UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

FORM 10-Q

 

(Mark One)
x QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended September 30, 2013

or

 

¨ TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from __________ to __________

 

Commission file number 000-53780

 

JOURNAL OF RADIOLOGY, INC.

(Exact name of registrant as specified in its charter)

 

Nevada	27-0491634
(State or other jurisdiction of incorporation or organization)	(I.R.S. Employer Identification No.)
2230 Michigan Avenue Santa Monica, California	90404
(Address of Principal executive offices)	(Zip Code)
Registrant’s telephone number, including area code.	(310) 460-7303

 

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes þ No o

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes o No þ

 

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. o

 

 

Large accelerated filer          o	Accelerated filer                    o
Non-accelerated filer            o	Smaller reporting company   þ

(Do not check if a smaller reporting company)

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes o No þ

 

As of November 14, 2013, the registrant had 2,012,550,000 outstanding shares of Common Stock.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

JOURNAL OF RADIOLOGY, INC.

(A Development Stage Company)

INDEX

 

		Page Number
PART I.	FINANCIAL INFORMATION
Item 1	Financial Statements:
	Balance Sheets as of September 30, 2013  and June 30, 2013 (Unaudited)	6
	Statements of Operations for the Three Months Ended September 30, 2013 and 2012 and from inception (May 21, 2009) to September 30, 2013 (Unaudited)	7
	Statement of Stockholders’ Equity (Deficit) from inception (May 21, 2009) to September 30, 2013 (Unaudited)	8
	Statements of Cash Flows for the Three Months Ended September 30, 2013 and 2012 and from inception (May 21, 2009) to September 30, 2013  (Unaudited)	9
	Notes to Financial Statements (Unaudited)	10
Item 2	Management's Discussion and Analysis of Financial Condition and Results of Operations	16
Item 3	Quantitative and Qualitative Disclosures About Market Risk	18
Item 4T	Controls and Procedures	18
PART II	OTHER INFORMATION
Item 1	Legal Proceedings	19
Item 1A	Risk Factors	19
Item 2	Unregistered Sales of Equity Securities and Use of Proceeds	23
Item 3	Defaults upon Senior Securities	23
Item 4	Mine Safety Disclosures	23
Item 5	Other Information	23
Item 6	Exhibits	23
SIGNATURES		24
EXHIBITS

 

 

 

 

 

 

 

 

 

 

 

 

Forward-Looking Statements

 

This report includes “forward-looking statements” within the meaning of Section 27A of the Securities Act of 1933, as amended (the “1933 Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (the “Exchange Act”). All statements other than statements of historical fact are “forward-looking statements” for purposes of this Quarterly Report on Form 10-Q, including any projections of earnings, revenue or other financial items, any statements regarding the plans and objectives of management for future operations, any statements concerning proposed new products or services, any statements regarding future economic conditions or performance, any statements regarding expected benefits from any transactions and any statements of assumptions underlying any of the foregoing. In some cases, forward-looking statements can be identified by the use of terminology such as “may,” “will,” “expects,” “plans,” “anticipates,” “estimates,” “potential” or “continue,” or the negative thereof or other comparable terminology. Although we believe that the expectations reflected in the forward-looking statements contained herein are reasonable, there can be no assurance that such expectations or any of the forward-looking statements will prove to be correct and actual results could differ materially from those projected or assumed in the forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to inherent risk and uncertainties, including, but not limited to, the risk factors set forth in “Part II, Item 1A – Risk Factors” below and for the reasons described elsewhere in this Quarterly Report on Form 10-Q. All forward looking statements and reasons why results may differ included in this report are made as of the date hereof and we do not intend to update any forward-looking statements except as required by law or applicable regulations. Except where the context otherwise requires, in this Quarterly Report on Form 10-Q, the “Company,” “Journal of Radiology,” “we,” “us” and “our” refer to Journal of Radiology, Inc., a Nevada corporation.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

PART 1 – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

The unaudited financial statements included herein have been prepared by Journal of Radiology, Inc. (the “Company”). In the opinion of management, the interim financial statements reflect all adjustments of a normal recurring nature necessary for a fair statement of the results for interim periods. It is suggested that these financial statements and notes to the financial statements be read in conjunction with the financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2013.

 

 

 

 

 

 

 

 

JOURNAL OF RADIOLOGY, INC.
(A Development Stage Company)
BALANCE SHEETS
(Unaudited)
			September 30,				June 30,
			2013				2013
Assets:
Cash		$	449			$	560
Total Current Assets		$	449			$	560
Liabilities and Stockholders’ Deficit:
Liabilities:
Accounts payable		$	96,235			$	100,186
Advances			33,545				19,683
Due to director			49,000				49,000
Total Current Liabilities			178,780				168,869
Stockholders' Deficit:
Preferred stock; par value $0.01; 49,000,000 shares authorized, nil issued and outstanding			—				—
Series A Convertible Preferred Stock; par value $0.01; 1,000,000 shares authorized, nil issued and outstanding			—				—
Common stock; par value $0.001; 5,000,000,000 shares authorized, 2,012,550,000 and 2,012,550,000 issued and outstanding, respectively.			2,012,550				2,012,550
Additional paid-in capital			107,374,135				107,374,135
Deficit accumulated during development stage			(109,565,016	)			(109,554,994	)
Total stockholders' deficit			(178,331	)			(168,309	)
Total liabilities and stockholders’ deficit		$	449			$	560
The accompanying notes are an integral part of these financial statements.

