Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended June 30, 2011, 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 since September 2008. Its primary business plan is to seek a merger or acquisition with an operating company. The company has no employees, and its sole director/officer provides services without cash compensation.
Key Financial Metrics
| Metric | Six Months Ended June 30, 2011 | Six Months Ended June 30, 2010 |
|---|---|---|
| Revenue | $0 | $0 |
| Net Loss | $(12,654) | $(9,834) |
| Operating Expenses | $10,717 | $8,501 |
| Interest Expense (Related Party) | $(1,937) | $(1,333) |
| Cash Flow from Operations | $(8,664) | $(4,971) |
| Cash Flow from Financing | $8,650 | $4,500 |
| Cash Balance (End of Period) | $400 | $104 |
| Total Assets | $400 | $414 |
| Total Liabilities | $61,163 | $48,523 |
| Stockholders' Deficit | $(60,763) | $(48,109) |
Material Changes vs. Prior Period
- Increased Losses: Net loss for the six-month period increased by approximately 29% compared to the prior year, driven primarily by higher professional fees ($9,773 vs. $8,401) and increased interest expense on related-party debt.
- Liquidity Position: Cash on hand decreased slightly from $414 to $400. The company remains in a negative working capital position, with current liabilities ($61,163) significantly exceeding current assets ($400).
- Debt Accumulation: Related-party notes payable and accrued interest increased. Total related-party debt obligations (principal and accrued interest) grew from approximately $52,546 at year-end 2010 to $59,110 at June 30, 2011.
Outlook, Risks, and Management Commentary
- Going Concern: The filing explicitly states that the company's losses, negative cash flows, and lack of revenue raise substantial doubt about its ability to continue as a going concern. Financial statements do not include adjustments for potential liquidation.
- Capital Needs: Management estimates annual operating expenses at approximately $20,000. The company anticipates relying on advances from related parties (specifically the President's entity, Lorikeet, Inc.) to fund operations for the next 12 months. There is no assurance that such funding will be available.
- Acquisition Strategy: The company has not identified a specific acquisition target. It intends to remain a shell company until a merger is consummated.
- Internal Controls: Management concluded that disclosure controls and procedures are not effective as of the evaluation date.
- Subsequent Events: On July 11, 2011, the company amended its Articles of Incorporation to increase authorized common stock to 600,000,000 shares.
Investor Verification Checklist
- Shell Status: Verify the company has no active business operations and is solely seeking an acquisition target.
- Related Party Dependence: Confirm the extent of reliance on the President (Steven L. White) and his entity (Lorikeet, Inc.) for all operating capital and debt financing.
- Liquidity Risk: Assess the risk of insolvency given the $61,163 in liabilities against only $400 in cash.
- Control Deficiencies: Note the formal admission that disclosure controls and procedures are ineffective.
- Capitalization: Verify the recent amendment to authorized share count (600 million shares) and potential dilution risks in a future reverse merger.