SOURCE: Her Imports

August 11, 2017 09:00 ET

Her Imports Reports 2017 Second Quarter Financial Results

LAS VEGAS, NV--(Marketwired - Aug 11, 2017) - Her Imports (OTCQB: HHER), a leading retailer of human hair extensions and related beauty products, today reported its financial results for the second quarter and first six months ended June 30, 2017. The Company generated record revenue of $4.6 million and $9.0 million during each period respectively.

Barry Hall, Chief Executive Officer of Her Imports, commented, "During the first half of 2017, we made key strides in continuing to build our company and further enhance the Her Imports brand image. Through the launch of a new easy to use eCommerce website and implementation of new digital marketing tools, we nearly doubled online revenue year-over-year during the second quarter and had a 75% increase sequentially as compared to the first quarter of 2017. We reported record revenue of $9.0 million for the first half of 2017 and quarterly revenue of $4.6 million while remaining cash flow positive."

Mr. Hall continued, "Our strategy is to test new markets with consultation studios and more recently with kiosks that require minimal capital expenditure and time to get up and running. While revenue from our consultation studios increased, it did not track with the eCommerce segment of our business. As a result, we are re-examining our expansion strategy beginning with closing three shopping mall kiosks that we opened in the first quarter and plan to close three under-performing consultation studios as we shift toward a regionalization of studio expansion. Additionally, we are focusing on expanding our product offering and recently introduced the market to our revolutionary product, Cling™, an improved adhesive for hair extensions. Most recently we launched Lashé Cling, specialized for temporary eye lashes, and three new styles of human hair extensions targeted at women looking for a natural 'kinky' base hair. We believe that it is important for us to remain at the forefront of providing women with the hair and beauty products they most want to feel and look great. Our quality products will remain a key driver in our Company growth in 2017 and beyond." 

Financial Results for the Three Months Ended June 30, 2017:
Revenue totaled $4.6 million for the second quarter 2017, as compared to $3.4 million, an increase of 35%, from the second quarter 2016. The year-over-year increase of 14.7% in consultation studio revenue was primarily due to the new consultation studios opened in the fourth quarter 2016 and first quarter 2017. In addition, online sales increased by 99.5% year-over-year. This is primarily due to the launch of a new eCommerce website as well as sales promotions implemented as part of a new marketing strategy.

Cost of products sold for the three months ended June 30, 2017 were $2.8 million, an increase of 43% as compared to cost of products sold of $1.9 million for the three months ended June 30, 2016. Gross margin was 40% for the second quarter 2017, as compared with 43% for the second quarter 2016. This is primarily due to sales promotions introduced to grow sales in during a period that has historically experienced seasonally lower sales.

Operating expenses consist of royalty expense, selling expense and general and administrative expense. Total operating expenses for the three months ended June 30, 2017 was $1.8 million, flat as compared to the three months ended June 30, 2016. The decrease in royalty expense of $339,103 due to the fact that the Company no longer pays royalties on its product sales was partially offset by an increase in both selling expense and general and administrative expense. Selling expense increased $324,351 or 27.1% for the three months ended June 30, 2017 when compared to the same 2016 period. This increase in selling expense was attributable to an increase in consultation studio operating expenses due to the addition of new locations and was offset by a decrease in advertising and web development expenses.

The above resulted in income from operations of $40,444 for the three months ended June 30, 2017 compared to a loss from operations of $295,280 for the three months ended June 30, 2016.

Net income attributable to the Company totaled $20,336 during the second quarter of 2017 as compared to net loss of $182,409 for the same period the prior year. Net loss to common shareholders totaled $159,664, for the second quarter 2017, compared with net loss of $182,409, for the second quarter 2016. The Company paid $180,000 in preferred stock dividends during the three months ended June 30, 2017. 

Financial Results for the Six Months Ended June 30, 2017:
Revenue totaled $9.0 million for the six months ended June 30, 2017, as compared to $7.6 million, an increase of 18%, from the six months ended June 30, 2016. Consultation studio revenue increased 12.5% year-over-year. During the six months ended June 30, 2017 there were 36 consultation studios open compared to 22 consultation studios open for the same period in 2016. Online sales increased by 36.1% year-over-year, partially offset by a decrease in wholesale sales. All wholesale sales occurred during the first quarter of both 2017 and 2016.

