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.
The accompanying notes are an integral part
of these condensed financial statements.
The accompanying notes are an integral
part of these condensed financial statements.
Notes to Financial Statements
December 31, 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.
The Company has not realized significant revenues
from its planned principal business purpose and is considered to be in its development state in accordance with the Financial Accounting
Standards Board (“FASB”) Accounting Standards Codification (“ASC”) 915, “Development Stage Entities”.
All losses accumulated since the inception of the Company have been considered as part of the Company’s development stage
activities.
Basis of presentation
The accompanying condensed financial statements
are unaudited. These unaudited interim condensed financial statements have been prepared in accordance with accounting principles
generally accepted in the United States (“GAAP”) and applicable rules and regulations of the Securities and Exchange
Commission (“SEC”) regarding interim financial reporting. Certain information and note disclosures normally included
in the financial statements prepared in accordance with GAAP have been condensed or omitted pursuant to such rules and regulations.
Accordingly, these interim condensed financial statements should be read in conjunction with the financial statements and notes
thereto contained in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2013 filed with the SEC.
The condensed balance sheet as of June 30, 2013 included herein was derived from the audited consolidated financial statements
as of that date, but does not include all disclosures, including notes, required by GAAP.
In the opinion of management, the accompanying
unaudited condensed consolidated financial statements contain all adjustments necessary to fairly present the Company's financial
position and results of operations for the interim periods reflected. Except as noted, all adjustments contained herein are of
a normal recurring nature. Results of operations for the fiscal periods presented herein are not necessarily indicative of fiscal
year-end results.
Going concern
The Company's financial statements are
prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the
realization of assets and the settlement of liabilities and commitments in the normal course of business. The Company is in
the development stage and has not generated any significant revenues from operations to date, and does not expect to do so in
the foreseeable future. The Company has experienced recurring operating losses and negative operating cash flows since
inception. As reflected in the accompanying unaudited condensed financial statements, the Company had a negative cash flow
from operations of $24,657 for the six month period ended December 31, 2013 and an accumulated deficit of $109,577,346 at
December 31, 2013. 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 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
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.
The more significant estimates and assumptions by management include among others, the fair value of shares of common stock issued
for services.
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.
STOCK-BASED COMPENSATION
The Company periodically issues stock options
and warrants to employees and non-employees in non-capital raising transactions for services and for financing costs. The Company
accounts for stock option and warrant grants issued and vesting to employees based on the authoritative guidance provided by the
Financial Accounting Standards Board (the “FASB”) whereas the value of the award is measured on the date of grant and
recognized over the vesting period. The Company accounts for stock option and warrant grants issued and vesting to non-employees
in accordance with the authoritative guidance of the FASB whereas the value of the stock compensation is based upon the measurement
date as determined at either a) the date at which a performance commitment is reached, or b) at the date at which the necessary
performance to earn the equity instruments is complete. Non-employee stock-based compensation charges generally are amortized over
the vesting period on a straight-line basis. In certain circumstances where there are no future performance requirements by the
non-employee, option grants are immediately vested and the total stock-based compensation charge is recorded in the period of the
measurement date.
The fair value of the Company's common stock
option grants are estimated using the Black-Scholes option pricing model, which uses certain assumptions related to risk-free interest
rates, expected volatility, expected life of the common stock options, and future dividends. Compensation expense is recorded based
upon the value derived from the Black-Scholes option pricing model, and based on actual experience. The assumptions used in the
Black-Scholes option pricing model could materially affect compensation expense recorded in future periods.
LOSS PER SHARE
Basic net loss per share 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. At December 31,
2013 and 2012 common stock equivalents were comprised of warrants to purchase 5,000,000 shares of the Company’s common stock,
and were not included in the computation of diluted earnings per share because the effect would be antidilutive.
FAIR VALUE MEASUREMENTS
Fair value measurements are determined using
authoritative guidance issued by the FASB, with the exception of the application of the guidance to non-recurring, non-financial
assets and liabilities as permitted. Fair value is defined in the authoritative guidance as the price that would be received to
sell an asset or paid to transfer a liability in the principal or most advantageous market for the asset or liability in an orderly
transaction between market participants at the measurement date. A fair value hierarchy was established, which prioritizes the
inputs used in measuring fair value into three broad levels as follows:
Level 1—Quoted prices in active markets for identical assets
or liabilities.
Level 2—Inputs, other than the quoted prices in active markets,
are observable either directly or indirectly.
Level 3—Unobservable inputs based on the Company's assumptions.
The Company is required to use observable market data if available
without undue cost and effort.
The Company’s financial instruments include cash and cash
equivalents, and accounts payable. Management has estimated that the carrying amounts approximate their fair value due to their
short-term nature.
RECENT ACCOUNTING PRONOUNCEMENTS
There have been no recent accounting pronouncements
or changes in accounting pronouncements that impacted the second quarter of fiscal 2013, or which are expected to impact future
periods that were not already adopted and disclosed in prior periods.
NOTE 3. STOCKHOLDERS' DEFICIENCY - 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 December 31, 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 December 31, 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 December 31, 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 December 31, 2013 and June 30, 2013, there were 2,012,550,000 common
shares issued and outstanding.
On May 21, 2009, the Company issued 32,550,000
shares of common stock pursuant to the Chapter 11 Plan of Reorganization confirmed by the U.S. Bankruptcy Court in the matter of
AP Corporate Services, Inc. ("AP").
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 4. ADVANCES
At December 31, 2013 and June 30, 2013, advances
from a shareholder totaled $44,151 and $19,683. The advances are non-interest bearing, unsecured, and have no specific terms of
repayment.
NOTE 5. RELATED PARTY TRANSACTIONS
At December 31, 2013 and June 30, 2013, due
to director totaled $49,000. 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. Management has determined such costs
are immaterial to the financial statements and accordingly, have not been reflected therein.
NOTE 6. 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.
The following is a summary of warrants
activity during the years ended June 30, 2013 and 2012:
|
|
Number of Shares
|
|
Weighted Average Exercise Price
|
|
|
|
|
|
|
|
|
|
Balance, July 1, 2013
|
|
|
5,000,000
|
|
|
$
|
0.10
|
|
|
|
|
|
|
|
|
|
|
Warrants granted and assumed
|
|
|
—
|
|
|
|
|
|
Warrants expired
|
|
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Balance, December 31, 2013
|
|
|
5,000,000
|
|
|
$
|
0.10
|
|
All
warrants outstanding as of December 31, 2013 are exercisable, and on January 4, 2014, all the warrants expired.