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

FORM 10-Q

 

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

 

For the quarterly period ended September 30, 2014

or

 

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

 

For the transition period from __________ to __________

 

Commission file number 000-53780

 

JOURNAL OF RADIOLOGY, INC.

(Exact name of registrant as specified in its charter)

 

Nevada 27-0491634
(State or other jurisdiction of incorporation or organization) (I.R.S. Employer Identification No.)
   

2230 Michigan Avenue

Santa Monica, California

 

90404

(Address of Principal executive offices) (Zip Code)
   
Registrant’s telephone number, including area code. (310) 460-7303

 

 

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

 

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

 

 

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

 

 

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

(Do not check if a smaller reporting company)

 

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

 

As of November 18, 2014, the registrant had 2,012,550,000 outstanding shares of Common Stock.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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JOURNAL OF RADIOLOGY, INC.

INDEX

 

   

Page

Number

PART I. FINANCIAL INFORMATION  
     
Item 1   Financial Statements:  
  Condensed Balance Sheets as of September 30, 2014  (Unaudited) and June 30, 2014 6
Condensed Statements of Operations for the Three Months Ended September 30, 2014 and 2013 (Unaudited) 7
  Condensed Statement of Stockholders’ Deficit from July 1, 2013 to September 30, 2014 (Unaudited) 8
  Condensed Statements of Cash Flows for the Three Months Ended September 30, 2014 (Unaudited) 9
  Notes to Condensed Financial Statements (Unaudited) 10
Item 2 Management's Discussion and Analysis of Financial Condition and Results of Operations 14
Item 3 Quantitative and Qualitative Disclosures About Market Risk 14
Item 4T Controls and Procedures 16
     
PART II OTHER INFORMATION  
     
Item 1 Legal Proceedings 17
Item 1A Risk Factors 17
Item 2 Unregistered Sales of Equity Securities and Use of Proceeds 21
Item 3 Defaults upon Senior Securities 21
Item 4 Mine Safety Disclosures 21
Item 5 Other Information 21
Item 6 Exhibits 21
     
SIGNATURES 22
     
EXHIBITS  

 

 

 

 

 

 

 

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Forward-Looking Statements

 

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

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

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PART 1 – FINANCIAL INFORMATION

ITEM 1. FINANCIAL STATEMENTS

The unaudited financial statements included herein have been prepared by Journal of Radiology, Inc. (the “Company”). In the opinion of management, the interim financial statements reflect all adjustments of a normal recurring nature necessary for a fair statement of the results for interim periods. It is suggested that these financial statements and notes to the financial statements be read in conjunction with the financial statements included in the Company’s Annual Report on Form 10-K for the fiscal year ended June 30, 2014.

 

 

 

 

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JOURNAL OF RADIOLOGY, INC.
CONDENSED BALANCE SHEETS
 
    As of    As of 
    September 30,    June 30, 
    2014    2014 

 

Assets

   (Unaudited)      
 Cash  $137   $215 
 Prepaid expense   1,375    1,375 
 Total assets  $1,512   $1,590 
           
Liabilities and Stockholders’ Deficit
          
Current Liabilities:          
Accounts payable and accrued liabilities  $110,854   $97,601 
Advances due shareholder   13,259    14,909 
Due to director   49,000    49,000 
Total Current Liabilities   173,113    161,510 
           
Redeemable secured note payable due to shareholder, net of debt discount of $0 and $13,093, respectively   84,283      65,888 
           
Commitments and contingencies          
           
Stockholders' Deficit:          
Preferred stock; par value $0.01; 49,000,000 shares authorized, no shares issued and outstanding   —      —   
Series A Convertible Preferred Stock; par value $0.01; 1,000,000 shares authorized, no shares issued and outstanding   —      —   
Common stock; par value $0.001; 5,000,000,000 shares authorized, 2,012,550,000 issued and outstanding   2,012,550    2,012,550 
Additional paid-in capital   107,442,135    107,442,135 
Accumulated deficit   (109,710,569)   (109,680,493)
Total stockholders' deficit   (255,884)   (225,808)
Total liabilities and stockholders’ deficit  $1,512   $1,590 
           
The accompanying notes are an integral part of these condensed financial statements.

