XOTC:JRRD Journal of Radiology Inc Annual Report 10-K Filing - 6/30/2012

Effective Date 6/30/2012

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

FORM 10-K

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

For the fiscal year ended June 30, 2012

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

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


Securities registered under Section 12(b) of the Exchange Act:

None

 

 

Securities registered under Section 12(g) of the Exchange Act:

Common stock, par value $0.001 per share

 

(Title of Class)


Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act. Yes ¨ No x


Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes ¨ No x


Indicate by check mark whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the last 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 x   No ¨


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 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes ¨       No ¨


Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrants knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.  ¨




1




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.


           

Large accelerated filer              

¨

Accelerated filer                         

¨

Non-accelerated filer                 

¨

Smaller reporting company   

x


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


Aggregate market value of the voting and non-voting common equity held by non-affiliates of the registrant as of September 24, 2012: $125,610,000


As of September 24, 2012 the registrant had 1,781,550,000 outstanding shares of Common Stock.


Documents incorporated by reference:  None.



2




TABLE OF CONTENTS

PART I

 

Page

Item 1.

Business

4

Item 1A.

Risk Factors

4

Item 1B.

Unresolved Staff Comments

8

Item 2.

Properties

8

Item 3.

Legal Proceedings

9

Item 4.

 Mine Safety Disclosures

9

PART II

 

 

Item 5.

Market for Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities

9

Item 6.

Selected Financial Data

10

Item 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operations

10

Item 7A.

Quantitative and Qualitative Disclosures About Market Risk

12

Item 8.

Financial Statements and Supplementary Data

12

Item 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

12

Item 9A.

Controls and Procedures

12

Item 9B.

Other Information

13

PART III

 

 

Item 10.

Directors, Executive Officers and Corporate Governance

13

Item 11.

Executive Compensation

14

Item 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

16

Item 13.

Certain Relationships and Related Transactions and Director Independence

16

Item 14.

Principal Accountant Fees and Services

16

PART IV

 

 

Item 15.

Exhibits, Financial Statement Schedules

18


 

 

Signatures

19

 

 

3





PART I.

Forward-Looking Information


Much of the discussion in this Item is “forward looking”.  Actual operations and results may materially differ from present plans and projections due to changes in economic conditions, new business opportunities, changed business conditions, and other developments.  Other factors that could cause results to differ materially are described in our filings with the Securities and Exchange Commission.


There are several factors that could cause actual results or events to differ materially from those anticipated, and include, but are not limited to, general economic, financial and business conditions, changes in and compliance with governmental laws and regulations, including various state and federal environmental regulations, our ability to obtain additional financing from outside investors and/or bank and mezzanine lenders, and our ability to generate sufficient revenues to cover operating losses and position us to achieve positive cash flow.


Readers are cautioned not to place undue reliance on the forward-looking statements contained herein, which speak only as of the date hereof.  We believe the information contained in this Form 10-K to be accurate as of the date hereof.  Changes may occur after that date.   We will not update that information except as required by law in the normal course of its public disclosure practices.


ITEM 1.

BUSINESS.

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.


The Company has been in the development stage since its formation and has realized revenues of $105,000 from its planned operations.


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.


ITEM 1A. RISK FACTORS.



4




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.



5




 

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 51% 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.




6




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.



7





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 1B.  UNRESOLVED STAFF COMMENTS

We have received no written comments regarding our periodic or current reports from the staff of the SEC that were issued 180 days or more preceding the end of our fiscal year 2012 that remain unresolved.

ITEM 2.

PROPERTIES.

The Company owns no real property.  


ITEM 3.

LEGAL PROCEEDINGS.

None.

ITEM 4.       MINE SAFETY DISCLOSURES

N/A






8




PART II.

ITEM 5.

MARKET FOR COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER PURCHASES OF EQUITY SECURITIES.

Market Information


Our common stock is quoted under the symbol “JRRDD” on the OTCBB operated by the Financial Industry Regulatory Authority, Inc. (“FINRA”) and the OTCQB operated by OTC Markets Group, Inc.  Few market makers continue to participate in the OTCBB system because of high fees charged by FINRA.  Consequently, market makers that once quoted our shares on the OTCBB system may no longer be posting a quotation for our shares. As of the date of this report, however, our shares are quoted by several market makers on the OTCQB. The criteria for listing on either the OTCBB or OTCQB are similar and include that we remain current in our SEC reporting.


