Filing identity and reporting period
The supplied filing is Bear Lake Recreation, Inc.’s unaudited Form 10-Q for the three months ended September 30, 2014, not a filing identified as Modular Medical, Inc. The filing describes Bear Lake as a Nevada shell company with no operations or assets. It reports 1,249,816 common shares outstanding as of November 12, 2014.
Financial performance and condition
- Revenue: $0 for the quarter; the company reported no operations.
- Expenses and earnings: General and administrative expenses were $4,524, versus $4,405 in the prior-year quarter. Related-party imputed interest expense was $3,334, versus $2,805. Net loss was $7,858, compared with $7,210; basic and diluted loss per share was $0.01 in both periods.
- Cash flow: Reported operating, investing, and financing cash flows were each $0 for the quarter and the comparative period. No cash or cash equivalents were on hand at September 30, 2014; cash paid for interest and income taxes was $0.
- Assets, liabilities, and liquidity: Total assets were $0. Current and total liabilities were $139,543, up from $131,685 at June 30, 2014, consisting of $4,100 accounts payable, $102,238 due to a related party, and $33,205 accrued related-party interest. Stockholders’ deficit was $139,543.
- Debt and related parties: The related-party loans are described as unsecured, payable on demand, and non-interest-bearing, but the company imputes interest at 10% annually. A principal shareholder paid $1,974 of expenses during the quarter.
Changes, outlook, and risks
Compared with the prior-year quarter, the net loss increased by $648, mainly because of higher imputed interest expense. General and administrative expenses rose by $119. Management’s stated plan was to consider potential industries and pursue a business through funding or acquisition, particularly a merger with an existing, well-capitalized operating company. No venture or acquisition had been identified, and the filing says the amount of any related-party funding required cannot be predicted. Management expected the principal shareholder to continue paying operating expenses and did not anticipate needing additional funds during the next 12 months, but this depends on continued support.
The filing states that the lack of assets and operations and accumulated losses raise substantial doubt about the company’s ability to continue as a going concern. The financial statements include no adjustments for the outcome of that uncertainty. The filing reports no legal proceedings or off-balance-sheet arrangements, and no material change in internal control over financial reporting; management concluded disclosure controls were effective. The company early-adopted ASU 2014-10.
Important facts for investors to verify
- Confirm the issuer: the provided filing is for Bear Lake Recreation, Inc., not Modular Medical, Inc.
- Verify the reported zero assets and cash against the company’s financial statements and any subsequent filings.
- Review the terms, demand status, and continued availability of shareholder advances, including the treatment of imputed interest.
- Assess the going-concern uncertainty and whether the proposed merger or acquisition plan has progressed.
- Note the filing’s stated period end of September 30, 2014; the request metadata’s “2014 Q1” label does not match a clearly stated fiscal-quarter designation in the supplied text.