 

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JOURNAL OF RADIOLOGY, INC.

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

   For the Three Months Ended
September 30, 2014
  For the Three Months Ended
September 30, 2013
       
Revenue  $—     $—   
          
Operating costs:          
Administrative expenses   78    111 
Professional fees   11,603    9,911 
Total operating costs   11,681    10,022 
           
Other income (expense)          
Interest   (18,395)   —   
           
Net loss  $(30,076)  $(10,022)
           
Net loss per share-basic and diluted  $(0.00)  $(0.00)
           
Weighted average shares outstanding-basic and diluted   2,012,550,000    2,012,550,000 

 

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

 

 

 

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JOURNAL OF RADIOLOGY, INC.

CONDENSED STATEMENT OF STOCKHOLDERS' DEFICIT

(Unaudited)

 

   Common
Shares
  Common
Stock
  Additional Paid-in Capital  Accumulated Deficit  Total Stockholders’ Deficit
Balance July 1, 2014   2,012,550,000   $2,012,550   $107,442,135   $(109,680,493)  $(225,808)
Net loss   —      —      —      (30,076)   (30,076)
Balance September 30, 2014   2,012,550,000   $2,012,550   $107,442,135   $(109,710,569)  $(255,884)

 

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

 

 

 

 

 

 

  

 

 

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JOURNAL OF RADIOLOGY, INC.
CONDENSED STATEMENTS OF CASH FLOWS
(Unaudited)
       
    For the Three months    For the Three months 
    Ended    Ended 
    September 30,    September 30, 
    2014    2013 
Cash Flows from Operating Activities          
Net loss  $(30,076)  $(10,022)
Adjustments to reconcile net loss to net cash used in operating activities:          
  Amortization of debt discount   13,093    —   
Changes in operating assets and liabilities          
   Accounts payable and accrued liabilities   11,603    (3,951)
   Accrued interest on redeemable secured note payable   5,302    —   
Net cash used in operating activities   (78)   (13,973)
           
Cash Flows from Financing Activities          
  Advances form shareholder   —      13,862 
Net cash provided by financing activities   —      13,862 
           
Decrease in cash   (78)   (111)
Cash, beginning of period   215    560 
Cash, end of period  $137   $449 
           
SUPPLEMENTAL DISCLOSURES OF CASH FLOW INFORMATION:          
Cash paid during the period for:          
 Interest  $—     $—   
 Income taxes  $—     $—   
NON-CASH INVESTING AND FINANCING ACTIVITIES:          
Reclassification of advances from shareholder to accounts payable and accrued liabilities  $1,650   $—   
 
The accompanying notes are an integral part of these condensed financial statements.
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JOURNAL OF RADIOLOGY, INC.

Notes to Financial Statements

September 30, 2014 AND 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.

 

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 unaudited 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, 2014 filed with the SEC. The condensed balance sheet as of June 30, 2014 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 has a shareholders’ deficit and has experienced recurring operating losses and negative operating cash flows since inception. As reflected in the accompanying financial statements, the Company had a net loss of $30,076 for the three months September 30, 2014, and had a working capital deficiency of $171,601 and a stockholders’ deficit of $255,884 at September 30, 2014. 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.

 

Primarily as a result of our recurring losses and our lack of liquidity, we have received a report from our independent registered public accounting firm for our financial statements for the year ended June 30, 2014 that includes an explanatory paragraph describing the uncertainty as to our ability to continue as a going concern.

 

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 areholders. 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.

 

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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.

 

BASIC AND DILUTED LOSS PER SHARE

 

Basic loss per share is computed by dividing net loss applicable to common stockholders by the weighted average number of outstanding common shares during the period. Diluted loss per share is computed by dividing the net loss applicable to common stockholders by the weighted average number of common shares outstanding plus the number of additional common shares that would have been outstanding if all dilutive potential common shares had been issued. Diluted loss per share excludes all potential common shares if their effect is anti-dilutive.