Only a limited market exists for our securities. There is no assurance that a regular trading market will develop, or if developed, that it will be sustained. Therefore, a shareholder may be unable to resell his securities in our company.


The following tables set forth the range of high and low prices for our common stock for the each of the periods indicated as reported by the OTCQB. These quotations reflect inter-dealer prices, without retail mark-up, mark-down or commission and may not necessarily represent actual transactions.


Fiscal Year Ending June 30, 2012

Quarter Ended

 

High $

 

Low $

June 30, 2012

 

$0.072

 

$0.067

March 31, 2012

 

$0.072

 

$0.072


On September 24, 2012, the last sales price per share of our common stock was $0.20.


Penny Stock


The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks. Penny stocks are generally equity securities with a market 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 or system. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock, to deliver a standardized risk disclosure document prepared by the SEC, that: (a) contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading; (b) contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to a violation of such duties or other requirements of the securities laws; (c) contains a brief, clear, narrative description of a dealer market, including bid and ask prices for penny stocks and the significance of the spread between the bid and ask price; (d) contains a toll-free telephone number for inquiries on disciplinary actions; (e) defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and (f) contains such other information and is in such form, including language, type size and format, as the SEC shall require by rule or regulation.



9




ITEM 6.

SELECTED FINANCIAL DATA.

Not Applicable.


ITEM 7.

MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
RESULTS OF OPERATIONS.

Journal of Radiology, Inc. 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.


RESULTS OF OPERATIONS


FISCAL YEAR ENDED JUNE 30, 2012 COMPARED TO THE FISCAL YEAR ENDED JUNE 30, 2011


REVENUES


For the fiscal year ended June 30, 2012 and fiscal year ended June 30, 2011 we generated $0 and $105,000 revenue, respectively.   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 fiscal year ended June 30, 2012 or fiscal year ended June 30, 2011


OPERATING COSTS


Administrative expenses were $494 for the fiscal year ended June 30, 2012, compared to $265 for the fiscal year ended June 30, 2011 and professional fees were $69,082 for the fiscal year ended June 30, 2012, compared to $131,174 a decrease of $62,092.  There was a decrease in professional fees since we did not earn revenue in the current year and, as such, did not incur professional fees to earn revenue. During the year ended June 30, 2012, the Company issued 669,000,000 shares of common stock valued at $44,600,000 for consulting services and recorded an impairment loss on licensing rights for interactive media technology of $64,500,000. As such, total operating costs were $109,169,576 for the fiscal year ended June 30, 2012, compared to $131,439 for the fiscal year ended June 30, 2011.


NET LOSS


Our net loss for the year ended June 30, 2012 and the fiscal year ended June 30, 2011 was $106,169,576 and $26,439 respectively. For the year ended June 30, 2012, the increase in our net loss was attributed to not earning revenues in the current year and the issuance of 669,000,000 shares of common stock valued at $44,600,000 for consulting services and an impairment loss on licensing rights for interactive media technology of $64,500,000. Net loss from inception (May 21, 2009) to June 30, 2012 is $109,200,901.


 



10




 

LIQUIDITY

 

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles, which contemplate continuation of the Company as a going concern. As of June 30, 2012, we had cash of $3,154 and total liabilities of $154,970. Our cash flows from operating activities for the fiscal year ended June 30, 2012 resulted in cash used of $34,576. 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 fiscal year ended June 30, 2012 and 2011 was $31,970 and $31,500, respectively.  The Company has an accumulated deficit during development stage at June 30, 2012 and June 30, 2011 of $109,200,901 and $31,325, respectively. The deficit reported at June 30, 2012 is largely a result of operating expenses for professional fees, shares issued for consulting services and impairment of licensing rights. These conditions led to our auditor reporting substantial doubt about our ability to continue as a going concern.


Over the next 12 months we expect to expend approximately $30,000 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 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 are currently funding our initial operations by way of 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 $30,000 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




11




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.


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 June 30, 2012 and 2011 of $109,200,901 and $31,325, 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 7.  QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.

Not applicable.


ITEM 8.

FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.


The financial statements and related notes are included as part of this report as indexed in the appendix on page F-1 through F-13.

ITEM 9.

CHANGE IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE.

None.


ITEM 9A.

CONTROLS AND PROCEDURES.

