Filing identity and reporting period
Important mismatch: The supplied filing is for Bear Lake Recreation, Inc., not Modular Medical, Inc. It is a Form 10-Q for the quarter ended March 31, 2016, covering the three and nine months then ended—not 2015 Q3 as stated in the request metadata.
Bear Lake Recreation identifies itself as a shell company with no established operations. It says it intends to seek a merger with an existing, well-capitalized operating company.
Financial results and liquidity
- Revenue: Zero for the three and nine months ended March 31, 2016 and the corresponding 2015 periods.
- Net loss: $6,717 for the 2016 quarter versus $7,957 in 2015; $24,606 for the nine months versus $23,348 in 2015. Basic and diluted loss per share was $0.01 for each quarter and $0.02 for each nine-month period.
- Expenses and margins: General and administrative expense was $2,142 for the quarter and $11,410 for nine months, compared with $4,117 and $12,498, respectively. No gross profit or margin was reported because there were no revenues or cost of goods sold.
- Assets and liquidity: At March 31, 2016, the company reported no assets, no cash, and no current assets. It reported current liabilities of $187,285, comprising $129,339 payable to a related party and $57,946 accrued related-party interest.
- Debt and cash flow: Related-party advances are unsecured, non-interest-bearing, and payable on demand; the company imputes interest at 10% annually. The nine-month cash flow statement reports zero operating, investing, and financing cash flow, and zero beginning and ending cash. No cash interest or income taxes were paid.
Changes versus prior comparable periods
Quarterly net loss improved by $1,240 year over year, largely because the company no longer amortized the cost of its OTC Markets QB listing, which expired October 30, 2015. Nine-month net loss increased by $1,258, mainly due to higher related-party interest expense. Related-party payable increased from $120,429 at June 30, 2015 to $129,339 at March 31, 2016; accrued related-party interest rose from $44,750 to $57,946. Total assets fell from $2,500 to zero.
Outlook, risks, and other matters
- Management states that substantial doubt exists about the company’s ability to continue as a going concern, given the absence of assets and operations and its accumulated losses. The financial statements contain no adjustments for the outcome of this uncertainty.
- The stated 12-month plan is to consider industries, adopt a business plan, and pursue operations through funding or acquisition. Management says it does not anticipate needing additional funds for foreseeable expenses because a principal shareholder has been paying operating costs; any funding for a potential acquisition or venture is uncertain.
- Management cautions that forward-looking statements are subject to risks, including the ability to raise capital and identify a business opportunity. No specific financial guidance was provided.
- Management reported effective disclosure controls and no material change in internal control over financial reporting during the quarter. The filing reports no legal proceedings or off-balance-sheet arrangements.
Investor verification points
- Confirm the filing issuer and period: the supplied document names Bear Lake Recreation, Inc. and reports March 31, 2016, despite the request identifying Modular Medical and 2015 Q3.
- Review the going-concern disclosure and the company’s ability to fund reporting costs and any proposed business combination.
- Verify the terms, demand status, and collectability or repayment expectations for related-party advances and accrued interest.
- Note that the company reports no operations, revenue, or assets, and that any future acquisition or financing remains uncertain.