |
Preferred stock, shares authorized | 6,666,667 | 6,666,667 |
Preferred stock, shares issued | 0 | 0 |
Preferred Stock, Series B-1 [Member] | ||
Preferred stock, par value per share | $ 0.0001 | $ 0.0001 |
Preferred stock, shares authorized | 3,333,333 | 3,333,333 |
Preferred stock, shares issued | 0 | 0 |
Preferred Stock, Series C [Member] | ||
Preferred stock, par value per share | $ 1 | $ 1 |
Preferred stock, shares authorized | 67 | 67 |
Preferred stock, shares issued | 0 | 0 |
Consolidated Statements Of Oper
Consolidated Statements Of Operations (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Income Statement [Abstract] | ||
Revenues, net | $ 4,060,168 | $ 6,752,196 |
Cost of sales | 3,040,897 | 5,172,729 |
Gross Profit | 1,019,271 | 1,579,467 |
Operating Expenses: | ||
Sales and marketing | 363,061 | 376,756 |
Compensation | 375,110 | 359,802 |
Professional fees | 148,887 | 204,802 |
Product development | 166,566 | 72,025 |
Other general and administrative | 174,288 | 178,619 |
Total Operating Expenses | 1,227,912 | 1,192,004 |
Operating Income (Loss) | (208,641) | 387,463 |
Other Income (Expense): | ||
Interest income | 12,945 | |
Interest expense | 21,730 | |
Total Other (Expense) | (8,785) | |
Income (Loss) Before Tax Provision (Benefit) | (208,641) | 378,678 |
Provision (Benefit) for Income Tax | (18,000) | 128,000 |
Net Income (Loss) | $ (190,641) | $ 250,678 |
Net Income (Loss) per Common Share | ||
Basic | $ (0.004) | $ 0.005 |
Diluted | $ (0.004) | $ 0.005 |
Weighted Average Shares Outstanding | ||
Basic | 47,046,364 | 47,621,553 |
Diluted | 47,046,364 | 47,883,977 |
Consolidated Statements Of Cash
Consolidated Statements Of Cash Flows (Unaudited) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
CASH FLOWS FROM OPERATING ACTIVITIES: | ||
Net income (loss) | $ (190,641) | $ 250,678 |
Adjustments necessary to reconcile net income (loss) to net cash provided by (used in) operating activities: | ||
Depreciation and amortization | 9,133 | 17,495 |
Accrued interest on note receivable | 12,945 | |
Stock based compensation expense | 28,875 | 20,475 |
Provision for deferred income tax | 9,000 | 128,000 |
Increase (decrease) in accrued sales allowance | (20,635) | 206,995 |
(Increase) decrease in accounts receivable | (1,689,880) | 1,539,687 |
(Increase) decrease in inventories | (77,950) | 147,868 |
(Increase) decrease in prepaid expenses | (160,569) | 214,361 |
Increase (decrease) in accounts payable and accrued liabilities | (843,679) | 1,103,216 |
(Decrease) in income tax payable | (613,088) | |
(Increase) in income tax refundable | 113,912 | |
(Decrease) in accrued interest on notes payable | (18,253) | |
Net cash provided by (used in) operating activities | 193,452 | (206,255) |
CASH FLOWS FROM INVESTING ACTIVITIES: | ||
Purchase of property and equipment | 13,433 | |
Net cash (used in) investing activities | (13,433) | |
CASH FLOWS FROM FINANCING ACTIVITIES: | ||
Proceeds from notes payable | 6,578,358 | 5,280,373 |
Repayments of notes payable | 6,578,358 | 5,280,373 |
Repurchase of shares from Involve, LLC | 150,000 | |
Repayments of notes and loans payable to related parties | 100,000 | |
Net cash (used in) financing activities | (250,000) | |
Net Increase (Decrease) in Cash and Cash Equivalents | 193,452 | (469,688) |
Cash and Cash Equivalents at Beginning of Period | 3,668,196 | 1,646,128 |
Cash and Cash Equivalents at End of Period | 3,861,648 | 1,176,440 |
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION: | ||
Cash paid during the period for: Interest | 39,983 | |
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, 2018 | |
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, 2018 and results of operations and cash flows for the three months ended March 31, 2018 and 2017. All significant intercompany accounts and transactions are eliminated in consolidation. These condensed consolidated financial statements and notes are presented in accordance with the rules and regulations of the United States Securities and Exchange Commission ("SEC") relating to interim financial statements and in conformity with U.S. GAAP. Certain information and note disclosures have been condensed or omitted in the condensed financial statements pursuant to SEC rules and regulations, although the Company believes that the disclosures made herein are adequate to make the information not misleading. The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes in the Company's Annual Report on Form 10-K for the year ended December 31, 2017 (the "2017 Annual Report"). The operating results for any interim period are not necessarily indicative of the operating results to be expected for any other interim period or the full fiscal year. Nature of Business Since the beginning of fiscal year 2007, the Company has been primarily engaged in the business of developing, marketing and selling home LED products through national and regional retailers in North America and in certain overseas markets. The Company's products are targeted for applications such as home indoor and outdoor lighting and will have different functionalities to meet consumer's needs. These products may be offered either under the Capstone brand or licensed brands. 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 invoiced amount and are not subject to any interest or finance charges. The Company does not have any off-balance sheet credit exposure related to any of its customers. As of March 31, 2018 and December 31, 2017, accounts receivable serves as collateral for the Company's note payable. The following table summarizes the components of Accounts Receivable, net: March 31, December 31, 2018 2017 Trade Accounts Receivables at period end $ 2,871,902 $ 4,561,782 Reserve for estimated marketing allowances, cash discounts and other incentives (173,426 ) (194,061 ) Total Accounts Receivable, net $ 2,698,476 $ 4,367,721 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, 2018 2017 Balance at beginning of the year $ (194,061 ) $ (1,200,792 ) Accrued allowances — (921,833 ) Reversal of prior year accrued allowances 1,749 58,867 Expenditures 18,886 1,869,697 Balance at period-end $ (173,426 ) $ (194,061 ) Marketing allowances include the cost of underwriting an in store instant rebate coupon or a target markdown allowance on a specific product. Cash discounts represent discounts offered to the retailer off outstanding accounts receivable in order to initiate early payment. Inventories The Company's inventory, recorded at lower of cost (first-in, first-out) or net realizable value, consists of finished goods for resale by Capstone, totaling $62,684 and $140,634 at March 31, 2018 and December 31, 2017, respectively. Prepaid Expenses The Company's prepaid expenses consist primarily of deposits on inventory purchases for future orders as well as prepaid insurance and trade show expense. Net Income Per Common Share Basic earnings per common share are computed by dividing net income by the weighted average number of shares of common stock outstanding as of March 31, 2018 and 2017. Diluted earnings per share reflects the potential dilution that would occur if securities or other contracts to issue common stock were exercised or converted into common stock. For calculation of the diluted net income per share, the basic weighted average number of shares is increased by the dilutive effect of stock options and warrants using the treasury stock method. In periods where losses are reported, the weighted average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive. At March 31, 2018 and 2017, the total number of potentially dilutive common stock equivalents excluded from the diluted earnings per share calculation was 950,003 and 5,182,226, respectively. Basic weighted average shares outstanding is reconciled to diluted weighted shares outstanding as follows: 3 months ended 3 months ended March 31, 2018 March 31, 2017 Basic weighted average shares outstanding 47,046,364 47,621,553 Dilutive warrants — 262,424 Diluted weighted average shares outstanding 47,046,364 47,883,977 Revenue Recognition The Company generates revenue from developing, marketing and selling consumer lighting products through national and regional retailers. The Company's products are targeted for applications such as home indoor and outdoor lighting and will have different functionalities. Capstone currently operates in the consumer lighting products category in the Unites States and in certain overseas markets. These products may be offered either under the Capstone brand or licensed brands. The 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, 