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United States

Securities and Exchange Commission

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarterly period ended October 31, 2014

 

OR

 

[ ] TRANSITION REPORT UNDER SECTION 13 OF 15(d) OF THE EXCHANGE ACT OF 1934

 

From the transition period ___________ to ____________.

 

Commission File Number 333-152444

 

MEDCAREERS GROUP, INC.

(Exact name of small business issuer as specified in its charter)

 

Nevada 7389 26-1580812
(State or jurisdiction of incorporation or organization) 

(Primary Standard Industrial

Classification Code Number)

(IRS Employer

Identification No.) 

 

758 E Bethel School Road, Coppell, Texas 75019

(Address of principal executive offices)

 

(972) 393-5892

(Issuer's telephone number)

 

Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days:

Yes [X] No [ ]

 

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

 

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

Large Accelerated Filer [   ]  Accelerated Filer [   ]
Non-Accelerated Filer [ ]   Smaller Reporting Company [X]

 

 Indicate by a check mark whether the company is a shell company (as defined by Rule 12b-2 of the Exchange Act):

 

Yes [ ] No [X].

 

As of December 17, 2014 there were 86,995,142shares of Common Stock of the issuer outstanding.

 

 

1
 

 

TABLE OF CONTENTS

 

 

     
PART I. FINANCIAL STATEMENTS 3
     
ITEM 1. Financial Statements 3
 

 

Notes to Financial Statements

7
     
ITEM 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations. 12

 

ITEM 3.

 

Quantitative and Qualitative Disclosure About Market Risk

18
     
ITEM 4. Controls and Procedures 18
     
     
PART II. OTHER INFORMATION 19
     
ITEM 1. Legal Proceedings 19
     
ITEM 1A. Risk Factors 19
     
ITEM 2. Unregistered Sales of Securities and Use of Proceeds 19
     
ITEM 3. Default Upon Senior Securities 25
     
ITEM 4. Mine Safety Disclosures 25
     
ITEM 5. Other Information 25
     
ITEM 6. Exhibits 25
     
     
     

 

 

2
 

 

 

 MEDCAREERS GROUP, INC.

Consolidated Balance Sheets

As of October 31, 2014 and January 31, 2014

 

 

    As of
October 31, 2014
Unaudited
  As of
January 31, 2014
Audited
Assets
Current Assets                
  Cash and Cash Equivalents   $ 1,477     $ 7,299  
  Other Current Assets     400       400  
    Total Current Assets     1,877       7,699  
                 
Property, Plant & Equipment                
  Equipment     1,799       1,799  
  Less: Accumulated Amortization     (1,799 )     (1,799 )
    Total Property, Plant & Equipment     0       0  
                 
                 
Total Assets   $ 1,877     $ 7,699  
                 
Liabilities and Stockholders’ Equity
Current Liabilities                
  Accounts Payable   $ 26,502     $ 61,141  
  Accrued Expenses – Related Parties     0       246,808  
  Accrued Expenses     8,377       13,998  
  Accrued Interest Payable     186,256       173,444  
  Current Portion of Long Term Debt     1,033,650       610,650  
    Total Current Liabilities     1,254,785       1,106,041  
                 
Long Term Liabilities                
  Notes Payable     1,033,650       610,650  
  Less: Current Portion     (1,033,650 )     (610,650 )
    Total Long Term Liabilities     0       0  
                 
  Total Liabilities     1,254,785       1,106,041  
                 
Stockholders’ Equity                
Preferred Stock, $0.001 par value, 10,000,000 shares, none outstanding                
Common Stock, $0.001 par value, 350,000,000 shares,                
   83,210,142 and 65,715,368 shares issued and outstanding     83,210       65,715  
                 
Additional Paid In Capital     5,022,564       4,679,251  
Accumulated (Deficit)     (6,358,682 )     (5,843,308 )
Total Stockholders’ Equity (Deficit)     (1,252,908 )     (1,098,342 )
                 
Total Liabilities and Stockholders’ Equity   $ 1,877     $ 7,699  

 

  

The Accompanying Notes are an Integral Part of these Financial Statements.

 

3
 

 

 

MEDCAREERS GROUP, INC.

(A Development Stage Company)

Consolidated Statement of Operations

For the Three and Nine Months Ended October 31, 2014 and 2013

 

 

 

    Three Months Ended   Nine Months Ended
    October 31, 2014   October 31, 2013   October 31, 2014   October 31, 2013
                 
  Revenue   $ 7,970     $ 3,185     $ 19,758     $ 11,405  
  Cost of Sales     4,055       7,017       22,135       30,969  
  Gross Profit (Loss)     3,915       (3,832 )     (2,377 )     (19,564 )
                                 
Operating Expenses:                                
   Depreciation and Amortization     0       162,168       0       251,801  
   Selling and Marketing     18,455       6,806       97,865       20,692  
   General and Administrative     100,514       253,151       335,835       545,315  
    Total Operating Expenses     118,969       422,125       433,700       817,808  
                                 
Net Operating Loss     (115,054 )     (425,937 )     (436,077 )     (837,372 )
                                 
Other Income (Expense)                                
    Interest Expense     (30,577 )     (22,731 )     (79,297 )     (60,748 )
    Total Other Income (Expense)     (30,577 )     (22,731 )     (79,297 )     (60,748 )
                                 
Net Loss   $ (145,631 )   $ (448,688 )   $ (515,374 )   $ (898,120 )
                                 
Basic and Diluted Earnings (Loss) per share   $ (0.00 )   $ (0.01   $ (0.00   $ (0.02
                                 
Weighted Average Shares Outstanding:                                
Basic and Diluted     77,471,515       54,493,241       76,879,373       51,039,602  
                                 

 

 

The Accompanying Notes are an Integral Part of these Financial Statements.

 

 

4
 

 

 

MEDCAREERS GROUP, INC.

Consolidated Statement of Changes in Stockholders’ Equity (Deficit)

For the Nine Months Ended October 31, 2014 and

For the Year Ended January 31, 2014

 

    Common Shares       Paid-In       Retained Earnings          
      Shares       Amount       Capital       (Deficit)       Totals  
                                         
Balance, January 31, 2013     50,125,528     $ 50,126     $ 3,997,996     $ (4,755,621 )   $ (707,499 )
                                         
Issuance of Common Stock for Cash     249,000       249       24,651               24,900  
Issuance of Common Stock for Services     1,800,000       1,800       150,200               152,000  
Issuance of Common Stock for Deferred Fees     1,733,835       1,733       171,601               173,334  
Conversion of Notes Payable to Common Stock     9,626,887       9,627       290,374               300,001  
Conversion of Accrued Interest to Common Stock     2,180,618       2,181       44,429               46,610  
Rounding                     (1 )     1          
                                         
Net (Loss)                             (1,087,688 )     (1,087,688 )
                                         
Balance, January 31, 2014     65,715,368     $ 65,715     $ 4,679,251     $ (5,843,308 )   $ (1,098,342 )
                                         
Issuance of Common Stock for Accounts Payable     6,536,160       6,536       320,272               326,808  
Conversion of Notes Payable to Common Stock     10,958,614       10,959       23,041               34,000  
                                         
Net (Loss)                             (515,374 )     (515,374 )
                                         
Balance, October 31, 2014     83,210,142     $ 83,210     $ 5,022,564     $ (6,358,682 )   $ (1,252,908 )

 

 

 

 

The Accompanying Notes are an Integral Part of these Consolidated Financial Statements.

 

5
 

 

 


 

 

MEDCAREERS GROUP, INC.