Cost of products sold for the six months ended June 30, 2017 were $4.9 million, an increase of 21% as compared to cost of products sold of $4.0 million for the six months ended June 30, 2016. Gross margin was 45% for the six months ended June 30, 2017, as compared with 47% for the six months ended June 30, 2016. Higher sales were offset by higher product costs.

Total operating expenses for the six months ended June 30, 2017 was $3.4 million, representing a 6.4% or $232,716 decrease from $3.6 for the six months ended June 30, 2016. The decrease in royalty expense of $721,097 due to the fact that the Company no longer pays royalties on its product sales was partially offset by an increase in both selling expense and general and administrative expense. Selling expense increased $342,784 or 14.0% for the six months ended June 30, 2017 when compared to the same 2016 period. This increase in selling expense was attributable to an increase in consultation studio operating expenses due to the addition of new locations and kiosks and was offset by a decrease in advertising expense.

The above resulted in income from operations of $688,773 for the six months ended June 30, 2017 compared to a loss from operations of $65,994 for the six months ended June 30, 2016.

Net income attributable to the Company for the six months ended June 30, 2017 was $438,235 compared to net loss attributable to the Company of $41,066 for the six months ended June 30, 2016. Net income to common shareholders totaled $78,235, for the six months ended June 30, 2017, compared with net loss of $41,066, for the second quarter 2016. The Company paid $360,000 in preferred stock dividends during the six months ended June 30, 2017. 

Net cash provided by operating activities totaled $195,357 for the first six months of 2017 as compared to net cash used by operating activities of $183,417 for the same period the prior year.

About Her Imports:
Her Imports sells human hair extensions and related hair-care and beauty products at retail locations throughout the U.S. and on our Website, 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.

Forward Looking Statements:
Statements in this document contain certain forward-looking statements within the meaning of Section 27A of the Securities Act of 1933 and Section 21E of the Securities Exchange Act of 1934, as amended. These statements are based on many assumptions and estimates and are not guarantees of future performance. These statements may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Her Imports to be materially different from future results, performance or achievements expressed or implied by such forward-looking statements. Her Imports assumes no obligation to update any forward-looking statements as a result of new information, future events or developments, except as required by applicable securities laws. For more information, please refer to Her Imports' financial statements as filed with the Securities and Exchange Commission.

   
   
Her Imports  
Condensed Consolidated Balance Sheets  
   
    June 30,     December 31,  
    2017     2016  
    (Unaudited)        
ASSETS                
                 
Current assets                
  Cash   $ 106,507     $ 355,568  
  Receivables     128,062       45,576  
  Related party receivables     73,765       26,612  
  Inventories     2,247,711       2,047,453  
  Prepaid maintenance fees - current     75,000       75,000  
  Other prepaid expenses     82,364       46,411  
  Deposits     302,884       32,950  
Total current assets     3,016,293       2,629,570  
                 
  Property, equipment and software, net     232,398       256,525  
  Prepaid maintenance fees - non current     246,875       284,375  
  Other asset     25,000       -  
  Trademark     8,200,000       8,200,000  
Total assets   $ 11,720,566     $ 11,370,470  
                 
LIABILITIES AND STOCKHOLDERS' EQUITY                
                 
Current liabilities                
  Accounts payable and accrued liabilities   $ 784,574     $ 728,425  
  Income tax liability     372,329       127,651  
  Notes payable     14,839       43,805  
Total current liabilities     1,171,742       899,881  
                 
Total liabilities     1,171,742       899,881  
                 
Stockholders' equity                
  Callable $0.072 per share per year non-cumulative dividend liquidation preference of $1.00 per share, preferred stock, $0.001 par value, 10,000,000 shares authorized and outstanding as of June 30, 2017 and December 31, 2016, respectively     10,000      

10,000
 
  Common stock, $0.001 par value, 65,000,000 shares authorized and 24,899,788 shares issued and outstanding as of June 30, 2017 and December 31, 2016, respectively    
24,900
     
24,900
 
  Additional paid-in capital     26,625,497       26,625,497  
  Accumulated deficit     (16,111,573 )     (16,189,808 )
Total stockholders' equity     10,548,824       10,470,589  
Total liabilities and stockholders' equity   $ 11,720,566     $ 11,370,470  
                 
See accompanying notes to these condensed consolidated financial statements.  
   
