Business context and reporting period
The supplied filing is Jolley Marketing, Inc.’s unaudited Form 10-Q for the quarter ended March 31, 2013—not a filing identified as Creative Medical Technology Holdings, Inc. Jolley describes itself as a shell company with no revenue since September 2008, pursuing a possible acquisition; it had identified no target or entered acquisition negotiations.
Financial results and liquidity
| Metric | Q1 2013 | Q1 2012 |
|---|---|---|
| Revenue | $0 | $0 |
| Professional fees | $8,454 | $7,812 |
| Related-party interest expense | $1,595 | $1,240 |
| Net loss | $(10,049) | $(9,052) |
| Basic and diluted loss per share | $(0.00) | $(0.00) |
| Cash used in operating activities | $(9,034) | $(6,974) |
| Cash at quarter-end | $597 | $631 |
At March 31, 2013, current assets were $1,778 (including $1,181 prepaid expense) against current liabilities of $109,576, a working-capital deficit of $107,798. Liabilities included $84,450 of related-party notes and $15,332 of accrued interest, as well as $9,794 of accounts payable. Total assets were $1,778 and stockholders’ deficit was $107,798. The company had no revenue, so a meaningful revenue margin is not applicable.
Changes, outlook, and risks
Compared with Q1 2012, net loss increased by $997; professional fees and interest expense both rose. Operating cash outflow increased by $2,060. Related parties advanced $8,850 during Q1 2013 through unsecured notes bearing 8% interest, due on demand.
Management estimated ongoing public-company expenses of about $20,000 per year and anticipated that related-party advances would meet needs for the next 12 months, but gave no assurance. It may seek additional related-party loans, equity sales, or other debt financing. The company had no capital-expenditure commitments or line of credit. Management reported that the lack of revenue, operating losses and cash outflows, and current liabilities exceeding current assets raise substantial doubt about the company’s ability to continue as a going concern; there is no assurance it can raise funds or achieve profitable operations. The financial statements include no adjustments for the outcome of this uncertainty.
Management concluded disclosure controls and procedures were not effective as of quarter-end. It reported no material changes to internal control over financial reporting during the quarter. The filing states there were no subsequent events requiring disclosure.
Important facts to verify
- Confirm issuer identity: the provided metadata names Creative Medical Technology Holdings, Inc., while the filing itself names Jolley Marketing, Inc.
- Verify the availability and terms of related-party funding, including demand repayment obligations and the ability to meet the stated 12-month cash needs.
- Assess the going-concern uncertainty, substantial working-capital deficit, and absence of revenue or an identified acquisition target.
- Review the disclosed ineffective controls and any subsequent developments not covered by this quarter’s filing.