We are a development stage company and were incorporated in the State of Florida on September 21, 2009, as a for-profit company, and an established fiscal year end of August 31. We intend to design our woman’s line of jeans branded as “Obscene Brand Jeans” internally and enter into outsourcing agreements for the manufacturing, marketing, selling and distributing agreements with independent agents, each of whom is to be granted exclusive rights to market and sell “Obscene Brand Jeans” in its respective territory. We intend to include a line of complimentary t-shirts, jackets and sweatshirts to accent the base of our intended collection.
The product line is intended to cater women who generally shop for high end, boutique or specialized clothing lines. We intend to market our product line for the United States and Italy. We anticipate that the design and testing of “Obscene Brand” jeans will take up to 9 months. Once the jeans are designed and tested, we can move onto engaging companies to manufacture, distribute and market our products. We plan to structure our outsourcing agreements to protect our proprietary designs and ensure efficient production and sales of our products. We anticipate that we will enter into manufacturing agreements with independent contractors based on a per unit price of production. We also anticipate that outsourcing agreements relating to marketing, selling and distributing will be entered into on an independent contractor basis and that each contractor will be provided with a geographical area in which they will have exclusive rights to market, sell and distribute our products. We expect that these contracts will earn a commission on the sales of our products on a per unit basis.
We intend to support our independent sales agents and distributors through attendance at all of the major trade and fashion industry exhibitions, advertising in trade publications and by intending to market and sell our products via our website “obscenejeans.com”. We have registered the domain name “obscenejeans.com”, however we have not yet began development of our website. Our intended initial strategy is to limit distribution to high-end boutique and department store retailers, building a reputation for producing fresh and innovative quality design products with on-time delivery. We do not currently plan to launch an aggressive advertising campaign through television, radio or print media. We intend to develop and market our high fashion jeans for sale in the United States and Italy to upscale retailers.
We intend to produce and sell only women’s styles of jeans. We expect that Obscene Brand Jeans will be made with high quality fabrics that are gently and naturally aged, hand finished, and accessorized with rich materials such as medieval Florentine steel mesh as well as other types of metallic knits.
We intend to produce our products in the U.S.A., utilizing independent contractors. Currently, we have no agreements with contract manufacturers to produce our products. The intended product line includes a Spring/Summer and Fall/Winter collection of Obscene Brand Jeans and complimentary t-shirts, jackets and sweatshirts. We intend to design a total of 10-15 separate styles of jeans.
We have not generated any revenues to date and our activities have been limited to developing our business plan. We will not have the necessary capital to develop our Business Plan until we are able to secure additional financing.
There can be no assurance that such financing will be available on suitable terms.
We have no revenues and have incurred losses since inception. Our auditors have been issued a going concern opinion on our financial statements. We rely upon the sale of our securities and working capital advances to fund operations.
In November 2011, after the period covered by this annual report, our Chief Executive Officer, Rachel Stark-Cappelli, resigned all positions with the Company. As a result of Ms. Stark-Cappelli’s resignation, the Company has decided to review its jeans and apparel business. Also after the period covered by this report, the Company established a subsidiary to pursue opportunities in the social networking sector. As a result of the Company’s review of its jeans and apparel business, the Company may decide to cease the jeans and apparel business and concentrate on its social networking business. Alternatively, the Company could pursue both opportunities simultaneously and use the Company’s social networking business as a marketing platform for its jeans and apparel.
Our strategy is to build brand recognition by marketing our products to fashion conscious, affluent consumers who shop in high-end boutiques and department stores and who want to wear and be seen in the latest, trendiest, jeans. We plan to limit distribution to the more exclusive retailers, specialty stores and department stores in an effort to maintain the intended unique nature of our brand and sell our Obscene Jeans Brand in the range of $150 to $200 per pair. We intend to utilize independent contract manufacturers located in the United States so that we can truthfully brand our products as having been “made in the U.S.A” and because, by using contract manufacturers we are better able to control our costs and keep fixed overhead to a minimum. We plan to update our product offerings-style, fit and washes every 6 months to be seen as a trend setter in the contemporary better jeans market. Currently, we have no agreements with contract manufacturers.
Sales and Marketing Strategy
We anticipate to market and distribute Obscene Jeans Brand in the United States and Italy by attendance at industry and trade shows and intend to enter into sales agency or distribution agreements with independent agents, each of whom is granted exclusive rights to market and sell Obscene Jeans Brand in their respective territory. We currently have no agreements in place with commissioned sales agents. We currently have no distribution agreements with distributors. Our vision is to market the most popular casual wear in the United States and abroad, being jeans, to fashion conscious consumers looking for a pair of jeans with unquestionably superior fit, finish, fabric and style.
