Filing summary
Reporting period and identity: The supplied filing is a Form 10-K for the fiscal year ended December 31, 2014, not a quarterly report. Although the request metadata names Creative Medical Technology Holdings, Inc., the filing itself identifies the registrant as Jolley Marketing, Inc. This summary reflects the filing text; the identity mismatch should be verified.
Business context
Jolley Marketing describes itself as a shell company with no operating business and no revenue since June 2008. Its former lighting-products business ceased operations in 2008. It is searching for a business to acquire or combine with, but had identified no target and reported no acquisition negotiations. The company had no employees or dedicated office facilities; its sole officer and director, Steven L. White, provided office space at no cost.
Financial results and condition
| Metric | FY 2014 | FY 2013 |
|---|---|---|
| Revenue | $0 | $0 |
| Operating expenses | $19,426 | $20,120 |
| Interest expense | $8,586 | $7,162 |
| Net loss | $28,012 | $27,282 |
| Net cash used in operations | $17,320 | $22,907 |
| Cash at year-end | $954 | $374 |
- Operating costs were primarily professional fees: $18,676 in 2014 versus $19,445 in 2013. No meaningful operating margin can be calculated because revenue was zero.
- At December 31, 2014, total assets were $954, consisting entirely of cash. The balance sheet reported accounts payable of $10,188 and related-party notes payable and accrued interest of $143,809, for total current liabilities of $153,997 and stockholders’ deficit of $153,043. The MD&A gives accounts payable as $10,189, a $1 difference from the balance sheet.
- Negative working capital was $153,043. Related-party financing supplied $17,900 in 2014; the company paid no interest in cash that year, and accrued interest increased.
- There were no off-balance-sheet arrangements. The filing does not report a debt covenant or credit facility.
Changes, outlook, and risks
- Compared with 2013, the net loss increased by $730 and interest expense rose by $1,424, which management attributed to increased notes payable. Operating expenses declined by $694. Operating cash outflow improved by $5,587, while year-end cash increased by $580.
- Management estimated expenses of approximately $30,000 for the next 12 months and said available working capital was insufficient to meet expected needs. It planned to seek loans or sell common stock and might rely on advances from the president or shareholders, but had no funding agreements.
- The independent auditor issued an unqualified opinion on the financial statements but highlighted substantial doubt about the company’s ability to continue as a going concern. Management likewise cited losses, no operations, and dependence on raising capital. The statements include no adjustments for the outcome of this uncertainty.
- On October 15, 2014, the company issued a $5,000 unsecured related-party note bearing 8% interest and payable on demand. In February 2015, two notes totaling $8,850 had their maturity dates extended by one year.
- Management concluded disclosure controls and internal control over financial reporting were not effective, citing the single-officer structure, lack of segregation of duties and accounting resources, and absence of an audit committee. The sole director was not independent.
- The company had no active trading volume in its common stock during 2014 or 2013, and the filing describes the stock as a penny stock. Its president beneficially owned 83.4% of outstanding shares as of February 17, 2015. Any future acquisition could substantially dilute existing shareholders and transfer control; the filing also describes potential conflicts if management negotiates a sale of its own shares alongside an acquisition.
Important facts to verify
- Confirm the registrant’s identity: the filing is for Jolley Marketing, Inc., not the company named in the request metadata.
- Reconcile the $1 discrepancy in reported 2014 accounts payable and confirm the related-party debt and accrued-interest balances and demand terms.
- Assess the company’s ability to fund its stated approximately $30,000 of expected expenses and its going-concern risk, including whether shareholder or officer financing is actually available.
- Review the lack of trading liquidity, concentrated ownership, potential dilution and control changes in any acquisition, and the disclosed management conflicts.
- Consider the acknowledged ineffective controls and lack of independent oversight when assessing financial-reporting risk.