2018 For the 3 Months Ended March 31, 2017 Capstone Brand License Brands Total Consolidated Capstone Brand License Brands Total Consolidated Lighting Products- U.S. $ 148,301 $ 3,594,781 $ 3,743,082 $ 716,995 $ 5,460,918 $ 6,177,913 Lighting Products-International 165,894 151,192 317,086 574,283 — 574,283 Total Revenue $ 314,195 $ 3,745,973 $ 4,060,168 $ 1,291,278 $ 5,460,918 $ 6,752,196 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, 2018 and 2017, Capstone determined that $1,749 and $47,741, 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 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, 2018 and December 31, 2017 balance sheets: March 31, December 31, 2018 2017 Balance at the beginning of the period $ 328,279 $ 294,122 Amount accrued 11,977 940,291 Amount expensed — (906,134 ) Balance at period-end $ 340,256 $ 328,279 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 $4,918 and $20,663 for the three months ended March 31, 2018 and 2017, respectively. Product Development Our research and development team located in Hong Kong working with our designated factories, are responsible for the design, development, testing, and certification of new product releases. Our engineering efforts support product development across all products, as well as product testing for specific overseas markets For the three months ended March 31, 2018 and 2017, product and development expenses were $166,566 and $72,025 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 $26,353 and $16,919 for the three months ended March 31, 2018 and 2017, respectively. Accounts Payable and Accrued Liabilities Accounts payable and accrued liabilities contained in the accompanying consolidated balance sheets include accruals for estimated amounts of credits to be issued in future years for potential warranty claims and various other expenses. As of March 31, 2018, and December 31, 2017, the Company has $500,090 and $600,622, respectively, in accrued liabilities. The following table summarizes the components of accounts payable and accrued liabilities at March 31, 2018 and December 31, 2017, respectively: March 31, December 31, 2018 2017 Accounts payable $ 1,389,747 $ 2,132,894 Accrued warranty reserve 340,256 328,279 Accrued compensation, benefits, commissions and other expenses 159,834 272,343 Total accrued liabilities 500,090 600,622 Total $ 1,889,837 $ 2,733,516 Income Taxes The Company accounts for income taxes under the provisions of Financial Accounting Standards Board ("FASB") Accounting Standard Codification ("ASC") 740 Income Taxes On December 22, 2017, President Trump signed into law the legislation generally known as Tax Cut and Jobs Act of 2017. The tax law includes significant changes to the U.S. corporate tax systems including a rate reduction from 35% to 21% beginning in January of 2018, a change in the treatment of foreign earnings going forward and a deemed repatriation transition tax. Refer to Note 6 for additional information on income taxes. Stock-Based Compensation The Company accounts for stock-based compensation under the provisions of ASC 718 Compensation- Stock Compensation ASC 718 requires companies to estimate the fair value of share-based payment awards on the date of the grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expenses over the requisite service periods in the Company's consolidated statements of income. Stock-based compensation expense recognized during the period is based on the value of the portion of share-based payment awards that is ultimately expected to vest during the period. 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 warranty obligations, valuation of inventories, tax related contingencies, valuation of stock-based compensation, other contingencies and litigation, among others. The Company generally bases its estimates on historical experience, agreed obligations, and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results could differ materially from those estimates. Recent Accounting Standards To be Adopted in a Future Period In February 2016, the FASB issued ASU 2016-02, Leases In January 2017, the FASB issued ASU 2017-04, Simplifying the Test for Goodwill Impairment, Adoption of New Accounting Standards In May 2014, the FASB issued Accounting Standards Update ("ASU") 2014-09, which provided guidance for revenue recognition. The standard's core principle was that a company would recognize revenue when it transferred promised goods or services to customers in an amount that reflected the consideration to which the company expected to be entitled in exchange for those goods or services. In doing so, companies needed to use more judgment and make more estimates than under previous guidance. In August 2015, the FASB issued ASU 2015-14, which deferred the effective date of ASU 2014-09 for all entities by one year. Accordingly, public business entities applied the guidance in ASU 2014-09 to annual reporting periods (including interim periods within those periods) beginning after December 15, 2017. The Company completed its study on the impact that implementing this standard would have on its consolidated financial statements, related disclosures and our internal control over financial reporting as well as whether the effect would be material to our revenue. Based on the results of our study the standard did not have a material effect to our revenue. Changes were made to our internal control over financial reporting processes to ensure all contracts are reviewed for each of the five revenue recognition steps. Additionally, the Company's revenue disclosures changed in fiscal 2018. The new disclosures required more granularity into our sources of revenue, as well as the assumptions about recognition timing, and include our selection of certain practical expedients and policy elections. We used the modified retrospective approach upon adoption of this guidance effective January 1, 2018. We reviewed our current accounting policies and practices to identify potential differences resulting from the application of the new requirements to our sales contracts, including evaluation of performance obligations in the sales contract, the transaction price, allocating the transaction price to each separate performance obligation and accounting treatment of costs to obtain and fulfill contracts. In addition, we updated certain disclosures, as applicable, included in our consolidated financial statements to meet the requirements of the new guidance. The adoption of ASC 606 did not have any impact on our operating cash flows. In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities , Fair Value Measurements In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments Statement of Cash Flows, In November 2016, the FASB issued ASU 2016-18, Cash Flows: Statement of Cash Flows (Topic 230) - Restricted Cash. In May 2017, the FASB issued ASU No. 2017-09, "Compensation – Stock Compensation (Topic 718) – Scope of Modification Accounting" 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, 2018 | |
Risks and Uncertainties [Abstract] | |
Concentration of Credit Risk and Economic Dependence | NOTE 2 - CONCENTRATIONS OF CREDIT RISK AND ECONOMIC DEPENDENCE Financial instruments that potentially subject the Company to credit risk consist principally of cash and cash equivalents and accounts receivable. The Company has no significant off-balance-sheet concentrations of credit risk such as foreign exchange contracts, options contracts or other foreign hedging arrangements. Cash and Cash Equivalents The Company considers all highly liquid debt instruments purchased with an original maturity of three months or less to be cash equivalents, to the extent the funds are not being held for investment purposes. The Company at times has cash and cash equivalents with its financial institution in excess of Federal Deposit Insurance Corporation ("FIDC") insurance limits. The Company places its cash and cash equivalents with high credit quality financial institutions which minimize these risks. Accounts Receivable The Company grants credit to its customers, substantially all of whom are retail establishments located throughout the United States and their international locations. The Company typically does not require collateral from customers. Credit risk is limited due to the financial strength of the customers comprising the Company's customer base and their dispersion across different geographical regions. The Company monitors exposure of credit losses and maintains allowances for anticipated losses considered necessary under the circumstances. These