MyGo Games Holding (MYGG) 10-Q 2012 Q1 Quarterly report

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington D.C. 20549

FORM 10-Q

x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934.

For the quarterly period ended November 30, 2011

¨ 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     333-166064

Obscene Jeans Corp.

(Exact Name of Registrant as Specified in Charter)

Florida	27-1070374
(State or Other Jurisdiction of Incorporation or Organization)	(I.R.S. Employer Identification Number)

1522 Romallo Lane, Sarasota, FL 34232

(Address of Principal Executive Offices)

(941) 330-7648

(Registrant’s Telephone Number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act 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 Web site, 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  x    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 definition of “accelerated filer, large accelerated filer and smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

Large accelerated filer	¨	Accelerated filer	¨
Non-accelerated filer	¨	Smaller reporting company	x

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

There were 19,500,000 shares of the Registrant’s common stock, $0.0001 par value outstanding as of December 31, 2011.

Obscene Jeans Corp.

(A Development Stage Company)

Contents

Part I – Financial Information
Item 1.	Financial Statements	1
Item 2.	Management’s Discussion and Analysis of Financial Condition and Results of Operation	9
Item 3.	Quantitative and Qualitative Disclosures About Market Risk	12
Item 4.	Controls and Procedures	12
Part II – Other Information
Item 1.	Legal Proceedings	12
Item 2.	Unregistered Sales of Equity Securities and Use of Proceeds	12
Item 3.	Defaults Upon Senior Securities	12
Item 4.	Removed and Reserved	12
Item 5.	Other Information	12
Item 6.	Exhibits	13
Signatures		13

PART I — FINANCIAL INFORMATION

Statements in this Quarterly Report on Form 10-Q may be “forward-looking statements.” Forward-looking statements include, but are not limited to, statements that express our intentions, beliefs, expectations, strategies, predictions or any other statements relating to our future activities or other future events or conditions. These statements are based on our current expectations, estimates and projections about our business based, in part, on assumptions made by our management. These assumptions are not guarantees of future performance and involve risks, uncertainties and assumptions that are difficult to predict. Therefore, actual outcomes and results may differ materially from what is expressed or forecasted in the forward-looking statements due to numerous factors, including those risks discussed in this Quarterly Report on Form 10-Q, under “Management’s Discussion and Analysis of Financial Condition or Plan of Operation” and in other documents which we file with the Securities and Exchange Commission (“SEC”).

In addition, such statements could be affected by risks and uncertainties related to our financial condition, factors that affect our industry, market and customer acceptance, changes in technology, fluctuations in our quarterly results, our ability to continue and manage our growth, liquidity and other capital resource issues, competition, fulfillment of contractual obligations by other parties and general economic conditions. Any forward-looking statements speak only as of the date on which they are made, and we do not undertake any obligation to update any forward-looking statement to reflect events or circumstances after the date of this Form 10-Q Quarterly Report, except as required by law.

Item 1. Financial Statements

Obscene Jeans Corp.

(A Development Stage Enterprise)

Contents

Consolidated Financial Statements:

Consolidated Balance Sheets, as of November 30, 2011 and August 31, 2011 (Unaudited)	2
Consolidated Statements of Operations, for the three months ended November 30, 2011 and 2010 and for the period from          September 21, 2009 (date of inception) through November 30, 2011 (Unaudited)	3
Consolidated Statements of Changes in Stockholders’ Equity, for the period from September 21, 2009 (date of inception) through          November 30, 2011 (Unaudited)	4
Consolidated Statements of Cash Flows, for the three months ended November 30, 2011 and 2010 and for the period from          September 21, 2009 (date of inception) through November 30, 2011 (Unaudited)	5
Notes to Unaudited Consolidated Financial Statements	6

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Obscene Jeans Corp.

