Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended June 30, 2009, for Jolley Marketing, Inc. (Note: The input metadata referenced "Creative Medical Technology Holdings, Inc.", but the filing text explicitly identifies the registrant as Jolley Marketing, Inc.). The company is a Nevada corporation classified as a shell company with no active revenue-generating operations. It has no employees and intends to seek a merger or acquisition with an operating entity. The company has generated no revenue since June 2008 after discontinuing its lighting supplies business.
Key Financial Metrics
| Metric | Six Months Ended June 30, 2009 | Six Months Ended June 30, 2008 |
|---|---|---|
| Revenue | $0 | $2,457 (Discontinued) |
| Operating Expenses | $18,752 | $16,605 |
| Net Loss | $(18,932) | $(17,624) |
| Cash Flow from Operations | $(15,552) | $(10,482) |
| Cash Balance (End of Period) | $765 | $9,071 |
| Total Assets | $765 | $1,502 (Dec 31, 2008) |
| Total Liabilities | $18,940 | $745 (Dec 31, 2008) |
| Stockholders' Equity | $(18,175) | $757 (Dec 31, 2008) |
Debt and Liquidity: The company has a working capital deficit. Current liabilities ($18,940) significantly exceed current assets ($765). Liabilities consist primarily of $16,180 in notes payable and accrued interest to a related party (officer/shareholder) and $2,760 in accounts payable.
Material Changes
- Discontinued Operations: The company ceased its lighting supplies business in June 2008. Consequently, revenue dropped to zero for the current period compared to $2,457 in the prior year.
- Related Party Financing: To fund operations, the company borrowed $16,000 from an entity owned by an officer/shareholder during the first half of 2009. This resulted in a new liability of $16,180 (including accrued interest) compared to zero in the prior period.
- Equity Deficit: Due to accumulated losses, Stockholders' Equity turned negative, moving from a positive $757 at year-end 2008 to a deficit of $(18,175) as of June 30, 2009.
- Cash Position: Cash on hand decreased from $317 at the beginning of the period to $765 at the end, a net increase of $448 driven entirely by the related party loan, as operating activities consumed $15,552.
Outlook, Risks, and Management Commentary
- Going Concern: Management has raised substantial doubt about the company's ability to continue as a going concern due to net losses, negative cash flows, and a lack of revenue. The financial statements do not include adjustments that might result from this uncertainty.
- Future Strategy: The company plans to remain a shell company until a merger or acquisition is consummated. It anticipates minimal cash requirements until then, relying on financing from its sole director/officer or affiliates.
- Subsequent Events: In July 2009, the company received an additional loan of $2,500 from a related party.
- Internal Controls: Management concluded that disclosure controls and procedures were not effective as of the evaluation date.
- Tax Position: The company has net operating loss carryforwards of approximately $76,800, but a full valuation allowance has been recorded against the deferred tax assets.
Investor Verification Checklist
- Shell Status: Verify the company's intent to merge or acquire an operating entity, as it currently has no business operations.
- Related Party Dependence: Confirm the terms and repayment status of the $16,180 note payable to the officer/shareholder, which represents the majority of liabilities.
- Liquidity Risk: Assess the company's ability to meet the $18,940 in current liabilities with only $765 in cash.
- Control Deficiencies: Review the implications of the ineffective disclosure controls and procedures noted in Item 4T.
- Subsequent Financing: Verify the terms of the additional $2,500 loan received in July 2009.