various anticipated allowances are accrued for but would be deducted from open invoices by the customer. Major Customers The Company had two customers who comprised 71% and 26% of net revenue during the three months ended March 31, 2018 and 51% and 48% of net revenue during the period ended March 31, 2017. The loss of these customers would adversely impact the business of the Company. For both the quarters ended March 31, 2018 and 2017, approximately 8% of the Company's net revenue resulted from international sales. Major Customers Gross Revenue % Gross Accounts Receivable As of March 31, As of March 31, As of March 31, As of December 31, 2018 2017 2018 2017 Customer A 71 % 51 % $ 2,000,376 $ 2,259,769 Customer B 26 % 48 % 851,905 2,268,426 Total 97 % 99 % $ 2,852,281 $ 4,528,195 Major Vendors The Company had two vendors from which it purchased 89% and 8% of merchandise sold during the period ended March 31, 2018, and 93% and 4% of merchandise sold during the period ended March 31, 2017. The loss of these suppliers could adversely impact the business of the Company. As of March 31, 2018, and December 31, 2017, approximately 78% and 87%, respectively, of accounts payable were due to the two vendors. Purchases % Accounts Payable As of March 31, As of March 31, As of March 31, As of December 31, 2018 2017 2018 2017 Vendor A 89 % 93 % $ 1,089,800 $ 922,310 Vendor B 8 % 4 % — 768,164 Total 97 % 97 % $ 1,089,800 $ 1,690,474 |
Notes Payable
Notes Payable | 3 Months Ended |
Mar. 31, 2018 | |
Debt Disclosure [Abstract] | |
Notes Payable | NOTE 3 – NOTES PAYABLE Sterling National Bank On September 8, As of both March 31, 2018 and December 31, 2017, there was no balance due to Sterling National Bank. As of March 31, 2018, the maximum amount that can be borrowed on this credit line is $7,000,000. |
Commitments And Contingencies A
Commitments And Contingencies And Subsequent Events | 3 Months Ended |
Mar. 31, 2018 | |
Commitments and Contingencies Disclosure [Abstract] | |
Commitments and Contingencies and Subsequent Events | NOTE 4 – COMMITMENTS AND CONTINGENCIES AND SUBSEQUENT EVENTS Operating Leases and Subsequent Events On June 29, 2007, the Company relocated its principal executive offices and sole operations facility to 350 Jim Moran Blvd., Suite 120, Deerfield Beach, Florida 33442, which is located in Broward County. This space consists of 4,000 square rentable feet and was leased on a month to month basis. Capstone entered into a lease agreement for the same office space as currently located. The lease agreement dated January 17, 2014, and effective February 1, 2014, had a 3-year term with a base annual rent of $87,678 paid in equal monthly installments. The Company had the one-time option to renew the lease for three (3) years subject to a 3% increase per each year of the renewal term. Effective February 1, 2017, the Company renewed the lease for 3 years ending January 31, 2020, with a base annual rent of $92,256 and with a total rent expense of $281,711 through the term of the agreement. Under the lease agreement, Capstone is responsible for a portion of common area maintenance charges and any other utility consumed in the leased premises. Capstone International Hong Kong Ltd, (CIHK), entered into a lease agreement for office space at 303 Hennessy Road, Wanchai, Hong Kong. The original agreement was for the period from February 17, 2014, to February 16, 2016, with a base annual rent of $48,000 (HK$ 372,000) paid in equal monthly installments. The lease was extended for three (3) months until May 16, 2016. The lease was renewed for (12) months ending May 16, 2017 with a base annual rate of $48,775 and was further extended for (12) months ending May 16, 2018 with a base annual rate of $54,193 paid in equal monthly installments. Effective April 24, 2018, the Company has further extended the lease for (3) months ending August 16, 2018 with a base rate increase of $225 per month. The Company entered into a six (6) month rental agreement from December 1, 2016 until May 31, 2017 and was extended until December 31, 2017 for showroom space at 3F, Wing Kin Industrial Building, 4-6 Wing Kin Road, Kwai Chung, NT, Hong Kong. This agreement has been further extended until December 31, 2018. The Company's rent expense amounted to $41,493 and $39,753 for the periods ended March 31, 2018 and 2017, respectively. Consulting Agreements On July 1, 2015, the Company entered into a consulting agreement with George Wolf, whereby Mr. Wolf was paid $10,500 per month through December 31, 2015 increasing to $12,500 per month from January 1, 2016 through December 31, 2017. A bonus compensation of $10,000 was paid in the month of January 2017 related to 2016 sales performance. On January 1, 2017, the agreement was amended, whereby Mr. Wolf was paid $13,750 per month from January 1, 2017 through December 31, 2017. Bonus compensation of $15,000 was paid on December 22, 2017 related to 2017 sales performance. On January 1, 2018, the agreement was further amended, whereby Mr. Wolf will be paid $13,750 per month from January 1, 2018 through December 31, 2018. The agreement can be terminated upon 30 days' notice by either party. The Company may, in its sole discretion at any time convert Mr. Wolf to a full-time Executive status. The annual salary and term of employment would be equal to that outlined in the consulting agreement. Employment Agreements On February 5, 2016, the Company entered into an Employment Agreement with Stewart Wallach, whereby Mr. Wallach was paid $287,163 per annum. As part of the agreement, the base salary was reviewed annually by the Compensation Committee for a potential increase, to at least reflect increases in the cost of living, but only if the Company shows a net profit for the year. The initial term of this agreement began February 5, 2016 and ended February 5, 2018. On February 5, 2018, the Company renewed the Employment Agreement with Stewart Wallach, whereby Mr. Wallach will be paid $301,521 per annum. The initial term of this new agreement began February 5, 2018 and ends February 5, 2020. The parties may extend the employment period of this agreement by mutual consent with approval of the Company's Board of Directors, but the extension may not exceed two years in length. On February 5, 2016, the Company entered into an Employment Agreement with James McClinton, whereby Mr. McClinton was paid $191,442 per annum. As part of the agreement, the base salary was reviewed annually by the Compensation Committee for a potential increase, to at least reflect increases in the cost of living, but only if the Company shows a net profit for the year. The initial term of this agreement began February 5, 2016 and ended February 5, 2018 On February 5, 2018, the Company renewed the Employment Agreement with James McClinton, whereby Mr. McClinton will be paid $191,442 per annum. The initial term of this new agreement began February 5, 2018 and ends February 5, 2020. The parties may extend the employment period of this agreement by mutual consent with approval of the Company's Board of Directors, but the extension may not exceed one year in length. Licensing Agreements and Subsequent Events On February 4, 2015, the Company finalized a Licensing Agreement with a globally recognized floorcare company that allows the Company to market home lighting products under the licensed brand, to discount retailers, warehouse clubs, home centers, on-line retailers and other retail distribution channels in the U.S., Canada and Mexico. The initial term of the agreement is for 3 years. The agreement does not have a guaranteed royalty stipulation. On December 29, 2016, the Company finalized the first amendment to the February 4, 2015 Licensing Agreement with the floorcare company in which the initial term was extended through February 3, 2020 and additional renewal terms and periods were also finalized. During this initial extended period through February 3, 2020, if the Company achieves net sales of $5,000,000, then the agreement would automatically be extended 2 years until February 3, 2022 and if during this second extended period the Company achieves net sales of $5,000,000, then the agreement would automatically be further extended 2 years until February 3, 2024. The license also added an additional product category. On April 12, 2018, the Company finalized the second amendment to the February 4, 2015 Licensing Agreement in which the license was further expanded to add an additional product category. Royalty expense related to this agreement was $142,208 and $172,964, for the periods ended March 31, 2018 and 