Filing identity and reporting period
The supplied filing is Bear Lake Recreation, Inc.’s unaudited Form 10-Q for the quarter ended March 31, 2017, covering the three and nine months ended that date. This does not match the request metadata identifying Modular Medical, Inc. and 2016 Q3; verify that this is the intended filing.
Financial results and liquidity
- Revenue: $0 for both the three and nine months ended March 31, 2017, and the comparable 2016 periods. The company reported no operations.
- Net loss: $7,505 for the quarter, versus $6,717 in 2016; $26,420 for nine months, versus $24,606. Basic and diluted loss per share was $0.01 for the quarter and $0.02 for nine months in both years.
- Expenses: Quarterly general and administrative expense was $2,192, versus $2,142; nine-month expense was $10,912, versus $11,410. Related-party imputed interest expense was $5,313 for the quarter and $15,508 for nine months.
- Balance sheet at March 31, 2017: No assets or cash. Current liabilities totaled $220,183, including $141,989 payable to related parties and $78,179 accrued related-party interest. Stockholders’ deficit was $220,183.
- Cash flow: The cash flow statement reports no operating, investing, or financing cash flow and no beginning or ending cash. Operating costs were funded by shareholders; cash interest and income taxes paid were both reported as zero.
Changes, outlook, and risks
Compared with 2016, the nine-month net loss increased by $1,814, primarily due to higher interest expense, partly offset by lower general and administrative expense. The company said it planned to consider industries, adopt a business plan, and pursue operations through funding or acquisition. It expected near-term expenses to be limited to corporate and SEC reporting costs and did not anticipate needing to raise funds during the next 12 months because a principal shareholder had been paying expenses.
Management disclosed substantial doubt about the company’s ability to continue as a going concern, citing no assets, no established operations, and accumulated losses. It intended to seek a merger with a well-capitalized operating company. Related-party loans were unsecured, non-interest-bearing, payable on demand, with interest imputed at 10% annually. The filing reports no legal proceedings or off-balance-sheet arrangements.
Subsequent event: On April 26, 2017, Manchester Explorer, L.P. acquired 2.9 million shares for $375,000. The transaction included new executive and director appointments, share cancellations, lender releases, and transaction expenses of approximately $78,000. The filing states that after closing the company had 3.5 million shares outstanding, nominal assets, and no outstanding indebtedness.
Investor facts to verify
- Confirm the issuer and reporting period: the source is Bear Lake Recreation, Inc., not Modular Medical, Inc., and the quarter ended March 31, 2017.
- Review the April 26 share acquisition and related Form 8-K filings, including the purchase, share cancellations, payments, and releases.
- Confirm the post-closing status of debt, assets, ownership, and management, and how transaction costs and payments were reflected after quarter-end.
- Assess the going-concern uncertainty and the company’s ability to fund reporting and other costs if shareholder support changes.