 

As of September 30, 2014, the Company had no potential common shares that would have a dilutive effect and accordingly the calculations of basic loss and diluted loss per share are the same. A redeemable secured note payable due shareholder redeemable into 842,830,000 shares of common stock has been excluded from the calculation at September 30, 2014 as the effect would have been anti-dilutive.

 

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 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.

 

FAIR VALUE OF 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.

 

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

 

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

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

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

The estimated fair value of certain financial instruments, including cash and cash equivalents and accounts payable and accrued expenses are carried at historical cost basis, which approximates their fair values because of the short-term nature of these instruments. The recorded value of the redeemable secured note payable due shareholder approximates its fair value based upon its effective interest rate.

 

RECENT ACCOUNTING PRONOUNCEMENTS

 

In May 2014, the Financial Accounting Standards Board (FASB) issued Accounting Standards Update No. 2014-09 (ASU 2014-09), Revenue from Contracts with Customers. ASU 2014-09 will eliminate transaction- and industry-specific revenue recognition guidance under current U.S. GAAP and replace it with a principle based approach for determining revenue recognition. ASU 2014-09 will require that companies recognize revenue based on the value of transferred goods or services as they occur in the contract. The ASU also will require additional disclosure about the nature, amount, timing and uncertainty of revenue and cash flows arising from customer contracts, including significant judgments and changes in judgments and assets recognized from costs incurred to obtain or fulfill a contract. ASU 2014-09 is effective for reporting periods beginning after December 15, 2016, and early adoption is not permitted. Entities can transition to the standard either retrospectively or as a cumulative-effect adjustment as of the date of adoption. Management is currently assessing the impact the adoption of ASU 2014-09 and has not determined the effect of the standard on our ongoing financial reporting.

 

In April 2014, the FASB issued Accounting Standards Update No. 2014-08 (ASU 2014-08), Presentation of Financial Statements (Topic 205) and Property, Plant and Equipment (Topic 360). ASU 2014-08 amends the requirements for reporting discontinued operations and requires additional disclosures about discontinued operations. Under the new guidance, only disposals representing a strategic shift in operations or that have a major effect on the Company's operations and financial results should be presented as discontinued operations. This new accounting guidance is effective for annual periods beginning after December 15, 2014. The Company is currently evaluating the impact of adopting ASU 2014-08 on the Company's results of operations or financial condition.

 

In August 2014, the FASB issued Accounting Standards Update No. 2014-15 (ASU 2014-15), Disclosure of Uncertainties about an Entity’s Ability to Continue as a Going Concern, which provides guidance on determining when and how to disclose going-concern uncertainties in the financial statements. The new standard requires management to perform interim and annual assessments of an entity’s ability to continue as a going concern within one year of the date the financial statements are issued. An entity must provide certain disclosures if conditions or events raise substantial doubt about the entity’s ability to continue as a going concern. The ASU applies to all entities and is effective for annual periods ending after December 15, 2016, and interim periods thereafter, with early adoption permitted. The Company is currently evaluating the impact the adopting ASU 2014-15 on the Company’s financial statement presentation and disclosures.

 

Other recent accounting pronouncements issued by the FASB, including its Emerging Issues Task Force, the American Institute of Certified Public Accountants, and the Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company's present or future consolidated financial statements.

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NOTE 3. ADVANCES DUE SHAREHOLDER

Advances due shareholder are non-interest bearing, unsecured, and have no specific terms of repayment.

 

NOTE 4. REDEEMABLE SECURED NOTE PAYABLE DUE SHAREHOLDER

On February 20, 2014, the Company agreed to exchange advances due to a shareholder for a redeemable secured note payable for $68,000. The note bears interest at 20% per annum, and is secured by all the assets of the Company. The note was originally due August 1, 2014 and has been was extended to August 1, 2015. On February 20, 2014, the Company recognized a note discount of $68,000 related to a beneficial conversion feature which was amortized over the initial term of the note from February 20, 2014 to August 1, 2014. During the three months ended September 30, 2014, $13,093 of discount amortization is included in interest expense. At September 30, 2014, there was no unamortized balance of note discount. At June 30, 2014, the unamortized balance of the discount was $13,093.

