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</LabelSeparator><Level>2</Level><ElementName>us-gaap_BasisOfPresentationAndSignificantAccountingPoliciesTextBlock</ElementName><ElementPrefix>us-gaap_</ElementPrefix><IsBaseElement>true</IsBaseElement><BalanceType>na</BalanceType><PeriodType>duration</PeriodType><IsReportTitle>false</IsReportTitle><IsSegmentTitle>false</IsSegmentTitle><IsCalendarTitle>false</IsCalendarTitle><IsEquityPrevioslyReportedAsRow>false</IsEquityPrevioslyReportedAsRow><IsEquityAdjustmentRow>false</IsEquityAdjustmentRow><IsBeginningBalance>false</IsBeginningBalance><IsEndingBalance>false</IsEndingBalance><IsReverseSign>false</IsReverseSign><FootnoteIndexer /><Cells><Cell FlagID="0" ContextID="From2013-01-01to2013-06-30" UnitID=""><Id>1</Id><IsNumeric>false</IsNumeric><IsRatio>false</IsRatio><DisplayZeroAsNone>false</DisplayZeroAsNone><NumericAmount>0</NumericAmount><RoundedNumericAmount>0</RoundedNumericAmount><NonNumbericText>&lt;p style="font: 8pt Times New Roman, Times, Serif; margin: 0"&gt;&lt;font style="font: 8pt Times New Roman, Times, Serif"&gt;The accompanying
condensed consolidated financial statements of Capital Financial Holdings, Inc., a North Dakota corporation, and its subsidiary
(collectively, the &amp;#34;Company&amp;#34;), included herein have been prepared by the Company, without audit, pursuant to the rules
and regulations of the Securities and Exchange Commission (&amp;#147;SEC&amp;#148;).&amp;#160;&amp;#160;These unaudited condensed consolidated
financial statements should be read in conjunction with the consolidated financial statements and the footnotes thereto contained
in the Annual Report on Form 10-K for the year ended December 31, 2012, of Capital Financial Holdings, Inc., as filed with the
SEC.&amp;#160;&amp;#160;The condensed consolidated balance sheet at December 31, 2012, contained herein, was derived from audited financial
statements, but does not include all disclosures included in the Form 10-K and applicable under accounting principles generally
accepted in the United States of America.&amp;#160;&amp;#160;Certain information and footnote disclosures normally included in annual
financial statements prepared in accordance with accounting principles generally accepted in the United States of America, but
not required for interim reporting purposes, have been condensed or omitted.&lt;/font&gt;&lt;/p&gt;

&lt;p style="font: 8pt Times New Roman, Times, Serif; margin: 0"&gt;&lt;font style="font: 8pt Times New Roman, Times, Serif"&gt;&amp;#160;&lt;/font&gt;&lt;/p&gt;

&lt;p style="font: 8pt Times New Roman, Times, Serif; margin: 0"&gt;&lt;font style="font: 8pt Times New Roman, Times, Serif"&gt;In the opinion
of the Company, the accompanying unaudited condensed consolidated financial statements contain all adjustments (which are of a
normal, recurring nature) necessary for a fair presentation of the financial statements.&amp;#160;&amp;#160;The results of operations
for the three months ended June 30, 2013, are not necessarily indicative of operating results for the entire year.&lt;/font&gt;&lt;/p&gt;</NonNumbericText><FootnoteIndexer /><CurrencyCode /><CurrencySymbol /><IsIndependantCurrency>false</IsIndependantCurrency><ShowCurrencySymbol>false</ShowCurrencySymbol><DisplayDateInUSFormat>false</DisplayDateInUSFormat></Cell></Cells><ElementDataType>nonnum:textBlockItemType</ElementDataType><SimpleDataType>na</SimpleDataType><ElementDefenition>The entire disclosure for the basis of presentation and significant accounting policies concepts. Basis of presentation describes the underlying basis used to prepare the financial statements (for example, US Generally Accepted Accounting Principles, Other Comprehensive Basis of Accounting, IFRS).  Accounting policies describe all significant accounting policies of the reporting entity.</ElementDefenition><ElementReferences>No definition available.</ElementReferences><IsTotalLabel>false</IsTotalLabel><UnitID>0</UnitID><Label>NOTE 1 - BASIS OF PRESENTATION</Label></Row></Rows><Footnotes /><IsEquityReport>false</IsEquityReport><ReportName>1. BASIS OF PRESENTATION</ReportName><MonetaryRoundingLevel>UnKnown</MonetaryRoundingLevel><SharesRoundingLevel>UnKnown</SharesRoundingLevel><PerShareRoundingLevel>UnKnown</PerShareRoundingLevel><ExchangeRateRoundingLevel>UnKnown</ExchangeRateRoundingLevel><HasCustomUnits>true</HasCustomUnits><IsEmbedReport>false</IsEmbedReport><IsMultiCurrency>false</IsMultiCurrency><ReportType>Sheet</ReportType><RoleURI>http://capitalfinancialholdings.com/role/BasisOfPresentation</RoleURI><NumberOfCols>1</NumberOfCols><NumberOfRows>2</NumberOfRows></InstanceReport>
