SEC Filing Summary
Issuer identification: The supplied filing is for Bear Lake Recreation, Inc., not Modular Medical, Inc. The filing describes Bear Lake as a development-stage shell company. Confirm that this is the intended filing before relying on the figures below.
Business context and reporting period
This Form 10-Q reports the quarter and six months ended December 31, 2011, with comparisons to the corresponding 2010 periods. Bear Lake reported no operations and stated that it intended to seek a merger with an existing, well-capitalized operating company.
Financial results and position
- Revenue: $0 for the three and six months ended December 31, 2011, and for both comparable 2010 periods.
- Profit and expenses: Net loss was $3,841 for the quarter and $9,976 for the six months, versus losses of $1,510 and $5,427, respectively, in 2010. Six-month general and administrative expense was $6,175, compared with $5,427. The 2011 losses included imputed related-party interest expense of $1,962 for the quarter and $3,801 for the six months.
- Margins: No current-period revenue was reported, so an operating margin is not meaningful. Cumulative revenue since inception was $1,396 and cumulative gross profit was $689.
- Cash flow and liquidity: Cash and total assets were $0 at December 31, 2011. Net cash from operating, investing, and financing activities was each $0 for the six-month period. The company had no cash on hand.
- Liabilities and deficit: Current and total liabilities were $80,585, consisting of $76,784 owed to a related party and $3,801 in accrued related-party interest. Total stockholders’ deficit was $80,585. At June 30, 2011, liabilities were $70,609 and stockholders’ deficit was $70,609.
- Related-party funding: A shareholder paid $2,359 of expenses on the company’s behalf during the quarter. Related-party advances are unsecured, non-interest-bearing, and payable on demand; the company imputes interest at 10% per year.
Changes, outlook, and risks
Compared with the prior-year periods, the company’s losses increased, primarily alongside higher general and administrative costs and newly recorded imputed interest expense. It continued to report no operations. Management said a principal shareholder had been paying operating expenses and did not anticipate needing to raise funds in the next 12 months for foreseeable administrative costs; any funding needs for a potential venture or acquisition were uncertain.
Management disclosed substantial doubt about the company’s ability to continue as a going concern because it has no assets or established operations and has accumulated losses. The financial statements contain no adjustments for the outcome of this uncertainty. The company’s stated plan was to evaluate possible industries, adopt a business plan, and pursue operations through funding or acquisition. Management reported disclosure controls were effective and no material change in internal control during the quarter. No legal proceedings or off-balance-sheet arrangements were reported.
Important facts for investors to verify
- Whether the Bear Lake Recreation filing is intended; the request metadata names Modular Medical, Inc.
- The filing’s stated share count date appears as January 31, 2011, while the report was signed January 31, 2012; verify the correct outstanding-share date and count.
- Whether the shareholder advances will remain available and whether the payable-on-demand balance could be called.
- Whether the company has identified a merger, acquisition, or other operating venture, and how it would fund that transaction.
- The effect of the disclosed going-concern uncertainty on the company’s ability to continue and meet reporting and corporate costs.