(A Development Stage Enterprise)

Consolidated Balance Sheets

(Unaudited)

	November 30, 2011			August 31, 2011
Assets
Current assets:
Cash	$	5,258		$	45,169
Prepaid expenses		2,086			2,086
Total current assets		7,344			47,255
Total assets	$	7,344		$	47,255
Liabilities and Stockholders’ Equity
Current liabilities:
Accounts payable	$	17,661		$	62,991
Advances payable		592,113			590,353
Total current liabilities		609,774			653,344
Convertible note payable, net of discount of $26,391 and $-, respectively		2,288			—
Total liabilities		612,062			653,344
Stockholders’ equity:
Preferred stock; $0.0001 par value; 10,000,000 shares authorized; 0 shares issued and outstanding		—			—
Common stock; $0.0001 par value; 100,000,000 shares authorized; 19,500,000 and 13,500,000 shares issued and outstanding, respectively		1,950			1,350
Additional paid in capital		1,075,288			680,150
Deficit accumulated during development stage		(1,681,956	)		(1,287,589	)
Total stockholders’ equity		(604,718	)		(606,089	)
Total liabilities and stockholders’ equity	$	7,344		$	47,255

The accompanying notes are an integral part of these financial statements.

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Obscene Jeans Corp.

(A Development Stage Enterprise)

Consolidated Statements of Operations

(Unaudited)

	Three months ended November 30,						Period from September 21, 2009 (Date of Inception) through November 30,
	2011			2010			2011
Expenses:
Selling, general and administrative	$	390,226		$	14,268		$	1,677,815
Loss from operations		(390,226	)		(14,268	)		(1,677,815	)
Other income (expense), net
Interest expense		(4,141	)		—			(4,141	)
		(4,141	)		—			(4,141	)
Net loss	$	(394,367	)	$	(14,268	)	$	(1,681,956	)
Net loss per share – basic and fully diluted	$	(0.02	)	$	(0.00	)
Weighted average number of common shares outstanding – basic and fully diluted		16,216,484			12,000,000

The accompanying notes are an integral part of these financial statements.

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Obscene Jeans Corp.

(A Development Stage Enterprise)

Consolidated Statement of Changes in Stockholders’ Equity

For the Period from September 21, 2009 (Date of Inception) through November 30, 2011

(Unaudited)

	Common Stock
	Shares	Amount		Additional Paid-in Capital			Accumulated Deficit			Total
Balance, September 21, 2009, Date of Inception	—	$	—	$	—		$	—		$	—
Issuance of common stock for cash, September 2009, $0.0001 per share	9,000,000		900		8,100			—			9,000
Issuance of common stock for cash, August 2010, $0.0175 per share	3,000,000		300		52,200			—			52,500
Net loss for the period	—		—		—			(20,572	)		(20,572	)
Balance, August 31, 2010	12,000,000	$	1,200	$	60,300		$	(20,572	)	$	40,928
Issuance of common stock for services:
- December 2010, $0.05 per share	1,000,000		100		49,900			—			50,000
- August 2011, $1.14 per share	500,000		50		569,950			—			570,000
Net loss for the period	—		—		—			(1,267,017	)		(1,267,017	)
Balance, August 31, 2011	13,500,000	$	1,350	$	680,150		$	(1,287,589	)	$	(606,089	)
Issuance of common stock for conversion of debt:
- September 2011	600,000		60		(60	)		—			—
- October 2011	4,500,000		450		1,403			—			1,853
Issuance of common stock for services:
- November 2011	900,000		90		314,910			—			315,000
Discount on convertible note payable	—		—		78,885			—			78,885
Net loss for the three months ended November 30, 2011 (unaudited)	—		—		—			(394,367	)		(394,367	)
Balance, November 30, 2011 (unaudited)	19,500,000	$	1,950	$	1,075,288		$	(1,681,956	)	$	(604,718	)

The accompanying notes are an integral part of these financial statements

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Obscene Jeans Corp.

(A Development Stage Enterprise)

Consolidated Statements of Cash Flows

(Unaudited)

