10-Q

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

WASHINGTON, D.C. 20549

FORM 10-Q

(Mark one)

[X] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the Quarterly Period Ended June 30, 2018

OR

[  ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15 (d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from _________________ to ________________

Commission File Number: 000-53810

HER IMPORTS

(Exact name of registrant as specified in its charter)

Nevada	30-0802599
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification No.)

8861 W. Sahara Ave., Suite 210	89117
(Address of principal executive offices)	(Zip Code)

Telephone: 702-544-0195

(Registrant’s telephone number, including area code)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [  ]

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes [  ] No [  ]

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.

See definitions of “large accelerated filer,” “accelerated filer,” “Smaller reporting company,” and “emerging growth company” in Rule 12-b of the Exchange Act.

Large accelerated filer	[  ]		Accelerated filer	[  ]
Non-accelerated filer	[  ]	(Do not check if a smaller reporting company)	Smaller reporting company	[X]
Emerging growth company	[X]

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act. [  ]

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Act). Yes [  ] No [X]

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

As of August 13, 2018, the registrant’s outstanding common stock consisted of 8,656,459 shares, $0.001 par value.

Table of Contents

Her Imports

Index to Form 10-Q

For the Quarterly Period Ended June 30, 2018

PART I	Condensed Consolidated Financial Information
ITEM 1.	Condensed Consolidated Financial Statements
	Condensed Consolidated Balance Sheets as of June 30, 2018 (Unaudited) and December 31, 2017	3
	Condensed Consolidated Statements of Operations for the Three and Six Months Ended June 30, 2018 and June 30, 2017 (Unaudited)	4
	Condensed Consolidated Statements of Cash Flows for the Six Months Ended June 30, 2018 and June 30, 2017 (Unaudited)	5
	Notes to the Condensed Consolidated Financial Statements	6
ITEM 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operations	18
ITEM 3.	Quantitative and Qualitative Disclosures About Market Risk	23
ITEM 4.	Controls and Procedures	23
PART II	Other Information	24
ITEM 1.	Legal Proceedings	24
ITEM 1A.	Risk Factors	24
ITEM 2.	Unregistered Sales of Equity Securities and Use of Proceeds	24
ITEM 3.	Defaults Upon Senior Securities	24
ITEM 4.	Mine Safety Disclosures	24
ITEM 5.	Other Information	24
ITEM 6.	Exhibits	25
	SIGNATURES	26

2

Her Imports

Condensed Consolidated Balance Sheets

	June 30,			December 31,
	2018			2017
ASSETS
Current assets
Cash	$	156,138		$	190,233
Receivables		124,707			165,770
Related party receivables		181,971			108,026
Inventories		2,054,653			2,335,753
Prepaid maintenance fees - current		-			75,000
Other prepaid expenses		15,785			64,923
Deposits		189,298			196,392
Total current assets		2,722,552			3,136,097
Property, Equipment and software, net		140,309			267,464
Prepaid maintenance fees - non-current		-			209,375
Other asset		25,000			25,000
Trademark		8,200,000			8,200,000
Total assets	$	11,087,861		$	11,837,936
LIABILITIES AND STOCKHOLDERS’ EQUITY
Current liabilities
Accounts payable and accrued liabilities	$	606,263		$	822,216
Income tax liability		38,316			134,432
Notes payable		384,062			177,390
Total current liabilities		1,028,641			1,134,038
Total liabilities		1,028,641			1,134,038
Stockholders’ equity
Callable $0.144 per share per year non-cumulative dividend liquidation preference of $2.00 per share, preferred stock, $0.001 par value, 10,000,000 shares authorized and 5,000,000 issued and outstanding as of June 30, 2018 and December 31, 2017, respectively		5,000			5,000
Common stock, $0.001 par value, 70,000,000 shares authorized, 8,656,459 and 4,150,059 shares issued and outstanding as of June 30, 2018 and December 31, 2017, respectively		8,656			4,150
Additional paid-in capital		30,128,593			26,679,777
Accumulated deficit		(20,083,029	)		(15,985,029	)
Total stockholders’ equity		10,059,220			10,703,898
Total liabilities and stockholders’ equity	$	11,087,861		$	11,837,936

See accompanying notes to these consolidated financial statements.

3

Her Imports

Condensed Consolidated Statements of Operations

(Unaudited)

	For the Three Months						For the Six Months
	June 30,						June 30,
	2018			2017			2018			2017
Product sales	$	3,108,412		$	4,623,778		$	6,418,092		$	8,984,798
Cost of products sold		1,849,932			2,758,268			3,476,039			4,893,332
Gross profit		1,258,480			1,865,510			2,942,053			4,091,466
Operating expenses
Royalties		4,522			5,894			9,449			5,894
Selling expense		1,066,480			1,522,059			2,282,109			2,786,840
General and administrative expense		350,159			297,113			687,434			609,959
Total operating expenses		1,421,161			1,825,066			2,978,992			3,402,693
Income (loss) from operations		(162,681	)		40,444			(36,939	)		688,773
Other (expense) income
Interest income		-			20			-			69
Interest expense		(2,484	)		(4,085	)		(12,994	)		(4,951	)
Loss on abandonment of fixed assets		(379	)		-			(384,454	)		-
Contract termination expense - related party		(3,397,500	)		-			(3,397,500	)		-
Total other expense		(3,400,363	)		(4,065	)		(3,794,948	)		(4,882	)
Income (loss) before benefit (provision) for income taxes		(3,563,044	)		36,379			(3,831,887	)		683,891
Benefit (provision) for income taxes		34,100			(16,043	)		93,887			(245,656	)
Net income (loss) attributable to Company		(3,528,944	)		20,336			(3,738,000	)		438,235
Preferred stock dividends		(180,000	)		(180,000	)		(360,000	)		(360,000	)
Net loss to common stockholders	$	(3,708,944	)	$	(159,664	)	$	(4,098,000	)	$	78,235
Net basic income (loss) per share attributable to common stockholders: basic and diluted	$	(0.08	)	$	(0.04	)	$	(0.18	)	$	0.02
Weighted average number of common shares outstanding: basic and diluted		4,645,619			4,150,059			4,399,208			4,150,059

See accompanying notes to these condensed consolidated financial statements.

4

Her Imports

Consolidated Statements of Cash Flows

	For the Six Month Ended
	June 30,
	2018			2017
OPERATING ACTIVITIES
Net income (loss) attributable to Company	$	(3,738,000	)	$	438,235
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization		39,591			54,579
Stock-based compensation		55,822			-
Loss on abandonment of fixed assets		384,454			-
Contract termination expense		3,397,500			-
Changes in operating assets and liabilities:
Receivables		41,063			(82,486	)
Related party receivables		(73,945	)		(47,153	)
Inventories		281,100			(200,258	)
Prepaid maintenance fees		-			37,500
Other prepaid expenses		49,138			(35,953	)
Deposits		7,094			(269,934	)
Accounts payable and accrued liabilities		(215,953	)		56,149
Income tax liability		(96,115	)		244,678
Other asset		-			(25,000	)
Net cash provided by operating activities		131,749			170,357
INVESTING ACTIVITIES
Purchase of fixed assets		(12,515	)		(30,452	)
Net cash used in investing activities		(12,515	)		(30,452	)
FINANCING ACTIVITIES
Issuance of notes payable		1,074,202			-
Repayment on notes payable		(867,530	)		(28,966	)
Payment of preferred dividend		(360,000	)		(360,000	)
Net cash used in financing activities		(153,329	)		(388,966	)
NET DECREASE IN CASH		(34,095	)		(249,061	)
CASH - BEGINNING OF PERIOD		190,233			355,568
CASH - END OF PERIOD	$	156,138		$	106,507
SUPPLEMENTAL DISCLOSURES:
Interest paid	$	12,994		$	4,951
Income taxes paid	$	4,254		$	-
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Shares issued in exchange of cancellation of MIP Agreement	$	4,500		$	-

See accompanying notes to these consolidated financial statements.

5

Notes to the Condensed Consolidated Financial Statements

1. Description of the Company

Her Imports, (previously known as EZJR, Inc.), (“the Company” or “Her”), was incorporated on August 14, 2006 under the laws of the State of Nevada.

Corporate Structure and Business

Her is a retailer of Human Hair Extensions and related haircare and beauty products headquartered in Las Vegas, Nevada. The Company sells its products at consultation studios and on its Website, www.herimports.com. As of June 30, 2018, the Company operated 21 retail locations, all of which are in the U.S. These locations are primarily in “executive offices suites” such as Regus PLC, where furniture, administrative staff and security are provided. The Company then stocks the location with products and point-of-sale equipment. These locations are leased on a short-term basis (primarily one year or less). Five leases, including our corporate office, have leases longer than one year at the time they were entered into. This allows the Company to open and close its consultation studios within a short period of time at minimal expense to the Company. At the Company’s consultation studios, the customer is provided with a personal, one-on-one consultation with a Her beauty expert. Additionally, the Company has one larger location in Greenbelt Maryland where there are several consultants as well as a waiting room.

The Company has one wholly owned subsidiary, Her Marketing Concepts, Inc. (“Her Marketing”), a Nevada corporation. All employees of the Company are employed by Her Marketing.

Agreement with Cabello Real Ltd.

On November 28, 2016, the Company entered into an Asset Share Purchase & Business Agreement with Cabello Real Ltd. (“Cabello”), a private United Arab Emirates company to acquire the exclusive U.S. rights to the Her Imports trademark. In addition to these rights, the Company also purchased certain other assets owned by Cabello including customer lists and various digital content. In exchange for these rights, and other digital assets, the Company issued to Cabello 10,000,000 shares of non-voting, non-cumulative, callable preferred stock (subsequently revised to 5,000,000) with a dividend rate of $0.144 per share per annum and a liquidation preference of $2.00 per share. In addition, the Cabello received 1,250,000 shares of common stock. Both the preferred stock and common stock issued were unregistered. Additionally, the Company applied with the State of Nevada for the approval of the Certificate of Designations, Preferences, and Rights of Callable Non-cumulative Preferred Stock. The Certificate designated 5,000,000 as Callable Non-cumulative Preferred Stock at a par value of $.001 per share. Cabello is controlled by Mr. Jonathan Terry, who is the Company’s principal shareholder who is also actively involved in its daily operations.

On January 12, 2017, the Company changed its name from EZJR, Inc. to Her Imports.

eCommerce Platform

In January 2018 the Company converted to a new cloud-based eCommerce platform from its server-based eCommerce platform. The primary reason for the change was to allow the Company to optimize its mobile marketing efforts. In the past, marketing efforts have focused on traditional media, email, and search. However, due to the proliferation of smart phones and social media it is much more effective, while less expensive, to reach our customers using mobile marketing using SMS messaging and social platforms such as Facebook and Snapchat. Furthermore, advances in eCommerce shopping carts to cloud-based platforms allow for significant customization that was not previously available. The Company can interface with the shopping cart using various self-developed “mini-CRMs” depending on the marketing promotion and platform.

As a result of the change, the Company incurred a one-time charge of $383,542 from the write-off of the previous CRM and the prepaid maintenance agreement associated with it.

6

Media Investor Purchaser Agreement

On June 29, 2014, the Company entered into a Media Investor Purchaser Agreement (“MIP”) with Leader Act HK Ltd (“Leader”), a shareholder. On July 31, 2017, this agreement was assigned by Leader to Cabello. Under the terms of the assigned agreement, Cabello undertakes the responsibility to provide the investment dollars for the “media purchase.” The purpose of this media purchase is to generate revenues from the sale of various products and services. When revenues are generated they will be split on a 50/50 basis after deducting direct expenses and fees related to the revenues the media purchase, merchant fees, product costs, and affiliate fees. Cabello is responsible for lead generation by spending the funds necessary to purchase various media while managing the overall process. Cabello is also responsible for graphic design, Website design and various other programming expenses. Conversely, the Company is responsible for customer service, network costs, accounting, and any other related general and administrative costs. Prior to signing the agreement Leader advanced the Company $50,000 which the agreement allowed to be converted to 83,333 shares of common at $.60 per share. That left up to 9,500,000 shares of common stock that Cabello could purchase at $0.05 per share from its portion of the funds generated by the offers it creates. Contrary to customary practice, the MIP did not provide for any adjustment in the event of a future reverse split so the Company’s recent reverse split did not affect the number of shares purchasable or the exercise price. This highlighted an unfair agreement which adversely affected the Company. This problem was exacerbated since Cabello is a related party. From April 19 to April 20, 2018, Cabello ran a program to sell a variety of the Company’s hair products. This program generated approximately $150,000 in revenue, however, a final accounting of the results of the program were never completed. Instead, on June 20, 2018 the Company issued to Cabello 4,500,000 of restricted common stock in exchange for cancelation of the MIP Agreement and forgiveness of any monies owed to Cabello for program in April. This cancellation resulted in a non-cash expense of $3,397,500 based on the estimated value of the stock issued in exchange for the cancellation of the agreement.

Agreement with Cabello Real FZE

On April 20, 2017, the Company entered into a Marketing and Selling Agreement with Cabello Real FZE, owner of a hair care product line called OSIworks, whereby the Company exclusively purchases, markets and sells OSIworks’ products in the United States. Under the agreement the Company pays Cabello a royalty of 2% of net sales. Cabello Real FZE is also controlled by Jonathan Terry, the Company’s principal shareholder. During the three and six months ended quarter ending June 30, 2018 the Company recognized royalty expense of $4,522 and $5,894, respectively, related to the agreement.

2. Summary of Significant Accounting Policies

There have been no changes in Significant Accounting Policies from those described in our Form 10-K for our fiscal year ending December 31, 2017 filed with the Securities and Exchange Commission on March 27, 2018.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company (a Nevada corporation) and its wholly owned subsidiary, Her Marketing. All significant intercompany transactions have been eliminated in consolidation.

Basis of Presentation of the Condensed Consolidated Financial Statements

The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Her Marketing. The Company maintains its books of account and prepares consolidated financial statements in accordance with Generally Accepted Accounting Principles in the United States of America (“U.S. GAAP”). The Company’s fiscal year ends on December 31. All significant intercompany balances and transactions have been eliminated in consolidation.

On January 31, 2017, the Company effected a 1-for-2 reverse stock split effective January 31, 2017. The par value was not adjusted as a result of the reverse stock split. On April 9, 2018, the Company effected a 1-for-6 reverse stock split effective April 9, 2018. All references to numbers of shares of our common stock and per-share information in the accompanying condensed consolidated financial statements and in these notes to the condensed consolidated financial statements have been adjusted retroactively to reflect these splits.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. The Company evaluates its estimates on an ongoing basis, including those related to the fair values of stock-based awards, income taxes and contingent liabilities, among others. The Company bases its estimates on historical experience and on various other assumptions that the Company believes to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from those estimates and such differences could be material to the consolidated financial position and results of operations.

7

Fair Value of Financial Instruments

The Company measures fair value based on the prices that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are based on a three-tier hierarchy that prioritizes the inputs used to measure fair value, using quoted prices in active markets for identical assets (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs (Level 3).

The Company did not have any assets measured at fair value on a recurring basis at June 30, 2018 and December 31, 2017.

The Company believes the carrying amounts of cash and cash equivalents, accounts receivable, other current assets, accounts payable, and other accrued liabilities are a reasonable approximation of the fair value of those financial instruments because of the nature of the underlying transactions and the short-term maturities involved.

8

Deposits

	June 30,		December 31,
	2018		2017
Deposits on Products	$	156,068	$	175,819
Security Deposits		33,230		20,573
Total	$	189,298	$	196,392

Intangibles

Intangible assets are comprised primarily of trademarks that represent the Company’s exclusive ownership of the HER trademarks in the US and are inclusive all related social media sites and domain names in the US., all used in connection with (consisting of the name, Her Imports and the Her Imports Logo) the manufacture, sale and distribution of human hair extensions and related beauty products. In accordance with Financial Accounting Standards Board Accounting Standard Codification 350 (FASB ASC 350), intangible assets with indefinite lives are not amortized but instead are measured for impairment at least annually, or when events indicate that an impairment exists through the use of discounted cash flow models. The Company calculates impairment as the excess of the carrying value of its indefinite-lived assets over their estimated fair value. If the carrying value exceeds the estimate of fair value a write-down is recorded. For the three and six months ended June 30, 2018 and 2017 there were no impairments recorded.

9

Revenue Recognition

In May 2014, the Financial Accounting Standards Board (“FASB”) issued accounting standards update (“ASU”) No. 2014-09, Revenue from Contracts with Customers, to clarify the principles of recognizing revenue and create common revenue recognition guidance between U.S. GAAP and International Financial Reporting Standards. ASU No. 2014-09, as amended, is effective for the Company as of January 1, 2018.

The adoption did not result in any material change in the timing of recognizing revenue The adoption will also result in a change in the timing of recognizing revenue for sales where we ship the merchandise to the customer from a distribution center or store, as revenue for sales where we ship the merchandise to customers will be recognized when control of the merchandise transfers to the customer, which is generally at the time of shipment rather than upon delivery of the products to the customer. Additionally, the Company has had a deminimis amount of sales returns.

The Company, through the Her Imports retail locations and its eCommerce Website, www.herimports.com, sells a variety of hair extensions and related products.

Revenue is recognized at the “point of sale” in the stores. Customers pay for the products using either cash, a debit card or a credit card. All sales are final. In the case of cash sales at the store, the store manager makes a nightly deposit of the cash. For credit card and debit sales, the Company recognizes the sale when the card is charged and approved. Sales tax collected from customers is excluded from revenue and is included in accrued liabilities on our condensed consolidated balance sheets.

Product purchases on the Company’s Website are paid for using either debit cards, credit cards, or PayPal Revenue for online product sales are recognized upon shipment of the product. Additionally, customers have the option of making installment payments on products purchased. In this case fifty percent of the purchase price is paid at the time of sale and the remainder withdrawn from the customer’s account via ACH. Because there is a significant amount of uncertainty related to the subsequent collections via ACH, those payment are only recognized as revenue upon receipt. Finally, customers may purchase product using a payment facility called PayNearMe where a customer who doesn’t have a debit/credit/PayPal account can place an online order with an agreement to take cash and pay for the order at a PayNearMe location. The product is then shipped at time PayNearMe notifies the Company that the payment has been received. Revenue is recognized at the time of the shipment of the product.

Also included in revenue is shipping revenue from our e-commerce customers. Sales taxes collected from retail customers are excluded from reported revenues when control of the merchandise transfers to the customers, which is generally at the time of shipment rather than upon delivery of the products to the customer.

Earnings (Loss) per Share

The Company utilizes FASB ASC 260. Basic earnings per share is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Common equivalent shares are excluded from the computation if their effect is anti-dilutive.

10

Reverse Stock Split

All references to numbers of shares of our common stock and per-share information in the accompanying financial statements have been adjusted retroactively to reflect the Company’s 1-for-2 reverse stock split effected on January 31, 2017, and a 1-for-6 reverse stock split effective April 9, 2018. The par value was not adjusted because of the reverse stock splits.

Stock-based compensation

The Company records stock-based compensation issued to external entities for goods and services at either the fair market value of the shares issued, or the value of the services received, whichever is more readily determinable, using the measurement date guidelines enumerated in FASB ASC 505-50-30. For the three months and six months ended June 30, 2018, the Company recognized stock-based compensation expense of $36,001 and $55,822, respectively. There was no stock-based compensation for the three months and six months ended June 30, 2017.

Recent Accounting Pronouncements

Except as noted below, the Company has considered all recent accounting pronouncements and has concluded that there are no recent accounting pronouncements that may have a material impact on its condensed consolidated financial statements, based on current information.