2017, respectively. On January 9, 2017, the Company finalized a Licensing Agreement with a globally recognized battery company that will allow the Company to market under the licensed brand, a specific product to a specific retailer in the warehouse club distribution channel. This agreement will be effective until December 31, 2018. The agreement does not have a guaranteed royalty stipulation, but the Company must meet minimum net sales requirements of $5,000,000 for contract year 1 and $7,000,000 for contract year 2. Royalty expense related to this agreement for the periods ended March 31, 2018 and 2017, was $27,054 and $60,049, respectively. Investment Banking Agreement On March 1, 2017, the Company executed an Investment Banking Agreement with Wilmington Capital Securities, LLC, ("Wilmington"), a registered broker-dealer under the Securities Exchange Act of 1934. The Company entered into the Agreement in order to obtain outside assistance in finding and considering possible opportunities to enhance Company shareholder value through significant corporate transactions or through funding expansion and/or diversification of the Company's primary business lines. The scope of such possible strategic transactions included mergers and acquisitions, asset acquisition or sales and funding through the issuance of Company securities. The agreement had an initial six-month term and renewed for an additional, consecutive six-month term. Wilmington received a cash retainer fee of $80,000, paid in monthly installments, in the first six-month term, and a reduced retainer fee of $45,000, paid in monthly installments, in the first renewal of the initial six-month term. Wilmington would also receive a transaction fee for any consummated strategic transaction introduced by Wilmington under the Agreement. The transaction fees are based on the Lehman Scale starting at 8% fee reducing to 4% on transactions from $5,000,000 to in excess of $20,000,000. The retainer fee paid for this agreement for the year ended December 31, 2017 was $120,000. A further retainer fee of $5,000 that remained on the agreement was paid in January 2018. The agreement has now expired. |
Stock Transactions
Stock Transactions | 3 Months Ended |
Mar. 31, 2018 | |
Equity [Abstract] | |
Stock Transactions | NOTE 5 - STOCK TRANSACTIONS Warrants During September and October 2007, the Company issued 2,121,569 shares of common stock for cash at $0.255 per share, or $541,000 total as part of a Private Placement under Rule 506 of Regulation D. Along with the stock, each investor also received a warrant to purchase 30% of the shares purchased in the Private Placement. In September 2017, an investor exercised a warrant option for 29,412 shares at the exercise price of $.255 per share. During October 2017 the remaining 607,062 outstanding warrants expired. Options In 2005, the Company authorized the 2005 Equity Plan that made available shares of common stock for issuance through awards of options, restricted stock, stock bonuses, stock appreciation rights and restricted stock units. There were no stock options issued during the period ended March 31, 2018. As of March 31, 2018, there were 950,003 stock options outstanding and 740,003 stock options vested. The stock options have a weighted average expense price of $0.435. For the periods ended March 31, 2018 and 2017, the Company recognized stock-based compensation expense of $28,875 and $20,475, respectively, related to these stock options. Such amounts are included in compensation expense in the accompanying consolidated statements of operations. A further compensation expense expected to be $39,981 will be recognized for these options in 2018. On May 2, 2017, the Company's Board of Directors amended the Company's 2005 Equity Incentive Plan to extend the Plan's expiration date from December 31, 2016 to December 31, 2021. Adoption of Stock Repurchase Plan On August 23, 2016, the Company's Board of Directors authorized the Company to implement a stock repurchase plan for up to $750,000 worth of shares of the Company's outstanding common stock. The stock purchases can be made in the open market, structured repurchase programs, or in privately negotiated transactions. The Company has no obligation to repurchase shares under the authorization, and the timing, actual number and value of the shares which are repurchased will be at the discretion of management and will depend on a number of factors including the price of the Company's common stock, market conditions, corporate developments and the Company's financial condition. The repurchase plan may be discontinued at any time at the Company's discretion. On December 21, 2016, the Company's Board of Directors approved an extension of the Company's stock repurchase plan through December 31, 2017, subject to an earlier termination at the discretion of the Company's Board of Directors. On February 13, 2017, as authorized under the Company's stock repurchase plan, the Company repurchased 1,000,000 shares of Company common stock from Involve, LLC., under the Option Agreement dated June 27, 2016, at an exercise price of $.15 per share. On May 1, 2017, as authorized under the Company's stock repurchase plan, the Company repurchased 666,667 shares of Company common stock from Involve, LLC., under the Option Agreement dated June 27, 2016, at an exercise price of $.15 per share. On May 2, 2017, the Company's Board of Directors authorized at the Company's discretion to either retain repurchased shares in the treasury or to retire the repurchased shares and these shares were retired on June 1, 2017. On December 15, 2017, the Company's Board of Directors approved an extension of the Company's stock repurchase plan for up to $750,000 through June 30, 2018. |
Income Taxes
Income Taxes | 3 Months Ended |
Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Income Taxes | NOTE 6 - INCOME TAXES As of March 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. The net deferred tax liability as of March 31, 2018 and December 31, 2017 was $260,000 and $251,000, respectively, and is reflected in long-term liabilities in the accompanying balance sheets. The Company is subject to income taxes in the U.S. federal jurisdiction, various state jurisdictions and certain other jurisdictions. Tax regulations within each jurisdiction are subject to the interpretation of the relaxed tax laws and regulations and require significant judgement to apply. The Company is not subject to U.S. federal, state and local tax examinations by tax authorities for the years 2014 and prior. If the Company were to subsequently record an unrecognized tax benefit, associated penalties and tax related interest expense would be recorded as a component of income tax expense. The provision (benefit) for income taxes for the three months ended March 31, 2018 and 2017 was calculated based on the estimated annual effective rate of 25.35% and 34%, respectively for both the full 2018 and 2017 calendar years. On December 22, 2017, President Trump signed into law the legislation generally known as Tax Cut and Jobs Act of 2017. The tax law includes significant changes to the U.S. corporate tax systems including a rate reduction from 35% to 21% beginning in January of 2018, a change in the treatment of foreign earnings going forward and a deemed repatriation transition tax. In accordance with ASC 740, the impact of a change in tax law is recorded in the period of enactment. During the fourth quarter of 2017, the Company recorded a non-cash, change in its net deferred income tax balances of approximately $120,000 related to the tax rate change. The income tax provision (benefit) for the three months ended March 31, 2018 and 2017 consists of: 2018 2017 Current: Federal $ (21,000 ) $ — State (6,000 ) — Foreign — — Deferred: Federal 8,500 128,000 State 500 — Income Tax Provision (Benefit) $ (18,000 ) $ 128,000 |
Organization And Summary Of S12
Organization And Summary Of Significant Accounting Policies (Policies) | 3 Months Ended |
Mar. 31, 2018 | |
