Business Context and Reporting Period
This Form 8-K, dated April 29, 2016, reports a material definitive agreement entered into by Jolley Marketing, Inc. (JLLM). The filing details a reverse merger transaction with Creative Medical Technologies, Inc. (CMT), scheduled to close on May 18, 2016. Upon closing, CMT will become the surviving corporation and a wholly-owned subsidiary of JLLM, effectively changing the company's business focus and management structure.
Key Financial Metrics and Transaction Terms
- Share Exchange Ratio: Each share of CMT common stock will convert into 6.4666666 shares of JLLM common stock.
- Post-Closing Ownership: CMT shareholders will own approximately 97% of the combined entity (not less than 97,000,000 shares).
- Post-Closing Capitalization: JLLM anticipates 100,013,750 shares of common stock outstanding.
- Share Repurchase: Steven L. White (majority shareholder of JLLM) will sell 15,100,000 shares to JLLM for $5,000, after which they will be cancelled.
- Debt and Advances: CMT's parent company will advance a total of $25,000 to JLLM at closing. Prior to this filing, $13,255.70 had already been advanced. These amounts will be evidenced by a promissory note.
- Debt Settlement: JLLM agreed to settle all outstanding promissory notes except those not exceeding $20,000, which will be paid post-closing.
Material Changes Versus Prior Period
The filing does not provide comparative financial performance data (revenue, profit, or cash flow) for the prior period. The material change is structural: the company is transitioning from Jolley Marketing, Inc. to a CMT-controlled entity through a reverse merger. This includes a complete change in the Board of Directors, with Timothy Warbington, Donald Dickerson, Thomas Ichim, and Amit Patel appointed effective immediately following the closing.
Guidance, Outlook, and Risks
- Closing Conditions: The transaction is subject to conditions including no material changes in the business or financial condition of the entities and the continued accuracy of representations and warranties.
- Regulatory Status: Shares issued pursuant to the conversion are not registered under the Securities Act of 1933 and cannot be offered or sold in the U.S. absent registration or an applicable exemption.
- Management Commentary: The filing focuses on the mechanics of the merger and the change of control rather than operational guidance or future revenue projections.
Important Facts for Investor Verification
- Verify the exact closing date of May 18, 2016, and whether all conditions precedent were met.
- Confirm the final post-closing share count and the specific terms of the promissory note for the $25,000 advance.
- Review the Information Statement filed under Rule 14f-1 for details on the new Board of Directors and corporate governance.
- Check the status of the unregistered shares issued to CMT shareholders regarding their liquidity and resale restrictions.
- Verify the settlement of JLLM's existing debt obligations, specifically the notes under $20,000.