We intend to market, sell and distribute our Obscene Jeans products through attendance at all of the major trade and fashion industry exhibitions, advertising in trade publications and via our anticipated website: “obscenejeans.com”. We intend to enter into sales agency or distribution agreements with independent agents, each of whom is granted exclusive rights to market and sell in their respective territory. We currently have no such agreements in place with commissioned sales agents and distributors. Our intended initial strategy is to limit distribution to high-end retailers, building a reputation for producing fresh and innovative quality design products with on-time delivery. We do not currently plan to launch an aggressive advertising campaign to the consumer.
Raw Materials and Manufacturing
We intend to purchase our fabrics where possible from United States fabric manufacturers. We intend to purchase our thread and other materials from various industry suppliers in the United States. Although the denim fabric that we intend to use in the manufacture of our jeans is of the highest quality, it is readily available from a large number of suppliers including mills in the United States and if necessary, from abroad.
We intend to outsource all of our manufacturing to independent contractors located in the United States. We intend for the contractor to purchase the fabric, sew and finish our products to our design and specifications. Our management believes that this process will enable us to manufacture our jeans without requiring a large amount of working capital. We intend to inspect the fabrics and the finished goods prior to shipping them as part of our quality control program. We plan to continue to outsource most, if not all, of our production. We intend to have other contractors developing our jackets, t-shirts and sweatshirts. Further, we recognize that as we grow, we will require additional contractors.
Our intended principal products are the high fashion “Obscene Brand Jeans” that we intend to design, market and sell. These jeans are intended to be sold in the United States and Italy to high-end retailers, department stores and boutiques, as well as through a website we intend to develop.
Our management anticipates that we will initially sell only women’s styles of jeans. The Obscene Jeans Brand products are anticipated to be made with high quality fabrics from the United States., that are gently and naturally aged, hand finished, and accented with rich materials such as medieval Florentine steel mesh as well as other types of metallic knits
We intend to produce our products in the United States utilizing independent contractors. The intended product line includes a Spring/Summer and Fall/Winter collection of Obscene Jeans Brand complimented with t-shirts, jackets and sweatshirts. We intend to design a total of 10-15 different styles of jeans catering to the intended audience. The 10-15 collections are anticipated to be named and designed to address Brooklyn, Bronx, Catskill, Chelsea, Harlem, Lexington, Manhattan, Park Avenue, Riverside, Times Square, Tribeca, Union Square and So Ho design looks.
The Obscene Jeans Brand is anticipated to be purchased by affluent consumers who shop in high-end boutiques and department stores and who want to wear and be seen in the latest, trendiest, and stylish styles of jeans.
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We anticipate that the logo and theme of the Obscene Jeans Brand will have a silhouette of a woman that will be printed or stitched onto the jeans representing named brand recognition. We have not yet fully developed our logo.
We have not generated any revenues to date and our activities have been limited to developing our business plan. We will not have the necessary capital to develop or execute our business plan until the company is able to secure financing. There can be no assurance that such financing will be available on suitable terms.
According to the Los Angeles Times May 22, 2009, Article “Designer jeans seem recession-proof” written by Ronald D. White (http://articles.latimes.com/2009/may/22/business/fi-jeans22). While consumer spending remains woefully depressed, expensive designer jeans have been one of the few bright spots for manufacturers and retailers according to NPD Group Inc., a market research company. Sales of premium brand jeans grew by 17% during 2008 and managed a 2.3% increase in the month period that ended in February of 2009, making premium denim one of a few “pockets of growth in an otherwise fizzling fashion market,” NPD Group said. “The denim business represents 10% of the total apparel business” Ten years ago it was only about 7% of the business. It’s a $200 billion business. The average woman owns eight pairs of jeans, according to Cotton Inc.’s Lifestyle Monitor research. The above information can be viewed at: http://articles.latimes.com/2009/may/22/business/fi-jeans22.
The high-end designer jeans market is a category we intend to pursue by designing, producing, marketing and selling premium quality and design apparel for women. The market is comprised of major and minor companies that provide designer jeans and complimentary clothing which is connected with their designer collections.
