Use of Certain Defined Terms
Except as otherwise indicated by the context, references in this report to “CocoLuv Inc.”, “we,” “us,” “our,” “our Company,”
Forward-Looking Statements
This Annual Report on Form 10-K contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995, Section 27A of the Securities Act of 1933, as amended, or the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). Forward-looking statements discuss matters that are not historical facts. Because they discuss future events or conditions, forward-looking statements may include words such as “anticipate,” “believe,” “estimate,” “intend,” “could,” “should,” “would,” “may,” “seek,” “plan,” “might,” “will,” “expect,” “anticipate,” “predict,” “project,” “forecast,” “potential,” “continue” negatives thereof or similar expressions. Forward-looking statements speak only as of the date they are made, are based on various underlying assumptions and current expectations about the future and are not guarantees. Such statements involve known and unknown risks, uncertainties and other factors that may cause our actual results, level of activity, performance or achievement to be materially different from the results of operations or plans expressed or implied by such forward-looking statements.
We cannot predict all of the risks and uncertainties. Accordingly, such information should not be regarded as representations that the results or conditions described in such statements or that our objectives and plans will be achieved, and we do not assume any responsibility for the accuracy or completeness of any of these forward-looking statements. These forward-looking statements are found at various places throughout this Annual Report on Form 10-K and include information concerning possible or assumed future results of our operations, including statements about potential acquisition or merger targets; business strategies; future cash flows; financing plans; plans and objectives of management; any other statements regarding future acquisitions, future cash needs, future operations, business plans and future financial results, and any other statements that are not historical facts.
These forward-looking statements represent our intentions, plans, expectations, assumptions and beliefs about future events and are subject to risks, uncertainties and other factors. Many of those factors are outside of our control and could cause actual results to differ materially from the results expressed or implied by those forward-looking statements. In light of these risks, uncertainties and assumptions, the events described in the forward-looking statements might not occur or might occur to a different extent or at a different time than we have described. You are cautioned not to place undue reliance on these forward-looking statements, which speak only as of the date of the Annual Report on Form 10-K. All subsequent written and oral forward-looking statements concerning other matters addressed in this Annual Report on Form 10-K and attributable to us or any person acting on our behalf are expressly qualified in their entirety by the cautionary statements contained or referred to in this Annual Report on Form 10-K.
Except to the extent required by law, we undertake no obligation to update or revise any forward-looking statements, whether as a result of new information, future events, a change in events, conditions, circumstances or assumptions underlying such statements, or otherwise.
Business Overview
CocoLuv Inc. (“CocoLuv Inc.” or the “Company”) was incorporated in the State of Nevada. We are an early stage company that plans to commence operations as an online retailer offering was incorporated in the State of Nevada as a for-profit Company on September 13, 2017 and established a fiscal year end of May 31. The Company intends to manufacture market and sell a product line of 5 hair care products derived from Virgin Coconut Oil. The initial 5 products will be 3 for women and 2 for men.
CocoLuv Inc. is an emerging growth stage company which intends to manufacture market and sell a proposed product line of 5 hair care products derived from Virgin Coconut Oil. We currently have no product to sell, but we intend to create a haircare line of that will initially consist of 5 products; 3 for women and 2 for men. Our proposed products will be of superior quality in that they will have a base of Virgin Coconut Oil. CocoLuv Inc. CocoLuv Inc. anticipates that it will derive its income from the sale of its intended products as follows: Hair Shine (for women), Curl Balm (for women), Hair Treatment (for women), Hair Pomade (for men’s hair, beards, moustaches) and Hair Cream (for men). We do not anticipate revenues until such time as we enter into retail operations. Since we are presently in the development stage of our business, we can provide no assurance that we will successfully bring retail online sales to fruition.
We have not earned any revenues to date. Our independent registered public accountant has issued an audit opinion which includes a statement expressing substantial doubt as to our ability to continue as a going concern.
We will need additional funding to implement our marketing and operational plans.