In July 2018, the FASB issued ASU 2018-10 Leases (Topic 842), Codification Improvements and ASU 2018-11 Leases (Topic 842), Targeted Improvements, to provide additional guidance for the adoption of Topic 842. ASU 2018-10 clarifies certain provisions and correct unintended applications of the guidance such as the application of implicit rate, lessee reassessment of lease classification, and certain transition adjustments that should be recognized to earnings rather than to stockholders’ equity. ASU 2018-11 provides an alternative transition method and practical expedient for separating contract components for the adoption of Topic 842. In February 2016, the FASB issued ASU 2016-02 Leases (Topic 842) which requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases with terms greater than 12 months. ASU 2018-11, ASU 2018-10, and ASU 2016-02 (collectively, “the new lease standards”) are effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the effect the new lease standards will have on its Condensed Consolidated Financial Statements; however, the Company anticipates recognizing assets and liabilities arising from any leases that meet the requirements under the new lease standards on the adoption date and including qualitative and quantitative disclosures in the Company’s Notes to the Condensed Consolidated Financial Statements.

In July 2018, the FASB issued ASU 2018-09, Codification Improvements. The amendments in ASU 2018-09 affect a wide variety of Topics in the FASB Codification and apply to all reporting entities within the scope of the affected accounting guidance. The Company has evaluated ASU 2018-09 in its entirety and determined that the amendments related to Topic 718-740, Compensation-Stock Compensation-Income Taxes, are the only provisions that currently apply to the Company. The amendments in ASU 2018-09 related to Topic 718-740, Compensation-Stock Compensation-Income Taxes, clarify that an entity should recognize excess tax benefits related to stock compensation transactions in the period in which the amount of the deduction is determined. The amendments in ASU 2018-09 related to Topic 718-740 are effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company does not expect the adoption of the new standard to have a material impact on the Company’s Condensed Consolidated Financial Statements.

In March 2018, the FASB issued ASU 2018-05, Income Taxes (Topic 740) - Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118. This standard amends Accounting Standards Codification 740, Income Taxes (ASC 740) to provide guidance on accounting for the tax effects of the Tax Cuts and Jobs Act (the Tax Reform Act) pursuant to Staff Accounting Bulletin No. 118, which allows companies to complete the accounting under ASC 740 within a one-year measurement period from the Tax Act enactment date. This standard is effective upon issuance. As described in the footnotes to the Annual Report on Form 10-K, the Company’s accounting for the tax effects of enactment of the Tax Reform Act is being assessed; however, in certain cases, as described below, we made a reasonable estimate of the effects on our existing deferred tax balances and valuation allowance. The Company determined that the $62.9 million recorded in connection with the re-measurement of certain deferred tax assets and liabilities, and corresponding valuation allowance was a provisional amount and a reasonable estimate at December 31, 2017. The Company has not completed the accounting with regard to the tax effects associated with an intra-entity transfer of certain intellectual property rights with the enactment of Tax Reform Act. Our accounting for the intra-entity transfer reflects the utilization of net operating losses on the basis of the laws in effect before the Tax Reform Act. The Company is evaluating the impact under Tax Reform Act on the Company’s global business structure. In all aspects, the Company will continue to make and refine calculations as additional analysis is completed. The Company expects to complete the accounting assessment during the one-year measurement period provided by SAB 118.

11

3. Property, Equipment and Software

Property and equipment consisted of the following:

	June 30,			December 31,
	2018			2017
Software	$	110,000		$	463,310
Computers and equipment		100,100			99,592
Furniture		37,169			30,391
Leasehold improvements		23,067			19,493
subtotal		270,336			612,786
Accumulated depreciation and amortization		(130,027	)		(345,322	)
Property, equipment and software, net	$	140,309		$	267,464

Depreciation and amortization expense on property, plant, equipment, and software for the three and six months ended June 30, 2018 was $19,997 and $39,591, respectively. Depreciation and amortization expense on property, plant, equipment, and software for the three and six months ended June 30, 2017 was $27,428 and $54,579, respectively.

4. Sales tax payable

The Company is delinquent in filing some sales tax returns for one state (including the remittance of taxes), for which the Company has transacted business. The Company has recorded tax obligations plus potential interest and penalties estimated to be approximately $35,180, computed through June 30, 2018, which are included in accounts payable and accrued liabilities on the balance sheet. The Company is in the process of becoming fully compliant.

5. Related Party Transactions

Related Party Accounts Receivable and Payable

At June 30, 2018 and December 31, 2017, the Company had a receivable from Cabello, its principal stockholder, of $181,971 and $108,026, respectively, that resulted from payments made by the Company on behalf of Cabello. The Company has the right to offset this receivable against any future dividend payments owed Cabello related to the preferred stock described in Note 1. As described in Note 11, subsequent to June 30, 2018, two dividends of $60,000 each were declared and offset against amounts owed by Cabello. For further information on related party transactions, see Note 1. As described below, the Company incurred $9,449 in royalty expense in 2018 which has also been offset against the Cabello receivable.

Royalty Expense

Royalty expense is a result of royalties incurred on products sold under the brand name OSIworks, a company under common control with the Company’s principal shareholder. During the three ended June 30, 2018 and 2017 royalty expense was $4,522 and $5,894, respectively. During the six months ended June 30, 2018 and 2017 royalty expense was $9,449 and $5,894, respectively.

Contract Termination Expense – Related Party

On June 20, 2018, the Company issued to Cabello 4,500,000 shares of restricted common stock in exchange for cancelation of the MIP Agreement (described in Note 1) and forgiveness of any monies owed to Cabello for program run in April. This cancellation resulted in a non-cash expense of $3,397,500 based on the estimated value of the stock issued in exchange for the cancellation of the agreement.

6. Commitments and Contingencies

Leases

At June 30, 2018, the Company leased or rented 23 different facilities including its corporate headquarters and active retail locations. Future lease obligation for these facilities are as follows:

Year		Amount
	2018 (remaining six months)	$	145,217
	2019		194,750
	2020		134,115
	2021		111,623
	2022		114,648
	Thereafter		49,072
	Total	$	749,425

Rent expense for the three months ended June 30, 2018 and 2017 was $128,533 and $172,204, respectively. Rent expense for the six months ended June 30, 2018 and 2017 was $252,922 and $325,507, respectively.

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Concentrations

As of June 30, 2018, the Company has only twelve qualified vendors that supply its wigs and hair extension products. The Company sources its hair care products from one vendor. There are numerous suppliers of styling tools as this is a commodity product. During the three months ended June 30, 2018, the Company purchased hair products from four different vendors, however, two vendors accounted for approximately 88.8% of all hair products purchased.

During the three months ended June 30, 2018, the Company purchased hair products from four different vendors, however, two vendors accounted for approximately 88.8% of all hair products purchased. During the six months ended June 30, 2018, the Company purchased hair products from five different vendors, however, two vendors accounted for approximately 91.5% of all hair products purchased. During the three months ended June 30, 2017, the Company purchased hair products from four different vendors, however, two vendors accounted for approximately 93.6% of all hair products purchased. During the six months ended June 30, 2017, the Company purchased hair products from six different vendors, however, two vendors accounted for approximately 95.0% of all hair products purchased.

Legal Proceedings

From time to time, the Company may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm the Company’s business.

On or about September 5, 2015, the Company received a summons naming it in a civil action against Her Imports, LLC, Her Imports New York, LLC, Her Holding, Inc. and EZJR, Inc. (now Her Imports) from a former independent contractor of Her Imports, LLC. The complaint claims unpaid wages and overtime wages in violation of New York Labor Law, among other things. No specific damages are mentioned in the complaint. The Company subsequently answered the complaint and denied any wrongdoing as EZJR had no relationship with the contractor, whatsoever. At this point in the litigation it is impracticable to foresee the outcome, however, the Company believes it has meritorious defense and is vigorously defending this litigation. On February 16, 2018, a magistrate judge ruled that EZJR, Her Holding and Her Imports, LLC acted as a joint employer. The judge also found that genuine issues of material fact exist as to “whether plaintiff qualifies as an ‘employee’ under the law or was an ‘independent contractor’.” While the Company disagrees with the ruling that it was a joint employer, it has decided to proceed to trial on the basis that the plaintiff was an independent contractor, while reserving the right to appeal the decision.

On or about On March 13, 2018, the Company received a summons in a civil action alleging that it had violated the Telephone Consumer Protection Act of 1991 (TCPA). In the complaint, an individual who provided his phone number to the Company to obtain certain discounts on the Company’s products, claims that the Company sent several text messages to his cell phone without prior written consent. The suit was filed by on behalf of the plaintiff and others similarly situated. On or about June 5, 2018 the Company received a second summons in a civil action also alleging that it had violated the TCPA. In the complaint, an individual who provided her phone number to the Company to obtain certain discounts on the Company’s products, claims that the Company sent several text messages to her cell phone without prior written consent. The suit was filed by on behalf of the plaintiff and others similarly situated. In both instances our review of the circumstance surrounding the claim are that the actions are not justified and as such we made the decision to intend to vigorously defend the Company against these actions. In the case of the first action we have filed a response denying the allegations. In the case of the second action we have file a motion to dismiss or consolidate this action with the first based on what is known “the-first-to-file rule.” To date there has been no ruling on this motion.

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On January 12, 2017, the Company entered into a Business Purchase Agreement with EnzymeBioSystems, Inc. (“EnzymeBio”), a Nevada corporation, whereby the Company entered into an agreement to purchase 100% ownership of EnzymeBio’s wholly owned subsidiary, Share Acquisition Corp. (“SAC”), a Nevada corporation in exchange for approximately 9,167 shares of the Company’s common stock and $25,000 cash. On February 28, 2017, EnzymeBio agreed to spin-off SAC as a dividend. Pursuant to the Business Purchase Agreement and Nevada Revised Stature 92A.180 (Merger of a subsidiary into parent or parent into subsidiary), SAC was to be acquired and merged into the Company. Restricted common shares of the Company were to be exchanged on a pro-rata one-for-one ownership basis. After the exchange took place, SAC would be collapsed into the Company and subsequently dissolved with the Nevada Secretary of State. The Company agreed to acquire SAC for the sole purpose to increase its shareholder base. As of the date of these financial statements, the $25,000 had been paid, however, the share exchange did not take place and the agreement was not consummated. The Company was subsequently informed by its legal counsel that this transaction cannot be concluded under applicable securities laws. The Company has informed EnzymeBio of this and requested that the $25,000 payment be returned. As a result, the $25,000 payment is recorded under Other Asset on the balance sheet. EnzymeBio refused to return the $25,000 and as a result on March 13, 2018 the Company filed a legal complaint against those parties which include a demand for the $25,000 as well as legal fees and specific damages the Company incurred as a result of their actions. In June 2018, the defendants responded to the complaint denying the allegation and also filed a counter claim against the Company and its Chief Executive Officer’s. Subsequently, the defendants stipulated and all charges against the Company and its Chief Executive Officer were dismissed.

7. Promissory Notes

UPS Capital

On November 8, 2017 the Company entered into an agreement with UPS Capital Corporation (UPS) for a $500,000 credit facility. Under the terms of the agreement UPS will loan 100% of the invoice amount on incoming offshore shipments carried by UPS. Upon funding the loan, the Company pays a transaction fee of 1.85% or 2.75% for air shipment or ocean shipment, respectively. Repayment of amounts funded are due in 60 days for air shipments and 90 days for ocean shipment. Amounts funded are secured by inventory on hand and are personally guaranteed by the Company’s Chief Executive Officer and the Company’s principal controlling shareholder. As of June 30, 2018, and December 31, 2017 the Company owed $384,062 and $177,390, respectively under the facility.

8. Stockholders’ Equity

On January 31, 2017, the Company effected a 1-for-2 reverse stock split effective January 31, 2017. The par value was not adjusted as a result of the reverse stock split. On April 9, 2018, the Company effected a 1-for-6 reverse stock split effective April 9, 2018. All references to numbers of shares of our common stock and per-share information in the accompanying condensed consolidated financial statements and in these notes to the condensed consolidated financial statements have been adjusted retroactively to reflect these splits.

As described in Note 1, on November 28, 2016, the Company entered into an Asset Share Purchase & Business Agreement with Cabello to acquire the exclusive U.S. rights to the Her Imports trademark. In exchange for these rights, and other digital assets, the Company issued to Cabello 10,000,000 shares of unregistered non-voting, non-cumulative, callable preferred stock (subsequently revised to 5,000,000 shares) and 1,250,000 unregistered common stock with a combined value of $8,200,000. All shares of callable preferred stock rank superior to all the Company’s preferred stock and common stock currently outstanding and hereafter issued, as to distributions of assets upon liquidation, dissolution or winding up of the Company, whether voluntary or involuntary (with the exception of a merger), including the payment of dividends. The callable preferred stock is subject to a monthly dividend payment equal to a rate of $0.144 per share of preferred stock per annum. The declaration and payment of the dividend on a monthly basis is subject to the approval of the Company’s Board of Directors. Such dividend is non-cumulative should the Company not pay the dividend. The Company has a right of first refusal to purchase the callable preferred stock, should the shareholder decide to sell all or part of their callable preferred stock. The callable preferred stock has no voting rights. Through June 30, 2018, the Board of Directors has declared and approved, preferred stock dividends of $1,140,000 ($60,000 each month) to Cabello related to the 5,000,000 shares of callable, non-voting, non-cumulative preferred stock. Because the dividends on the preferred stock are non-cumulative and at the discretion of the Company, these preferred shares are considered to be equity.

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At June 30, 2018 and December 31, 2017, the Company had 10,000,000 shares of preferred stock authorized and 5,000,000 issued and outstanding and 70,000,000 shares of common stock authorized. At June 30 2018 and December 31, 2017 there were 8,656,459 and 4,150,039 shares of common stock outstanding, respectively.

As described in Note 1, on October 13, 2016, the Company entered into a five-year maintenance agreement on its eCommerce platform with Leader in exchange for 250,000 shares of the Company’s common stock valued at $375,000 based on the fair market value of a service maintenance contract provided to other third parties which approximates the fair value of the common stock at the time it was issued. In January 2018 the Company converted to a new cloud-based eCommerce platform from its server-based eCommerce platform. As a result, the Company wrote off $265,625 of unamortized prepaid software maintenance related to the agreement.

As described in Note 1, on June 20, 2018 the Company issued 4,500,000 shares of restricted common stock to Cabello in exchange for cancelation of the MIP Agreement and forgiveness of monies owed to Cabello for program that was run in April 2018.

9. Stock-based Compensation

On September 5, 2017 the Company adopted the 2017 Her Imports Stock Incentive Plan. For the three and six months ended June 30, 2018, the Company recognized $36,001 and $55,822, respectively in stock-based compensation related to stock options and common stock issued under the plan. Stock-based compensation expense is included in the following captions on the condensed consolidated statements of operations.

	Three Month Ended		Six Month Ended
	June 30, 2018		June 30, 2018
Selling expense	$	19,080	$	28,590
General and administrative expense		16,921		27,232
Total	$	36,001	$	55,822

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Changes in the Company’s outstanding stock options under the plan during the six months ended June 30, 2018 were as follows:

				Weighted
	Number of			Average
	Options			Price
Outstanding at December 31, 2017		58,332		$	9.42
Granted		3,332			1.65
Exercised		-			-
Forfeited of expired		(8,333	)		10.68
Outstanding at June 30, 2018		53,331		$	8.73
Exercisable at June 30, 2018		18,958		$	9.15

The weighted average remaining contractual term and aggregate intrinsic value of outstanding options as of June 30, 2018 was 4.12 years and $124,547, respectively.

The Company’s stock options are measured at fair value using the Black-Scholes Option Pricing Model methodology. A summary of the weighted average (in aggregate) significant unobservable inputs (Level 3 inputs) used in measuring the Company’s stock options that are categorized within Level 3 of the fair value hierarchy for six months June 30, 2018 is as follows:

Strike Price	$	1.65 to 10.68
Volatility		46.21	%
Risk-free interest rate		2.15	%
Contractual life (in years)		5
Dividend yield (per share)		0	%

10. Income Taxes

The tax reform bill that Congress voted to approve December 20, 2017, also known as the “Tax Cuts and Jobs Act”, made sweeping modifications to the Internal Revenue Code, including a much lower corporate tax rate, changes to credits and deductions, and a move to a territorial system for corporations that have overseas earnings. The act replaced the prior-law graduated corporate tax rate, which taxed income over $10 million at 35%, with a flat rate of 21%.

The Company and its subsidiaries are subject to U.S. federal income tax as well as income tax of multiple state jurisdictions. An approximate estimated blended tax rate of 18.3% was used to calculate the benefit for taxes based on operations for the six months ended June 30, 2018 and 35.9% to calculate the provision for taxes based on income for the three months ended June 30, 2017. For financial reporting purposes the benefit for income taxes is based on a pre-tax loss of $509,377 for the six months ended June 30, 2018 and pre-tax income of $683,891 for the six months ended June 30, 2017. In 2018, and for fourteen years thereafter, there will be a permanent book versus tax difference of $546,667 each year related to the amortization of the trademark, which is deductible for tax purposes but is not amortized and expensed for financial reporting purposes. The provision (benefit) for income taxes for the three and six months ended June 30, 2018 and 2017 consisted of the following:

	Three Months Ended						Six Months Ended
	June 30,			June 30,			June 30,			June 30,
	2018			2017			2018			2017
U.S. Federal	$	47,711		$	(10,361	)	$	100,755		$	(225,758	)
U.S. State		(13,611	)		(5,906	)		(6,868	)		(19,898	)
Total		34,100			(16,267	)		93,887			(245,656	)
Deferred		-			-			-			-
Total benefit (provision) for income taxes	$	34,100		$	(16,267	)	$	93,887		$	(245,656	)

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As of June 30, 2018, we had a tax loss carryforward of approximately $436,968 which can be used to offset future Federal income taxes.

11. Subsequent Events

On July 3, 2018, the Board of Directors approved the monthly $60,000 dividend related to 5,000,000 shares of Callable Preferred Stock owned by Cabello Real Ltd. This dividend was offset against amounts owed to the Company by Cabello.

On August 7, 2018, the Board of Directors approved the monthly $60,000 dividend related to 5,000,000 shares of Callable Preferred Stock owned by Cabello Real Ltd. This dividend was offset against amounts owed to the Company by Cabello.

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ITEM 2. – MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULT OF OPERATIONS

Our discussion and analysis of our financial condition and results of operations are based upon our condensed consolidated financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these condensed consolidated financial statements requires management to make estimates and assumptions that may affect the reported amounts of assets and liabilities at the date of the condensed consolidated financial statements and the reported amounts of revenues, costs and expenses during the reporting periods. Actual results could differ materially from these estimates.

Forward-Looking Statements

This report contains forward-looking statements including our statements on liquidity, anticipated capital asset requirements and anticipated growth and plans for funding our operations. Forward-looking statements can be identified by words such as “anticipates,” “intends,” “plans,” “seeks,” “believes,” “estimates,” “expects” and similar references to future periods.

Forward-looking statements are based on our current expectations and assumptions regarding our business, the economy and other future conditions. Because forward-looking statements relate to the future, they are subject to inherent uncertainties, risks and changes in circumstances that are difficult to predict. Our actual results may differ materially from those contemplated by the forward-looking statements. We caution you therefore against relying on any of these forward-looking statements. They are neither statements of historical fact nor guarantees or assurances of future performance. Important factors that could cause actual results to differ materially from those in the forward-looking statements include the risks contained in our Form 10-K for the year ended December 31, 2017 which was filed with the Securities and Exchange Commission (the “SEC”) on March 27, 2018 and other risks including a deterioration in general or regional economic, market and political conditions, failure to raise capital or obtain a credit facility ineffective marketing, unanticipated federal legislation or regulation that increases our cost of compliance, failure to implement our business plan and competition.

Any forward-looking statement made by us speaks only as of the date on which it is made. Factors or events that could cause our actual results to differ may emerge from time to time, and it is not possible for us to predict all of them. We undertake no obligation to publicly update any forward-looking statement, whether as a result of new information, future developments or otherwise, except as may be required by law.

The following discussion and analysis compares our results of operations for the three and six months ended June 30, 2018 and June 30, 2017. This discussion and analysis should be read in conjunction with the consolidated financial statements and notes thereto and our Form 10-K for our fiscal year ending December 31, 2017 filed with the SEC on March 27, 2018.

