Business Context and Reporting Period
The supplied filing is a Form 10-Q for Bear Lake Recreation, Inc., for the quarter ended December 31, 2015 (the six-month period ended December 31, 2015). This does not match the request metadata identifying Modular Medical, Inc.; the filing’s figures and disclosures below are for Bear Lake Recreation, Inc.
The company reported no operations and identified itself as a shell company. It said it intended to seek a merger with an existing, well-capitalized operating company. The filing is unaudited.
Financial Results and Position
| Metric | Three months ended Dec. 31, 2015 | Three months ended Dec. 31, 2014 | Six months ended Dec. 31, 2015 | Six months ended Dec. 31, 2014 |
|---|---|---|---|---|
| Revenue | $0 | $0 | $0 | $0 |
| General and administrative expenses | $2,417 | $3,857 | $9,268 | $8,381 |
| Related-party interest expense | $4,440 | $3,676 | $8,621 | $7,010 |
| Net loss | $6,857 | $7,533 | $17,889 | $15,391 |
| Basic and diluted loss per share | $0.01 | $0.01 | $0.01 | $0.01 |
At December 31, 2015, the company reported no assets or cash, current liabilities of $180,568, and a stockholders’ deficit of $180,568. Liabilities included $127,197 due to a shareholder and $53,371 of accrued related-party interest. The shareholder advances are unsecured, non-interest-bearing and payable on demand; the company imputes interest at 10% annually.
For the six months, reported operating, investing and financing cash flows were each $0, with no beginning or ending cash. Operating expenses and accrued interest were offset in the cash-flow reconciliation by changes in prepaid expenses and related-party payables. Cash interest and income taxes paid were both $0.
Changes, Outlook and Risks
- Quarterly net loss narrowed by $676 year over year, while six-month net loss increased by $2,498. Management attributed the quarterly improvement primarily to lower amortization of prepaid OTCMarkets QB listing costs; the six-month expense increase reflected more months of listing costs recognized in 2015.
- The company did not renew its OTCMarkets QB listing, which expired October 30, 2015.
- Management said foreseeable cash needs over the next 12 months were for corporate standing, SEC reporting and related professional fees, and evaluating potential ventures. It did not anticipate needing to raise funds during that period because a principal shareholder had been paying expenses. Management noted that additional funding might be advanced as shareholder or management loans if needed.
- The company had no identified acquisition or venture, making the amount of any potential loan or transaction funding uncertain. It disclosed substantial doubt about its ability to continue as a going concern; the financial statements include no adjustments for the outcome of that uncertainty.
- Management reported disclosure controls as effective and 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 to Verify
- Confirm whether this Bear Lake Recreation filing is the intended document, given the mismatch with the requested company, Modular Medical, Inc.
- Verify the demand terms and collectability or repayment expectations for the $127,197 shareholder payable and $53,371 accrued interest.
- Assess how the company will fund SEC reporting and other obligations given its lack of cash and assets, and the going-concern uncertainty.
- Confirm the status and terms of any contemplated merger or acquisition; none had been identified in this filing.