Proposed Company Product Line
Coconut oil is rich in antioxidants, and has antiviral, antifungal, and antibacterial properties. When used on hair, it improves scalp health, fights infections and fungus, supports hair growth, all while adding volume and shine without the common harmful chemicals. CocoLuv Inc.’s products are intended to embody the best of virgin coconut oil and provide all of the above benefits. We intend to create the following line of products:
WOMENS PRODUCTS
Product 1: Hair Shine
Product 2: Hair Balm:
Product 3: Hair Treatment
Product 1: Hair Pomade
Product 2: Hair Cream
Corporate History
CocoLuv Inc. was incorporated on September 13, 2017 under the laws of the State of Nevada. Reymund Guillermo has served as President and Chief Executive Officer, and Mr. Geoff Norman is our Secretary/Treasurer of our company from September 13, 2017 to the current date. No person other than Mr. Guillermo has acted as a promoter of CocoLuv Inc. since our inception. Other than the 4,000,000 common shares issued by the Company, to Mr. Guillermo, at a purchase price of $0.001 per share for net proceeds to the Company of $4,000, no other shares have been issued by the Company.
Recent Developments
Capital Stock
The Company’s capitalization is 200,000,000 common shares with a par value of $0.001 per share. No preferred shares have been authorized or issued.
On September 30, 2017, the Company issued 4,000,000 common shares at $0.001 per share to the sole director and President of the Company. The Company received net proceeds of $4,000 in payment of the shares.
Industry Analysis/Competition
Industry Overview
According to the Global Virgin Coconut Oil Market report “The global virgin coconut oil market to grow at a CAGR of 9.75% during the period 2017-2021. The report covers the present scenario and the growth prospects of the global virgin coconut oil market for 2017-2021. To calculate the market size, the report considers the revenue generated from the sales of virgin coconut oil to individual consumers. The report also includes a discussion of the key vendors operating in this market. The players in the market are coming up with new value-added products from virgin coconut oil. Such products will increase the consumer interest in the market and will also help the farmers to gather more return on their products. Only 8% of value addition in coconut oil is happening in India, while it is about 60%-70% in the Philippines. The value-added products will help the market grow during the forecast period. According to the report, the players are launching new products to stay competitive in the market and also to keep the interest of the consumers alive in the market. In October 2016, Dash Organics launched 100% raw extra virgin coconut oil. The new product is Fairtrade and certified 100% organic by Soil Association. In January 2016, Tiana Fair Trade Organics introduced its raw virgin coconut oil under the brand name Coco Pacific.
The product launch is backed by $0.61 million marketing campaign and the company has also roped in Aldo Zilli, celebrity chef and restaurateur, as the brand ambassador. In July 2015, FAL Food and Beverages launched its virgin coconut oil under the brand name Coco Joy. In December 2014, GraceKennedy Limited launched its virgin coconut oil after spending about $5 million on researches for the new product. Further, the report state that the product recalls of virgin coconut oil due to various reasons is one of the challenges to the growth of the market. The product recalls will create a negative impression among the consumers. The product recalls will also cause the consumers to lose trust in the products in the market. In March 2016, Nisshin OilliO Group issued a voluntary recall of its coconut oil products including Nisshin Extra Virgin Coconut Oil due to the presence of Aspergillus, a type of fungus, in the products. The company recalled about 1.6 million products.
According to Euromonitor International the category leader L’Oréal USA saw healthy growth of 6% in current value terms in 2016, which enabled it to maintain its value share of 22%. This growth was championed by its Garnier brand, which saw overall current value growth of 40% in hair care in 2016 as its value share rose from 2% to 3%. Garnier’s success was due to the launch of its on-trend Whole Blends line, catering to demand for natural and botanical products. However, L’Oréal’s growth continues to be constrained by its focus on the declining category of colorants, which it led in 2016 with a 40% value share.
