| 2. Summary of Significant Accounting Policies | Principles
of Consolidation The
condensed consolidated financial statements include the accounts of the Company (a Nevada Corporation) and its whollyowned subsidiary,
Her Marketing Concepts, Inc. All significant intercompany transactions have been eliminated in consolidation. Basis
of Presentation of the Condensed Consolidated Financial Statements The
accompanying unaudited condensed consolidated financial statements of the Company are prepared by management on the accrual basis
of accounting and in accordance with principles generally accepted in the United States of America ("GAAP") for interim
financial information as contained in the Financial Accounting Standards Board ("FASB") Accounting Standards Codification
("ASC"), and in conjunction with rules and regulations of the SEC. Certain information and footnote disclosures required
for annual financial statements have been condensed or excluded pursuant to SEC rules and regulations. Accordingly, the unaudited
condensed consolidated financial statements do not include all of the information and footnotes required by the US GAAP for complete
financial statements. The unaudited condensed consolidated financial statements include accounts and related adjustments, which
are, in the opinion of management, of a normal recurring nature and necessary for a fair presentation of the Company's financial
position, results of operations and cash flows for the interim period. Operating results for the three months ended March 31,
2016 are not necessarily indicative of the results that may be expected for the year ending December 31, 2016. These unaudited
condensed consolidated financial statements should be read in conjunction with the condensed consolidated financial statements
and notes thereto included in the Company's Annual Report on Form 10-K for the year ended December 31, 2015. The
condensed consolidated balance sheet as of December 31, 2015 contained herein has been derived from the audited consolidated financial
statements as of December 31, 2015, but do not include all disclosures required by the US GAAP. Use
of Estimates The
preparation of condensed consolidated financial statements in conformity with generally accepted accounting principles
requires management to make estimates and assumptions that affect certain reported amounts and disclosures. Management
uses its historical records and knowledge of its business in making estimates. Accordingly, actual results could differ
from those estimates. Discontinued
Operations As
described in Note 1, above, on May 15, 2015 the Company sold three whollyowned subsidiaries as part of an exchange of
stock. For financial reporting purposes the sale of these entities is reported as discontinued operations for the three
months ended March 31, 2015. Cash
Equivalents The
Company considers deposits that can be redeemed on demand and investments that have original maturities of less than three months,
when purchased, to be cash equivalents. As of March 31, 2016 and December 31, 2015, the Company's cash and cash equivalents were
on deposit in federally insured financial institutions, and at times may exceed federally insured limits. Concentration
of Credit Risk for Cash Deposits at Banks Financial
instruments that potentially subject the Company to concentrations of credit risk consist principally of cash deposits. The Federal
Deposit Insurance Corporation (FDIC) insures deposits up to $250,000 for any single account at the Company's financial institutions.
From time-to-time one or more of the Company's bank accounts may exceed the FDIC insurance limits. Accounts
Receivable Accounts
receivable represent balances related to products sold for which the Company had not received the related funds from various financial
institutions as of the reporting period. Interest is not accrued on accounts receivable and all receivables were received within
one week of the end of the reporting period and, as such, the Company has no allowance for doubtful accounts as of March 31, 2016
and December 31, 2015. 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 March 31, 2016 or December 31, 2015. The
Company believes the carrying amounts of cash and cash equivalents, accounts receivable, other current assets, accounts payable,
accrued salaries, wages and payroll taxes, and other accrued expenses 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. Inventories Inventory
is booked at cost on a FIFO basis plus incoming shipping charges. The Company evaluates the carrying value of inventory to determine
if the carrying value is recoverable at estimated selling prices. To the extent that estimated selling prices do not exceed the
associated carrying values, inventory carrying amounts are written down. In addition, the Company inventory on hand or committed
with suppliers, that is not expected to be sold within the next 12 months, is considered as excess and thus appropriate write-downs
of the inventory carrying amounts are established through a charge to cost of revenues. Significant reductions in product pricing,
or changes in technology and/or demand may necessitate additional write-downs of inventory carrying value in the future. Deposits Deposits
consists of the following:
March
31, December
31,
2016 2015
Deposits
on Products $ 284,888 $ -
Security Deposits 21,428 17,780
Total $ 306,316 $ 17,780 Intangible
asset, net Effective
September 1, 2015, the Company issued 4,000,000 shares of restricted common stock valued at $2,200,000 to Her Holding in exchange
for a reduction in the royalty cash payments to 2.5%. Additionally, the Company agreed to pay for certain connectivity,
telephony and customer service expenses that heretofore were paid by Her. For financial statement reporting purposes, the
value of the stock paid to Her was treated as an intangible asset to be amortized into expense until such time as the reduction
in royalties paid totals $2,200,000. During the three months ended March 31, 2016, amortization of the intangible asset
was $286,496. The amount of intangible asset amortized is calculated by taking the difference between the royalty calculation
at previous royalty rate of 10% and the new rate of 2.5%. Basis
for Recording Fixed Assets, Lives, and Depreciation Methods Property
and equipment 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
Leasehold improvement remaining life of the lease Revenue