Management, including our chief executive officer and chief financial officer, as of the end of the period covered by this Annual Report on Form 10-K, have concluded our disclosure controls and procedures (as defined in Rules 13a-14(c) and 15d-14(c) under the Securities Exchange Act of 1934) were not effective to ensure that information required to be disclosed in reports we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in SEC rules and forms.


Changes in Internal Controls. There were no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of their evaluation. There were no significant deficiencies or material weaknesses and therefore there were no corrective actions taken. However, the design of any system of controls is based in part upon certain assumptions about the likelihood of future events and there is no certainty that any design will succeed in achieving its stated goal under all potential future considerations, regardless of how remote.  



12




Management’s Report on Internal Control over Financial Reporting

 

Our management is responsible for establishing and maintaining adequate internal control over financial reporting as defined in Rule 13a-15(f) under the Exchange Act. Internal control over financial reporting refers to a process designed by, or under the supervision of, our Chief Executive Officer and Chief Financial Officer and effected by our Board, management and other personnel, to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes in connection with generally accepted accounting principles, including those policies and procedures that:


 

 

 

 

-

pertain to the maintenance of records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of our assets;

 

 

 

 

-

Provide a  reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with generally accepted accounting principles, and that our receipts and expenditures are being made only in accordance with authorizations of our management and directors; and

 

 

 

 

-

Provide a reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use or disposition of our assets that could have a material effect on our consolidated financial statements.

 

Because of its inherent limitations, internal control over financial reporting cannot provide absolute assurance of the prevention or detection of misstatements. In addition, projections of any evaluation of effectiveness to future periods are subject to risk that controls may become inadequate because of changes in conditions, or that the degree of compliance with the policies or procedures may deteriorate.


In connection with the preparation of this Annual Report on Form 10-K for the year ended June 30, 2012, management, with the participation of our Chief Executive Officer and Chief Financial Officer, has evaluated the effectiveness of our internal controls over financial reporting, pursuant to Rule 13a-15 under the Exchange Act. Our Chief Executive Officer and Chief Financial Officer have concluded that the design and operation of our internal controls and procedures are not effective as of June 30, 2012. There were no significant changes in our internal controls over financial reporting that occurred during the fourth fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal controls over financial reporting.

 

This Annual Report on Form 10-K does not include an attestation report of the Company’s independent registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this Annual Report on Form 10-K.


Changes in Internal Control over Financial Reporting

There was no change in the Company’s internal control over financial reporting identified in connection with the requisite evaluation that occurred during the last fiscal quarter that has materially affected, or is reasonably likely to materially affect, the Company’s internal control over financial reporting.


ITEM 9B.

OTHER INFORMATION.

None.



 

13




PART III

ITEM 10.

DIRECTORS, EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE

The executive officers and directors of the Company as of September 24, 2011 are as follows:

 

Name

Age

Position

 

Aaron Shrira

70

President and Director

 

Elana Berman-Shrira

62

Secretary, Treasurer and Director


Duties, Responsibilities and Experience


Biographical Information


Aaron Shrira, age 70, has been the President and CEO of the Company since its incorporation. He is also the founder, and has been the CEO since 1983, of Reliable Printing Solutions and its affiliates including Century Computer Products, Inc. These companies, based in Santa Monica, California, market toner and ink jet cartridges and related products and employ approximately 130 people. Prior to 1983 Mr. Shrira owned a construction company that built and operated Gasoline Stations. He began his business career in Real Estate, buying and selling real estate investments. Mr. Shrira received his BS degree in Mechanical Engineering from Indiana Institute of Technology. He is married to Elana Berman-Shrira, the other officer and director of the Company.


Elana Berman-Shrira, age 62, has been the Secretary, Treasurer and CFO of the Company since its incorporation. She has been involved in design, manufacturing and distribution of collectable jewelry for both private and public clientele since 1997. In addition she has been actively involved in consulting others in the purchasing of real estate, and the design and renovation/restoration of properties since 1995. Prior to that, Ms. Berman-Shrira received a B.A. in Sociology from California State University, Northridge and worked as a medical social worker for the County of Los Angeles. Subsequently, she earned a Master's Degree from Antioch University in Clinical Psychology. She is married to Aaron Shrira, the other officer and director of the Company.


CONFLICTS OF INTEREST


As noted above, the two members of the Company's management have other business interests, however, these other businesses are not seeking mergers or acquisitions and have entirely different business plans from that of this Issuer. Consequently, there are no known potential conflicts of interest in the different businesses.  However there is a potential conflict of interest in the time which the officers and directors devote to this Company and to their other interests. We do not currently have an agreement as to the amount of time that will be devoted to the Company's affairs. Management has stated that it will devote such time as it believes necessary to seeking out potential business

combination targets for the Company.


