UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington D.C. 20549
FORM 10-12G
GENERAL FORM FOR REGISTRATION OF SECURITIES
Pursuant to Section 12(b) or (g) of The Securities Exchange Act of 1934
JOURNAL OF RADIOLOGY, INC.
(Exact name of registrant as specified in its charter)
Nevada 27-0491634
(State or other jurisdiction of (I.R.S. Employer
incorporation or organization) Identification No.)
2230 Michigan Avenue
Santa Monica, California 90404
(Address of principal executive offices) (Zip code)
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Registrant's telephone number, including area code: (310) 460-7303
Copies to:
Daniel C. Masters, Esq.
P. O. Box 66
La Jolla, CA 92038
(858) 459-1133
Securities to be registered pursuant to Section 12(b) of the Act:
None
Securities to be registered pursuant to Section 12(g) of the Act:
Common Stock - $0.001 Par Value
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non accelerated filer, or a smaller reporting company.
Large accelerated filer [ ] Accelerated filer [ ]
Non-accelerated filer [ ] Smaller reporting company [X]
ITEM 1. DESCRIPTION OF BUSINESS
BACKGROUND AND PREDECESSOR
Journal of Radiology, Inc. ("the Company" or "the Issuer" or "Journal") was organized under the laws of the State of Nevada on May 21, 2009 as part of the implementation of the Chapter 11 plan of reorganization of AP Corporate Services, Inc. ("AP"). AP filed for Chapter 11 Bankruptcy in September 2008 in the U.S. Bankruptcy Court for the Central District of California. AP's plan of reorganization was entered by the Court on December 24, 2008 and became effective on January 4, 2009. The plan of reorganization provided for the establishment of the Issuer and the transfer to the Issuer of any and all interest which AP might have had in the development and publication of a professional journal directed at the medical radiology profession. The plan of reorganization also required the Issuer to issue 1,085,000 shares of it's common stock and distribute these to AP's general unsecured creditors, to its administrative creditors, and to its shareholders. The shares were distributed pursuant to section 1145 of the Bankruptcy code and are exempt from the registration requirements of Section 5 of the Securities Act of 1933 and any state or local law requiring registration for an offer or sale of securities.
DESCRIPTION OF CURRENT BUSINESS
AP, operating through a subsidiary company, initiated work to develop a publication directed at radiology professionals prior to its voluntary bankruptcy. Other AP entities were involved in various aspects of the medical radiology business and it was believed that the Journal would benefit both the profession and the other AP radiology related businesses. The Issuer was established to further develop that concept and its shares were distributed to the creditors of AP in order to enhance their opportunity for recovery.
On July 30, 2009 management determined that the Company lacks the resources to properly develop the envisioned professional publication and agreed to seek a merger or an acquisition with a larger, better capitalized entity which will bring greater value to our shareholders. Therefore, as of the date hereof, the Company can be defined as a "shell" company, an entity which is generally described as having no or nominal operations and with no or nominal assets. As a shell company, our purpose at this time, described more fully below, is to negotiate a business agreement or combination with a larger entity which will bring greater value to our shareholders. We hope to consummate this business combination with an entity engaged in a related business, however we will not limit our search for a business combination target to only businesses engaged in the publication of professional journals.
Management of the Issuer believes that a potential merger or acquisition target will be a business which seeks the benefits of our shareholder base or status as a reporting issuer. Management believes that such a merger or acquisition can provide an additional source of recovery for AP's creditors, our shareholders, as envisioned in AP's bankruptcy plan of reorganization. We will not limit our search for a business combination target to the publishing industry, but rather will be guided by the desire to bring greater value to our shareholders.
We will not restrict our search to any specific business or geographical location. This discussion of the proposed business is purposefully general and is not meant to be restrictive of our discretion to search for and enter into potential business opportunities. 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.
We may seek a business opportunity with entities which have recently commenced operations, or which wish to expand into new products or markets, to develop a new product, or to utilize the public marketplace in order to raise additional capital.
We anticipate that the selection of a business opportunity in which to participate will be complex and extremely risky. Due to general economic conditions, rapid changes in the business environment, and shortages of available capital, management believes that there are numerous firms seeking the benefits of an issuer who has complied with the 1934 Act.
It is our present intent to continue to comply with all of the reporting requirements under the 1934 Act. The officers and directors of the Company, have agreed to provide the necessary funds, without interest, for the Company to comply with the 1934 Act reporting requirements, provided that they are officers and directors of the Company when the obligation is incurred.
It is anticipated that we will incur nominal expenses in the implementation of the business plan described herein. Because we have no capital with which to pay these anticipated expenses, present management of the Company will pay these charges with their personal funds, as interest free loans to the Company or as capital contributions. However, if loans, the only opportunity which management has to have these loans repaid will be from a prospective licensee or merger or acquisition candidate.
ACQUISITION OF OPPORTUNITIES
In implementing a structure for a particular business venture, we may become a party to a merger, consolidation, reorganization, joint venture, or licensing agreement with another corporation or entity. We may also acquire stock or assets of an existing business. On the consummation of an agreement, it is probable that the present management and shareholders of the Company will no longer be in control of the Company. In addition, and especially if there is a business combination, our directors may, as part of the terms of the acquisition or merger, resign and be replaced by new directors without a vote of our shareholders or may sell their stock in the Company.
It is anticipated that any securities issued by our Company in any such reorganization would be issued in reliance upon an exemption from registration under applicable federal and state securities laws. It is anticipated that it will also be a method of taking a private company public known as a "back door" 1934 Act registration procedure.
We will participate in a business opportunity only after the negotiation and execution of appropriate written agreements. Although the terms of such agreements cannot be predicted, generally such agreements will require some specific representations and warranties by all of the parties thereto, will specify certain events of default, will detail the terms of closing and the conditions which must be satisfied by each of the parties prior to and after such closing, will outline the manner of verifying revenue and bearing costs, including costs associated with the Company's attorneys and accountants, will set forth remedies on default and will include miscellaneous other terms.
Our present intent is that we will not enter into a licensing agreement with an entity that will not agree to future independent audits of, at a minimum, that portion of their books covering income and expenses related to the licensed technology; nor will we enter into an agreement to acquire or merge with any entity which cannot provide independent audited financial statements at the time of closing of the proposed transaction and supply other information that is normally disclosed in filings with the Securities and Exchange Commission. We are subject to all of the reporting requirements included in the 1934 Act. These rules are intended to protect investors by deterring fraud and abuse in the securities markets through the use of shell companies. Included in these requirements is the affirmative duty of the Company to file independent audited financial statements as part of its Form 8-K to be filed with the Securities and Exchange Commission upon consummation of a merger or acquisition, as well as the Company's audited financial statements included in its annual report on Form 10-KSB. In addition, in the filing of the Form 8-K that we file
to report an event that causes us to cease being a shell company, we are required to include that information that is normally reported by a company in its original Form 10 or Form 10-SB.
ACCOUNTING IN THE EVENT OF A BUSINESS COMBINATION
In July 2001, the Financial Accounting Standards Board issued Statement of Financial Accounting Standards "SFAS" No. 141, "Business Combinations" and SFAS No. 142, "Goodwill and Other Intangible Assets." SFAS No. 141 requires business combinations initiated after June 30, 2001 to be accounted for using the purchase method of accounting, and broadens the criteria for recording intangible assets separate from goodwill. Recorded goodwill and intangibles will be evaluated against these new criteria and may result in certain intangibles being subsumed into goodwill, or alternatively, amounts initially recorded as goodwill may be separately identified and recognized apart from goodwill. SFAS No. 142 requires the use of a non-amortization approach to account for purchased goodwill and certain intangibles. Under a non-amortization approach, goodwill and certain intangibles is more than its fair value. Goodwill is the excess of the acquisition costs of the acquired entity over the fair value of the identifiable net assets acquired. The Company is required to test goodwill and intangible assets that are determined to have an indefinite life for impairments at least annually. The provisions of SFAS No. 142 require the completion of an annual impairment test with any impairment recognized in current earnings. The provisions of SFAS No. 141 and SFAS No. 142 may be applicable to any business combination that we may enter into in the future.