 

 

 

JOURNAL OF RADIOLOGY, INC.
(A Development Stage Company)
STATEMENTS OF OPERATIONS
(Unaudited)
			For the Three Months				For the Three Months				From Inception
			Ended				Ended				(May 21, 2009) to
			September 30,				September 30,				September 30,
			2013				2012				2013
Revenue		$	—			$	—			$	105,000
Total revenue			—				—				105,000
Operating expenses:
Professional fees			9,911				24,360				272,913
Administrative expenses			111				11,989				17,503
Impairment of licensing rights			—				—				64,500,000
Stock based compensation			—				—				44,879,600
Total operating expenses			10,022				36,349				109,670,016
Net loss		$	(10,022	)		$	(36,349	)		$	(109,565,016	)
Net loss per share, basic		$	(0.00	)		$	(0.00	)
Weighted average number of common shares outstanding – basic			2,012,550,000				1,781,550,000
The accompanying notes are an integral part of these financial statements.

  

 

JOURNAL OF RADIOLOGY, INC.

(A Development Stage Company)

STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)

FROM INCEPTION (MAY 21, 2009) TO SEPTEMBER 30, 2013

(Unaudited)

		Common Shares				Common Stock				Additional Paid-in Capital				Deficit Accumulated During Development Stage				Total Stockholders’ Equity (Deficit)
Common stock issued per court order May 21, 2009			32,550,000			$	32,550			$	(31,465	)		$	—			$	1,085
Net loss			—				—				—				(1,085	)			(1,085	)
Balance June 30, 2009			32,550,000				32,550				(31,465	)			(1,085	)			—
Common stock issued for cash			180,000,000				180,000				(174,000	)			—				6,000
Net loss			—				—								(3,801	)			(3,801	)
Balance June 30, 2010			212,550,000				212,550				(205,465	)			(4,886	)			2,199
Net loss			—				—				—				(26,439	)			(26,439	)
Balance June 30, 2011			212,550,000				212,550				(205,465	)			(31,325	)			(24,240	)
Common stock issued for consulting services			669,000,000				669,000				43,931,000								44,600,000
Common stock issued for licensing rights			900,000,000				900,000				63,600,000								64,500,000
Net loss			—				—								(109,169,576	)			(109,169,576	)
Balance June 30, 2012			1,781,550,000				1,781,550				107,325,535				(109,200,901	)			(93,816	)
Common stock issued for consulting services			354,000,000				354,000				(74,400	)			—				279,600
Common stock received for cancellation			(123,000,000	)			(123,000	)			123,000				—				—
Net loss			—				—				—				(354,093	)			(354,093	)
Balance June 30, 2013			2,012,550,000			$	2,012,550			$	107,374,135			$	(109,554,994	)		$	(168,309	)
Net loss			—				—				—				(10,022	)			(10,022	)
Balance September 30, 2013			2,012,550,000			$	2,012,550			$	107,374,135			$	(109,565,016	)		$	(178,331	)

 

The accompanying notes are an integral part of these financial statements.

 

  

 

 

 

 

JOURNAL OF RADIOLOGY, INC.
(A Development Stage Company)
STATEMENTS OF CASH FLOWS
(Unaudited)
			For the Three months				For the Three months				From Inception
			Ended				Ended				(May 21, 2009) to
			September 30,				September 30,				September 30,
			2013				2012				2013
Cash Flows from Operating Activities
Net loss		$	(10,022	)		$	(36,349	)		$	(109,565,016	)
Adjustments to reconcile net loss to net cash used for operating activities:
Issuance of common stock per court order			—				—				1,085
Shares issued for services			—				—				44,879,600
Impairment of licensing rights			—				—				64,500,000
Changes in operating assets and liabilities
(Increase) decrease in accounts receivable			—				—				(46,693	)
(Decrease) increase in accounts payable			(3,951	)			9,998				96,235
Net cash used in operating activities			(13,973	)			(26,351	)			(134,789	)
Cash Flows from Financing Activities
Increase in advance from director			—				—				49,000
Issuance of common stock			—				—				6,000
Advances			13,862				24,773				80,738
Repayment of advances			—				—				(500	)
Net cash provided by financing activities			13,862				24,773				135,238
Increase (decrease) in cash			(111	)			(1,578	)			449
Cash, beginning of period			560				3,154				—
Cash, end of period		$	449			$	1,576			$	449
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:
Cash paid during the period for:
Interest		$	—			$	—			$	—
Income taxes		$	—			$	—			$	—
NON-CASH INVESTING AND FINANCING ACTIVITIES:
Advances applied against account receivable		$	—			$	41,743			$	46,693
The accompanying notes are an integral part of these financial statements.

JOURNAL OF RADIOLOGY, INC.

(A Development Stage Company)

Notes to Financial Statements

September 30, 2013

(Unaudited)

 

 

NOTE 1. NATURE AND BACKGROUND OF BUSINESS

 

Journal of Radiology, Inc. ("the Company" or "the Issuer") was organized under the laws of the State of Nevada on May 21, 2009. The Company was established as part of the Chapter 11 reorganization of AP Corporate Services, Inc. ("AP"). Under AP's Plan of Reorganization, as confirmed by the U.S. Bankruptcy Court for the Central District of California, the Company was organized to own and develop a professional journal devoted to radiology. Management believes the Company lacks the resources to effectively develop such a journal on its own at this time and is therefore engaged in a search for a strategic partner to assist in the development of the journal, or for a merger or acquisition partner with the resources to take the Company in a new direction and bring greater value to its shareholders.

 

On May 28, 2012, the Company issued 900,000,000 shares of common stock for licensing rights for interactive media technology from Imagin8. The agreement gives the Company the right to market the products of Imagin8. The agreement commences on May 1, 2012 and has duration of one year and thereafter on a month-by-month basis. Imagin8 has the option, at any time, in its sole discretion with sixty (60) day prior notice to terminate the agreement.

