Filing summary
Entity and period: The request identifies Modular Medical, Inc., but the supplied filing is for Bear Lake Recreation, Inc. This Form 10-Q covers the quarter ended September 30, 2011, the company’s fiscal first quarter following its June 30 year-end. The filing describes Bear Lake as a development-stage, shell company with no current operations. The company reported 1,249,816 common shares outstanding as of November 3, 2011.
Financial results and position
| Metric | Quarter ended September 30, 2011 | Comparable 2010 quarter |
|---|---|---|
| Revenue | $0 | $0 |
| General and administrative expenses | $4,296 | $3,917 |
| Related-party interest expense | $1,839 | $0 |
| Net loss | $6,135 | $3,917 |
| Basic and diluted loss per share | $0.01 | $0.01 |
| Net cash from operating activities | $0 | $0 |
| Cash at quarter-end | $0 | Not stated in the comparison presented |
At September 30, 2011, total assets were $0 and total liabilities were $76,744, consisting of $74,425 payable to a related party, $1,839 accrued related-party interest, and $480 accounts payable. Stockholders’ deficit was $76,744. The related-party balance is unsecured, payable on demand, and described as non-interest-bearing; the company imputes interest at 10% annually. No interest or income taxes were paid in cash during the quarter. The filing reports no margins because there was no quarterly revenue.
Since inception, the company reported $1,396 in revenue, a cumulative net loss of $160,822, and cumulative operating cash outflow of $57,336. Cash flows from investing and financing activities since inception were outflows of $22,742 and net inflows of $80,078, respectively.
Changes and management outlook
Compared with the prior-year quarter, general and administrative expenses increased by $379 and net loss increased by $2,218. The current-quarter loss included $1,839 of imputed related-party interest, versus none in the prior-year quarter. Management attributed most general and administrative expenses to accounting and office fees.
Management’s plan for the next 12 months was to consider industries, develop a business plan, and pursue operations through funding or acquisition of an operating company. It intended to seek a merger with a well-capitalized operating company. Management said a principal shareholder had been paying operating expenses and did not anticipate needing additional funds during the next 12 months for foreseeable expenses; however, the filing says the amount of any funding needed for a potential venture could not be predicted.
Risks, contingencies, and other matters
- The company had no significant assets and had not established operations. Accumulated losses and these conditions raised substantial doubt about its ability to continue as a going concern. The statements include no adjustments for the outcome of that uncertainty.
- There was no cash available at quarter-end. The company may depend on management or shareholders for loans, which are payable on demand.
- The company identified the ability to raise capital and general economic, market, regulatory, and other factors as risks that could cause actual results to differ from forward-looking statements.
- Management concluded disclosure controls and procedures were effective and reported no material change in internal control over financial reporting during the quarter. The filing reported no legal proceedings or off-balance-sheet arrangements.
Important facts for investors to verify
- Confirm the filing’s issuer: the supplied document is Bear Lake Recreation, Inc., not Modular Medical, Inc.
- Verify the company’s current corporate status, business plan, and any subsequent merger, acquisition, or operating activity.
- Assess how the company can meet obligations with zero cash and whether the shareholder-related payable will be demanded, extended, or converted.
- Review subsequent filings for funding needs, going-concern developments, and changes in share count or ownership.