The officers and directors are, so long as they are officers or directors of the Company, subject to the restriction that all opportunities contemplated by the Company's plan of operation which come to their attention, either in the performance of their duties or in any other manner, will be considered opportunities of, and be made available to the Company. A breach of this requirement will be a breach of the fiduciary duties of the officer or director.


However, all directors may still individually take advantage of opportunities if the Company should decline to do so. Except as set forth above, we have not adopted any other conflict of interest policy with respect to such transactions.


ITEM 11.

EXECUTIVE COMPENSATION.

Summary of Cash and Certain Other Compensation 

The following table provides certain summary information concerning the compensation earned by the named executive officers for the fiscal years ended June 30, 2012 and 2011, for services rendered in all capacities to Journal of Radiology, Inc.:



14







Name & Principal Position

Year

Salary ($)

Bonus

($)

Stock Awards ($)

Option Awards ($)

Non-Equity Incentive Plan Compensation ($)

Nonqualified Deferred Compensation Earnings ($)

All Other Compensation ($)

Total ($)

Aaron Shrira,  President and Director               

2012

$-

$ -

$ -

$ -

$-

$ -

$ -

$ -

 

2011

$-

$ -

$ -

$ -

$-

$ -

$ -

$ -

 

 

 

 

 

 

 

 

 

 

Elana Berman-Shrira,

Secretary, Treasurer and Director               

2012

$-

$ -

$ -

$ -

$-

$ -

$ -

$ -

 

2011

$-

$ -

$ -

$ -

$-

$ -

$ -

$ -

 

 

 

 

 

 

 

 

 

 



Director Compensation



The following table provides compensation summary concerning the compensation earned by the named directors for the years ended June 30, 2012 and 2011.


Name







Year

Fees Earned or Paid in Cash

Stock Awards

Option Awards

Non-Equity Incentive Plan Compensation

Non-Qualified Deferred Compensation Earnings

All Other Compensation

Total

Aaron Shrira, Director

2012

$-

$ -

$ -

$ -

$ -

$ -

$-


2011

$-

$ -

$ -

$ -

$ -

$ -

$-

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Elana Berman-Shrira, Director

2012

$-

$ -

$ -

$ -

$ -

$ -

$-


2011

$-

$ -

$ -

$ -

$ -

$ -

$-

 

 

 

 

 

 

 

 

 





15




ITEM 12.

SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED STOCKHOLDER MATTERS.

Security Ownership of Certain Beneficial Owners and Management

The following table sets forth, as of June 30, 2012, information about the beneficial ownership of our capital stock with respect to each person known by Journal of Radiology, Inc. to own beneficially more than 5% of the outstanding capital stock, each director and officer, and all directors and officers as a group.

 

Number of Shares Beneficially Owned

 

Percentage of Class (2)                                         

Name and Address(1)               

Class

Aaron Shrira(3)            

180,000,000

Common

10.1%

President and Director

 

 

 

Elana Berman-Shrira(3)

-

Common

*

Imagin8 (4)

975,000,000

Common

54.7%

All directors and executive

officers (2 persons)

1,155,000,000

Common

64.8%

*Denotes less than 1%

 

1)     Unless noted otherwise, the address for all persons listed is c/o the Company at 2230 Michigan Avenue,

               Santa Monica, California 90404.

2)    The above percentages are based on 1,781,550,000 shares of common stock outstanding as September 24, 2012.

3)   Elana Berman-Shrira may be considered the beneficial owner of 180,000,000 shares owned by her husband Aaron Shrira.

4)

Represents 75,000,000 shares held directly and 900,000,000 shares hold by a wholly owned corporation, Imagin8. Address: 53Theddore PL, Thornhill, Ontario, Canada L4J 8E4

 

“Beneficial ownership” means the sole or shared power to vote or to direct the voting of, a security, or the sole or shared investment power with respect to a security (i.e., the power to dispose of or to direct the disposition of, a security).

There are no arrangements, known to us, including any pledge by any person of our securities, the operation of which may at a subsequent date result in a change in control of Journal of Radiology, Inc.

There are no arrangements or understandings among members of both the former and the new control groups and their associates with respect to election of directors or other matters.

