Filing summary
Entity and period: The supplied filing is Jolley Marketing, Inc.’s unaudited Form 10-Q for the quarter and nine months ended September 30, 2013. This does not match the request metadata naming Creative Medical Technology Holdings, Inc.; verify the issuer before relying on this summary.
Business context
Jolley describes itself as a shell company with no revenue since September 2008. It intends to seek a business combination but reports no identified target, negotiations, or acquisition commitments. It has no employees; its sole officer and director provides services without compensation.
Financial results and position
| Metric | Three months ended September 30, 2013 | Nine months ended September 30, 2013 | Comparison |
|---|---|---|---|
| Revenue | $0 | $0 | $0 in both comparable 2012 periods |
| Operating expenses | $3,597 | $16,037 | $4,083 and $15,589 in 2012 |
| Interest expense | $1,846 | $5,195 | $1,418 and $4,003 in 2012 |
| Net loss | $5,443 | $21,232 | $5,501 and $19,592 in 2012 |
| Basic and diluted loss per share | $(0.00) | $(0.00) | Same reported amount in 2012 |
At September 30, 2013, cash and total current assets were $398, versus $1,568 at December 31, 2012. Current liabilities were $119,379, including $8,098 accounts payable and $111,281 in related-party notes and accrued interest. Stockholders’ deficit was $118,981. Related-party notes are generally due on demand and bear 8% interest.
For the nine months, operating cash outflow was $18,609, compared with $13,549 in 2012. Financing provided $18,226, including $26,550 in related-party note proceeds and $8,324 in repayments. Cash declined by $383 to $398. The filing reports no investing cash flows.
Changes, outlook, and risks
- Nine-month net loss increased by $1,640 year over year; management attributes the increase to higher professional fees, including XBRL services, and higher interest expense associated with increased borrowings. Quarterly net loss was $58 lower than in 2012.
- Management estimates ongoing expenses of about $20,000 annually and expects to need additional funding. It anticipates related-party advances may cover needs for the next 12 months, but gives no assurance; it may also seek loans, equity financing, or other debt.
- The filing states that operating losses, negative operating cash flows, liabilities exceeding current assets, and absence of revenue raise substantial doubt about the company’s ability to continue as a going concern. It warns that financing or profitable operations are not assured.
- A minority shareholder loaned the company $9,300 on November 7, 2013, after quarter-end, under an 8% demand note for operating costs. During the quarter, the company also issued a related-party $12,000 unsecured demand note at 8%.
- Management concluded disclosure controls and procedures were not effective as of September 30, 2013. No material change in internal control over financial reporting was reported during the quarter.
Important facts to verify
- Confirm the filing belongs to the intended company: its cover and financial statements identify Jolley Marketing, Inc., not Creative Medical Technology Holdings, Inc.
- Reconcile the going-concern note’s stated nine-month net loss of $21,237 with the statements of operations and MD&A, which report $21,232.
- Verify the composition and terms of the $111,281 related-party notes and accrued interest, including demand repayment provisions and subsequent financing.
- Assess the company’s ability to obtain funding and the status of any potential business combination; no target or agreement is disclosed.