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, 2018 and results of operations and cash flows for the three months ended March 31, 2018 and 2017. All significant intercompany accounts and transactions are eliminated in consolidation. These condensed consolidated financial statements and notes are presented in accordance with the rules and regulations of the United States Securities and Exchange Commission ("SEC") relating to interim financial statements and in conformity with U.S. GAAP. Certain information and note disclosures have been condensed or omitted in the condensed financial statements pursuant to SEC rules and regulations, although the Company believes that the disclosures made herein are adequate to make the information not misleading. The condensed consolidated financial statements should be read in conjunction with the consolidated financial statements and notes in the Company's Annual Report on Form 10-K for the year ended December 31, 2017 (the "2017 Annual Report"). The operating results for any interim period are not necessarily indicative of the operating results to be expected for any other interim period or the full fiscal year. |
Nature of Business | Nature of Business Since the beginning of fiscal year 2007, the Company has been primarily engaged in the business of developing, marketing and selling home LED products through national and regional retailers in North America and in certain overseas markets. The Company's products are targeted for applications such as home indoor and outdoor lighting and will have different functionalities to meet consumer's needs. These products may be offered either under the Capstone brand or licensed brands. 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 invoiced amount and are not subject to any interest or finance charges. The Company does not have any off-balance sheet credit exposure related to any of its customers. As of March 31, 2018 and December 31, 2017, accounts receivable serves as collateral for the Company's note payable. The following table summarizes the components of Accounts Receivable, net: March 31, December 31, 2018 2017 Trade Accounts Receivables at period end $ 2,871,902 $ 4,561,782 Reserve for estimated marketing allowances, cash discounts and other incentives (173,426 ) (194,061 ) Total Accounts Receivable, net $ 2,698,476 $ 4,367,721 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, 2018 2017 Balance at beginning of the year $ (194,061 ) $ (1,200,792 ) Accrued allowances — (921,833 ) Reversal of prior year accrued allowances 1,749 58,867 Expenditures 18,886 1,869,697 Balance at period-end $ (173,426 ) $ (194,061 ) 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, totaling $62,684 and $140,634 at March 31, 2018 and December 31, 2017, respectively. |
Prepaid Expenses | Prepaid Expenses The Company's prepaid expenses consist primarily of deposits on inventory purchases for future orders as well as prepaid insurance and trade show expense. |
Net Income Per Common Share | Net Income Per Common Share Basic earnings per common share are computed by dividing net income by the weighted average number of shares of common stock outstanding as of March 31, 2018 and 2017. Diluted earnings per share reflects the potential dilution that would occur if securities or other contracts to issue common stock were exercised or converted into common stock. For calculation of the diluted net income per share, the basic weighted average number of shares is increased by the dilutive effect of stock options and warrants using the treasury stock method. In periods where losses are reported, the weighted average number of common shares outstanding excludes common stock equivalents because their inclusion would be anti-dilutive. At March 31, 2018 and 2017, the total number of potentially dilutive common stock equivalents excluded from the diluted earnings per share calculation was 950,003 and 5,182,226, respectively. Basic weighted average shares outstanding is reconciled to diluted weighted shares outstanding as follows: 3 months ended 3 months ended March 31, 2018 March 31, 2017 Basic weighted average shares outstanding 47,046,364 47,621,553 Dilutive warrants — 262,424 Diluted weighted average shares outstanding 47,046,364 47,883,977 |
Revenue Recognition | Revenue Recognition The Company generates revenue from developing, marketing and selling consumer lighting products through national and regional retailers. The Company's products are targeted for applications such as home indoor and outdoor lighting and will have different functionalities. Capstone currently operates in the consumer lighting products category in the Unites States and in certain overseas markets. These products may be offered either under the Capstone brand or licensed brands. The 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, 2018 For the 3 Months Ended March 31, 2017 Capstone Brand License Brands Total Consolidated Capstone Brand License Brands Total Consolidated Lighting Products- U.S. $ 148,301 $ 3,594,781 $ 3,743,082 $ 716,995 $ 5,460,918 $ 6,177,913 Lighting Products-International 165,894 151,192 317,086 574,283 — 574,283 Total Revenue $ 314,195 $ 3,745,973 $ 4,060,168 $ 1,291,278 $ 5,460,918 $ 6,752,196 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, 2018 and 2017, Capstone determined that $1,749 and $47,741, 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 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, 2018 and December 31, 2017 balance sheets: March 31, December 31, 2018 2017 Balance at the beginning of the period $ 328,279 $ 294,122 Amount accrued 11,977 940,291 Amount expensed — (906,134 ) Balance at period-end $ 340,256 $ 328,279 |
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 $4,918 and $20,663 for the three months ended March 31, 2018 and 2017, 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 For the three months ended March 31, 2018 and 2017, product and development expenses were $166,566 and $72,025 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 $26,353 and $16,919 for the three months ended March 31, 2018 and 2017, respectively. |
Accounts Payable and Accrued Liabilities | Accounts Payable and Accrued Liabilities Accounts payable and accrued liabilities contained in the accompanying consolidated balance sheets include accruals for estimated amounts of credits to be issued in future years for potential warranty claims and various other expenses. As of March 31, 2018, and December 31, 2017, the Company has $500,090 and $600,622, respectively, in accrued liabilities. The following table summarizes the components of accounts payable and accrued liabilities at March 31, 2018 and December 31, 2017, respectively: March 31, December 31, 2018 2017 Accounts payable $ 1,389,747 $ 2,132,894 Accrued warranty reserve 340,256 328,279 Accrued compensation, benefits, commissions and other expenses 159,834 272,343 Total accrued liabilities 500,090 600,622 Total $ 1,889,837 $ 2,733,516 |
Income Taxes | Income Taxes The Company accounts for income taxes under the provisions of Financial Accounting Standards Board ("FASB") Accounting Standard Codification ("ASC") 740 Income Taxes On December 22, 2017, President Trump signed into law the legislation generally known as Tax Cut and Jobs Act of 2017. The tax law includes significant changes to the U.S. corporate tax systems including a rate reduction from 35% to 21% beginning in January of 2018, a change in the treatment of foreign earnings going forward and a deemed repatriation transition tax. Refer to Note 6 for additional information on income taxes. |
Stock-Based Compensation | Stock-Based Compensation The Company accounts for stock-based compensation under the provisions of ASC 718 Compensation- Stock Compensation ASC 718 requires companies to estimate the fair value of share-based payment awards on the date of the grant using an option-pricing model. The value of the portion of the award that is ultimately expected to vest is recognized as expenses over the requisite service periods in the Company's consolidated statements of income. Stock-based compensation expense recognized during the period is based on the value of the portion of share-based payment awards that is ultimately expected to vest during the period. 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 warranty obligations, valuation of inventories, tax related contingencies, valuation of stock-based compensation, other contingencies and litigation, among others. The Company generally bases its estimates on historical experience, agreed obligations, and on various other assumptions that are believed to be reasonable under the circumstances, the results of which form the basis of making judgments about the carrying value of assets and liabilities that are not readily apparent from other sources. Actual results could differ materially from those estimates. |
