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EX-31 - CERTIFICATE OF THE PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER - MEDCAREERS GROUP, Inc.exhibit_31-1.htm
EX-32 - CERTIFICATE OF THE PRINCIPAL EXECUTIVE OFFICER AND PRINCIPAL FINANCIAL OFFICER - MEDCAREERS GROUP, Inc.exhibit_32-1.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-K

 

[X]

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

 

For the fiscal year ended   January 31, 2018

 

[  ]

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

 

For the transition period from _________________________ to _________________________

 

Commission file number:   333-152444

 

MEDCAREERS GROUP, INC.

(Exact name of registrant as specified in its charter)

 

Nevada

 

26-1580812

(State or other jurisdiction of incorporation or organization)

 

(I.R.S. Employer Identification No.)

 

6515 Goodman Rd, #258, Olive Branch, MS

 

38654

(Address of principal executive offices)

 

(Zip Code)

 

Registrant’s telephone number, including area code:   662-510-8992

 

Securities registered pursuant to Section 12(b) of the Act:

None

 

Securities registered pursuant to Section 12(g) of the Act:

None

 

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.


Yes [  ]          No [X]

 

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act.


Yes [X]          No [  ]

 

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

 

Yes [  ]          No [X]

 

Indicate by check mark whether the registrant has submitted electronically on its corporate Website, if any, every Interactive Data File required to be submitted 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 such files).

 

Yes [  ]          No [X]

 

Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§ 229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.   [X]

 



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

 

 

Large accredited filer

[  ]

Accredited filer

[  ]

 

 

 

 

 

 

Non-accredited filer

[  ]

Smaller reporting company

[X]

 

 

 

 

 

 

 

 

Emerging Growth Company

[  ]

 

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.   [  ]

 

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

 

Yes [  ]          No [X]

 

The aggregate market value of common stock, par value $0.001 per share, held by non-affiliates of the registrant, based on the average bid and asked prices of the common stock on January 31, 2018 (the last business day of the registrant’s most recently completed fiscal period covered by this report) was approximately $215 thousand.

 

Number of common shares outstanding at November 6, 2018:   1,064,651,043

 

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MEDCAREERS GROUP, INC.

FORM 10-K


TABLE OF CONTENTS


PART I

 

4

 

 

 

ITEM 1.

Business

4

ITEM 1A.

Risk Factors

7

ITEM 1B.

Unresolved Staff Comments

14

ITEM 2.

Properties

14

ITEM 3.

Legal Proceedings

14

ITEM 4.

Mine Safety Disclosures

14

 

 

 

PART II

 

15

 

 

 

ITEM 5.

Market for Registrant’s Common Equity, Related Stockholders Matters and Issuer Purchases of Equity Securities

15

ITEM 6.

Selected Financial Data

18

ITEM 7.

Management’s Discussion and Analysis of Financial Condition and Results of Operation

18

ITEM 7A.

Quantitative and Qualitative Disclosures About Market Risk

20

ITEM 8.

Financial Statements and Supplementary Data

20

ITEM 9.

Changes in and Disagreements with Accountants on Accounting and Financial Disclosure

20

ITEM 9A.

Controls and Procedures

21

ITEM 9B.

Other Information

21

 

 

 

PART III

 

22

 

 

 

ITEM 10.

Directors, Executive Officers and Corporate Governance

22

ITEM 11.

Executive Compensation

24

ITEM 12.

Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters

25

ITEM 13.

Certain Relationships and Related Transactions, and Director Independence

26

ITEM 14.

Principal Accounting Fees and Services

28

 

 

 

PART IV

 

28

 

 

 

ITEM 15.

Exhibits and Financial Statement Schedules

28


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FORWARD-LOOKING STATEMENTS


This annual report on Form 10-K includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, which we refer to in this annual report as the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, which we refer to in this annual 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 annual report. Factors that can cause or contribute to these differences include those described under the headings “Risk Factors” and “Management’s Discussion and Analysis of Financial Condition and Results 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 annual 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 annual 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.


PART I


Item 1.  Business.


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 or around January 7, 2010 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.


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 founder and president of Nurses Lounge, Inc., who received 14,902,795 shares.


Pursuant to the Exchange, Nurses Lounge, Inc. 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.


Effective September 10, 2011, Timothy Armes, the Company’s then majority shareholder was appointed as the Chief Executive Officer, President, Secretary, Treasurer and sole director of the Company.


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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.


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, 2014 and then live on September 2, 2014. With the completion of this upgrade Nurses Lounge functions as a true Professional Network for Nurses (or comparatively a LinkedIn for Nurses). Like LinkedIn, when a nurse joins they can create an online professional profile and invite colleagues to join their online professional network.


With the added capabilities of the new network, the new version was launched with an “Interactive Lounge” (comparable to a group on LinkedIn or Facebook) for 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. Representatives from these organizations can take administrative control of these lounge pages, 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.


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.


As members of the Nurses Lounge, nurses are able to participate in groups created by organizations such as schools, associations and employers 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.


Along with the professional network, Nurses Lounge has a fully functional job board for nursing professionals as well as a nursing faculty for nursing schools looking to hire faculty.


Nurses Lounge expects to generate a substantial percentage of revenue from the job board and, as nurse membership grows, expects to generate additional revenue from targeted ads and email campaigns both from employers and nursing schools looking to fill online classes as well as continuing education offerings.


Over the last year we have concentrated our efforts into re-launching the employer area of our network into a talent acquisition platform for hiring nurses as well as the launch of a searchable degree program directory.


Along with the talent acquisition platform, we have included what we believe to be the first nurses only map oriented job search. This allows nurses the potential to see hundreds of jobs available them within a geographic radius. By clicking on a pin on the job map they can view and apply for jobs at that specific location.


The degree program directory, targeted to 4 year BSN schools, has 26 degree categories to search such as online RN to BSN programs as well as various PhD programs. We do not charge schools for posting their programs in the directory. However, we do request that they place our social link on their web site and invite their students and alumni to follow them in the Nurses Lounge.


Additionally, we plan to be current with all required filings including the April 30, 2018 and July 31, 2018 Form 10-Q’s. With the completion of this process coming to a close, we are presently looking at various strategic options to enhance shareholder value, including the option of selling our subsidiary, which could relieve the Company of much of its debt.


- 5 -



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 OnCourse Learning (purchase from Gannet in 2014) 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 2012-2022 released in December 2013, Registered Nursing (RN) is listed among the top occupations in terms of job growth through 2022. The RN workforce is expected to grow from 2.71 million in 2012 to 3.24 million in 2022, an increase of 526,800 or 19%. The Bureau also projects the need for 525,000 replacements nurses in the workforce bringing the total number of job openings for nurses due to growth and replacements to 1.05 million by 2022.

 

 

According to a 2013 survey conducted by the National Council of State Boards of Nursing and The Forum of State Nursing Workforce Centers, 55% of the RN workforce is age 50 or older.

 

 

Approximately 700 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 5,600 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 end of 2018.


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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 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.


Item 1A.  Risk Factors.


Business Risk


An investment in our common stock is highly speculative, and should only be made by persons who can afford to lose their entire investment in us. You should carefully consider the following risk factors and other information in this annual report before deciding to become a holder of our common stock. If any of the following risks actually occur, our business and financial results could be negatively affected to a significant extent.


We Require Additional Capital In Order To Take The Necessary Steps To Grow Our Business.


Currently, the Company does not have available funds to develop the marketing and advertising materials or fund other operating and general and administrative expenses necessary to grow its business.  The Company has decided to abandon the previously announced acquisition targets described above and focus on the Nurses Lounge business which does not require significant capital.  The Company believes that moving forward it will be able to enlist commission based sales persons to generate sales and revenue without incurring significant overhead.  The Company has used some available funds to hire independent contractors to pursue sales.  If we cannot secure additional financing, our growth and operations could be impaired by limitations on our access to capital. There can be no assurance that capital from outside sources will be available, or if such financing is available, that it will be on terms that management deems sufficiently favorable. If we are unable to obtain additional financing upon terms that management deems sufficiently favorable, or at all, it could have a material adverse impact upon our ability to conduct our business operations and pursue our expansion of Nurses Lounge.  As of the date of this report, we have only limited operations, and did not generate any significant revenues during the years ended January 31, 2017 or 2016.   In the event we do not raise additional capital from conventional sources, it is likely that we may need to scale back or curtail implementing our business plan, which could cause any securities in the Company to be worthless.


Shareholders May Be Diluted Significantly Through Our Efforts To Obtain Financing, Satisfy Obligations And/Or Complete Acquisitions Through The Issuance Of Additional Shares Of Our Common Stock Or Other Securities.


We have no committed source of financing. Wherever possible, our Board of Directors will attempt to use non-cash consideration to satisfy obligations. In many instances, we believe that the non-cash consideration will consist of restricted shares of our common stock or other securities. Additionally, moving forward, we may attempt to conduct acquisitions of other entities or assets using our common stock or other securities as payment for such acquisitions.  Our Board of Directors has authority, without action or vote of the shareholders, to issue all or part of the authorized but unissued shares of common stock and preferred stock with various preferences and other rights. These actions may result in substantial dilution of the ownership interests of existing shareholders, and dilute the book value of the Company’s common stock.


We Have Historically Generated Limited Revenues And Have Generated Only Nominal Revenues For A Period Of Over Two Years.


We generated nominal revenues for the years ended January 31, 2018 and 2017 of $36,416 and $30,414 respectively. Furthermore, we anticipate our expenses increasing in the future.  We do not currently generate significant revenues.  We can make no assurances that we will be able to generate any revenues in the future, that we will have sufficient funding to support our operations and pay our expenses.  In the event we are unable to generate revenues and/or support our operations, we will be forced to curtail and/or abandon our current business plan and any investment in the Company could become worthless.


- 7 -



Since Acquiring Nurses Lounge, We Are No Longer Currently Actively Pursuing Acquisition And/Or Merger Opportunities But We May Choose To Enter Into Additional Merger And/Or Acquisition Transactions In The Future.


Although it is not presently anticipated that the Company will make a significant acquisition, the Company may enter into additional merger and/or acquisitions with separate companies, which may result in our majority shareholders changing and new shares of common or preferred stock being issued, resulting in substantial dilution to our then current shareholders.  If we do consummate any acquisitions, and our management fails to properly manage and direct our operations, we may be forced to scale back or abandon our operations, which will cause the value of our common stock to decline or become worthless.


Shareholders Who Hold Unregistered Shares Of Our Common Stock Are Subject To Resale Restrictions Pursuant To Rule 144, Due To Our Status As A Former “Shell Company.


Pursuant to Rule 144 of the Securities Act of 1933, as amended (“Rule 144”), a “shell company” is defined as a company that has no or nominal operations; and, either no or nominal assets; assets consisting solely of cash and cash equivalents; or assets consisting of any amount of cash and cash equivalents and nominal other assets.  As such, we believe we were a “shell company” pursuant to Rule 144 prior to our acquisition of WorkAbroad.com on August 10, 2010, and as such, sales of our securities pursuant to Rule 144 are not able to be made until 1) we have ceased to be a “shell company”; 2) we are subject to Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended, and have filed all of our required periodic reports for the prior one year period; and a period of at least twelve months has elapsed from the date “Form 10 information” has been filed with the Commission reflecting the Company’s status as a non-“shell company,” , which information was filed on August 11, 2010, and which sales pursuant to Rule 144 can therefore not be made any earlier than the date that we are current in our filings with the Commission.  Because none of our non-registered securities can be sold pursuant to Rule 144, until at least the date we are current in our filings (or longer if we are still deemed to be a “shell company”), any non-registered securities we sell or issue to consultants or employees, in consideration for services rendered or for any other purpose, will have no liquidity until and unless such securities are registered with the Commission and/or until at least the later of (a) the date we become current in our filings, provided that there is no assurance that we will become current in our filings (or one year following the date we are deemed to not be a “shell company”); and (b) six months from the issuance of such securities.  Additionally, in the future, if we cease filing reports with the Commission or Rule 144 is not available for the sale of our securities, it may be impossible for holders of our securities to sell such securities.  As a result, it may be harder for us to fund our operations and pay our consultants with our securities instead of cash.  Furthermore, it will be harder for us to raise funding through the sale of debt or equity securities unless we agree to register such securities with the Commission, which could cause us to expend additional resources in the future.  Additionally, moving forward, our status as a former “shell company” could prevent us from raising additional funds, engaging consultants, and using our securities to pay for any acquisitions (although none are currently planned), which could cause the value of our securities, if any, to decline in value or become worthless.


Timothy Armes, The Chief Executive Officer Of The Company, Exercises Significant Voting Control Over The Company.


As a result of the Exchange and the other transactions described above, Timothy Armes, the former largest shareholder of Nurses Lounge and our Chief Executive Officer and sole director, has beneficial ownership of 129,618,724 shares or approximately 13.47% of the Company’s common stock.  Therefore, Mr. Armes currently has significant voting control in determining the outcome of all corporate transactions or other matters, including the election and removal of directors, mergers, consolidations, the sale of all or substantially all of our assets, and also the power to prevent or cause a change in control. Any investors who purchase shares will have little to no say in the direction of the Company and the election of directors. Additionally, it will be difficult if not impossible for investors to remove Mr. Armes from any officer position or director position he may choose to hold within the Company, which will mean he will remain in constructive control of who serves as officers of the Company as well as whether any changes are made in the Board of Directors. As a potential investor in the Company, you should keep in mind that even if you own shares of the Company’s common stock and wish to vote them at annual or special shareholder meetings, your shares will likely have little effect on the outcome of corporate decisions.