Consolidated Statements of Cash Flows

For the Nine Months Ended October 31, 2014 and 2013

 

 

   

Nine Months

Ended Oct 31,

2014

     

Nine Months

Ended Oct 31,

2013

 
CASH FLOWS FROM OPERATING ACTIVITIES              
Net Income (Loss) $ (515,374 )   $ (898,120 )
               
Adjustments to reconcile net deficit to cash used
by operating activities:
             
    Depreciation and Amortization of Property and Equipment   0       0  
    Amortization of Deferred Loan Fees   0       251,801  
    Common Stock Issued for Services   0       140,000  
    Stock Option Expense   0       0  
Change in Assets and Liabilities:              
  (Increase) Decrease in Other Current Assets   0       (1,095 )
  (Increase) Decrease in Other Assets   0       0  
  Increase (Decrease) in Accounts Payable   (34,639 )     51,099  
  Increase (Decrease) in Accrued Expenses   (621 )     61,982  
  Increase (Decrease) in Due to Related Party   75,000       64,950  
  Increase (Decrease) in Accrued Interest   12,812       0  
CASH FLOWS (USED IN) OPERATING ACTIVITIES   (462,822 )     (329,383 )
               
CASH FLOWS FROM INVESTING ACTIVITIES              
  Proceeds from Disposal of Fixed Assets   0       0  
  Purchase of Fixed Assets   0       0  
CASH FLOWS (USED IN) INVESTING ACTIVITIES   0       0  
               
CASH FLOWS FROM FINANCING ACTIVITIES              
  Proceeds from Notes Payable   457,000       227,500  
  Proceeds from Sale of Common Stock   0       19,900  
  Conversion of Notes Payable to Common Stock   0       0  
CASH FLOWS PROVIDED BY FINANCING ACTIVITIES   457,000       247,400  
               
NET INCREASE (DECREASE) IN CASH   (5,822 )     (81,983 )
Cash, beginning of period   7,299       89,680  
               
Cash, end of period   1,477     $ 7,697  
               
SUPPLEMENTAL CASH FLOW INFORMATION              
Interest paid $ 3,000     $ 4,575  
Taxes paid $ 0     $ 0  
Issuance of Common Stock for Services $ 0     $ 140,000  
Issuance of Common Stock for Payables $ 326,809     $ 314,739  
Issuance of Common Stock for Loan Fees $ 0     $ 173,333  
Issuance of Common Stock for Debt $ 34,000     $ 0  

 

The Accompanying Notes are an Integral Part of these Financial Statements.

 

 

6
 

 

 


 

 MEDCAREERS GROUP, INC.

Notes to Financial Statements

October 31, 2014 and January 31, 2014

 

 

NOTE 1 – NATURE OF ACTIVITIES AND SIGNIFICANT ACCOUNTING POLICIES

 

Nature of Activities, History and Organization – The Company was formed as RX Scripted, LLC on December 30, 2004 as a North Carolina limited liability company and converted to a Nevada corporation as RX Scripted, Inc. on December 5, 2007.  On December 16, 2009, an amendment was filed with the State of Nevada to change the name to “MedCareers Group, Inc.” (the “Company” or “MedCareers”) and change the authorized capital of the Company. On November 5, 2010, the Company issued 24,000,000 shares of its common stock in exchange for 100% of Nurses Lounge, Inc. (“Nurses Lounge”), a Texas corporation. As a result of the share exchange, Nurses Lounge became the wholly-owned subsidiary of MedCareers. As a result, the shareholders of Nurses Lounge owned a majority of the voting stock of MedCareers. The transaction was accounted for as a reverse merger whereby Nurses Lounge was considered to be the accounting acquirer as its shareholders retained control of MedCareers after the exchange, although MedCareers is the legal parent company. The share exchange was treated as a recapitalization of MedCareers. As such, Nurses Lounge (and its historical financial statements) is the continuing entity for financial reporting purposes. The financial statements have been prepared as if MedCareers had always been the reporting company and, on the share exchange date, changed its name and reorganized its capital.  The Company operates a website for nurses, nursing schools and nurses organizations which enables the respective entities to communicate more easily and efficiently with their members.

 

Significant Accounting Policies:

The Company’s management selects accounting principles generally accepted in the United States of America and adopts methods for their application.  The application of accounting principles requires the estimating, matching and timing of revenue and expense. The accounting policies used conform to generally accepted accounting principles which have been consistently applied in the preparation of these financial statements.

The financial statements and notes are representations of the Company’s management which is responsible for their integrity and objectivity. Management further acknowledges that it is solely responsible for adopting sound accounting practices, establishing and maintaining a system of internal accounting control and preventing and detecting fraud.  The Company's system of internal  accounting control is designed to assure, among other items, that  1) recorded  transactions  are valid;  2) valid  transactions  are recorded;  and  3) transactions  are  recorded in the proper  period in a timely  manner to produce financial  statements which present fairly the financial  condition,  results of operations  and cash  flows of the  Company  for the  respective  periods  being presented.

 

Basis of Presentation:

The Company prepares its financial statements on the accrual basis of accounting in conformity with accounting principles generally accepted in the United States.

 

Principles of Consolidation:

The financial statements include the accounts of MedCareers Group, Inc. as well as Nurses Lounge, Inc.  All significant inter-company transactions have been eliminated.  All amounts are presented in U.S. Dollars unless otherwise stated.

 

Cash and Cash Equivalents:

The Company considers all highly liquid debt instruments with a maturity of three months or less to be cash equivalents.  At times, cash balances may be in excess of the Federal Deposit Insurance Corporation (“FDIC”) insurance limits.  The carrying amount approximates fair market value.

7
 

 

Fixed Assets:

Fixed assets are carried at cost.  Depreciation is provided over each asset’s estimated useful life.  Upon retirement and disposal, the asset cost and related accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the determination of the net income.   Additions and significant improvements are capitalized and depreciated.

 

Advertising Costs:

The Company incurred no advertising costs for the periods ended October 31, 2014 and January 31, 2014.

 

Income Taxes:

Income from the corporation is taxed at regular corporate rates per the Internal Revenue Code.  Although the Company has tax loss carry-forwards (see Note 7), there is uncertainty as to utilization prior to their expiration.  Accordingly, the future income tax asset amounts have been fully reserved by a valuation allowance.

Income taxes are accounted for under the asset and liability method. Deferred tax assets and liabilities are recognized when items of income and expense are recognized in the financial statements in different periods than when recognized in the tax return. Deferred tax assets arise when expenses are recognized in the financial statements before the tax returns or when income items are recognized in the tax return prior to the financial statements. Deferred tax assets also arise when operating losses or tax credits are available to offset tax payments due in future years. Deferred tax liabilities arise when income items are recognized in the financial statements before the tax returns or when expenses are recognized in the tax return prior to the financial statements. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in income in the period that includes the enactment date.

 

Use of Estimates:

In order to prepare financial statements in conformity with accounting principles generally accepted in the United States, management must make estimates, judgments and assumptions that affect the amounts reported in the financial statements and determine whether contingent assets and liabilities, if any, are disclosed in the financial statements. The ultimate resolution of issues requiring these estimates and assumptions could differ significantly from resolution currently anticipated by management and on which the financial statements are based.

 

Fair Value of Financial Instruments:

 

Pursuant to ASC No. 820, “Fair Value Measurements and Disclosures”, the Company is required to estimate the fair value of all financial instruments included on its balance sheet as of January 31, 2014.  The Company’s financial instruments consist of cash, accounts payable, advances and notes payable.  The Company considers the carrying value of such amounts in the financial statements to approximate their fair value due to the short-term nature of these financial instruments.

 

Revenue Recognition:

 

Revenue from contracts for consulting services with fees based on time and materials or cost-plus are recognized as the services are performed and amounts are earned.  The Company considers amounts to be earned once evidence of an arrangement has been obtained, services are delivered, fees are fixed or determinable, and collectability is reasonably assured.  For contracts with fixed fees, the Company recognizes revenues as amounts become billable in accordance with contract terms, provided the billable amounts are not contingent, are consistent with the services delivered, and are earned. The Company recognizes revenue in accordance with ASC 605-10, "Revenue Recognition in Financial Statements", (formerly Staff Accounting Bulletin No. 104 (“SAB 104”)).   Revenue is recognized when persuasive evidence of an arrangement exists, delivery or service has occurred, the sales price is fixed or determinable and receipt of payment is probable.

 

8
 

 

 

Earnings per Common Share:

Earnings (loss) per share are calculated in accordance with ASC 260 “Earnings per Share”. The weighted average number of common shares outstanding during each period is used to compute basic earnings (loss) per share.  Diluted earnings per share are computed using the weighted average number of shares and potentially dilutive common shares outstanding. Dilutive potential common shares are additional common shares assumed to be exercised. Potentially dilutive common shares consist of stock options and are excluded from the diluted earnings per share computation in periods where the Company has incurred a net loss, as their effect would be considered anti-dilutive.

 

There were no potentially dilutive common stock equivalents as of October 31, 2014, therefore basic earnings per share equals diluted earnings per share for the period ended October 31, 2014. The Company had 17,743,000 options outstanding at October 31, 2014. As the Company incurred a net loss during the year ended October 31, 2014, the basic and diluted loss per common share is the same amount, as any common stock equivalents would be considered anti-dilutive.

 

Recently Issued Accounting Pronouncements:

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.