Recent Accounting Standards | Recent Accounting Standards To be Adopted in a Future Period In February 2016, the FASB issued ASU 2016-02, Leases 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 May 2014, the FASB issued Accounting Standards Update ("ASU") 2014-09, which provided guidance for revenue recognition. The standard's core principle was that a company would recognize revenue when it transferred promised goods or services to customers in an amount that reflected the consideration to which the company expected to be entitled in exchange for those goods or services. In doing so, companies needed to use more judgment and make more estimates than under previous guidance. In August 2015, the FASB issued ASU 2015-14, which deferred the effective date of ASU 2014-09 for all entities by one year. Accordingly, public business entities applied the guidance in ASU 2014-09 to annual reporting periods (including interim periods within those periods) beginning after December 15, 2017. The Company completed its study on the impact that implementing this standard would have on its consolidated financial statements, related disclosures and our internal control over financial reporting as well as whether the effect would be material to our revenue. Based on the results of our study the standard did not have a material effect to our revenue. Changes were made to our internal control over financial reporting processes to ensure all contracts are reviewed for each of the five revenue recognition steps. Additionally, the Company's revenue disclosures changed in fiscal 2018. The new disclosures required more granularity into our sources of revenue, as well as the assumptions about recognition timing, and include our selection of certain practical expedients and policy elections. We used the modified retrospective approach upon adoption of this guidance effective January 1, 2018. We reviewed our current accounting policies and practices to identify potential differences resulting from the application of the new requirements to our sales contracts, including evaluation of performance obligations in the sales contract, the transaction price, allocating the transaction price to each separate performance obligation and accounting treatment of costs to obtain and fulfill contracts. In addition, we updated certain disclosures, as applicable, included in our consolidated financial statements to meet the requirements of the new guidance. The adoption of ASC 606 did not have any impact on our operating cash flows. In January 2016, the FASB issued ASU 2016-01, Financial Instruments - Overall: Recognition and Measurement of Financial Assets and Financial Liabilities , Fair Value Measurements In August 2016, the FASB issued ASU 2016-15, Statement of Cash Flows (Topic 230): Classification of Certain Cash Receipts and Cash Payments Statement of Cash Flows, In November 2016, the FASB issued ASU 2016-18, Cash Flows: Statement of Cash Flows (Topic 230) - Restricted Cash. In May 2017, the FASB issued ASU No. 2017-09, "Compensation – Stock Compensation (Topic 718) – Scope of Modification Accounting" 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 S13
Organization And Summary Of Significant Accounting Policies (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Organization And Summary Of Significant Accounting Policies Tables | |
Schedule of Components of Accounts Receivable, net | The following table summarizes the components of Accounts Receivable, net: March 31, December 31, 2018 2017 Trade Accounts Receivables at period end $ 2,871,902 $ 4,561,782 Reserve for estimated marketing allowances, cash discounts and other incentives (173,426 ) (194,061 ) Total Accounts Receivable, net $ 2,698,476 $ 4,367,721 |
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, 2018 2017 Balance at beginning of the year $ (194,061 ) $ (1,200,792 ) Accrued allowances — (921,833 ) Reversal of prior year accrued allowances 1,749 58,867 Expenditures 18,886 1,869,697 Balance at period-end $ (173,426 ) $ (194,061 ) |
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, 2018 March 31, 2017 Basic weighted average shares outstanding 47,046,364 47,621,553 Dilutive warrants — 262,424 Diluted weighted average shares outstanding 47,046,364 47,883,977 |
Schedule of Net Revenue by Major Source | The following table disaggregates net revenue by major source: For the 3 Months Ended March 31, 2018 For the 3 Months Ended March 31, 2017 Capstone Brand License Brands Total Consolidated Capstone Brand License Brands Total Consolidated Lighting Products- U.S. $ 148,301 $ 3,594,781 $ 3,743,082 $ 716,995 $ 5,460,918 $ 6,177,913 Lighting Products-International 165,894 151,192 317,086 574,283 — 574,283 Total Revenue $ 314,195 $ 3,745,973 $ 4,060,168 $ 1,291,278 $ 5,460,918 $ 6,752,196 |
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, 2018 and December 31, 2017 balance sheets: March 31, December 31, 2018 2017 Balance at the beginning of the period $ 328,279 $ 294,122 Amount accrued 11,977 940,291 Amount expensed — (906,134 ) Balance at period-end $ 340,256 $ 328,279 |
Schedule of Components of Accounts Payable and Accrued Liabilities | The following table summarizes the components of accounts payable and accrued liabilities at March 31, 2018 and December 31, 2017, respectively: March 31, December 31, 2018 2017 Accounts payable $ 1,389,747 $ 2,132,894 Accrued warranty reserve 340,256 328,279 Accrued compensation, benefits, commissions and other expenses 159,834 272,343 Total accrued liabilities 500,090 600,622 Total $ 1,889,837 $ 2,733,516 |
Concentration Of Credit Risk 14
Concentration Of Credit Risk And Economic Dependence (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Concentration Of Credit Risk And Economic Dependence Tables | |
Schedule of Concentration of Credit Risk of Major Customers And Major Vendors | Major Customers Gross Revenue % Gross Accounts Receivable As of March 31, As of March 31, As of March 31, As of December 31, 2018 2017 2018 2017 Customer A 71 % 51 % $ 2,000,376 $ 2,259,769 Customer B 26 % 48 % 851,905 2,268,426 Total 97 % 99 % $ 2,852,281 $ 4,528,195 Major Vendors Purchases % Accounts Payable As of March 31, As of March 31, As of March 31, As of December 31, 2018 2017 2018 2017 Vendor A 89 % 93 % $ 1,089,800 $ 922,310 Vendor B 8 % 4 % — 768,164 Total 97 % 97 % $ 1,089,800 $ 1,690,474 |
Income Taxes (Tables)
Income Taxes (Tables) | 3 Months Ended |
Mar. 31, 2018 | |
Income Tax Disclosure [Abstract] | |
Schedule of Income Tax Provision (benefit) | The income tax provision (benefit) for the three months ended March 31, 2018 and 2017 consists of: 2018 2017 Current: Federal $ (21,000 ) $ — State (6,000 ) — Foreign — — Deferred: Federal 8,500 128,000 State 500 — Income Tax Provision (Benefit) $ (18,000 ) $ 128,000 |
Organization And Summary Of S16
Organization And Summary Of Significant Accounting Policies (Components Of Accounts Receivable, Net) (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Organization And Summary Of Significant Accounting Policies Components Of Accounts Receivable Net Details | |||
Trade Accounts Receivables at period end | $ 2,871,902 | $ 4,561,782 | |
Reserve for estimated marketing allowances, cash discounts and other incentives | 173,426 | 194,061 | $ 1,200,792 |
Total Accounts Receivable, net | $ 2,698,476 | $ 4,367,721 |
Organization And Summary Of S17
Organization And Summary Of Significant Accounting Policies (Schedule Of Changes In Reserve) (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Organization And Summary Of Significant Accounting Policies Schedule Of Changes In Reserve Details | ||
Balance at beginning of the year | $ 194,061 | $ 1,200,792 |
Accrued allowances | 921,833 | |
Reversal of prior year accrued allowances | 1,749 | 58,867 |
Expenditures | (18,886) | (1,869,697) |
Balance at period-end | $ 173,426 | $ 194,061 |
Organization And Summary Of S18
Organization And Summary Of Significant Accounting Policies (Schedule Of Basic Weighted Average Shares) (Details) - shares | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Organization And Summary Of Significant Accounting Policies Schedule Of Basic Weighted Average Shares Details | ||
Basic weighted average shares outstanding | 47,046,364 | 47,621,553 |
Dilutive warrants | 262,424 | |
Diluted weighted average shares outstanding | 47,046,364 | 47,883,977 |
Organization And Summary Of S19
Organization And Summary Of Significant Accounting Policies (Schedule Of Net Revenue By Major Source) (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Total Revenue | $ 4,060,168 | $ 6,752,196 |
Capstone Brand [Member] | ||
Total Revenue | 314,195 | 1,291,278 |
License Brands [Member] | ||
Total Revenue | 3,745,973 | 5,460,918 |
Total Consolidated [Member] | ||
Total Revenue | 4,060,168 | 6,752,196 |
Lighting Products - U.S. [Member] | Capstone Brand [Member] | ||
Total Revenue | 148,301 | 716,995 |
