Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended September 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 discontinued its previous lighting supplies business and is currently seeking to acquire assets or voting securities of an operating company. The company has no employees, and its sole director/officer provides services without cash compensation.
Key Financial Metrics
| Metric | Period Ended Sep 30, 2009 | Period Ended Sep 30, 2008 |
|---|---|---|
| Revenue | $0 | $0 (3-month) / $2,457 (9-month discontinued) |
| Net Loss | $(2,947) (3-month) / $(21,879) (9-month) | $(23,071) (3-month) / $(40,695) (9-month) |
| Operating Expenses | $2,575 (3-month) / $21,327 (9-month) | $24,944 (3-month) / $41,549 (9-month) |
| Cash and Cash Equivalents | $430 | $10,441 (End of 9-month period) |
| Total Assets | $430 | $1,502 (Dec 31, 2008) |
| Total Liabilities | $21,552 | $745 (Dec 31, 2008) |
| Stockholders' Equity | $(21,122) | $757 (Dec 31, 2008) |
| Debt (Notes Payable - Related Party) | $21,000 principal + $552 accrued interest | $0 |
Material Changes vs. Prior Period
- Revenue: The company generated no revenue in the current period. In the prior year, revenue of $2,457 was generated from discontinued operations before the business was shut down in June 2008.
- Expenses: Operating expenses decreased significantly from $41,549 in the prior nine-month period to $21,327 in the current period, primarily due to a reduction in professional fees ($40,283 vs. $21,232).
- Liquidity: Cash balances declined from $10,441 at the end of the prior nine-month period to $430 as of September 30, 2009. Net cash used by operating activities was $20,887 for the nine months ended September 30, 2009.
- Debt: The company incurred $21,000 in related-party debt during the current period to fund operations, whereas no such debt existed in the prior period.
- Equity: Stockholders' equity turned negative, moving from a surplus of $757 at year-end 2008 to a deficit of $(21,122) due to accumulated losses.
Outlook, Risks, and Management Commentary
- Going Concern: The filing includes a substantial doubt disclosure regarding the company's ability to continue as a going concern. This is due to recurring net losses, negative cash flows, current liabilities exceeding current assets, 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 Strategy: The company remains a shell entity with no identified acquisition target. It anticipates minimal cash requirements until a merger or acquisition is consummated.
- Internal Controls: Management concluded that disclosure controls and procedures are not effective as of the evaluation date.
- Tax Position: The company has net operating loss carryforwards of approximately $79,400, but a full valuation allowance has been recorded against the deferred tax assets due to uncertainty regarding future utilization.
Investor Verification Checklist
- Shell Status: Verify the company's status as a shell company with no active operations and no identified acquisition target.
- Liquidity Crisis: Confirm the extremely low cash balance ($430) against current liabilities ($21,552) and the reliance on related-party financing.
- Related Party Dependence: Note that all recent debt ($21,000) is owed to an entity owned by an officer/shareholder, due on demand with 8% interest.
- Control Deficiencies: Acknowledge the formal statement that internal disclosure controls are ineffective.
- Going Concern Risk: Assess the high risk of insolvency given the negative equity and lack of revenue.