 

 

NOTE 2 - NOTES PAYABLE

 

The components of the Company’s debt as of October 31, 2014 and January 31, 2013 were as follows:

  Oct 2014   Jan 2014  
Note Payable - $100,000, 12% interest payable monthly or accrued, due Nov 4, 2013 $ 100,000     $ 100,000  
Note Payable - $50,000, 12% interest payable monthly or accrued, due on demand 50,000     50,000  
Note Payable - $468,150, 12% interest payable monthly or accrued, due on demand 418,150     263,150  
Note Payable - $25,000, 12% interest added to note quarterly, due April 30, 2013 25,000     25,000  
Note Payable - $16,000, 12% interest added to note quarterly, due January 31, 2014 16,000     16,000  
Note Payable - $40,000, 20% interest added to note quarterly, due July 28, 2012 20,000     40,000  
Note Payable - $4,000, 12% interest added to note quarterly, due April 30, 2013 4,000     4,000  
Note Payable - $45,000, 12% interest added to note quarterly, due Nov 5, 2013 45,000     45,000  
Note Payable - $5,000, 12% interest added to note quarterly, due Nov 5, 2013 5,000     5,000  
Note Payable - $30,000, 8% interest, due Jan 31, 2014 30,000     30,000  
Note Payable - $42,500, 8% interest, due May 15, 2014 8,500     32,500  
Note Payable - $32,500, 8% interest, due Sept 20, 2014 32,500     0  
Note Payable - $32,500, 8% interest, due Nov 21, 2014 32,500     0  
Note Payable - $32,500, 8% interest, due Feb 7, 2014 32,500     0  
Note Payable - $32,500, 8% interest, due Mar 15, 2014 32,500     0  
Note Payable - $32,000, 8% interest, due Nov 21, 2014 32,000     0  
Note Payable - $33,000, 8% interest, due Nov 23, 2014 33,000     0  
Note Payable - $19,500, 8% interest, due on demand 19,500     0  
Note Payable - $72,500, 8% interest, due Jan 14, 2015 72,500     0  
Note Payable - $72,500, 8% interest, due Jan 14, 2015 25,000     0  
Subtotal 1,033,650     610,650  
Less – currently payable (1,033,650)     (610,650)  
Long-term debt $           0     $           0  
               

 

The Company had accrued interest payable of $186,256 and $112,944 interest on the notes at October 31, 2014 and January 31, 2014, respectively.

 

9
 

 

 

NOTE 3 - STOCKHOLDERS’ EQUITY

 

Preferred Stock:

The Company is authorized to issue 10,000,000 shares of Preferred Stock, having a par value of $0.001 per share.  There are no preferred shares outstanding at October 31, 2014 and January 31, 2014.

 

Common Stock:

The Company is authorized to issue 850,000,000 common shares at a par value of $0.001 per share.  These shares have full voting rights.  At October 31, 2014 and January 31, 2014, there were 83,210,142 and 65,715,638 shares outstanding respectively.  No dividends were paid in the periods ended October 31, 2014 or January 31, 2014.  

Options and Warrants:

The Company had the following options or warrants outstanding at October 31, 2014:

 

Issued To # Options Dated Expire Strike Price
President and CEO 4,000,000 11/18/2010 11/18/2016 $0.10 per share
Vice President 2,000,000 11/18/2010 11/18/2016 $0.10 per share
Shareholder 127,500 08/28/2011 08/28/2016 $0.10 per share
Shareholder 50,000 04/04/2012 04/04/2013 $0.20 per share
Shareholder 8,000 04/27/2012 04/27/2013 $0.20 per share
Shareholder 127,500 04/29/2012 04/29/2017 $0.10 per share
Shareholder 200,000 05/17/2012 05/17/2013 $0.20 per share
Shareholder 50,000 05/22/2012 05/22/2013 $0.20 per share
Shareholder 80,000 05/21/2012 05/21/2013 $0.20 per share
Shareholder 25,000 07/12/2012 07/12/2013 $0.20 per share
Shareholder 25,000 07/10/2012 07/10/2013 $0.20 per share
Shareholder 50,000 08/09/2012 08/09/2013 $0.20 per share
Shareholder 1,000,000 08/31/2012 08/31/2016 $0.12 per share
Shareholder 2,000,000 01/18/2013 01/18/2018 $0.05 per share
Chief Financial Officer 1,000,000 09/23/2013 11/18/2016 $0.10 per share
Financier 3,500,000 07/02/2014 07/01/2019 $0.10 per share*
Chief Financial Officer 1,000,000 07/31/2014 07/31/2017 $0.10 per share
Salespersons 2,500,000 07/31/2014 01/31/2018 $0.10 per share

 

* The Company can redeem the option at $0.001 per share (total of $3,500) if the stock price closes above $0.125 for 15 consecutive days.

 

NOTE 4 – EMPLOYEE BENEFIT PLANS

During the periods ended October 31, 2014 and January 31, 2014, there were no qualified or non-qualified employee pension, profit sharing, stock option, or other plans authorized for any class of employees.

 

NOTE 5 – INCOME TAXES

 

MedCareers Group, Inc. has incurred losses since inception.  Therefore, MedCareers has no federal tax liability. Additionally, there are limitations imposed by certain transactions which are deemed to be ownership changes. The net deferred tax asset generated by the loss carryforward has been fully reserved.  The cumulative net operating loss carryforward is about $6,358,682 at October 31, 2014 of which $5,521,482 is available for carryforward for federal income tax purposes and will expire in fiscal years 2026 to 2029.  At October 31, 2014 and January 31, 2014, the deferred tax asset consisted of the following:

 

10
 

 

 

    October 2014   January 2014
Deferred tax asset:                
   Net operating loss   $ 1,840,776     $ 1,665,549  
   Less valuation allowance     (1,840,776 )     (1,665,549 )
   Net deferred tax asset   $ 0     $ 0  

 

 

 

NOTE 6 – COMMITMENTS AND CONTINGENCIES

 

The Company may from time to time be involved with various litigation and claims that arise in the normal course of business.  As of October 31, 2014, no such matters were outstanding.

 

 

NOTE 7 - GOING CONCERN AND FINANCIAL POSITION

 

MedCareers’ financial statements are prepared using United States generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business.  The Company has incurred cumulative losses through October 31, 2014 of $6,358,682 and has a working capital deficit at October 31, 2014 of $1,252,908.

 

Historically, revenues have not been sufficient to cover operating costs that would permit the Company to continue as a going concern.  The potential proceeds from the sale of common stock and other contemplated debt and equity financing, and increases in operating revenues from new development and business acquisitions might enable MedCareers to continue as a going concern.  There can be no assurance that the Company can or will be able to complete any debt or equity financing, or develop or acquire one or more business interests on terms favorable to it.  MedCareers’ financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 

NOTE 8 – RECENT ACCOUNTING PRONOUNCEMENTS

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 flows.

 

 

 

 

 

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ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.

 

FORWARD-LOOKING STATEMENTS

This quarterly report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, which we refer to in this quarterly report as the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, which we refer to in this quarterly report as the Exchange Act. Forward-looking statements are not statements of historical fact but rather reflect our current expectations, estimates and predictions about future results and events. These statements may use words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “predict,” “project” and similar expressions as they relate to us or our management. When we make forward-looking statements, we are basing them on our management’s beliefs and assumptions, using information currently available to us. These forward-looking statements are subject to risks, uncertainties and assumptions, including but not limited to, risks, uncertainties and assumptions discussed in this quarterly report. Factors that can cause or contribute to these differences include those described under the headings “Risk Factors” and “Management Discussion and Analysis and Plan of Operation.”

If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may vary materially from what we projected. Any forward-looking statement you read in this quarterly report reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. All subsequent written and oral forward-looking statements attributable to us or individuals acting on our behalf are expressly qualified in their entirety by this paragraph. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this quarterly report. The Company expressly disclaims any obligation to release publicly any updates or revisions to these forward-looking statements to reflect any change in its views or expectations. The Company can give no assurances that such forward-looking statements will prove to be correct.

 

Company

Medcareers Group, Inc. (“MedCareers”, the “Company”, “we” or “us”), the Company described herein, is a Nevada corporation, with offices located at 758 E Bethel School Road, Coppell, Texas 75019. It can be reached by phone at (972) 393-5892.

 

History

The Company was formed as RX Scripted, LLC on December 30, 2004 as a North Carolina limited liability company and converted to a Nevada Corporation as RX Scripted, Inc. on December 5, 2007.  On December 16, 2009, an amendment was filed with the State of Nevada, among other things, to change the name of the company to “MedCareers Group, Inc.” and affect a 10 for 1 forward stock split (which became effective on January 7, 2010). Unless otherwise stated or the context suggests otherwise, the number of shares disclosed throughout this report have been retroactively reflected for the stock split.