Business Organization and Overview

We are a retailer of Human Hair Extension and related haircare and beauty products headquartered in Las Vegas, Nevada. We sell our products at consultation studios throughout the U.S. and on our Website at www.herimports.com. Additionally, by way of our proprietary eCommerce platform and strategic leveraging of social media buys, we convert prospects into customers while developing long-term personal relationships and loyal customers. Our consultation studios are primarily leased on a short-term basis (one year or less). This allows the Company to open and close locations with a minimal amount of time and expense. At these consultation studios, the customer is provided with a personal, one-on-one consultation. Additionally, the Company has one “super-store” in Greenbelt Maryland where we have a number of consultants as well as a waiting room.

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Seasonality

In the opinion of our management, the business areas in which we operate are subject to seasonal fluctuations during holidays and personal income tax filing season. We believe our quarterly revenues are highest in the late Winter and Spring when our customers receive income tax refunds. As such, past quarterly results are not indicative of future results and may be subject to seasonal fluctuations.

Results of Operations

Discussion of three months ended June 30, 2018 and 2017

Product Sales

Product sales for the three months ended June 30, 2018 were $3,108,412 representing a 32.8% decrease from revenues of $4,623,778 for the three months ended June 30, 2017. These sales were derived primarily from the sale of human hair extensions and related hair care products under the brands “Her Imports” or “OSIworks.” These sales were made either online or at Her Imports’ consultation studios. Consultation studio sales decreased by 52% to $1,680,888 for the three months ended June 30, 2018 when compared to $3,540,101 for the three months ended June 30, 2017. The reason for the decrease is that we closed 13 under-performing studios during second half of 2017 and in the first quarter of 2018. We also experienced greater competition from various online retailers. Partially offsetting this decrease in studio sales was an increase in online sales. Online sales increased by 30.8% to $1,417,524 for the three months ended June 30, 2018 from $1,083,677 for the three months ended June 30, 2017. Online sales as a percentage of overall sales increased to 45.6% for the three months ended June 30, 2018 compared to 23.4% for the three months ended June 30, 2017. This increase in online sales as a percentage of overall sales continued a trend that began in the second quarter of 2017 as we moved away from retail expansion to an emphasis on online sales and a launch of a new eCommerce Website as well as sales promotions that were implemented with new marketing techniques utilizing our customer database. Additionally, at the beginning of 2018 we launched a new cloud-based eCommerce platform. Finally, during the three months ended June 30, 2018, the were $10,000 of wholesale sales. There were no wholesale sales during the three months ended June 30, 2017.

Cost of Products Sold, Gross Profit and Gross Margins

Cost of products sold for the three months ended June 30, 2018 were $1,849,923 representing a 32.9% decrease from cost of products sold of $2,758,268 for the three months ended June 30, 2017. Accompanying this decrease was a nominal increase in gross margins to 40.5% for the three months ended June 30, 2018 up from a gross margin of 40.3% for the three months ended June 30, 2017. As a result, gross profit decreased to $1,258,480 or 32.5% from gross profit of $1,865,510 for the three months ended June 30, 2017.

Operating Expenses

Operating expenses consist of royalty expense, selling expense and general and administrative expense and decreased by 22.1% when comparing the three months ended June 30, 2018 to the same period for 2017. Total operating expenses for the three months ended June 30, 2018 were $1,421,161, compared to $1,825,066 for the three months ended June 30, 2017. Royalty expense for the three months ended June 30, 2018 was $4,522 compared to $5,894 for the three months ended June 30, 2017. Selling expense for the three months ended June 30, 2018 decreased by $455,579 or 29.9% for the three months ended June 30, 2018 when compared to the same 2017 period. The decrease in selling expense was primarily attributable to a decrease in consultation studio operating expenses including payroll, rent, travel expenses and other operating expenses due to the closing of these retail locations. There were 23 consultation studios open at some time during the three months ended June 30, 2018 compared to 35 consultation studios open in the same period for 2017. Also, contributing to the decrease were decreases in Website development expense and promotion expense. General and administrative expenses increased by $53,046 or 17.9% for the three months ended June 30, 2018 when compared to the same period last year. This increase was primarily due to non-cash compensation, Board of Directors expenses, and legal fees. These increase we partially offset by a decrease in investor relations and shareholder expenses and depreciation and amortization.

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Income (loss) from operations

The above resulted in loss from operations of $162,681 for the three months ended June 30, 2018 compared to income from operations of $40,444 for the three months ended June 30, 2017.

Other income and expense

For the three months ended June 30, 2018, other expense of $3,400,363 consisted primarily of $3,397,500 of non-cash contract termination expense as well as interest expense of $2,484 from notes payable and a $379 loss on the abandonment of fixed assets. This compares to other expense for the three months ended June 30, 2017 of $4,065 consisting of interest expense of $4,085 and interest income of $20.

Provision for income taxes

For the three months ended June 30, 2018, we recognized a tax benefit of $34,100 compared to a provision for taxes of $16,043 for the three months ended June 30, 2017. These provisions/benefits are based on estimated income for the entire year. An approximate estimated blended tax rate of 22.1% was used to calculate the provision for taxes based on income for the 2018 and 35.9% for 2017. The reason for the decrease in the effective tax rate in 2018 was a change in the Federal corporate tax rate from 35% to 21% as a result of the “Tax and Jobs Act” pass by Congress in December 2017.

Net income (loss) attributable to company

As a result of the above, net loss attributable to company for the three months ended June 30, 2018 was $3,528,944 compared to net income attributable to company of $20,336 for the three months ended June 30, 2017.

Results of Operations

Discussion of six months ended June 30, 2018 and 2017

Product Sales

Product sales for the six months ended June 30, 2018 were $6,418,092 representing a 28.6% decrease from revenues of $8,984,798 for the six months ended June 30, 2017. These sales were derived primarily from the sale of human hair extensions and related hair care products under the brands “Her Imports” or “OSIworks.” These sales are made either online or at Her Imports’ consultation studios. Consultation studio sales decreased by 41.0% to $3,789,562 for the six months ended June 30, 2018 when compared to $6,423.495 for the six months ended June 30, 2017. The reason for the decrease was primarily due to the closure of consultation studios as the Company began focusing on online sales. There were 35 consultation studios open at some time during the six months ended June 30, 2017 compared to 23 consultation studios open at some time during the same period for 2018. This decrease was partially offset was by an increase in online sales wholesale sales. Online sales increased by 2.6% to $2,618,531 for the six months ended June 30, 2018 from $2,553,381 for the six months ended June 30, 2017. Wholesale sales decreased by $2,078 when comparing the six months ended June 30, 2018 to the six months ended June 30, 2017.

Cost of Products Sold

Cost of products sold for the six months ended June 30, 2018 were $3,476,039, representing a 29.0% decrease from cost of products sold of $4,893,332 for the six months ended June 30, 2017. This decrease was the result of lower sales. Gross margin increased slightly to 45.8% for the six months ended June 30, 2018 up from a gross margin of 45.5% for the six months ended June 30, 2017.

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Operating Expenses

Operating expenses consist of royalty expense, selling expense and general and administrative expense. Total operating expenses for the six months ended June 30, 2018 was $2,978,992, representing a 12.5% or $423,701 decrease from $3,402,693 for the six months ended June 30, 2017. This decrease was primarily a result of decrease in selling expense partially offset by an increase in both general and administrative expense and royalties. Selling expense for the six months ended June 30, 2017 decreased $504,731 or 18.1% for the six months ended June 30, 2018 when compared to the same 2017 period. The decrease in selling expense was primarily attributable to a decrease in consultation studio operating expenses including payroll, rent, travel expenses and other operating expenses due to the closing of retail locations. There were 23 consultation studios open at some time during the six months ended June 30, 2018 compared to 35 consultation studios open in the same period for 2017. Also, contributing to the decrease were decreases in Website development expense and promotion expense. General and administrative expenses for increased by $77,475 or 12.7% for the six months ended June 30, 2018 when compared to the same period last year. This increase was primarily due to non-cash compensation, Board of Directors expenses, administrative payroll and professional fees. These increase we partially offset by a decrease in investor relations, bank service fees and depreciation and amortization. Royalty expense was $9,449 for the six months ended June 30, 2018 compared to $5,894 for the six months ended June 30, 2017. The reason for increase is that in 2017 there were no royalty expenses during in the first quarter.

Income from operations

The above resulted in loss from operations of $36,939 for the six months ended June 30, 2018 compared to income from operations of 688,773 for the six months ended June 30, 2017.

Other income and expense

For the six months ended June 30, 2018, other expense of $3,794,948 consisted of a non-cash charge of $3,397,500 related to the termination of the Media Investor Purchase Agreement, dated as of June 29, 2014, a $384,454 loss on abandonment of fixed assets and $12,994 of interest expense related to notes payable. This compares other expense $4,882 for the six months ended June 30, 2017 of which consisted of $4,951 of interest expense and $69 of interest income.

Provision for income taxes

For the six months ended June 30, 2018, a tax benefit of $93,887 was recognized compared to a tax provision of $245,656 for the six months ended June 30, 2017. These provisions/benefits are based on estimated income for the entire year. An approximate estimated blended tax rate of 22.1% was used to calculate the provision for taxes based on income for the 2018 and 35.9% for 2017. The reason for the decrease in the effective tax rate in 2018 was a reduction in the Federal corporate tax rate from 35% to 21% as a result of the “Tax and Jobs Act” pass by Congress in December 2017.

Net income (loss) attributable to company

As a result of the above, net loss attributable to the Company for the six months ended June 30, 2018 was $3,738,000 compared to net income attributable to the Company of $438,235 for the six months ended June 30, 2017.

Liquidity and Capital Resources

We had a working capital surplus of $1,693,911 and $2,002,059 at June 30, 2018 and December 31, 2017, respectively, representing a $308,148 decrease in our working capital. As of August 13, 2018, we had $76,796 in cash.

Our primary use of cash is the purchase of inventory and the payment of dividends on outstanding callable non-cumulative preferred stock. We anticipate that inventory will continue to fluctuate depending on the level of sales and, as we add additional SKU’s to our product line and when close or we open new retail operations, subject to the occurrence of any material risks, trends and uncertainties stated above. We currently plan to fund our growth through earnings, however, we are currently negotiating with various financial institutions to obtain a credit facility related to the purchase of inventory. Additionally, it is likely that during the coming year, we will seek to raise additional capital either through the sale of equity to support our plan to list our common stock on a national securities exchange. We believe we have sufficient working capital to pay our expenses for the next twelve months and anticipate paying monthly dividends of $60,000 on the preferred stock until such time that we call the preferred stock.

A large portion of our future expenditures is to fund our growth, and we can adjust our capital and operating expenditures by operating segment, including future expansion of our product offerings. We may need or want to raise additional funds in the future, and these funds may not be available to us when we need or want them, or at all. If we cannot raise additional funds when we need or want them, our operations and prospects could be negatively affected.

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Net Cash Provided by Operating Activities

Net cash provided by operating activities for the six months ended June 30, 2018 totaled $131,749 primarily from a reduction of inventory of $281,100, offset by a net change in accounts payable and accrued liabilities of ($215,953) and income tax liability of ($96,115). Non-cash items were contract termination expense of $3,397,500, depreciation of $39,591, stock-based compensation of $55,822 and $384,455 of loss on abandonment of fixed assets.

Net cash provided by operating activities for the six months ended June 30, 2017 totaled $170,357 and resulted primarily from net income attributable to the Company of $438,235, offset by a net change in operating assets and liabilities of ($297,457). The most significant change in operating assets and liabilities was an increase of $200,258 in inventories, a $269,934 in deposits in accounts receivable and a $244,679 in income tax liability. Non-cash items were $54,579 in depreciation and amortization.

Net Cash Used in Investing Activities

Net cash used in investing activities during the six months ended June 30, 2018 totaled $12,516 related to purchases of fixed assets.

Net cash used in investing activities during the six months ended June 30, 2017 totaled $30,452, reflecting primarily purchase of fixed assets.

Net Cash Used in Financing Activities

Net cash used in financing activities during the six months ended June 30, 2018 totaled $153,329 resulting from borrowings of $1,074,202 offset by $867,530 of repayments of these borrowings. Additionally, the Company paid preferred dividends of $360,000 during the period.

Net cash used in financing activities during the six months ended June 30, 2017 totaled $388,966 resulting from payments of preferred dividends of $360,000 and repayments on notes payable of $28,966.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that is material to investors.

Related Party Transactions

For information on related party transactions and their financial impact, see Note 5 to the Unaudited Condensed Consolidated Financial Statements.

Critical Accounting Policies and Estimates

In response to the SEC’s financial reporting release, FR-60, Cautionary Advice Regarding Disclosure About Critical Accounting Policies, the Company has selected its most subjective accounting estimation processes for purposes of explaining the methodology used in calculating the estimate, in addition to the inherent uncertainties pertaining to the estimate and the possible effects on the Company’s financial condition. These estimates involve certain assumptions that if incorrect could create a material adverse impact on the Company’s results of operations and financial condition. There were no material changes to our principal accounting estimates during the period covered by this report.

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Revenue Recognition: Revenue is recognized at the “point of sale” in the stores. Customers pay for the products using either cash, a debit card or a credit card. In the case of cash sales at the store, the store manager makes a nightly deposit of the cash. For cash sales, we recognize the sale when the deposit is recorded into our account by the bank. For credit card and debit sales, we recognize the sale when the card is charged and approved. Allowances for sales returns are recorded as a reduction of net sales in the periods in which the related sales are recognized. Sales tax collected from customers is excluded from revenue and is included in accrued expenses on our Consolidated Balance Sheets.

Product purchases on the Website are paid for using either debit cards, credit cards, PayPal, or an independent financing company. Revenue for Website product sales are recognized upon shipment of the product. Also included in revenue is shipping revenue from our e-commerce customers. Sales taxes collected from retail customers are excluded from reported revenues.

Recent Pronouncements

Our management has evaluated all the recently issued accounting pronouncements through the filing date of this quarterly report on Form 10-Q and does not believe that any of these pronouncements will have a material impact on our financial position and results of operations. See Note 1 to the Unaudited Consolidated Financial Statements.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Our disclosure controls and procedures, as defined in Rule 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934, as amended (the “Exchange Act”), are designed to ensure that information required to be disclosed in reports filed or submitted under the Exchange Act is recorded, processed, summarized, and reported within the time periods specified in rules and forms adopted by the SEC, and that such information is accumulated and communicated to management, including the Chief Executive Officer, to allow timely decisions regarding required disclosures.

Management, with the participation of the Chief Executive Officer and Chief Financial Officer, who is also a member of our Board of Directors, have evaluated the effectiveness of our disclosure controls and procedures as of June 30, 2018. Based on such evaluation, the Chief Executive Officer concluded that, as of June 30, 2018, our disclosure controls and procedures were not effective. Our disclosure controls and procedures were not effective at the reasonable assurance level due to the “material weaknesses” described below:

In light of the material weaknesses described below, we performed additional analysis and other post-closing procedures to ensure our consolidated financial statements were prepared in accordance with generally accepted accounting principles. Accordingly, we believe that the consolidated financial statements included in this report fairly present, in all material respects, our financial condition, results of operations and cash flows for the periods presented.

A material weakness is a control deficiency (within the meaning of the Public Company Accounting Oversight Board (PCAOB) Auditing Standards) or combination of control deficiencies that result in more than a remote likelihood that a material misstatement of the annual or interim consolidated financial statements will not be prevented or detected. Management has identified the following material weakness which has caused management to conclude that, as of June 30, 2018, our disclosure controls and procedures were not effective at the reasonable assurance level:

We do not have written documentation of our internal control policies and procedures. Written documentation of key internal controls over financial reporting is a requirement of Section 404 of the Sarbanes-Oxley Act which is applicable to us for the quarter ending June 30, 2018. Management evaluated the impact of our failure to have adequate written documentation of our internal controls and procedures on our assessment of our disclosure controls and procedures and has concluded that the control deficiency that resulted represented a material weakness.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting (as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act) during the period covered by this report that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

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PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

From time to time, we may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may adversely affect our business.

ITEM 1A. RISK FACTORS

As a Smaller Reporting Company, we are not required to provide information otherwise required by this item; however, you may review risk factors contained in our Form 10-K for the fiscal year ending December 31, 2017.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None.

ITEM 3. DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4. MINE SAFETY DISCLOSURES.

Not applicable.

ITEM 5. OTHER INFORMATION

None.

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ITEM 6. EXHIBITS

The exhibits listed in the accompanying “Index to Exhibits” are filed or incorporated by reference as part of this Form 10-Q.

INDEX TO EXHIBITS

Exhibit		Incorporated by Reference			Filed or Furnished
No.	Exhibit Description	Form	Date	Number	Herewith
3.1	Articles of Incorporation	SB-2	6/14/07	3.1
3.1(a)	Certificate of Amendment to Articles of Incorporation - name change	8-K	1/12/17	10.18
3.1(b)	Certificate of Amendment to Articles of Incorporation - preferred stock	8-K	2/14/18	3.1
3.1(c)	Certificate of Amendment to Articles of Incorporation - reverse stock split	10-Q	5/15/18	3.1(c)
3.1(d)	Certificate of Correction to the Certificate of Amendment to Articles of Incorporation - reverse stock split	8-K	4/4/2018	3.1
3.2	Amended and Restated Bylaws				Filed
31.1	Certification of Principal Executive Officer and Principal Financial Officer (302)				Filed
32.1	Certification of Principal Executive and Principal Financial Officer (906)				Furnished**
101.INS	XBRL Instance Document				Filed
101.SCH	XBRL Taxonomy Extension Schema Document				Filed
101.CAL	XBRL Taxonomy Extension Calculation Linkbase Document				Filed
101.DEF	XBRL Taxonomy Extension Definition Linkbase Document				Filed
101.LAB	XBRL Taxonomy Extension Label Linkbase Document				Filed
101.PRE	XBRL Taxonomy Extension Presentation Linkbase Document				Filed

Copies of this report (including the financial statements) and any of the exhibits referred to above will be furnished at no cost to our shareholders who make a written request to our Corporate Secretary at 8861 W. Sahara Ave., Suite 210, Las Vegas, NV 89117.

* Represents compensatory plan of management.

** This exhibit is being furnished rather than filed and shall not be deemed incorporated by reference into any filing, in accordance with Item 601 of Regulation S-K.

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

Date: August 14, 2018	By:	/s/ Barry Hall
	Name:	Barry Hall
	Title:	Executive Chairman, Chief Executive Officer and Chief Financial Officer
		(Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)

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EX-3.2

Exhibit 3.2

AMENDED AND RESTATED

BYLAWS

OF

HER IMPORTS CORPORATION

I. REFERENCES TO CERTAIN TERMS AND CONSTRUCTION

1.01. Certain References. Any reference herein made to law shall be deemed to refer to the law of the State of Nevada, including any applicable provision of Chapter 78 of Title 7 of the Nevada Revised Statutes, or any successor statutes, as from time to time amended and in effect (sometimes referred to herein as the “Nevada General Corporation Law”). Any reference herein made to the Company’s Articles shall be deemed to refer to its Articles of Incorporation and all amendments thereto as at any given time on file with the Nevada Secretary of State (any reference herein to that office being intended to include any successor to the incorporating and related functions being performed by that office at the date of the initial adoption of these Bylaws). Except as otherwise required by law, the term “stockholder” as used herein shall mean one who is a holder of record of shares of the Company.

1.02. Seniority. The law and the Articles (in that order of precedence) shall in all respects be considered senior and superior to these Bylaws, with any inconsistency to be resolved in favor of the law and such Articles (in that order of precedence), and with these Bylaws to be deemed automatically amended from time to time to eliminate any such inconsistency which may then exist.

1.03. Computation of Time. The time during which an act is required to be done, including the time for the giving of any required notice herein, shall be computed by excluding the first day or hour, as the case may be, and including the last day or hour.

II. OFFICES

2.01. Principal Office. The principal office or place of business of the Company in the State of Nevada shall be the registered office of the Company in the State of Nevada. The Company may change its registered office from time to time in accordance with the relevant provisions of the Nevada General Corporation Law. The Company may have such other offices, either within or without the State of Nevada, as the Board of Directors may designate or as the business of the Company may require from time to time.