ITEM 13.

CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS AND DIRECTOR INDEPENDENCE.

None.



ITEM 14.

PRINCIPAL ACCOUNTANT FEES AND SERVICES.

Audit Fees

The aggregate fees billed by the Company's auditors for the professional services rendered in connection with the audit of the Company's annual financial statements, review of our Form 10 and reviews of the financial statements included in the Company's Forms 10-Qs and Form 10-Ks for fiscal 2012 and 2011 were approximately $11,250 and $9,250, respectively.



16




 

Audit-Related Fees

None.

Tax Fees

None.

All Other Fees

Fees billed in connection with subsidiary stand alone audits in fiscal 2011 and 2011 were approximately $0 and $0, respectively.  



 









17





PART IV.

ITEM 15.

EXHIBITS.

 

 

 

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.INS

XBRL Instance Document

X

 

 

 

 

101.SCH

XBRL Taxonomy Extension Schema Document

X

 

 

 

 

101.CAL

XBRL Taxonomy Extension Calculation Linkbase Document

X

 

 

 

 

101.LAB

XBRL Taxonomy Extension Label Linkbase Document

X

 

 

 

 

101.PRE

XBRL Taxonomy Extension Presentation Linkbase Document

X

 

 

 

 

101.DEF

XBRL Taxonomy Extension Definition Linkbase Definition

X

 

 

 

 



18




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:  October 3, 2012

By:

/s/ Aaron Shrira

 

 

Aaron Shrira

President and Director (Principal Executive Officer)

 

 

 

 

 

 

Date: October 3, 2012

By:

/s/ Elana Berman-Shrira

Elana Berman-Shrira

Treasurer and Director (Principal Accounting and Financial Officer)




19





 




JOURNAL OF RADIOLOGY, INC.

FINANCIAL STATEMENTS

JUNE 30, 2012 AND 2011


 

 

 


 





F-1





 

Office Locations

La s Vegas, NV

New York, NY

Pune, India

Beijing, China

 

[jori_201210k09302012002.gif]

 

 

 

 

 



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and Stockholders

Journal of Radiology, Inc.,


We have audited the accompanying balance sheets of Journal of Radiology, Inc. (A Development Stage Company) (the “Company”) as of June 30, 2012 and 2011 and the related statements of operations, stockholders’ equity (deficit) and cash flows for each of the years then ended and for the period from inception (May 21, 2009) through June 30, 2012. Journal of Radiology, Inc’s management is responsible for these financial statements.  Our responsibility is to express an opinion on these financial statements based on our audits.


We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion.  An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.


In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Journal of Radiology, Inc. (A Development Stage Company) as of June 30, 2012 and 2011 and the results of its operations and its cash flows for each of the years then ended and for the period from inception (May 21, 2009) through June 30, 2012 in conformity with accounting principles generally accepted in the United States of America.


The accompanying financial statements have been prepared assuming the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company has suffered losses from operations, which raise substantial doubt about its ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 3. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.



/s/ De Joya Griffith, LLC

Henderson, Nevada

September 26, 2012





De Joya Griffith, LLC 2580 Anthem Village Dr. Henderson, NV 89052

Telephone (702) 563-1600 Facsimile (702) 920-8049

www.dejoyagriffith.com



F-2




JOURNAL OF RADIOLOGY, INC.

(A Development Stage Company)

BALANCE SHEETS

(Audited)

 

 

As of Year End

June 30,

2012

 





As of Year End
June 30,

2011

Assets

 

 

 

 

 Cash

$

3,154

$

5,760

Accounts receivable

 

58,000

 

105,000

     Total assets

$

61,154

$

110,760

Liabilities and Stockholders’  (Deficit)

 

 

 

 

  Accounts payable

$

89,000

$

101,000

  Advances

 

16,970

 

-

  Due to director

 

49,000

 

34,000


     Total liabilities

 

154,970


135,000


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, 1,781,550,000 and 212,550,000 issued and outstanding, respectively.

 

1,781,550

 

212,550

Additional paid-in capital

 

107,325,535

 

(205,465)

 Deficit accumulated during development stage

 

(109,200,901)

 

(31,325)

Total stockholders’ deficit

 

(93,816)

 

(24,240)

 

 

 

 

 

    Total liabilities and stockholders' deficit

$

61,154

$

110,760


See Notes to Financial Statements.



F-3




JOURNAL OF RADIOLOGY, INC.