 

On or around November 19, 2010, the Company entered into a Share Exchange Agreement (the “Exchange”) with Nurses Lounge, Inc., a Texas corporation (“Nurses Lounge”) and the nine shareholders of Nurses Lounge (the “Nurses Lounge Shareholders”).  Pursuant to the Exchange, we agreed to issue 24,000,000 restricted shares of our common stock to the Nurses Lounge Shareholders in exchange for 100% of the issued and outstanding shares of common stock of Nurses Lounge.  Pursuant to the Exchange, Nurses Lounge became a wholly-owned subsidiary of the Company.

 

History and Description of the Operations of Nurses Lounge

 

The Company was formed as RX Scripted, LLC on December 30, 2004 as a North Carolina limited liability company and converted to a Nevada corporation as RX Scripted, Inc. on December 5, 2007.  

 

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On or around December 16, 2009, the Company filed a Certificate of Amendment to the Company’s Articles of Incorporation (the “Certificate”) to (a) authorize and approve a 10 for 1 forward stock split (the “Stock Split”) of the Company’s authorized and outstanding common stock and preferred stock, effective as of the close of business on January 15, 2010, which effective date was later changed to January 7, 2010 (the “Effective Date”); (b) to change the Company’s name to “MedCareers Group, Inc.” (the “Name Change”); (c) to increase the Company’s total authorized shares of common stock, to 350,000,000 shares of $0.001 par value per share common stock following the Stock Split; and (d) to re-authorize 10,000,000 shares of “blank check” preferred stock, $0.001 par value per share following the Stock Split (collectively with (c) the “Authorized Share Transactions”).

 

As a result of the Certificate (as corrected) and the Stock Split which became effective January 7, 2010, the Company has 350,000,000 shares of common stock and 10,000,000 shares of preferred stock, $0.001 par value per share authorized; and as a result of the Name Change, the Company’s name was changed to MedCareers Group, Inc. Additionally, as a result of filing the Certificate, the Company’s symbol on the Over-The-Counter Bulletin Board changed to “MCGI”, effective January 7, 2010. Effective in October 2010, we were automatically delisted from the Over-The-Counter Bulletin Board for failing to timely file our August 31, 2010 Form 10-Q, and since that time, we have traded on the Pink Sheets trading market under the symbol “MCGI.

 

Unless otherwise stated or the context suggests otherwise, the number of shares disclosed throughout this report have been retroactively reflected for the Stock Split.

 

On or around November 19, 2010, the Company entered into a Share Exchange Agreement (the “Exchange”) with Nurses Lounge, Inc., a Texas corporation (“Nurses Lounge”) and the nine shareholders of Nurses Lounge (the “Nurses Lounge Shareholders”).  Pursuant to the Exchange, we agreed to issue 24,000,000 restricted shares of our common stock to the Nurses Lounge Shareholders in exchange for 100% of the issued and outstanding shares of common stock of Nurses Lounge.  Although 24,000,000 restricted shares were issued in connection with the Exchange, certain significant shareholders of the Company also agreed to cancel some of the shares they owned so that the net effect of the Exchange was an increase to the outstanding shares by 7,175,000 shares rather than 24,000,000.  Included in the shareholders receiving shares in connection with the Exchange, was Timothy Armes, who received 14,902,795 shares; the Fox-McCarthy Family Limited Partnership, LLP, which is beneficially owned by Martin Fox, which received 3,945,081 shares; and AJBCA, LLLP, which is beneficially owned by Tony Unruh, which received 3,945,081 shares.

 

In connection with the Exchange, Archetype Partners, LLC (“Archetype”), our majority shareholder prior to the Exchange, which is controlled by Robert Bryan Crutchfield, our former Chief Executive Officer and director, agreed to cancel 11,185,000 of the shares of common stock which it held (leaving Archetype the holder of 7,575,000 shares post-Exchange) in consideration for $50,000.  Additionally, pursuant to a separate Voting Agreement, which has since expired, Archetype agreed to provide Timothy Armes, the largest shareholder of and Chief Executive Officer of Nurses Lounge, rights to vote all 7,575,000 of the shares retained by Archetype (and any additional securities of the Company acquired by Archetype) for a period of two years beginning on November 19, 2010 (the “Voting Agreement”).  The Voting Agreement became effective upon the consummation of the Exchange.

 

Additionally, in connection with and as a required term and condition of the Exchange, a former Chief Executive Officer, director and significant shareholder, MaryAnne McAdams and our former significant shareholder, David M. Loev, each agreed to cancel 2,820,000 shares of common stock which they owned (representing an aggregate of 5,640,000 shares of our common stock) upon the consummation of the Exchange (collectively with the cancellation of the shares by Archetype described above, the “Cancellation Agreements”).   

 

Pursuant to the Exchange, Nurses Lounge became a wholly-owned subsidiary of the Company and as a result of the Exchange, the Cancellation Agreements and the Voting Agreement, Timothy Armes, the former largest shareholder of Nurses Lounge obtained majority voting control over the Company; provided that effective upon the expiration of the Voting Agreement in November 2012, Mr. Armes is no longer our majority shareholder.

 

Additionally, in November 2010, MaryAnne McAdams, our former Chief Executive Officer, director and significant shareholder, and the Company entered into a Spin-Off Agreement, pursuant to which the Company agreed to spin-off the Company’s prior event planning and consulting operations, assets and liabilities to Ms. McAdams.  The Company intends to focus on the Nurses Lounge business operations and model.

 

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Effective September 10, 2011, Marc Bercoon resigned as the Chief Financial Officer and Treasurer of the Company and William Goldstein resigned as President, Chief Executive Officer and Secretary and as the sole director of the Company. Effective the same date, Timothy Armes, the Company’s then majority shareholder was appointed as the Chief Executive Officer, President, Secretary, Treasurer and sole director of the Company to fill the vacancies created by such resignations.

 

History and Description of the Operations of Nurses Lounge

 

At the beginning of 2003 in Dallas, Texas, Timothy Armes took over control of the nursing internet portal and nursing job board NursesLounge.com and re-launched the web site shortly thereafter. Mr. Armes also launched a localized direct mail magazine as a companion to the website. Years of managing a portal and publishing a monthly magazine gave Mr. Armes insight to numerous organizations in need of a more efficient way to communicate important information to nursing professionals such as news, meetings and continuing education requirements on a timely basis.

 

With this understanding, and the development of social media technology, Mr. Armes designed and launched a beta version of a professional network for nurses in the summer of 2009 designed to provide a common platform for nursing organizations such as nursing schools, associations and major nurse employers to connect and communicate more effectively to their nurse constituents and broader nursing profession. Additionally, the network was developed to allow individual nurses the ability to interact with these organizations and other professionals via a professional profile separate from a social profile that they may have on Facebook as example.

 

In June of 2014 Nurses Lounge began the development of a 2.0 version of the network. The new version was a complete upgrade that went into beta testing on August 1 and then live on September 2, 2014.

 

Along with a complete new design, the new version includes an interactive directory of approximately 600 schools that offer a Bachelor of Science in Nursing (BSN), 1,000 nursing schools that offer an Associate Degree in Nursing (ADN), 6,000 medical facilities, plus interactive lounges for 97 nurse specialties. These organizations can take administrative control of these lounge pages that allows them to customize their pages with images, logos, and videos, as well as the ability to post news and info that is instantly distributed to their nurse followers.

 

As a communication utility, Nurses Lounge solves many of the communication issues these organizations face:

 

[ ] Local chapters of nurse associations use Nurses Lounge (opposed to outdated, hard to manage static web sites and email lists) as a more efficient way to communicate with their members as well as for recruiting new members and disseminating news and information to their local nursing profession.

 

[ ] Nursing Schools benefit with a group in the Nurses Lounge not only as a means to easily distribute news and info, but also to manage and keep alumni notified of educational opportunities as well as providing a professional networking platform between students, faculty and alumni.

 

[ ] Employer’s benefits include managing a positive brand, distribution of news, job postings, managing employee referral programs as well as internal communications for things such as shared governance.

 

There is no cost to schools, associations or other non-profit organizations to utilize the Nurses Lounge communication and networking capabilities while employers, and other for profit organizations, are charged minimal set-up fees that also may include unlimited job postings for a limited time.

 

Nurses that register with the Nurses Lounge by creating a professional profile are then able to share their perspectives through their participation in these groups in order to keep current on news, information, meetings and jobs openings as well as to network professionally with like-minded colleagues.  Participation and postings by members in Lounges creates new connections and makes it easier for people to find and connect with each other.  Finally, by inviting new colleagues and contacts to join them in the Nurses Lounge, members both grow their own network of connections and help to increase membership in Nurses Lounge.