III. STOCKHOLDERS

3.01. Annual Stockholders Meeting. The annual meeting of the stockholders shall be held on such date, at such time and place, either within or without the State of Nevada, as shall be fixed by the Board of Directors and stated in the notice of the meeting, at which meetings the stockholders shall elect members of the Board of Directors and transact such other business as may properly come before the meeting.

3.02. Special Stockholders Meetings. Subject to the rights of the holder of any series of preferred stock of the Company, unless otherwise prescribed by law or by the Articles, special meetings of the stockholders, for any purpose, may be called only by the Chief Executive Officer, the Chairman of the Board of Directors, or the President of the Company, and shall be called by the Chief Executive Officer, the President,, or the Secretary of the Company upon a written request signed by a majority of members of the Board of Directors (whether or not there exists any vacancy in previously authorized directorships at the time any such resolution is presented to the Board of Directors for adoption). Any business to be transacted at a special meeting of stockholders must be confined to the purposes stated in the notice of the stockholders’ meeting and to such additional matters as the Chairman of the meeting may rule to be relevant to such purposes. The Board of Directors shall designate the place for any meeting of stockholders, and if no designation is made, the stockholders’ meeting shall take place at the principal office of the Company.

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3.03. Notice of Stockholders Meetings.

(a) Required Notice. Except as otherwise allowed or required by law, written notice stating the place, day and hour of any annual or special stockholders meeting shall be given not less than ten (10) nor more than sixty (60) days before the date of the meeting by or at the direction of the person or persons calling the meeting, to each stockholder entitled to vote at such meeting and to any other stockholder entitled to receive notice of the meeting by law or the Articles. Such notice may be given either personally or by sending a copy thereof through the mail,, by private delivery service (including overnight courier), or by email transmission, charges prepaid, to each stockholder at his or her address as it appears on the records of the Company. If the notice is sent by mail, or by private delivery service, it shall be deemed to have been given to the person entitled thereto when deposited in the United States mail or private delivery service for transmission to such person. If the notice is sent by email, and the Company is subject to the proxy rules of the Securities Exchange Commission, it shall comply with the rules regarding email delivery.

(b) Adjourned Meeting. If any stockholders meeting is adjourned to a different date, time, or place, notice need not be given of the new date, time, and place, if the new date, time, and place are announced at the meeting at which the adjournment is taken. But if the adjournment is for more than thirty (30) days, or if after the adjournment a new record date is fixed for the adjourned meeting, then notice of the adjourned meeting shall be given to each stockholder of record entitled to such notice pursuant to Section 3.03(a).

(c) Waiver of Notice. Any stockholder may waive notice of a meeting (or any notice of any other action required to be given by the Nevada General Corporation Law, the Company’s Articles, or these Bylaws), at any time before, during, or after the meeting or other action, by a writing signed by the stockholder entitled to the notice. Each such waiver shall be delivered to the Company for inclusion in the minutes or filing with the corporate records. Attendance of a stockholder at a meeting shall constitute a waiver of notice of the meeting, except when the stockholder attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened.

(d) Contents of Notice. The notice of each special stockholders meeting shall include a description of the purpose or purposes for which the meeting is called. Except as required by law or the Company’s Articles, the notice of an annual stockholders meeting need not include a description of the purpose or purposes for which the meeting is called.

3.04. Fixing of Record Date. For the purpose of determining stockholders entitled to notice of or to vote at any meeting of stockholders or any adjournment thereof, or in order to make a determination of stockholders for any other proper purpose, unless a period of more than 60 days or a period of less than 10 days is prescribed or fixed in the articles of incorporation, the directors may prescribe a period not exceeding 60 days before any meeting of the stockholders during which no transfer of stock on the books of the corporation may be made, or may fix, in advance, a record date not more than 60 or less than 10 days before the date of any such meeting as the date as of which stockholders entitled to notice of and to vote at such meetings must be determined. Only stockholders of record on that date are entitled to notice or to vote at such a meeting. If a record date is not fixed, the record date is at the close of business on the day before the day on which the first notice is given or, if notice is waived, at the close of business on the day before the meeting is held. In the case of determining stockholders entitled to consent to corporate action in writing without a meeting (which entitlement shall be limited as set forth in Section 3.14), the record date shall not be more than ten (10) days after the date upon which the resolution fixing the record date is adopted by the Board of Directors. In the case of determining stockholders entitled to receive payment of any dividend or other distribution or allotment of any rights or the stockholders entitled to exercise any rights in respect of any change, conversion or exchange of stock, or for the purpose of any other lawful action, the record date shall be not more than sixty (60) days prior to such action. If no record date is so fixed by the Board of Directors, the record date for the determination of stockholders shall be as provided in the Nevada General Corporation Law.

When a determination of stockholders entitled to notice of or to vote at any meeting of stockholders has been made as provided in this Section 3.04, such determination shall apply to any adjournment thereof, unless the Board of Directors fixes a new record date.

3.05. Stockholder Quorum and Voting Requirements. Unless otherwise provided in the Articles, these Bylaws or as required by law:

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(a) a majority of the shares entitled to vote, present in person or represented by proxy, shall constitute a quorum at a meeting of stockholders;

(b) in all matters other than the election of directors, the affirmative vote of the majority of shares voting for or against the subject matter shall be at the act of the stockholders;

(c) a nominee for director shall be elected by a plurality of the votes cast at any meeting of stockholders;

(d) where a separate vote by a class or classes is required, a majority of the outstanding shares of such class or classes, present in person or represented by proxy, shall constitute a quorum entitled to take action with respect to that vote on that matter and the affirmative vote of the majority of shares of such class or classes present in person or represented by proxy at the meeting shall be the act of such class.

Except as provided below, voting shall be by ballot on any question as to which a ballot vote is demanded prior to the time the voting begins by any person entitled to vote on such question; otherwise, a voice vote shall suffice. Unless otherwise provided in the Articles, all elections of directors shall be by written ballot. No ballot or change of vote shall be accepted after the polls have been declared closed following the ending of the announced time for voting.

3.06. Proxies. At any meeting of the stockholders, any stockholder may be represented and vote by a proxy or proxies appointed by an instrument in writing. In the event that any such instrument in writing shall designate two (2) or more persons to act as proxies, a majority of such persons present at the meeting, or, if only one shall be present, then that one shall have and may exercise all of the powers conferred by such written instrument upon all the persons so designated unless the instrument shall otherwise provide. No such proxy shall be valid after the expiration of six (6) months from the date of its execution, unless coupled with an interest or unless the person executing it specifies therein the length of time for which it is to continue in force, which in no case shall exceed seven (7) years from the date of its execution. Subject to the above, any proxy duly executed is not revoked and continues in full force and effect until an instrument revoking it or a duly executed proxy bearing a later date is filed with the Secretary of the Company.

3.07. Voting of Shares. Unless otherwise provided in the Articles or the Nevada General Corporation Law, each outstanding share entitled to vote shall be entitled to one (1) vote upon each matter submitted to a vote at a meeting of stockholders.

3.08. Election Inspectors. The Board of Directors, in advance of any meeting of the stockholders, may appoint an election inspector or inspectors to act at such meeting (and at any adjournment thereof). If an election inspector or inspectors are not so appointed, the chairman of the meeting may, or upon request of any person entitled to vote at the meeting will, make such appointment. If any person appointed as an inspector fails to appear or to act, a substitute may be appointed by the chairman of the meeting. If appointed, the election inspector or inspectors (acting through a majority of them if there be more than one) shall determine the number of shares outstanding, the authenticity, validity, and effect of proxies, the credentials of persons purporting to be stockholders or persons named or referred to in proxies, and the number of shares represented at the meeting in person and by proxy; shall receive and count votes, ballots, and consents and announce the results thereof; shall hear and determine all challenges and questions pertaining to proxies and voting; and, in general, shall perform such acts as may be proper to conduct elections and voting with complete fairness to all stockholders. No such election inspector need be a stockholder of the Company.

3.09. Organization and Conduct of Meetings. Each meeting of the stockholders shall be called to order and thereafter chaired by the Chairman of the Board of Directors if there is one, or, if not, or if the Chairman of the Board of Directors is absent or so requests, then by the Chief Executive Officer or President, or if both the Chairman of the Board of Directors and the Chief Executive Officer or President are unavailable, then by such other officer of the Company or such stockholder as may be appointed by the Board of Directors. The Company’s Secretary or in his or her absence, an Assistant Secretary shall act as secretary of each meeting of the stockholders. If neither the Secretary nor an Assistant Secretary is in attendance, the chairman of the meeting may appoint any person (whether a stockholder or not) to act as secretary for the meeting. After calling a meeting to order, the chairman thereof may require the registration of all stockholders intending to vote in person and the filing of all proxies with the election inspector or inspectors, if one or more have been appointed (or, if not, with the secretary of the meeting). After the announced time for such filing of proxies has ended, no further proxies or changes, substitutions, or revocations of proxies shall be accepted. If directors are to be elected, a tabulation of the proxies so filed will, if any person entitled to vote in such election so requests, be announced at the meeting (or adjournment thereof) prior to the closing of the election polls. Absent a showing of bad faith on his or her part, the chairman of a meeting will, among other things, have absolute authority to fix the period of time allowed for the registration of stockholders and the filing of proxies, to determine the order of business to be conducted at such meeting, and to establish reasonable rules for expediting the business of the meeting and preserving the orderly conduct thereof (including any informal, or question and answer portions thereof).

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3.10. Stockholder Approval or Ratification. The Board of Directors may submit any contract or act for approval or ratification of the stockholders at a duly constituted meeting of the stockholders. Except as otherwise determined by law, a ratification or validation of a corporate act is conclusive in the absence of actual fraud in the transaction. Ratification or validation must not be the exclusive means by which a corporate act may be ratified or validated and shall not be construed to limit the authority of the board of directors, the stockholders or the corporation to effect any lawful means of ratification or validation of a corporate act or correction of a record.

3.11. Informalities and Irregularities. All informalities or irregularities in any call or notice of a meeting of the stockholders or in the areas of credentials, proxies, quorums, voting, and similar matters, shall be deemed waived if no objection is made at the meeting.

3.12. Nomination of Directors. Only persons who are nominated in accordance with the following procedures shall be eligible for election as directors of the Company. Nominations of persons for election to the Board of Directors may be made at any annual meeting of stockholders, or at any special meeting of the stockholders called for the purpose of electing one or more directors pursuant to Section 78.345 of the Nevada General Corporation Law: (a) by or at the direction of the Board of Directors (or any duly authorized committee thereof); or (b) by any stockholder of the Company who, (i) is a stockholder of record on the date of the giving of the notice provided for in this Section 3.12 and on the record date for the determination of stockholders entitled to vote at such annual meeting, and (ii) who complies with the notice procedures set forth in this Section 3.12.

In addition to any other applicable requirements, for a nomination to be made by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary of the Company, as prescribed below.

No person shall be elected to the Board of Directors of the Company at an annual meeting of the stockholders unless, with respect to a person nominated by a stockholder of the Company, a written notice of nomination of such person by the stockholder was received by the Secretary of the Company not earlier than one hundred and twenty (120) days and not later than ninety (90) days prior to the anniversary date of the immediately preceding annual meeting; provided, however, that in the event that the annual meeting is called for a date that is not within 30 days before or after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the tenth day following the day on which notice of the date of the annual meeting was mailed or public disclosure of the date of the annual meeting was made, whichever first occurs; and, in the case of a special meeting of the stockholders called for the purpose of electing directors pursuant to Section 78.345 of the Nevada General Corporation Law, not later than the close of business on the tenth day following the day on which notice of the date of the special meeting was mailed or public disclosure of the date of the special meeting was made, whichever first occurs. In no event shall the public announcement of an adjournment or postponement of a meeting of stockholders commence a new time period for the giving of a stockholder’s notice as described above.

To be in proper written form, a stockholder’s notice to the Secretary must set forth: (a) as to each person whom the stockholder proposes to nominate for election as a director, (i) the name, age, business address and residence address of the person, (ii) the principal occupation or employment of the person, (iii) the class or series and number of shares of capital stock of the Company which are owned beneficially or of record by the person, and (iv) any other information relating to the person that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Securities Exchange Act of 1934(the “Exchange Act”), and the rules and regulations promulgated thereunder; and (b) as to the stockholder giving the notice, (i) the name and record address of such stockholder, (ii) the class or series and number of shares of capital stock of the Company which are owned beneficially or of record by such stockholder, (iii) a description of all arrangements or understandings between such stockholder and each proposed nominee and any other person or persons (including their names) pursuant to which the nomination(s) are to be made by such stockholder, (iv) a representation that such stockholder intends to appear in person or by proxy at the meeting to nominate the persons named in its notice, and (v) any other information relating to such stockholder that would be required to be disclosed in a proxy statement or other filings required to be made in connection with solicitations of proxies for election of directors pursuant to Section 14 of the Exchange Act and the rules and regulations promulgated thereunder. Such notice must be accompanied by a written consent of each proposed nominee to being named as a nominee and to serve as a director if elected and the Company may require any proposed nominee to furnish such other information as may reasonably be required by the Company to determine the eligibility of such proposed nominee to serve as a director of the Company.

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No person shall be eligible for election as a director of the Company unless nominated in accordance with the procedures set forth in this Section 3.12. If the chairman of the meeting determines that a nomination was not made in accordance with the foregoing procedures, the chairman shall declare to the meeting that the nomination was defective and such defective nomination shall be disregarded.

Notwithstanding compliance with the foregoing provisions, the Board of Directors shall not be obligated to include information as to any stockholder nominee for director in any proxy statement or other communication sent to stockholders.

3.13. Business at Stockholder Meetings. No business may be transacted at an annual or special meeting of stockholders other than business that is: (a) specified in the notice of meeting (or any supplement thereto) given by or at the direction of the Board of Directors (or any duly authorized committee thereof); (b) otherwise properly brought before the meeting by or at the direction of the Board of Directors (or any duly authorized committee thereof); or (c) in the case of an annual meeting, otherwise properly brought before the meeting by any stockholder of the Company, (i) who is a stockholder of record on the date of the giving of the notice provided for in this Section 3.13 and on the record date for the determination of stockholders entitled to vote at such meeting, and (ii) who complies with the notice procedures set forth in this Section 3.13.

In addition to any other applicable requirements of law or the Articles, for business to be properly brought before an annual meeting by a stockholder, such stockholder must have given timely notice thereof in proper written form to the Secretary of the Company. To be timely, a stockholder’s notice to the Secretary must be delivered to or mailed and received at the principal executive offices of the Company not earlier than one hundred and twenty (120) days and not later than ninety (90) days prior to the anniversary date of the immediately preceding annual meeting; provided, however, that in the event that the annual meeting is called for a date that is not within thirty (30) days before or after such anniversary date, notice by the stockholder in order to be timely must be so received not later than the close of business on the tenth day following the day on which such notice of the date of the annual meeting was mailed or such public disclosure of the date of the meeting was made, whichever first occurs. In no event shall the public announcement of an adjournment or postponement of an annual meeting commence a new time period for the giving of a stockholder’s notice as described above.

To be in proper written form, a stockholder’s notice to the Secretary with respect to any proposal (not involving the nomination of directors, which shall be brought in accordance with Article III, Section 3.12 of these Bylaws) to be brought before the annual meeting must set forth as to each such proposal: (a) the text of the proposal to be presented (including the text of any resolutions to be proposed for consideration by the stockholders), together with a brief description of the business desired to be brought before the annual meeting and the reasons for conducting such business at the annual meeting; (b) the name and record address of such stockholder; (c) the class or series and number of shares of capital stock of the Company that are owned beneficially or of record by such stockholder; (d) a description of all arrangements or understandings between such stockholder and any other person or persons (including their names) in connection with the proposal of such business by such stockholder and any material interest of such stockholder in such business; and (e) a representation that such stockholder intends to appear in person or by proxy at the meeting to bring such business before the meeting.

No business may be conducted at an annual or special meeting of stockholders except business brought before the meeting in accordance with the procedures set forth in this Section 3.13, provided, however, that, once business has been properly brought before the meeting in accordance with such procedures, nothing in this Section 3.13 shall be deemed to preclude discussion by any stockholder of any such business. If the chairman of an annual or special meeting determines that business was not properly brought before such meeting in accordance with the foregoing procedures, the chairman shall declare to the meeting that the business was not properly brought before the meeting and such business shall not be transacted.

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3.14 No Action by Written Consent. If and so long as the Company shall be registered as a public company pursuant to the Exchange Act and subject to the reporting requirements of Section 12 of said Act, all action by holders of the Company’s outstanding voting securities shall be taken at an annual or special meeting of the stockholders following notice as provided by law or in the Bylaws and stockholders of the Company shall not have the power to act by means of written consent.

3.15 Acquisition of Controlling Interest. Sections 78.378 to 78.3793, inclusive, shall not apply to the Corporation.

IV. BOARD OF DIRECTORS

4.01. General Powers. The business and affairs of the Company shall be managed by or under the direction of the Board of Directors.

4.02. Number, Tenure, and Qualification of Directors. The number of directors which shall constitute the full Board of Directors of the Company shall not be fewer than three (3) nor more than nine (9). The number of directors in office from time to time shall be within the limits specified above, except as prescribed initially in the Articles and thereafter as prescribed from time to time by resolution adopted by either the stockholders or by the Board of Directors. The Board of Directors, , shall have the power to increase or decrease its size within the aforesaid limits. Each director elected shall hold office for the term for which such director is elected and until such director’s successor is elected and qualified or until such director’s earlier death, resignation or removal. In accordance with the Company’s Articles, at each annual meeting of stockholders, directors shall be elected for a term of office expiring at the next annual meeting of stockholders, or until such director’s earlier death, resignation or removal.

4.03. Regular Meetings of the Board of Directors. A regular annual meeting of the Board of Directors is to be held as soon as practicable after the adjournment of each annual meeting of the stockholders, either at the place of the stockholders meeting or at such other place as the directors elected at the stockholders meeting may have been informed of at or prior to the time of their election. Additional regular meetings may be held at regular intervals at such places and at such times as the Board of Directors may determine.

4.04. Special Meetings of the Board of Directors. Special meetings of the Board of Directors may be held whenever and wherever called for by the Chairman of the Board of Directors, the Chief Executive Officer, the President, , or the number of directors that would be required to constitute a quorum.

4.05. Notice of, and Waiver of Notice for, Directors Meetings. No notice need be given of regular meetings of the Board of Directors. Notice of the time and place (but not necessarily the purpose or all of the purposes) of any special meeting shall be given to each director in person or by telephone or email. Notice to any director of any such special meeting shall be deemed given sufficiently in advance when: (a), if given by mail, the same is deposited in the United States mail at least four (4) days before the meeting date, with postage thereon prepaid; (b), if given by email, the same is transmitted at least 24 hours prior to the convening of the meeting; or (c), if personally delivered (including by overnight courier) , the same is handed, or the substance thereof is communicated telephonically or electronically to the director or to an adult member of his or her office staff or household, at least 24 hours prior to the convening of the meeting. Any director may waive notice of any meeting and any adjournment thereof at any time before, during, or after it is held, as provided by law. Except as provided in the next sentence below, the waiver must be in writing, signed by the director entitled to the notice, and filed with the minutes or corporate records. The attendance of a director at a meeting shall constitute a waiver of notice of such meeting, except when the person attends a meeting for the express purpose of objecting, at the beginning of the meeting, to the transaction of any business because the meeting is not lawfully called or convened.

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4.06. Director Quorum. A majority of the total number of directors then in office shall constitute a quorum for the transaction of business at any meeting of the Board of Directors, unless the Articles requires a greater number. If there are less than three directors in office, the directors shall have the power to fill vacancies on the Board of Directors.

4.07. Directors, Manner of Acting.

(a) The affirmative vote of a majority of the directors present at a meeting at which a quorum is present shall be the act of the Board of Directors unless the Articles or these Bylaws require a greater percentage and except as otherwise required by law.