	Three months ended November 30,						Period from September 21, 2009 (date of inception) through November 30,
	2011			2010			2011
OPERATING ACTIVITIES:
Net loss	$	(394,367	)	$	(14,268	)	$	(1,681,956	)
Adjustments to reconcile net loss to net cash used in operating activities:
Common stock issued for services		315,000			—			935,000
Amortization of discount on convertible note payable		3,347			—			3,347
Changes in operating assets and liabilities:
Prepaid expenses		—			2,500			(2,086	)
Accounts payable		(45,330	)		(10,000	)		17,661
Accrued interest payable		794			—			794
Net cash used by operating activities		(120,556	)		(21,768	)		(727,240	)
FINANCING ACTIVITIES:
Proceeds from advances		80,645			—			670,998
Proceeds from issuance of common stock		—			—			61,500
Net cash provided by financing activities		80,645			—			732,498
NET (DECREASE) INCREASE IN CASH		(39,911	)		(21,768	)		5,258
CASH, BEGINNING OF PERIOD		45,169			41,761			—
CASH, END OF PERIOD	$	5,258		$	19,993		$	5,258
Cash paid during the period for:
Interest	$	—		$	—		$	—
Taxes	$	—		$	—		$	—
Common stock issued for services	$	315,000		$	—		$	935,000

The accompanying notes are an integral part of these financial statements.

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Obscene Jeans Corp.

(A Development Stage Corporation)

Notes to Unaudited Consolidated Financial Statements

1. Background Information

Obscene Jeans Corp. (the “Company”), a Florida corporation, was formed to design, develop, wholesale, market, distribute and sell a woman’s line of apparel using the name “Obscene Brand Jeans.” The Company also will include a line of complimentary t-shirts, jackets and sweatshirts to accent the base of the intended collection.

The Company was incorporated on September 21, 2009 (Date of Inception) with its corporate headquarters located in Sarasota, Florida. Its year-end is August 31.

On November 10, 2011, the Company formed Obscene Interactive, LLC (“Obscene Interactive”), a wholly-owned subsidiary.  Obscene Interactive has no assets or liabilities. It has begun identifying potential acquisition targets in the social media industry.

2. Going Concern

For the three months ended November 30, 2011, the Company had a net loss of $394,367 and negative cash flow from operating activities of $120,556. As of November 30, 2011, the Company has negative working capital of $602,430.  The Company has not emerged from the development stage.

These factors raise a substantial doubt about the Company’s ability to continue as a going concern.  The accompanying consolidated financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classifications of liabilities that may result from the possible inability of the Company to continue as a going concern.

The Company does not have the resources at this time to repay its credit and debt obligations, make any payments in the form of dividends to its shareholders or fully implement its business plan. Without additional capital, the Company will not be able to remain in business.

Management has plans to address the Company’s financial situation as follows:

In the near term, management plans to continue to focus on raising the funds necessary to fully implement the Company’s business plan.  Management will continue to seek out debt financing to obtain the capital required to meet the Company’s financial obligations.  There is no assurance, however, that lenders will continue to advance capital to the Company or that the new business operations will be profitable.  The possibility of failure in obtaining additional funding and the potential inability to achieve profitability raise doubts about the Company’s ability to continue as a going concern.

In the long term, management believes that the Company’s projects and initiatives will be successful and will provide cash flow to the Company which will be used to finance the Company’s future growth.  However, there can be no assurances that the Company’s planned activities will be successful, or that the Company will ultimately attain profitability.  The Company’s long term viability depends on its ability to obtain adequate sources of debt or equity funding to meet current commitments and fund the continuation of its business operations, and the ability of the Company to ultimately achieve adequate profitability and cash flows from operations to sustain its operations.

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3. Financial Statements

Basis of Presentation – The Company’s consolidated financial statements are presented in accordance with accounting principles generally accepted in the United States of America (“GAAP”).  In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the result of operations for the periods presented have been reflected herein.

Consolidated Financial Statements –The consolidated financial statements of the Company include the accounts of the Company and its wholly-owned subsidiary, Obscene Interactive, from the date of its formation. Significant intercompany transactions have been eliminated in consolidation.

Interim Financial Statements –These financial statements are prepared on the accrual basis of accounting in conformity with GAAP and the rules of the Securities and Exchange Commission (“SEC”), and should be read in conjunction with the audited financial statements for the year ended August 31, 2011 and notes thereto contained in the Company’s Annual Report filed with the SEC on Form 10-K. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein.  The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year. Notes to the financial statements which would substantially duplicate the disclosures contained in the audited financial statements for the most recent fiscal year ended August 31, 2011, as reported in the Form 10-K, have been omitted.

Development Stage Company – The Company is considered to be in the development stage as defined in ASC 915, ”Accounting and Reporting by Development Stage Enterprises “. The Company has devoted substantially all of its efforts to the corporate formation, the raising of capital and attempting to generate initial revenues.