   
   
   
Her Imports  
Condensed Consolidated Statements of Operations  
(Unaudited)  
   
    For the Three Months     For the Six Months  
    June 30,     June 30,  
    2017     2016     2017     2016  
Product sales   $ 4,623,778     $ 3,426,813     $ 8,984,798     $ 7,599,124  
Cost of products sold     2,758,268       1,934,811       4,893,332       4,029,709  
Gross profit     1,865,510       1,492,002       4,091,466       3,569,415  
                                 
Operating expenses                                
  Royalties     5,894       344,997       5,894       726,991  
  Selling expense     1,522,059       1,197,708       2,786,840       2,444,056  
  General and administrative expense     297,113       244,577       609,959       464,362  
Total operating expenses     1,825,066       1,787,282       3,402,693       3,635,409  
                                 
Income from operations     40,444       (295,280 )     688,773       (65,994 )
                                 
Other (expense) income                                
  Interest income     20       68       69       68  
  Interest expense     (4,085 )     (187 )     (4,951 )     (504 )
Total other expense     (4,065 )     (119 )     (4,882 )     (436 )
Income before benefit (provision) for income taxes     36,379       (295,399 )     683,891       (66,430 )
                                 
  Benefit (provision) for income taxes     (16,043 )     112,990       (245,656 )     25,364  
Net income (loss) attributable to Company     20,336       (182,409 )     438,235       (41,066 )
Preferred stock dividends     (180,000 )     -       (360,000 )     -  
Net income (loss) to common stockholders   $ (159,664 )   $ (182,409 )   $ 78,235     $ (41,066 )
                                 
                                 
Net basic income per share attributable to common Stockholders: basic and diluted   $ 0.00     $ (0.01 )   $ 0.02     $ (0.00 )
                                 
Weighted average number of common shares outstanding: basic and diluted     24,899,788       16,299,788       24,899,788       16,299,788  
                                 
See accompanying notes to these condensed consolidated financial statements.  
   
   
   
   
Her Imports  
Condensed Consolidated Statements of Cash Flows  
(Unaudited)  
       
    For the Six Months Ended  
    June 30,  
    2017     2016  
OPERATING ACTIVITIES                
  Net income (loss) attributible to Company   $ 438,235     $ (41,066 )
  Adjustments to reconcile net income (loss) to net cash provided by (used by) operating activities:                
    Depreciation and amortization     54,579       593,434  
  Changes in operating assets and liabilities:                
    Receivables     (82,486 )     6,226  
    Related party receivables     (47,153 )     (204,033 )
    Inventories     (200,258 )     (688,539 )
    Prepaid maintenance fees     37,500       31,250  
    Other prepaid expenses     (35,953 )     (16,913 )
    Deposits     (269,934 )     (76,705 )
    Accounts payable and accrued liabilities     56,149       238,293  
    Income tax liability     244,678       (25,364 )
Net cash provided by (used by) operating activities     195,357       (183,417 )
                 
INVESTING ACTIVITIES                
    Purchase of fixed assets     (30,452 )     (16,126 )
    Investment in subsidiary     (25,000 )     -  
Net cash used in investing activities     (55,452 )     (16,126 )
                 
FINANCING ACTIVITIES                
    Repayment on notes payable     (28,966 )     (14,497 )
    Payment of preferred dividend     (360,000 )     -  
Net cash used in financing activities     (388,966 )     (14,497 )
                 
                 
NET (DECREASE) INCREASE IN CASH     (249,061 )     (214,040 )
                 
  CASH - BEGINNING OF PERIOD     355,568       449,675  
  CASH - END OF PERIOD   $ 106,507     $ 235,635  
                 
SUPPLEMENTAL DISCLOSURES:                
      Interest paid   $ 4,951     $ 504  
      Income taxes paid   $ -     $ -  
                 
                 
See accompanying notes to these condensed consolidated financial statements.  
   

Contact Information

  • Investor Contact:
    Valter Pinto / Allison Soss
    KCSA Strategic Communications
    Phone: (212) 896-1254 / (212) 896-1267
    Email: Email Contact / Email Contact