(A Development Stage Company)

STATEMENTS OF OPERATIONS

(Audited)

 




For the Year ended

June 30,

2012

 




For the Year ended

June 30,

2011

 



From Inception

(May 21, 2009) to
June 30,

2012

 

 

 

 

 

 

 

 

 

 

 

 

Revenue

$

 

$

105,000 

 

$

105,000 

 

 

 

 

 

 

Total  revenue

 

105,000 

 

105,000 

 

 

 

 

 

 

Operating costs:

 

 

 

 

 

Professional fees

69,082 

 

131,174 

 

204,341 

Administrative expenses

494 

 

265 

 

1,560 

Impairment of licensing rights

64,500,000 

 

 

64,500,000 

Stock based compensation

44,600,000 

 

 

44,600,000 

 

 

 

 

 

 

Total operating costs

109,169,576 

 

131,439 

 

109,305,901 

 

 

 

 

 

 

Net loss

$

(109,169,576)

 

$

(26,439)

 

$

(109,200,901)

 

 

 

 

 

 

 Basic loss per share

$

(0.24)

 

(0.00)

 

 

 

 

 

 

 

 

Weighted average number of common shares outstanding- basic

455,804,795 

 

212,550,000 

 

 

 

 

 

 

 

 


See Notes to Financial Statements.


 

F-4




JOURNAL OF RADIOLOGY, INC.

(A Development Stage Company)

STATEMENT OF STOCKHOLDERS' EQUITY (DEFICIT)

FROM INCEPTION (MAY 21, 2009) TO JUNE 30, 2012

(Audited)

 

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)

 


See Notes to Financial Statements.




F-5




 

JOURNAL OF RADIOLOGY, INC.

(A Development Stage Company) 

STATEMENTS OF CASH FLOWS

(Audited)

 


For the Year  Ended
June 30,

2012

 


For the Year Ended

June 30,

2011

 


From Inception

(May 21, 2009) to
June 30,

2012

Cash Flows from Operating Activities

 

 

 

 

 

Net loss

$

(109,169,576)

 

$

(26,439)

 

$

(109,200,901)

Adjustments to reconcile net loss to net cash used in operating activities and liabilities:

 

 

 

 

 

Issuance of common stock per court order

 

 

1,085 

Stock issued for services

44,600,000 

 

 

44,600,000 

Impairment of licensing rights

64,500,000 

 

 

64,500,000 

Changes in operating assets and liabilities:

 

 

 

 

 

Decrease (increase) in accounts receivable

47,000 

 

(105,000)

 

(58,000)

Increase (decrease) in accounts payable

(12,000)

 

101,000 

 

89,000 

Net cash used in operating activities

(34,576)

 

(30,439)

 

(68,816)

 

 

 

 

 

 

Cash Flows from Financing Activities:

 

 

 

 

 

   Increase in advance from director

15,000 

 

31,500 

 

49,000 

   Issuance of common stock

 

 

6,000 

   Advances

17,470 

 

 

17,470 

   Repayment of advances

(500)

 

 

(500)

Net cash provided by financing activities

31,970 

 

31,500 

 

71,970 

 

 

 

 

 

 

Net change in cash

(2,606)

 

1,061 

 

3,154 

Cash beginning of year

5,760 

 

4,699 

 

Cash end of year

$

3,154 

 

$

5,760 

 

$

3,154 

 

 

 

 

 

 

SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION

 

 

 

 

 

Cash paid during period for:

 

 

 

 

 

   Interest paid

$

 

$

 

$

   Income tax paid

$

 

$

 

$

   Shares issued for purchase of licensing rights

$

64,500,000 

 

$

 

$

64,500,000 


See Notes to Financial Statements.



 

F-6






JOURNAL OF RADIOLOGY, INC.

(A Development Stage Company)

Notes to Financial Statements

June 30, 2012

                                                                     (Audited)


NOTE 1. NATURE AND BACKGROUND OF BUSINESS


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.


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 June 30, 2012 and 2011 were not included in the computation of diluted earnings per share because the effect would be antidilutive.



F-7




 

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 EQUIVALENTS

 

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 June 30, 2012 and June 30, 2011, 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.