We have also been informed that most business combinations will be accounted for as a reverse acquisition with us being the surviving registrant. As a result of any business combination, if the acquired entity's shareholders will exercise control over us, the transaction will be deemed to be a capital transaction where we are treated as a non-business entity. Therefore, the accounting for the business combination is identical to that resulting from a reverse merger, except no goodwill or other intangible assets will be recorded. For accounting purposes, the acquired entity will be treated as the accounting acquirer and, accordingly, will be presented as the continuing entity.
REPORTING ISSUER STATUS
The Company chose to become a reporting company on a voluntary basis because one attraction of the Company as a merger partner or acquisition vehicle will be its status as a public company. In addition, we became a reporting company to enhance investor protection and to provide information if a trading market commences. Only those companies that report their current financial information to the Securities and Exchange Commission, banking, or insurance regulators are permitted to be quoted on the OTC Bulletin Board System.
Based upon our proposed future business activities, it is possible that we may be deemed a "blank check" company (see "Risk Factors"). The Securities and Exchange Commission definition of such a company is a development stage company that has no specific business plan or purpose, or has indicated that its business plan is to engage in a merger or acquisition with an unidentified company or companies, or other entity or person, and is issuing "penny stock."
A "penny stock" security is any equity security other than a security (i) that is a reported security (ii) that is issued by an investment company (iii) that is a put or call issued by the Option Clearing Corporation (iv) that has a price of $5.00 or more (except for purposes of Rule 419 of the Securities Act of 1933, as amended) (v) that is registered on a national securities exchange (vi) that is authorized for quotation on the NASDAQ Stock Market, unless other provisions of the defining rule are not satisfied, or (vii) that is issued by an issuer with (a) net tangible assets in excess of $2,000,000, if in continuous operation for more than three years or $5,000,000 if in operation for less than three years or (b) average revenue of at least $6,000,000 for the last three years.
ITEM 1A. RISK FACTORS
Our business is subject to numerous risk factors, including the following:
1. 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 that 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.
2. 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. In the event we complete a business agreement or combination, of which there can be no assurance, the success of our operations may be dependent upon management of the successor firm or venture partner firm and numerous other factors beyond our control.
3. We face intense competition in the publishing industry.
We are and will continue to be an insignificant participant in the professional publication industry. A large number of established and well-financed entities, many of which are more proven or famous than ours, are in the publishing arena, and any one of these might decide to publish a Journal dealing with radiology. Many such entities have significantly greater financial resources, technical expertise and managerial capabilities than we have. Consequently, we will be at a competitive disadvantage in identifying opportunities for mergers in this industry and an insurmountable disadvantage if we were to try to start a new publication.
4. 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.
5. We have no agreements for a business combination or licensing transaction and have established no standards for such transactions.
We have no arrangement, agreement or understanding with respect to entering into an agreement or engaging in a merger with, joint venture with or acquisition of, a private or public entity. There can be no assurance that we will be successful in identifying and evaluating suitable business opportunities
or in concluding a business transaction. Management has not identified any particular business for our evaluation. There is no assurance that we will be able to negotiate a business combination on terms favorable to us. We have not established a specific length of operating history or a specified level of earnings, assets, net worth or other criteria which we will require a target business opportunity to have achieved, and without which we would not consider a business transaction in any form with such business opportunity. Accordingly, we may enter into a business agreement or a business combination with a business having no significant operating history, losses, limited potential or no potential for earnings, limited assets, negative net worth or other negative characteristics.
6. 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 Issuer, and Elana Berman-Shrira is the Secretary and Treasurer and CFO of the Issuer. 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.
7. 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, in the filing of the Form 8-K that we file to report an event that causes us to cease being a shell company, we will be required to include that information that is normally reported by a company in a Form 10 or Form 10-SB. 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.
8. 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.
9. 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.
10. Our present management most likely will not remain after we complete a business combination or will have little power to influence the direction of business development.
A business combination will, in all likelihood, result in management of the acquired business determining the timing and funding of our development. Our management will have little to do except monitor business activity, if they remain in management at all. A business combination involving the issuance of our Common Stock will, in all likelihood, result in shareholders of a private company obtaining a controlling interest in us. Any such business combination may require our management to sell or transfer all or a portion of the Company's Common Stock held by them, and/or resign as members of the Board of Directors. The resulting change in our control could result in removal of one or both present officers and directors and a corresponding reduction in or elimination of their participation in our future affairs.
11. 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 and may result in a change in our control or in our management.
12. As a shell company, we face substantial additional adverse business and legal consequences if we enter a business combination.
We may enter into a business combination with an entity that desires to establish a public trading market for its shares. A business opportunity may attempt to avoid what it deems to be adverse consequences of undertaking its own public offering by seeking a business combination with us. Such consequences may include, but are not limited to, time delays of the registration process, significant expenses to be incurred in such an offering, loss of voting control to public shareholders and the inability or unwillingness to comply with various federal and state laws enacted for the protection of investors.
On June 29, 2005, the Securities and Exchange Commission adopted final rules amending the Form S-8 and the Form 8-K for shell companies like us. The amendments expand the definition of a shell company to be broader than a company with no or nominal operations/assets or assets consisting of cash and cash equivalents. The amendments prohibit the use of a Form S-8 (a form used by a corporation to register securities issued to an employee, director, officer, consultant or advisor), under certain circumstances, and revise the Form 8-K to require a shell company to include current Form 10 information, including audited financial statements, in the filing on Form 8-K that the shell company files to report the acquisition of the business opportunity. This initial filing must be made within four days of the acquisition. The Form 8-K filing may be reviewed by the Securities and Exchange Commission and the prospects of certain disclosures or review or the lack of the ability to issue securities using a Form S-8 may delay the consummation of a business combination because of the target entity's inability to comply with various federal and state laws enacted for the protection of investors or the unwillingness to assume the significant costs of compliance.
13. 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.
14. Our officers and directors are the principal shareholders and will be able to approve all corporate actions without shareholder consent and will control our Company.
Our principal shareholder, Aaron Shrira, currently owns approximately 85% of our Common Stock. He will have significant influence over all matters requiring approval by our shareholders, but not requiring the approval of the minority shareholders. In addition, he is now an officer and director. Because he is the majority shareholder, he 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, he may transact most corporate matters requiring shareholder approval by written consent, without a duly-noticed and duly-held meeting of shareholders.
15. Our Common Stock may never be publicly traded and you may have no ability to sell the shares.
There is no established public trading market for our shares of Common Stock, and there is no assurance that our Common Stock will be accepted for listing on the OTC Bulletin Board or in any other trading system in the future.
There can be no assurance that a market for our Common Stock will be established or that, if established, a market will be sustained. Therefore, if you purchase our Common Stock you may be unable to sell the shares. Accordingly, you should be able to bear the financial risk of losing your entire investment.
Only market makers can apply to quote securities. A market maker who desires to initiate quotations in the OTC Bulletin Board system must complete an application (Form 211) (unless an exemption is applicable) and by doing so, will have to represent that it has satisfied all applicable requirements of the Securities and Exchange Commission Rule 15c2-11 and the filing and information requirements promulgated under the Financial Industry Regulatory Authority ("Finra") Bylaws. The OTC Bulletin Board will not charge us a fee for being quoted on the service. Finra rules prohibit market makers from accepting any remuneration in return for quoting issuers' securities on the OTC Bulletin Board or any similar medium. Finra will review the market maker's application (unless an exemption is applicable) and if cleared, it cannot be assumed by any investor that any federal, state or self-regulatory requirements other than certain Finra rules and Rule 15c2-11 have been considered by Finra. Furthermore, the clearance should not be construed by any investor as indicating that Finra, the Securities and Exchange Commission, or any state securities commission has passed upon the accuracy or adequacy of the documents contained in the submission.