 

The Company has been in the development stage since its formation and has only one client from its planned operations.

 

NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

 

a. BASIS OF ACCOUNTING

 

The Company's financial statements are prepared in accordance with accounting principles generally accepted in the United States. The Company has elected a June 30 year-end.

 

b. BASIC EARNINGS PER SHARE

 

ASC No. 260, “Earnings Per Share”, specifies the computation, presentation, and disclosure requirements for earnings (loss) per share for entities with publicly held common stock. The Company has adopted the provisions of ASC No. 260.

Basic net loss per share amount is computed by dividing the net loss by the weighted average number of common shares outstanding. In computing diluted earnings per share, the weighted average number of shares outstanding is adjusted to reflect the effect of potentially dilutive securities, such as stock options and warrants. Common stock equivalent shares are excluded from the computation if their effect is antidilutive. Common stock equivalents, which include warrants to purchase common stock, on September 30, 2013 and 2012 were not included in the computation of diluted earnings per share because the effect would be antidilutive.

 

c. ESTIMATES

 

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

 

 

 

 

d. CASH AND CASH EQUIVALENT

 

Investments with maturity of three months or less are considered to be cash equivalents.

 

The Company minimizes its credit risk associated with cash by periodically evaluating the credit quality of its primary financial institution. The balance at times may exceed federally insured limits. At September 30, 2013 and June 30, 2013, the balance did not exceed the federally insured limit.

 

e. REVENUE RECOGNITION

 

The Company recognizes revenues and the related costs when persuasive evidence of an arrangement exists, delivery and acceptance has occurred or service has been rendered, the price is fixed or determinable, and collection of the resulting receivable is reasonably assured. Amounts invoiced or collected in advance of product delivery or providing services are recorded as deferred revenue. The Company accrues for warranty costs, sales returns, bad debts, and other allowances based on its historical experience.

 

f. STOCK-BASED COMPENSATION

 

The Company follows FASB ASC Subtopic 718, Stock Compensation, which requires that new, modified and unvested share-based payment transactions with employees, such as grants of stock options and restricted stock, be recognized in the financial statements based on their fair value at the grant date and recognized as compensation expense over their vesting periods. The Company estimates the fair value of stock options as of the date of grant using the Black-Scholes option pricing model and restricted stock based on the quoted market price. For non-employee stock-based compensation, the Company follows ASC Topic 505 – Equity-Based Payments to Non-Employees, which requires stock-based compensation related to non-employees to be accounted for based on the fair value of the related stock or options or the fair value of the services on the grant date, whichever is more readily determinable in accordance with ASC Topic 718.

 

g. INCOME TAXES

 

Income taxes are provided in accordance with Codifications topic 740, “Income Taxes”, which requires an asset and liability approach for the financial accounting and reporting of income taxes. Current income tax expense (benefit) is the amount of income taxes expected to be payable (receivable) for the current year. A deferred tax asset and/or liability is computed for both the expected future impact of differences between the financial statement and tax bases of assets and liabilities and for the expected future tax benefit to be derived from tax loss and tax credit carry forwards. Deferred income tax expense is generally the net change during the year in the deferred income tax asset and liability. Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be “more likely than not” realized in future tax returns. Tax rate changes and changes in tax law are reflected in income in the period such changes are enacted.

 

h. IMPAIRMENT OR DISPOSAL OF LONG-LIVED ASSETS

 

The Company evaluates its long-lived assets for indicators of possible impairment. The intangible asset subject to amortization held and used by the Company is reviewed for impairment whenever events or changes in circumstances indicate that its net book value may not be recoverable. When such factors and circumstances exist, the Company compares the projected undiscounted future cash flows associated with the related asset or group of assets over their estimated useful lives against their respective carrying amounts. Impairment, if any, is based on the excess of the carrying amount over the fair value of those assets and is recorded in the period in which the determination was made. The most important factor in the calculation of the fair value of the intangible asset is the projected sales derived from interactive media technology which are estimated by extrapolating the current growth trends of the product and applying judgment as to the appropriate future growth rate among other factors. We conducted a test for impairment which was triggered because the Company was unable to forecast sales of for the fiscal year ended June 30, 2012. An impairment charge of $64,500,000 was recorded and included in the statement of operations from Inception (May 21, 2009) to September 30, 2013, respectively.

 

 

i. IMPACT OF NEW ACCOUNTING STANDARDS

 

There have been no recent accounting pronouncements or changes in accounting pronouncements that impacted the first quarter of fiscal 2013, or which are expected to impact future periods that were not already adopted and disclosed in prior periods.

 

NOTE 3. GOING CONCERN

 

The Company's financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern. This contemplates course of business. Currently, the Company does not have significant cash or other material assets, nor does it have operations or a source of revenue sufficient to cover its operation costs and allow it to continue as a going concern. The officers and directors have committed to advancing certain operating costs of the Company. The accompanying financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts, or amounts and classification of liabilities that might result from this uncertainty.

 

Management plans to seek a strategic partner to assist in the development of the journal business, or a merger or acquisition partner with the resources to take the Company in a new direction and bring greater value to its shareholders. Management has yet to identify any of these and there is no guarantee that the Company will be able to identify such opportunities in the future.

 

NOTE 4. FINANCIAL INSTRUMENTS

 

Fair value is defined as the price that would be received upon sale of an asset or paid upon transfer of a liability in an orderly transaction between market participants at the measurement date and in the principal or most advantageous market for that asset or liability. The fair value should be calculated based on assumptions that market participants would use in pricing the asset or liability, not on assumptions specific to the entity. In addition, the fair value of liabilities should include consideration of non-performance risk including our own credit risk.