Use of Estimates – The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period. Actual results could differ.

Cash and cash equivalents –All cash is maintained with a major financial institution in the United States of America. Deposits with this bank may occasionally exceed the amount of insurance provided on such deposits. Temporary cash investments with an original maturity of three months or loss are considered to be cash equivalents.

Recent accounting pronouncements

In April 2010, the FASB issued ASU No. 2010-13, Compensation-Stock Compensation (Topic 718)-Effect of Denominating the Exercise Price of a Share-Based Payment Award in the Currency of the Market in Which the Underlying Equity Security Trades - a consensus of the FASB Emerging Issues Task Force.  The amendments in this Update are effective for fiscal years, and interim periods within those fiscal years, beginning on or after December 15, 2010.  Earlier application is permitted.  The Company adopted ASU No. 2010-13 on September 1, 2011.  The adoption of the provisions of ASU 2010-13 did not have a material effect on the financial position, results of operations or cash flows of the company.

In June 2011, the FASB issued ASU No. 2011-05,Comprehensive Income (Topic 220) - Presentation of Comprehensive Income (“ASU 2011-05”). ASU 2011-05 changes the presentation of comprehensive income in the financial statements for all periods reported and eliminates the option under the current guidance that allows for presentation of other comprehensive income as part of the Statement of Stockholders’ Equity. The update proposes two options for the proper presentation of comprehensive income: 1) a single Statement of Comprehensive Income, which includes all components of net income and other comprehensive income; or 2) a Statement of Income followed immediately by a Statement of Comprehensive Income, which includes the summarized net income and all components of other comprehensive income. The provisions of ASU 2011-05 are effective for public entities retrospectively for annual periods, and interim periods within those years, beginning after December 15, 2011, with early adoption permitted. Therefore, ASU 2011-05 was effective for the Company on September 1, 2012. Because the Company does not have components of comprehensive income other than net income, the provisions of this update did not change the presentation of the consolidated financial statements of the Company.

Other recent accounting pronouncements issued are not believed by management to have a material impact on the Company’s present or future consolidated financial statements.

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4. Advances from Third Parties

During the three months ended November 30, 2011, the Company received net, non-interest bearing advances from certain third parties totaling $80,645.  The total amount due under these advances as of November 30, 2011 was $592,113.  These advances are not collateralized and are due on demand.  Interest was not imputed on these advances due to immateriality.

On September 26, 2011, the Company agreed with the lender to refinance a portion of these advances in the amount of $78,885 into a convertible promissory note. See Note 5.

5. Convertible note payable

On September 26, 2011, the Company signed a Convertible Promissory Note which refinanced non-interest bearing advances in the amount of $78,885 into a convertible note payable. The Convertible Promissory Note bears interest at 10% per annum and is payable along with accrued interest on February 28, 2013.  The Convertible Promissory Note is convertible into common stock at the option of the holder at the rate of $0.01 per share.

The Company evaluated the terms of this note in accordance with ASC Topic No. 815 – 40,Derivatives and Hedging - Contracts in Entity’s Own Stock and determined that the underlying common stock is indexed to the Company’s common stock. The Company determined that the conversion feature did not meet the definition of a liability and therefore did not bifurcate the conversion feature and account for it as a separate derivative liability. The Company evaluated the conversion feature for a beneficial conversion feature. The effective conversion price was compared to the market price on the date of the notes and was deemed to be less than the market value of underlying common stock at the inception of the note.  Therefore, the Company will recognize a beneficial conversion feature in the amount of $78,885 on September 26, 2011. The beneficial conversion feature will be recognized as an increase in additional paid-in capital and a discount to the Convertible Note Payable. The discount to the Convertible Note Payable will be amortized to interest expense over the life of the note.

On September 27, 2011, the holder of the Convertible Note Payable elected to convert principal in the amount of $6,000 into 600,000 shares of common stock. On that date, the unamortized discount related to this principal was $6,000. The net amount of $- was recognized as an increase in stockholders’ equity as a result of this conversion.