(b) Any or all directors may participate in a regular or special meeting by, or conduct the meeting through the use of, conference telephone or similar communications equipment by means of which all persons participating in the meeting may hear each other, in which case any required notice of such meeting may generally describe the arrangements (rather than or in addition to the place) for the holding thereof. A director participating in a meeting by this means is deemed to be present in person at the meeting.

(c) A director who is present at a meeting of the Board of Directors or a committee of the Board of Directors when corporate action is taken is deemed to have assented to the action taken unless, (i) the director objects at the beginning of the meeting (or promptly upon his or her arrival) to holding it or transacting business at the meeting, or (ii) his or her dissent or abstention from the action taken is entered in the minutes of the meeting, The right of dissent or abstention is not available to a director who votes in favor of the action taken.

4.08. Director Action Without a Meeting. Any action required or permitted to be taken by the Board of Directors at a meeting may be taken without a meeting if the action is taken by unanimous written consent of the Board of Directors as evidenced by one (1) or more written consents describing the action taken, signed, either manually or electronically including email consent, by each director and filed with the minutes or proceedings of the Board of Directors.

4.09. Removal of Directors by Stockholders. Except as limited by the Articles or by law, a director may be removed by the stockholders only at an annual meeting of stockholders or at a special meeting of stockholders called for such purpose and otherwise in conformity with these Bylaws, and only by the affirmative vote of the holders of two-thirds of the voting power of all the shares entitled to vote at such meeting.

4.10. Board of Director Vacancies. Unless the Articles provide otherwise and except as otherwise provided by law, any vacancy or newly created directorship may be filled by a majority of the directors then in office (whether or not a quorum), or by a sole remaining director. Any director so chosen shall hold office for the unexpired portion of the term of the class of directors in which the new directorship was created or the vacancy occurred and until his or her successor shall have been elected and shall have been elected and qualified or until any such director’s earlier death, resignation or removal.

4.11. Director Compensation. Unless otherwise provided in the Articles, by resolution of the Board of Directors, each director may be paid his or her expenses, if any, of attendance at each meeting of the Board of Directors or any committee thereof, and may be paid a stated fee for service as director or a fixed sum for attendance at each meeting of the Board of Directors or any committee thereof, or both. Directors shall be eligible to participate and receive awards under the Company’s Equity Incentive Plan (the “Plan”) in accordance with the terms of the Plan or subject plans approved by the Board or an appropriate committee. No such payment or award shall preclude any director from serving the Company in any capacity and receiving compensation therefor.

4.12. Director Committees.

(a) Creation of Committees. The Board of Directors may create one (1) or more committees and appoint members of the Board of Directors to serve on them. Except where a greater number is required by any applicable rules of a National Securities Exchange, each committee shall have one (1) or more members, who serve at the pleasure of the Board of Directors.

(b) Selection of Members. The creation of a committee and appointment of members to it shall be approved by a majority of the directors in office when the action is taken. The Board of Directors may designate one or more directors as alternate members of any committee, who may replace any absent or disqualified member at any meeting of the committee. In the absence or disqualification of any member of a committee, the member or members thereof present at any meeting and not disqualified from voting, whether or not he or she or they constitute a quorum, may unanimously appoint another member of the Board of Directors to act at the meeting in the place of any such absent or disqualified member.

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(c) Required Procedures. Sections 4.03 through 4.08 of this Article IV, which govern meetings, action without meetings, notice and waiver of notice, and quorum and voting requirements of the Board of Directors, apply to committees and their members.

(d) Authority. Unless limited by the Articles and except to the extent limited by law, each committee may exercise those aspects of the authority of the Board of Directors which the Board of Directors confers upon such committee in the resolution creating the committee.

4.13. Director Resignations. Any director or committee member may resign from his or her office at any time by written notice delivered to the Company as required by law. Any such resignation shall be effective upon its receipt unless some later time is therein fixed, and then from that time. The acceptance of a resignation shall not be required to make it effective.

4.14. Interested Directors. No contract or transaction between the Company and one or more of its directors or officers, or between the Company and any other company, partnership, association, or other organization in which one or more of its directors or officers are directors or officers, or have a financial interest, shall be void or voidable solely for this reason, or solely because the director or officer is present at or participates in the meeting of the Board of Directors or committee thereof which authorizes the contract or transaction, or solely because such director’s vote is counted for such purpose if: (a) the material facts as to such director’s relationship or interest and as to the contract or transaction are disclosed or are known to the Board of Directors or the committee, and the Board of Directors or committee in good faith authorizes the contract or transaction by the affirmative votes of a majority of the disinterested directors, even though the disinterested directors be less than a quorum; or (b) the material facts as to such director’s relationship or interest and as to the contract or transaction are disclosed or are known to the stockholders entitled to vote thereon, and the contract or transaction is specifically approved in good faith by vote of the stockholders; or (c) the contract or transaction is fair as to the Company as of the time it is authorized, approved or ratified, by the Board of Directors, a committee thereof or the stockholders. Interested directors may be counted in determining the presence of a quorum at a meeting of the Board of Directors or of a committee which authorizes the contract or transaction.

V. OFFICERS

5.01. Executive Officers; Election; Qualifications; Term Of Office; Resignation; Removal; Vacancies. The Board of Directors shall elect a Chief Executive Officer, a President, Chief Financial Officer, a Treasurer and a Secretary. The Board of Directors may also choose one or more executive officers, Vice Presidents, one or more Assistant Secretaries, and one or more Assistant Treasurers. Each such officer shall hold office until the first meeting of the Board of Directors after the annual meeting of stockholders next succeeding his or her election, and until his or her successor is elected and qualified or until his or her earlier resignation or removal. Any officer may resign at any time upon written notice to the Company. The Board of Directors may remove any officer with or without cause at any time, but such removal shall be without prejudice to the contractual rights of such officer, if any, with the Company. Any number of offices may be held by the same person. Any vacancy occurring in any office of the Company by death, resignation, removal or otherwise may be filled for the unexpired portion of the term by the Board of Directors.

5.02. Duties. The officers of this Company shall have and perform the powers and duties usually pertaining to their respective offices, the powers and duties prescribed by these bylaws, any additional powers and duties as may from time to time be prescribed by the Board of Directors and such other duties as delegated by the Chief Executive Officer including the following:

The Chief Executive Officer shall have general and active management of the business and affairs of the Company subject to the directions of the Board of Directors.

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The President, if any, shall be the Chief Operating Officer and is responsible for the day-to-day activities of the Company and for the development, design, operation and improvement of its operations. He shall also perform such duties as are conferred upon him by the Chief Executive Officer of the Company and as may be prescribed by the Board of Directors.

The Chief Financial Officer shall keep correct and complete records of account, showing accurately at all times the financial condition of the Company and be primarily responsible for all filings with the Securities and Exchange Commission. He shall furnish at meetings of the Board of Directors, or whenever requested, a statement of the financial condition of the Company and shall perform such other duties as may be prescribed by the Board of Directors. In the absence of a resolution of the Board of Directors appointing a different officer, the Chief Financial Officer shall act when the Chief Executive Officer is unavailable.

The Secretary shall have custody of and maintain all of the corporate records except the financial records, shall record the minutes of all meetings of the shareholders and whenever else required by the Board of Directors and shall perform such other duties as may be prescribed by the Board of Directors.

The Treasurer shall be the legal custodian of all monies, notes, securities and other valuables that may from time to time come into the possession of the Company. He shall immediately deposit all funds of the Company coming into his hands in some reliable bank or other depositary to be designated by the Board of Directors and shall keep this bank account in the name of the Company.

VI. CERTIFICATES FOR SHARES AND THEIR TRANSFER

6.01. Certificates for Shares.

(a) Content. Certificates representing shares of the Company shall, at a minimum, state on their face the name of the issuing company and that it is formed under the laws of the State of Nevada, the name of the person to whom issued, and the number and class of shares and the designation of the series, if any, the certificate represents. Such certificates shall be signed (either manually or by facsimile to the extent allowable by law) by any of the Chairman of the Board of Directors (if any), the Chief Executive Officer, the President, or any Vice-President and by the Secretary or any assistant secretary or the Treasurer or any assistant treasurer of the Company, and may be sealed with a corporate seal or a facsimile thereof. Each certificate for shares shall be consecutively numbered or otherwise identified and shall exhibit such information as may be required by law. If a supply of unissued certificates bearing the facsimile signature of a person remains when that person ceases to hold the office of the Company indicated on such certificates or ceases to be the transfer agent or registrar of the Company, they may still be issued by the Company and countersigned, registered, issued, and delivered by the Company’s transfer agent and/or registrar thereafter, as though such person had continued to hold the office indicated on such certificate.

(b) Legend as to Class or Series. If the Company is authorized to issue different classes of shares or different series within a class, the powers, designations, preferences, and relative, participating, optional, or other special rights applicable to each class or series and the qualifications, limitations, or restrictions of such preference and/or rights shall be set forth in full or summarized on the front or back of each certificate as required by law. Alternatively, each certificate may state on its front or back that the Company shall furnish a stockholder this information on request and without charge.

(c) Stockholder List. The name and address of the person to whom shares are issued, with the number of shares and date of issue, shall be entered on the stock transfer books of the Company.

(d) Lost Certificates. In the event of the loss, theft, or destruction of any certificate representing shares of the Company or of any predecessor company, the Company may issue (or, in the case of any such shares as to which a transfer agent and/or registrar have been appointed, may direct such transfer agent and/or registrar to countersign, register, and issue) a new certificate, and cause the same to be delivered to the registered owner of the shares represented thereby; provided that such owner shall have submitted such evidence showing the circumstances of the alleged loss, theft, or destruction, and his, her, or its ownership of the certificate, as the Company considers satisfactory, together with any other facts that the Company considers pertinent; and further provided that, if so required by the Company, the owner shall provide a bond or other indemnity in form and amount satisfactory to the Company (and to its transfer agent and/or registrar, if applicable).

9

6.02. Registration of the Transfer of Shares. Transfers of shares of stock of the Company shall be made only on the stock transfer books of the Company by the holder of record thereof or by his or her legal representative or attorney in fact, who shall furnish proper evidence of authority to transfer to the Secretary, or a transfer agent, and upon surrender of the certificate or certificates for such shares properly endorsed and payment of all taxes thereon. The person in whose name shares of stock stand on the books of the Company shall be deemed the owner thereof for all purposes as regards the Company.

The Board of Directors may make such rules and regulations as it may deem expedient, not inconsistent with these Bylaws, concerning the issue, transfer and registration of certificates for stock of the Company. The Board of Directors may appoint, or authorize any officer or officers or any committee to appoint, one or more transfer clerks or one or more transfer agents and one or more registrars, and may require all certificates for stock to bear the signature or signatures of any of them.

6.03. Shares Without Certificates. The Board of Directors may authorize the issuance of uncertificated shares by the Company and may prescribe procedures for the issuance and registration of transfer thereof and with respect to such other matters as the Board of Directors shall deem necessary or appropriate.

VII. DIVIDENDS AND DISTRIBUTIONS

7.01. Distributions. Subject to such restrictions or requirements as may be imposed by applicable law or the Company’s Articles or as may otherwise be binding upon the Company, the Board of Directors may from time to time declare, and the Company may pay or make, dividends or other distributions to its stockholders.

VIII. CORPORATE SEAL

8.01. Corporate Seal. The Board of Directors may provide for a corporate seal of the Company that shall have inscribed thereon any designation including the name of the Company, Nevada as the state of incorporation, the year of incorporation, and the words “Company Seal.”

IX. AMENDMENTS

9.01. Amendments. These Bylaws may be repealed, altered or amended, or new bylaws may be adopted by the affirmative vote of a majority of the Board of Directors. These Bylaws may also be repealed, altered or amended, or new bylaws may be adopted by the affirmative vote of a majority of the combined voting stock of the outstanding capital stock of the Company.

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EX-31.1

Exhibit 31.1

CERTIFICATION PURSUANT TO 18 USC, SECTION 1350,

AS ADOPTED PURSUANT TO

SECTION 302 OF THE SARBANES-OXLEY ACT OF 2002

I, Barry Hall, certify that:

1. I have reviewed this report on Form 10-Q of Her Imports;

2. Based on my knowledge, this report does not contain any untrue statement of a material fact or omit to state a material fact necessary to make the statements made, in light of the circumstances under which such statements were made, not misleading with respect to the period covered by this report;

3. Based on my knowledge, the consolidated financial statements, and other financial information included in this report, fairly present in all material respects the financial condition, results of operations and cash flows of the registrant as of, and for, the periods presented in this report;

4. The registrant’s other certifying officer(s) and I are responsible for establishing and maintaining disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) and internal control over financial reporting (as defined in Exchange Act Rules 13a-15(f) and 15d-15(f)) for the registrant and have:

(a) Designed such disclosure controls and procedures, or caused such disclosure controls and procedures to be designed under our supervision, to ensure that material information relating to the registrant, including its consolidated subsidiaries, is made known to us by others within those entities, particularly during the period in which this report is being prepared;

(b) Designed such internal control over financial reporting, or caused such internal control over financial reporting to be designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of consolidated financial statements for external purposes in accordance with generally accepted accounting principles;

(c) Evaluated the effectiveness of the registrant’s disclosure controls and procedures and presented in this report our conclusions about the effectiveness of the disclosure controls and procedures, as of the end of the period covered by this report based on such evaluation; and

(d) Disclosed in this report any change in the registrant’s internal control over financial reporting that occurred during the registrant’s most recent fiscal quarter (the registrant’s fourth fiscal quarter in the case of an annual report) that has materially affected, or is reasonably likely to materially affect, the registrant’s internal control over financial reporting; and

5. The registrant’s other certifying officer(s) and I have disclosed, based on our most recent evaluation of internal control over financial reporting, to the registrant’s auditors and the audit committee of the registrant’s Board of Directors (or persons performing the equivalent functions):

(a) All significant deficiencies and material weakness in the design or operation of internal control over financial reporting which are reasonably likely to adversely affect the registrant’s ability to record, process, summarize and report financial information; and

(b) Any fraud, whether or not material, that involves management or other employees who have a significant role in the registrant’s internal control over financial reporting.

Date: August 14, 2018

/s/ Barry Hall

Barry Hall, Executive Chairman, Chief Executive Officer and Chief Financial Officer

(Principal Executive Officer and Principal Financial Officer)

EX-32.1

Exhibit 32.1

CERTIFICATION PURSUANT TO 18 U.S.C. 1350,

AS ADOPTED PURSUANT TO

SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the quarterly report of Her Imports (the “Company”) on Form 10-Q for the periods ended June 30, 2018, as filed with the Securities and Exchange Commission on the date hereof (the “Report”), I, Barry Hall, Executive Chairman, Chief Executive Officer and Chief Financial Officer of the Company, certify, to the best of my knowledge and belief, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

i.	The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934 (15 U.S.C. 78m(a) or 78o(d)); and
ii.	The information contained in the Report fairly presents, in all material respects, the financial condition and results of operations of the Company.

Date: August 14, 2018

/s/ Barry Hall

Barry Hall, Executive Chairman, Chief Executive Officer and Chief Financial Officer

(Principal Executive Officer and Principal Financial Officer)

XML

Document and Entity Information - shares	6 Months Ended
	Jun. 30, 2018	Aug. 13, 2018
Document And Entity Information
Entity Registrant Name	Her Imports
Entity Central Index Key	0001402453
Document Type	10-Q
Document Period End Date	Jun. 30, 2018
Amendment Flag	false
Current Fiscal Year End Date	--12-31
Entity Filer Category	Smaller Reporting Company
Entity Common Stock, Shares Outstanding		8,656,459
Trading Symbol	HHER
Document Fiscal Period Focus	Q2
Document Fiscal Year Focus	2018

XML

Condensed Consolidated Balance Sheets - USD ($)	Jun. 30, 2018	Dec. 31, 2017
Current assets
Cash	$ 156,138	$ 190,233
Receivables	124,707	165,770
Related party receivables	181,971	108,026
Inventories	2,054,653	2,335,753
Prepaid maintenance fees - current		75,000
Other prepaid expenses	15,785	64,923
Deposits	189,298	196,392
Total current assets	2,722,552	3,136,097
Property, Equipment and software, net	140,309	267,464
Prepaid maintenance fees - non-current		209,375
Other asset	25,000	25,000
Trademark	8,200,000	8,200,000
Total assets	11,087,861	11,837,936
Current liabilities
Accounts payable and accrued liabilities	606,263	822,216
Income tax liability	38,316	134,432
Notes payable	384,062	177,390
Total current liabilities	1,028,641	1,134,038
Total liabilities	1,028,641	1,134,038
Stockholders' equity
Callable $0.144 per share per year non-cumulative dividend liquidation preference of $2.00 per share, preferred stock, $0.001 par value, 10,000,000 shares authorized and 5,000,000 issued and outstanding as of June 30, 2018 and December 31, 2017, respectively	5,000	5,000
Common stock, $0.001 par value, 70,000,000 shares authorized, 8,656,459 and 4,150,059 shares issued and outstanding as of June 30, 2018 and December 31, 2017, respectively	8,656	4,150
Additional paid-in capital	30,128,593	26,679,777
Accumulated deficit	(20,083,029)	(15,985,029)
Total stockholders' equity	10,059,220	10,703,898
Total liabilities and stockholders' equity	$ 11,087,861	$ 11,837,936

XML

Condensed Consolidated Balance Sheets (Parenthetical) - $ / shares	Jun. 30, 2018	Dec. 31, 2017
Statement of Financial Position [Abstract]
Preferred stock call price per share	$ 0.144	$ 0.144
Liquidation preference price per share	2.00	2.00
Preferred stock, par value	$ 0.001	$ 0.001
Preferred stock, shares authorized	10,000,000	10,000,000
Preferred stock, shares issued	5,000,000	5,000,000
Preferred stock, shares outstanding	5,000,000	5,000,000
Common stock, par value	$ 0.001	$ 0.001
Common stock, shares authorized	70,000,000	70,000,000
Common stock, shares issued	8,656,459	4,150,059
Common stock, shares outstanding	8,656,459	4,150,059

XML

Condensed Consolidated Statements of Operations (Unaudited) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Income Statement [Abstract]
Product sales	$ 3,108,412	$ 4,623,778	$ 6,418,092	$ 8,984,798
Cost of products sold	1,849,932	2,758,268	3,476,039	4,893,332
Gross profit	1,258,480	1,865,510	2,942,053	4,091,466
Operating expenses
Royalties	4,522	5,894	9,449	5,894
Selling expense	1,066,480	1,522,059	2,282,109	2,786,840
General and administrative expense	350,159	297,113	687,434	609,959
Total operating expenses	1,421,161	1,825,066	2,978,992	3,402,693
Income (loss) from operations	(162,681)	40,444	(36,939)	688,773
Other (expense) income
Interest income		20		69
Interest expense	(2,484)	(4,085)	(12,994)	(4,951)
Loss on abandonment of fixed assets	(379)		(384,454)
Contract termination expense - related party	(3,397,500)		(3,397,500)
Total other expense	(3,400,363)	(4,065)	(3,794,948)	(4,882)
Income (loss) before benefit (provision) for income taxes	(3,563,044)	36,379	(3,831,887)	683,891
Benefit (provision) for income taxes	34,100	(16,043)	93,887	(245,656)
Net income (loss) attributable to Company	(3,528,944)	20,336	(3,738,000)	438,235
Preferred stock dividends	(180,000)	(180,000)	(360,000)	(360,000)
Net loss to common stockholders	$ (3,708,944)	$ (159,664)	$ (4,098,000)	$ 78,235
Net basic income (loss) per share attributable to common stockholders: basic and diluted	$ (0.08)	$ (0.04)	$ (0.18)	$ 0.02
Weighted average number of common shares outstanding: basic and diluted	4,645,619	4,150,059	4,399,208	4,150,059

XML

Consolidated Statements of Cash Flows (Unaudited) - USD ($)	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
OPERATING ACTIVITIES
Net income (loss) attributable to Company	$ (3,738,000)	$ 438,235
Adjustments to reconcile net income (loss) to net cash provided by operating activities:
Depreciation and amortization	39,591	54,579
Stock-based compensation	55,822
Loss on abandonment of fixed assets	384,454
Contract termination expense	3,397,500
Changes in operating assets and liabilities:
Receivables	41,063	(82,486)
Related party receivables	(73,945)	(47,153)
Inventories	281,100	(200,258)
Prepaid maintenance fees		37,500
Other prepaid expenses	49,138	(35,953)
Deposits	7,094	(269,934)
Accounts payable and accrued liabilities	(215,953)	56,149
Income tax liability	(96,115)	244,678
Other asset		(25,000)
Net cash provided by operating activities	131,749	170,357
INVESTING ACTIVITIES
Purchase of fixed assets	(12,515)	(30,452)
Net cash used in investing activities	(12,515)	(30,452)
FINANCING ACTIVITIES
Issuance of notes payable	1,074,202
Repayment on notes payable	(867,530)	(28,966)
Payment of preferred dividend	(360,000)	(360,000)
Net cash used in financing activities	(153,329)	(388,966)
NET DECREASE IN CASH	(34,095)	(249,061)
CASH - BEGINNING OF PERIOD	190,233	355,568
CASH - END OF PERIOD	156,138	106,507
SUPPLEMENTAL DISCLOSURES:
Interest paid	12,994	4,951
Income taxes paid	4,254
SUPPLEMENTAL SCHEDULE OF NON-CASH INVESTING AND FINANCING ACTIVITIES:
Shares issued in exchange of cancellation of MIP Agreement	$ 4,500

XML

Description of the Company

6 Months Ended

Jun. 30, 2018

Accounting Policies [Abstract]

Description of the Company

1. Description of the Company

Her Imports, (previously known as EZJR, Inc.), (“the Company” or “Her”), was incorporated on August 14, 2006 under the laws of the State of Nevada.

