Filing summary
Entity and period discrepancy: The supplied filing identifies the issuer as Bear Lake Recreation, Inc., not Modular Medical, Inc. It reports the quarter and nine months ended March 31, 2012 (fiscal year ended June 30, 2012), not 2011 Q3. Verify that this is the intended filing.
Business context
Bear Lake Recreation describes itself as a development-stage, shell company with no current operations or assets. Management’s plan is to consider potential industries, adopt a business plan, and pursue operations through funding or acquisition of an operating company. Its common stock was reported as trading under BLKE.OB.
Financial results and position
- Revenue: None in the three- and nine-month periods ended March 31, 2012 or the comparable 2011 periods. Cumulative revenue since inception was $1,396.
- Loss: Net loss was $3,941 for the quarter and $13,917 for the nine months, versus $1,700 and $7,127, respectively, in 2011. Nine-month general and administrative expense increased to $8,163 from $7,127. The 2012 nine-month loss included $5,754 of imputed related-party interest; 2011 had none.
- Margins: No current-period gross margin is meaningful because there were no sales. Cumulative gross profit since inception was $689.
- Cash flow and liquidity: Cash was zero at March 31, 2012, and at June 30, 2011. Reported net cash from operating, investing, and financing activities was zero for the nine months ended March 31, 2012 and 2011.
- Liabilities: Total current liabilities were $84,526, up from $70,609 at June 30, 2011. They consisted of $78,772 payable to a shareholder and $5,754 accrued related-party interest; the prior-period balance also included $578 of accounts payable. The shareholder advances are unsecured, non-interest-bearing, and payable on demand; the company imputes interest at 10% annually.
- Equity: Stockholders’ deficit was $84,526, compared with $70,609 at June 30, 2011. No assets were reported at either date.
Changes, outlook, and risks
The company had no operations during either 2012 comparison period. The higher nine-month net loss primarily reflects imputed interest expense on related-party advances. A principal shareholder paid $1,988 of expenses during the quarter; management says shareholder support has covered operating costs and anticipates no need to raise funds over the next 12 months, although future funding needs for a potential venture are unknown.
The filing states that the lack of assets and operations and accumulated losses raise substantial doubt about the company’s ability to continue as a going concern. Management intends to seek a merger with a well-capitalized operating company. The financial statements contain no adjustments for the outcome of this uncertainty. The filing reports 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.
Investor verification points
- Confirm the issuer and reporting period: the filing is for Bear Lake Recreation, Inc. for the period ended March 31, 2012, despite the request metadata naming Modular Medical and 2011 Q3.
- Verify the nature, terms, and repayment status of the $78,772 shareholder payable and the related accrued interest.
- Assess the going-concern uncertainty, the company’s lack of cash and assets, and its ability to obtain support or complete a merger.
- Confirm whether any operating-company transaction or funding plan emerged after the filing date.