Our Limited Operating History Makes It Difficult To Forecast Our Future Results, Making Any Investment In Us Highly Speculative.


We have a limited operating history, and our historical financial and operating information is of limited value in predicting our future operating results.  We may not accurately forecast customer behavior and recognize or respond to emerging trends, changing preferences or competitive factors facing us, and, therefore, we may fail to make accurate financial forecasts.  Our current and future expense levels are based largely on our investment plans and estimates of future revenue.  As a result, we may be unable to adjust our spending in a timely manner to compensate for any unexpected revenue shortfall, which could then force us to curtail or cease our business operations.


- 8 -



Our Losses Raise Doubt As To Whether We Can Continue As A Going Concern.


We had cumulative operating losses through January 31, 2018 of $9,060,663 and had a working capital deficit at January 31, 2018 of $2,830,241.  These factors among others indicate that we may be unable to continue as a going concern, particularly in the event that we cannot generate revenues, obtain additional financing and/or obtain profitable operations. As such, there is substantial doubt as to our ability to continue as a going concern.  The accompanying financial statements do not include any adjustments that might result from the outcome of this uncertainty and if we cannot continue as a going concern, your investment in us could become devalued or worthless.


Our Industry Is Highly Competitive.


The Company’s industry is highly competitive and fragmented. The Company expects competition to intensify in the future. The Company competes in its market with numerous national, regional and local companies, many of which have substantially greater financial, managerial and other resources than those presently available to the Company. Numerous well-established companies are focusing significant resources on providing services that currently compete and will compete with the Company’s services in the future.  Although we believe that there is a need for a “niche” business, such as ours, the Company can make no assurance that it will be able to effectively compete with these other companies that may enter the market of Nurses Lounge. In the event that the Company cannot effectively compete on a continuing basis or competitive pressures arise, such inability to compete or competitive pressures will have a material adverse effect on the Company’s business, results of operations and financial condition.


The Success Of The Company Depends Heavily On Timothy Armes, Our Sole Director and Chief Executive Officer.


The success of the Company will depend on the ability of Timothy Armes, our sole director and Chief Executive Officer.  The loss of Mr. Armes will have a material adverse effect on the business, results of operations (if any) and financial condition of the Company.  In addition, the loss of Mr. Armes may force the Company to seek a replacement who may have less experience, fewer contacts, or less understanding of the business.   Further, we may not be able to find a suitable replacement for Mr. Armes, which could force the Company to curtail its operations and/or cause any investment in the Company to become worthless.


In The Future We May Be Subject To Intellectual Property Rights Claims Which Are Costly To Defend, Could Require Us To Pay Damages, And Could Limit Our Ability To Use Certain Technologies In The Future.


Companies in the Internet, technology and media industries own large numbers of patents, copyrights, trademarks and trade secrets and frequently enter into litigation based on allegations of infringement or other violations of intellectual property rights. Our future technologies may not be able to withstand any third-party claims or rights against their use. Any intellectual property claims, with or without merit, could be time-consuming, expensive to litigate or settle and could divert management resources and attention. An adverse determination also could prevent us from offering our services to others.


With respect to any intellectual property rights claim, we may have to pay damages or stop using technology found to be in violation of a third party’s rights. We may have to seek a license for the technology, which may not be available on reasonable terms and may significantly increase our operating expenses. The technology also may not be available for license to us at all. As a result, we may also be required to develop alternative non-infringing technology, which could require significant effort and expense. If we cannot license or develop technology for the infringing aspects of our business, we may be forced to limit our product and service offerings and may be unable to compete effectively. Any of these results could harm our brand and operating results.


Privacy Concerns Relating To Elements Of Our Technology Could Damage Our Reputation And Deter Current And Potential Users From Using Our Products And Services.


From time to time, concerns may be expressed about whether our future technology compromises the privacy of users and others. Concerns about our collection, use or sharing of personal information or other privacy-related matters, even if unfounded, could damage our reputation and operating results.


More Individuals Are Using Non-Pc Devices To Access The Internet, And Our Future Technology May Not Be Widely Adopted By Users Of These Devices.


The number of people who access the Internet through devices other than personal computers, including mobile telephones, hand-held calendaring and email assistants, and television set-top devices, has increased dramatically in the past few years. The lower resolution, functionality and memory associated with alternative devices of our websites may not perform well for these non-PC devices, which may greatly limit the marketability of our website to this increasingly important non-PC device portion of the market for online services.


- 9 -



We May Rely On Insurance In The Future To Mitigate Some Risks And, To The Extent The Cost Of Insurance Increases Or We Are Unable Or Choose Not To Maintain Sufficient Insurance To Mitigate The Risks Facing Our Business, Our Operating Results May Be Diminished.


We currently plan to contract for insurance to cover certain potential risks and liabilities. In the current environment, insurance companies are increasingly specific about what they will and will not insure. It is possible that we may not be able to get enough insurance to meet our needs, may have to pay very high prices for the coverage we do get or may not be able to acquire any insurance for certain types of business risk. In addition, we may choose not to obtain insurance for certain risks facing our business. This could leave us exposed to potential claims. If we were found liable for a significant claim in the future, our operating results could be negatively impacted. Also, to the extent the cost of maintaining insurance increases, our operating results will be negatively affected.


We Have To Keep Up With Rapid Technological Change To Remain Competitive In Our Rapidly Evolving Industry.


Our future success will depend on our ability to implement our plans, adapt to rapidly changing technologies and evolving industry standards to improve the performance and reliability of our services. Our failure to adapt to such changes would harm our business. New technologies and advertising media could adversely affect us. In addition, the widespread adoption of new Internet, networking or telecommunications technologies or other technological changes could require substantial expenditures to modify or adapt our future technology for these changing demands.


Nurses Lounge Has Not Produced Significant Revenue To Date.


Nurses Lounge has not generated significant revenue to date. Although the Company is optimistic about the potential for such website to generate revenues, there is no assurance that the Company will be successful in its endeavors or will be able to create a successful revenue generating operation, or that Nurses Lounge will generate sufficient revenues to allow us to support our operations.  As such, we may never generate significant revenue and our securities may decline in value or become worthless.


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 Other Internet Job Posting Websites.


Although the Company does not intend to utilize nurseslounge.com in a manner to directly compete with established job posting websites, the Company acknowledges that we face competition in every aspect of our planned business, and particularly from other companies that seek to connect people with jobs and employers with employees through the use of the Internet, including, but not limited to Monster.com and Careerbuilder.com, niche healthcare sites such as Nurse.com and HealtheCareers, aggregator sites such as Indeed.com and Simplyhired.com and other Internet job sites  We will also compete with companies, including recruiting search firms, as well as newspapers, magazines and other traditional media companies that provide online job search services, such as CareerPath.com. We also compete with large Internet information hubs, or portals, such as AOL.com, Google.com, Yahoo.com and Bing.com.  Finally, we compete with “communities” that claim to provide nurses with news, career advice and social interaction, and include Nurse.com - owned by OnCourse Learning; 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 competes with other websites that encourage users to create connections with other colleagues and persons with similar interests such as LinkedIn and Facebook.


We may also experience competition in the future from potential customers to the extent that they develop their own services internally.  All of those companies and potential competitors will likely have more employees, more resources, better brand recognition, and longer operating histories than we do. Although it is not the Company’s intent to operate a website that competes with these established brands, we may be unable to compete with these and other websites in the efforts to draw Internet traffic to our websites in the future, which could force us to curtail our business plan or operations, which would ultimately cause the value of our securities to decline in value or become worthless.


Our Intellectual Property Rights Are Valuable, And Any Inability To Protect Them Could Reduce The Value Of Our Products, Services And Brand.


Currently, the fees to retain the use of our domain names are relatively immaterial, but if the classification of domain names were to change and the costs of securing the attendants rights to domain names were to become significant or if registrations for domain names were to significantly increase, the Company could be in a position where it could not afford to maintain its rights to its domain names.  Although the Company does not anticipate this to occur, any significant increase in these types of costs could harm our business or our ability to protect our ownership rights and could make it more expensive to do business and harm our operating results, if any.


- 10 -



We Face Risks In Connection With Changes In The Industry That Currently Exist That Allow Websites To Generate Revenue From A Variety Of Means Such As Pay Per Click; Keyword Purchases; Paid Search Results; Revenue Sharing From Advertising; And Banner Ads.


Currently, websites are able to generate revenue from a variety of uses and services.  To the extent any of these uses become more limited or there is a trend away from online commercial activity to any degree or there is a greater shift in the economic environment away from Internet based businesses, the Company’s prospects and plans can be diminished or made infeasible.  Any of these conditions could make the Company’s ability to operate more difficult and could have an adverse effect on the Company’s securities.


Our Planned Future Operations Could Be Hindered By The Slow Economic Recovery.


The online job and employment recruitment industry is largely dependent on the demand for such employees and the general economic conditions, including the unemployment rate in the United States and internationally.  Due to the fact that the United States and several other international countries are currently in a slow economic recovery from the last recession, demand for online recruitment offerings and the recruitment of healthcare workers in general, may be significantly and adversely affected by the level of economic activity, demand for healthcare workers and the level of unemployment in the United States and abroad. A further prolonged economic recovery could cause employers to reduce or postpone their recruiting efforts generally and their online recruiting efforts in particular, which could have adverse effects on our planned business, future results of operations and financial condition, which could be materially and adversely affected.


We May Be Unable To Build Awareness Of The “Nurses Lounge” Brand Name.


We believe that building awareness of the “Nurses Lounge” brand name is critical to achieving widespread acceptance of our services. Brand recognition is a key differentiating factor among providers of online recruitment offerings and other services and we believe it could become more important as competition increases. Moving forward, funding permitting, we may find it necessary to spend significant funds on our sales and marketing efforts or otherwise increase our financial commitment, if any, to creating and maintaining brand awareness among potential customers. If we fail to successfully promote and maintain our brand or incur significant expenses in promoting our brand, our business, results of operations and financial condition could be materially and adversely affected.


Our Future Business Will Be Dependent On the Development and Maintenance of the Internet Infrastructure.


Our success will depend, in large part, upon the development and maintenance of the Internet infrastructure as a reliable network backbone with the necessary speed, data capacity and security, and timely development of enabling products, for providing reliable Internet access and services. We cannot assure you that the Internet infrastructure will continue to effectively support the demands placed on it as the Internet continues to experience increased numbers of users, greater frequency of use or increased bandwidth requirements of users. Even if the necessary infrastructure or technologies are developed, we may have to spend considerable resources to adapt our offerings accordingly. Furthermore, in the past, the Internet has experienced a variety of outages and other delays. Any future outages or delays could affect our ability to maintain and operate our websites and the willingness of employers and job seekers to use our future online recruitment offering. If any of these events occur, our business, results of operations and financial condition could be materially and adversely affected.


Breaches Of Internet Security Could Adversely Affect Our Business Operations.


The need to securely transmit confidential information over the Internet has been a significant barrier to electronic commerce and communications over the Internet. Any well-publicized compromise of security on the Internet could deter more people from using the Internet or from using it to conduct transactions that involve transmitting confidential information, such as a job seeker’s resume or an employer’s hiring needs. We may be required to incur significant costs to protect against the threat of security breaches to our websites in the future or to alleviate problems caused by such breaches. If any of these events occur, our business, results of operations and financial condition could be materially and adversely affected.


We May Be Liable For Information Retrieved From Or Transmitted Over The Internet.


We may be sued for defamation, negligence, copyright or trademark infringement, personal injury or other legal claims relating to information that is published or made available on our website. These types of claims have been brought, sometimes successfully, against online services in the past. We could also be sued for the content that is accessible from our websites through links to other Internet sites or through content and materials that may be posted by employers or job seekers. In addition, we could incur significant costs in investigating and defending such claims, even if we ultimately are not found liable. If any of these events occur, our business, results of operations and financial condition could be materially and adversely affected.


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Our Growth Will Place Significant Strains On Our Resources.


The Company’s growth, if any, is expected to place a significant strain on the Company’s managerial, operational and financial resources as the Company only has two officers and a small number of employees and the Company will likely continue to have limited employees in the future.  Furthermore, assuming the Company receives clients, it will be required to manage multiple relationships with various clients and other third parties. These requirements will be exacerbated in the event of further growth of the Company or in the number of its clients. There can be no assurance that the Company’s systems, procedures or controls will be adequate to support the Company’s operations or that the Company will be able to achieve the rapid execution necessary to successfully offer its services and implement its business plan. The Company’s future operating results, if any, will also depend on its ability to add additional personnel commensurate with the growth of its business, if any. If the Company is unable to manage growth effectively, the Company’s business, results of operations and financial condition will be adversely affected.


Our Articles Of Incorporation, As Amended, And Bylaws Limit The Liability Of, And Provide Indemnification For, Our Officers And Directors.