Segmentation and customization are set to be the major areas of consumer interest in hair care in the US over the forecast period. Each American consumer tends to view their hair as unique and this means that they will likely be prepared to look for products which they see as tailored towards their own hair. A major component of this will be the growth anticipated in the area of multicultural hair care space as women of color turn to brands which address their specific hair care needs, especially needs that they feel that mainstream brands currently fail to meet. African Americans are turning away from relaxants and are instead buying increasing amounts of other hair care products designed for textured hair, a trend that will likely continue for some time. L’Oréal-owned brand Carol’s Daughter is benefitting from the growth of multicultural hair care, as are Shea Moisture and Mexican hair care brand Tio Nacho. Latino and multiracial women have also traditionally struggled to find hair care products which meet their unique needs and represent a fast-growing area of the population with increasing spending power.
The direct competitors for CocoLuv Inc. are Healthy Traditions, Jarrow Formulas, Nutiva, Coco & Co., Shea Moisture and Nature Well. There are many other companies that have lines of coconut oil products, however, we focus on Virgin Coconut Oil as our main driver of quality and do not see other companies that do not use Virgin Coconut Oil as direct competition.
Marketing Strategy
CocoLuv Inc. plans to engage a marketing company to provide the following services to our intended website; social media accounts; e-commerce store and Twitter community:
Brand Marketing – CocoLuv Inc. plans to focus on increasing brand awareness through the following avenues that will be managed by a marketing firm that we intend to engage: Integrated Marketing Communications, Brand Development and Implementation, Targeted Lead Generation, Business to Business / Business to Customer Campaigns, Strategic Planning & Account Management, Marketing Consulting and Planning, Strategic Planning & Account Management, Marketing Consulting and Planning
Digital and Social Media -The Company plans to create a wide spread social media campaign based on effective planning and creative thinking to interest users, make them potential customers and then drive them to buy. In order to be successful, it is critical that we discover and create the perfect content to engage our audience. We intend to hire a marketing company to manage and schedule upcoming posts, manage any questions or comments left by users, and analyze how effective our efforts will be. In addition, we will want this marketing company to perform a custom audit of all of our intended social media accounts and website to provide feedback and recommendations to take our proposed social media accounts to the next level in order to maximize our results.
Leverage Social Reviews to Automate Word of Mouth Marketing; - Using product reviews to create trust and provide insights on your products is a great way to increase sales. Yotpo is a popular free social review app that’s available in Shopify’s app store. The app helps convert over 8% of customers to reviewers through their mail after purchase email which results in a large number of reviews being created. The process is automated.
Traditional media
CocoLuv Inc. intends to engage a marketing firm to work with our digital and social media consultants in order to combine efforts to create maximum exposure and brand awareness through television and print campaigns alongside our digital and social media presence.
Sales Strategy
CocoLuv Inc.’s sales strategy is simple and straight forward for the purpose of maintaining focus. We first intend to sell our proposed products online through our proposed website while building and driving our proposed social and digital media presence. It is our plan that this will create revenue and the necessary brand awareness to move to our second step. This step is to supply to spas and hair salons and place our entire line on their shelves. We will have regular and seasonal promotions for our online customers and in addition, will work with our spa and salon customers to create effective sales and seasonal promotions that will drive their sales.
Patent and Trademarks
We do no currently own any domestic or foreign patents relating to our proposed products.
Employees
As of May 31, 2019, other than its President, Mr. Reymund Guillermo and Mr. Geoff Norman, its Secretary/Treasurer. The Company has no other employees.
As a “smaller reporting company,” as defined in Rule 12b-2 of the Exchange Act, we are not required to provide the information called for by this Item.
Not applicable to a “smaller reporting company” as defined in Item 10(f)(1) of Regulation S-K.
The Company does not own any real estate or other properties and has not entered into any long-term lease or rental agreements for property.
There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or stockholder is a party adverse to the Company or has a material interest adverse to the Company. Our address for service of process in Nevada is 112 North Curry Street, Carson City, Nevada, 89703-4934.
Not applicable.