 

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Along with the professional network, Nurses Lounge has a fully functional job board for nursing professionals as well as a nursing faculty job board specialty site for nursing schools looking to hire faculty. This specialty site was launched in June 2012.

 

The faculty job board was launched in response to the increasing number of schools joining our network and adding their faculty and graduate degree nurses coupled with a growing shortage of nursing faculty.

 

Competition

 

While there are various online community forums and nurse portals, Nurses Lounge does not believe that there is a direct competitor designed from the ground up as a professional network for nurses and to solve many of the day-to-day communications problems nursing organizations have.  The largest competitors of Nurses Lounge bill themselves as “communities” that claim to provide news, career advice and social interaction, and include Nurse.com - owned by Gannett; NurseConnect  - owned and operated by AMN healthcare, a large travel firm; NurseZone  - also owned and operated by AMN healthcare; and Allnurses – a nursing forum and discussion board.  Additionally, and to a lesser extent, Nurses Lounge indirectly competes with other websites that encourage users to create connections with other colleagues and persons with similar interests such as Linkedin and Facebook, however, unlike like these websites which have very broad general appeal, Nurses Lounge focuses solely on the nursing pro and the organizations which support them.

 

Proprietary Rights

 

We plan to rely on a combination of copyright, trade secret and trademark laws, and non-disclosure and other contractual arrangements to protect our proprietary rights moving forward. There can be no assurance that the steps we plan to take in the future to protect our future proprietary rights, however, will be adequate to deter misappropriation of proprietary information, and we may not be able to detect unauthorized use and take appropriate steps to enforce our intellectual property rights. Although we believe that our websites and services will not infringe upon the intellectual property rights of others and that we have all rights necessary to utilize our intellectual property, we are subject to the risk of claims alleging infringement of third-party intellectual property rights. Any such claims could require us to spend significant sums on litigation, pay damages, delay our products and software, develop non-infringing intellectual property or acquire licenses to intellectual property that are the subject of any such infringement. Therefore, such claims could have a material adverse effect on our planned business, operating results and financial condition.

 

Nursing Profession Overview

 

From Nurses Lounge business viewpoint, the nursing profession is broken down into the individual registered nurses (RNs) and the professions stake holder organizations consisting of nursing schools, associations and employers.

 

Throughout their career, nurses need to be connected with numerous organizations in order to simply stay up to date with basic continuing education requirements which they need to meet state guidelines and/or employers qualification to maintain employment.

 

As such, we believe that there is an opportunity to unite the industry on one simple to use communication platform that can upgrade, simplify and reduce the cost of communications used by stakeholder organizations while providing nurses quick access to the information important to their careers. The market for nurses is growing in the United States and we believe that our website has a significant number of potential users based on the following:

  • According to the Bureau of Labor Statistics’ Employment Projections 2010-2020 released in February 2012, the Registered Nursing workforce is the top occupation in terms of job growth through 2020. It is expected that the number of employed nurses will grow from 2.74 million in 2010 to 3.45 million in 2020, an increase of 712,000 or 26%.
  • Based on findings from the Nursing Management Aging Workforce Survey released in the July 2006 issue of Nursing Management magazine, 55% of surveyed nurses reported their intention to retire between 2011 and 2020.

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  • Approximately 660 4-year schools offer a Bachelor of Science in Nursing (BSN) and other advanced degrees such as Masters and PhD.

  • Approximately 2,500 community college type schools offer a 2 year Associate Degree in Nursing (ADN).

  • Approximately 5,000 hospitals are located across the U.S. where approximately 60% of all nurses are employed, according to American Association Colleges of Nursing (AACN).

  • An approximate 250,000 shortage in nurses has been predicted by 2018.

 

Due to the above factors, the Company’s Nurses Lounge professional Network has a significant market for their services and that even with significant competition for recruitment and job placement services as described below in the risk factor entitled “WE WILL FACE SIGNIFICANT COMPETITION FROM MONSTER.COM and CAREERBUILDER, NICHE HEALTHCARE SITES SUCH AS NURSE.COM AND HEALTHECAREERS AS WELL AS JOB AGGREGATOR SITES SUCH AS INDEED.COM AND SIMPLYHIRED AND OTHER INTERNET JOB POSTING WEBSITES”. ”, there will be room in the global marketplace for website posting, recruiting and job placement services for the Company’s niche healthcare related websites.

 

***

 

Results for the three and nine months ended October 31, 2014

Revenue. Revenue for the three months ended October 31, 2014 and 2013 was $7,970 and $3,185, respectively. Revenue for the nine months ended October 31, 2014 and 2013 was $19,758 and $11,405, respectively.

Cost of Revenues. Cost of revenues were $4,055 and $7,017 for the three months ended October 31, 2014 and 2013, respectively. Cost of revenues were $22,135 and $30,969 for the nine months ended October 31, 2014 and 2013, respectively. The changes reflect the swings in costs as the Company promotes its nurse portal and the variation in those costs as the Company has yet to enter a period where the operations in sales and cost of sales are relatively constant. Until the Company enters a reasonably constant operating period, the costs will vary widely.

Selling expenses. Selling expenses were $18,455 and $6,806 for the three months ended October 31, 2014 and 2013. Selling expenses were $97,865 and $20,692 for the nine months ended October 31, 2014 and 2013. The increase was due to doing more promotion of our Nurses Lounge site and hiring salespeople.

Operating Expenses. Operating expenses for the three months ended October 31, 2014 and 2013 were $100,514 and $253,151 respectively. The above expenses do not include depreciation and amortization amounts of $0 and 162,168 for the three months ended October 31, 2014 and 2013, respectively.

Operating expenses for the nine months ended October 31, 2014 and 2013 were $335,835 and $545,315 respectively. The significant decrease in the quarterly expenses was due to no common shares being issued as incentive fees for loan renewals. The above expenses do not include depreciation and amortization amounts of $0 and $251,801 for the nine months ended October 31, 2014 and 2013, respectively.

Other Income (Expense). Other income represents interest paid on loans which was $30,577 and $22,731 for the three months ended October 31, 2014 and 2013, respectively. Other income represents interest paid on loans which was $79,297 and $60,748 for the nine months ended October 31, 2014 and 2013, respectively.

Liquidity and Capital Resources

As of October 31, 2014, the Company had negative working capital of $1,252,908, comprised of current assets of $1,877 and current liabilities of $1,254,785.

 

Net cash used in operations for the nine months ended October 31, 2014 was $462,822 compared to $329,383 for the Nine months ended October 31, 2013.

 

Cash used for purchase of fixed assets was $0 for the nine months ended October 31, 2014 and 2013.

 

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Cash provided by financing activities for the nine months ended October 31, 2014 was $457,000 compared to $247,400 for the same period in 2013.

 

The Company has borrowed funds and/or sold stock for working capital.  These transactions are detailed in the section “Recent Sales of Unregistered Securities”.

 

Currently the Company does not have sufficient cash reserves or revenues to meet its contractual obligations under its outstanding notes payable and to pay its ongoing monthly expenses, which the Company anticipates totaling approximately $300,000 over the next 12 months.  The Company has been able to continue operating to date largely from loans made by its shareholders and other debt financings to date.  The Company is currently looking at both short-term and more permanent financing opportunities, including debt or equity funding, bridge or short term loans, and/or traditional bank funding, but we have not decided on any specific path moving forward.  Unless we have raised sufficient funding to pay our ongoing expenses associated with being a public company, and we have sufficient funds to support our planned operations, the Company can provide no assurances that it will be able to meet its short and long term liquidity needs. The Company continues to generate revenue from the Nurses Lounge business, which the Company believes will increase to the point where the Company can cover its basis monthly obligations, of which there can be no assurance.

 

We do not currently have any additional formal commitments or identified sources of additional capital from third parties or from our officers, director or significant shareholders. We can provide no assurance that additional financing will be available on favorable terms, if at all. If we are not able to raise the capital necessary to continue our business operations, we may be forced to abandon or curtail our business plan.

 

In the future, we may be required to seek additional capital by selling additional debt or equity securities, selling assets, if any, or otherwise be required to bring cash flows in balance when we approach a condition of cash insufficiency. The sale of additional equity or debt securities, if accomplished, may result in dilution to our then shareholders. We provide no assurance that financing will be available in amounts or on terms acceptable to us, or at all.

 

Recent Activity

 

In early April of 2014, Nurses Lounge was informed by our mobile app developers that our network provider, Oracle, did not have the API’s necessary to complete the app. This was after a kick-off meeting in early February where we were informed that all was in place to complete and launch the app by early April. We were later informed that they could not provide a definitive time in which the API’s would be available.