Our Articles of Incorporation, generally limit our officers’ and directors’ personal liability to the Company and its stockholders for breach of fiduciary duty as an officer or director except for breach of the duty of loyalty or acts or omissions not made in good faith or which involve intentional misconduct or a knowing violation of law. Our Articles of Incorporation, as amended, and Bylaws provide indemnification for our officers and directors to the fullest extent authorized by the Nevada Revised Statutes against all expense, liability, and loss, including attorney’s fees, judgments, fines excise taxes or penalties and amounts to be paid in settlement reasonably incurred or suffered by an officer or director in connection with any action, suit or proceeding, whether civil or criminal, administrative or investigative (hereinafter a “Proceeding”) to which the officer or director is made a party or is threatened to be made a party, or in which the officer or director is involved by reason of the fact that he or she is or was an officer or director of the Company, or is or was serving at the request of the Company as an officer or director of another corporation or of a partnership, joint venture, trust or other enterprise whether the basis of the Proceeding is alleged action in an official capacity as an officer or director, or in any other capacity while serving as an officer or director. Thus, the Company may be prevented from recovering damages for certain alleged errors or omissions by the officers and directors for liabilities incurred in connection with their good faith acts for the Company.  Such an indemnification payment might deplete the Company’s assets. Stockholders who have questions respecting the fiduciary obligations of the officers and directors of the Company should consult with independent legal counsel. It is the position of the Securities and Exchange Commission that exculpation from and indemnification for liabilities arising under the Securities Act of 1933, as amended and the rules and regulations thereunder is against public policy and therefore unenforceable.


As We Are A Public Reporting Company, We Will Incur Significant Costs In Connection With Compliance With Section 404 Of The Sarbanes Oxley Act, And Our Management Will Be Required To Devote Substantial Time To New Compliance Initiatives.


We are subject to among other things, the periodic reporting requirements of the Securities Exchange Act of 1934, as amended (provided however that we are currently deficient in our filing obligations), and will incur significant legal, accounting and other expenses in connection with such requirements.  The Sarbanes-Oxley Act of 2002 (the “Sarbanes-Oxley Act”) and new rules subsequently implemented by the SEC have imposed various new requirements on public companies, including requiring changes in corporate governance practices. As such, our management and other personnel will need to devote a substantial amount of time to these new compliance initiatives. Moreover, these rules and regulations will increase our legal and financial compliance costs and will make some activities more time-consuming and costly. In addition, the Sarbanes-Oxley Act requires, among other things, that we report on the effectiveness of our internal controls for financial reporting and disclosure of controls and procedures. Our compliance with Section 404 will require that we incur additional accounting expense and expend significant management efforts. We currently do not have an internal audit group, and we will need to hire additional accounting and financial staff with appropriate public company experience and technical accounting knowledge to have effective internal controls for financial reporting. Additionally, due to the fact that we only have two persons who serve as our officers and directors, who have no experience as officers or directors of a reporting company, such lack of experienced personnel may impair our ability to maintain effective internal controls over financial reporting and disclosure controls and procedures, which may result in material misstatements to our financial statements and an inability to provide accurate financial information to our stockholders. Moreover, if we are not able to comply with the requirements of Section 404 in a timely manner, or if we or our independent registered public accounting firm identify deficiencies in our internal controls over financial reporting that are deemed to be material weaknesses, the market price of our stock could decline, and we could be subject to sanctions or investigations by the SEC or other regulatory authorities, which would require additional financial and management resources.


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The Market for Our Common Stock is Illiquid, Sporadic and Subject to Wide Fluctuations.


Our common stock currently trades on the OTC Pink under the symbol “MCGI” and historically only a limited number of shares of our common stock have traded.  There may not be an active public market for our common stock in the future. If there is an active market for our common stock in the future, we anticipate that such market would be illiquid and would be subject to wide fluctuations in response to several factors, including, but not limited to:


 

(1)

actual or anticipated variations in our results of operations;

 

(2)

our ability or inability to generate new revenues;

 

(3)

the number of shares in our public float;

 

(4)

increased competition; and

 

(5)

conditions and trends in our industry, and possible healthcare legislation; and

 

(6)

future acquisitions we may make.


Furthermore, our stock price may be impacted by factors that are unrelated or disproportionate to our operating performance. These market fluctuations, as well as general economic, political and market conditions, such as recessions, interest rates or international currency fluctuations may adversely affect the market price of our common stock.  Additionally, moving forward we anticipate having a limited number of shares in our public float, and as a result, there could be extreme fluctuations in the price of our common stock.  Further, due to the limited volume of our shares which trade and our limited public float, we believe that our stock prices (bid, ask and closing prices) will be entirely arbitrary, will not relate to the actual value of the Company, and will not reflect the actual value of our common stock.  Shareholders and potential investors in our common stock should exercise caution before making an investment in the Company, and should not rely on the publicly quoted or traded stock prices in determining our common stock value, but should instead determine the value of our common stock based on the information contained in the Company’s public reports, industry information, and those business valuation methods commonly used to value private companies.


Investors May Face Significant Restrictions On The Resale Of Our Common Stock Due To Federal Regulations Of Penny Stocks.


Our common stock will be subject to the requirements of Rule 15g-9, promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”) as long as the price of our common stock is below $5.00 per share. Under such rule, broker-dealers who recommend low-priced securities to persons other than established customers and accredited investors must satisfy special sales practice requirements, including a requirement that they make an individualized written suitability determination for the purchaser and receive the purchaser’s consent prior to the transaction. The Securities Enforcement Remedies and Penny Stock Reform Act of 1990, also requires additional disclosure in connection with any trades involving a stock defined as a penny stock. Generally, the Commission defines a penny stock as any equity security not traded on an exchange or quoted on NASDAQ that has a market price of less than $5.00 per share. The required penny stock disclosures include the delivery, prior to any transaction, of a disclosure schedule explaining the penny stock market and the risks associated with it. Such requirements could severely limit the market liquidity of the securities and the ability of purchasers to sell their securities in the secondary market.


In addition, various state securities laws impose restrictions on transferring “penny stocks” and as a result, investors in the common stock may have their ability to sell their shares of the common stock impaired.


Shareholders May Be Diluted Significantly Through Our Efforts To Obtain Financing And Satisfy Obligations Through The Issuance Of Additional Shares Of Our Common Stock.


We have no committed source of financing. Wherever possible, our Board of Directors will attempt to use non-cash consideration to satisfy obligations. In many instances, we believe that the non-cash consideration will consist of restricted shares of our common stock. Our Board of Directors has authority, without action or vote of the shareholders, to issue all or part of the authorized but unissued shares of common stock. In addition, if a trading market develops for our common stock, we may attempt to raise capital by selling shares of our common stock, possibly at a discount to market. These actions will result in dilution of the ownership interests of existing shareholders, may further dilute common stock book value, and that dilution may be material. Such issuances may also serve to enhance existing management’s ability to maintain control of the Company because the shares may be issued to parties or entities committed to supporting existing management.


- 13 -



State Securities Laws May Limit Secondary Trading, Which May Restrict The States In Which And Conditions Under Which You Can Sell Shares.


Secondary trading in our common stock may not be possible in any state until the common stock is qualified for sale under the applicable securities laws of the state or there is confirmation that an exemption, such as listing in certain recognized securities manuals, is available for secondary trading in the state. If we fail to register or qualify, or to obtain or verify an exemption for the secondary trading of the common stock in any particular state, the common stock could not be offered or sold to, or purchased by, a resident of that state. In the event that a significant number of states refuse to permit secondary trading in our common stock, the liquidity for the common stock could be significantly impacted.


Because We Are Not Subject To Compliance With Rules Requiring The Adoption Of Certain Corporate Governance Measures, Our Stockholders Have Limited Protections Against Interested Director Transactions, Conflicts Of Interest And Similar Matters.


The Sarbanes-Oxley Act of 2002, as well as rule changes proposed and enacted by the SEC, the New York and American Stock Exchanges and the Nasdaq Stock Market, as a result of Sarbanes-Oxley, require the implementation of various measures relating to corporate governance. These measures are designed to enhance the integrity of corporate management and the securities markets and apply to securities that are listed on those exchanges or the Nasdaq Stock Market. Because we are not presently required to comply with many of the corporate governance provisions and because we chose to avoid incurring the substantial additional costs associated with such compliance any sooner than legally required, we have not yet adopted these measures.


Because our sole director is not independent, we do not currently have independent audit or compensation committees. As a result, our sole director has the ability to, among other things; determine his own level of compensation. Until we comply with such corporate governance measures, regardless of whether such compliance is required, the absence of such standards of corporate governance may leave our stockholders without protections against interested director transactions, conflicts of interest, if any, and similar matters and any potential investors may be reluctant to provide us with funds necessary to expand our operations.


We intend to comply with all corporate governance measures relating to director independence as and when required. However, we may find it very difficult or be unable to attract and retain additional qualified officers, directors and members of board committees required to provide for our effective management as a result of the Sarbanes-Oxley Act of 2002. The enactment of the Sarbanes-Oxley Act of 2002 has resulted in a series of rules and regulations by the SEC that increase responsibilities and liabilities of directors and executive officers. The perceived increased personal risk associated with these recent changes may make it more costly or deter qualified individuals from accepting these roles.


Item 1B.  Unresolved Staff Comments.


Not applicable.


Item 2.  Properties.


Executive Offices


The Company maintains its executive offices of approximately 300 sq. ft., at 3170 Getwell Ln, Olive Branch, MS 38654 in the home of the President and CEO for which it pays no rent. The Company and the CEO moved the office to 6515 Goodman Rd., #258, Olive Branch, Mississippi 38654 in July 2018. The Company plans to lease office space when their operations require it and funding permits.


Item 3.  Legal Proceedings.


None.


Item 4.  Mine Safety Disclosures.


None.


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PART II


Item 5.  Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.


The Company’s common stock is traded on the OTC Pink market (otherwise known as the “pink sheets”) maintained by OTC Markets under the symbol “MCGI”.  The following table sets forth, for the periods indicated, the high and low sales prices, which set forth reflect inter-dealer prices, without retail mark-up or mark-down and without commissions; and may not reflect actual transactions.


Calendar Quarter Ending

Low

High

 

 

 

January 31, 2018

0.0001

0.0013

October 31, 2017

0.0003

0.0005

July 31, 2017

0.0003

0.0005

April 31, 2017

0.0003

0.0005

 

 

 

January 31, 2017

0.0003

0.0004

October 31, 2016

0.0002

0.0005

July 31, 2016

0.0003

0.0005

April 31, 2016

0.0005

0.0008


No cash dividends on the Company common stock have been declared or paid since the Company’s inception. The Company had approximately 80 shareholders at August 15, 2018. This does not include shareholders that hold their shares in street name or with a broker.


Recent Sales of Unregistered Securities


Preferred Stock


On January 26, 2016, pursuant to the rights available under the Articles of Incorporated, as amended from time to time, the Board of Directors of MedCareers, Inc. (the “Company”) authorized the issuance of 1,000 shares of to be designated Series B Preferred shares as payment incentive for continued employment to Timothy Armes, the Company’s Chief Executive Officer.  The issuance was confirmed by the shareholders of the Company, though no shareholder approval was required, on January 13, 2016. The issuance could not be deemed effective until a formal designation was accepted by the state of Nevada.  On April, 27, 2016, the designation of a series of Preferred A stock and a series B Preferred stock was stamped as accepted by the state of Nevada, upon which the issuance of 1,000 shares of Series B Preferred shares to Timothy Armes was deemed effective.


The Company relied upon an exemption from registration in accordance with Section 4(2) of the Securities Act of 1933.


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Common Stock


 

Consideration

 

Date

 

# Shares

Balance, Number of shares outstanding, January 31, 2016

 

 

 

 

454,838,100

Common stock at issued fifty percent discount to market per note conversion agreement

Convert a portion of note payable

(1)

Feb 5, 2016

 

27,525,867

Common stock at issued fifty percent discount to market per note conversion agreement

Convert a portion of note payable

(2)

Mar 11, 2016

 

43,328,767

Common stock at issued fifty percent discount to market per note conversion agreement

Convert a portion of note payable

(3)

May 10, 2016

 

35,962,743

Number of shares outstanding, January 31, 2017

 

 

 

 

561,655,477

Common stock at issued fifty percent discount to market per note conversion agreement

Convert a portion of note payable

(4)

Nov 15, 2017

 

55,938,667

Common stock at issued fifty percent discount to market per note conversion agreement

Convert a portion of note payable

(5)

Nov 29, 2017

 

61,429,041

Common stock at issued fifty percent discount to market per note conversion agreement

Convert a portion of note payable

(6)

Dec 8, 2017

 

61,455,342

Common stock at issued fifty percent discount to market per note conversion agreement

Convert a portion of note payable

(7)

Jan 19, 2018

 

34,000,000

Accrued expenses converted to common stock – related party

Convert a portion of accrued expense

(8)

Jan 31, 2018

 

30,000,000

Accrued expenses converted to common stock – related party

Convert a portion of accrued expense

(9)

Jan 31, 2018

 

15,000,000

Accrued expenses converted to common stock

Convert a portion of accrued expense

(10)

Jan 31, 2018

 

10,000,000

Common stock issued for services

Services

(11)

Jan 31, 2018

 

10,000,000

Common stock issued for services

Services

(12)

Jan 31, 2018

 

1,000,000

Number of shares outstanding, January 31, 2018

 

 

 

 

840,478,527


(1) Partial conversion of Note that had a conversion feature at 52% of market price per share. These shares were issued for the conversion of $4,000 of the note and $129 in accrued interest.


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) Partial conversion of Note that had a conversion feature at 50% of market price per share. These shares were issued for the conversion of $12,500 of the note and $499 of accrued interest.


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.


(3) Partial conversion of Note that had a conversion feature at 52% of market price per share. These shares were issued for the conversion of $4,000 of the note and $2,293 in accrued interest.


