The Jeans for the Scene — In, Out, or Ob?

I was minding my own business, doing research when I saw an ad that showed a back view of a woman in very tight jeans, with the text: “If you think I’m hot you should see this stock! OBJE”

Remember my rule, “Don’t buy what someone wants to sell you.  Buy what you have researched for yourself.”  It is true with physical objects, but even more true where the goods are immaterial, and quality cannot be easily verified, as with stocks.  So when I hear a pitch for a stock through advertising, I am immediately skeptical.

Now, I am not the first to the scene here, partially because I delayed. 24/7 Wall Street noted that OBJE has a going concern problem.  Good job, Doug.

But there is more: where is the company located?  In a residence in Florida.  Not much for a company with a market cap of 30MM+.  But what else is located there?  These businesses:

Quite a lot to be going on in one residence.  But wait, the woman who lives there, who was a crucial part of OBJE’s strategies has been let go by OBJE.  Curious, huh?

Now the current CEO, Robert Federowicz has done many things, but nothing worthy of being a CEO of a small public company.

He previously served as Chief Information Officer of a start-up international power development company and as government affairs liaison for an international power company. From 2005 to 2009, Mr. Federowicz was an Owner and Operator of a fitness gym in Houston, Texas. During 2010, he served as an Account executive for Screentek, Inc., a seller of LCD screen technology for laptop computers.

Of course the company has press releases touting its non-existent products.  And there are penny stock touts that pick up the furor.  Just because a stock has a low price does not make it a buy.

Then there is the investor relations page at their website.  No credible company lays on the “buy us” mantra so thick.

That leaves us with the hard data.  Let me start with the opening lines from the risk disclosures in the 10K:

BECAUSE WE HAVE NOT PRODUCED A SAMPLE OF OUR OBSCENE BRAND JEANS AND COMPLIMENTED PRODUCTS, THESE PRODUCTS, MAY NOT WORK OR FIT PROPERLY AND/OR THE PRODUCTION COST CAN EXCEED EXPECTATIONS

OUR LACK OF AN OPERATING HISTORY GIVES NO ASSURANCE THAT OUR FUTURE OPERATIONS WILL RESULT IN PROFITABLE REVENUES, WHICH COULD RESULT IN THE SUSPENSION OR END OF OUR OPERATIONS

WE ARE A NEW COMPANY WITH NO OPERATING HISTORY AND WE FACE A HIGH RISK OF BUSINESS FAILURE WHICH WOULD RESULT IN THE LOSS OF YOUR INVESTMENT

As of the date of this prospectus, we have earned no revenue. Failure to generate revenue will cause us to go out of business, which could result in the complete loss of your investment.

BECAUSE OUR CURRENT OFFICER AND DIRECTOR DOES NOT HAVE SIGNIFICANT EXPERIENCE IN STARTING A JEANS PRODUCTS COMPANY AND WE LACK CUSTOMERS AND SUPPLIERS, OUR BUSINESS HAS A HIGHER RISK OF FAILURE

BECAUSE WE ARE SMALL AND DO NOT HAVE MUCH CAPITAL, WE MUST LIMIT OUR MARKETING ACTIVITIES. AS A RESULT, OUR SALES MAY NOT BE ENOUGH TO OPERATE PROFITABLY. IF WE DO NOT MAKE A PROFIT, WE MAY HAVE TO SUSPEND OR CEASE OPERATIONS

OUR PRODUCTS MAY NOT FIND ACCEPTANCE FOR OUR PRODUCTS IN HIGH END BOUTIQUES AND DEPARTMENT STORES.

OUR OPERATING RESULTS MAY PROVE UNPREDICTABLE WHICH COULD NEGATIVELY AFFECT OUR PROFIT

OUR SOLE OFFICER AND DIRECTOR MAY NOT BE IN A POSITION TO DEVOTE A MAJORITY OF HER TIME TO OUR OPERATIONS, WHICH MAY RESULT IN PERIODIC INTERRUPTIONS AND EVEN BUSINESS FAILURE

(and she has been let go)

KEY MANAGEMENT PERSONNEL MAY LEAVE THE COMPANY WHICH COULD ADVERSELY AFFECT THE ABILITY OF THE COMPANY TO CONTINUE OPERATIONS

IF OUR COMPANY IS DISSOLVED, IT IS UNLIKELY THAT THERE WILL BE SUFFICIENT ASSETS REMAINING TO DISTRIBUTE TO OUR SHAREHOLDERS

