Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended March 31, 2009, for Jolley Marketing, Inc. (Note: The input metadata referenced "Creative Medical Technology Holdings, Inc.", but the filing text 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 June 2008. It intends to seek a merger or acquisition with an operating entity. The company has no employees, and its sole director/officer provides services without cash compensation.
Key Financial Metrics
| Metric | Q1 2009 | Q1 2008 |
|---|---|---|
| Revenue | $0 | $1,720 (Discontinued) |
| Operating Expenses | $9,702 | $5,189 |
| Net Loss | $(9,702) | $(5,739) |
| Cash at Period End | $146 | $17,558 |
| Total Assets | $146 | $1,502 |
| Total Liabilities | $9,091 | $745 |
| Stockholders' Equity | $(8,945) | $757 |
| Shares Outstanding | 18,113,750 | 16,913,750 |
Liquidity and Debt: The company has a working capital deficit of $8,945. Current liabilities ($9,091) significantly exceed current assets ($146). There is no long-term debt, but accounts payable increased substantially during the quarter.
Material Changes vs. Prior Period
- Revenue: Revenue dropped to zero as the company discontinued its lighting supplies business in June 2008. The prior year included $1,720 in revenue from discontinued operations.
- Expenses: Operating expenses increased by approximately 87% (from $5,189 to $9,702), driven primarily by a rise in professional fees from $4,932 to $9,702 due to public filing requirements.
- Liquidity: Cash reserves declined from $317 at the start of the period to $146 at the end. Total assets decreased from $1,502 to $146.
- Liabilities: Accounts payable surged from $745 to $9,091, reflecting unpaid obligations.
Outlook, Risks, and Management Commentary
Going Concern: The filing explicitly states that substantial doubt exists regarding the company's ability to continue as a going concern. This is due to recurring net losses, negative cash flows, and a lack of revenue-generating activities. Management plans to raise funds through loans or stock sales, but there is no assurance of success.
Subsequent Events: In April and May 2009, the company received $11,000 in loans from an officer/shareholder. These loans are due on demand and bear 8% annual interest.
Controls and Procedures: Management concluded that disclosure controls and procedures were not effective as of the evaluation date.
Tax Position: The company has net operating loss carryforwards of approximately $67,600 expiring between 2027 and 2029. A full valuation allowance has been recorded against deferred tax assets.
Investor Verification Checklist
- Verify the company's status as a shell company with no active operations and no identified acquisition target.
- Confirm the $11,000 in subsequent loans from an officer/shareholder and the terms (due on demand, 8% interest).
- Assess the sustainability of operations given the $146 cash balance and $9,091 in current liabilities.
- Review the effectiveness of internal controls, which management has admitted are ineffective.
- Monitor for any future capital raises or merger announcements, as these are the only paths to solvency.