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) Partial conversion of Note that had a conversion feature at 52% of market price per share. These shares were issued for the conversion of $6,050 of the note and $2,341 in accrued interest.


- 16 -



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) Partial conversion of Note that had a conversion feature at 52% of market price per share. These shares were issued for the conversion of $4,400 of the note and $1,743 in accrued interest.


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) Partial conversion of Note that had a conversion feature at 52% of market price per share. These shares were issued for the conversion of $4,400 of the note and $1,745 in accrued interest.


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) Partial conversion of Note that had a conversion feature at 50% of market price per share. These shares were issued for the conversion of $2,550 of 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.


(8) Partial conversion of related party accrued expenses. These shares were issued for the conversion of $2,250 of the accrued expenses.


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) Partial conversion of related party accrued expenses. These shares were issued for the conversion of $1,125 of the accrued expenses.


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) Partial conversion of accrued expenses. These shares were issued for the conversion of $750 of the accrued expenses.


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) Common stock issued for services valued at $3,000.


- 17 -



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) Common stock issued for services valued at $300.


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


The Company had the following options or warrants outstanding at January 31, 2018:


Issued To

# Options

Dated

Expire

Strike Price

Lender (1)

3,500,000

07/02/2014

07/01/2019

$0.10 per share


(1) Option for 3,500,000 common shares granted to a lender as part of the loan transaction. The options have a strike price of $0.10 per share and expire on July 1, 2019.


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.


EQUITY COMPENSATION PLAN INFORMATION


The Company has no shareholder approved compensation plans.


Item 6.  Selected Financial Data.


Not applicable.


Item 7.  Management’s Discussion and Analysis of Financial Condition and Results of Operations.


Recent Activity


At the end of our fiscal year end and through this filing we have concentrated further development of our network into a talent acquisition platform for hiring nurses as well as the launch of a searchable nursing degree program directory.


Based on interest to date, we believe that by FYE 2020 we can have the largest searchable nursing degree program directory on the internet. As of this filing, we have approximately 400 degree plans listed by some of the largest nursing schools in the country. The majority of the degree plans listed are for graduate degrees as well as online RN to BSN degree programs.


We plan to monetize the directory by selling advertising packaging to schools which include banner ads, email campaigns as well as sponsorships of degree plans by category. To date we have sold ad campaigns ranging between $1,500 and $4,000.


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, we plan to be current with all required filings including the April 30, 2018 and July 31, 2018 Form 10-Q’s. With the completion of this process coming to a close, we are presently looking at various strategic options to enhance shareholder value, including the option of selling our subsidiary, which could relieve the Company of much of its debt.


- 18 -



Acquisition


On June 18, 2018, the Company entered into a Binding Letter of Intent (“Binding LOI”), with The 4Less Corp. (“4Less”). The Company will acquire all of the issued and outstanding shares of common stock of 4Less. The Company shall issue (1) 19,000 shares of Series B preferred stock (2) 6,750 shares of Series C preferred stock (3) 750 shares of Series D preferred stock to shareholders and pay $150,000 to 4Less within 15 days of execution of this Binding LOI. Timothy Armes, CEO of the Company, agreed to return 60,000,000 shares of common stock of the Company in exchange for 120 shares of Series D preferred stock at the time of execution of the definitive agreement.


Results of Operations For the Year Ended January 31, 2018 compared to the year ended January 31, 2017


We had revenue of $36,416 for the year ended January 31, 2018, compared to $30,414 for the year ended January 31, 2017.  We had total cost of revenues of $0 for the year ended January 31, 2018, compared to cost of revenues of $2,945 for the year ended January 31, 2017.


We had total operating expenses of $393,821 for the year ended January 31, 2018, consisting of $3,872 of selling and marketing expenses and $389,949 of general and administrative expenses, which included $300 of stock issued for services.  For the year ended January 31, 2017, we had total operating expenses of $312,543, consisting of $27,831 of selling and marketing expenses and $284,712 of general and administrative expenses.


We had total other expense of $543,257 for the year ended January 31, 2018, consisting of interest expense of $226,516, loss on derivatives of $149,008, amortization of debt discount of $79,052, loss on note conversions of $51,900, and loss on debt extinguishment of $36,781.


We had total other income of $80,818 for the year ended January 31, 2017, consisting of interest expense of $119,951, gain on derivatives of $358,442, amortization of debt discount of $152,940 and amortization of deferred financing costs of $4,733.


We had a net loss of $900,662 for the year ended January 31, 2018, compared to a net loss of $204,256 for the year ended January 31, 2017.


Liquidity and Capital Resources


As of January 31, 2018, the Company had total current assets of $2,830, consisting of cash. We had total liabilities of $2,912,514, made up of accounts payable of $44,342, accrued expenses of $215,591, accrued expenses to related parties of $292,415, deferred revenue of $14,496, accrued interest payable of $527,831, derivative liabilities of $760,788 and $1,057,051 of short term debt net of debt discounts and deferred financing costs of $46,788. We had negative working capital of $2,909,684 as of January 31, 2018.


Net cash used in operations for the year ended January 31, 2018 was $54,737 compared to $103,844 for the year ended January 31, 2018.


Cash provided by financing activities for the year ended January 31, 2018 was $56,411 compared to $105,000 for the year ended January 31, 2017. In both years the cash provided from financing activities was from the net proceeds of notes payable.


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 to meet its contractual obligations and its ongoing monthly expenses, which the Company anticipates totaling approximately $360,000 over the next 12 months.  Historically, revenues have not been sufficient to cover operating costs that would permit the Company to continue as a going concern. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. The Company has been able to continue operating to date largely from loans made by its shareholders, other debt financings and sale of common stock.  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.  Until 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, until necessary financing is secured.  The Company generates revenue from the Nurses Lounge business, which the Company hopes will increase to the point where the Company can finance at least a substantial portion of the Company’s obligations, of which there can be no assurance.


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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.


Acquisition


On June 18, 2018, the Company entered into a Binding Letter of Intent (“Binding LOI”), with The 4Less Corp. (“4Less”). The Company will acquire all of the issued and outstanding shares of common stock of 4Less. The Company shall issue (1) 19,000 shares of Series B preferred stock (2) 6,750 shares of Series C preferred stock (3) 750 shares of Series D preferred stock to shareholders and pay $150,000 to 4Less within 15 days of execution of the Binding LOI. The amount was subsequently reduced to $110,000 by verbal agreement between the parties. The Company paid the $110,000 in June 2018. Timothy Armes, CEO of the Company, agreed to return 60,000,000 shares of common stock of the Company in exchange for 120 shares of Series D preferred stock at the time of execution of the definitive agreement. The parties agreed to enter into mutually agreeable definitive agreement for the closing of the transaction within 120 days of the execution of this Binding LOI.


Item 7A.  Quantitative and Qualitative Disclosures 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 8.  Financial Statements and Supplementary Data.


The Company’s consolidated financial statements, together with the report of the independent registered public accounting firm thereon and the notes thereto, are presented beginning at page F-1. The Company’s balance sheets as of January 31, 2018 and 2017 and the related statements of operations, changes in stockholders’ deficit and cash flows for the years then ended have been audited by independent registered public accounting firms Marcum, LLP and MaloneBailey, LLP respectively. These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and pursuant to Regulation S-K as promulgated by the Securities and Exchange Commission and are included herein pursuant to Part II, Item 8 of this Form 10-K. The financial statements have been prepared assuming the Company will continue as a going concern.


Table of Contents of Financial Statements


 

Report of Independent Registered Public Accounting Firm

F-1

 

 

 

 

Consolidated Balance Sheets as of January 31, 2018 and 2017

F-3

 

 

 

 

Consolidated Statements of Operations for the Years Ended January 31, 2018 and 2017

F-4

 

 

 

 

Consolidated Statement of Changes in Stockholders’ Deficit for the Years Ended January 31, 2018 and 2017

F-5

 

 

 

 

Consolidated Statements of Cash Flows for the Years Ended January 31, 2018 and 2017

F-6

 

 

 

 

Notes to the Consolidated Financial Statements for the Years Ended January 31, 2018 and 2017

F-7


Item 9.  Changes in and Disagreements with Accountants on Accounting and Financial Disclosure.


None.


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Item 9A.  Controls and Procedures.


Evaluation of Disclosure on Controls and Procedures


We carried out an evaluation of the effectiveness of the design and operation of our disclosure controls and procedures (as defined in Exchange Act Rules 13a-15(e) and 15d-15(e)) as of January 31, 2017. This evaluation was accomplished under the supervision and with the participation of our Chief Executive Officer (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer) who concluded that 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 (Principal Executive Officer) and Chief Financial Officer (Principal Financial Officer), as appropriate, to allow timely decisions regarding required disclosure.


We have identified the following weaknesses:


     •     Reliance upon independent financial reporting consultants for review of critical accounting areas and disclosures and material non-standard transaction


     •     Lack of sufficient accounting staff which results in a lack of segregation of duties necessary for a good system of internal control, and lack of accounting personnel with experience in SEC reporting and U.S. GAAP.


In order to remedy our existing internal control deficiencies, as our finances allow, we will hire additional accounting staff.


Management’s Annual Report on Internal Control Over Financial Reporting


Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as such term is defined in Rules 13a-15(f) and 15d-15(f) of the Exchange Act. Our internal control system was designed to provide reasonable assurance regarding the reliability of financial reporting and the preparation of financial statements for external purposes, in accordance with generally accepted accounting principles in the United States of America. Our internal control over financial reporting includes those policies and procedures that (i) pertain to the maintenance records that, in reasonable detail, accurately and fairly reflect the transactions and dispositions of the assets of the Company; (ii) provide reasonable assurance that transactions are recorded as necessary to permit preparation of financial statements in accordance with accounting principles generally accepted in the United States of America, and that receipts and expenditures of the Company are being made only in accordance with authorizations of management of the Company; and (iii) provide reasonable assurance regarding prevention or timely detection of unauthorized acquisition, use, or disposition of the Company’s assets that could have a material effect on the financial statements.


Because of inherent limitations, a system of internal control over financial reporting may not prevent or detect misstatements. Also, projections of any evaluation of effectiveness to future periods are subject to the risk that controls may become inadequate due to change in conditions, or that the degree of compliance with the policies or procedures may deteriorate.


Our management conducted an evaluation of the effectiveness of our internal control over financial reporting using the criteria set forth by the Committee of Sponsoring Organizations of the Treadway Commission (COSO) in Internal Control—Integrated Framework at January 31, 2018. Based on its evaluation, our management concluded that, as of January 31, 2018, our internal control over financial reporting was not effective because of limited staff and a need for a full time chief financial officer and the identification of the material weaknesses described above.  A material weakness is a deficiency, or a combination of control deficiencies, in internal control over financial reporting such that there is a reasonable possibility that a material misstatement of the Company’s annual or interim financial statements will not be prevented or detected on a timely basis.


This annual report does not include an attestation report of the Company’s registered public accounting firm regarding internal control over financial reporting.  Management’s report was not subject to the attestation by the Company’s registered public accounting firm pursuant to rules of the SEC that permit the Company to provide only management’s report in this annual report.


Changes in Internal Controls 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.


Item 9B. Other Information


None.


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PART III


Item 10.  Directors, Executive Officers and Corporate Governance.


The following table lists the names and ages of the executive officers and director of the Company.  The director(s) will continue to serve until the next annual shareholders meeting, or until their successors are elected and qualified. All officers serve at the discretion of the Board of Directors.


Name

 

Age

 

Position

 

Date First Appointed/ Elected To the Company

Timothy Armes

 

62

 

Chairman, Chief Executive Officer, President, Secretary and Treasurer and President and Chief Executive Officer of Medcareers

 

August 2011

 

 

 

 

 

 

 

 

 

 

 

Chairman, Chief Executive Officer, President, Secretary and Treasurer and President and Chief Executive Officer of Nurses Lounge

 

September 2006

 

 

 

 

 

 

 

Garret Armes

 

33

 

Vice President of Nurses Lounge

 

November 18, 2009


Timothy Armes. Mr. Armes has served as President and Chief Executive Officer of Medcareers since August 2011 and of Nurses Lounge since September 2002.  From February 2011 to August 2011, Mr. Armes served as the Chief Operating Officer of the Company.  Since August 2011, Mr. Armes has served as the Chairman, Chief Executive Officer, President, Secretary and Treasurer of the Company. Mr. Armes began his career in recruiting when he entered the career fair business in 1987. In 1992 Mr. Armes launched one of the first online job bulletin boards which eventually grew into jobs.com. As CEO of Jobs.com he raised over 100 million dollars and grew it into one of the top employment web sites before leaving the company in May of 2000.  Prior to entering the career fair business, Mr. Armes began his career as an auditor for Ernst and Young and then as a real estate workout specialist with different firms in the mid 1980’s. Mr. Armes obtained a Bachelor of Business Administration degree in Accounting from the University of Texas in 1980 and is a Certified Public Accountant.


Director Qualifications:


The Company believes that Mr. Armes is well qualified to serve as a Director of the Company because of his significant experience working with and building Nurses Lounge (which since November 2010, has been our wholly-owned operating subsidiary); his prior experience growing Jobs.com, and his financial and accounting background.


