Filing summary
Important identity discrepancy: The request identifies Creative Medical Technology Holdings, Inc., but the supplied Form 10-Q is for Jolley Marketing, Inc. The summary below describes the supplied filing and should not be attributed to Creative Medical without verification.
Business context and reporting period
Jolley Marketing reported for the quarter and six months ended June 30, 2015. It describes itself as a Nevada shell company with no employees, no revenue since September 2008, and no identified acquisition target or active acquisition negotiations. Its stated plan is to seek a business combination while maintaining public-company reporting.
Financial results and position
| Metric | Three months ended June 30, 2015 | Three months ended June 30, 2014 | Six months ended June 30, 2015 | Six months ended June 30, 2014 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| Operating expenses | $3,765 | $3,635 | $10,757 | $11,674 |
| Related-party interest expense | $2,502 | $2,106 | $4,782 | $4,082 |
| Net loss | $6,267 | $5,741 | $15,539 | $15,756 |
- Per-share loss: Reported as $0.00 per share (rounded) for each period; weighted average shares were 18,113,750.
- Cash and liquidity: Cash was $641 at June 30, 2015, down from $954 at December 31, 2014. Current liabilities were $169,223, yielding a working-capital deficit of $168,582.
- Liabilities and debt: Current liabilities included $11,330 in accounts payable and $157,893 in related-party notes payable and accrued interest. Management’s discussion breaks the latter into $126,000 of notes and $31,893 of accrued interest. Certain notes are due on demand and bear 8% interest.
- Cash flows: Six-month operating cash use was $10,313, compared with $9,335 in 2014. Financing provided $10,000, including $13,000 of related-party note proceeds and $3,000 of note repayments; 2014 financing provided $10,250. No investing cash flows were reported.
- Margins: Not meaningful because the company reported no revenue.
Changes versus the prior comparable period
Quarterly net loss increased by $526, primarily alongside higher professional fees and related-party interest expense. For the first six months, net loss improved by $217 as lower professional fees and other general and administrative costs more than offset higher interest expense. Operating cash use increased by $978 year over year. Related-party financing remained essential, and cash declined during the first half.
Outlook, risks, and unusual items
- Going concern: The filing states that the six-month loss, negative operating cash flow, current liabilities exceeding current assets, and lack of revenue raise substantial doubt about the company’s ability to continue as a going concern. Management expects to seek loans or sell common stock, but says there is no assurance of obtaining capital or achieving profitable operations.
- Funding outlook: Management estimates ongoing public-company costs of about $30,000 annually and expects related parties to advance enough funds for the next 12 months, but provides no assurance. No capital-expenditure commitments or credit line were reported.
- Acquisition plan: No target, agreement, or financing commitment for a business combination was identified. The filing cautions that an acquisition may not be found or completed on favorable terms.
- Related-party transactions: The company issued a $5,000 unsecured, 8% demand note to a related party in May 2015. It repaid a separate $3,000 related-party note and obtained maturity extensions on several other notes, including amendments disclosed after quarter-end.
- Controls: The president/principal financial officer concluded that disclosure controls and procedures were not effective. No material change in internal control over financial reporting was reported during the quarter.
- Reporting inconsistency: The MD&A labels amounts that include interest expense as “operating expenses.” The financial statements separately present operating expenses and interest expense; their presentation is used above.
- Market risk: Quantitative and qualitative market-risk disclosure was stated to be not required for this smaller reporting company.
Most important facts to verify
- Whether the supplied Jolley Marketing filing is the intended filing for Creative Medical Technology Holdings.
- The composition, terms, demand status, and maturity dates of related-party notes and accrued interest.
- Whether related parties will continue funding operations and whether the company can meet its estimated annual expenses.
- Management’s stated going-concern uncertainty and ineffective disclosure controls.
- The MD&A expense-labeling discrepancy against the financial statements.