Lighting Products - U.S. [Member] | License Brands [Member] | ||
Total Revenue | 3,594,781 | 5,460,918 |
Lighting Products - U.S. [Member] | Total Consolidated [Member] | ||
Total Revenue | 3,743,082 | 6,177,913 |
Lighting Products-International [Member] | Capstone Brand [Member] | ||
Total Revenue | 165,894 | 574,283 |
Lighting Products-International [Member] | License Brands [Member] | ||
Total Revenue | 151,192 | |
Lighting Products-International [Member] | Total Consolidated [Member] | ||
Total Revenue | $ 317,086 | $ 574,283 |
Organization And Summary Of S20
Organization And Summary Of Significant Accounting Policies (Schedule Of Product Warranty Liabilities) (Details) - USD ($) | 3 Months Ended | 12 Months Ended |
Mar. 31, 2018 | Dec. 31, 2017 | |
Organization And Summary Of Significant Accounting Policies Schedule Of Product Warranty Liabilities Details | ||
Balance at the beginning of the period | $ 328,279 | $ 294,122 |
Amount accrued | 11,977 | 940,291 |
Amount expensed | 906,134 | |
Balance at period-end | $ 340,256 | $ 328,279 |
Organization And Summary Of S21
Organization And Summary Of Significant Accounting Policies (Components Of Accounts Payable) (Details) - USD ($) | Mar. 31, 2018 | Dec. 31, 2017 | Dec. 31, 2016 |
Organization And Summary Of Significant Accounting Policies Components Of Accounts Payable Details | |||
Accounts payable | $ 1,389,747 | $ 2,132,894 | |
Accrued warranty reserve | 340,256 | 328,279 | $ 294,122 |
Accrued compensation, benefits, commissions and other expenses | 159,834 | 272,343 | |
Total accrued liabilities | 500,090 | 600,622 | |
Total | $ 1,889,837 | $ 2,733,516 |
Concentration Of Credit Risk 22
Concentration Of Credit Risk And Economic Dependence (Major Customers) (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Concentration Risk [Line Items] | |||
Gross Accounts Receivable | $ 2,871,902 | $ 4,561,782 | |
Customer A [Member] | |||
Concentration Risk [Line Items] | |||
Gross Accounts Receivable | 2,000,376 | 2,259,769 | |
Customer B [Member] | |||
Concentration Risk [Line Items] | |||
Gross Accounts Receivable | 851,905 | 2,268,426 | |
Major Customers [Member] | |||
Concentration Risk [Line Items] | |||
Gross Accounts Receivable | $ 2,852,281 | $ 4,528,195 | |
Gross Revenue [Member] | Customer A [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 71.00% | 51.00% | |
Gross Revenue [Member] | Customer B [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 26.00% | 48.00% | |
Gross Revenue [Member] | Major Customers [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 97.00% | 99.00% |
Concentration Of Credit Risk 23
Concentration Of Credit Risk And Economic Dependence (Major Vendors) (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 | |
Concentration Risk [Line Items] | |||
Accounts Payable | $ 1,389,747 | $ 2,132,894 | |
Vendor A [Member] | |||
Concentration Risk [Line Items] | |||
Accounts Payable | 1,089,800 | 922,310 | |
Vendor B [Member] | |||
Concentration Risk [Line Items] | |||
Accounts Payable | 768,164 | ||
Major Vendor [Member] | |||
Concentration Risk [Line Items] | |||
Accounts Payable | $ 1,089,800 | $ 1,690,474 | |
Purchases [Member] | Vendor A [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 89.00% | 93.00% | |
Purchases [Member] | Vendor B [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 8.00% | 4.00% | |
Purchases [Member] | Major Vendor [Member] | |||
Concentration Risk [Line Items] | |||
Concentration risk percentage | 97.00% | 97.00% |
Income Taxes (Schedule Of Incom
Income Taxes (Schedule Of Income Tax Provision (Benefit)) (Details) - USD ($) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Current: | ||
Federal | $ (21,000) | |
State | (6,000) | |
Foreign | ||
Deferred: | ||
Federal | 8,500 | 128,000 |
State | 500 | |
Income Tax Provision (Benefit) | $ (18,000) | $ 128,000 |
Organization And Summary Of S25
Organization And Summary Of Significant Accounting Policies (Narrative) (Details) - USD ($) | Dec. 22, 2017 | Mar. 31, 2018 | Mar. 31, 2017 | Dec. 31, 2017 |
Potentially dilutive common stock equivalents excluded from diluted earnings per share | 950,003 | 5,182,226 | ||
Accrued sales allowances recovered | $ 1,749 | $ 47,741 | ||
Changes in income tax rate description | On December 22, 2017, President Trump signed into law the legislation generally known as Tax Cut and Jobs Act of 2017. The tax law includes significant changes to the U.S. corporate tax systems including a rate reduction from 35% to 21% beginning in January of 2018, a change in the treatment of foreign earnings going forward and a deemed repatriation transition tax. | |||
Accounts Payable And Accrued Liabilities [Member] | ||||
Accrual of credits on account of pontential warranty claims and various other expenses | 500,090 | $ 600,622 | ||
Sales and Marketing Expenses [Member] | ||||
Advertising and promotion expense | 4,918 | 20,663 | ||
Shipping and handling costs | $ 26,353 | $ 16,919 |
Concentrations Of Credit Risk A
Concentrations Of Credit Risk And Economic Dependence (Narrative) (Details) | 3 Months Ended | |
Mar. 31, 2018 | Mar. 31, 2017 | |
Net Revenue [Member] | International Sales [Member] | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 8.00% | 8.00% |
Accounts Payable [Member] | Two Vendors [Member] | ||
Concentration Risk [Line Items] | ||
Concentration risk percentage | 78.00% | 87.00% |
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, 2018 | Dec. 31, 2017 |
Line of Credit Facility [Line Items] | |||
Line of credit funding description | The assignments provide funding for an amount up to 85% of net invoices submitted and 50% of inventory value. | ||
Percentage of base management fee of the gross invoice amount | 0.30% | ||
Line of credit interest rate description | The interest rate of the loan advance is .25% above Sterling National Bank's Base Rate which at time of closing was 6.25%. | ||
Line of credit interest rate | 6.25% | 6.25% | |
Line of credit collateral description | The amounts borrowed under this agreement are due on demand and collateralized by substantially all the assets of Capstone. | ||
Line of credit, outstanding amount | |||
Line of credit current maximum borrowing capacity | $ 7,000,000 |
Commitments And Contingencies28
Commitments And Contingencies And Subsequent Events (Operating Leases And Subsequent Events) (Narrative) (Details) | Apr. 24, 2018USD ($) | May 16, 2017USD ($) | Feb. 01, 2017USD ($) | Dec. 01, 2016 | May 16, 2016USD ($) | Feb. 16, 2016 | Feb. 17, 2014USD ($) | Feb. 01, 2014USD ($) | Mar. 31, 2018USD ($) | Mar. 31, 2017USD ($) | Feb. 17, 2014HKD ($) | Jun. 29, 2007ft² |
Operating Leased Assets [Line Items] | ||||||||||||
Rent expenses | $ 41,493 | $ 39,753 | ||||||||||
Operating Lease Agreement - Office Space [Member] | ||||||||||||
Operating Leased Assets [Line Items] | ||||||||||||
Area of rental space | ft² | 4,000 | |||||||||||
Base annual rent payable | $ 92,256 | $ 87,678 | ||||||||||
Operating lease description | Effective February 1, 2017, the Company renewed the lease for 3 years ending January 31, 2020. | The Company had the one-time option to renew the lease for three (3) years subject to a 3% increase per each year of the renewal term. | ||||||||||
Operating lease term | 3 years | |||||||||||
Operating lease renewal term | 3 years | |||||||||||
Total rental expenses | $ 281,711 | |||||||||||
Operating Lease Agreement - Office Space [Member] | Capstone International Hong Kong Ltd (CIHK) [Member] | ||||||||||||
Operating Leased Assets [Line Items] | ||||||||||||
Base annual rent payable | $ 54,193 | $ 48,775 | $ 48,000 | |||||||||
Operating lease description | Further extended for (12) months ending May 16, 2018 | The lease was renewed for (12) months ending May 16, 2017 | The lease was extended for three (3) months until May 16, 2016. | The original agreement was for the period from February 17, 2014, to February 16, 2016. | ||||||||
Operating lease renewal term | 12 months | 12 months | 3 months | |||||||||
Operating Lease Agreement - Office Space [Member] | Capstone International Hong Kong Ltd (CIHK) [Member] | Subsequent Event [Member] | ||||||||||||
Operating Leased Assets [Line Items] | ||||||||||||
Operating lease description | The Company has further extended the lease for (3) months ending August 16, 2018 | |||||||||||
Operating lease renewal term | 3 months | |||||||||||
Increase in base rent payable per month | $ 225 | |||||||||||
Operating Lease Agreement - Office Space [Member] | Capstone International Hong Kong Ltd (CIHK) [Member] | Hong Kong, Dollars | ||||||||||||
Operating Leased Assets [Line Items] | ||||||||||||