 

In addition to defining fair value, the standard expands the disclosure requirements around fair value and establishes a fair value hierarchy for valuation inputs. The hierarchy prioritizes the inputs into three levels based on the extent to which inputs used in measuring fair value are observable in the market. Each fair value measurement is reported in one of the three levels which are determined by the lowest level input that is significant to the fair value measurement in its entirety. These levels are:

 

Level 1 – inputs are based upon unadjusted quoted prices for identical instruments traded in active markets.

 

Level 2 – inputs are based upon significant observable inputs other than quoted prices included in Level 1, such as quoted prices for identical or similar instruments in markets that are not active, and model-based valuation techniques for which all significant assumptions are observable in the market or can be corroborated by observable market data for substantially the full term of the assets or liabilities.

 

Level 3 – inputs are generally unobservable and typically reflect management’s estimates of assumptions that market participants would use in pricing the asset or liability. The fair values are therefore determined using model-based techniques that include option pricing models, discounted cash flow models, and similar techniques.

 

The carrying value of the Company’s financial assets and liabilities which consist of cash, accounts receivable, accounts payable and due to director in management’s opinion approximate their fair value due to the short maturity of such instruments. These financial assets and liabilities are valued using level 3 inputs, except for cash which is at level 1. Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant interest, exchange or credit risks arising from these financial instruments.

 

 

 

NOTE 5. INTERACTIVE MEDIA TECHNOLOGY SUBJECT TO AMORTIZATION, NET

 

Intangible assets represent interactive media technology acquired on May 28, 2012. Acquisition costs were $0 and $64,500,000 at September 30, 2013 and June 30, 2013, respectively.  These costs are presented on the balance sheet net of impairment charge of $64,500,000 at September 30, 2013 and June 30, 2013, respectively.  The Company issued 900,000,000 shares of common stock for interactive media technology valued at $64,500,000 ($0.072 per share).

 

NOTE 6. STOCKHOLDERS' EQUITY - COMMON STOCK

 

On April 24, 2012, the Company filed a Certificate of Designation creating a series of 1,000,000 shares of preferred stock, par value $0.01 per share, designated as Series A Convertible Preferred Stock.

 

On May 10, 2012, the Company filed a Certificate of Amendment to its Articles of Incorporation, increasing the number of authorized shares of common stock from 75,000,000 to 500,000,000 and adding 5,000,000 shares of blank check preferred stock, with a par value of $0.01 per share.

 

On July 20, 2012, the Company’s Board of Directors adopted a resolution and the majority of the Company’s stockholders approved an amendment to the Articles of Incorporation to (i) increase the number of authorized shares of common stock from 500,000,000 to 5,000,000,000 and increase the number of blank check preferred stock from 5,000,000 to 50,000,000 (ii) affect a thirty (30) to one (1) forward stock split of the outstanding shares of common stock. All share and per share information presented in these financial statements has been restated to retroactively reflect this stock split.

 

The stockholders’ equity of the Company comprises the following classes of capital stock as of September 30, 2013 and June 30, 2013:

 

The authorized Preferred Stock of the Company consists of 49,000,000 shares with $0.01 par value. As of September 30, 2013, there was no issued and outstanding preferred stock.

 

The authorized Series A Convertible Preferred Stock of the Company consists of 1,000,000 shares with $0.01 par value. As of September 30, 2013, there was no issued and outstanding Series A Convertible Preferred Stock.

 

The authorized common stock of the Company consists of 5,000,000,000 shares with $0.001 par value. As of September 30, 2013 and June 30, 2013, there were 2,012,550,000 common shares issued and outstanding.

 

The Company's first stock issuance, totaling 32,550,000 shares, took place on May 21, 2009 pursuant to the Chapter 11 Plan of Reorganization confirmed by the U.S. Bankruptcy Court in the matter of AP Corporate Services, Inc. ("AP").

 

 

1. The Court ordered the distribution of shares in Journal of Radiology, Inc. to all general unsecured creditors of AP, with these creditors to receive their PRO RATA share (according to amount of debt held) of a pool of 2,400,000 shares in the Company.
2. The Court also ordered the distribution of shares in the Company to all shareholders of AP, with these shareholders to receive their PRO RATA share (according to number of shares held) of a pool of 150,000 shares in the Company.
3. The Court also ordered the distribution of shares and warrants in the Company to all administrative creditors of AP, with these creditors to receive one share and five warrants in the Company for each $0.10 of AP's administrative debt which they held. These creditors received an aggregate of 1,000,000 common shares in the Company and 5,000,000 warrants consisting of 1,000,000 "A Warrants" each convertible into one share of common stock at an exercise price of $0.033; 1,000,000 "B Warrants" each convertible into one share of common stock at an exercise price of $0.067; 1,000,000 "C Warrants" each convertible into one share of common stock at an exercise price of $0.10; 1,000,000 "D Warrants" each convertible into one share of common stock at an exercise price of $0.133; and 1,000,000 "E Warrants" each convertible into one share of common stock at an exercise price of $0.167. All warrants are exercisable at any time during the five year period immediately following the effective date January 4, 2009.

 

On July 6, 2009, the Company received $6,000 in cash from the CEO of the Company in exchange for 180,000,000 shares of common stock ($0.000033 per share).

 

On May 9, 2012, the Company issued 669,000,000 shares of common stock for consulting services valued at $44,600,000 ($0.067 per share).

 

On May 28, 2012, the Company issued 900,000,000 shares of common stock for interactive media technology valued at $64,500,000 ($0.072 per share).

 

On March 1, 2013, the Company issued 50,000,000 shares of common stock for consulting services valued at $30,000 ($0.0006 per share).

