Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended March 31, 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 involves 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 | Q1 2011 | Q1 2010 |
|---|---|---|
| Revenue | $0 | $0 |
| Net Loss | $(8,182) | $(7,946) |
| Operating Expenses | $7,270 | $7,324 |
| Interest Expense (Related Party) | $(912) | $(622) |
| Cash Flow from Operations | $(3,750) | $(4,971) |
| Cash Flow from Financing | $3,650 | $4,500 |
| Cash Balance (End of Period) | $314 | $104 |
| Total Assets | $314 | $414 |
| Total Liabilities | $56,605 | $48,523 |
| Stockholders' Equity (Deficit) | $(56,291) | $(48,109) |
Material Changes vs. Prior Period
- Liabilities: Total current liabilities increased by approximately $8,082, driven by new accounts payable of $3,520 and an increase in related-party notes payable and accrued interest.
- Cash Position: Cash decreased by $100 during the quarter, ending at $314. This was offset by $3,650 in proceeds from a related-party note issuance.
- Expenses: Professional fees decreased slightly from $7,224 to $6,520, while other general and administrative expenses increased from $100 to $750.
- Equity: The accumulated deficit grew by $8,182 due to the net loss for the period.
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 due to recurring losses, negative cash flows, and a lack of revenue. Management intends to raise funds through loans or stock sales, with no assurance of success.
- Related Party Dependence: The company is heavily reliant on loans from an entity owned by an officer/shareholder (Lorikeet, Inc.). A new $3,650 note was issued in March 2011, and a subsequent $5,000 loan was received in May 2011. All notes bear 8% interest and are due on demand.
- Controls and Procedures: Management concluded that disclosure controls and procedures are not effective.
- Future Strategy: The company remains a shell entity awaiting a merger or acquisition. No specific target has been identified.
Investor Verification Checklist
- Capital Adequacy: Verify the company's ability to secure additional funding given the $56,605 in liabilities against only $314 in cash.
- Related Party Terms: Confirm the repayment terms and interest accrual on the $53,085 in related-party debt, which is due on demand.
- Acquisition Status: Determine if any negotiations for a merger or acquisition have commenced, as the company has no independent revenue stream.
- Internal Controls: Assess the risk of financial misstatement given the management's admission of ineffective disclosure controls.
- Subsequent Events: Note the $5,000 loan received in May 2011 and its impact on the company's liquidity post-filing.