The apparel industry is intensely competitive. We intend to compete against small companies like ours, as well as large companies that have similar business. Additionally, we will be competing with large marketing companies, importers and distributors that sell products similar to, or competitive, with ours. Examples of companies with whom we intend to compete with include Innovo Group Inc. (Joe’s Jeans Inc.) True Religion Jeans, Levi Strauss & Co., Giorgio Armani, Polo Ralph Lauren Corporation, Calvin Klein, Nautica Enterprises, Guess, Tommy Hilfiger Corp., Gap, Inc., Abercrombie & Fitch.
Many of our competitors have longer operating histories, better brand recognition and greater financial resources than we do. In order for us to successfully compete in our industry we will need to:
· develop highly marketable jean styles;
· develop relationships with major distributors; and
· increase our financial resources.
However, there can be no assurance that even if we do these things and our jeans are produced as intended, that we will be able to compete effectively with the other companies in our industry.
EMPLOYEES AND EMPLOYMENT AGREEMENTS
As of August 31, 2011, we have no employees other than Paul Watson, our sole officer and director. Mr. Watson has the flexibility to work on our business up to 10 to 25 hours per week. He is prepared to devote more time to our operations as may be required and we do not have any employment agreements with him.
We do not presently have, pension, health, annuity, insurance, stock options, profit sharing, or similar benefit plans; however, we may adopt plans in the future. There are presently no personal benefits available to our sole director and officer.
During the initial implementation of our marketing strategy, we intend to hire independent consultants to develop and execute our business plan.
As a smaller reporting company, we are not required to provide the information required by this Item.
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UNRESOLVED STAFF COMMENTS
DESCRIPTION OF PROPERTY
We maintain our statutory registered agent’s office at 677 N. Washington Blvd., Sarasota, FL 34236 and our business office is located at 677 N. Washington Blvd., Sarasota, FL 34236. Tel: (941) 952-5825.
ITEM 3 .
We know of no material, active or pending legal proceedings against us, nor are we involved as a plaintiff in any material proceedings or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered beneficial shareholder are an adverse party or has a material interest adverse to us.
REMOVED AND RESERVED
MARKET FOR COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
Our common stock began trading on the “Over the Counter” Bulletin Board (“OTC”) under the symbol “OBJE” in January 2011. The following table sets forth, for the period indicated, the prices of the common stock in the over-the-counter market, as reported and summarized by OTC Markets Group, Inc.. These quotations represent inter-dealer quotations, without adjustment for retail markup, markdown or commission and may not represent actual transactions. There is an absence of an established trading market for the Company’s common stock, as the market is limited, sporadic and highly volatile, which may affect the prices listed below.
Fiscal Year Ended August 31, 2011
Quarter ended August 31, 2011
Quarter ended May 31, 2011
Quarter ended February 28, 2011
As of the date of this filing, there were eight holders of record of our common stock.
To date, we have not paid dividends on shares of our common stock and we do not expect to declare or pay dividends on shares of our common stock in the foreseeable future. The payment of any dividends will depend upon our future earnings, if any, our financial condition, and other factors deemed relevant by our Board of Directors.
We are authorized to issue 100,000,000 shares of common stock, with a par value of $0.0001. The closing price of our common stock on November 29, 2011, as quoted by the OTC, was $0.18. There were 19,500,000 shares of common stock issued and outstanding as of November 29, 2011. All shares of common stock have one vote per share on all matters including election of directors, without provision for cumulative voting. The common stock is not redeemable and has no conversion or preemptive rights. The common stock currently outstanding is validly issued, fully paid and non- assessable. In the event of liquidation of the Company, the holders of common stock will share equally in any balance of the Company’s assets available for distribution to them after satisfaction of creditors and preferred shareholders, if any. The holders of common stock of the Company are entitled to equal dividends and distributions per share with respect to the common stock when, as and if, declared by the Board of Directors from funds legally available.
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During the year ended August 31, 2011, there was no modification of any instruments defining the rights of holders of the Company’s common stock and no limitation or qualification of the rights evidenced by the Company’s common stock as a result of the issuance of any other class of securities or the modification thereof.
We are authorized to issue 10,000,000 shares of preferred stock with a par value of $0.0001. No shares of preferred stock have been issued. If preferred stock were issued, the terms and conditions would be determined by the Board of Directors.
SECURITIES AUTHORIZED FOR ISSUANCE UNDER EQUITY COMPENSATION PLANS
The following table shows the number of shares of common stock that could be issued upon exercise of outstanding options and warrants, the weighted average exercise price of the outstanding options and warrants, and the remaining shares available for future issuance as of August 31, 2011.
