Filing summary
Important identification discrepancy: The request identifies Modular Medical, Inc. and “2014 Q3,” but the supplied filing is for Bear Lake Recreation, Inc., for the quarter and nine months ended March 31, 2015. The filing describes a fiscal third quarter of 2015, not 2014. This summary reflects the supplied filing.
Business context and reporting period
Bear Lake Recreation reported no established operations and no revenue for the three or nine months ended March 31, 2015. It identified itself as a shell company and said it intended to seek a merger with an existing, well-capitalized operating company. The interim financial statements are unaudited.
Financial results and liquidity
- Revenue and margins: No revenue or cost of goods sold in the three- or nine-month periods; gross profit was zero.
- Expenses and net loss: Third-quarter general and administrative expense was $4,117, versus $2,150 a year earlier; net loss was $7,957, versus $5,202. Nine-month general and administrative expense was $12,498, versus $9,030; net loss was $23,348, versus $17,869.
- Interest: Imputed related-party interest expense was $3,840 for the quarter and $10,850 for the nine months. The loans are otherwise non-interest-bearing, unsecured, and payable on demand.
- Assets and liabilities: At March 31, 2015, assets consisted of $4,375 in prepaid expenses, with no cash. Current liabilities were $159,408, including $118,687 due to a related party and $40,721 of accrued related-party interest. Stockholders’ deficit was $155,033.
- Cash flow: Reported operating, investing, and financing cash flows were each zero for the nine months. The filing reports no cash paid for interest or income taxes. Shareholder-paid expenses and accrued interest helped offset the net loss in the operating cash-flow reconciliation.
- Debt and liquidity: No separate conventional borrowing balance is identified; the related-party payable is due on demand. The company reported no cash and stated that management or shareholders might advance additional funds if needed.
Changes versus the prior comparable period
Quarterly and nine-month net losses increased by $2,755 and $5,479, respectively, compared with the corresponding 2014 periods. Management attributed the higher expenses mainly to the OTC Markets QB application and listing, along with accounting and office costs. Related-party amounts payable rose from $100,264 at June 30, 2014 to $118,687 at March 31, 2015; accrued related-party interest rose from $29,871 to $40,721.
Outlook, risks, and other matters
- Management’s next-12-month plan was to assess potential industries, adopt a business plan, and pursue operations through funding or acquiring a going concern. No venture or acquisition had been identified.
- The filing says minimal assets, no established operations, and accumulated losses raise substantial doubt about the company’s ability to continue as a going concern. The statements include no adjustments for the outcome of that uncertainty.
- Management expected foreseeable costs to relate to maintaining corporate good standing, SEC reporting, and evaluating potential ventures; it did not anticipate needing additional funds during the next 12 months because a principal shareholder had been paying operating expenses.
- Management identified capital-raising, market, regulatory, economic, and other risks that could cause actual results to differ from forward-looking statements. No legal proceedings or off-balance-sheet arrangements were reported.
- Management concluded disclosure controls were effective and reported no material change in internal control over financial reporting during the quarter.
Important facts for investors to verify
- Confirm the issuer and period: the supplied filing is Bear Lake Recreation, Inc., for the quarter ended March 31, 2015, not Modular Medical, Inc.
- Review the going-concern uncertainty, lack of cash, and substantial current liabilities relative to assets.
- Verify the terms, demand status, and continued availability of shareholder support for related-party obligations and future expenses.
- Assess whether a merger or operating-business plan has been identified or advanced since the filing.