The OTC Bulletin Board is a market maker or dealer-driven system offering quotation and trading reporting capabilities - a regulated quotation service - that displays real-time quotes, last-sale prices, and volume information in OTC equity securities. The OTC Bulletin Board securities are not listed and traded on the floor of an organized national or regional stock exchange. Instead, OTC Bulletin Board securities transactions are conducted through a telephone and computer network connecting market makers or dealers in stocks.
16. 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.
17. 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 majority shareholder, 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.
We do not have any legal opinions as it relates to whether we are a blind pool or blank-check company. The Securities and Exchange Commission have adopted
a rule (Rule 419) which defines a blank-check company as (i) a development stage company, that is (ii) offering penny stock, as defined by Rule 3a51-1, and (iii) that has no specific business plan or purpose or has indicated that its business plan is to engage in a merger or acquisition with an unidentified company or companies. Certain jurisdictions may have definitions that are more restrictive than Rule 419. We have been informed that the Securities and Exchange Commission has cautioned that "it will scrutinize registered offerings for attempts to create the appearance that the registrant... has a specific business plan, in an effort to avoid the application of Rule 419." Provisions of Rule 419 apply to every registration statement filed under the Securities Act of 1933, as amended, relating to an offering by a blank-check company. We have never filed a registration statement under the Securities Act of 1933, as amended.
If we are later determined to be a so-called "blank check" company, our shareholders will be required to file a registration statement under the Securities Act of 1933, as amended, prior to the resale of the Common Stock, unless there exists a transactional or security exemption for such sale under the Securities Act of 1933, as amended or under Title 11 of the U.S. Code. 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.
18. Our Common Stock may be subject to significant restriction on resale due to federal penny stock restrictions.
The Securities and Exchange Commission has adopted rules that regulate broker or dealer practices in connection with transactions in penny stocks. Penny stocks generally are equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges or quoted on the Nasdaq system, provided that current price and volume information with respect to transactions in such securities is provided by the exchange system). The penny stock rules require a broker or dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document prepared by the Securities and Exchange Commission that provides information about penny stocks and the nature and level of risks in the penny stock market. The broker or dealer also must provide the customer with bid and offer quotations for the penny stock, the compensation of the broker or dealer, and its salesperson in the transaction, and monthly account statements showing the market value of each penny stock held in the customer's account. The penny stock rules also require that prior to a transaction in a penny stock not otherwise exempt from such rules, the broker or dealer must make a special written determination that a penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction.
These disclosure requirements may have the effect of reducing the level of trading activity in any secondary market for our stock that becomes subject to the penny stock rules, and accordingly, shareholders of our Common Stock may find it difficult to sell their securities, if at all.
ITEM 2. FINANCIAL INFORMATION
SELECTED FINANCIAL DATA
The Company was organized on May 21, 2009 and therefore no significant historical financial information exists. The Company's statement of operations for the period from May 21, 2009 (inception) through June 30, 2009 reflects the following:
2009
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Revenues 0
Expenses 1,085
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Profit (Loss) (1,085)
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MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
1) Liquidity: The Company had no cash and no liquid instruments at June 30, 2009. The Company has since (in July, 2009) received $6,000 from an investor in exchange for 6,000,000 shares of stock. It is anticipated that we will incur nominal expenses in the implementation of the business plan described herein. Because we have little capital with which to pay these anticipated expenses, present management of the Company will pay these charges with their personal funds, as interest free loans to the Company or as capital contributions. However, if loans, the only opportunity which management has to have these loans repaid will be from a prospective merger or acquisition candidate.
2) Capital Resources: As noted above, the Company has no significant capital resources but will rely upon interest free loans or capital contributions from management to meet its needs.
3) Results of Operations: As noted above, the Company was recently organized and has conducted no operations other than organizational efforts and the preparation of this Form 10.
4) Off-Balance Sheet Arrangements: The Company has no off balance sheet arrangements.
INFORMATION ABOUT MARKET RISK
The Company is not subject to fluctuations in interest rates, currency exchange rates, or other financial market risks. Management of the Company has agreed to extend loans to the Company as needed to meet obligations, however these will be interest free. The Company has not made any sales, purchases, or commitments with foreign entities which would expose it to currency risks.
ITEM 3. DESCRIPTION OF PROPERTY
We presently utilize minimal office space at 2230 Michigan Avenue, Santa Monica, California. This space is provided to the Company by our president on a rent free basis, and it is anticipated that this arrangement will remain until such time as the Company successfully consummates a merger, acquisition or other business combination. Management believes that this arrangement will meet the Company's needs for the foreseeable future.
ITEM 4. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT
(a) Security Ownership of Certain Beneficial Owners.
The following table sets forth the security and beneficial ownership for each class of our equity securities for any person who is known to be the beneficial owner of more than five (5%) percent of the Company.
Name and Amount and
Address of Nature of
Beneficial Beneficial Percent
Title of Class Owner Owner of Class
-------------- ----- ----- --------
Common Aaron Shrira 6,000,000 84.69%
2230 Michigan Avenue
Santa Monica, CA 90404
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The remaining 1,085,000 shares of the Company's outstanding common stock are held by 95 persons, no one of which is known to be the beneficial owner of five percent (5%) or more of the Company's common shares. There are, as of the date hereof, a total of 7,085,000 common shares issued and outstanding.
(b) Security Ownership of Management.
The following table sets forth the ownership for each class of equity securities of the Company owned beneficially and of record by all of our directors and officers.
Name and Amount and
Address of Nature of
Beneficial Beneficial Percent
Title of Class Owner Owner of Class
-------------- ----- ----- --------
Common Aaron Shrira 6,000,000 84.69%
2230 Michigan Avenue
Santa Monica, CA 90404
Common Elana Berman-Shrira * 0 0%
2230 Michigan Avenue
Santa Monica, CA 90404
Common All Officers and 6,000,000 84.69%
Directors as a Group
(two [2] individuals) *
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* Aaron Shrira and Elana Berman-Shrira are husband and wife and, therefore, under California's community property law Ms. Berman-Shrira may be considered a beneficial part owner of property held in her husband's name.
ITEM 5. DIRECTORS AND EXECUTIVE OFFICERS
Our directors and officers (and promoters, affiliates and control persons) are as follows:
Name Age Position
---- --- --------
Aaron Shrira 67 President/Director
Elana Berman-Shrira 59 Secretary/Treasurer/Director
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The above listed officers and directors will serve until the next annual meeting of the shareholders or until their death, resignation, retirement, removal, or disqualification, or until their successors have been duly elected and qualified. Vacancies in the existing Board of Directors are filled by majority vote of the remaining Directors. Officers of the Company serve at the will of the Board of Directors. There are no agreements or understandings for
any officer or director to resign at the request of another person and no officer or director is acting on behalf of or will act at the direction of any other person.
RESUMES
Aaron Shrira, age 67, has been the President and CEO of the Issuer 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 59, has been the Secretary, Treasurer and CFO of the Issuer 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.
OTHER OFFERINGS
Neither of the directors and officers named above are directors or officers of any other publicly traded companies or SEC registrants.
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 6. EXECUTIVE COMPENSATION
No officer/director has received any compensation for services rendered to the Company since its inception, nor are there any agreements in place or contemplated to provide compensation to any officer or director.