 

The Company may prepay the note in readily available funds at any time prior to the maturity date. The Company has the right to redeem the note into shares of the Company’s common stock at any time prior to the maturity date at a fixed price of $0.0001 per common stock. At September 30, 2014, the face amount of the note plus accrued interest was $84,283 and is redeemable into 842,830,000 shares of common stock.

 

NOTE 5. RELATED PARTY TRANSACTIONS

 

As of September 30, 2014 and June 30, 2014, the Company owed the President and Director of the Company $49,000 and $49,000, respectively for payment of expenses. The advance is non-interest bearing, unsecured, and due on demand.

 

The President and Director of the Company provides office space and office services to the Company without rent or charge. Management has determined that such costs are immaterial to the financial statements and accordingly, have not been reflected therein

 

 

 

 

 

 

 

 

 

 

 

 

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ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED SEPTEMBER 30, 2014 AND 2013

 

Company Overview

 

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

 

RESULTS OF OPERATIONS

 

THREE MONTHS ENDED SEPTEMBER 30, 2014 COMPARED WITH THE THREE MONTHS ENDED SEPTEMBER 30, 2013

 

REVENUES

 

For the three months ended September 30, 2014 and 2013, we had no revenues. We are completely dependent upon the willingness of our management to fund our initial operations by way of loans from our Chief Executive Officer, shareholders and others. The Company has not realized a profit from its planned operations.

 

COSTS OF GOODS SOLD

 

We did not incur cost of sales for the three months ended September 30, 2014 and 2013.

 

OPERATING COSTS

 

Administrative expenses were $78 for the three months ended September 30, 2014, compared to $111 for the three months ended September 30, 2013 and professional fees were $11,603 for the three months ended September 30, 2014, compared to $9,911 for the three months ended September 30, 2013. The increase in total administration and professional costs is due to changes in accounting, audit, legal and transfer agent costs related to SEC compliance and investor relation expenses.

 

OTHER INCOME (LOSS)

 

Other income (loss) includes interest expense of $18,395 and $0 for the three months ended September 30, 2014 and 2013, respectively, related to the redeemable secured note due shareholder issued on February 20, 2014 and renewed for one year on August 1, 2014.

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NET LOSS

 

Our net losses for the three months September 30, 2014 and 2013 were $30,076 and $10,022, respectively. Our losses increased in the current year primarily because of an interest expense related to the redeemable secured note due shareholder.

 

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 September 30, 2014, we had cash of $137 and total liabilities of $257,396. Our cash flows from operating activities for the three months ended September 30, 2014 resulted in cash used of $78. Our current cash balance and cash flow from operating activities will not be sufficient to fund our operations. Our cash flow used by financing activities for the three months ended September 30, 2014 was $0. The Company has a working capital deficiency of $171,601 and a shareholders’ deficit of $255,884 at September 30, 2014.

 

Primarily as a result of our recurring losses and our lack of liquidity, we have received a report from our independent registered public accounting firm for our financial statements for the year ended June 30, 2014 that includes an explanatory paragraph describing the uncertainty as to our ability to continue as a going concern.

 

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

 

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

 

The 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

 

Our Chief Executive Officer has committed to advancing us an additional $50,000 for certain operating costs in order to start implementing our business plan, the funds are loaned to the Company as required to pay amounts owed by the Company. As such, our operating capital is currently limited to the personal resources of our Chief Executive Officer. The loans from our Chief Executive Officer are unsecured and non-interest bearing and have no set terms of repayment. We anticipate receiving additional capital once we are able to have our securities actively trading on a public exchange. There is no guarantee our stock will develop a market on that public exchange.

 

PLAN OF OPERATION AND FUNDING

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

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

      (i) filing of Exchange Act reports, and

      (ii) costs relating to developing our new business plan

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

 

Employees

 

Journal of Radiology, Inc. currently has no employees.

 

Office and Facilities

 

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

 

Off-Balance Sheet Arrangements

 

We do not have any off-balance sheet arrangements.

Going Concern

The Company's financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Company has a shareholders’ deficit and has experienced recurring operating losses and negative operating cash flows since inception. As reflected in the accompanying financial statements, the Company had a net loss of $30,076 for the three months September 30, 2014, and had a working capital deficiency of $171,601 and a shareholder’s deficit of $255,884 at September 30, 2014. 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.