Garret Armes. Has served as the Vice President of Nurses Lounge since November 18, 2010 and as Vice President of Nurses Lounge since the launch of the Nurses Lounge network in March 2009.  Garret is a 2008 graduate of the University of North Texas with a Bachelor of Arts in Advertising and a Minor in Marketing. Upon graduation Garret assumed several responsibilities with Nurses Lounge. When Nurses Lounge magazine was in circulation he created in-house ads, wrote articles, assisted with layout, and managed the distribution lists. Garret led the transition of the website from a portal into a professional network for nurses including design and re-launching of the site as well as the day-to-day administration. Responsibilities range from creating banner ads, writing articles and press releases, sales and support, web development and design, as well as lead community administrator.  Garret Armes is the son of Timothy Armes.


Corporate Governance


The Company promotes accountability for adherence to honest and ethical conduct; endeavors to provide full, fair, accurate, timely and understandable disclosure in reports and documents that the Company files with the Securities and Exchange Commission (the “SEC”) and in other public communications made by the Company; and strives to be compliant with applicable governmental laws, rules and regulations.


In lieu of an Audit Committee, the Company’s Board of Directors (currently consisting solely of Timothy Armes), is responsible for reviewing and making recommendations concerning the selection of outside auditors, reviewing the scope, results and effectiveness of the annual audit of the Company’s financial statements and other services provided by the Company’s independent public accountants. The Board of Directors reviews the Company’s internal accounting controls, practices and policies.


- 22 -



Committees of the Board


Our Company currently does not have nominating, compensation, or audit committees or committees performing similar functions nor does our Company have a written nominating, compensation or audit committee charter. The Board of Directors believes that it is not necessary to have such committees, at this time, because the functions of such committees can be adequately performed by the sole director.


Audit Committee Financial Expert


Our Board of Directors has determined that we do not have an independent board member that qualifies as an “audit committee financial expert” as defined in Item 407(D)(5) of Regulation S-K, nor do we have a Board member that qualifies as “independent” as the term is used in Item 7(d)(3)(iv)(B) of Schedule 14A under the Exchange Act.


We believe that our sole director is capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. The sole director does not believe that it is necessary to have an audit committee because management believes that the functions of an audit committee can be adequately performed by the sole director. In addition, we believe that retaining an independent director who would qualify as an “audit committee financial expert” would be overly costly and burdensome and is not warranted in our circumstances given the stage of our development and the fact that we have not generated any positive cash flows from operations to date.


Involvement in Certain Legal Proceedings


Our sole director and our executive officers have not been involved in any of the following events during the past ten years:


1.

any bankruptcy petition filed by or against any business of which such person was a general partner or executive officer either at the time of the bankruptcy or within two years prior to that time;

2.

any conviction in a criminal proceeding or being subject to a pending criminal proceeding (excluding traffic violations and other minor offenses);

3.

being subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction, permanently or temporarily enjoining, barring, suspending or otherwise limiting his involvement in any type of business, securities or banking activities; or

4.

being found by a court of competent jurisdiction (in a civil action), the Commission or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated.


Board Meetings and Annual Meeting


During the fiscal year ended January 31, 2018, our Board of Directors (currently consisting solely of Timothy Armes) did not meet or hold any formal meetings.  We did not hold an annual meeting in the year ended January 31, 2018.  In the absence of formal board meetings, the Board conducted all of its business and approved all corporate actions during the fiscal year ended January 31, 2018 by the unanimous written consent of its sole director.


Code of Ethics


We have not adopted a formal Code of Ethics. The Board of Directors evaluated the business of the Company and the number of employees and determined that since the business is operated by a small number of persons, general rules of fiduciary duty and federal and state criminal, business conduct and securities laws are adequate ethical guidelines.  In the event our operations, employees and/or directors expand in the future, we may take actions to adopt a formal Code of Ethics.


Shareholder Proposals


Our Company does not have any defined policy or procedural requirements for shareholders to submit recommendations or nominations for directors. The sole director believes that, given the stage of our development, a specific nominating policy would be premature and of little assistance until our business operations develop to a more advanced level. Our Company does not currently have any specific or minimum criteria for the election of nominees to the Board of Directors and we do not have any specific process or procedure for evaluating such nominees. The Board of Directors will assess all candidates, whether submitted by management or shareholders, and make recommendations for election or appointment.


A shareholder who wishes to communicate with our Board of Directors may do so by directing a written request addressed to our Chief Executive Officer, at the address appearing on the first page of this report.


- 23 -



Item 11.  Executive Compensation.


Summary Compensation Table


The table below summarizes the total compensation paid or earned by the Company’s Chief Executive Officer and Chief Financial Officer during the fiscal years ended January 31, 2018 and 2017.  The Company did not have any executive officers who received total compensation in excess of $100,000 during the fiscal years disclosed below, other than disclosed below.


Name and principal position (1)

 

Year

 

Salary

 

Bonus

 

Stock Awards

 

Option Awards

 

All other compensation*

 

Total compensation

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Timothy Armes

 

2018

 

$

24,100

 

 

 

 

 

 

$

24,100

CEO, President, Treasurer, Secretary and Director (1)

 

2017

 

$

14,000

 

 

 

 

 

 

$

14,000

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Garret Armes

 

2018

 

$

5,050

 

 

 

 

 

 

$

5,050

Vice President Nurses Lounge

 

2017

 

$

5,100

 

 

 

 

 

 

$

5,100

__________

*

Does not include any accruals not paid in cash or perquisites and other personal benefits in amounts less than 10% of the total annual salary and other compensation.  No executive officer earned any non-equity incentive plan compensation or nonqualified deferred compensation during the periods reported above. The value of the Stock Awards and Option Awards in the table above, if any, was calculated based on the fair value of such securities calculated in accordance with Financial Accounting Standards Board Accounting Standards Codification Topic 718.


 

(1)

No executive director receive any consideration, separate from the compensation they received as an executive officer of the Company (if any) for service on the Board of Directors of the Company during the periods disclosed.


Employment Agreements


The Company (through Nurses Lounge) has employment agreements in place with its President and Vice President that provide for the following:


Timothy Armes, President


In November 2010, Nurses Lounge entered into an Employment Agreement with Timothy Armes, pursuant to which Mr. Armes agreed to serve as President and Chief Executive Officer of Nurses Lounge until November 30, 2012, subject to yearly extensions, unless terminated by either party thirty days prior to November 30, 2012, and each anniversary date of the parties’ entry into the agreement thereafter.  Pursuant to the agreement, Nurses Lounge agreed to pay Mr. Armes $120,000 per year; that Mr. Armes would be eligible for a discretionary bonus in the determination of the Board of Directors of the Company; and that Mr. Armes would be granted options to purchase 4,000,000 shares of common stock of the Company at an exercise price of $0.25 per share.  The options are subject to certain vesting requirements provided in Mr. Armes’ option agreement.  In the event the agreement is terminated without cause by Nurses Lounge, Mr. Armes is to receive 12 months of his base salary as severance pay.  In the event the agreement is terminated for any other reason, Mr. Armes is to receive such consideration as has been earned by him as of the date of such termination.  Mr. Armes agreed not to compete with the Company for 12 months following the termination of the agreement.


Garret Armes, Vice President Nurses Lounge


In November 2010, Nurses Lounge entered into an Employment Agreement with Garret Armes, pursuant to which Mr. Armes agreed to serve as Vice President of Nurses Lounge on a continuing month-to-month basis until such time as either party provides the other 30 days prior written notice of its intention to terminate the agreement. Pursuant to the agreement, Nurses Lounge agreed to pay Mr. Armes $36,000 per year; that Mr. Armes would be eligible for a discretionary bonus in the determination of the Board of Directors of the Company; and that Mr. Armes would be granted options to purchase 2,000,000 shares of common stock of the Company at an exercise price of $0.25 per share.  The options are subject to certain vesting requirements provided in Mr. Armes’ option agreement.  Mr. Armes agreed not to compete with the Company for 12 months following the termination of the agreement.


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Grants of Plan-Based Awards


Outstanding Equity Awards at Fiscal Year End.  None.


Potential Payments upon Termination or Change in Control


The Company does not have any contract, agreement, plan or arrangement with its named executive officers that provides for payments to a named executive officer at, following, or in connection with the resignation, retirement or other termination of a named executive officer, or a change in control of the Company, or a change in the named executive officer’s responsibilities following a change in control.


Retirement Plans


The Company does not have any plan that provides for the payment of retirement benefits, or benefits that will be paid primarily following retirement.


Compensation of Directors


In the past, the Company has not instituted a policy of compensating non-management directors. However, the Company plans to use stock-based compensation to attract and retain qualified candidates to serve on its Board of Directors. In setting director compensation, the Company will consider the significant amount of time that directors expend in fulfilling their duties to the Company, as well as the skill-level required by the Company of its Board members.


Item 12.  Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.


The following table sets forth information regarding the beneficial ownership of our voting stock, as of May 12, 2016, by: (i) each person known by us to be the beneficial owner of more than 5% of our outstanding shares of common stock; (ii) each of our officers and directors (provided that Mr. Armes currently serves as our sole director); and (iii) all of our officers and directors as a group.


Based on information available to us, all persons named in the table have sole voting and investment power with respect to all shares of common stock beneficially owned by them, unless otherwise indicated. Beneficial ownership is determined in accordance with Rule 13d-3 under the Securities Exchange Act of 1934, as amended. In computing the number of shares beneficially owned by a person or a group and the percentage ownership of that person or group, shares of our common stock subject to options or warrants currently exercisable or exercisable within 60 days after the date of this filing are deemed outstanding, but are not deemed outstanding for the purpose of computing the percentage of ownership of any other person. The following table is based on 1,015,028,292 common shares issued and outstanding as of August 16, 2018.


 

Beneficial Owner

 

Address

 

Common Shares

 

Percent Ownership

 

 

 

 

 

 

 

 

Common Stock

Timothy Armes

Chairman / CEO

President, Secretary, CFO

 

6515 Goodman Road #258

Olive Branch, MS 38654

 

129,627,564

 

12.77%

 

 

 

 

 

 

 

 

Common Stock

Garret Armes

Vice President Nurses Lounge

 

6515 Goodman Road #258

Olive Branch, MS 38654

 

46,945,000

 

4.62%

 

 

 

 

 

 

 

 

 

All Officers and Directors as a Group
(2 Persons)

 

 

 

146,572,641

 

14.44%

 

 

 

 

 

 

 

 

 

Greater than 5% Shareholders

 

 

 

 


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Item 13.  Certain Relationships and Related Transactions, and Director Independence.


In November 2010, Nurses Lounge entered into an Employment Agreement with Timothy Armes, pursuant to which Mr. Armes agreed to serve as President and Chief Executive Officer of Nurses Lounge until November 30, 2012, subject to yearly extensions, unless terminated by either party thirty days prior to November 30, 2012, and each anniversary date of the parties’ entry into the agreement thereafter.  Pursuant to the agreement, Nurses Lounge agreed to pay Mr. Armes $120,000 per year; that Mr. Armes would be eligible for a discretionary bonus in the determination of the Board of Directors of the Company; and that Mr. Armes would be granted options to purchase 4,000,000 shares of common stock of the Company at an exercise price of $0.25 per share.  The options are subject to certain vesting requirements provided in Mr. Armes’ option agreement. The options subsequently expired without any being exercised. In the event the agreement is terminated without cause by Nurses Lounge, Mr. Armes is to receive 12 months of his base salary as severance pay.  In the event the agreement is terminated for any other reason, Mr. Armes is to receive such consideration as has been earned by him as of the date of such termination.  Mr. Armes agreed not to compete with the Company for 12 months following the termination of the agreement.


In December of 2016, Mr. Armes was issued 72 million shares as part of his employment with the Company.


Additionally, in consideration for agreeing to employment, Garret Armes, the Vice President of Nurses Lounge and the son of Timothy Armes, was granted options to purchase 2,000,000 shares of the Company’s common stock at an exercise price of $0.25 per share (together with the options granted to Timothy Armes, the “Options”). The Options were exercisable, subject to vesting provisions, any time prior to November 15, 2015, had an exercise price of $0.25 per share, and contain a cashless exercise provision. The options subsequently expired without any being exercised.


Effective September 10, 2011, 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.


Following is a list of transactions with Larry Glenn.


Larry Glenn was issued 1,600,000 total shares issued on 12/16/2011. 1,200,000 were issued in consideration for extending the note originally dated October 29, 2010 and due November 1, 2011 and extended to November 1, 2012, in the amount of $190,000. Additionally 400,000 shares of restricted common stock was issued in consideration for making an additional loan in the amount of $50,000 dated December 15, 2011 for a term of one year.  The note bears interest at 12%, with the Company paying the Holder interest only commencing on December 1, 2011 and continuing on the first day (1st) day of each month thereafter through and including November 1, 2011, the Maturity Date, which final payment shall include all principal and accrued interest. 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.


Larry Glenn purchased common stock for cash.  On January 9, 2013 the Company issued 2,000,000 units of its securities in a private placement to an accredited investor. The price of these Units was $0.10 per unit. Each Unit consists of 1 share of restricted common stock valued at $0.10 per share for a total of 2,000,000 shares and one 5 year Warrant. Each Series B Warrant entitles the holder to purchase one share of common stock at an exercise price of $0.12 per share and subject to adjustments due to recapitalization or reclassification of common stock. The Company received proceeds of $200,000.


Investment

Acceptance
Date

Units (.25)

New Shares
Issued (.10)

Warrants

Warrant#

$200,000

01/09/13

2,000,000

2,000,000

2,000,000

B-100

 

 

Exercise Price

$0.12

 

 

 

Potential Proceeds

240,000

 


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 -



Larry Glenn was issued 134,500 shares issued on 1/30/2012 in consideration for lending the Company $12,500, note dated May 8, 2012. The note bears interest at 12%, with the Company paying the Holder interest only commencing on December 1, 2011 and continuing on the first day (1st) day of each month thereafter through and including November 1, 2011, the Maturity Date, which final payment shall include all principal and accrued interest. 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.