None of our directors or officers will receive any finders fee, either directly or indirectly, as a result of their respective efforts to implement the
Company's business plan outlined herein and/or identify or negotiate a merger or acquisition for the Company.
We have no retirement, pension, profit sharing, stock option or insurance programs or other similar programs for the benefit of our officers, directors, or employees, and we have no employees.
ITEM 7. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS
There have been no related party transactions, or any other transactions or relationships required to be disclosed pursuant to Item 404 of Regulation S-B.
The officers and directors of the Company have agreed to provide the necessary funds, without interest, for the Company to comply with the 1934 Act provided that the lender is an officer and director of the Company when the obligation is incurred. All advances are interest-free.
ITEM 8. LEGAL PROCEEDINGS
There is no litigation pending or threatened by or against the Company.
ITEM 9. MARKET PRICE OF AND DIVIDENDS ON THE REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS
(a) Market Price.
There is no trading market for our Common Stock at present and there has been no trading market to date. We do not have a trading symbol. There is no assurance that a trading market will ever develop or, if such a market does develop, that it will continue. The Company intends to request a broker-dealer to make application to Finra to have the Company's securities traded on the OTC Bulletin Board System or published, in print and electronic media, or either, in the Pink Sheets, LLC ("Pink Sheets"), however there is no assurance that a broker-dealer will agree to make such application or, if one does, that Finra will provide us with a symbol.
The Securities and Exchange Commission adopted Rule 15g-9, which established the definition of a "penny stock," for purposes relevant to the Company, as any equity security that has a market price of less than $5.00 per share or with an exercise price of less than $5.00 per share, subject to certain exceptions. For any transaction involving a penny stock, unless exempt, the rules require: (i) that a broker or dealer approve a person's account for transactions in penny stocks; and (ii) the broker or dealer receive from the investor a written agreement to the transaction, setting forth the identity and quantity of the penny stock to be purchased. In order to approve a person's account for transactions in penny stocks, the broker or dealer must (i) obtain financial information and investment experience and objectives of the person; and (ii) make a reasonable determination that the transactions in penny stocks are suitable for that person and that person has sufficient knowledge and experience in financial matters to be capable of evaluating the risks of transactions in penny stocks. The broker or dealer must also deliver, prior to any transaction in a penny stock, a disclosure schedule prepared by the Commission relating to the penny stock market, which, in highlight form, (i) sets forth the basis on which the broker or dealer made the suitability determination; and (ii) that the broker or dealer received a signed, written agreement from the investor prior to the transaction. Disclosure also has to be made about the risks of investing in penny stock in both public offering and in secondary trading, and about commissions payable to both the broker-dealer and the registered representative, current quotations for the securities and the rights and remedies available to an investor in cases of fraud in penny stock transactions. Finally, monthly statements have to be sent disclosing recent
price information for the penny stock held in the account and information on the limited market in penny stocks.
For the initial listing in the NASDAQ SmallCap market, a company must have net tangible assets of $4 million or market capitalization of $50 million or a net income (in the latest fiscal year or two of the last fiscal years) of $750,000, a public float of 1,000,000 shares with a market value of $5 million. The minimum bid price must be $4.00 and there must be 3 market makers. In addition, there must be 300 shareholders holding 100 shares or more, and the company must have an operating history of at least one year or a market capitalization of $50 million.
For continued listing in the NASDAQ SmallCap market, a company must have net tangible assets of $2 million or market capitalization of $35 million or a net income (in the latest fiscal year or two of the last fiscal years) of $500,000, a public float of 500,000 shares with a market value of $1 million. The minimum bid price must be $1.00 and there must be 2 market makers. In addition, there must be 300 shareholders each holding 100 shares or more.
Our management intends to strongly consider undertaking a transaction with a merger or acquisition candidate that will allow the Company's securities to be traded on NASDAQ or some other national market. However, there can be no assurance that, upon a successful merger or acquisition, the Company will qualify its securities for listing on NASDAQ or some other national exchange, or, if it does, that it will be able to maintain the maintenance criteria necessary to insure continued listing. The failure of the Company to qualify its securities or to meet the relevant maintenance criteria after such qualification in the future may result in the discontinuance of the inclusion of the Company's securities on a national exchange. In such events, trading, if any, in the Company's securities may then continue in the non-NASDAQ over-the-counter market. As a result, a shareholder may find it more difficult to dispose of, or to obtain accurate quotations as to the market value of, the Company's securities.
(b) Holders.
There are ninety-six (96) shareholders of record of the Company's Common Stock. All but one of these shareholders received their shares as a result of the bankruptcy of AP Corporate Services, Inc. In that case the Bankruptcy Court for the Central District of California ordered certain shares of the Company's stock to be distributed to the creditors of AP Corporate Services, Inc. The shares were distributed under an exemption from registration provided by Section 1145 of Title 11 of the U.S. Code (the Bankruptcy Code).
(c) Dividends.
The Company has not paid any cash dividends to date, and has no plans to do so in the immediate future.
(d) Securities authorized for issuance under equity compensation plans.
The Company has not authorized the issuance of any securities under any compensation plan.
ITEM 10. RECENT SALES OF UNREGISTERED SECURITIES.
(a) Securities issued in bankruptcy.
1,085,000 shares of our common stock were distributed to 95 shareholders by order of the U.S. Bankruptcy Court for the Central District of California as part of the confirmed Plan of Reorganization of AP Corporate Services, Inc. (the "Debtor"). Plans for a professional publication directed at the Radiology industry were developed by the Debtor through an LLC subsidiary prior to the bankruptcy. The Court ordered the incorporation of the Issuer, the assignment to it of the plans to establish a publication, and ordered the Issuer's securities
to be distributed to creditors of the Debtor in partial satisfaction of their claims against the Debtor and in order to enhance the creditors' opportunity for recovery.
The issuance of the shares of stock issued in exchange for claims against the estate of AP Corporate Services, Inc. was exempt from registration under the Securities Act of 1933, as amended, because they were issued under section 1145 of the Bankruptcy Code (Title 11 of the U.S. Code). In addition, we may have also relied upon section 3(a)(7) of the Securities Act of 1933 as a transaction ordered by a court as part of a bankruptcy reorganization.
(b) Securities issued in a private placement.
On July 6, 2009 the Company issued 6,000,000 restricted shares of its common stock to Aaron Shrira at par value (0.001 per share) for total consideration of $6,000. We relied upon Section 4(2) of the Securities Act of 1933, as amended for the above issuance. We believed that Section 4(2) was available because:
- The issuance involved no underwriter, underwriting discounts or
commissions;
- We placed restrictive legends on all certificates issued;
- No sales were made by general solicitation or advertising;
- Sales were made only to an accredited investor
In connection with the above transactions, we provided the following to the investor:
- Access to all our books and records.
- Access to all material contracts and documents relating to our
operations.
- The opportunity to obtain any additional information, to the extent we
possessed such information, necessary to verify the accuracy of the
information to which the investors were given access.
ITEM 11. DESCRIPTION OF REGISTRANT'S SECURITIES TO BE REGISTERED
The Company's authorized capital stock consists of 75,000,000 Common Shares, par value $0.001 per share. We have no other class of equity securities authorized, and we have no debt securities presently authorized. We have 7,085,000 Common Shares issued and outstanding as of the date of this filing. We also have warrants outstanding which are convertible into an additional 5,000,000 Common Shares.