Base annual rent payable | $ 372,000 | |||||||||||
Operating Lease Agreement - Showroom Space [Member] | Capstone International Hong Kong Ltd (CIHK) [Member] | ||||||||||||
Operating Leased Assets [Line Items] | ||||||||||||
Operating lease description | The Company entered into a six (6) month rental agreement from December 1, 2016 until May 31, 2017 and was extended until December 31, 2017 for showroom space at 3F, Wing Kin Industrial Building, 4-6 Wing Kin Road, Kwai Chung, NT, Hong Kong. This agreement has been further extended until December 31, 2018. | |||||||||||
Operating lease term | 6 months |
Commitments And Contingencies29
Commitments And Contingencies And Subsequent Events (Consulting Agreements) (Narrative) (Details) - Consulting Agreement With George Wolf [Member] - USD ($) | Jan. 02, 2018 | Dec. 22, 2017 | Jan. 02, 2017 | Jan. 02, 2016 | Jul. 01, 2015 | Jan. 31, 2017 | Mar. 31, 2018 |
Other Commitments [Line Items] | |||||||
Amount payable per month under the agreement | $ 13,750 | $ 13,750 | $ 12,500 | $ 10,500 | |||
Agreement description | On January 1, 2018, the agreement was further amended, whereby Mr. Wolf will be paid $13,750 per month from January 1, 2018 through December 31, 2018. | On January 1, 2017, the agreement was amended, whereby Mr. Wolf will be paid $13,750 per month from January 1, 2017 through December 31, 2017. | Increasing to $12,500 per month from January 1, 2016 through December 31, 2017 | Mr. Wolf will be paid $10,500 per month through December 31, 2015 | The agreement can be terminated upon 30 days' notice by either party. The Company may, in its sole discretion at any time convert Mr. Wolf to a full-time Executive status. The annual salary and term of employment would be equal to that outlined in the consulting agreement. | ||
Compensation bonus | $ 15,000 | $ 10,000 |
Commitments And Contingencies30
Commitments And Contingencies And Subsequent Events (Employment Agreements) (Narrative) (Details) - USD ($) | Feb. 05, 2018 | Feb. 05, 2016 |
Employment Agreement With Stewart Wallach [Member] | ||
Other Commitments [Line Items] | ||
Amount payable per annum under the agreement | $ 301,521 | $ 287,163 |
Agreement description | The initial term of this new agreement began February 5, 2018 and ends February 5, 2020. The parties may extend the employment period of this agreement by mutual consent with approval of the Company's Board of Directors, but the extension may not exceed two years in length. | As part of the agreement, the base salary was reviewed annually by the Compensation Committee for a potential increase, to at least reflect increases in the cost of living, but only if the Company shows a net profit for the year. The initial term of this agreement began February 5, 2016 and ended February 5, 2018. |
Employment Agreement With James McClinton [Member] | ||
Other Commitments [Line Items] | ||
Amount payable per annum under the agreement | $ 191,442 | $ 191,442 |
Agreement description | The initial term of this new agreement began February 5, 2018 and ends February 5, 2020. The parties may extend the employment period of this agreement by mutual consent with approval of the Company's Board of Directors, but the extension may not exceed one year in length. | As part of the agreement, the base salary was reviewed annually by the Compensation Committee for a potential increase, to at least reflect increases in the cost of living, but only if the Company shows a net profit for the year. The initial term of this agreement began February 5, 2016 and ended February 5, 2018. |
Commitments And Contingencies31
Commitments And Contingencies And Subsequent Events (Licensing Agreements) (Narrative) (Details) - USD ($) | Apr. 12, 2018 | Jan. 09, 2017 | Dec. 29, 2016 | Feb. 04, 2015 | Mar. 31, 2018 | Mar. 31, 2017 |
Licensing Agreement With Floorcare Company | ||||||
Other Commitments [Line Items] | ||||||
Agreement description | On December 29, 2016, the Company finalized the first amendment to the February 4 th | On February 4, 2015, the Company finalized a Licensing Agreement with a globally recognized floorcare company that allows the Company to market home lighting products under the licensed brand, to discount retailers, warehouse clubs, home centers, on-line retailers and other retail distribution channels in the U.S., Canada and Mexico. The initial term of the agreement is for 3 years. The agreement does not have a guaranteed royalty stipulation. | ||||
Royalty expense | $ 142,208 | $ 172,964 | ||||
Licensing Agreement With Floorcare Company | Subsequent Event [Member] | ||||||
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. | |||||
Licensing Agreement With Battery Company | ||||||
Other Commitments [Line Items] | ||||||
Agreement description | This agreement will be effective until December 31, 2018. The agreement does not have a guaranteed royalty stipulation, but the Company must meet minimum net sales requirements of $5,000,000 for contract year 1 and $7,000,000 for contract year 2. | |||||
Royalty expense | $ 27,054 | $ 60,049 |
Commitments And Contingencies32
Commitments And Contingencies And Subsequent Events (Investment Banking Agreement) (Narrative) (Details) - Investment Banking Agreement With Wilmington Capital Securities, LLC [Member] - USD ($) | Mar. 01, 2017 | Jan. 31, 2018 | Dec. 31, 2017 |
Other Commitments [Line Items] | |||
Cash retainer fee payable | $ 80,000 | ||
Agreement description | The agreement had an initial six-month term and renewed for an additional, consecutive six-month term. Wilmington received a cash retainer fee of $80,000, paid in monthly installments, in the first six-month term, and a reduced retainer fee of $45,000, paid in monthly installments, in the first renewal of the initial six-month term. Wilmington would also receive a transaction fee for any consummated strategic transaction introduced by Wilmington under the Agreement. The transaction fees are based on the Lehman Scale starting at 8% fee reducing to 4% on transactions from $5,000,000 to in excess of $20,000,000. | The agreement has now expired. | |
Retainer fees | $ 5,000 | $ 120,000 |
Stock Transactions (Warrants) (
Stock Transactions (Warrants) (Narrative) (Details) - Private Placement [Member] - USD ($) | 1 Months Ended | 2 Months Ended | |
Oct. 31, 2017 | Sep. 30, 2017 | Oct. 31, 2007 | |
Common Stock [Member] | |||
Stock issued for cash, shares | 2,121,569 | ||
Stock issued for cash, value | $ 541,000 | ||
Sale of stock price per share | $ 0.255 | ||
Warrant [Member] | |||
Sale of stock description | Along with the stock, each investor also received a warrant to purchase 30% of the shares purchased in the Private Placement. | ||
Warrants exercised | 29,412 | ||
Exercise price of warrants | $ 0.255 | ||
No of outstanding warrants expired | 607,062 |
Stock Transactions (Options) (N
Stock Transactions (Options) (Narrative) (Details) - USD ($) | May 02, 2017 | Mar. 31, 2018 | Mar. 31, 2017 |
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock based compensation expense | $ 28,875 | $ 20,475 | |
2005 Equity Plan [Member] | Stock Options [Member] | |||
Share-based Compensation Arrangement by Share-based Payment Award [Line Items] | |||
Stock options outstanding | 950,003 | ||
Stock options vested | 740,003 | ||
Weighted average exercise price of options | $ 0.435 | ||
Stock based compensation expense | $ 28,875 | $ 20,475 | |
Unrecognized stock based compensation expense | $ 39,981 | ||
Stock options amendment terms | On May 2, 2017, the Company's Board of Directors amended the Company's 2005 Equity Incentive Plan to extend the Plan's expiration date from December 31, 2016 to December 31, 2021. | ||
Stock options expiration date | Dec. 31, 2021 |
Stock Transactions (Adoption Of
Stock Transactions (Adoption Of Stock Repurchase Plan) (Narrative) (Details) - Stock Repurchase Plan [Member] - Common Stock [Member] - USD ($) | Dec. 15, 2017 | May 01, 2017 | Feb. 13, 2017 | Aug. 23, 2016 |
Value of shares authorized to be repurchased | $ 750,000 | $ 750,000 | ||
No of shares repurchased from Involve, LLC | 666,667 | 1,000,000 | ||
Exercise price of shares repurchased | $ 0.15 | $ 0.15 |
Income Taxes (Narrative) (Detai
Income Taxes (Narrative) (Details) - USD ($) | 3 Months Ended | ||
Mar. 31, 2018 | Dec. 31, 2017 | Mar. 31, 2017 | |
Income Taxes Narrative Details | |||
Operating loss carryforward limitations on use | Offset against future taxable income through 2034. | ||
Estimated effective annual income tax rate | 25.35% | 34.00% | |
Change in net deferred income tax balances related to tax rate change | $ 120,000 |