Filing summary
Entity and period: The provided filing is for Bear Lake Recreation, Inc., not Modular Medical, Inc. It is a Form 10-Q for the three months ended September 30, 2013 (the company’s fiscal quarter; the filing does not identify it as calendar-year Q1). The filing describes the company as a development-stage shell with no operations.
Financial results and condition
- Revenue: $0 for the quarter, compared with $0 in the prior-year quarter. No quarterly gross profit or operating margin was generated.
- Expenses and loss: General and administrative expense was $4,405, down from $4,705. Imputed related-party interest expense was $2,805, versus $2,286. Net loss was $7,210, compared with $6,991; basic and diluted loss per share was $0.01 in both periods.
- Cash flow and liquidity: Cash and total assets were $0 at September 30, 2013. Quarterly operating cash flow was $0 because expenses and interest were offset by increases in payables. The company reported no investing or financing cash flows during the quarter.
- Liabilities and deficit: Current and total liabilities were $116,101, up from $108,891 at June 30, 2013. This included $95,022 owed to a shareholder, $20,654 of accrued related-party interest, and $425 of accounts payable. Stockholders’ deficit was $116,101.
- Debt terms: Related-party loans are unsecured, non-interest-bearing by contract, and payable on demand; the company records imputed interest at 10% annually. No cash interest was paid during the quarter.
Changes, outlook, and risks
Compared with the prior-year quarter, administrative costs declined, but net loss increased modestly, mainly alongside higher imputed interest. Management reported no operations and no identified acquisition or business venture. Its stated plan was to evaluate potential industries, adopt a business plan, and seek to commence operations through funding or acquisition of a going concern, including a possible merger with a well-capitalized operating company.
Management expected near-term cash needs to cover corporate standing, SEC reporting, legal and accounting costs, and evaluation of potential ventures. It said a principal shareholder had been paying operating expenses and therefore did not anticipate needing additional funds in the next 12 months; however, future funding needs were uncertain and shareholder advances may be required. The filing states that the absence 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 this uncertainty.
Management concluded disclosure controls were effective and reported no material change in internal control over financial reporting. The filing reported no off-balance-sheet arrangements or legal proceedings. Forward-looking statements are subject to risks including the ability to raise capital and general economic, market, regulatory, and other conditions.
Important facts for investors to verify
- Confirm the intended issuer: the supplied filing names Bear Lake Recreation, Inc., whereas the request identifies Modular Medical, Inc.
- Verify the company’s current operating status, corporate identity, and any subsequent merger, acquisition, or change in business plan.
- Assess the going-concern uncertainty and the company’s ability to meet obligations, especially shareholder loans payable on demand.
- Check subsequent filings for financing, new operations, changes in related-party balances, or updated cash and liability information.