On October 20, 2011, the holder of the Convertible Note Payable elected to convert principal in the amount of $45,000 into 4,500,000 shares of common stock. On that date, the unamortized discount related to this principal was $43,147. The net amount of $1,853 was recognized as an increase in stockholders’ equity as a result of this conversion.

The Company accrued interest in the amount of $794 during the three months ended November 30, 2011.

6. Common Stock

On September 27, 2011, the Company issued 600,000 shares of common stock as a result of the conversion of the Convertible Note Payable in the amount of $6,000.

On October 20, 2011, the Company issued 4,500,000 shares of common stock as a result of the conversion of the Convertible Note Payable in the amount of $45,000.

On November 3, 2011, the Company issued 900,000 shares of common stock to a third party for services. The shares were valued at $315,000 based on the closing market price of the stock on the date of issuance.

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PART I — FINANCIAL INFORMATION

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operation

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.

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.

OVERVIEW OF THE COMPANY

OVERVIEW

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”. 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.

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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.

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; have incurred losses since inception, have no operations, have been issued a going concern opinion from our auditors and rely upon the sale of our securities to fund operations.

As of November 30, 2011, we had $5,258 cash on hand.  We believe that this cash will satisfy our operating requirements for approximately one month.

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 next 18 months, we intend to continue implementing 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.

We intend to pursue capital through public or private financing as well as borrowings and other sources, such as our officer and director, in order to finance our businesses activities. We cannot guarantee that additional funding will be available on favorable terms, if at all. If adequate funds are not available, then our ability to continue our operations may be significantly hindered.

We have not yet begun the development of any of our anticipated products and even if we do secure adequate financing, there can be no assurance that our products will be accepted by the marketplace and that we will be able to generate revenues.

Our management does not plan to hire any employees at this time. Our sole officer and director will be responsible for implementing our business plan. We intend to hire independent consultants and sales representatives to carry out sales, marketing and distribution activities.

RESULTS OF OPERATIONS

We incurred a net loss of $394,367 for the three months ended November 30, 2011, and had a working capital deficit of $602,430 as of November 30, 2011.  We do not anticipate having positive net income in the immediate future.  Net cash used by operations for the three months ended November 30, 2011 was $120,556.  These conditions create an uncertainty as to our ability to continue as a going concern.

We continue to rely on advances to fund operating shortfalls and do not foresee a change in this situation in the immediate future. There can be no assurance that we will continue to have such advances available. We will not be able to continue operations without them. We are pursuing alternate sources of financing, but there is no assurance that additional capital will be available to the Company when needed or on acceptable terms.

We have not generated any revenues from our operations. We cannot guarantee we will be successful in our business operations. Our business is subject to risks inherent in the establishment of a new business enterprise, including the financial risks associated with the limited capital resources currently available to us for the implementation of our business strategies. To become profitable and competitive, we must develop the business and marketing plan and execute the plan. Our management will attempt to secure financing through various means including borrowing and investment from institutions and private individuals.

Since inception, the majority of our time has been spent refining our business plan and collection design sketches.

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Results of Operations for the three months ended November 30, 2011 compared to the three months ended November 30, 2010

General and Administrative Expenses

General and administrative expenses increased in the three months ended November 30, 2011 as compared to the three months ended November 30, 2010 from $14,268 to $390,226 due to increased expenses related to developing the Obscene Jeans brand and increased legal and professional expenses related to exploring new business opportunities.

Loss from Operations

The increase in our operating loss for the three months ended November 30, 2011 as compared to the comparable period of 2010 from $14,268 to $390,226 is due to the increase in general and administrative expenses described above.

Net Income (Loss)

We recognized a net loss of $394,367 for the three months ended November 30, 2011 as compared to a loss of $14,268 for the same period of 2010.  The change in net loss is primarily attributable to the change in operating loss described above.

LIQUIDITY AND CAPITAL RESOURCES

As of the date of this filing, we have yet to generate any revenues from our business operations.

We anticipate needing a minimum of $150,000 for Phase One and an additional $350,000 for Phase Two, totaling $500,000 in order to effectively execute our business plan over the next eighteen months. Currently available cash is not sufficient to allow us to commence full execution of our business plan. Our business expansion will require significant capital resources that may be funded through the issuance of common stock or of notes payable or other debt arrangements that may affect our debt structure. Despite our current financial status, we believe that we may be able to issue notes payable or debt instruments in order to start executing our business plan. However, there can be no assurance that we will be able to raise money in this fashion and have not entered into any agreements that would obligate a third party to provide us with capital.

