Business Context and Reporting Period
This Form 10-Q covers the quarterly period ended June 30, 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 with no active revenue-generating operations. It discontinued its lighting business in June 2008 and currently 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 | Six Months Ended June 30, 2010 | Six Months Ended June 30, 2009 |
|---|---|---|
| Revenue | $0 | $0 |
| Net Loss | $(9,834) | $(18,932) |
| Operating Expenses | $8,501 | $18,752 |
| Cash Flow from Operations | $(4,971) | $(15,552) |
| Cash Balance (End of Period) | $104 | $765 |
| Total Current Liabilities | $40,791 | $33,928 |
| Stockholders' Equity (Deficit) | $(40,687) | $(30,853) |
Debt and Liquidity: The company holds no long-term debt but has significant related-party notes payable totaling $37,890 (including accrued interest) as of June 30, 2010. Current liabilities exceed current assets by approximately $40,687, indicating a working capital deficit.
Material Changes vs. Prior Period
- Expense Reduction: Operating expenses decreased by approximately 54% year-over-year (from $18,752 to $8,501). This reduction was primarily driven by a decrease in professional fees, which dropped from $18,682 in 2009 to $8,401 in 2010. The 2009 fees included costs associated with submitting the company's stock for trading.
- Net Loss Improvement: The net loss narrowed from $(18,932) in the prior period to $(9,834) in the current period, reflecting the lower operating expenses.
- Cash Position: Cash on hand declined from $575 at the beginning of the period to $104 at the end of the period, despite financing inflows.
Outlook, Risks, and Management Commentary
- Going Concern: The filing includes a "Going Concern" note stating that substantial doubt exists regarding the company's ability to continue operations. This is due to accumulated losses, negative cash flows, and a lack of revenue. Management plans to raise funds through loans or stock sales, but there is no assurance of success.
- Related Party Financing: The company relies heavily on loans from an entity owned by its President/Principal Shareholder (Lorikeet, Inc.). During the six months ended June 30, 2010, the company received $4,500 in new related-party loans. A subsequent event note indicates an additional $5,000 loan was received in July 2010. All notes bear 8% interest and are due on demand.
- Controls and Procedures: 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 $99,000, but a full valuation allowance has been recorded against the deferred tax assets due to uncertainty regarding future profitability.
Investor Verification Checklist
- Capital Adequacy: Verify if the company has secured the additional financing required to meet its current liabilities of ~$40,800 and fund future operations, given the "Going Concern" warning.
- Related Party Terms: Confirm the repayment terms and interest accrual on the $37,890 in related-party debt, which is due on demand.
- Acquisition Progress: Assess if the company has identified any specific acquisition targets or entered into negotiations, as it currently has no business operations.
- Internal Controls: Review the status of remediation efforts regarding the ineffective disclosure controls and procedures.