Corporate Structure and Business

Her is a retailer of Human Hair Extensions and related haircare and beauty products headquartered in Las Vegas, Nevada. The Company sells its products at consultation studios and on its Website, www.herimports.com. As of June 30, 2018, the Company operated 21 retail locations, all of which are in the U.S. These locations are primarily in “executive offices suites” such as Regus PLC, where furniture, administrative staff and security are provided. The Company then stocks the location with products and point-of-sale equipment. These locations are leased on a short-term basis (primarily one year or less). Five leases, including our corporate office, have leases longer than one year at the time they were entered into. This allows the Company to open and close its consultation studios within a short period of time at minimal expense to the Company. At the Company’s consultation studios, the customer is provided with a personal, one-on-one consultation with a Her beauty expert. Additionally, the Company has one larger location in Greenbelt Maryland where there are several consultants as well as a waiting room.

The Company has one wholly owned subsidiary, Her Marketing Concepts, Inc. (“Her Marketing”), a Nevada corporation. All employees of the Company are employed by Her Marketing.

Agreement with Cabello Real Ltd.

On November 28, 2016, the Company entered into an Asset Share Purchase & Business Agreement with Cabello Real Ltd. (“Cabello”), a private United Arab Emirates company to acquire the exclusive U.S. rights to the Her Imports trademark. In addition to these rights, the Company also purchased certain other assets owned by Cabello including customer lists and various digital content. In exchange for these rights, and other digital assets, the Company issued to Cabello 10,000,000 shares of non-voting, non-cumulative, callable preferred stock (subsequently revised to 5,000,000) with a dividend rate of $0.144 per share per annum and a liquidation preference of $2.00 per share. In addition, the Cabello received 1,250,000 shares of common stock. Both the preferred stock and common stock issued were unregistered. Additionally, the Company applied with the State of Nevada for the approval of the Certificate of Designations, Preferences, and Rights of Callable Non-cumulative Preferred Stock. The Certificate designated 5,000,000 as Callable Non-cumulative Preferred Stock at a par value of $.001 per share. Cabello is controlled by Mr. Jonathan Terry, who is the Company’s principal shareholder who is also actively involved in its daily operations.

On January 12, 2017, the Company changed its name from EZJR, Inc. to Her Imports.

eCommerce Platform

In January 2018 the Company converted to a new cloud-based eCommerce platform from its server-based eCommerce platform. The primary reason for the change was to allow the Company to optimize its mobile marketing efforts. In the past, marketing efforts have focused on traditional media, email, and search. However, due to the proliferation of smart phones and social media it is much more effective, while less expensive, to reach our customers using mobile marketing using SMS messaging and social platforms such as Facebook and Snapchat. Furthermore, advances in eCommerce shopping carts to cloud-based platforms allow for significant customization that was not previously available. The Company can interface with the shopping cart using various self-developed “mini-CRMs” depending on the marketing promotion and platform.

As a result of the change, the Company incurred a one-time charge of $383,542 from the write-off of the previous CRM and the prepaid maintenance agreement associated with it.

Media Investor Purchaser Agreement

On June 29, 2014, the Company entered into a Media Investor Purchaser Agreement (“MIP”) with Leader Act HK Ltd (“Leader”), a shareholder. On July 31, 2017, this agreement was assigned by Leader to Cabello. Under the terms of the assigned agreement, Cabello undertakes the responsibility to provide the investment dollars for the “media purchase.” The purpose of this media purchase is to generate revenues from the sale of various products and services. When revenues are generated they will be split on a 50/50 basis after deducting direct expenses and fees related to the revenues the media purchase, merchant fees, product costs, and affiliate fees. Cabello is responsible for lead generation by spending the funds necessary to purchase various media while managing the overall process. Cabello is also responsible for graphic design, Website design and various other programming expenses. Conversely, the Company is responsible for customer service, network costs, accounting, and any other related general and administrative costs. Prior to signing the agreement Leader advanced the Company $50,000 which the agreement allowed to be converted to 83,333 shares of common at $.60 per share. That left up to 9,500,000 shares of common stock that Cabello could purchase at $0.05 per share from its portion of the funds generated by the offers it creates. Contrary to customary practice, the MIP did not provide for any adjustment in the event of a future reverse split so the Company’s recent reverse split did not affect the number of shares purchasable or the exercise price. This highlighted an unfair agreement which adversely affected the Company. This problem was exacerbated since Cabello is a related party. From April 19 to April 20, 2018, Cabello ran a program to sell a variety of the Company’s hair products. This program generated approximately $150,000 in revenue, however, a final accounting of the results of the program were never completed. Instead, on June 20, 2018 the Company issued to Cabello 4,500,000 of restricted common stock in exchange for cancelation of the MIP Agreement and forgiveness of any monies owed to Cabello for program in April. This cancellation resulted in a non-cash expense of $3,397,500 based on the estimated value of the stock issued in exchange for the cancellation of the agreement.

Agreement with Cabello Real FZE

On April 20, 2017, the Company entered into a Marketing and Selling Agreement with Cabello Real FZE, owner of a hair care product line called OSIworks, whereby the Company exclusively purchases, markets and sells OSIworks’ products in the United States. Under the agreement the Company pays Cabello a royalty of 2% of net sales. Cabello Real FZE is also controlled by Jonathan Terry, the Company’s principal shareholder. During the three and six months ended quarter ending June 30, 2018 the Company recognized royalty expense of $4,522 and $5,894, respectively, related to the agreement.

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Summary of Significant Accounting Policies

6 Months Ended

Jun. 30, 2018

Accounting Policies [Abstract]

Summary of Significant Accounting Policies

2. Summary of Significant Accounting Policies

There have been no changes in Significant Accounting Policies from those described in our Form 10-K for our fiscal year ending December 31, 2017 filed with the Securities and Exchange Commission on March 27, 2018.

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company (a Nevada corporation) and its wholly owned subsidiary, Her Marketing. All significant intercompany transactions have been eliminated in consolidation.

Basis of Presentation of the Condensed Consolidated Financial Statements

The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Her Marketing. The Company maintains its books of account and prepares consolidated financial statements in accordance with Generally Accepted Accounting Principles in the United States of America (“U.S. GAAP”). The Company’s fiscal year ends on December 31. All significant intercompany balances and transactions have been eliminated in consolidation.

On January 31, 2017, the Company effected a 1-for-2 reverse stock split effective January 31, 2017. The par value was not adjusted as a result of the reverse stock split. On April 9, 2018, the Company effected a 1-for-6 reverse stock split effective April 9, 2018. All references to numbers of shares of our common stock and per-share information in the accompanying condensed consolidated financial statements and in these notes to the condensed consolidated financial statements have been adjusted retroactively to reflect these splits.

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. The Company evaluates its estimates on an ongoing basis, including those related to the fair values of stock-based awards, income taxes and contingent liabilities, among others. The Company bases its estimates on historical experience and on various other assumptions that the Company believes to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from those estimates and such differences could be material to the consolidated financial position and results of operations.

Fair Value of Financial Instruments

The Company measures fair value based on the prices that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are based on a three-tier hierarchy that prioritizes the inputs used to measure fair value, using quoted prices in active markets for identical assets (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs (Level 3).

The Company did not have any assets measured at fair value on a recurring basis at June 30, 2018 and December 31, 2017.

The Company believes the carrying amounts of cash and cash equivalents, accounts receivable, other current assets, accounts payable, and other accrued liabilities are a reasonable approximation of the fair value of those financial instruments because of the nature of the underlying transactions and the short-term maturities involved.

Deposits

	June 30,		December 31,
	2018		2017
Deposits on Products	$	156,068	$	175,819
Security Deposits		33,230		20,573
Total	$	189,298	$	196,392

Intangibles

Intangible assets are comprised primarily of trademarks that represent the Company’s exclusive ownership of the HER trademarks in the US and are inclusive all related social media sites and domain names in the US., all used in connection with (consisting of the name, Her Imports and the Her Imports Logo) the manufacture, sale and distribution of human hair extensions and related beauty products. In accordance with Financial Accounting Standards Board Accounting Standard Codification 350 (FASB ASC 350), intangible assets with indefinite lives are not amortized but instead are measured for impairment at least annually, or when events indicate that an impairment exists through the use of discounted cash flow models. The Company calculates impairment as the excess of the carrying value of its indefinite-lived assets over their estimated fair value. If the carrying value exceeds the estimate of fair value a write-down is recorded. For the three and six months ended June 30, 2018 and 2017 there were no impairments recorded.

Revenue Recognition

In May 2014, the Financial Accounting Standards Board (“FASB”) issued accounting standards update (“ASU”) No. 2014-09, Revenue from Contracts with Customers, to clarify the principles of recognizing revenue and create common revenue recognition guidance between U.S. GAAP and International Financial Reporting Standards. ASU No. 2014-09, as amended, is effective for the Company as of January 1, 2018.

The adoption did not result in any material change in the timing of recognizing revenue The adoption will also result in a change in the timing of recognizing revenue for sales where we ship the merchandise to the customer from a distribution center or store, as revenue for sales where we ship the merchandise to customers will be recognized when control of the merchandise transfers to the customer, which is generally at the time of shipment rather than upon delivery of the products to the customer. Additionally, the Company has had a deminimis amount of sales returns.

The Company, through the Her Imports retail locations and its eCommerce Website, www.herimports.com, sells a variety of hair extensions and related products.

Revenue is recognized at the “point of sale” in the stores. Customers pay for the products using either cash, a debit card or a credit card. All sales are final. In the case of cash sales at the store, the store manager makes a nightly deposit of the cash. For credit card and debit sales, the Company recognizes the sale when the card is charged and approved. Sales tax collected from customers is excluded from revenue and is included in accrued liabilities on our condensed consolidated balance sheets.

Product purchases on the Company’s Website are paid for using either debit cards, credit cards, or PayPal Revenue for online product sales are recognized upon shipment of the product. Additionally, customers have the option of making installment payments on products purchased. In this case fifty percent of the purchase price is paid at the time of sale and the remainder withdrawn from the customer’s account via ACH. Because there is a significant amount of uncertainty related to the subsequent collections via ACH, those payment are only recognized as revenue upon receipt. Finally, customers may purchase product using a payment facility called PayNearMe where a customer who doesn’t have a debit/credit/PayPal account can place an online order with an agreement to take cash and pay for the order at a PayNearMe location. The product is then shipped at time PayNearMe notifies the Company that the payment has been received. Revenue is recognized at the time of the shipment of the product.

Also included in revenue is shipping revenue from our e-commerce customers. Sales taxes collected from retail customers are excluded from reported revenues when control of the merchandise transfers to the customers, which is generally at the time of shipment rather than upon delivery of the products to the customer.

Earnings (Loss) per Share

The Company utilizes FASB ASC 260. Basic earnings per share is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Common equivalent shares are excluded from the computation if their effect is anti-dilutive.

Reverse Stock Split

All references to numbers of shares of our common stock and per-share information in the accompanying financial statements have been adjusted retroactively to reflect the Company’s 1-for-2 reverse stock split effected on January 31, 2017, and a 1-for-6 reverse stock split effective April 9, 2018. The par value was not adjusted because of the reverse stock splits.

Stock-based compensation

The Company records stock-based compensation issued to external entities for goods and services at either the fair market value of the shares issued, or the value of the services received, whichever is more readily determinable, using the measurement date guidelines enumerated in FASB ASC 505-50-30. For the three months and six months ended June 30, 2018, the Company recognized stock-based compensation expense of $36,001 and $55,822, respectively. There was no stock-based compensation for the three months and six months ended June 30, 2017.

Recent Accounting Pronouncements

Except as noted below, the Company has considered all recent accounting pronouncements and has concluded that there are no recent accounting pronouncements that may have a material impact on its condensed consolidated financial statements, based on current information.

In July 2018, the FASB issued ASU 2018-10 Leases (Topic 842), Codification Improvements and ASU 2018-11 Leases (Topic 842), Targeted Improvements, to provide additional guidance for the adoption of Topic 842. ASU 2018-10 clarifies certain provisions and correct unintended applications of the guidance such as the application of implicit rate, lessee reassessment of lease classification, and certain transition adjustments that should be recognized to earnings rather than to stockholders’ equity. ASU 2018-11 provides an alternative transition method and practical expedient for separating contract components for the adoption of Topic 842. In February 2016, the FASB issued ASU 2016-02 Leases (Topic 842) which requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases with terms greater than 12 months. ASU 2018-11, ASU 2018-10, and ASU 2016-02 (collectively, “the new lease standards”) are effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the effect the new lease standards will have on its Condensed Consolidated Financial Statements; however, the Company anticipates recognizing assets and liabilities arising from any leases that meet the requirements under the new lease standards on the adoption date and including qualitative and quantitative disclosures in the Company’s Notes to the Condensed Consolidated Financial Statements.

In July 2018, the FASB issued ASU 2018-09, Codification Improvements. The amendments in ASU 2018-09 affect a wide variety of Topics in the FASB Codification and apply to all reporting entities within the scope of the affected accounting guidance. The Company has evaluated ASU 2018-09 in its entirety and determined that the amendments related to Topic 718-740, Compensation-Stock Compensation-Income Taxes, are the only provisions that currently apply to the Company. The amendments in ASU 2018-09 related to Topic 718-740, Compensation-Stock Compensation-Income Taxes, clarify that an entity should recognize excess tax benefits related to stock compensation transactions in the period in which the amount of the deduction is determined. The amendments in ASU 2018-09 related to Topic 718-740 are effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company does not expect the adoption of the new standard to have a material impact on the Company’s Condensed Consolidated Financial Statements.

In March 2018, the FASB issued ASU 2018-05, Income Taxes (Topic 740) - Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118. This standard amends Accounting Standards Codification 740, Income Taxes (ASC 740) to provide guidance on accounting for the tax effects of the Tax Cuts and Jobs Act (the Tax Reform Act) pursuant to Staff Accounting Bulletin No. 118, which allows companies to complete the accounting under ASC 740 within a one-year measurement period from the Tax Act enactment date. This standard is effective upon issuance. As described in the footnotes to the Annual Report on Form 10-K, the Company’s accounting for the tax effects of enactment of the Tax Reform Act is being assessed; however, in certain cases, as described below, we made a reasonable estimate of the effects on our existing deferred tax balances and valuation allowance. The Company determined that the $62.9 million recorded in connection with the re-measurement of certain deferred tax assets and liabilities, and corresponding valuation allowance was a provisional amount and a reasonable estimate at December 31, 2017. The Company has not completed the accounting with regard to the tax effects associated with an intra-entity transfer of certain intellectual property rights with the enactment of Tax Reform Act. Our accounting for the intra-entity transfer reflects the utilization of net operating losses on the basis of the laws in effect before the Tax Reform Act. The Company is evaluating the impact under Tax Reform Act on the Company’s global business structure. In all aspects, the Company will continue to make and refine calculations as additional analysis is completed. The Company expects to complete the accounting assessment during the one-year measurement period provided by SAB 118.

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Property, Equipment and Software

6 Months Ended

Jun. 30, 2018

Property, Plant and Equipment [Abstract]

Property, Equipment and Software

3. Property, Equipment and Software

Property and equipment consisted of the following:

	June 30,			December 31,
	2018			2017
Software	$	110,000		$	463,310
Computers and equipment		100,100			99,592
Furniture		37,169			30,391
Leasehold improvements		23,067			19,493
subtotal		270,336			612,786
Accumulated depreciation and amortization		(130,027	)		(345,322	)
Property, equipment and software, net	$	140,309		$	267,464

Depreciation and amortization expense on property, plant, equipment, and software for the three and six months ended June 30, 2018 was $19,997 and $39,591, respectively. Depreciation and amortization expense on property, plant, equipment, and software for the three and six months ended June 30, 2017 was $27,428 and $54,579, respectively.

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Sales Tax Payable

6 Months Ended

Jun. 30, 2018

Sales Tax Payable

Sales Tax Payable

4. Sales tax payable

The Company is delinquent in filing some sales tax returns for one state (including the remittance of taxes), for which the Company has transacted business. The Company has recorded tax obligations plus potential interest and penalties estimated to be approximately $35,180, computed through June 30, 2018, which are included in accounts payable and accrued liabilities on the balance sheet. The Company is in the process of becoming fully compliant.

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Related Party Transactions

6 Months Ended

Jun. 30, 2018

Related Party Transactions [Abstract]

Related Party Transactions

5. Related Party Transactions

Related Party Accounts Receivable and Payable

At June 30, 2018 and December 31, 2017, the Company had a receivable from Cabello, its principal stockholder, of $181,971 and $108,026, respectively, that resulted from payments made by the Company on behalf of Cabello. The Company has the right to offset this receivable against any future dividend payments owed Cabello related to the preferred stock described in Note 1. As described in Note 11, subsequent to June 30, 2018, two dividends of $60,000 each were declared and offset against amounts owed by Cabello. For further information on related party transactions, see Note 1. As described below, the Company incurred $9,449 in royalty expense in 2018 which has also been offset against the Cabello receivable.

Royalty Expense

Royalty expense is a result of royalties incurred on products sold under the brand name OSIworks, a company under common control with the Company’s principal shareholder. During the three ended June 30, 2018 and 2017 royalty expense was $4,522 and $5,894, respectively. During the six months ended June 30, 2018 and 2017 royalty expense was $9,449 and $5,894, respectively.

Contract Termination Expense – Related Party

On June 20, 2018, the Company issued to Cabello 4,500,000 shares of restricted common stock in exchange for cancelation of the MIP Agreement (described in Note 1) and forgiveness of any monies owed to Cabello for program run in April. This cancellation resulted in a non-cash expense of $3,397,500 based on the estimated value of the stock issued in exchange for the cancellation of the agreement.

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Commitments and Contingencies

6 Months Ended

Jun. 30, 2018

Commitments and Contingencies Disclosure [Abstract]

Commitments and Contingencies

6. Commitments and Contingencies

Leases

At June 30, 2018, the Company leased or rented 23 different facilities including its corporate headquarters and active retail locations. Future lease obligation for these facilities are as follows:

Year		Amount
	2018 (remaining six months)	$	145,217
	2019		194,750
	2020		134,115
	2021		111,623
	2022		114,648
	Thereafter		49,072
	Total	$	749,425

Rent expense for the three months ended June 30, 2018 and 2017 was $128,533 and $172,204, respectively. Rent expense for the six months ended June 30, 2018 and 2017 was $252,922 and $325,507, respectively.