IF WE ARE UNABLE TO GAIN ANY SIGNIFICANT MARKET ACCEPTANCE FOR OUR PRODUCTS OR ESTABLISH A SIGNIFICANT MARKET PRESENCE, WE MAY BE UNABLE TO GENERATE SUFFICIENT REVENUE TO CONTINUE OUR BUSINESS

MANAGEMENT’S ABILITY TO IMPLEMENT THE BUSINESS STRATEGY MAY BE SLOWER THAN EXPECTED AND WE MAY BE UNABLE TO GENERATE A PROFIT

IF WE ARE UNABLE TO MANAGE OUR FUTURE GROWTH OUR BUSINESS COULD BE HARMED

OUR PRODUCT MAY NOT BE ABLE TO DISTINGUISH ITSELF IN THE MARKET AND WE MAY BE UNABLE TO ATTRACT ENOUGH CUSTOMERS TO OPERATE PROFITABLY, WITHOUT A PROFIT WE MAY HAVE TO SUSPEND OR CEASE OPERATIONS

WE MAY BE UNABLE TO MAKE NECESSARY ARRANGEMENTS AT ACCEPTABLE COST, WE MAY HAVE TO SUSPEND OR CEASE OPERATIONS ENTIRELY WHICH COULD RESULT IN A TOTAL LOSS OF YOUR INVESTMENT.

COMPETITORS MAY ENTER THIS SECTOR WITH SUPERIOR PRODUCTS, INFRINGING OUR CUSTOMER BASE, AND AFFECTING OUR BUSINESS ADVERSELY.

SINCE OUR SOLE OFFICER AND DIRECTOR CURRENTLY OWNS 100% OF THE OUTSTANDING COMMON STOCK, INVESTORS MAY FIND THAT HER DECISIONS ARE CONTRARY TO THEIR INTERESTS YOU SHOULD NOT PURCHASE SHARES UNLESS YOU ARE WILLING TO ENTRUST ALL ASPECTS OF MANAGEMENT TO OUR SOLE OFFICER AND DIRECTOR, OR HER SUCCESSORS

Notable, because she was let go with little fanfare, aside from an 8K.

THERE IS SUBSTANTIAL UNCERTAINTY ABOUT OUR ABILITY TO CONTINUE OUR OPERATIONS AS A GOING CONCERN

THE ENACTMENT OF THE SARBANES-OXLEY ACT MAY MAKE IT MORE DIFFICULT FOR US TO RETAIN OR ATTRACT OFFICERS AND DIRECTORS, WHICH COULD INCREASE OUR OPERATING COSTS OR PREVENT US FROM BECOMING PROFITABLE.

SINCE WE ANTICIPATES OPERATING EXPENSES WILL INCREASE PRIOR TO EARNING REVENUE, WE MAY NEVER ACHIEVE PROFITABILITY

IF WE CANNOT SECURE ADDITIONAL CAPITAL, OR IF AVAILABLE CAPITAL IS TOO EXPENSIVE, OUR BUSINESS WILL FAIL.

WE DO NOT HAVE SUFFICIENT CAPITAL TO CONTINUE MAINTAINING OUR REPORTING STATUS.

What do you see when you review the most recent 10K and 10Q?  They are starving for liquidity, and have negative earnings and a negative net worth.  This is not a recipe for success.

This would have been obvious from the share offering as well, which was done at far lower prices.

If I worked for the SEC, I would ask this question — who was willing to buy the shares after the offering, creating prices that would deceive others?  Answering that question could reveal networks that cheat.

 

3 Comments

  • cold.as.ice says:

    While much of this is dishonest and should be criminal and prosecuted, you have to wonder about the buyers of some of this. Coworkers, very smart engineers and software professional, were buying MCI and GM just above zero and some of these same type of scam companies. Some of this has less odds of success than a lotto ticket.

    It is like someone who refuses to change the oil in their car. Hence the saying “A fool and his money are soon parted”. Perhaps it is the greater fool theory in practice.

    We did this study http://www.investopedia.com/features/crashes/ in the middle / high school investment club I coached. Funny thing is when I shared this with adults a good % would say “If I am early in and out before the bust, I win”.

  • And now I see another ad for the stock:

    Sponsored Links

    New Issue Alert – OBJE

    Hot Stock Obscene Jeans Inc. Explosive Investment Potential

    http://www.ObsceneJeans.com

  • oso polaris says:

    I came upon your website purely by chance and I owe you a huge thank you. I have read other blogs regarding finances but I have not learned as much as I have by reading yours. Thanks for all the info, tips and advice you blog about.

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