 

F-8









g. INCOME TAXES


Income taxes are provided in accordance with Codification 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 is currently unable to forecast sales of the fiscal year ended June 30, 2012. An impairment charge of $64,500,000 and $0 was recorded and included in in the statement of operations during the years ended June 30, 2012 and 2011, respectively.


i. IMPACT OF NEW ACCOUNTING STANDARDS

There have been no recent accounting pronouncements or changes in accounting pronouncements that impacted the year ended June 30, 2012 or which are expected to impact future periods, that were not already adopted and disclosed in prior periods.

 

F-9




 


NOTE 3. GOING CONCERN


The Company's financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern. 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.



F-10







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 AMORTIZATON, NET

Intangible assets represent interactive media technology acquired on May 28, 2012. Acquisition costs were $64,500,000 and $0 at June 30, 2012 and 2011, respectively.  These costs are presented on the balance sheet net of impairment charge of $64,500,000 and $0 at June 30, 2012 and 2011, 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


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 June 30, 2012 and 2011:


The authorized Preferred Stock of the Company consists of 49,000,000 shares with $0.01 par value. As of June 30, 2012, there was no issued and outstanding preferred stock.




F-11






The authorized Series A Convertible Preferred Stock of the Company consists of 1,000,000 shares with $0.01 par value. As of June 30, 2012, 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 June 30, 2012 and 2011, there were 1,781,550,000 and 212,550,000 common shares issued and outstanding, respectively.


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).

  

NOTE 7 – INCOME TAXES


Income taxes are computed using the asset and liability method of accounting. Under the asset and liability method, a deferred tax asset or liability is recognized for estimated future



F-12






tax effects attributable to temporary differences and carryforwards. The measurement of deferred income tax assets is adjusted by a valuation allowance, if necessary, to recognize future tax benefits only to the extent that, based on available evidence, it is more likely than not those benefits will be realized. The Company’s deferred tax assets were fully reserved at June 30, 2012 and 2011.


Income taxes differ from the amount that would be computed by applying the Federal statutory income tax rates of 34% (2010 – 34%) as of June 30.  The reasons for the differences are as follows:



 

 

    2012    

 

     2011    

 

Provision for income taxes:

 

 

 

 

 

Net loss

 

$

(109,169,576)

 

$

(26,439)

 

Adjustments:

 

 

 

 

 

 

 

Impairment of licensing rights

 

 

64,500,000

 

 

-

 

Stock issued for consulting services  

 

 

44,600,000

 

 

-

 

   Tax loss

 

 

(69,576)

 

 

(26,439)

 

   Federal statutory income tax rate

 

 

34%

 

 

34%

 

   

 

 

23,656

 

 

8,989

 

  Change in valuation allowance

 

 

(23,656)

 

 

(8,989)

 

 

 

$

-

 

$

-

 


 Deferred tax assets and liabilities consist of the following as of June 30:


 

 

    2012   

 

     2011    

 

Deferred tax assets:

 

 

 

 

 

Net operating loss carry forwards

 

$

34,307

 

$

10,651

 

Less valuation allowance

 

 

(34,307)

 

 

(10,651)

 

    Net deferred tax asset  

 

$

-

 

$

-

 


The tax years 2009 through 2012 remain open to examination by the major taxing jurisdictions in which the Company operates. The Company expects no material changes to unrecognized tax positions within the next twelve months.


NOTE 8. RELATED PARTY TRANSACTIONS


During the fiscal years June 30, 2012 and 2011, the Company received from a director $49,000 and $34,000, respectively for payment of expenses. These amounts are included on the balance sheet as a current liability.  The advance is non-interest bearing, unsecured, and due on demand.


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



F-13






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 is 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 did not trade, and since its par value is $0.001, the fair value of the warrants came out to be zero.


The following is a summary of warrants activity during the years ended June 30, 2012 and 2011:



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Number of Shares

Weighted Average Exercise Price

Balance, June 30, 2010

5,000,000

$

0.10

 

 

 

Warrants granted and assumed

0

 

Warrants expired

0

 

 

 

 

Balance,  June 30, 2011

5,000,000

$

0.10

 

 

 

Warrants granted and assumed

0

 

Warrants expired

0

 

 

 

 

Balance,  June 30, 2012

5,000,000

$

0.10


 

All warrants outstanding as of June 30, 2012 are exercisable.



NOTE 10. SUBSEQUENT EVENTS


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.




F-15

 




XOTC:JRRD Journal of Radiology Inc Annual Report 10-K Filling

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XOTC:JRRD Journal of Radiology Inc Annual Report 10-K Filing - 6/30/2012
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