 

On March 1, 2013, the Company received for no consideration 123,000,000 shares of its common stock for cancellation, the effect of the cancellation of shares was immaterial thus no retroactive treatment was applied.

 

On April 10, 2013, the Company issued 80,000,000 shares of common stock for consulting services valued at $112,000 ($0.0014 per share).

 

On April 26, 2013, the Company issued 160,000,000 shares of common stock for consulting services valued at $112,000 ($0.0007 per share).

 

On June 17, 2013, the Company issued 64,000,000 shares of common stock for consulting services valued at $25,600 ($0.0004 per share).

 

NOTE 7. ADVANCES

 

Advances are non-interest bearing, unsecured and have no specific terms of repayment. Total advances received of $33,545 comprises of additional cash advances of $13,862 received during the three months ended September 30, 2013 and $19,683 of advances due as of June 30, 2013.

 

NOTE 8. RELATED PARTY TRANSACTIONS

 

Total amounts advanced by a director as of September 30, 2013 and June 30, 2013 are $49,000 and $49,000, respectively. Amounts due to director are unsecured, non-interest bearing and have no specific terms of repayment.

 

The Company neither owns nor leases any real or personal property. An officer of the corporation provides office services without charge. Such costs are immaterial to the financial statements and accordingly, have not been reflected therein. The officers and directors for the Company are involved in other business activities and may, in the future, become involved in other business opportunities. If a specific business opportunity becomes available, such persons may face a conflict in selecting between the Company and their other business interests. The Company has not formulated a policy for the resolution of such conflicts.

 

 

NOTE 9. WARRANTS AND OPTIONS

 

On May 21, 2009 (inception), the Company issued 5,000,000 warrants exercisable into 5,000,000 shares of the Company's common stock. These warrants were issued per order of the U.S. Bankruptcy Court in the matter of AP Corporate Services, Inc. ("AP") to the administrative creditors of AP. These creditors received an aggregate of 5,000,000 warrants consisting of 1,000,000 "A Warrants" each convertible into one share of common stock at an exercise price of $0.033; 1,000,000 "B Warrants" each convertible into one share of common stock at an exercise price of $0.067; 1,000,000 "C Warrants" each convertible into one share of common stock at an exercise price of $0.10; 1,000,000 "D Warrants" each convertible into one share of common stock at an exercise price of $0.133; and 1,000,000 "E Warrants" each convertible into one share of common stock at an exercise price of $0.167. All warrants are exercisable at any time prior to January 4, 2014. As of the date of this report, no warrants have been exercised.

 

The fair value of these warrants was estimated at the date of the Company's inception, May 21, 2009, which was also the date of the grant, using the Black-Scholes Option Pricing Model with current value of the stock at $0.001 (par value) since there was no market for the stock at the time; dividend yield of 0%; risk-free interest rate of 2.16% (5 year Treasury Note rate at the issue date); and expiration date of 5 years. Since the stock does not trade, and since its par value was $0.001, the fair value of the warrants came out to be zero.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2013 AND 2012 AND FROM INCEPTION (MAY 21, 2009) TO SEPTEMBER 30, 2013

 

Company Overview

 

Journal of Radiology, Inc. ("the Company") was organized under the laws of the State of Nevada on May 21, 2009. The Company was established as part of the Chapter 11 reorganization of AP Corporate Services, Inc. ("AP"). Under AP's Plan of Reorganization, as confirmed by the U.S. Bankruptcy Court for the Central District of California, the Company was organized to own and develop a professional journal devoted to radiology. Management believes the Company lacks the resources to effectively develop such a journal on its own at this time and is therefore engaged in a search for a strategic partner to assist in the development of the journal, or for a merger or acquisition partner with the resources to take the Company in a new direction and bring greater value to its shareholders.

 

On May 28, 2012, the Company issued 900,000,000 shares of common stock for licensing rights for interactive media technology from Imagin8. The agreement gives the Company the right to market the products of Imagin8. The agreement commences on May 1, 2012 and has duration of one year and thereafter on a month-by-month basis. Imagin8 has the option, at any time, in its sole discretion with sixty (60) day prior notice to terminate the agreement.

 

 

RESULTS OF OPERATIONS

 

THREE MONTHS ENDED SEPTEMBER 30, 2013 COMPARED WITH THE THREE MONTHS ENDED SEPTEMBER 30, 2012 AND FROM INCEPTION (MAY 21, 2009) TO SEPTEMBER 30, 2013

 

REVENUES

 

For the three months ended September 30, 2013, we had revenues of $0 compared to $0 for the three months ended September 30, 2012. We recorded revenues of $105,000 for the cumulative period from Inception (May 21, 2009) through September 30, 2013.

 

We are completely dependent upon the willingness of our management to fund our initial operations by way of loans from our Chief Executive Officer. The Company has been in the development stage since its formation and has not yet realized a profit from its planned operations.

 

COSTS OF GOODS SOLD

 

We did not incur cost of sales for the three month periods ended September 30, 2013 and 2012 and for the cumulative period from Inception (May 21, 2009) through September 30, 2013.

 

OPERATING COSTS

 

Administrative expenses were $111 for the three months ended September 30, 2013, compared to $11,989 for the three months ended September 30, 2012, a decrease of $11,878, and professional fees were $9,911 for the three months ended September 30, 2013, compared to $24,360 for the three months ended September 30, 2012, a decrease of $14,449. Professional fees comprise of accounting and other fees to comply with SEC filing requirements. Total operating expenses for the cumulative period from Inception (May 21, 2009) through September 30, 2013 was $109,670,016.