For the three months ended November 30, 2011, we spent approximately $390,000 on general operating expenses. We raised the cash amounts to be used in these activities from the sale of common stock and through non-interest bearing advances.

As of November 30, 2011, we had $5,258 of cash on hand.

As of the date of this filing, the current funds available to the Company may not be sufficient to continue maintaining its reporting status with the SEC.  Management believes that if the Company cannot maintain its reporting status with the SEC, it will have to cease all business activity. As such, any investment previously made would be lost in its entirety.

The Company currently has no external sources of liquidity such as arrangements with credit institutions or off-balance sheet arrangements that will have or are reasonably likely to have a current or future effect on our financial condition or immediate access to capital.

The Company intends to seek additional financing through means such as borrowings from institutions or private individuals. There can be no assurance that the Company will be able to keep costs from being more than these estimated amounts or that the Company will be able to raise such funds. The Company may not be able to obtain additional capital or generate sufficient revenues to fund our operations. If we are unsuccessful at raising sufficient funds, for whatever reason, to fund our operations, the Company may be forced to seek a buyer for our business or another entity with which we could create a joint venture. If all of these alternatives fail, we expect that the Company will be required to seek protection from creditors under applicable bankruptcy laws.

Our independent auditor has expressed substantial doubt about our ability to continue as a going concern and believes that our ability is dependent on our ability to implement our business plan, raise capital and generate revenues. See Note 2 of our financial statements.

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.

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Item 3. Quantitative and Qualitative Disclosures About Market Risk

Not applicable.

Item 4. Controls and Procedures

The Company’s Chief Executive Officer and Chief Financial Officer have evaluated the effectiveness of the Company’s disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the Exchange Act) as of and for the period covered by this Quarterly Report on Form 10-Q. Based upon such evaluation, the Chief Executive Officer and Chief Financial Officer have concluded that, as of the end of such period, the Company’s disclosure controls and procedures were not effective. The controls were determined to be ineffective due to the lack of segregation of duties. Currently, management contracts with an outside CPA to perform certain crucial accounting and financial reporting activities. However, the Company will be unable to remediate this weakness until it has received additional funding to hire additional administrative personnel.

Changes in Internal Control Over Financial Reporting

No change in the Company’s internal control over financial reporting occurred during the three months ended November 30, 2011, that materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.

PART II — OTHER INFORMATION

Item 1. Legal Proceedings

As of the date of this Quarterly Report, neither we nor any of our officers or directors is involved in any litigation either as plaintiffs or defendants. As of this date, there is not any threatened or pending litigation against us or any of our officers or directors.

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

On September 27, 2011, the Company issued 600,000 shares of common stock as a result of the conversion of the Convertible Note Payable in the amount of $6,000.

On October 20, 2011, the Company issued 4,500,000 shares of common stock as a result of the conversion of the Convertible Note Payable in the amount of $45,000.

Item 3. Defaults upon Senior Securities

There have been no defaults in any material payments during the covered period.

Item 4. Removed and Reserved

Item 5. Other Information

The Company does not have any other material information to report with respect to the three month period ended November 30, 2011.

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Item 6. Exhibits

3.1	Articles of Incorporation (incorporated by reference to our Form S-1 filed on April 14, 2010)
3.2	Bylaws (incorporated by reference to our Form S-1 filed on April 14, 2010)
31.1	Certification of the Chief Executive Officer and Chief Financial Officer *
32.1	Certification of the Chief Executive Officer and Chief Financial Officer pursuant to 18 U.S.C. Section 1350 *
101	XBRL Interactive Data *, **

*    Filed or furnished herewith

**  In accordance with Regulation S-T, the Interactive Data Files in Exhibit 101 to the Quarterly Report on Form 10-Q shall be deemed “furnished” and not “filed”.

SIGNATURES

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

	OBSCENE JEANS CORP.
Dated: January 17, 2011	By:	/s/ Paul Watson
		Paul Watson President, Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, Secretary, Treasurer and Director

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