Number of securities to be
issued upon exercise of
warrants and rights
Weighted average exercise
price of outstanding
options, warrants and rights
Number of securities
for future issuance
Equity compensation plans approved by security holders
Equity compensation plans not approved by security holders
SELECTED FINANCIAL DATA
As a smaller reporting company, we are not required to provide the information required by this Item.
MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
THIS FILING CONTAINS FORWARD-LOOKING STATEMENTS. THE WORDS “ANTICIPATED,” “BELIEVE,” “EXPECT,” “PLAN,” “INTEND,” “SEEK,” “ESTIMATE,” “PROJECT,” “WILL,” “COULD,” “MAY,” AND SIMILAR EXPRESSIONS ARE INTENDED TO IDENTIFY FORWARD-LOOKING STATEMENTS. THESE STATEMENTS INCLUDE, AMONG OTHERS, INFORMATION REGARDING FUTURE OPERATIONS, FUTURE CAPITAL EXPENDITURES, AND FUTURE NET CASH FLOW. SUCH STATEMENTS REFLECT THE COMPANY’S CURRENT VIEWS WITH RESPECT TO FUTURE EVENTS AND FINANCIAL PERFORMANCE AND INVOLVE RISKS AND UNCERTAINTIES, INCLUDING, WITHOUT LIMITATION, GENERAL ECONOMIC AND BUSINESS CONDITIONS, CHANGES IN FOREIGN, POLITICAL, SOCIAL, AND ECONOMIC CONDITIONS, REGULATORY INITIATIVES AND COMPLIANCE WITH GOVERNMENTAL REGULATIONS, THE ABILITY TO ACHIEVE FURTHER MARKET PENETRATION AND ADDITIONAL CUSTOMERS, AND VARIOUS OTHER MATTERS, MANY OF WHICH ARE BEYOND THE COMPANY’S CONTROL. SHOULD ONE OR MORE OF THESE RISKS OR UNCERTAINTIES OCCUR, OR SHOULD UNDERLYING ASSUMPTIONS PROVE TO BE INCORRECT, ACTUAL RESULTS MAY VARY MATERIALLY AND ADVERSELY FROM THOSE ANTICIPATED, BELIEVED, ESTIMATED, OR OTHERWISE INDICATED. CONSEQUENTLY, ALL OF THE FORWARD-LOOKING STATEMENTS MADE IN THIS FILING ARE QUALIFIED BY THESE CAUTIONARY STATEMENTS AND THERE CAN BE NO ASSURANCE OF THE ACTUAL RESULTS OR DEVELOPMENTS.
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The following discussion and analysis of our financial condition and plan of operations should be read in conjunction with our financial statements and related notes appearing elsewhere herein. This discussion and analysis contains forward-looking statements including information about possible or assumed results of our financial conditions, operations, plans, objectives and performance that involve risk, uncertainties and assumptions. The actual results may differ materially from those anticipated in such forward-looking statements. For example, when we indicate that we expect to increase our product sales and potentially establish additional license relationships, these are forward-looking statements. The words expect, anticipate, estimate or similar expressions are also used to indicate forward-looking statements.
Background of our company
We are a development-stage company, incorporated in the State of Florida on September 21, 2009, as a for-profit company, and an established fiscal year of August 31. We have not yet generated or realized any revenues from business operations. Our auditor has issued a going concerned opinion. This means there is substantial doubt that we can continue as an on-going business for the next eighteen (18) months unless we obtain additional capital to pay our bills. Accordingly, we must raise cash from sources other than loans we undertake.
On November 10, 2011, the Company formed Obscene Interactive, LLC, a wholly-owned subsidiary. Obscene Interactive was established to identify emerging trends and companies within the social media space for the purpose of acquisitions, joint ventures and global licensing of technology platforms and algorithms. As of the date of this filing, Obscene Interactive has no assets, liabilities or operations.
From inception through our current date, August 31, 2011, our business operations have primarily been focused on developing our business plan and design collection sketches, design collection sketches, specifications, researching contractors, sales agents, distributors and website designers. We have not generated any revenue from business operations.
Plan of Operations
We believe we do not have adequate funds to satisfy our working capital requirements for the next twelve months. We will need to raise additional capital to continue our operations. During the 18 months following the completion of this offering, we intend to implement our business and marketing plan. We believe we must raise an additional $500,000 to pay for expenses associated with our development over the next 18 months. $150,000 will be used to finance anticipated activities during Phase One of our development plan as described below, and $350,000 will be used to finance anticipated activities during Phase Two of our development plan as described below.