All shares of our Common Stock have equal voting rights and, when validly issued and outstanding, are entitled to one vote per share in all matters to be voted upon by shareholders. The shares of Common Stock have no preemptive, subscription, conversion or redemption rights and may be issued only as fully-paid and nonassessable shares. Cumulative voting in the election of directors is not permitted, which means that the holders of a majority of the issued and outstanding shares of Common Stock represented at any meeting at which a quorum is present will be able to elect the entire Board of Directors if they so choose and, in such event, the holders of the remaining shares of Common Stock will not be able to elect any directors. In the event of liquidation of the Company, each shareholder is entitled to receive a proportionate share of the Company's assets available for distribution to shareholders after the payment of liabilities and after distribution in full of preferential amounts, if any. All shares of the Company's Common Stock issued and outstanding are fully-paid and nonassessable. Holders of the Common Stock are entitled to share pro rata in dividends and distributions with respect to the Common Stock, as may be declared by the Board of Directors out of funds legally available therefor.
In addition to the 7,085,000 shares which we currently have outstanding there are 5,000,000 warrants outstanding, each of which is convertible into one share of our common stock. These consist of 1,000,000 "A Warrants" each convertible in to one share of common stock at an exercise price of $1.00; 1,000,000 "B Warrants" each convertible in to one share of common stock at an exercise price of $2.00; 1,000,000 "C Warrants" each convertible in to one share
of common stock at an exercise price of $3.00; 1,000,000 "D Warrants" each convertible in to one share of common stock at an exercise price of $4.00; and 1,000,000 "E Warrants" each convertible in to one share of common stock at an exercise price of $5.00. All of the warrants will expire if unexercised on January 4, 2014 unless extended by vote of the Board of Directors. All of these warrants were issued to creditors of AP Corporate Services, Inc. by order of the Bankruptcy Court as part of the Chapter 11 Plan of Reorganization of AP Corporate Services. The warrants were distributed under an exemption from registration provided by Section 1145 of Title 11 of the U.S. Code (the Bankruptcy Code).
ITEM 12. INDEMNIFICATION OF DIRECTORS AND OFFICERS
Except for acts or omissions which involve intentional misconduct, fraud or known violation of law, there shall be no personal liability of a director or officer to the Company, or its stockholders for damages for breach of fiduciary duty as a director or officer. The Company may indemnify any person for expenses incurred, including attorneys fees, in connection with their good faith acts if they reasonably believe such acts are in and not opposed to the best interests of the Company and for acts for which the person had no reason to believe his or her conduct was unlawful. The Company may indemnify the officers and directors for expenses incurred in defending a civil or criminal action, suit or proceeding as they are incurred in advance of the final disposition of the action, suit or proceeding, upon receipt of an undertaking by or on behalf of the director or officer to repay the amount of such expenses if it is ultimately determined by a court of competent jurisdiction in which the action or suit is brought that such person is fairly and reasonably entitled to indemnification for such expenses which the court deems proper.
Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended, may be permitted to officers, directors or persons controlling the Company pursuant to the foregoing, we have been informed that in the opinion of the Securities and Exchange Commission such indemnification is against public policy as expressed in the Securities Act of 1933, as amended, and is therefore unenforceable.
ITEM 13. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA
The Company's audited financial statements are attached hereto.
ITEM 14. CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL DISCLOSURE
There are no disagreements with the findings of our accountant.
ITEM 15. FINANCIAL STATEMENTS AND EXHIBITS
The Company's audited financial statements as of June 30, 2009 are filed herewith.
Exhibit: 3.1 Articles of Incorporation Filed herewith 3.2 Bylaws Filed herewith 23.1 Consent of Chang G. Park, CPA Filed herewith |
SIGNATURES
Pursuant to the requirements of Section 12 of the Securities Exchange Act of 1934, the Registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized.
Date: September 3, 2009 JOURNAL OF RADIOLOGY, INC.
By: /s/ Aaron Shrira
---------------------------------
Aaron Shrira
President, CEO and Director
By: /s/ Elana Berman-Shrira
-------------------------------------
Elana Berman-Shrira
CFO, Secretary, and Director
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JOUNAL OF RADIOLOGY, INC.
FINANCIAL REPORT
JUNE 30, 2009
CONTENTS
Independent Auditors' Report
Balance Sheet - Assets and Liabilities and Stockholders' Equity
Statement of Operations
Statement of Changes in Stockholders' Equity
Statement of Cash Flows
Notes to Financial Statements
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM
To the Board of Directors and Stockholders Journal of Radiology, Inc.
We have audited the accompanying balance sheet of Journal of Radiology, Inc. (A Development Stage Company, the "Company") as of June 30, 2009 and the related statements of operations, changes in shareholders' equity and cash flows for the period from May 21, 2009 (inception) through June 30, 2009. These financial statements are the responsibility of the Company's management. Our responsibility is to express an opinion on these financial statements based on our audits.
We conducted our audit 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. An audit includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements. An audit also includes assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audit provides 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. as of June 30, 2009, and the result of its operations and its cash flows for the period from May 21, 2009 (inception) through June 30, 2009 in conformity with U.S. generally accepted accounting principles.
The financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 3 to the financial statements, the Company's losses from operations raise substantial doubt about its ability to continue as a going concern. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
/s/ Chang Park -------------------------------- CHANG G. PARK, CPA August 13, 2009 San Diego, CA. 92108 |
JOURNAL OF RADIOLOGY, INC.
(A Development Stage Company)
BALANCE SHEET
June 30, 2009
ASSETS
Assets
Cash $ --
-------
TOTAL ASSETS $ --
=======
LIABILITIES AND SHAREHOLDERS' EQUITY (DEFICIT)
TOTAL LIABILITIES $ --
STOCKHOLDERS' EQUITY (DEFICIT)
Common stock, $0.001 par value:
75,000,000 shares authorized, 1,085,000 shares
issued and outstanding as of June 30, 2009 $ 1,085
Deficit accumulated during the development sate (1,085)
-------
TOTAL SHAREHOLDERS' EQUITY (DEFICIT) --
-------
TOTAL LIABILITIES & STOCKHOLDERS' EQUITY $ --
=======
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See Notes to Financial Statements
JOURNAL OF RADIOLOGY, INC.
(A Development Stage Company)
STATEMENT OF OPERATIONS
June 30, 2009
Period From
May 21, 2009
(Inception) to
June 30,
2009
----------
REVENUE $ --
----------
Total Revenue --
EXPENSES
Professional Expense 1,085
General & Admin Exps --
----------
Operating Expense 1,085
----------
OPERATING INCOME (LOSS) (1,085)
OTHER INCOME (EXPENSE)
Current Income Tax --
Income Tax Benefit --
----------
NET INCOME (LOSS) $ (1,085)
==========
Basic (Loss) per Share (0.0010)
----------
Weighted average number of common shares
outstanding 1,085,000
Diluted (Loss) per Share assuming all 5,000,000
Warrants were exercised (0.0002)
Weighted number of shares outstanding after exercise
of 5,000,000 warrants 6,085,000
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See Notes to Financial Statements
JOURNAL OF RADIOLOGY, INC.
(A Development Stage Company)
STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY From inception May 21, 2009 to June 30, 2009
Accumulated
Additional During the Total
Common Stock Paid-in Development Stockholders
Shares Amount Capital Stage Equity
------ ------ ------- ----- ------
Common Stock Issued Per Court
Order May 21, 2009 1,085,000 $ 1,085 $ 0 $ 0 $ 1,085
Net loss for period Ended
June 30, 2009 (1,085) (1,085)
---------- ------- ------ -------- --------
Balance, June 30, 2009 1,085,000 $ 1,085 $ 0 $ (1,085) $ --
========== ======= ====== ======== ========
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See Notes to Financial Statements
JOURNAL OF RADIOLOGY, INC.