 

Primarily as a result of our recurring losses and our lack of liquidity, we have received a report from our independent registered public accounting firm for our financial statements for the year ended June 30, 2014 that includes an explanatory paragraph describing the uncertainty as to our ability to continue as a going concern.

 

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.

ITEM 3. QUANTITATIVE AND QUALITIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

 

ITEM 4T. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

 

As required by Rule 13a-15 of the Securities Exchange Act of 1934, our principal executive officer and principal financial officer evaluated our company's disclosure controls and procedures (as defined in Rules 13a-15(e) of the Securities Exchange Act of 1934) as of the end of the period covered by this report. Based on this evaluation, our principal executive officer and principal financial officer concluded that as of the end of the period covered by this report, these disclosure controls and procedures were not effective to ensure that the information required to be disclosed by our company in reports it files or submits under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the Securities Exchange Commission and to ensure that such information is accumulated and communicated to our company's management, including our principal executive officer and principal financial officer, to allow timely decisions regarding required disclosure. The conclusion that our disclosure controls and procedures were not effective was due to the presence of the following material weaknesses in internal control over financial reporting which are indicative of many small companies with small staff: (i) inadequate segregation of duties and effective risk assessment; and (ii) insufficient written policies and procedures for accounting and financial reporting with respect to the requirements and application of both United States generally accepted accounting principles and Securities and Exchange Commission guidelines. Management anticipates that such disclosure controls and procedures will not be effective until the material weaknesses are remediated.

 

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We plan to take steps to enhance and improve the design of our internal controls over financial reporting. During the period covered by this quarterly report on Form 10-Q, we have not been able to remediate the material weaknesses identified above. To remediate such weaknesses, we plan to implement the following changes during our fiscal year ending June 30, 2015, subject to obtaining additional financing: (i) appoint additional qualified personnel to address inadequate segregation of duties and ineffective risk management; and (ii) adopt sufficient written policies and procedures for accounting and financial reporting. The remediation efforts set out above are largely dependent upon our securing additional financing to cover the costs of implementing the changes required. If we are unsuccessful in securing such funds, remediation efforts may be adversely affected in a material manner.

 

Changes in Internal Control over Financial Reporting

There were no changes in our internal control over financial reporting during the quarter ended September 30, 2014 that have materially affected or are reasonably likely to materially affect, our internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

NONE.

ITEM 1A. RISK FACTORS

 

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

 

RISK FACTORS CONCERNING OUR BUSINESS

 

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

 

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

 

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

 

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

 

Our proposed plan of operation is speculative.

 

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

 

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We face intense competition for business combination opportunities.

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

 

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

None

 

ITEM 3. DEFAULTS UPON SENIOR SECURITIES.

 

None

ITEM 4. MINE SAFETY DISCLOSURES

Not applicable

ITEM 5. OTHER INFORMATION.

None
 

ITEM 6. EXHIBITS.

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

 

      Incorporated by reference
Exhibit Exhibit Description Filed herewith Form Period ending Exhibit Filing date
3.1 Articles of Incorporation   10/A#2   3.1 11/5/2009
3.2 Bylaws   10/A #2   3.2 11/5/2009
31.1 Certification of Chief Executive Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 X        
31.2 Certification of Chief Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 X        
32.1 Certification of Chief Executive Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 X        
32.2 Certification of Chief Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 X        
101

Interactive Data Files for the Journal of Radiology, Inc. Form 10Q for the period ended September 30, 2014 

X        

 

 

 

 

 

 

 

 

 

 

 

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SIGNATURES

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

 

  JOURNAL OF RADIOLOGY, INC.
     
     
Date:  November 18, 2014 By: /s/ Aaron Shrira
   

Aaron Shrira

President and Director (Principal Executive Officer)

     
     
Date:  November 18, 2014 By:

/s/ Elana Berman-Shrira

Elana Berman-Shrira

Treasurer and Director (Principal Accounting and Financial Officer)

 

 

 

 

 

 

 

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