Concentrations

As of June 30, 2018, the Company has only twelve qualified vendors that supply its wigs and hair extension products. The Company sources its hair care products from one vendor. There are numerous suppliers of styling tools as this is a commodity product. During the three months ended June 30, 2018, the Company purchased hair products from four different vendors, however, two vendors accounted for approximately 88.8% of all hair products purchased.

During the three months ended June 30, 2018, the Company purchased hair products from four different vendors, however, two vendors accounted for approximately 88.8% of all hair products purchased. During the six months ended June 30, 2018, the Company purchased hair products from five different vendors, however, two vendors accounted for approximately 91.5% of all hair products purchased. During the three months ended June 30, 2017, the Company purchased hair products from four different vendors, however, two vendors accounted for approximately 93.6% of all hair products purchased. During the six months ended June 30, 2017, the Company purchased hair products from six different vendors, however, two vendors accounted for approximately 95.0% of all hair products purchased.

Legal Proceedings

From time to time, the Company may become involved in various lawsuits and legal proceedings, which arise in the ordinary course of business. However, litigation is subject to inherent uncertainties, and an adverse result in these or other matters may arise from time to time that may harm the Company’s business.

On or about September 5, 2015, the Company received a summons naming it in a civil action against Her Imports, LLC, Her Imports New York, LLC, Her Holding, Inc. and EZJR, Inc. (now Her Imports) from a former independent contractor of Her Imports, LLC. The complaint claims unpaid wages and overtime wages in violation of New York Labor Law, among other things. No specific damages are mentioned in the complaint. The Company subsequently answered the complaint and denied any wrongdoing as EZJR had no relationship with the contractor, whatsoever. At this point in the litigation it is impracticable to foresee the outcome, however, the Company believes it has meritorious defense and is vigorously defending this litigation. On February 16, 2018, a magistrate judge ruled that EZJR, Her Holding and Her Imports, LLC acted as a joint employer. The judge also found that genuine issues of material fact exist as to “whether plaintiff qualifies as an ‘employee’ under the law or was an ‘independent contractor’.” While the Company disagrees with the ruling that it was a joint employer, it has decided to proceed to trial on the basis that the plaintiff was an independent contractor, while reserving the right to appeal the decision.

On or about On March 13, 2018, the Company received a summons in a civil action alleging that it had violated the Telephone Consumer Protection Act of 1991 (TCPA). In the complaint, an individual who provided his phone number to the Company to obtain certain discounts on the Company’s products, claims that the Company sent several text messages to his cell phone without prior written consent. The suit was filed by on behalf of the plaintiff and others similarly situated. On or about June 5, 2018 the Company received a second summons in a civil action also alleging that it had violated the TCPA. In the complaint, an individual who provided her phone number to the Company to obtain certain discounts on the Company’s products, claims that the Company sent several text messages to her cell phone without prior written consent. The suit was filed by on behalf of the plaintiff and others similarly situated. In both instances our review of the circumstance surrounding the claim are that the actions are not justified and as such we made the decision to intend to vigorously defend the Company against these actions. In the case of the first action we have filed a response denying the allegations. In the case of the second action we have file a motion to dismiss or consolidate this action with the first based on what is known “the-first-to-file rule.” To date there has been no ruling on this motion.

On January 12, 2017, the Company entered into a Business Purchase Agreement with EnzymeBioSystems, Inc. (“EnzymeBio”), a Nevada corporation, whereby the Company entered into an agreement to purchase 100% ownership of EnzymeBio’s wholly owned subsidiary, Share Acquisition Corp. (“SAC”), a Nevada corporation in exchange for approximately 9,167 shares of the Company’s common stock and $25,000 cash. On February 28, 2017, EnzymeBio agreed to spin-off SAC as a dividend. Pursuant to the Business Purchase Agreement and Nevada Revised Stature 92A.180 (Merger of a subsidiary into parent or parent into subsidiary), SAC was to be acquired and merged into the Company. Restricted common shares of the Company were to be exchanged on a pro-rata one-for-one ownership basis. After the exchange took place, SAC would be collapsed into the Company and subsequently dissolved with the Nevada Secretary of State. The Company agreed to acquire SAC for the sole purpose to increase its shareholder base. As of the date of these financial statements, the $25,000 had been paid, however, the share exchange did not take place and the agreement was not consummated. The Company was subsequently informed by its legal counsel that this transaction cannot be concluded under applicable securities laws. The Company has informed EnzymeBio of this and requested that the $25,000 payment be returned. As a result, the $25,000 payment is recorded under Other Asset on the balance sheet. EnzymeBio refused to return the $25,000 and as a result on March 13, 2018 the Company filed a legal complaint against those parties which include a demand for the $25,000 as well as legal fees and specific damages the Company incurred as a result of their actions. In June 2018, the defendants responded to the complaint denying the allegation and also filed a counter claim against the Company and its Chief Executive Officer’s. Subsequently, the defendants stipulated and all charges against the Company and its Chief Executive Officer were dismissed.

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Promissory Notes

6 Months Ended

Jun. 30, 2018

Debt Disclosure [Abstract]

Promissory Notes

7. Promissory Notes

UPS Capital

On November 8, 2017 the Company entered into an agreement with UPS Capital Corporation (UPS) for a $500,000 credit facility. Under the terms of the agreement UPS will loan 100% of the invoice amount on incoming offshore shipments carried by UPS. Upon funding the loan, the Company pays a transaction fee of 1.85% or 2.75% for air shipment or ocean shipment, respectively. Repayment of amounts funded are due in 60 days for air shipments and 90 days for ocean shipment. Amounts funded are secured by inventory on hand and are personally guaranteed by the Company’s Chief Executive Officer and the Company’s principal controlling shareholder. As of June 30, 2018, and December 31, 2017 the Company owed $384,062 and $177,390, respectively under the facility.

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Stockholders' Equity

6 Months Ended

Jun. 30, 2018

Equity [Abstract]

Stockholders' Equity

8. Stockholders’ Equity

On January 31, 2017, the Company effected a 1-for-2 reverse stock split effective January 31, 2017. The par value was not adjusted as a result of the reverse stock split. On April 9, 2018, the Company effected a 1-for-6 reverse stock split effective April 9, 2018. All references to numbers of shares of our common stock and per-share information in the accompanying condensed consolidated financial statements and in these notes to the condensed consolidated financial statements have been adjusted retroactively to reflect these splits.

As described in Note 1, on November 28, 2016, the Company entered into an Asset Share Purchase & Business Agreement with Cabello to acquire the exclusive U.S. rights to the Her Imports trademark. In exchange for these rights, and other digital assets, the Company issued to Cabello 10,000,000 shares of unregistered non-voting, non-cumulative, callable preferred stock (subsequently revised to 5,000,000 shares) and 1,250,000 unregistered common stock with a combined value of $8,200,000. All shares of callable preferred stock rank superior to all the Company’s preferred stock and common stock currently outstanding and hereafter issued, as to distributions of assets upon liquidation, dissolution or winding up of the Company, whether voluntary or involuntary (with the exception of a merger), including the payment of dividends. The callable preferred stock is subject to a monthly dividend payment equal to a rate of $0.144 per share of preferred stock per annum. The declaration and payment of the dividend on a monthly basis is subject to the approval of the Company’s Board of Directors. Such dividend is non-cumulative should the Company not pay the dividend. The Company has a right of first refusal to purchase the callable preferred stock, should the shareholder decide to sell all or part of their callable preferred stock. The callable preferred stock has no voting rights. Through June 30, 2018, the Board of Directors has declared and approved, preferred stock dividends of $1,140,000 ($60,000 each month) to Cabello related to the 5,000,000 shares of callable, non-voting, non-cumulative preferred stock. Because the dividends on the preferred stock are non-cumulative and at the discretion of the Company, these preferred shares are considered to be equity.

At June 30, 2018 and December 31, 2017, the Company had 10,000,000 shares of preferred stock authorized and 5,000,000 issued and outstanding and 70,000,000 shares of common stock authorized. At June 30 2018 and December 31, 2017 there were 8,656,459 and 4,150,039 shares of common stock outstanding, respectively.

As described in Note 1, on October 13, 2016, the Company entered into a five-year maintenance agreement on its eCommerce platform with Leader in exchange for 250,000 shares of the Company’s common stock valued at $375,000 based on the fair market value of a service maintenance contract provided to other third parties which approximates the fair value of the common stock at the time it was issued. In January 2018 the Company converted to a new cloud-based eCommerce platform from its server-based eCommerce platform. As a result, the Company wrote off $265,625 of unamortized prepaid software maintenance related to the agreement.

As described in Note 1, on June 20, 2018 the Company issued 4,500,000 shares of restricted common stock to Cabello in exchange for cancelation of the MIP Agreement and forgiveness of monies owed to Cabello for program that was run in April 2018.

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Stock-based Compensation

6 Months Ended

Jun. 30, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Stock-based Compensation

9. Stock-based Compensation

On September 5, 2017 the Company adopted the 2017 Her Imports Stock Incentive Plan. For the three and six months ended June 30, 2018, the Company recognized $36,001 and $55,822, respectively in stock-based compensation related to stock options and common stock issued under the plan. Stock-based compensation expense is included in the following captions on the condensed consolidated statements of operations.

	Three Month Ended		Six Month Ended
	June 30, 2018		June 30, 2018
Selling expense	$	19,080	$	28,590
General and administrative expense		16,921		27,232
Total	$	36,001	$	55,822

Changes in the Company’s outstanding stock options under the plan during the six months ended June 30, 2018 were as follows:

				Weighted
	Number of			Average
	Options			Price
Outstanding at December 31, 2017		58,332		$	9.42
Granted		3,332			1.65
Exercised		-			-
Forfeited of expired		(8,333	)		10.68
Outstanding at June 30, 2018		53,331		$	8.73
Exercisable at June 30, 2018		18,958		$	9.15

The weighted average remaining contractual term and aggregate intrinsic value of outstanding options as of June 30, 2018 was 4.12 years and $124,547, respectively.

The Company’s stock options are measured at fair value using the Black-Scholes Option Pricing Model methodology. A summary of the weighted average (in aggregate) significant unobservable inputs (Level 3 inputs) used in measuring the Company’s stock options that are categorized within Level 3 of the fair value hierarchy for six months June 30, 2018 is as follows:

Strike Price	$	1.65 to 10.68
Volatility		46.21	%
Risk-free interest rate		2.15	%
Contractual life (in years)		5
Dividend yield (per share)		0	%

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Income Taxes

6 Months Ended

Jun. 30, 2018

Income Tax Disclosure [Abstract]

Income Taxes

10. Income Taxes

The tax reform bill that Congress voted to approve December 20, 2017, also known as the “Tax Cuts and Jobs Act”, made sweeping modifications to the Internal Revenue Code, including a much lower corporate tax rate, changes to credits and deductions, and a move to a territorial system for corporations that have overseas earnings. The act replaced the prior-law graduated corporate tax rate, which taxed income over $10 million at 35%, with a flat rate of 21%.

The Company and its subsidiaries are subject to U.S. federal income tax as well as income tax of multiple state jurisdictions. An approximate estimated blended tax rate of 18.3% was used to calculate the benefit for taxes based on operations for the six months ended June 30, 2018 and 35.9% to calculate the provision for taxes based on income for the three months ended June 30, 2017. For financial reporting purposes the benefit for income taxes is based on a pre-tax loss of $509,377 for the six months ended June 30, 2018 and pre-tax income of $683,891 for the six months ended June 30, 2017. In 2018, and for fourteen years thereafter, there will be a permanent book versus tax difference of $546,667 each year related to the amortization of the trademark, which is deductible for tax purposes but is not amortized and expensed for financial reporting purposes. The provision (benefit) for income taxes for the three and six months ended June 30, 2018 and 2017 consisted of the following:

	Three Months Ended						Six Months Ended
	June 30,			June 30,			June 30,			June 30,
	2018			2017			2018			2017
U.S. Federal	$	47,711		$	(10,361	)	$	100,755		$	(225,758	)
U.S. State		(13,611	)		(5,906	)		(6,868	)		(19,898	)
Total		34,100			(16,267	)		93,887			(245,656	)
Deferred		-			-			-			-
Total benefit (provision) for income taxes	$	34,100		$	(16,267	)	$	93,887		$	(245,656	)

As of June 30, 2018, we had a tax loss carryforward of approximately $436,968 which can be used to offset future Federal income taxes.

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Subsequent Events

6 Months Ended

Jun. 30, 2018

Subsequent Events [Abstract]

Subsequent Events

11. Subsequent Events

On July 3, 2018, the Board of Directors approved the monthly $60,000 dividend related to 5,000,000 shares of Callable Preferred Stock owned by Cabello Real Ltd. This dividend was offset against amounts owed to the Company by Cabello.

On August 7, 2018, the Board of Directors approved the monthly $60,000 dividend related to 5,000,000 shares of Callable Preferred Stock owned by Cabello Real Ltd. This dividend was offset against amounts owed to the Company by Cabello.

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Summary of Significant Accounting Policies (Policies)

6 Months Ended

Jun. 30, 2018

Accounting Policies [Abstract]

Principles of Consolidation

Principles of Consolidation

The condensed consolidated financial statements include the accounts of the Company (a Nevada corporation) and its wholly owned subsidiary, Her Marketing. All significant intercompany transactions have been eliminated in consolidation.

Basis of Presentation of the Condensed Consolidated Financial Statements

Basis of Presentation of the Condensed Consolidated Financial Statements

The accompanying condensed consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Her Marketing. The Company maintains its books of account and prepares consolidated financial statements in accordance with Generally Accepted Accounting Principles in the United States of America (“U.S. GAAP”). The Company’s fiscal year ends on December 31. All significant intercompany balances and transactions have been eliminated in consolidation.

On January 31, 2017, the Company effected a 1-for-2 reverse stock split effective January 31, 2017. The par value was not adjusted as a result of the reverse stock split. On April 9, 2018, the Company effected a 1-for-6 reverse stock split effective April 9, 2018. All references to numbers of shares of our common stock and per-share information in the accompanying condensed consolidated financial statements and in these notes to the condensed consolidated financial statements have been adjusted retroactively to reflect these splits.

Use of Estimates

Use of Estimates

The preparation of financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. The Company evaluates its estimates on an ongoing basis, including those related to the fair values of stock-based awards, income taxes and contingent liabilities, among others. The Company bases its estimates on historical experience and on various other assumptions that the Company believes to be reasonable, the results of which form the basis for making judgments about the carrying values of assets and liabilities. Actual results could differ from those estimates and such differences could be material to the consolidated financial position and results of operations.

Fair Value of Financial Instruments

Fair Value of Financial Instruments

The Company measures fair value based on the prices that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants at the measurement date. Fair value measurements are based on a three-tier hierarchy that prioritizes the inputs used to measure fair value, using quoted prices in active markets for identical assets (Level 1); significant other observable inputs (Level 2); and significant unobservable inputs (Level 3).

The Company did not have any assets measured at fair value on a recurring basis at June 30, 2018 and December 31, 2017.

The Company believes the carrying amounts of cash and cash equivalents, accounts receivable, other current assets, accounts payable, and other accrued liabilities are a reasonable approximation of the fair value of those financial instruments because of the nature of the underlying transactions and the short-term maturities involved.

Deposits

Deposits

	June 30,		December 31,
	2018		2017
Deposits on Products	$	156,068	$	175,819
Security Deposits		33,230		20,573
Total	$	189,298	$	196,392

Intangibles

Intangibles

Intangible assets are comprised primarily of trademarks that represent the Company’s exclusive ownership of the HER trademarks in the US and are inclusive all related social media sites and domain names in the US., all used in connection with (consisting of the name, Her Imports and the Her Imports Logo) the manufacture, sale and distribution of human hair extensions and related beauty products. In accordance with Financial Accounting Standards Board Accounting Standard Codification 350 (FASB ASC 350), intangible assets with indefinite lives are not amortized but instead are measured for impairment at least annually, or when events indicate that an impairment exists through the use of discounted cash flow models. The Company calculates impairment as the excess of the carrying value of its indefinite-lived assets over their estimated fair value. If the carrying value exceeds the estimate of fair value a write-down is recorded. For the three and six months ended June 30, 2018 and 2017 there were no impairments recorded.

Impairment Assessments of Intangibles

Impairment Assessments of Intangibles

As described in Note 1, on November 28, 2016, the Company entered into an Asset Share Purchase & Business Agreement with Cabello to acquire the exclusive U.S. rights to the Her Imports trademark as well as other assets. The value of the trademark at the time of its purchase was estimated to be $8,200,000. The Company makes judgments about the value of this long-lived asset whenever events or changes in circumstances indicate that an impairment in the remaining value of the assets recorded on the balance sheet may exist. To estimate the fair value of long-lived asset, the Company typically makes various assumptions about the prospects for the business that the asset relates to, considers market factors specific to that business and estimates future cash flows to be generated by that business. These assumptions and estimates are necessarily subjective and based on management’s best estimates based on the information available at the time such estimates are made. Based on these assumptions and estimates, the Company determines whether it needs to record an impairment charge to reduce the value of the asset stated on the balance sheet to reflect its estimated fair value determined by a discounted cash flow analysis. The Company has not recognized any impairment charges related to the trademark during the three and six months ended June 30, 2018 and 2017.

Property, Equipment and Software, Net

Property, Equipment and Software, net

Property equipment and software are recorded at cost. Expenditures for major additions and improvements are capitalized and minor replacements, maintenance, and repairs are charged to expense as incurred. When property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective period. Depreciation is provided over the estimated useful lives of the related assets using the straight-line method for financial statement purposes. The Company uses other depreciation methods for tax purposes where appropriate. The estimated useful lives for significant property and equipment categories are as follows:

Furniture and fixtures	5 years
Computers and equipment	3 years
Software	5 years
Kiosks	3 years
Leasehold improvement	remaining life of the lease

On May 28, 2014, the Company purchased from Leader, for 833,333 shares of common stock, an eCommerce software program totaling $350,000. The software was amortized over five years. During the three months ended March 31, 2018, the software’s unamortized value of $99,167 was written off as it was abandoned in favor of a cloud-based platform. Amortization expense for the three months and six months ended June 30, 2017 was $17,500 and $35,000, respectively.

Revenue Recognition

Revenue Recognition

In May 2014, the Financial Accounting Standards Board (“FASB”) issued accounting standards update (“ASU”) No. 2014-09, Revenue from Contracts with Customers, to clarify the principles of recognizing revenue and create common revenue recognition guidance between U.S. GAAP and International Financial Reporting Standards. ASU No. 2014-09, as amended, is effective for the Company as of January 1, 2018.

The adoption did not result in any material change in the timing of recognizing revenue The adoption will also result in a change in the timing of recognizing revenue for sales where we ship the merchandise to the customer from a distribution center or store, as revenue for sales where we ship the merchandise to customers will be recognized when control of the merchandise transfers to the customer, which is generally at the time of shipment rather than upon delivery of the products to the customer. Additionally, the Company has had a deminimis amount of sales returns.

The Company, through the Her Imports retail locations and its eCommerce Website, www.herimports.com, sells a variety of hair extensions and related products.

Revenue is recognized at the “point of sale” in the stores. Customers pay for the products using either cash, a debit card or a credit card. All sales are final. In the case of cash sales at the store, the store manager makes a nightly deposit of the cash. For credit card and debit sales, the Company recognizes the sale when the card is charged and approved. Sales tax collected from customers is excluded from revenue and is included in accrued liabilities on our condensed consolidated balance sheets.

Product purchases on the Company’s Website are paid for using either debit cards, credit cards, or PayPal Revenue for online product sales are recognized upon shipment of the product. Additionally, customers have the option of making installment payments on products purchased. In this case fifty percent of the purchase price is paid at the time of sale and the remainder withdrawn from the customer’s account via ACH. Because there is a significant amount of uncertainty related to the subsequent collections via ACH, those payment are only recognized as revenue upon receipt. Finally, customers may purchase product using a payment facility called PayNearMe where a customer who doesn’t have a debit/credit/PayPal account can place an online order with an agreement to take cash and pay for the order at a PayNearMe location. The product is then shipped at time PayNearMe notifies the Company that the payment has been received. Revenue is recognized at the time of the shipment of the product.