(A Development Stage Company)
STATEMENT OF CASH FLOWS
June 30, 2009
CASH FLOWS FROM OPERATING ACTIVITIES
Net Income (Loss) $(1,085)
-------
Adjustments to reconcile net income (loss) to net
cash (used in) operations --
Changes in operating assets and liabilities --
-------
NET CASH PROVIDED BY (USED IN) OPERATIONS (1,085)
-------
CASH FLOWS FROM INVESTING ACTIVITIES
NET CASH PROVIDED BY INVESTING ACTIVITIES --
-------
CASH FLOWS FROM FINANCING ACTIVITIES
Common stock issuance 1,085
-------
NET CASH PROVIDED BY FINANCING ACTIVITIES 1,085
-------
NET INCREASE (DECREASE) (1,085)
-------
CASH BEGINNING OF PERIOD --
-------
CASH END OF PERIOD $ --
=======
Supplemental Disclosures of Cash Flow Information
Interest paid $ --
-------
Income taxes paid $ --
-------
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See Notes to Financial Statements
JOURNAL OF RADIOLOGY, INC.
(A Development Stage Company)
Notes to Financial Statements
June 30, 2009
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 been in the development stage since its formation and has not yet realized any revenues from its planned operations.
NOTE 2. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
a. BASIS OF ACCOUNTING
The Company's financial statements are prepared using the accrual method of accounting. The Company has elected a June 30 year-end.
b. BASIC EARNINGS PER SHARE
In February 1997, the FASB issued SFAS No. 128, "Earnings Per Share", which
specifies the computation, presentation and disclosure requirements for earnings
(loss) per share for entities with publicly held common stock. SFAS No. 128
supersedes the provisions of APB No. 15, and requires the presentation of basic
earnings (loss) per share and diluted earnings (loss) per share.
Basic net loss per share amounts are computed by dividing the net loss by the weighted average number of common shares outstanding. Diluted earnings per share are computed by dividing the net loss by the weighted average number of common shares potentially outstanding, assuming that all outstanding warrants, options, etc. were exercised. The Company has warrants outstanding which are exercisable for a total of 5,000,000 common shares.
c. ESTIMATES
The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.
d. CASH AND CASH EQUIVALENT
For the Balance Sheet and Statements of Cash Flows, all highly liquid investments with maturity of three months or less are considered to be cash equivalents.
JOURNAL OF RADIOLOGY, INC.
(A Development Stage Company)
Notes to Financial Statements
June 30, 2009
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
Statement of Financial Accounting Standards No. 123 ("SFAS 123"), "Accounting for Stock-Based Compensation", provides for the use of a fair value based method of accounting for stock-based compensation. However, SFAS 123 allows the measurement of compensation cost for stock options granted to employees using the intrinsic value method of accounting prescribed by Accounting Principles Board Opinion No. 25 ("APB 25"), "Accounting for Stock Issued to Employees", which only requires charges to compensation expense for the excess, if any, of the fair value of the underlying stock at the date a stock option is granted (or at an appropriate subsequent measurement date) over the amount the employee must pay to acquire the stock. The Company has elected to account for employee stock options using the intrinsic value method under APB 25. By making that election, the Company is required by SFAS 123 to provide pro forma disclosures of net loss as if a fair value based method of accounting had been applied.
g. INCOME TAXES
Income taxes are provided for using the liability method of accounting in accordance with SFAS No. 109 "ACCOUNTING FOR INCOME TAXES." A deferred tax asset or liability is recorded for all temporary differences between financial and tax reporting. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax basis. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effect of changes in tax laws and rates on the date of enactment.
h. IMPACT OF NEW ACCOUNTING STANDARDS
The Company does not expect the adoption of recently issued accounting pronouncements to have a significant impact on the Company's results of operations, financial position, or cash flow.
JOURNAL OF RADIOLOGY, INC.
(A Development Stage Company)
Notes to Financial Statements
June 30, 2009
NOTE 3. GOING CONCERN
The Company's financial statements are prepared in accordance with generally accepted accounting principles applicable to a going concern. This contemplates the realization of assets and the liquidation of liabilities in the normal course of business. Currently, the Company does not have significant cash or other material assets, nor does it have operations or a source of revenue sufficient to cover its operation costs and allow it to continue as a going concern. The officers and directors have committed to advancing certain operating costs of the Company.
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. STOCKHOLDERS' EQUITY - COMMON STOCK
The authorized common stock of the Company consists of 75,000,000 shares with $0.001 par value. No other class of stock is authorized. As of June 30, 2009, there were a total of 1,085,000 common shares issued and outstanding.
The Company's first stock issuance, totaling 1,085,000 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"). 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 80,000 shares in the Company. 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 5,000 shares in the Company.
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 $1.00; 1,000,000 "B Warrants" each convertible into one share of common stock at an exercise price of $2.00; 1,000,000 "C Warrants" each convertible into one share of common stock at an exercise price of $3.00; 1,000,000 "D Warrants" each convertible into one share of common stock at an exercise price of $4.00; and 1,000,000 "E Warrants" each convertible into one share of common stock at an exercise price of $5.00. All warrants are exercisable at any time during the five year period immediately following the effective date January 4, 2009.
As a result of these issuances there were a total 1,085,000 common shares issued and outstanding, and a total of 5,000,000 warrants issued and outstanding, at June 30, 2009.
JOURNAL OF RADIOLOGY, INC.
(A Development Stage Company)
Notes to Financial Statements
June 30, 2009
NOTE 5. INCOME TAXES
The Company has had no business activity and made no U.S. federal income tax provision since its inception on May 21, 2009.
NOTE 6. RELATED PARTY TRANSACTIONS
The Company neither owns nor leases any real or personal property. An officer of the corporation provides office services without charge. Such costs are immaterial to the financial statements and accordingly, have not been reflected therein. The officers and directors for the Company are involved in other business activities and may, in the future, become involved in other business opportunities. If a specific business opportunity becomes available, such persons may face a conflict in selecting between the Company and their other business interests. The Company has not formulated a policy for the resolution of such conflicts.
NOTE 7. WARRANTS AND OPTIONS
There were 5,000,000 warrants outstanding, each to acquire one share of common stock of the Company, as at June 30, 2009. These warrants are more fully described above in Note 4: Stockholders' Equity.
NOTE 8. COMMITMENT AND CONTIGENTCY
There is no commitment or contingency to disclose during the period ended June 30, 2009.
NOTE 9. SUBSEQUENT EVENTS
On July 6, 2009 the Company issued a total of 6,000,000 shares of common stock to an Officer and Director in exchange for $6,000 in cash to be used as operating capital for the Company. The shares were issued at a price of $0.001 per share which is their par value. Thus, as of July 6, 2009 the Company's balance sheet showed an additional $6,000 in cash, no added liabilities, and an additional $6,000 in shareholders' equity.
Exhibit 3.1
ROSS MILLER
Secretary of State
206 North Carson Street
Carson City, Nevada 89701-4298
(775) 684-5708
Website: www.nvsos.gov
Document Number
20090429608-20
Filing Date and Time
05/21/2009 4:30 PM
Entity Number
E0276082009-3
Filed in the office of
ARTICLES OF INCORPORATION /s/ Ross Miller
(PURSUANT TO NRS 78) Ross Miller
Secretary of State
State of Nevada
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ABOVE SPACE IS FOR OFFICE USE ONLY
1. Name of
Corporation: Journal of Radiology, Inc.
2. Resident Agent IncSmart.biz
Name and Street Name
Address:
(must be a
Nevada address where Address City Zip Code
process may
be served). Optional Mailing Address City State Zip Code
3. Shares:
(number of shares Number of shares Number of shares
corporation with par value: 75,000,000 Par value: $0.001 without par value: None
authorized
to issue)
1. Aaron Shrira
4. Names & Addresses, Name
of Board of 614 North Camden Dr. Beverly Hills CA 90210
Directors/Trustees: Street Address City State Zip Code
(attach additional page
if there is more than 3 2.
directors/trustees Name
Street Address City State Zip Code
3.