 

As such, in early June, Nurses Lounge began the ground-up development of a version 2.0 of our network with all the most current networking functionality. On September 2, Nurses Lounge officially launched version 2.0 of their professional network for nurses after a month of beta testing that began on August 1, 2014.

 

Along with a complete new design, the new network includes an interactive directory of approximately 600 schools that offer a Bachelor of Science in Nursing (BSN), 1,000 nursing schools that offer an Associate Degree in Nursing (ADN), 6,000 medical facilities, plus interactive lounges for 97 nurse specialties. These organizations can take administrative control of these lounge pages that allows them to customize their pages with images, logos, and videos, as well as the ability to post news and info that is instantly distributed to their nurse followers.

 

Additionally, the network provides the most current networking tools necessary for student and local professional nurse associations to more effectively manage and grow their organizations versus outdated and obsolete web sites.

 

A mobile app for the network was completed in time for demonstration at the Mid-Year National Student Nurse Association Conference held on November 7-9 in Portland, Oregon. On November 21st the mobile app was approved by Apple to be available for download in the APP Store. An Android version is expected to be completed and available for download in mid January 2015 in time for nursing students returning to class for the spring semester.

 

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We also intend to strengthen our brand and grow membership through increased marketing efforts and expanded and enhanced features and functionalities that the new network capabilities afford.

 

Management also reduced sales and marketing regions from 12 to 6 and, as of December 17, 2014, had sales and marketing representatives in 4 of the 6 regions.

 

In early November 2014, we combined the job board and network allowing members a single sign-on. With this in place, sales representatives began for the first time sells of unlimited job posting packages for a term of 6 months at a cost of $3,600 and 12 month terms for $6,000.00. In early December, we had closed and collected on our first annual unlimited job posting sale and as of December 17th each sales representative had multiple interested prospects in their sale’s pipeline.

 

With this increased sales activity we are also seeing greater interest in our single 60-day job postings priced at $245.00. We have additionally created volume discounts for employers buying 5 and 10 job posting credits upfront. We believe we now have a very competitive price point that can fit any size of employer looking to hire nurses.

 

Additionally, as membership grows, management will look to diversify the revenue model from primarily job posting revenue. Potential income streams are expected to include targeted banner ads, email sponsorships, continuing education as well as mobile apps.

 

We are currently considering offerings of securities under private placements, acquisitions (which are directly related to Nurses Lounge), issuing debt instruments, and joint ventures with other companies public and private and other activities to either build sales or generate much needed capital to grow and undertake our business plan (for example, obtain, if possible, loans).  However, we do not currently have any lines of credit or other bank financing arrangements. Generally, we have financed operations to date through the proceeds of the private placement of equity and debt securities and loans from our shareholders and other third parties.

 

Our financial statements contain information expressing substantial doubt about our ability to continue as a going concern. The consolidated financial statements have been prepared "assuming that we will continue as a going concern," which contemplates that we satisfy our liabilities and commitments in the ordinary course of business.

 

Additionally, with the completion of new network and mobile app as well as our administration and SEC reporting obligations current, we are positioned to spend the majority of any equity raised to build out the national sales team with a proper level of marketing support. The Company estimates it needs $750,000 annually to fully implement its full service 12 month operating plan as we begin to move forward in 2015.

 

 

ITEM 3. Quantitative and Qualitative Disclosure about Market Risk.

 

Pursuant to Item 305(e) of Regulation S-K (§ 229.305(e)), we are not required to provide the information required by this Item as it is a “smaller reporting company,” as defined by Rule 229.10(f)(1).

 

 ITEM 4. Controls and Procedures

(a)           Evaluation of disclosure controls and procedures. Our Chief Executive Officer and Principal Financial Officer, after evaluating the effectiveness of our "disclosure controls and procedures" (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-Q (the "Evaluation Date"), has concluded that as of the Evaluation Date, our disclosure controls and procedures were not effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.  Moving forward, we hope that our Chief Executive Officer and Principal Financial Officer will be able to devote the additional time and effort required so that our disclosure controls and procedures are once again effective.  Notwithstanding the assessment that our internal controls and procedures were not effective, we believe that our financial statements contained in this Quarterly Report for the quarter ended October 31, 2014 fairly present our financial position, results of operations and cash flows for the years and months covered thereby in all material respects.

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(b) Changes in internal control over financial reporting. There were no changes in our internal control over financial reporting during our most recent fiscal quarter that materially affected, or were reasonably likely to materially affect, our internal control over financial reporting.

 

 

 

PART II

 

Item 1. Legal Proceedings

 

From time to time, we may become party to litigation or other legal proceedings that we consider to be a part of the ordinary course of our business. We are not currently involved in legal proceedings that could reasonably be expected to have a material adverse effect on our business, prospects, financial condition or results of operations. We may become involved in material legal proceedings in the future.

 

Item 1A. Risk Factors

 

There have been no material changes from the risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the year ended January 31, 2014, filed with the Commission on May 15, 2014, other than as set forth below, and investors are encouraged to review such risk factors below and in the Form 10-K, prior to making an investment in the Company.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds

 

Recent Sales of Unregistered Securities

 

  Consideration   Date # Shares
Balance, Number of shares outstanding, January 31, 2013       50,125,528
         
Shares issued for deferred fees Incentive for new loan (1) July 19, 2013 200,000
Shares issued for deferred fees Incentive for new loan (2) October 31, 2013 166,667
Shares issued for deferred fees Incentive for new loan (3) October 31, 2013 133,334
Shares issued for deferred fees Incentive for new loan (4) October 31, 2013 133,334
Shares issued for deferred fees Note extension (5) October 31, 2013 1,100,000
Shares issued for note conversion Convert $25,000 note (6) Aug 5, 2013 250,000
Shares issued for note conversion Convert $20,000 note (7) Aug 10, 2013 200,000
Shares issued for note conversion Convert $20,000 note (8) Aug 10, 2013 200,000
Shares issued for note conversion and accrued interest Convert $140,000 note + Int (9) Aug 10, 2013 2,205,714
Shares issued for note conversion and accrued interest Convert $70,000 note + Int (10) Aug 10, 2013 949,385
Shares issued for cash at $0.10 per share Sale of shares for cash (11) Sept 2013 199,000
Shares issued for services Services @ $0.10/share (12) Sept 23, 2013 1,000,000

 

 

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Shares issued for services Services @ $0.10/share (13) Oct 3, 2013 100,000
Shares issued for cash at $0.10 per share Sale of shares for cash (14) Oct 28, 2013 20,000
Shares issued for cash at $0.10 per share Sale of shares for cash (15) Nov 27, 2013 30,000
Shares issued for services Services @ $0.10/share (16) Nov 3, 2013 100,000
Shares securing assets sold based on market Shares sold at market (17) Dec 9, 2013 8,002,406
Common stock issued at forty eight percent discount to market per note conversion agreement Convert a portion of note payable (18) May 20, 2014 1,339,286
Common stock issued at forty eight percent discount to market per note conversion agreement Convert a portion of note payable (18) June 2, 2014 1,600,000
Common stock issued at forty eight percent discount to market per note conversion agreement Convert a portion of note payable (18) June 6, 2014 971,429
Shares issued for accounts payable Convert $224,558 in payable (19) July 31, 2014 4,491,160
Shares issued for accounts payable Convert $97,250 in payable (20) July 31, 2014 1,945,000
Shares issued for accounts payable Convert $5,000 in payable (21) July 31, 2014 100,000
Common stock issued at forty eight percent discount to market per note conversion agreement Convert a portion of note payable (18) Sept 22, 2014 1,290,323
Common stock issued at forty eight percent discount to market per note conversion agreement Convert a portion of note payable (18) Oct 8, 2014 2,727,273
Common stock at issued forty eight percent discount to market per note conversion agreement Convert a portion of note payable (18) Oct 29, 2014 3,030,303
Balance, Number of shares outstanding, October 31, 2014       83,210,142

 

 

(1) 200,000 total shares issued on 7/19/2013 in consideration for lending the Company $30,000, note dated July 19, 2013, 12% annual interest rate, due Oct 31, 2013. Jamie Bernard was issued a total of 200,000 shares of restricted common stock. Additionally, the note is convertible at $0.10 per share. The value of these shares were determined on the day of agreement and booked in the financial statement as Deferred Fees and amortized over the life of the loan.