Additionally, the Holder received 72,000 restricted shares of common stock as a 1st quarter interest payment of $7,200 on his 190,000, 12% note renewed in November 2011 and 50,000, 12% note originated in December 2011.


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.


Larry Glenn was issued 478,250 shares issued on 10/2/2012 in consideration for lending the Company $95,650 to be funded over 12 months at $7,500 per month after initial payment of $5,650. The note was dated September, 2012, and it was agreed the Holder would receive a total of 957,000 of restricted common stock as an incentive to make the loan. 478,500 shares was issued as agreed after the first payment was received with the additional 478,500 shares to be issued in September 2013 after funding entire note. The note bears interest at 12%, with the Company paying the Holder interest only on the first day (1st) day of each month thereafter through and including January 31, 2014, the Maturity Date, which final payment shall include all principal and accrued interest. 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.


Review, Approval and Ratification of Related Party Transactions


Given our small size and limited financial resources, we had not adopted formal policies and procedures for the review, approval or ratification of transactions, such as those described above, with our executive officers, director(s) and significant stockholders.  However, the Company makes it a practice of having its Board of Directors (currently consisting solely of Mr. Armes) approve and ratify all related party transactions.  In connection with such approval and ratification, the Board of Directors takes into account several factors, including their fiduciary duties to the Company; the relationships of the related parties to the Company; the material facts underlying each transaction; the anticipated benefits to the Company and related costs associated with such benefits; whether comparable products or services are available; and the terms the Company could receive from an unrelated third party.


We intend to establish formal policies and procedures in the future, once we have sufficient resources and have appointed additional directors, so that such transactions will be subject to the review, approval or ratification of our Board of Directors, or an appropriate committee thereof.  On a moving forward basis, the Board of Directors will continue to approve any related party transaction based on the criteria set forth above.


Director Independence


We currently only have one director, Timothy Armes, who is not independent.  We have no current plans to appoint any independent directors.


- 27 -



Item 14.  Principal Accounting Fees and Services.


(1) Audit Fees


The aggregate fees billed for professional services rendered by our auditors, for the audit of the registrant’s annual financial statements and review of the financial statements included in the registrant’s Form 10-K and Form 10-Q(s) for services that are normally provided by the accountant in connection with statutory and regulatory filings or engagements, for fiscal years 2018 and 2017 was approximately $26,000 and $30,000, respectively.


(2) Audit Related Fees


None


(3) Tax Fees


None


(4) All Other Fees


None


PART IV


Item 15.  Exhibits and Financial Statement Schedules.


1. Consolidated Financial Statements


 

Page

Report of Independent Registered Public Accounting Firm

F-1

Financial Statements:

 

Consolidated Balance Sheets as of January 31, 2018 and 2017

F-3

Consolidated Statements of Operations for the Years Ended January 31, 2018 and 2017

F-4

Consolidated Statement of Changes in Stockholders’ Deficit for the Years Ended January 31, 2018 and 2017

F-5

Consolidated Statements of Cash Flows for the Years Ended January 31, 2018 and 2017

F-6

Notes to the Consolidated Financial Statements for the Years Ended January 31, 2018 and 2017

F-7


2. Financial Statement Schedules


Schedules have been omitted because they are not required, not applicable, or the required information is otherwise included.


3. Exhibits


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


- 28 -



SIGNATURES


Pursuant to the requirements of Section 13 or 15(d) 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

(Principal Executive Officer and Principal Financial/Accounting Officer)


Date: November 7, 2018



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.


- 29 -



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM



To the Board of Directors and Stockholders of

MedCareers Group, Inc.

Coppell, Texas



We have audited the accompanying consolidated balance sheets of MedCareers Group, Inc. and its subsidiary (the “Company”) as of January 31, 2017, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for the year then ended. The Company’s management is responsible for these financial statements. Our responsibility is to express an opinion on these financial statements based on our audit.


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 an audit to obtain reasonable assurance about whether the financial statements are free of material misstatement. The company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, 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 consolidated financial statements referred to above present fairly, in all material respects, the financial position of the Company as of January 31, 2017, and the related consolidated statements of operations, stockholders’ deficit, and cash flows for the year then ended in conformity with accounting principles generally accepted in the United States of America.


The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 10 to the financial statements, the Company has suffered recurring loss from operations and has a working capital deficit. These factors raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans regarding those matters are described in Note 10. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.



/s/ MALONEBAILEY, LLP


MALONEBAILEY, LLP

www.malone-bailey.com

Houston, Texas

May 18, 2018, except for Note 10 as to which the date is May 23, 2018.


F-1



REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Stockholders and Board of Directors of

MedCareers Group, Inc.


Opinion on the Financial Statements


We have audited the accompanying consolidated balance sheet of MedCareers Group, Inc. (the “Company”) as of January 31, 2018, the related consolidated statements of operations, stockholders’ deficit and cash flows for the year then ended and the related notes (collectively referred to as the “financial statements”).  In our opinion, the financial statements present fairly, in all material respects, the financial position of the Company as of January 31, 2018, and the results of its operations and its cash flows for the year ended January 31, 2018, in conformity with accounting principles generally accepted in the United States of America.


Explanatory Paragraph – Going Concern


The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As more fully described in Note 2, the Company has incurred significant losses and incurred negative operating cash flows and needs to raise additional funds to meet its obligations and sustain its operations. These conditions raise substantial doubt about the Company’s ability to continue as a going concern. Management’s plans in regard to these matters are also described in Note 2. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.


Basis for Opinion


These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on the Company’s financial statements based on our audit. We are a public accounting firm registered with the Public Company Accounting Oversight Board (United States) (“PCAOB”) and are required to be independent with respect to the Company in accordance with the U.S. federal securities laws and the applicable rules and regulations of the Securities and Exchange Commission and the PCAOB.


We conducted our audit in accordance with the standards of the PCAOB. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement, whether due to error or fraud. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. As part of our audit we are required to obtain an understanding of internal control over financial reporting but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion.


Our audit included performing procedures to assess the risks of material misstatement of the financial statements, whether due to error or fraud, and performing procedures that respond to those risks. Such procedures included examining, on a test basis, evidence regarding the amounts and disclosures in the financial statements. Our audit also included evaluating the accounting principles used and significant estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that our audit provides a reasonable basis for our opinion.


/s/ Marcum LLP


Marcum LLP


We have served as the Company’s auditor since 2018.


Houston, Texas

November 7, 2018


F-2



MEDCAREERS GROUP, INC.

Consolidated Balance Sheets

January 31, 2018 and 2017


 

 

2018

 

2017

 

Assets

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

Cash and Cash Equivalents

 

$

2,830

 

$

1,156

 

 

 

 

 

 

 

 

 

Total Assets

 

$

2,830

 

$

1,156

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Deficit

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

Accounts Payable

 

$

44,342

 

$

67,424

 

Accrued Expenses

 

 

215,591

 

 

44,023

 

Accrued Expenses – Related Party

 

 

292,415

 

 

145,650

 

Deferred Revenue

 

 

14,496

 

 

10,902

 

Accrued Interest Payable

 

 

527,831

 

 

407,681

 

Derivative Liabilities

 

 

760,788

 

 

421,973

 

Short-term Debt, net of unamortized debt discount of $46,788 and $45,526

 

 

1,057,051

 

 

1,023,927

 

Total Current Liabilities

 

 

2,912,514

 

 

2,121,580

 

 

 

 

 

 

 

 

 

Stockholders’ Deficit

 

 

 

 

 

 

 

Preferred Stock, $0.001 par value, 19,642,880 undesignated shares authorized; 0 shares outstanding

 

 

 

 

 

Preferred Stock, Series A, $0.001 par value, 330,000 shares authorized, 330,000 shares issued and outstanding

 

 

330

 

 

330

 

Preferred Stock, Series B, $0.001 par value, 20,000 shares authorized, 1,000 shares issued and outstanding

 

 

1

 

 

1

 

Preferred Stock, Series C, $0.001 par value, 7,250 shares authorized, 0 shares issued and outstanding

 

 

 

 

 

Common Stock, $0.001 par value,4,000,000,000 shares authorized, 840,478,527 and 561,655,477 shares issued and outstanding

 

 

840,478

 

 

561,655

 

Additional Paid In Capital

 

 

5,387,205

 

 

5,554,626

 

Accumulated Deficit

 

 

(9,137,698

)

 

(8,237,036

)

Total Stockholders’ Deficit

 

 

(2,909,684

)

 

(2,120,424

)

 

 

 

 

 

 

 

 

Total Liabilities and Stockholders’ Deficit

 

$

2,830

 

$

1,156

 


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


F-3



MEDCAREERS GROUP, INC.

Consolidated Statements of Operations

For the Years Ended January 31, 2018 and 2017


 

 

2018

 

2017

 

Revenue

 

$

36,416

 

$

30,414

 

 

 

 

 

 

 

 

 

Operating Expenses:

 

 

 

 

 

 

 

Cost of Revenues

 

 

 

 

2,945

 

Selling and Advertising

 

 

3,872

 

 

27,831

 

General and Administrative

 

 

389,949

 

 

284,712

 

Total Operating Expenses

 

 

393,821

 

 

315,488

 

 

 

 

 

 

 

 

 

Net Operating Loss

 

 

(357,405

)

 

(285,074

)

 

 

 

 

 

 

 

 

Other Expense

 

 

 

 

 

 

 

Amortization of Debt Discount

 

 

(79,052

)

 

(152,940

)

Amortization of Deferred Financing Costs

 

 

 

 

(4,733

)

Change in Fair Value on Derivatives

 

 

(149,008

)

 

358,442

 

Loss on Conversion of Notes Payable

 

 

(51,900

)

 

 

Loss on Debt Extinguishment

 

 

(36,781

)

 

 

Interest Expense

 

 

(226,516

)

 

(119,951

)

Total Other Income (Expense)

 

 

(543,257

)

 

80,818

 

 

 

 

 

 

 

 

 

Net Loss

 

$

(900,662

)

$

(204,256

)

 

 

 

 

 

 

 

 

Weighted Average Shares Outstanding - Basic and Diluted

 

 

595,032,788

 

 

543,051,889

 

Loss per Share - Basic and Diluted

 

$

(0.00

)

$

(0.00

)


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


F-4



MEDCAREERS GROUP, INC.

Consolidated Statements of Changes in Stockholders’ Deficit

For the Years Ended January 31, 2018 and 2017


 

 

Preferred Stock

 

Preferred Stock

 

 

 

 

 

 

 

 

 

 

 

 

 

Series A

 

Series B

 

Preferred Stock

 

Common Stock

 

Paid-In

 

Retained

 

 

 

 

 

Shares

 

Amount

 

Shares

 

Amount

 

Shares

 

Amount

 

Shares

 

Amount

 

Capital

 

(Deficit)

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Balance at January 31, 2016

 

330,000

 

$

330

 

1,000

 

$

1

 

 

$

 

454,838,100

 

$

454,838

 

$

5,582,990

 

$

(8,032,780

)

$

(1,994,621

)

Conversion of Notes Payable to Common Stock

 

 

 

 

 

 

 

 

 

 

106,817,377

 

 

106,817

 

 

(83,396

)

 

 

 

23,421

 

Reclass of Derivative Liability to Equity Upon Conversion

 

 

 

 

 

 

 

 

 

 

 

 

 

 

55,032

 

 

 

 

55,032

 

Net Loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(204,256

)

 

(204,256

)

Balance at January 31, 2017

 

330,000

 

$

330

 

1,000

 

$

1

 

 

$

 

561,655,477

 

$

561,655

 

$

5,554,626

 

$

(8,237,036

)

$

(2,120,424

)

Conversion of Notes Payable to Common Stock and Related Derivative Liabilities

 

 

 

 

 

 

 

 

 

 

212,823,050

 

 

212,823

 

 

(121,221

)

 

 

 

91,602

 

Issuance of Common Stock for Accounts Payable and Accrued Expenses

 

 

 

 

 

 

 

 

 

 

65,000,000

 

 

65,000

 

 

(45,500

)

 

 

 

19,500

 

Issuance of Common Stock for Services

 

 

 

 

 

 

 

 

 

 

1,000,000

 

 

1,000

 

 

(700

)

 

 

 

300

 

Net Loss

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(900,662

)

 

(900,662

)

Balance at January 31, 2018

 

330,000

 

$

330

 

1,000

 

$

1

 

 

$

 

840,478,527

 

$

840,478

 

$

5,387,205

 

$

(9,137,698

)

$

(2,909,684

)


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


F-5



MEDCAREERS GROUP, INC.

