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, 2012, filed October 31, 2012. It does not identify Modular Medical, Inc.; the company and requested “2012 Q1” metadata do not match the filing. The company describes itself as a development-stage company and reports shell-company status.
Financial performance and position
| Metric | Three months ended September 30, 2012 | Prior comparable period |
|---|---|---|
| Revenue | $0 | $0 |
| General and administrative expenses | $4,705 | $4,296 |
| Net loss | $6,991 | $6,135 |
| Basic and diluted loss per share | $0.01 | $0.01 |
| Operating cash flow | $0 | $0 |
At September 30, 2012, cash and total assets were $0. Total liabilities were $95,092, comprising $650 accounts payable, $84,177 payable to a related party, and $10,265 accrued related-party interest. Stockholders’ deficit was $95,092. The related-party balance is unsecured, non-interest-bearing and payable on demand; the company imputes interest at 10% annually. No cash interest or income taxes were paid during the quarter.
Changes versus prior period
Quarterly net loss increased by $856 from $6,135 to $6,991. General and administrative expenses rose by $409. Imputed related-party interest expense increased to $2,286 from $1,839. The company reported no operations or revenue in either quarter.
Outlook, risks and other matters
Management said the company intends to seek a merger with an existing, well-capitalized operating company and is considering possible industries and ventures. It had not identified an acquisition or venture and provided no quantified operating or financing guidance. Management expected near-term expenses to be covered by a principal shareholder, which paid $4,055 of expenses during the quarter; additional funding needs remain uncertain.
The filing states that having no assets or established operations and accumulating losses raise substantial doubt about the company’s ability to continue as a going concern. The financial statements contain no adjustments for the outcome of that uncertainty. The company reported no off-balance-sheet arrangements or legal proceedings. Management concluded disclosure controls were effective and reported no material change in internal control over financial reporting.
Important facts for investors to verify
- Confirm the filing is for Bear Lake Recreation, Inc., not Modular Medical, Inc., and clarify the intended reporting period.
- Assess the company’s ability to continue as a going concern given zero cash and assets, no operations, and $95,092 of liabilities.
- Verify the terms, demand status, and potential repayment of the $84,177 related-party payable and accrued imputed interest.
- Track whether the proposed merger or other business plan progresses and how any required funding would be obtained.