Recognition Product
Sales The
Company, through the Her Imports store locations and its eCommerce Website, www.herimports.com, sells a variety of hair extensions
and related products. 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, rounded down to a dollar. For cash sales, the
Company recognizes the sale when the deposit is recorded into the Company's account by the bank. For credit card and debit sales,
the Company recognizes the sale when the card is charged. Product
sales on the Website are paid for using either debit cards, credit cards, PayPal or an independent financing company. Sales for
Website product sales are recognized upon shipment of the product. The
Company recognizes revenue from product sales and services once all of the following criteria for revenue recognition have been
met: persuasive evidence that an agreement exists; the services have been rendered; the fee is fixed and determinable and not
subject to refund or adjustment; and collection of the amount due is reasonably assured. Impairment
Assessments of Purchased Software On
May 28, 2014, the Company purchased, for restricted shares of common stock, an eCommerce software program. The value of the software
is amortized over five years. 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. In
order to estimate the fair value of long-lived asset, the Company typically makes various assumptions about the future 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 software during the periods ended March 31, 2016 and March 31, 2015. 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 of the deferred income tax asset will be realized. Earnings
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. 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. Recent
Accounting Pronouncements ASU
2015-14 In
August 2015, the FASB issued ASU No. 2015-14, Revenue From Contracts With Customers (Topic 606)." The amendments in this
ASU defer the effective date of ASU 2014-09. Public business entities should apply the guidance in ASU 2014-09 to annual reporting
periods beginning after December 15, 2017, including interim reporting periods within that reporting period. Earlier application
is permitted only as of annual reporting periods beginning after December 15, 2016, including interim reporting periods within
that reporting period. We are still evaluating the effect of the adoption of ASU 2014-09. ASU
2015-11 In
July 2015, the FASB issued ASU No. 2015-11, "Simplifying the Measurement of Inventory (Topic 330)." ASU 2015-11 simplifies
the accounting for the valuation of all inventory not accounted for using the last-in, first-out ("LIFO") method by
prescribing that inventory be valued at the lower of cost and net realizable value. ASU 2015-11 is effective for financial statements
issued for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2016 on a prospective basis.
We do not expect the adoption of ASU 2015-11 to have a material effect on our financial position, results of operations or cash
flows. ASU
2015-05 In
April 2015, the FASB issued ASU 2015-05, "Intangibles - Goodwill and Other - Internal-Use Software (Subtopic 350-40)."
ASU 2015-05 provides guidance regarding the accounting for a customer's fees paid in a cloud computing arrangement; specifically,
about whether a cloud computing arrangement includes a software license, and if so, how to account for the software license. ASU
2015-05 is effective for public companies' annual periods, including interim periods within those fiscal years, beginning after
December 15, 2015 on either a prospective or retrospective basis. Early adoption is permitted. We do not expect the adoption of
ASU 2015-05 to have a material effect on our financial position, results of operations or cash flows. ASU
2015-03 In
April 2015, the FASB issued ASU No. 2015-03, "Interest - Imputation of Interest (Subtopic 835-30): Simplifying the Presentation
of Debt Issuance Costs." The amendments in this ASU require that debt issuance costs related to a recognized debt liability
be presented in the balance sheet as a direct deduction from the carrying amount of that debt liability, consistent with debt
discounts. The recognition and measurement guidance for debt issuance costs are not affected by the amendments in this ASU. The
amendments are effective for financial statements issued for fiscal years, and interim periods within those fiscal years, beginning
after December 15, 2015. The amendments are to be applied on a retrospective basis, wherein the balance sheet of each individual
period presented is adjusted to reflect the period-specific effects of applying the new guidance. We do not expect the adoption
of ASU 2015-03 to have a material effect on our financial position, results of operations or cash flows. ASU
2015-02 In
February 2015, the FASB issued ASU No. 2015-02, "Consolidation (Topic 810): Amendments to the Consolidation Analysis,"
which is intended to improve targeted areas of consolidation guidance for legal entities such as limited partnerships, limited
liability corporations, and securitization structures (collateralized debt obligations, collateralized loan obligations, and mortgage-backed
security transactions). The ASU focuses on the consolidation evaluation for reporting organizations that are required to evaluate
whether they should consolidate certain legal entities. In addition to reducing the number of consolidation models from four to
two, the new standard simplifies the FASB Accounting Standards Codification and improves current U.S. GAAP by placing more emphasis
on risk of loss when determining a controlling financial interest, reducing the frequency of the application of related-party
guidance when determining a controlling financial interest in a variable interest entity ("VIE"), and changing consolidation
conclusions for companies in several industries that typically make use of limited partnerships or VIEs. The ASU will be effective
for fiscal years, and interim periods within those fiscal years, beginning after December 15, 2015. Early adoption is permitted,
including adoption in an interim period. We do not expect the adoption of ASU 2015-02 to have a material effect on our financial
position, results of operations or cash flows. The
Company has evaluated other recent pronouncements and believes that none of them will have a material impact on the Company's
financial position, results of operations or cash flows. |