Also included in revenue is shipping revenue from our e-commerce customers. Sales taxes collected from retail customers are excluded from reported revenues when control of the merchandise transfers to the customers, which is generally at the time of shipment rather than upon delivery of the products to the customer.

Income Taxes

Income Taxes

The Company accounts for income taxes under the liability method in accordance with FASB ASC 740-10. Under this standard, deferred income tax liabilities and assets are determined based on the difference between the financial statement and tax bases of assets and liabilities using the enacted tax rates expected to be in effect for the year in which the differences are expected to reverse. Deferred income tax assets are reduced by a valuation allowance when the Company is unable to make the determination that it is more likely than not that some portion or all the deferred income tax asset will be realized.

Earnings (Loss) Per Share

Earnings (Loss) per Share

The Company utilizes FASB ASC 260. Basic earnings per share is computed by dividing income available to common stockholders by the weighted-average number of common shares outstanding. Diluted earnings per share is computed similar to basic earnings per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. Common equivalent shares are excluded from the computation if their effect is anti-dilutive.

Reverse Stock Split

Reverse Stock Split

All references to numbers of shares of our common stock and per-share information in the accompanying financial statements have been adjusted retroactively to reflect the Company’s 1-for-2 reverse stock split effected on January 31, 2017, and a 1-for-6 reverse stock split effective April 9, 2018. The par value was not adjusted because of the reverse stock splits.

Stock-based Compensation

Stock-based compensation

The Company records stock-based compensation issued to external entities for goods and services at either the fair market value of the shares issued, or the value of the services received, whichever is more readily determinable, using the measurement date guidelines enumerated in FASB ASC 505-50-30. For the three months and six months ended June 30, 2018, the Company recognized stock-based compensation expense of $36,001 and $55,822, respectively. There was no stock-based compensation for the three months and six months ended June 30, 2017.

Recent Accounting Pronouncements

Recent Accounting Pronouncements

Except as noted below, the Company has considered all recent accounting pronouncements and has concluded that there are no recent accounting pronouncements that may have a material impact on its condensed consolidated financial statements, based on current information.

In July 2018, the FASB issued ASU 2018-10 Leases (Topic 842), Codification Improvements and ASU 2018-11 Leases (Topic 842), Targeted Improvements, to provide additional guidance for the adoption of Topic 842. ASU 2018-10 clarifies certain provisions and correct unintended applications of the guidance such as the application of implicit rate, lessee reassessment of lease classification, and certain transition adjustments that should be recognized to earnings rather than to stockholders’ equity. ASU 2018-11 provides an alternative transition method and practical expedient for separating contract components for the adoption of Topic 842. In February 2016, the FASB issued ASU 2016-02 Leases (Topic 842) which requires an entity to recognize assets and liabilities arising from a lease for both financing and operating leases with terms greater than 12 months. ASU 2018-11, ASU 2018-10, and ASU 2016-02 (collectively, “the new lease standards”) are effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company is currently evaluating the effect the new lease standards will have on its Condensed Consolidated Financial Statements; however, the Company anticipates recognizing assets and liabilities arising from any leases that meet the requirements under the new lease standards on the adoption date and including qualitative and quantitative disclosures in the Company’s Notes to the Condensed Consolidated Financial Statements.

In July 2018, the FASB issued ASU 2018-09, Codification Improvements. The amendments in ASU 2018-09 affect a wide variety of Topics in the FASB Codification and apply to all reporting entities within the scope of the affected accounting guidance. The Company has evaluated ASU 2018-09 in its entirety and determined that the amendments related to Topic 718-740, Compensation-Stock Compensation-Income Taxes, are the only provisions that currently apply to the Company. The amendments in ASU 2018-09 related to Topic 718-740, Compensation-Stock Compensation-Income Taxes, clarify that an entity should recognize excess tax benefits related to stock compensation transactions in the period in which the amount of the deduction is determined. The amendments in ASU 2018-09 related to Topic 718-740 are effective for fiscal years beginning after December 15, 2018, with early adoption permitted. The Company does not expect the adoption of the new standard to have a material impact on the Company’s Condensed Consolidated Financial Statements.

In March 2018, the FASB issued ASU 2018-05, Income Taxes (Topic 740) - Amendments to SEC Paragraphs Pursuant to SEC Staff Accounting Bulletin No. 118. This standard amends Accounting Standards Codification 740, Income Taxes (ASC 740) to provide guidance on accounting for the tax effects of the Tax Cuts and Jobs Act (the Tax Reform Act) pursuant to Staff Accounting Bulletin No. 118, which allows companies to complete the accounting under ASC 740 within a one-year measurement period from the Tax Act enactment date. This standard is effective upon issuance. As described in the footnotes to the Annual Report on Form 10-K, the Company’s accounting for the tax effects of enactment of the Tax Reform Act is being assessed; however, in certain cases, as described below, we made a reasonable estimate of the effects on our existing deferred tax balances and valuation allowance. The Company determined that the $62.9 million recorded in connection with the re-measurement of certain deferred tax assets and liabilities, and corresponding valuation allowance was a provisional amount and a reasonable estimate at December 31, 2017. The Company has not completed the accounting with regard to the tax effects associated with an intra-entity transfer of certain intellectual property rights with the enactment of Tax Reform Act. Our accounting for the intra-entity transfer reflects the utilization of net operating losses on the basis of the laws in effect before the Tax Reform Act. The Company is evaluating the impact under Tax Reform Act on the Company’s global business structure. In all aspects, the Company will continue to make and refine calculations as additional analysis is completed. The Company expects to complete the accounting assessment during the one-year measurement period provided by SAB 118.

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Summary of Significant Accounting Policies (Tables)

6 Months Ended

Jun. 30, 2018

Accounting Policies [Abstract]

Schedule of Deposits

	June 30,		December 31,
	2018		2017
Deposits on Products	$	156,068	$	175,819
Security Deposits		33,230		20,573
Total	$	189,298	$	196,392

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Property, Equipment and Software (Tables)

6 Months Ended

Jun. 30, 2018

Property, Plant and Equipment [Abstract]

Summary of Property, Equipment and Software

Property and equipment consisted of the following:

	June 30,			December 31,
	2018			2017
Software	$	110,000		$	463,310
Computers and equipment		100,100			99,592
Furniture		37,169			30,391
Leasehold improvements		23,067			19,493
subtotal		270,336			612,786
Accumulated depreciation and amortization		(130,027	)		(345,322	)
Property, equipment and software, net	$	140,309		$	267,464

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Commitments and Contingencies (Tables)

6 Months Ended

Jun. 30, 2018

Commitments and Contingencies Disclosure [Abstract]

Schedule of Future Lease Payments

At June 30, 2018, the Company leased or rented 23 different facilities including its corporate headquarters and active retail locations. Future lease obligation for these facilities are as follows:

Year		Amount
	2018 (remaining six months)	$	145,217
	2019		194,750
	2020		134,115
	2021		111,623
	2022		114,648
	Thereafter		49,072
	Total	$	749,425

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Stock-based Compensation (Tables)

6 Months Ended

Jun. 30, 2018

Disclosure of Compensation Related Costs, Share-based Payments [Abstract]

Schedule of Stock-based Compensation Expense

Stock-based compensation expense is included in the following captions on the condensed consolidated statements of operations.

	Three Month Ended		Six Month Ended
	June 30, 2018		June 30, 2018
Selling expense	$	19,080	$	28,590
General and administrative expense		16,921		27,232
Total	$	36,001	$	55,822

Schedule of Outstanding Stock Options

Changes in the Company’s outstanding stock options under the plan during the six months ended June 30, 2018 were as follows:

				Weighted
	Number of			Average
	Options			Price
Outstanding at December 31, 2017		58,332		$	9.42
Granted		3,332			1.65
Exercised		-			-
Forfeited of expired		(8,333	)		10.68
Outstanding at June 30, 2018		53,331		$	8.73
Exercisable at June 30, 2018		18,958		$	9.15

Summary of Weighted Average Stock Options Assumptions

A summary of the weighted average (in aggregate) significant unobservable inputs (Level 3 inputs) used in measuring the Company’s stock options that are categorized within Level 3 of the fair value hierarchy for six months June 30, 2018 is as follows:

Strike Price	$	1.65 to 10.68
Volatility		46.21	%
Risk-free interest rate		2.15	%
Contractual life (in years)		5
Dividend yield (per share)		0	%

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Income Taxes (Tables)

6 Months Ended

Jun. 30, 2018

Income Tax Disclosure [Abstract]

Schedule of Provision (Benefit) for Income Taxes

The provision (benefit) for income taxes for the three and six months ended June 30, 2018 and 2017 consisted of the following:

	Three Months Ended						Six Months Ended
	June 30,			June 30,			June 30,			June 30,
	2018			2017			2018			2017
U.S. Federal	$	47,711		$	(10,361	)	$	100,755		$	(225,758	)
U.S. State		(13,611	)		(5,906	)		(6,868	)		(19,898	)
Total		34,100			(16,267	)		93,887			(245,656	)
Deferred		-			-			-			-
Total benefit (provision) for income taxes	$	34,100		$	(16,267	)	$	93,887		$	(245,656	)

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Description of the Company (Details Narrative) - USD ($)				3 Months Ended		6 Months Ended
	Jun. 20, 2018	Apr. 20, 2018	Jun. 29, 2014	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017	Apr. 20, 2017	Nov. 28, 2016
Preferred stock call price per share				$ 0.144		$ 0.144		$ 0.144
Liquidation preference price per share				$ 2.00		$ 2.00		$ 2.00
Write off of previous CRM one time charges						$ 383,542
Revenue		$ 150,000
Contract termination expense - related party	$ 3,397,500			$ 3,397,500		3,397,500
Royalties				$ 4,522	$ 5,894	$ 9,449	$ 5,894
Asset Share Purchase & Business Agreement [Member]
Unregistered non-voting, non-cumulative, callable preferred stock										10,000,000
Revised unregistered preferred stock										5,000,000
Preferred stock call price per share										$ 0.144
Unregistered common stock										1,250,000
Cabello Real Ltd [Member] | Asset Share Purchase & Business Agreement [Member]
Unregistered non-voting, non-cumulative, callable preferred stock										10,000,000
Revised unregistered preferred stock										5,000,000
Preferred stock call price per share										$ 0.144
Liquidation preference price per share										$ 2.00
Unregistered common stock										1,250,000
Callable non-cumulative preferred stock designated										5,000,000
Callable non-cumulative preferred stock, par value										$ 0.001
Cabello Real Ltd [Member] | Media Investor Purchaser Agreement [Member]
Common stock price per share			$ 0.05
Number of common stock shares issued			9,500,000
Number of restricted common stock shares issued in exchange for cancelation of agreement and forgiveness of money	4,500,000
Cabello Real Ltd [Member] | Marketing and Selling Agreement [Member]
Royalty cash payments percentage									2.00%
Leader Act Ltd HK [Member] | Media Investor Purchaser Agreement [Member]
Value of advanced amount under agreement			$ 50,000
Number of stock conversion of converted shares			83,333
Common stock price per share			$ 0.60

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Summary of Significant Accounting Policies (Details Narrative) - USD ($)		1 Months Ended	3 Months Ended	6 Months Ended
	Apr. 09, 2018	Jan. 31, 2017	Jun. 30, 2018	Jun. 30, 2018	Jun. 30, 2017
Accounting Policies [Abstract]
Reverse stock split	1-for-6 reverse stock split	1-for- 2 reverse stock split
Recognized stock base compensation expense			$ 36,001	$ 55,822
Re-measurement of deferred tax assets			$ 62,900,000

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Summary of Significant Accounting Policies - Schedule of Deposits (Details) - USD ($)	Jun. 30, 2018	Dec. 31, 2017
Accounting Policies [Abstract]
Deposits on Products	$ 156,068	$ 175,819
Security Deposits	33,230	20,573
Total	$ 189,298	$ 196,392

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Property, Equipment and Software (Details Narrative) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Property, Plant and Equipment [Abstract]
Depreciation and amortization expense	$ 19,997	$ 27,428	$ 39,591	$ 54,579

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Property, Equipment and Software - Summary of Property, Equipment and Software (Details) - USD ($)	Jun. 30, 2018	Dec. 31, 2017
Property, Plant and Equipment [Abstract]
Software	$ 110,000	$ 463,310
Computers and equipment	100,100	99,592
Furniture	37,169	30,391
Leasehold improvements	23,067	19,493
Property, equipment and software, gross	270,336	612,786
Accumulated depreciation and amortization	(130,027)	(345,322)
Property, equipment and software, net	$ 140,309	$ 267,464

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Sales Tax Payable (Details Narrative)	Jun. 30, 2018 USD ($)
Sales Tax [Member]
Tax amount	$ 35,180

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Related Party Transactions (Details Narrative) - USD ($)		3 Months Ended		6 Months Ended
	Jun. 20, 2018	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Related party receivables		$ 181,971		$ 181,971		$ 108,026
Dividend declared		60,000		60,000
Royalty expense		4,522	$ 5,894	9,449	$ 5,894
Loss on termination of agreement	$ 3,397,500	$ 3,397,500		$ 3,397,500
Media Investor Purchaser Agreement [Member] | Cabello [Member]
Royalty expense	$ 9,449
Restricted common stock shares issued	4,500,000

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Commitments and Contingencies (Details Narrative) - USD ($)				3 Months Ended		6 Months Ended
	Mar. 13, 2018	Feb. 28, 2017	Jan. 12, 2017	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017	Dec. 31, 2017
Rent expense				$ 128,533	$ 172,204	$ 252,922	$ 325,507
Purchase of common stock from stockholder							$ 25,000
Other asset				$ 25,000		25,000		$ 25,000
Investment in subsidiary						$ 25,000
Legal fees	$ 25,000
Business Purchase Agreement [Member] | EnzymeBioSystems, Inc [Member]
Equity method investment, ownership percentage			100.00%
Number of common stock shares exchanged			9,167
Number of common stock shares exchanged, value			$ 25,000
Purchase of common stock from stockholder		$ 25,000
Product Concentration Risk [Member] | Two Vendors [Member]
Concentrations risk percentage				88.80%	93.60%	91.50%	95.00%

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Commitments and Contingencies - Schedule of Future Lease Payments (Details)	Jun. 30, 2018 USD ($)
Commitments and Contingencies Disclosure [Abstract]
2018 (remaining six months)	$ 145,217
2019	194,750
2020	134,115
2021	111,623
2022	114,648
Thereafter	49,072
Total	$ 749,425

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Promissory Notes (Details Narrative) - USD ($)	Nov. 08, 2017	Nov. 08, 2017	Jun. 30, 2018	Dec. 31, 2017
Note payable			$ 384,062	$ 177,390
UPS Capital Corporation [Member]
Line of credit facility	$ 500,000
Percent of loan on invoice amount	100.00%	100.00%
UPS Capital Corporation [Member] | Air Shipment [Member]
Transaction fee, percent		1.85%
UPS Capital Corporation [Member] | Ocean Shipment [Member]
Transaction fee, percent		2.75%

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Stockholders' Equity (Details Narrative) - USD ($)			1 Months Ended	6 Months Ended
	Apr. 09, 2018	Oct. 13, 2016	Jan. 31, 2017	Jun. 30, 2018	Dec. 31, 2017	Nov. 28, 2016
Reverse stock split	1-for-6 reverse stock split		1-for- 2 reverse stock split
Preferred stock call price per share				$ 0.144	$ 0.144
Preferred stock, shares authorized				10,000,000	10,000,000
Preferred stock, shares issued				5,000,000	5,000,000
Preferred stock, shares outstanding				5,000,000	5,000,000
Common stock, shares authorized				70,000,000	70,000,000
Common stock, shares issued				8,656,459	4,150,059
Common stock, shares outstanding				8,656,459	4,150,059
Asset Share Purchase & Business Agreement [Member]
Unregistered non-voting, non-cumulative, callable preferred stock						10,000,000
Revised unregistered preferred stock						5,000,000
Unregistered common stock						1,250,000
Unregistered common stock combined value						$ 8,200,000
Preferred stock call price per share						$ 0.144
Software Maintenance Agreement [Member]
Maintenance agreement, terms		5 years
Issuance of common stock in exchange of software maintenance agreement, Shares		250,000
Issuance of common stock in exchange of software maintenance agreement		$ 375,000
Software unamortized written off value		$ 265,625
Cabello Real Ltd [Member]
Preferred stock dividend payment				$ 1,140,000
Preferred stock monthly dividend payment				$ 60,000
Preferred stock dividend payment shares				5,000,000

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Stock-based Compensation (Details Narrative) - USD ($)	3 Months Ended	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2018	Jun. 30, 2017
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Stock-based compensation	$ 36,001	$ 55,822
Weighted average remaining contractual term		4 years 1 month 13 days
Options outstanding value	$ 124,547	$ 124,547

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Stock-based Compensation - Schedule of Stock-Based Compensation Expense (Details) - USD ($)	3 Months Ended	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2018	Jun. 30, 2017
Total	$ 36,001	$ 55,822
Selling Expense [Member]
Total	19,080	28,590
General and Administrative Expense [Member]
Total	$ 16,921	$ 27,232

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Stock-based Compensation - Schedule of Outstanding Stock Options (Details)	6 Months Ended
	Jun. 30, 2018 $ / shares shares
Disclosure of Compensation Related Costs, Share-based Payments [Abstract]
Number of Options Outstanding Beginning Balance | shares	58,332
Number of Options Granted | shares	3,332
Number of Options Exercised | shares
Number of Options Forfeited of Expired | shares	(8,333)
Number of Options Outstanding Ending Balance | shares	53,331
Number of Options Exercisable Ending Balance | shares	18,958
Weighted Average Price Outstanding Beginning Balance | $ / shares	$ 9.42
Weighted Average Price Granted | $ / shares	1.65
Weighted Average Price Exercised | $ / shares
Weighted Average Price Forfeited of Expired | $ / shares	10.68
Weighted Average Price Outstanding Ending Balance | $ / shares	8.73
Weighted Average Price Exercisable Ending Balance | $ / shares	$ 9.15

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Stock-based Compensation - Summary of Weighted Average Stock Options Assumptions (Details)	6 Months Ended
	Jun. 30, 2018 $ / shares
Volatility	46.21%
Risk-free interest rate	2.15%
Contractual life (in years)	5 years
Dividend yield (per share)	0.00%
Minimum [Member]
Strike Price	$ 1.65
Maximum [Member]
Strike Price	$ 10.68

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Income Taxes (Details Narrative) - USD ($)	6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017
Income Tax Disclosure [Abstract]
Corporate taxed income	$ 10,000,000
Corporate tax rate	35.00%
Corporate flat rate	21.00%
Estimated blended tax rate	18.30%
Provision for tax percentage		35.90%
Benefit for income taxes on pre-tax loss (income)	$ 509,377	$ (683,891)
Amortization of trademark expenses	546,667
Tax loss carryforward	$ 436,968

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Income Taxes - Schedule of Provision (Benefit) for Income Taxes (Details) - USD ($)	3 Months Ended		6 Months Ended
	Jun. 30, 2018	Jun. 30, 2017	Jun. 30, 2018	Jun. 30, 2017
Income Tax Disclosure [Abstract]
U.S. Federal	$ 47,711	$ (10,361)	$ 100,755	$ (225,758)
U.S. State	(13,611)	(5,906)	(6,868)	(19,898)
Total	34,100	(16,267)	93,887	(245,656)
Deferred
Total benefit (provision) for income taxes	$ 34,100	$ (16,043)	$ 93,887	$ (245,656)

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Subsequent Events (Details Narrative) - Callable Preferred Stock [Member] - Subsequent Event [Member] - USD ($)	Aug. 07, 2018	Jul. 03, 2018
Preferred stock monthly dividend payment	$ 60,000	$ 60,000
Preferred stock dividend payment shares	5,000,000	5,000,000