 

 

The Company claims an exemption from registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the “Act”) since the foregoing issuances and grants did not involve a public offering, the recipients took the shares and options for investment and not resale, the Company took appropriate measures to restrict transfer, and the recipients were either (a) “accredited investors” and/or (b) had access to similar documentation and information as would be required in a Registration Statement under the Act. No underwriters or agents were involved in the foregoing issuances and the Company paid no underwriting discounts or commissions.

 

(2) 166,667 shares were issued on 7/31/2013 in consideration for lending the Company $25,000, note dated October 31, 2013, 12% annual interest rate, due Oct 31, 2013. Additionally, the note is convertible at $0.10 per share. The value of these shares were determined on the day of agreement and booked in the financial statement as Deferred Fees and amortized over the life of the loan.

The Company claims an exemption from registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the “Act”) since the foregoing issuances and grants did not involve a public offering, the recipients took the shares and options for investment and not resale, the Company took appropriate measures to restrict transfer, and the recipients were either (a) “accredited investors” and/or (b) had access to similar documentation and information as would be required in a Registration Statement under the Act. No underwriters or agents were involved in the foregoing issuances and the Company paid no underwriting discounts or commissions.

 

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(3) 133,334 shares were issued on 7/31/2013 in consideration for lending the Company $20,000, note dated October 31, 2013, 12% annual interest rate, due Oct 31, 2013. Additionally, the note is convertible at $0.10 per share. The value of these shares were determined on the day of agreement and booked in the financial statement as Deferred Fees and amortized over the life of the loan.

The Company claims an exemption from registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the “Act”) since the foregoing issuances and grants did not involve a public offering, the recipients took the shares and options for investment and not resale, the Company took appropriate measures to restrict transfer, and the recipients were either (a) “accredited investors” and/or (b) had access to similar documentation and information as would be required in a Registration Statement under the Act. No underwriters or agents were involved in the foregoing issuances and the Company paid no underwriting discounts or commissions.

 

(4) 133,334k total shares issued on 7/31/2013 in consideration for lending the Company $20,000, note dated October 31, 2013, 12% annual interest rate, due Oct 31, 2013 - the note was converted on August 5, 2013. Additionally, the note is convertible at $0.10 per share. The value of these shares were determined on the day of agreement and booked in the financial statement as Deferred Fees and amortized over the life of the loan.

The Company claims an exemption from registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the “Act”) since the foregoing issuances and grants did not involve a public offering, the recipients took the shares and options for investment and not resale, the Company took appropriate measures to restrict transfer, and the recipients were either (a) “accredited investors” and/or (b) had access to similar documentation and information as would be required in a Registration Statement under the Act. No underwriters or agents were involved in the foregoing issuances and the Company paid no underwriting discounts or commissions.

 

(5) 1,100,000 shares issued on 7/31/2013 in consideration for extending his original note a second time with his original note dated November 4, 2010 and due November 4, 2011 and then renewed and due November 4, 2012 and additionally renewed a second time and due November 4, 2013 in the amount of $100,000 for an additional year. The value of these shares were determined on the day of agreement and booked in the financial statement as Deferred Fees and amortized over the life of the loan.

The Company claims an exemption from registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the “Act”) since the foregoing issuances and grants did not involve a public offering, the recipients took the shares and options for investment and not resale, the Company took appropriate measures to restrict transfer, and the recipients were either (a) “accredited investors” and/or (b) had access to similar documentation and information as would be required in a Registration Statement under the Act. No underwriters or agents were involved in the foregoing issuances and the Company paid no underwriting discounts or commissions.

 

(6) Conversion of Note dated October 31, 2013 that had a conversion feature at $.10 per share. These shares were issued for the conversion of a $25,000 note.

 

The Company claims an exemption from registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the “Act”) since the foregoing issuances and grants did not involve a public offering, the recipients took the shares and options for investment and not resale, the Company took appropriate measures to restrict transfer, and the recipients were either (a) “accredited investors” and/or (b) had access to similar documentation and information as would be required in a Registration Statement under the Act. No underwriters or agents were involved in the foregoing issuances and the Company paid no underwriting discounts or commissions.

 

(7) Conversion of Note dated October 31, 2013 that had a conversion feature at $.10 per share. These shares were issued for the conversion of a $20,000 note.

The Company claims an exemption from registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the “Act”) since the foregoing issuances and grants did not involve a public offering, the recipients took the shares and options for investment and not resale, the Company took appropriate measures to restrict transfer, and the recipients were either (a) “accredited investors” and/or (b) had access to similar documentation and information as would be required in a Registration Statement under the Act. No underwriters or agents were involved in the foregoing issuances and the Company paid no underwriting discounts or commissions.

 

(8) Conversion of Note dated October 31, 2013 that had a conversion feature at $.10 per share. These shares were issued for the conversion of a $20,000 note.

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The Company claims an exemption from registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the “Act”) since the foregoing issuances and grants did not involve a public offering, the recipients took the shares and options for investment and not resale, the Company took appropriate measures to restrict transfer, and the recipients were either (a) “accredited investors” and/or (b) had access to similar documentation and information as would be required in a Registration Statement under the Act. No underwriters or agents were involved in the foregoing issuances and the Company paid no underwriting discounts or commissions.

 

(9) Conversion of Note dated October 31, 2013 that had a conversion feature at $.07 per share. These shares were issued for the conversion of a $140,000 note plus accrued interest of $14,400.

The Company claims an exemption from registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the “Act”) since the foregoing issuances and grants did not involve a public offering, the recipients took the shares and options for investment and not resale, the Company took appropriate measures to restrict transfer, and the recipients were either (a) “accredited investors” and/or (b) had access to similar documentation and information as would be required in a Registration Statement under the Act. No underwriters or agents were involved in the foregoing issuances and the Company paid no underwriting discounts or commissions.

 

(10) Conversion of Note dated October 31, 2013 that had a conversion feature at $.10 per share. These shares were issued for the conversion of a $70,000 note plus accrued interest of $24,938.

The Company claims an exemption from registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the “Act”) since the foregoing issuances and grants did not involve a public offering, the recipients took the shares and options for investment and not resale, the Company took appropriate measures to restrict transfer, and the recipients were either (a) “accredited investors” and/or (b) had access to similar documentation and information as would be required in a Registration Statement under the Act. No underwriters or agents were involved in the foregoing issuances and the Company paid no underwriting discounts or commissions.

 

(11) Sale of 199,000 shares of common stock to various parties at $0.10 per share.

The Company claims an exemption from registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the “Act”) since the foregoing issuances and grants did not involve a public offering, the recipients took the shares and options for investment and not resale, the Company took appropriate measures to restrict transfer, and the recipients were either (a) “accredited investors” and/or (b) had access to similar documentation and information as would be required in a Registration Statement under the Act. No underwriters or agents were involved in the foregoing issuances and the Company paid no underwriting discounts or commissions.

 

(12) Issue 1,000,000 shares of common stock at $0.07 per share to our Chief Financial Officer for services provided and as an incentive to join the Company.

The Company claims an exemption from registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the “Act”) since the foregoing issuances and grants did not involve a public offering, the recipients took the shares and options for investment and not resale, the Company took appropriate measures to restrict transfer, and the recipients were either (a) “accredited investors” and/or (b) had access to similar documentation and information as would be required in a Registration Statement under the Act. No underwriters or agents were involved in the foregoing issuances and the Company paid no underwriting discounts or commissions.

 

(13) Issue 100,000 shares of common stock at $0.10 per share to an investment banker for services provided to the Company.

The Company claims an exemption from registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the “Act”) since the foregoing issuances and grants did not involve a public offering, the recipients took the shares and options for investment and not resale, the Company took appropriate measures to restrict transfer, and the recipients were either (a) “accredited investors” and/or (b) had access to similar documentation and information as would be required in a Registration Statement under the Act. No underwriters or agents were involved in the foregoing issuances and the Company paid no underwriting discounts or commissions.

 

(14) Sale of 20,000 shares of common stock at $0.10 per share.

The Company claims an exemption from registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the “Act”) since the foregoing issuances and grants did not involve a public offering, the recipients took the shares and options for investment and not resale, the Company took appropriate measures to restrict transfer, and the recipients were either (a) “accredited investors” and/or (b) had access to similar documentation and information as would be required in a Registration Statement under the Act. No underwriters or agents were involved in the foregoing issuances and the Company paid no underwriting discounts or commissions.

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(15) Sale of 30,000 shares of common stock at $0.10 per share.

The Company claims an exemption from registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the “Act”) since the foregoing issuances and grants did not involve a public offering, the recipients took the shares and options for investment and not resale, the Company took appropriate measures to restrict transfer, and the recipients were either (a) “accredited investors” and/or (b) had access to similar documentation and information as would be required in a Registration Statement under the Act. No underwriters or agents were involved in the foregoing issuances and the Company paid no underwriting discounts or commissions.