 

NET LOSS

 

Our net loss for the three months ended September 30, 2013 and the three months ended September 30, 2012 was $10,022 and $36,349, respectively. Our net losses are primarily attributed to costs for professional fees. Our net loss for the cumulative period from Inception (May 21, 2009) through September 30, 2013 was $109,565,016.

 

 

LIQUIDITY

 

Our financial statements have been prepared on a going concern basis which contemplates the realization of assets and the liquidation of liabilities in the ordinary course of business. As of September 30, 2013, we had cash of $449 and total liabilities of $178,780. Our cash flows from operating activities for the three months ended September 30, 2013 resulted in cash used of $13,973. Our current cash balance and cash flow from operating activities will not be sufficient to fund our operations. Our cash flow provided by financing activities for the three months ended September 30, 2013 and 2012 were $13,862 and $24,773, respectively. The Company has an accumulated deficit during development stage at September 30, 2013 of $109,565,016. The deficit reported at September 30, 2013 is largely a result of operating expenses for professional fees, impairment of licensing rights and stock-based compensation.

 

Over the next 12 months we expect to expend approximately $50,000 in cash for legal, accounting and related services. Cash used for other expenditures is expected to be minimal. We hope to be able to attract suitable investors for our business plan, which will not require us to use our cash, although there can be no assurances that we will be successful in these efforts.

 

We expect to be able to secure capital through advances from our Chief Executive Officer in order to pay expenses such as organizational costs, filing fees, accounting fees and legal fees. We believe it will be difficult to secure capital in the future because we have no assets to secure debt and there is currently no trading market for our securities. We will need additional capital in the next twelve months and if we cannot raise such capital on acceptable terms, we may have to curtail our operations or terminate our business entirely. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

The inability to obtain financing or generate sufficient cash from operations could require us to reduce or eliminate expenditures for acquiring suitable partners or otherwise curtail or discontinue our operations, which could have a material adverse effect on our business, financial condition and results of operations. Furthermore, to the extent that we raise additional capital through the sale of equity or convertible debt securities, the issuance of such securities may result in dilution to existing stockholders. If we raise additional funds through the issuance of debt securities, these securities may have rights, preferences and privileges senior to holders of our common stock and the terms of such debt could impose restrictions on our operations. Regardless of whether our cash assets prove to be inadequate to meet our operational needs, we may seek to compensate providers of services by issuing stock in lieu of cash, which may also result in dilution to existing stockholders.

 

OPERATING CAPITAL AND CAPITAL EXPENDITURE REQUIREMENTS

 

We funded our initial operations by issuing 180,000,000 shares of our common stock valued at $ 0.000033 per share to our Chief Executive Officer. We had hoped to be able to attract suitable publishing partners seeking the benefits of stock-based compensation, which will not require us to use our cash, although there can be no assurances that we will be successful in these efforts. Our Chief Executive Officer has committed to advancing us an additional $50,000 for certain operating costs in order to start implementing our business plan, the funds are loaned to the company as required to pay amounts owed by the Company. As such, our operating capital is currently limited to the personal resources of our Chief Executive Officer. The loans from our Chief Executive Officer are unsecured and non-interest bearing and have no set terms of repayment. We anticipate receiving additional capital once we are able to have our securities actively trading on a public exchange. There is no guarantee our stock will develop a market on that public exchange.

 

PLAN OF OPERATION AND FUNDING

 

We do not currently engage in enough business activities that provide cash flow. The costs of investigating and analyzing business combinations for the next 12 months and beyond such time will be paid with amounts to be loaned to or invested in us by our stockholders, management or other investors.

      During the next twelve months we anticipate incurring costs related to:

      (i) filing of Exchange Act reports, and

      (ii) costs relating to developing our new business plan

 

We believe we will be able to meet these costs through amounts, as necessary, to be loaned to or invested in us by our stockholders, management or other investors.

 

Employees

 

Journal of Radiology, Inc. currently has no employees.

 

Office and Facilities

 

Our corporate headquarters are located at 2230 Michigan Avenue, Santa Monica, California 90404.

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements.

Going Concern

The Company's financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern. This contemplates the realization of assets and the liquidation of liabilities in the normal course of business. Currently, the Company does not have material assets, nor does it have operations or a source of revenue to cover its operating costs and allow it to continue as a going concern. The Company has a deficit accumulated during development stage at September 30, 2013 and June 30, 2013 of $109,565,016 and $109,554,994, respectively. The Company will be dependent upon the raising of additional capital through placement of its common stock in order to implement its business plan. There can be no assurance that the Company will be successful in this situation.

 

Accordingly, these factors raise substantial doubt as to the Company's ability to continue as a going concern. These financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classifications of liabilities that might result from this uncertainty. The Company is funding its initial operations by way of loans from its Chief Executive Officer. The Company's officers and directors have committed to advancing certain operating costs of the Company.

ITEM 3. QUANTITATIVE AND QUALITIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

 

ITEM 4T. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

 

As required by Rule 13a-15 of the Securities Exchange Act of 1934, our principal executive officer and principal financial officer evaluated our company's disclosure controls and procedures (as defined in Rules 13a-15(e) of the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based on this evaluation, our principal executive officer and principal financial officer concluded that as of the end of the period covered by this report, these disclosure controls and procedures were not effective to ensure that the information required to be disclosed by our company in reports it files or submits under the Securities Exchange Act of 1934 is recorded,

processed, summarized and reported within the time periods specified in the rules and forms of the Securities Exchange Commission and to ensure that such information is accumulated and communicated to our company's management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure. The conclusion that our disclosure controls and procedures were not effective was due to the presence of the following material weaknesses in internal control over financial reporting which are indicative of many small companies with small staff: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both United States generally accepted accounting principles and Securities and Exchange Commission guidelines. Management anticipates that such disclosure controls and procedures will not be effective until the material weaknesses are remediated.