Name
Street Address City State Zip Code
5. Purpose: (optional- The purpose of this Corporation shall be:
see instructions)
6. Names, Address Daniel C. Masters /s/ Daniel C. Masters
and Signature of Name Signature
Incorporator.
(attach additional page 1752 Castellana Road La Jolla CA 92037
if there is more than 1 Address City State Zip Code
incorporator).
7. Certificate of I hereby accept appointment as Resident Agent for the above named corporation.
Acceptance of
Appointment of /s/ Michael LaSala for IncSmart.biz May 20, 2009
Resident Agent: Authorized Signature of R. A. or On Behalf of R. A. Company Date
|
EXHIBIT 3.2
BY-LAWS
OF
JOURNAL OF RADIOLOGY, INC.
OFFICES
I - The registered office of the corporation shall be in the State of Nevada. The resident agent in charge thereof shall be appointed by the Board of Directors. The corporation may also have offices at such other places both within and without the State of Nevada as the Board of Directors may from time to time determine or the business of the corporation may require.
CORPORATE SEAL
2. The corporation may transact any and all business without the need for a corporate seal. If a seal is required by law, the corporation may use a facsimile where inscribed therein is the name of the corporation, the year of its incorporation, and the words "Corporate Seal, Nevada". In its discretion, the Board is permitted to acquire and use a true seal setting forth the information noted above.
MEETING OF STOCKHOLDERS
3. The annual meeting of stockholders for the election of directors shall be held on a day during the first six months of each fiscal year, at a time, and at a place all as set by the Board of Directors. At said meeting the stockholders shall elect by plurality vote, a Board of Directors, and may transact such other business as may come before the meeting.
4. Special meetings of the stockholders may be called at any time by the President, and shall be called by the President or Secretary on the request in writing of a majority of the directors or at the request in writing of a majority in voting interest of stockholders entitled to vote.
5. All meetings of the stockholders for the elections of directors shall be held at the office of the corporation in the State of Nevada, or at such other place as may be fixed by the Board of Directors, provided that at least ten days' notice be given to the stockholders of the place so fixed. All other meetings of the stockholders shall be held at such place or places, within or without the State of Nevada, as may from time to time be fixed in the notices or waivers of notice thereof.
6. Stockholders of the corporation entitled to vote shall be such persons as are registered on the stock transfer books of the corporation as owners of stock. The Board of Directors may set a record date for annual meetings, but such record date may not be more than 45 days prior to the annual meeting.
7. A complete list of stockholders entitled to vote, arranged in alphabetical order, shall be prepared by the Secretary or Transfer Agent and shall be open to the examination of any stockholder at the place of election during the whole time of the election.
8. Each stockholder entitled to vote shall, at every meeting of the stockholders, be entitled to one vote for each share held. Each stockholder entitled to vote may vote in person or by proxy signed by the stockholder, but no proxy shall be voted on or after three years from its date, unless it provides for a longer period. Such right to vote shall be subject to the right of the Board of Directors to fix a record date for stockholders as provided by these By-Laws.
9. The holders of 30% of the stock issued and outstanding and entitled to vote at a meeting of the stockholders, present in person or represented by proxy, shall constitute a quorum at all meetings of the stockholders for the transaction of business except as otherwise provided by statute or by the Certificate of Incorporation. If such quorum shall not be present or represented at any meeting of the stockholders, the stockholders entitled to vote at the meeting, present in person or represented by proxy, shall have the power to adjourn the meeting from time to time, without notice other than announcement at the meeting, until a quorum shall be present or represented. At such adjourned meeting at which a quorum shall be present or represented, any business may be transacted which might have been transacted at the meeting as originally notified. If the adjournment is for more than 30 days, or if after the adjournment a new record date is fixed for the adjourned meeting, a notice of the adjourned meeting shall be given to each stockholder of record entitled to vote at the meeting.
10. When a quorum is present at any meeting, the vote of the holders of a majority of the stock having voting power, present in person or represented by proxy, shall decide any question properly brought before such meeting, unless the question is one which by express provision of the statutes of the State of Nevada or of the Certificate of Incorporation, a different vote is required, in which case such express provision shall govern and control the decision of such question.
11. Notice of all meetings shall be mailed by the Secretary to each stockholder of record entitled to vote at his last known post office address, for annual meetings fifteen days and for special meetings ten days prior thereto.
12. Business transacted at any special meeting of stockholders shall be limited to the purposes stated in the notice.
13. Unless otherwise provided in the Certificate of Incorporation, any action required to be taken at any annual or special meeting of stockholders of the corporation, or any action which may be taken at any annual or special meeting of such stockholders, may be taken without a meeting, without prior notice and without a vote, if consent in writing, setting forth the action so taken, shall be signed by the holders of outstanding stock having not less than the minimum number of voters that would be necessary to authorize or take such action at a. meeting at which all shares entitled to vote thereon were present
and voted. Prompt notice of the taking of the corporate action without a meeting by less than unanimous written consent, shall be given to those stockholders who have not consented in writing.
DIRECTORS
14. The property and business of the corporation shall be managed and controlled by the Board of Directors.
15. The directors shall hold office until the next annual election and until their successors are elected and qualified. Directors shall be elected by the stockholders, except that if there be any vacancies on the Board of Directors by reason of death, resignation, or otherwise, or if there be any newly created directorships resulting from any increase in the number of directors, such vacancies or newly created directorships may be filled for the unexpired term by a majority of the directors then in office, though less than a quorum.
POWERS OF DIRECTORS
16. The Board of Directors shall have all such powers as may be exercised by directors of a Nevada corporation, subject to the provisions of the statutes of Nevada, the Certificate of Incorporation, and the By-Laws.
MEETINGS OF DIRECTORS
17. After each annual election of directors, the newly elected directors may meet for the purpose of organization, the election of officers, and the transaction of other business, at such time and place as shall be fixed by the stockholders at the annual meeting, and, if a majority of the directors be present at such place and time, no prior notice of such meeting will be required to be given to the directors. The place and time of such meeting may also be fixed by written consent of the directors.
18. Regular meetings of the Board of Directors may be held without notice at such time and at such place as shall from time to time be determined by the Board.
19. Special meetings of the directors may be called by the president on two days' notice in writing or on one days notice by telegram or facsimile to each director and shall be called by the president in like manner on the written request of two directors.
20. Special meetings of the directors may be held within or without the State of Nevada at such place as is indicated in the notice or waiver of notice thereof.
21. A majority of the directors in office at the time of any regular or special meeting shall constitute a quorum.
22. Any action required or permitted to be taken at any meeting of the Board of Directors may be taken without a meeting, if all members of the Board consent thereto in writing, and the writing or writings are filed with the minutes of proceedings of the Board.
23. Members of the Board of Directors may participate in a meeting of the Board of Directors by means of a conference telephone or similar communications equipment by means of which all persons participating in the meeting may hear one another, and such participation in a meeting shall constitute presence in person at the meeting.
COMMITTEES
24. The Board of Directors may, by resolution, create committees from time to time, which committees shall have and may exercise all the powers and authority of the Board of Directors to manage the business and affairs of the corporation. However, the committees shall not have the power to amend the Certificate of Incorporation, adopt an agreement of merger or consolidation, recommend to the stockholders the sale, lease or exchange of all or substantially all of the corporation's property and assets, recommend to the stockholders a dissolution of the corporation or a revocation of a dissolution, amend the By-Laws of the corporation; and, unless a resolution or the Certificate of Incorporation expressly so provides, no such committee shall have the power to declare a dividend or authorize the issuance of stock.
INDEMNIFICATION
25. The personal liability of the directors of the corporation is hereby eliminated to the fullest extent permitted by the provisions of the Corporation Laws of the State of Nevada, as the same may be amended and supplemented.
