We are a public holding company organized under the laws of the State of Florida.
We design and manufacture a line of specialty power failure lighting solutions
and other innovative specialty consumer products for the North American and
Global retail markets through our operating subsidiary. CIHK was established
to expand our product development, engineering and factory resource capabilities
in Hong Kong. Our product line consists of stylish, innovative and easy to use
consumer lighting products, including power failure multi-function handheld
lights, power failure multi-function nightlights and wall-plates, decorative
nightlights, wireless motion sensor lights, remote control battery powered accent
lights and remote control outlets. Our products are sold under CAPI brand name,
"Capstone Lighting"and also under a nationally recognized licensed
brand. We seek to deliver strong, consistent business results and superior shareholder
returns by providing consumers on a global basis with unique products that make
their lives simpler and safer.
Our objective is to increase profitability, cash flow and revenues while enhancing
our position as a leading manufacturer, marketer and distributor through the
ongoing development of innovative and technologically advanced ideas and concepts
for the LED Home Lighting consumer product categories. We plan to leverage our
product successes by expanding our offerings into all categories of the LED
Home Lighting product lines. We have established the Capstone Lighting brand
in the power failure and wireless motion sensor light product lines. To successfully
enter into the expanded new Home LED product lines, we determined a highly recognized
national brand could be advantageous. In 2014 the Company initiated a search
for a brand name that would resonate with consumers. The desired brand had to
have a rich heritage, trusted by American homeowners for high performance, quality
and innovative products. With the brand name secured and marketing campaign
finalized, the Company successfully launched its largest expansion of new products
in the Companys history at the International Hardware Show in May 2015. The
Company will continue its product expansion with major product releases scheduled
for the International Hardware Show in May 2016.
Our investment in AC Kinetic Technologies, an Armonk, New York technology development
company, has allowed us to develop certain innovative concepts that the Company
has conceived that are complex and that will hopefully yield intellectual property
which will further distinguish the Companys products from other off-the-shelf
products commonly marketed at retail. The Company plans to exploit the trade
secret technologies developed by AC Kinetic Technologies within the Companys
own products, both labeled under "Capstone" and under the new brand.
The first of these products were introduced to the market in May 2015 at the
International Hardware Show and are currently being reviewed by our retail customers.
Perceived or Essential Strengths. We have extensive experience in introducing
new products to retail market channels and believe that provides us a competitive
edge. In our early development, we sought to find niche product opportunities
that may have been overlooked or underexploited by competitors, in order to
win a profitable niche of the market share with minimal cost of entry. In May
2016, the Company plans to launch another extensive array of new products at
the International Hardware Show. The new products will not only introduce additional
functionality to existing categories of products that are meaningful to consumers
but will also seek to revitalize categories that have grown stale due to minimal
investment and creativity by competitors. The Companys desired product(s) characteristics
are as follows:
Designed to make everyday tasks or usage simpler and more enjoyable for consumers;
While continuing to focus on increased profit margins, the products must be
affordable to win at the point of sale and deliver increased revenues for retail
partners;
The products must represent significant value when compared with items produced
or marketed by competitive consumer product companies; and
Wherever feasible, the products must be unique to the market whether this be
accomplished though design techniques, added functionality or some proprietary
innovation.
Due to the extensive, modern manufacturing, design and engineering capabilities
in China, and the lower unit costs in China, we believe that it is more economical
and efficient to continue to manufacture certain products in China and have
them shipped to the United States rather than to have such products produced
in North America. While this resource is available to and used by large numbers
of U.S. companies, including our competitors, we believe this Chinese manufacturing
resource gives us the level of production cost and quality that allows us to
be competitive with larger competitors in the United States. However, as design
technologies can influence the degree of hand labor in building its future products,
the Company expects the advantages it has realized by manufacturing solely in
China to be challenged. In these cases, the Company will evaluate production
opportunities in the United States.
The Company has begun to utilize U.S. based industrial design support to augment
the CIHKs Hong Kong based team, and to isolate and protect some of the Companys
latest intellectual property or "IP". The Company has at the same
time expanded CIHKs operations in Hong Kong, with additional personnel experienced
in engineering and design, product development, international logistics and
quality control. These associates work with our OEM Chinese factories to develop
and prototype new product concepts and to ensure products meet Consumer Product
Regulations and rigorous Quality Control standards. All products are tested
before and during production by Company personnel. This team also provides extensive
product development, quality control and logistics support to our factory partners
to ensure on time shipments. The Company initiated its expansion in Hong Kong
in 2013 as product line extensions and increased number of factories utilized
became factors. In anticipation of the Companys expected growth we have continued
our investment to ensure overseas factory performance meets stringent tolerances
to maintain our competitiveness and operational excellence.
We have expanded our international sales primarily by leveraging our relationships
with our existing global retailers and by strengthening our international product
offerings. With our Hong Kong office in place, they will assist us in placing
more products into foreign market channels. This year we have surpassed our
initial expansion goal with product sales in Australia, Canada, Japan, South
Korea, Taiwan and the United Kingdom. International sales represented 7% of
total net revenue with 93% of net revenue originating from the United States.
1.8%