 

We plan to take steps to enhance and improve the design of our internal controls over financial reporting. During the period covered by this quarterly report on Form 10-Q, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we plan to implement the following changes during our fiscal year ending June 30, 2014, subject to obtaining additional financing: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out above are largely dependent upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended September 30, 2013 that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

NONE.

ITEM 1A. RISK FACTORS

 

An investment in our common stock involves a high degree of risk. You should carefully consider the risks described below before deciding to purchase shares of our common stock. If any of the events, contingencies, circumstances or conditions described in the risks below actually occurs, our business, financial condition or results of operations could be seriously harmed.

 

RISK FACTORS CONCERNING OUR BUSINESS

 

Our business is subject to numerous risk factors, including the following:

 

We have had little operating history and no revenues or earnings from operations.

 

We have no assets. We will, in all likelihood, sustain operating expenses without corresponding revenues, at least until the consummation of a business combination. This may result in us incurring a net operating loss that will increase continuously until we can consummate a business combination with a profitable business entity. There is no assurance that we can identify such a business entity and consummate such an agreement or combination.

 

Our auditor's going concern opinion and the notation in the financial statements indicate that we do not have significant cash or other material assets and we are relying on advances from stockholders, officers and directors to meet our limited operating expenses. We may become insolvent if we are unable to pay our debts in the ordinary course of business as they become due.

 

Our proposed plan of operation is speculative.

 

The success of our proposed plan of operation will depend to a great extent on the operations, financial condition and management of the business opportunity which we identify, if any is identified. While management intends to seek business agreement(s) or combination(s) with entities having established operating histories, there can be no assurance that we will be successful in locating candidates meeting such criteria.

 

We face intense competition for business combination opportunities.

 

We are and will continue to be an insignificant participant in the business of seeking mergers with, joint ventures with and acquisitions of small private and public entities. A large number of established and well-financed entities, including venture capital firms, are active in mergers and acquisitions of companies that may be our desirable target candidates. Nearly all such entities have significantly greater financial resources, technical expertise and managerial capabilities than we have and, consequently, we will be at a competitive disadvantage in identifying possible business opportunities and successfully completing a business combination. Moreover, we will also compete in seeking merger or acquisition candidates with numerous other small public companies.

 

Our success is dependent on management that has other full time employment, has limited experience and will only devote limited time (part time) to working for the Company, all of which makes our future even more uncertain.

 

Aaron Shrira is the President and Chief Executive Officer of the Company and Elana Berman-Shrira is the Secretary and Treasurer and CFO of the Company. Both Mr. Shrira and Ms. Berman-Shrira will serve without pay while maintaining other employment. Although both Mr. Shrira and Ms. Berman-Shrira have considerable business and marketing experience, neither has any experience in the publishing industry or in mergers and acquisitions. Notwithstanding the limited experience and availability of management, loss of the services of either officer would adversely affect development of our business and its likelihood of continuing in operation.

 

The reporting requirements under federal securities law may delay or prevent us from making certain acquisitions.

 

Sections 13 and 15(d) of the Securities Exchange Act of 1934, as amended, (the "1934 Act"), require companies subject thereto to provide certain information about significant acquisitions, including certified financial statements for the company acquired, covering one, two, or three years, depending on the relative size of the acquisition. The time and additional costs that may be incurred by some target entities to prepare such statements may significantly delay or essentially preclude consummation of an otherwise desirable acquisition by the Company. Acquisition prospects that do not have or are unable to obtain the required audited statements may not be appropriate for acquisition so long as the reporting requirements of the 1934 Act are applicable.

 

In addition to the audited financial statements, the time and additional costs that may be incurred by some target entities to prepare and disclose such information may significantly delay or essentially preclude consummation of an otherwise desirable acquisition by the Company.

 

An acquisition could create a situation wherein we would be required to register under The Investment Company Act of 1940 and thus be required to incur substantial additional costs and expenses.

 

Although we will be subject to regulation under the 1934 Act, management believes the Company will not be subject to regulation under the Investment Company Act of 1940, insofar as we will not be engaged in the business of investing or trading in securities. In the event we engage in a business combination that results in us holding passive investment interests in a number of entities, we could be subject to regulation under the Investment Company Act of 1940. In such event, we would be required to register as an investment company and could be expected to incur significant registration and compliance costs. We have obtained no formal determination from the Securities and Exchange Commission as to the status of our Company under the Investment Company Act of 1940 and, consequently, any violation of such Act would subject us to material adverse consequences.

 

A merger, acquisition, or licensing agreement would most likely be exclusive, resulting in a lack of diversification.

 

Management anticipates that it may be able to participate in only one potential business venture because a business partner might require exclusivity. This lack of diversification should be considered a substantial risk to our shareholders because it will not permit us to offset potential losses from one venture against gains from another.

 

If we do any business combination, each shareholder will most likely hold a substantially lesser percentage ownership in the Company.

 

If we enter a business combination with a private concern, that, in all likelihood, would result in the Company issuing securities to shareholders of any such private company. The issuance of our previously authorized and unissued Common Stock would result in reduction in percentage of shares owned by our present and prospective shareholders.

 

The requirement of audited financial statements may disqualify some business opportunities seeking a business combination with us.

 

Our management believes that any potential business combination opportunity must provide audited financial statements for review, for the protection of all parties to the business combination. One or more attractive business opportunities may choose to forego the possibility of a business combination with us, rather than incur the expenses associated with preparing audited financial statements.