Consolidated Statements of Cash Flows

For the Years Ended January 31, 2018 and 2017


 

2018

 

2017

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

Net Loss

$

(900,662

)

$

(204,256

)

Adjustments to reconcile net loss to cash used by operating activities:

 

 

 

 

 

 

Stock-based Compensation

 

300

 

 

 

Change in Fair Value of Derivative Liabilities

 

149,008

 

 

(358,442

)

Amortization of Debt Discount

 

79,052

 

 

152,940

 

Amortization of Deferred Financing Costs

 

 

 

4,733

 

Additional Interest Expenses from Derivative Liabilities

 

82,143

 

 

 

Loss on Debt Extinguishment

 

36,781

 

 

 

Loss on Conversion of Notes Payable

 

51,900

 

 

 

Change in Operating Assets and Liabilities:

 

 

 

 

 

 

Accounts Receivable

 

 

 

995

 

Other Current Assets

 

 

 

83

 

Accounts Payable

 

(9,538

)

 

19,840

 

Accrued Expenses – Related Party

 

146,765

 

 

145,650

 

Deferred Revenue

 

3,594

 

 

10,902

 

Interest Payable

 

134,354

 

 

119,278

 

Accrued Expenses

 

171,566

 

 

4,433

 

CASH FLOWS USED IN OPERATING ACTIVITIES

 

(54,737

)

 

(103,844

)

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

Proceeds from Notes Payable, Net of Financing Costs

 

81,411

 

 

105,000

 

Payments on Notes Payable

 

(25,000

)

 

 

CASH FLOWS PROVIDED BY FINANCING ACTIVITIES

 

56,411

 

 

105,000

 

 

 

 

 

 

 

 

NET INCREASE IN CASH

 

1,674

 

 

1,156

 

 

 

 

 

 

 

 

CASH AT BEGINNING OF PERIOD

 

1,156

 

 

 

 

 

 

 

 

 

 

CASH AT END OF PERIOD

$

2,830

 

$

1,156

 

 

 

 

 

 

 

 

Supplemental Disclosure of Cash Flows Information:

 

 

 

 

 

 

Cash Paid for Interest

$

3,072

 

$

 

Income Taxes

$

 

$

 

 

 

 

 

 

 

 

Non-Cash Investing and Financing Activities:

 

 

 

 

 

 

Recognition of Derivative Liabilities related to Convertible Debt

$

80,411

 

$

90,318

 

Issuance of Common Shares for Accounts Payable – Related Party

$

16,500

 

$

 

Issuance of Common Shares for Accounts Payable

$

3,000

 

$

 

Issuance of Common Shares for Debt and Accrued Interests Conversion

$

94,010

 

$

23,421

 

Reclass of Derivative Liability to Equity Upon Conversion

$

 

$

55,032

 


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


F-6



MEDCAREERS GROUP, INC.

Notes to Financial Statements

January 31, 2017 and 2016


NOTE 1 – NATURE OF BUSINESS AND SIGNIFICANT ACCOUNTING POLICIES


Business


MedCareers Group, Inc. (the “Company”, “MedCareers”) currently 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 (“U.S. GAAP”) 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.


Basis of Presentation


The Company prepares its financial statements on the accrual basis of accounting in conformity with U.S. GAAP.


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.


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.


Cash and Cash Equivalents


The Company considers all highly liquid 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 of cash and cash equivalents approximates fair market value.


Income Taxes


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.


F-7



On December 22, 2017, the Tax Cuts and Jobs Act (“Tax Act”) was signed into law. ASC 740, Accounting for Income Taxes requires companies to recognize the effects of changes in tax laws and rates on deferred tax assets and liabilities and the retroactive effects of changes in tax laws in the period in which the new legislation is enacted. The Company’s gross deferred tax assets were revalued based on the reduction in the federal statutory tax rate from 35% to 21%. A corresponding offset has been made to the valuation allowance, and any potential other taxes arising due to the Tax Act will result in reductions to the Company’s net operating loss carryforward and valuation allowance. The Company will continue to analyze the Tax Act to assess its full effects on the Company’s financial results, including disclosures, for the Company’s fiscal year ending January 31, 2019, but the Company does not expect the Tax Act to have a material impact on the Company’s consolidated financial statements.


Fair Value of Financial Instruments


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. Derivatives are recorded at fair value at each period end. Fair value is defined as the price that would be received to sell an asset or paid to transfer a liability (an exit price) in an orderly transaction between market participants at the reporting date.


The ASC guidance for fair value measurements and disclosure establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).  The three levels of the fair value hierarchy are described below:


Level 1 Inputs – Quoted prices for identical instruments in active markets.


Level 2 Inputs – Quoted prices for similar instruments in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations whose inputs are observable or whose significant value drivers are observable.


Level 3 Inputs – Instruments with primarily unobservable value drivers.


As of January 31, 2018 and 2017, the Company’s derivative liabilities were measured at fair value using Level 3 inputs.  See Note 7.


Related Party Transactions


The Company has a formal, written policy that includes procedures intended to ensure compliance with the related party provisions in common practice for public companies. For purposes of the policy, a “related party transaction” is a transaction in which the Company or any one of its subsidiaries participates and in which a related party has a direct or indirect material interest, other than ordinary course, arms-length transactions of less than 1% of the revenue of the counterparty. Any transaction exceeding the 1% threshold, and any transaction involving consulting, financial advisory, legal or accounting services that could impair a director’s independence, must be approved by the CEO. Any related party transaction in which an executive officer or a Director has a personal interest, or which could present a possible conflict under the Guide to Ethical Conduct, must be approved by Board of Directors, following appropriate disclosure of all material aspects of the transaction.


Derivative Liability


The derivative liabilities are valued as a level 3 input for valuing financial instruments. The derivatives arise from convertible debt where the debt is convertible into common stock at variable conversion prices and reclassification of equity instrument to liability due to insufficient shares for issuance. As the price of the common stock varies, it triggers a gain or loss based upon the discount to market assuming the debt was converted at the balance sheet date. When evaluating the effect of the issuance of new equity-linked or equity-settled instruments on previously issued instruments, the Company uses first-in, first-out method (“FIFO”) where authorized and unused shares would first be used to satisfy the earliest issued equity-linked instruments. As of January 31, 2018, warrants to purchase 3,500,000 common shares issued in July 2014 were not classified as derivative liability while the remaining warrants outstanding were classified as derivative liability based on the FIFO method.


The fair value of the derivative liability is determined using a lattice model, is re-measured on the Company’s reporting dates, and is affected by changes in inputs to that model including our stock price, expected stock price volatility, the expected term, and the risk-free interest rate.


F-8



Revenue Recognition


The Company generates revenues from job postings, banner advertisements and email campaigns. 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. Certain sales are for services over the period of six months or a year and those sales are recognized ratably over the period. Any amount collected but not earned is recorded as deferred revenue.


Stock-Based Compensation


The Company accounts for stock options at fair value. The Company estimates the fair value of each stock option at the grant date by using the Black-Scholes option-pricing model and provides for expense recognition over the service period, if any, of the stock option.


Loss per Common Share


The weighted average number of common shares outstanding during each period is used to compute basic loss per share.  Diluted loss per common share are computed using the weighted average number of common shares and potentially dilutive common shares outstanding.  Potentially dilutive common shares are additional common shares assumed to be exercised.  Potentially dilutive common shares 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.


The Company had 37,500,000 warrants, 330,000 shares of Series A Preferred Stock and 1,000 shares of Series B Preferred Stock outstanding at January 31, 2018 which were potentially dilutive common stock equivalents but would be antidilutive and are not included.  As the Company incurred a net loss during the year ended January 31, 2018, the basic and diluted loss per common share is the same amount, as any common stock equivalents would be considered anti-dilutive. Excluded from this calculation are convertible notes of $1,060,839 and $1,044,453 at January 31, 2018 and 2017, respectively, since the impact would be antidilutive thus not included.


Recently Issued Accounting Standards


Revenue from Contracts with Customers: In May 2014, ASC 606 was issued related to revenue from contracts with customers. Under this guidance, revenue is recognized when promised goods or services are transferred to customers in an amount that reflects the consideration that is expected to be received for those goods or services. The updated standard will replace most existing revenue recognition guidance under GAAP when it becomes effective and permits the use of either the retrospective or cumulative effect transition method. This accounting standard update, as amended, will be effective for reporting periods beginning after December 15, 2017. Early adoption is permitted, but no earlier than fiscal 2017. The Company will adopt the new guidance effective February 1, 2018 and is not expected to have an impact on the Company’s consolidated financial statements.


There were various other accounting standards and interpretations issued recently, none of which are expected to a have a material impact on our financial position, operations or cash flows.


NOTE 2 – GOING CONCERN AND FINANCIAL POSITION


The consolidated financial statements have been prepared on a going concern basis, which contemplates the realization of assets and liquidation of liabilities in the normal course of business.  The Company has incurred cumulative losses through January 31, 2018 of $9,137,698 and has a working capital deficit at January 31, 2018 of $2,909,684. As of January 31, 2018, the Company only had cash and cash equivalents of $2,830 and had short-term debt in default. The short-term debt agreements provide legal remedies for satisfaction of defaults, none of the lenders to this point have pursued their legal remedies. These conditions raise substantial doubt about the Company’s ability to continue as a going concern for a period of one year from the date that the financial statements were issued.


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 the Company to continue as a going concern.  However, revenues have not been sufficient to cover operating costs that would permit the Company to continue as a going concern historically and 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.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.


F-9



NOTE 3 – SHORT-TERM DEBT


The components of the Company’s debt as of January 31, 2018 and 2017 were as follows:


 

 

 

Outstanding Principal at

 

Maturity Date

Interest Rate

Conversion Price

January 31, 2018

 

January 31, 2017

 

Nov 4, 2013

12%

$0.075

$

100,000

 

$

100,000

 

Jan 31, 2014

12%

$0.10

 

16,000

 

 

16,000

 

Jan 31, 2014

12%

$0.10

 

45,000

 

 

45,000

 

July 31, 2013

12%

$0.06

 

5,000

 

 

5,000

 

Nov 30, 2014

12%

Not convertible

 

18,000

 

 

18,000

 

April 30, 2013

12%

Not convertible

 

25,000

 

 

25,000

 

Jan 31, 2014

12%

$0.10

 

30,000

 

 

30,000

 

Dec 24, 2015

8%

(1)

 

5,000

 

 

5,000

 

Sep 10, 2017

8%

(2)

 

27,361

 

 

57,958

 

Sep 10, 2017

8%

(2)

 

23,863

 

 

23,863

 

Sep 10, 2017

8%

(2)

 

12,355

 

 

12,355

 

Sep 10, 2017

8%

(2)

 

26,697

 

 

10,950

 

Sep 10, 2017

8%

(2)

 

38,677

 

 

38,677

 

Dec 4, 2017

8%

(2)

 

25,000

 

 

25,000

 

Feb 3, 2017

8%

(5)

 

25,000

 

 

25,000

 

Mar 3, 2017

8%

(5)

 

30,000

 

 

30,000

 

Mar 24, 2017

8%

(6)

 

25,000

 

 

25,000

 

Feb 5, 2017

8%

(3)

 

 

 

25,000

 

Jan 2014 to Jan 2018

12%

$0.07 to $0.10

 

454,650

 

 

479,150

 

July 8, 2015

8%

(1)

 

5,500

 

 

5,500

 

May 5, 2015

8%

(1)

 

4,500

 

 

4,500

 

May 14, 2015

8%

(1)

 

23,297

 

 

23,297

 

May 19, 2015

8%

(1)

 

7,703

 

 

7,703

 

June 12, 2015

8%

(1)

 

26,500

 

 

26,500

 

July 19, 2016

8%

(1)

 

5,000

 

 

5,000

 

Mar 3, 2017

8%

(6)

 

21,500

 

 

 

Feb 3, 2017

8%

(5)

 

7,161

 

 

 

Dec 27, 2018

15%

(4)

 

51,750

 

 

 

Jan 5, 2019

0%

(4)

 

18,325

 

 

 

Deferred Financing Costs

 

 

 

(3,248

)

Debt Discount

 

(46,788

)

 

(42,278

)

Subtotal

$

1,057,051

 

$

1,023,927

 

__________

(1)

52% of the lowest trading price for the fifteen trading days prior to conversion day.

(2)

50% of the lowest trading price for the fifteen trading days prior to conversion day.

(3)

50% of the lowest trading price for the twenty trading days prior to conversion day.

(4)

50% of the lowest trading price for the forty trading days prior to conversion day, but not higher than $0.000075.

(5)

50% of the lowest trading price for the fifteen trading days prior to conversion day, but not higher than $0.001.

(6)

50% of the lowest trading price for the fifteen trading days prior to conversion day, but not higher than $0.005.


The Company had accrued interest payable of $527,831 and $407,681 on the notes at January 31, 2018 and 2017, respectively.


The Company analyzed the conversion option for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that some instruments should be classified as liabilities due to there being no explicit limit to the number of shares to be delivered upon settlement of the above conversion options. The instruments are measured at fair value at the end of each reporting period or termination of the instrument with the change in fair value recorded to earnings. The fair value of the embedded conversion option resulted in a discount to the note on the debt modification date. See more information in Note 8.


During the years ended January 31, 2018 and 2017, the Company converted a total of $23,229 and $23,421 of the convertible notes plus accrued interest into 212,823,050 and 106,817,377 common shares, respectively.


F-10



A summary of the debt in total is as follows:


 

2018

 

2017

 

Convertible debt – fixed conversion rate

$

550,650

 

$

693,150

 

Convertible debt – variable conversion rates, net of debt discount

 

463,401

 

 

305,777

 

Non-Convertible debt

 

43,000

 

 

25,000

 

Net

$

1,057,051

 

$

1,023,927

 


The Company has $43,000 and $25,000 of debt which has no conversion feature at January 31, 2018 and 2017, respectively.


The Company is in default on a number of its promissory notes which provide legal remedies for satisfaction of defaults, none of the lenders to this point have pursued their legal remedies. The Company continues to accrue interest at the listed rates, and plans to seek their conversion or payoff within the next twelve months.


