ModelSim undefined initial value

Probably you see undetermined results due to propagation delay of the signal in your logic (you need some time before the reset propagates to the output).

However the way you define your testbench is awkward.

Better use a process for the clock:

always

begin

clk=1'b0;# 10;

clk=1'b1;# 10;

end

This will be repeated forever

then the initial block, that is processed only once at the beginning of the simulation:

initial

begin

reset=1'b1;# 105;

reset=1'b0;# 1000;

$stop;

end

Try this (if I didn't make too many mistakes in the code)