 

Our principal shareholders will be able to approve all corporate actions without shareholder consent and will control our Company.

 

Our principal shareholder, Imagin8, currently owns approximately 44.7% of our Common Stock. It will have significant influence over all matters requiring approval by our shareholders, but not requiring the approval of the minority shareholders. Because it is the majority shareholder, it will be able to elect all of the members of our board of directors, allowing him to exercise significant control of our affairs and management. In addition, it may transact most corporate matters requiring shareholder approval by written consent, without a duly-noticed and duly-held meeting of shareholders.

 

If our Common Stock does not meet blue sky resale requirements, certain shareholders may be unable to resell our Common Stock.

 

The resale of Common Stock must meet the blue sky resale requirements in the states in which the proposed purchasers reside. If we are unable to qualify the Common Stock and there is no exemption from qualification in certain states, the holders of the Common Stock or the purchasers of the Common Stock may be unable to sell them.

 

Our shareholders may face significant restrictions on the resale of our Common Stock due to state "blue sky" laws or if we are determined to be a "blank check" company.

 

There are state regulations that may adversely affect the transferability of our Common Stock. We have not registered our Common Stock for resale under the securities or "blue sky" laws of any state. We may seek qualification or advise our shareholders of the availability of an exemption. We are under no obligation to register or qualify our Common Stock in any state or to advise the shareholders of any exemptions.

 

Current shareholders, and persons who desire to purchase the Common Stock in any trading market that may develop in the future, should be aware that there might be significant state restrictions upon the ability of new investors to purchase the Common Stock.

 

Blue sky laws, regulations, orders, or interpretations place limitations on offerings or sales of securities by "blank check" companies or in "blind-pool" offerings, or if such securities represent "cheap stock" previously issued to promoters or others. Our CEO, because he received stock at a price of $.001 for each share, may be deemed to hold "cheap stock." These limitations typically provide, in the form of one or more of the following limitations that such securities are:

 

(a) Not eligible for sale under exemption provisions permitting sales without registration to accredited investors or qualified purchasers;

 

(b) Not eligible for the transaction exemption from registration for non-issuer transactions by a registered broker-dealer;

 

(c) Not eligible for registration under the simplified small corporate offering registration (SCOR) form available in many states;

 

(d) Not eligible for the "solicitations of interest" exception to securities registration requirements available in many states;

 

(e) Not permitted to be registered or exempted from registration, and thus not permitted to be sold in the state under any circumstances.

 

Virtually all 50 states have adopted one or more of these limitations, or other limitations or restrictions affecting the sale or resale of stock of blank check companies or securities sold in "blind pool" offerings or "cheap stock" issued to promoters or others. Specific limitations on such offerings have been adopted in:

 

Alaska	Nevada	Tennessee
Arkansas	New Mexico	Texas
California	Ohio	Utah
Delaware	Oklahoma	Vermont
Florida	Oregon	Washington
Georgia	Pennsylvania
Idaho	Rhode Island
Indiana	South Carolina
Nebraska	South Dakota

 

Any secondary trading market which may develop may only be conducted in those jurisdictions where an applicable exemption is available or where the shares have been registered.

 

Current shareholders and persons who desire to purchase the Common Stock in any trading market that may develop in the future, should be aware that we are under no obligation to register the shares on behalf of our shareholders under the Securities Act of 1933, as amended.

 

The Company's officers, directors and majority shareholders have expressed their intentions not to engage in any transactions with respect to the Company's Common Stock except in connection with or following a business combination resulting in us no longer being defined as a blank check issuer. Any transactions in our Common Stock by said shareholders will require compliance with the registration requirements under the Securities Act of 1933, as amended.

 

Our Common Stock may be subject to significant restriction on resale due to federal penny stock restrictions.

 

The Securities and Exchange Commission has adopted rules that regulate broker or dealer practices in connection with transactions in penny stocks. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the Nasdaq system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange system). The penny stock rules require a broker or dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document prepared by the Securities and Exchange Commission that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker or dealer also must provide the customer with bid and offer quotations for the penny stock, the compensation of the broker or dealer, and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer's account. The penny stock rules also require that prior to a transaction in a penny stock not otherwise exempt from such rules, the broker or dealer must make a special written determination that a penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction.

 

 

 

These disclosure requirements may have the effect of reducing the level of trading activity in any secondary market for our stock that becomes subject to the penny stock rules, and accordingly, shareholders of our Common Stock may find it difficult to sell their securities, if at all.

 

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS.

None

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

 

None

 

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable

ITEM 5. OTHER INFORMATION.

None

ITEM 6. EXHIBITS.

Except as so indicated in Exhibits 32.1 and 32.2, the following exhibits are filed as part of, or incorporated by reference, to this Quarterly Report on Form 10-Q.

 

			Incorporated by reference
Exhibit	Exhibit Description	Filed herewith	Form	Period ending	Exhibit	Filing date
3.1	Articles of Incorporation		10/A#2		3.1	11/5/2009
3.2	Bylaws		10/A #2		3.2	11/5/2009
31.1	Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	X
31.2	Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002	X
32.1	Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	X
32.2	Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002	X
101	Interactive Data Files for the Journal of Radiology, Inc. Form 10Q for the period ended September 30, 2013	X

 

 

 

 

SIGNATURES

In accordance with Section 13 or 15 (d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

	JOURNAL OF RADIOLOGY, INC.
Date:  November 14, 2013	By:	/s/ Aaron Shrira
		Aaron Shrira President and Director (Principal Executive Officer)
Date: November 14, 2013	By:	/s/ Elana Berman-Shrira Elana Berman-Shrira Treasurer and Director (Principal Accounting and Financial Officer)