OFFICERS OF THE CORPORATION
26. The officers of the corporation shall be a president, a secretary, a treasurer, and such other officers as may from time to time be chosen by the Board of Directors. All offices may be held by the same person.
27. The officers of the corporation shall hold office until their successors are chosen and qualify in their stead. Any officer chosen or appointed by the Board of Directors may be removed either with or without cause at any time by the affirmative vote of a majority of the whole Board of Directors. If the office of any officer or officers becomes vacant for any reason, the vacancy shall be filled by the affirmative vote of a majority of the whole Board of Directors.
28. In case of the absence or disability of any officer of the corporation, or for any other reason deemed sufficient by a majority of the Board of Directors, the duties of that officer may be delegated by the Board of Directors to any other officer or to any director.
INDEMNIFICATION
29. The corporation shall, to the fullest extent permitted by the provisions of the Corporation Laws of the State of Nevada, as the same may be amended and supplemented, indemnify any and all persons whom it shall have power
to indemnify under said section from and against any and all of the expenses, liabilities, or other matters referred to in or covered by said section. The indemnification provided for herein shall not be deemed exclusive of any other rights to which those indemnified may be entitled under any agreement, vote of stockholders or disinterested directors, or otherwise. Such indemnification shall apply both as to action in his official capacity of one holding office, and shall continue as to a person who has ceased to be a director, officer, employee, or agent and shall inure to the benefit of the heirs, executors, and administrators of such a person."
SECRETARY
30. The secretary shall attend all meetings of the corporation, the Board of Directors, and its committees. He shall act as clerk thereof and shall record all of the proceedings of such meetings in a book kept for that purpose. He shall have custody of the corporate seal of the corporation and shall have authority to affix the seal to any instrument requiring it and when so affixed, it may be attested by his signature. He shall give proper notice of meetings of stockholders and directors and shall perform other such duties as shall be assigned to him by the president or the Board of Directors.
TREASURER
31. The treasurer shall have custody of the funds and securities of the corporation and shall keep full and accurate accounts of receipts and disbursements in books belonging to the corporation. He shall deposit all monies and other valuable effects in the name and to the credit of the corporation in such depositories as may be designated by the Board of Directors.
32. The treasurer shall disburse such funds of the corporation as may be ordered by the Board or the president, taking proper vouchers for such disbursements, and shall render to the president and directors, whenever they may require it, an account of all his transactions as treasurer and of the financial condition of the corporation, and at the regular meeting of the Board next preceding the annual members meeting, a like report for the preceding year.
33. The treasurer shall keep an account of stock registered and transferred in such manner subject to such regulations as the Board of Directors may prescribe.
34. The treasurer shall give the corporation a bond if required by the Board of Directors in such sum and with security satisfactory to the Board of Directors for the faithful performance of the duties of his office and the restoration to the corporation, in the case of his death, resignation, or removal from office, of all books, paper, vouchers, money and other property of whatever kind in his possession, belonging to the corporation. He shall perform such other duties as the Board of Directors or executive committee may from time to time prescribe or require.
PRESIDENT
35. The president shall be the chief executive officer of the corporation. He shall preside at all meetings of the stockholders and the Board of Directors, and shall have general and active management of the business of the corporation, and shall see that all orders and resolutions of the Board of Directors are carried into effect.
36. The president shall execute bonds, mortgages, and other contracts requiring a seal, under the seal of the corporation, except where required or permitted by law to be otherwise signed and executed, and except where the signing and execution thereof shall be expressly delegated by the Board of Directors to some other officer or agent of the corporation.
STOCKS
37. Every holder of stock in the corporation shall be entitled to have a certificate, signed by, or in the name of the corporation by, the president or secretary of the corporation, certifying the number of shares owned by him in the corporation. Certificates may be issued for partly paid shares, and in such case upon the face or back of the certificates issued to represent any such partly paid shares, the total amount of the consideration to be paid therefore, and the amount paid thereon, shall be specified.
38. Any or all of the signatures on the certificates may be facsimile.
39. The Board of Directors may direct a new certificate or certificates to be issued in place of any certificate or certificates theretofore issued by the corporation alleged to have been lost, stolen, or destroyed, upon the making of an affidavit of that fact by the person claiming their certificate of stock to be lost, stolen or destroyed. The Board of Directors may, in its discretion and as a condition precedent to the issuance thereof; require the owner of such lost, stolen, or destroyed certificate or certificates to give the corporation a bond in such sum as it may direct as indemnity against any claim that may be made against the corporation with respect to the certificate alleged to have been lost, stolen, or destroyed.
CHECKS
40. All checks, drafts, or orders for the payment of money shall be signed by the treasurer or by such other officer or officers as the Board of Directors may from time to time designate. No check shall be signed in blank.
BOOKS AND RECORDS
41 The Books, accounts, and records of the corporation, except as otherwise required by the laws of the State of Nevada, may be kept within or without the State of Nevada, at such place or places as may from time to time be designated by the By-Laws or by the resolutions of the directors.
NOTICES
42 Notice required to be given under the provisions of these By-Laws to any director, officer or stockholder, shall not be construed to mean personal notice, but may be given in writing by depositing the same in a post office or letter box, in a post-paid sealed wrapper, addressed to such stockholder, officer, or director at such address as appears on the books of the corporation, and such notice shall be deemed to be given at the time when the same shall thus be mailed. Any stockholder, officer, or director, may waive, in writing, any notice required to be given under these By-Laws, whether before or after the time stated therein.
DIVIDENDS
43. Dividends upon the capital stock of the corporation, subject to the Certificate of incorporation, may be declared by the Board of Directors at any regular or special meeting, pursuant to law. Dividends may be paid in cash, in property, or in shares of the capital stock of the corporation, subject to the provisions of the Certificate of Incorporation.
44. Before payment of any dividend, there may be set aside out of any funds of the corporation available for dividends such sum or sums as the directors from time to time, in their absolute discretion, think proper as a reserve or reserves to meet contingencies or for equalizing dividends, or for repairing or maintaining any property of the corporation, or for such other purposes as the directors shall think conducive to the best interest of the corporation. The directors may modify or abolish any such reserve in the manner by which it was created.
FISCAL YEAR
45. The fiscal year of the corporation shall be determined by the Board of Directors.
AMENDMENT OF BY-LAWS
46. These By-Laws may be amended, altered, repealed, or added to at any regular meeting of the stockholders or of the Board of Directors, or at any special meeting called for that purpose, by affirmative vote of a majority of the stockholders entitled to vote, or by affirmative vote of a majority of the whole board, as the case may be.
47. Any and all disputes and controversies by and between the shareholders or the directors arising out of or with respect to the business of or affecting the affairs of the corporation, which disputes and controversies cannot be resolved under the terms of the corporate By-Laws or Certificate of Incorporation, because of a tie vote or deadlock between the directors and shareholders shall be settled by arbitration in the following manner. Each side of the dispute shall be entitled to name one arbitrator and both arbitrators so named shall together agree upon a third arbitrator, with the findings of the arbitration panel to be binding upon all parties to the dispute. Unless otherwise mutually agreed by the parties the arbitration shall take place in accordance with and subject to the provisions of the laws of the State of Nevada.
Exhibit 23.1
September 3, 2009
To Whom It May Concern:
The firm of Chang G. Park, CPA consents to the inclusion of our report of August 13, 2009 on the audited financial statements of Journal of Radiology, Inc. as of June 30, 2009 in any filings that are necessary now or in the near future with the U.S. Securities and Exchange Commission.
Very truly yours,
/s/ Chang G. Park -------------------------------- Chang G. Park, CPA |
Member of the California Society of Certified Public Accountants Registered with the Public Company Accounting Oversight Board