 

(16) Issue 100,000 shares of common stock at $0.12 per share to an investment banker for services provided to the Company.

The Company claims an exemption from registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the “Act”) since the foregoing issuances and grants did not involve a public offering, the recipients took the shares and options for investment and not resale, the Company took appropriate measures to restrict transfer, and the recipients were either (a) “accredited investors” and/or (b) had access to similar documentation and information as would be required in a Registration Statement under the Act. No underwriters or agents were involved in the foregoing issuances and the Company paid no underwriting discounts or commissions.

 

(17) Note securing all the assets of the company was sold and guaranteed by shares of the company at market. The note was converted and the note holder sold the stock in the market to satisfy the note.

The Company claims an exemption from registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the “Act”) since the foregoing issuances and grants did not involve a public offering, the recipients took the shares and options for investment and not resale, the Company took appropriate measures to restrict transfer, and the recipients were either (a) “accredited investors” and/or (b) had access to similar documentation and information as would be required in a Registration Statement under the Act. No underwriters or agents were involved in the foregoing issuances and the Company paid no underwriting discounts or commissions.

 

(18) The Company entered into a loan agreement on November 12, 2013 with a funding company for $32,500, accruing interest at 8%, which provided for repayment in six months. The loan, if not repaid, provided for the lender to be able to convert all or a portion of the principal and interest due on the note into common stock at a discount of 48% to market. These conversions represent common stock converted pursuant to the note. As of October 31, 2014, approximately $8,500 remained owing on the note.

 

(19) Conversion of accounts payable to our Chief Executive Officer in the amount of $224,558 on October 31, 2014, at a conversion rate of $0.05 per share.

The Company claims an exemption from registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the “Act”) since the foregoing issuances and grants did not involve a public offering, the recipients took the shares and options for investment and not resale, the Company took appropriate measures to restrict transfer, and the recipients were either (a) “accredited investors” and/or (b) had access to similar documentation and information as would be required in a Registration Statement under the Act. No underwriters or agents were involved in the foregoing issuances and the Company paid no underwriting discounts or commissions.

 

(20) Conversion of accounts payable to our Vice President of Nurses Lounge in the amount of $97,250 on October 31, 2014, at a conversion rate of $0.05 per share.

The Company claims an exemption from registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the “Act”) since the foregoing issuances and grants did not involve a public offering, the recipients took the shares and options for investment and not resale, the Company took appropriate measures to restrict transfer, and the recipients were either (a) “accredited investors” and/or (b) had access to similar documentation and information as would be required in a Registration Statement under the Act. No underwriters or agents were involved in the foregoing issuances and the Company paid no underwriting discounts or commissions.

 

(21) Conversion of accounts payable to a vendor in the amount of $5,000 on October 31, 2014, at a conversion rate of $0.05 per share.

 

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The Company claims an exemption from registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the “Act”) since the foregoing issuances and grants did not involve a public offering, the recipients took the shares and options for investment and not resale, the Company took appropriate measures to restrict transfer, and the recipients were either (a) “accredited investors” and/or (b) had access to similar documentation and information as would be required in a Registration Statement under the Act. No underwriters or agents were involved in the foregoing issuances and the Company paid no underwriting discounts or commissions.

 

Options and Warrants

 

(22) Three options for 127,500 shares of restricted common stock at an exercise price of $0.10 per share and for a term of 5 years was awarded Geneva7, LLC in consideration for loaning the company $25,000 and renewing the note two additional times. Geneva7, LLC originally loaned the company $25,000 at 12% interest on August 29, 2011 and was awarded an option to purchase 127,500 shares of restricted common stock at an exercise price of $0.10. The term of the option is 5 years. The loan matured on April 30, 2012 and Geneva 7 agreed to renew the loan and accrue interest through October 31, 2013 and additionally renewed the loan through October 31, 2103 when it matured on October 31, 2013. With each additional renewal, Geneva7 received an additional option to purchase 127,500 shares of restricted common stock at an exercise price of $0.10 per share and for a term of 5 years. This note was sold to a third party who converted the note into common shares at market and sold the shares.

 

(23) Warrant 1,000,0000 shares. The Company entered into a contract for services with Horse and Hammerhead Marketing Solutions, LLC, a management consulting firm. Based on the agreement, the consultant was issued a warrant for 1,000,000 shares of MCGI’s restricted common stock at an exercise price of $0.12 per/share with a 4-year term.

The Company claims an exemption from registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the “Act”) since the foregoing issuances and grants did not involve a public offering, the recipients took the shares and options for investment and not resale, the Company took appropriate measures to restrict transfer, and the recipients were either (a) “accredited investors” and/or (b) had access to similar documentation and information as would be required in a Registration Statement under the Act. No underwriters or agents were involved in the foregoing issuances and the Company paid no underwriting discounts or commissions.

 

(24) Warrant 100,000 shares. The Company entered into a contract for services with EBCO, LLC. Based on the agreement, in consideration for extending their $16,000 loan, they were issued a warrant for 100,000 shares of MCGI’s restricted common stock at an exercise price of $0.10 per/share, expiring March 29, 2016.

The Company claims an exemption from registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the “Act”) since the foregoing issuances and grants did not involve a public offering, the recipients took the shares and options for investment and not resale, the Company took appropriate measures to restrict transfer, and the recipients were either (a) “accredited investors” and/or (b) had access to similar documentation and information as would be required in a Registration Statement under the Act. No underwriters or agents were involved in the foregoing issuances and the Company paid no underwriting discounts or commissions.

 

(25) Option for 1,000,000 common shares granted to the Chief Financial Officer as part of his accepting the position with the Company. The options have a strike price of $0.10 per share and expire on November 18, 2016.

The Company claims an exemption from registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the “Act”) since the foregoing issuances and grants did not involve a public offering, the recipients took the shares and options for investment and not resale, the Company took appropriate measures to restrict transfer, and the recipients were either (a) “accredited investors” and/or (b) had access to similar documentation and information as would be required in a Registration Statement under the Act. No underwriters or agents were involved in the foregoing issuances and the Company paid no underwriting discounts or commissions.

 

(26) Option for 1,000,000 common shares granted to the Chief Financial Officer for past work with the Company. The options have a strike price of $0.10 per share and expire on July 31, 2017.

The Company claims an exemption from registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the “Act”) since the foregoing issuances and grants did not involve a public offering, the recipients took the shares and options for investment and not resale, the Company took appropriate measures to restrict transfer, and the recipients were either (a) “accredited investors” and/or (b) had access to similar documentation and information as would be required in a Registration Statement under the Act. No underwriters or agents were involved in the foregoing issuances and the Company paid no underwriting discounts or commissions.

 

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(27) Options for 2,500,000 common shares granted to salespersons as an incentive to make sales for the Company. The options have a strike price of $0.10 per share, vest one third on January 31, 2015, 2016 and 2017 and expire on January 31, 2018.

The Company claims an exemption from registration afforded by Section 4(2) of the Securities Act of 1933, as amended (the “Act”) since the foregoing issuances and grants did not involve a public offering, the recipients took the shares and options for investment and not resale, the Company took appropriate measures to restrict transfer, and the recipients were either (a) “accredited investors” and/or (b) had access to similar documentation and information as would be required in a Registration Statement under the Act. No underwriters or agents were involved in the foregoing issuances and the Company paid no underwriting discounts or commissions.

 

Item 3. Default Upon Senior Securities

 

None.

 

Item 4. Mine Safety Disclosures

 

Not applicable.

 

Item 5. Other Information

 

None.

 

Item 6. Exhibits

 

See the Exhibit Index immediately following the signature page of this Report on Form 10-Q.

 

 

 

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SIGNATURES

 

In accordance with the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this Report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Medcareers Group, Inc.

 

By:  /s/ Timothy Armes

Timothy Armes

Chairman (Director), Chief Executive Officer, President, Secretary and Treasurer

 

Date: December 19, 2014

 

 

 

 

 

 

 

 

 

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EXHIBIT INDEX

 

Exhibit

Number

Description of Exhibit
   
   
31.1* Certificate of the Principal Executive Officer and Principal Financial Officer pursuant to Section 302 of the Sarbanes-Oxley Act of 2002
   
32.1*  Certificate of the Principal Executive Officer and Principal Financial Officer pursuant to Section 906 of the Sarbanes-Oxley Act of 2002
   

 

*   Filed herewith.

 

 

 

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