Journal of Radiology, Inc. | 2013 | FY |

NOTE 9. WARRANTS AND OPTIONS

On May 21, 2009 (inception), the Company issued 5,000,000 warrants exercisable into 5,000,000 shares of the Company's common stock. These warrants were issued per order of the U.S. Bankruptcy Court in the matter of AP Corporate Services, Inc. ("AP") to the administrative creditors of AP. These creditors received an aggregate of 5,000,000 warrants consisting of 1,000,000 "A Warrants" each convertible into one share of common stock at an exercise price of $0.033; 1,000,000 "B Warrants" each convertible into one share of common stock at an exercise price of $0.067; 1,000,000 "C Warrants" each convertible into one share of common stock at an exercise price of $0.10; 1,000,000 "D Warrants" each convertible into one share of common stock at an exercise price of $0.133; and 1,000,000 "E Warrants" each convertible into one share of common stock at an exercise price of $0.167. All warrants are exercisable at any time prior to

January 4, 2014. As of the date of this report, no warrants have been exercised.

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

The following is a summary of warrants activity during the years ended June 30, 2013 and 2012:

All warrants outstanding as of June 30, 2013 are exercisable.

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