Market Information
Our common stock was not quoted on any exchange or trading platform and therefore no data is available for the periods ended May 31, 2019 and May 31, 2018.
Not applicable to a “smaller reporting company” as defined in Rule 12b-2 of the Exchange Act.
This Management’s Discussion and Analysis of Financial Condition and Results of Operations is intended to provide a reader of our financial statements with a narrative from the perspective of our management on our financial condition, results of operations, liquidity, and certain other factors that may affect our future results. The following discussion and analysis should be read in conjunction with our audited consolidated financial statements and the accompanying notes thereto included in “Item 8. Financial Statements and Supplementary Data.” In addition to historical financial information, the following discussion and analysis contains forward-looking statements that involve risks, uncertainties and assumptions. See “Forward-Looking Statements.” Our results and the timing of selected events may differ materially from those anticipated in these forward-looking statements as a result of many factors.
Plan of Operations
Our plan of operation has two Phases. In Phase I, we intend to complete this offering of $150,000 and to develop a business relationship with our proposed manufacturer and supplier while seeking out additional companies to provide us the same services for redundancy and possible competitive price advantages. Phase II, we intended to raise an additional $250,000 and we plan to use the majority of these funds to conduct social media marketing to support initial customer online sales and begin to market our complete product lines for sale and use in salons and spas. Within the next 12 to 24 months CocoLuv Inc. plans to begin manufacturing and the sale of the 5 different hair products.
According to Research Nesters Virgin Coconut Oil Market the Global Demand Analysis & Opportunity Outlook 2023, the North American market is the second largest for Virgin Coconut Oil sales, in many forms, including hair products for both men and women. CocoLuv Inc. expects to capitalize on this future growth and demand potential. We intend to contribute to the social media exposure with a marketing campaign that is expected to reach individual customers and salons. This will prepare us for the latter part of the second Phase of our plan, which is to have complete product lines sold in salons across North America.
As the demand for quality and healthy haircare products is substantial, CocoLuv Inc. believes that we will be able to reach many cities across the whole of North America. Maintaining o ur mission; to create a company that will provide exceptional products of quality that embody the true value of the benefits of virgin coconut oil. This will be our plan of operation for the twelve months following the date of this prospectus. It is as follows: (i) complete the first Phase of our proposed plan: which is our intention to develop a business relationship with a manufacturer and supplier while seeking out additional companies to provide us the same services for redundancy and possible competitive price advantages (ii) at the same time we expect to drive a large marketing campaign over social media in order to generate interest in our products and product line.
We plan to find a marketing firm to assist in marketing our products and product line and the development of the second Phase of our proposed operational plan: we plan to conduct social media marketing to support online sales initially and support the expansion to sell complete product lines for sale and use in salons and spas. In addition, we will look to hire consultant and developer to upgrade our website to support expected sales demands, continue marketing and customer support services. In order to execute the two Phases of our proposed development program as outlined below, we anticipate spending $400,000 on program development, professional and administrative fees, including fees payable in connection with the filing of this registration statement, complying with reporting obligations and arranging financing for both Phases of our development program. Total expenditures during the next twelve months is estimated to be $200,000. If we are unable to raise the full amount in Phase I of this offering, we may not have sufficient to begin operations and may not cover the costs of the offering. Total expenditures over the next twenty-four months are therefore expected to be approximately $400,000. If we experience a shortage of funds prior to funding during the next twenty-four months, we may utilize funds from Mr. Guillermo, our Chairman of the Board of Directors, who has informally agreed to advance funds to allow us to pay for professional fees, including fees payable in connection with the filing of this registration statement and operation expenses, however he has no formal obligation, arrangement or legal commitment to advance or loan funds to the company. We will require the funds from this offering to proceed. If we receive only nominal funds from this offering, we plan to operate on a limited basis for the limited purpose of meeting our reporting obligations to the Securities and Exchange Commission. No such plan exists at this time in case of such contingency, and we cannot assure or guarantee that we would be able to raise additional funding if only nominal funding is obtained from this offering.