Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended March 31, 2010, 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 and a smaller reporting company. It has no revenue-generating operations, having discontinued its lighting business in June 2008. The company's current strategy is to seek a merger or acquisition with an operating entity. As of May 6, 2010, there were 18,113,750 shares of common stock outstanding.
Key Financial Metrics
| Metric | Q1 2010 | Q1 2009 |
|---|---|---|
| Revenue | $0 | $0 |
| Operating Expenses | $7,324 | $9,702 |
| Net Loss | $(7,946) | $(9,702) |
| Cash Flow from Operations | $(4,971) | $(171) |
| Cash Flow from Financing | $4,500 | $0 |
| Cash Balance (End of Period) | $104 | $146 |
| Total Assets | $104 | $3,075 |
| Total Liabilities | $38,903 | $33,928 |
| Stockholders' Equity (Deficit) | $(38,799) | $(30,853) |
Debt and Liquidity: The company has significant related-party debt. Notes payable and accrued interest to a related party totaled $37,179 as of March 31, 2010, up from $32,059 in the prior period. Current liabilities ($38,903) significantly exceed current assets ($104), indicating a negative working capital position.
Material Changes vs. Prior Period
- Operating Expenses: Decreased by approximately 24% from $9,702 in Q1 2009 to $7,324 in Q1 2010, primarily due to a reduction in professional fees.
- Net Loss: Improved slightly from a loss of $9,702 to $7,946.
- Cash Position: Cash on hand declined from $575 at the beginning of the period to $104 at the end, despite financing proceeds. The decrease in prepaid expenses ($2,500) provided a non-cash adjustment to operating cash flow.
- Debt: Related-party notes payable increased by $5,122 during the quarter, driven by new borrowings and accrued interest.
Outlook, Risks, and Management Commentary
- Going Concern: The filing explicitly states that the company's financial condition raises substantial doubt about its ability to continue as a going concern. This is due to accumulated losses, negative cash flows, and a lack of revenue-generating activities.
- Capital Needs: Management intends to raise necessary funds through loans or additional sales of common stock. There is no assurance that such capital will be secured.
- Business Plan: The company remains a shell with no employees and no identified acquisition target. Operations are minimal, funded by the sole director/officer or affiliates.
- Internal Controls: Management concluded that disclosure controls and procedures are not effective as of the evaluation date.
- Tax Status: The company has net operating loss carryforwards of approximately $97,000, but a full valuation allowance has been recorded against the deferred tax assets due to uncertainty regarding future profitability.
Investor Verification Checklist
- Shell Status: Verify the company's status as a shell company with no active operations and no identified merger target.
- Liquidity Crisis: Confirm the extremely low cash balance ($104) against current liabilities of nearly $39,000.
- Related-Party Dependence: Assess the reliance on loans from an officer/shareholder to fund operations and the terms of these notes (due on demand, 8% interest).
- Going Concern Risk: Review the auditor's or management's assessment regarding the company's ability to survive without immediate capital infusion.
- Control Deficiencies: Note the admission of ineffective disclosure controls and procedures.