On April 25, 2018, the Company entered into replacement notes with 4 existing note holders. The new notes combined the principle amounts of each of their existing notes along with each note’s accrued interest, extended the maturity dates to April 24, 2020 with an interest rate per annum of 15%. The total principal and accrued interest replaced were $538,353 and $308,976, respectively.


NOTE 4 – STOCKHOLDERS’ DEFICIT


Preferred Stock


The Company is authorized to issue 20,001,000 shares of Preferred Stock, having a par value of $0.001 per share.


The Series A Preferred Stock have an automatic forced conversion into common stock upon the completion of the repurchase or extinguishing of all “toxic” debt (notes having conversion features tied to the Company’s common stock), the extinguishing of all other existing dilutive debt or equity structures, and total recapitalization of the Company. The shares have voting rights as of converted on the record date, are not entitled to dividends, and the Company does not have the right of redemption. Currently there are 330,000 Series A Preferred Shares issued.


The Series B Preferred Stock have voting rights equal 51% of the total voting rights at any time. There are no conversion rights granted holders of Series B Preferred shares, they are not entitled to dividends, and the Company does not have the right of redemption. Currently, there are 1,000 shares issued and outstanding of the Series B Preferred Stock, held by Timothy Armes, CEO of the Company.


The Series C Preferred Stock have the right to convert into the common stock of the Company by multiplying the number of issued and outstanding shares of common stock by 2.63 on the conversion date. The holders of Series C Preferred shares are not entitled to dividends, and the Company does not have the right of redemption. At January 31, 2018, there are 0 shares issued and outstanding of the Series C Preferred Stock.


Common Stock


The Company is authorized to issue 4,000,000,000 common shares at a par value of $0.001 per share. These shares have full voting rights.  At January 31, 2018 and 2017, there were 840,478,527 and 561,655,477 shares outstanding, respectively.  No dividends were paid in the years ended January 31, 2018 or 2017.


The Company issued the following shares of common stock in the year ended January 31, 2017:


Conversion of Notes Payable to Common Stock

 

 

106,817,377


The Company issued 106,817,377 shares of common stock for the conversion of Notes payable and accrued interest in the amount of $23,421.


The Company issued the following shares of common stock in the year ended January 31, 2018:


Issuance of Common Shares for Services with a fair value of $300

 

 

1,000,000

Conversion of $23,229 Notes Payable and Accrued Interest to Common Stock

 

 

212,823,050

Conversion of Accrued Expenses to Common Stock with a value of $19,500

 

 

65,000,000


F-11



The Company issued a total of 212,823,050 shares of common stock for the conversion of notes payable and accrued interest in the amount of $23,229 with conversion options that have been bifurcated. The fair value of the derivative liabilities related to the conversion options was $18,881 on the conversion dates. The shares had a value of $94,010 on the issuance date, and therefore, resulted in a loss of $51,900 on the conversion. In addition, the Company issued 34,000,000 warrants at a fair value of $2,408 upon the conversion.


The Company issued 1,000,000 shares of common stock for services with a market value of $300.


The Company issued 65,000,000 shares of common stock for the settlement of accrued expenses in the amount of $6,125. The shares had a value of $19,500 on the issuance date and therefore resulted a loss of $13,375.


Options and Warrants:


The Company recorded option and warrant expense of $0 and $0 in the years ended January 31, 2018 and 2017, respectively.


In January 2018, the Company issued 34,000,000 warrants associated with the conversion of its convertible debt. The warrants are exercisable upon issuance, have exercise price of $0.000075 and expire on January 8, 2021. The warrants are recorded as derivative liabilities because the Company did not have enough shares for issuance at January 31, 2018.


The Company had the following options and warrants outstanding at January 31, 2018:


Issued To

# Warrants

Dated

Expire

Strike Price

Lender

3,500,000

07/02/2015

07/01/2019

$0.10 per share

Lender

34,000,000

01/08/2018

01/08/2021

$0.000075 per share



 

 

Options

 

Weighted Average
Exercise Price

 

Warrants

 

Weighted Average
Exercise Price

 

Outstanding at January 31, 2016

 

 

$

 

6,982,500

 

$

0.09

 

Granted

 

 

 

 

 

 

 

Exercised

 

 

 

 

 

 

 

Forfeited and canceled

 

 

 

 

(1,227,500

)

 

 

Outstanding at January 31, 2017

 

 

$

 

5,755,000

 

$

0.08

 

Granted

 

 

 

 

34,000,000

 

$

0.000075

 

Exercised

 

 

 

 

 

 

 

Forfeited and canceled

 

 

 

 

(2,255,500

)

$

0.06

 

Outstanding at January 31, 2018

 

 

$

 

37,500,000

 

$

0.01

 



Summary of warrants outstanding and exercisable as of January 31, 2018 is as follows:


Range of Exercise
Prices

 

Weighted Average
Remaining Contractual
Life (years)

 

Number of Warrants
Outstanding

 

Number of Warrants
Exercisable

$ 0.10 to $0.00075

 

2.80

 

37,500,000

 

37,500,000



Summary of warrants outstanding and exercisable as of January 31, 2017 is as follows:


Range of Exercise
Prices

 

Weighted Average
Remaining Contractual
Life (years)

 

Number of Warrants
Outstanding

 

Number of Warrants
Exercisable

$ 0.05 to $ 0.12

 

1.11

 

5,755,000

 

5,755,000


F-12



NOTE 5 – INCOME TAXES


The Company has adopted ASC 740-10, “Income Taxes”, which requires the use of the liability method in the computation of income tax expense and the current and deferred income taxes payable (deferred tax liability) or benefit (deferred tax asset).  Valuation allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.


At January 31, 2018 and 2017, the deferred tax asset consisted of the following (rounded to $00):


 

 

2018

 

2017

 

Deferred tax asset:

 

 

 

 

 

Net operating loss

 

$

1,651,800

 

$

2,475,900

 

Less valuation allowance

 

 

(1,651,800

)

 

(2,475,900

)

Net deferred tax asset

 

$

 

$

 


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 was $7,865,794 and $7,281,971, respectively, that is available for carryforward for federal income tax purposes and will expire in fiscal years 2026 to 2033.


Although the Company has tax loss carry-forwards, 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.


A reconciliation of the statutory tax rate to the effective tax rate is as follows (rounded to $00):


 

 

2018

 

2017

 

Income tax benefit computed at statutory rate

 

$

296,200

 

$

69,400

 

Change in fair value of derivative

 

 

(49,000

)

 

121,900

 

Other non-deductible expenses

 

 

(55,200

)

 

(157,900

)

Effect of U.S. tax law change

 

 

(1,016,100

)

 

 

Less valuation allowance

 

 

824,100

 

 

(33,400

)

Net deferred tax asset

 

$

 

$

 


The Company has maintained a full valuation allowance against its deferred tax assets at January 31, 2018 and 2017. A valuation allowance is required to be recorded when it is more likely than not that some portion or all of the net deferred tax assets will not be realized. Since the Company cannot be assured of realizing the net deferred tax asset, a full valuation allowance has been provided.


The Company does not have any uncertain tax positions at January 31, 2018 and 2017 that would affect its effective tax rate. The Company does not anticipate a significant change in the amount of unrecognized tax benefits over the next twelve months. Because the Company is in a loss carryforward position, the Company is generally subject to US federal and state income tax examinations by tax authorities for all years for which a loss carryforward is available. If and when applicable, the Company will recognize interest and penalties as part of income tax expense.


On December 22, 2017, the Tax Cuts and Jobs Act (“The Act”) was enacted into law. The Act provides for significant changes to the U.S. Internal Revenue Code of 1986 that impact corporate taxation requirements, such as the reduction of the federal tax rate for corporations from 34% to 21%. As a result of the Tax Act, deferred tax assets decreased by approximately $1,016,100, with an offsetting decrease to the valuation allowance.


NOTE 6 – COMMITMENTS AND CONTINGENCIES


There is pending litigation initiated by the Company around the validity of a $100,000 note which the Company signed based upon representations of funding from the maker which were never received. The Company initiated litigation to dispute the note and the 10,151,540 shares that have been issued. There was no consideration for the issuance of the shares and the shares have been accounted for as if they were returned and cancelled although they have not been returned.


F-13



NOTE 7 – DERIVATIVE LIABILITIES


As of January 31, 2018 and January 31, 2017, the Company had derivative liabilities of $760,788 and $421,973, respectively. During the years ended January 31, 2018 and 2017, the Company recorded a loss of $149,008 and a gain of $358,442 from the change in the fair value of derivative liabilities, respectively.


The derivative liabilities are valued as a level 3 input for valuing financial instruments.


The derivatives arise from convertible debt where the debt is convertible into common stock at variable conversion prices. As the price of the common stock varies it triggers a gain or loss based upon the discount to market assuming the debt was converted at the balance sheet date.


In addition, the Company had derivatives arising from reclassification of equity instrument to liability due to insufficient authorized shares available for issuance using FIFO method.


The fair value of the derivative liability is determined using the lattice model, is re-measured on the Company’s reporting dates, and is affected by changes in inputs to that model including our stock price, expected stock price volatility, the expected term, and the risk-free interest rate. In our calculation at January 31, 2018, volatility ranged from 242% to 288%, the term ranged from 0.66 to 2.94 year, and the risk free interest rate was from 1.88% to 2.03%. At January 31, 2017, volatility ranged from 170% to 315%, the term ranged from 0.66 to 2.16 years, and the average risk free interest rate was 0.997%.


 

 

Level 3

 

 

Derivatives

Balance, January 31, 2016

 

$

745,129

 

Derivative Liabilities due to New Convertible Debt

 

$

90,318

 

Reclassification of Derivative Liabilities to Additional Paid-in Capital

 

 

 

 

Due to Conversion of Notes Payable

 

$

(55,032

)

Market-to-Market Adjustment of Derivatives

 

$

(358,442

)

Balance, January 31, 2017

 

$

421,973

 

Derivative Liabilities due to New Convertible Debt

 

$

206,280

 

Derivative Liabilities due to Tainted Warrant

 

 

2,408

 

Reclassification of Derivative Liabilities to Additional Paid in Capital

 

 

 

 

Due to Conversion of Notes Payable

 

$

(18,881

)

Market-to-Market Adjustment of Derivatives

 

$

149,008

 

Balance, January 31, 2018

 

$

760,788

 


NOTE 8 – RELATED PARTY TRANSACTIONS


As of January 31, 2018 and 2017, the Company had $292,415 and $145,650, respectively, of related party accrued expenses related to accrued compensation for employees and consultants.


The Company maintains its executive offices of approximately 300 sq. ft., at 758 E. Bethel School Road, Coppell, Texas 75019 in the home of the President and CEO for which it pays no rent. The Company and the CEO moved the office to 6515 Goodman Rd., #258, Olive Branch, Mississippi. 38654 in July 2018. The Company plans to lease office space when their operations require it and funding permits.


NOTE 9 – SUBSEQUENT EVENTS


Conversion of notes


On June 6, 2018, 66,897,096 shares were issued for the conversion of a $2,200 note and $1,145 interest that had a conversion price at 50% of the lowest market price during the period that the Company fails to make all required periodic filings with SEC.


On July 30, 2018, 54,767,518 shares were issued for the conversion of a $1,760 note and $978 interest that had a conversion price at 50% of the lowest market price during the period that the Company fails to make all required periodic filings with SEC.


On October 9, 2018, 52,885,151 shares were issued for the conversion of a $1,650 note and $994 interest that had a conversion price at 50% of the lowest market price during the period that the Company fails to make all required periodic filings with SEC.


F-14



On October 22, 2018, 49,622,751 shares were issued for the conversion of a $1,540 note and $941 interest that had a conversion price at 50% of the lowest market price during the period that the Company fails to make all required periodic filings with SEC.


Issuance of convertible notes


On March 23, 2018, the Company issued a convertible note of $10,000. The note bears interest at 15% per annum and mature in twelve months from the issuance date. The note can be converted at a price equal to 50% of the lowest bid price of common stock reported on the National Quotations Bureau OTC Markets during the 20 days prior to the conversion.


In May and June 2018, the Company received funding of $12,500 for the backend note entered in December 2017. The note bears interest at 15% per annum and matures on December 27, 2018. The note can be converted at a price equal to 50% of the lowest bid price of common stock reported on the National Quotations Bureau OTC Markets for the 20 days prior to the conversion, but not higher than $0.000075.


On June 6, 2018, the Company issued a convertible note with principal of $82,500 and net proceed of $71,500. The note bears interest at 12% per annum and mature in twelve months from the issuance date. The note can be converted at a price equal to 52% of the lowest bid price of common stock reported on the National Quotations Bureau OTC Markets for the 20 days prior to the conversion. Upon default, the conversion price change to 35% of the lowest trading price for the 20 days prior to the conversion.


On June 20, 2018, the Company issued a convertible note with principal of $55,000 and net proceed of $50,000. The note bears a one-time interest at 10% of the principal amount on the issuance date and mature in eight months from the issuance date. The note can be converted at a price equal to 60% of the lowest bid price of common stock reported on the National Quotations Bureau OTC Markets for the 20 days prior to the conversion. Upon default, the outstanding balance shall increase to 150% of the outstanding balance and a penalty of $1,000 per day shall accrue until the default is remedied.


On June 21, 2018, the Company received $33,500 (net proceeds of $32,000) for the backend notes entered in March 2016. The notes bears interest at 24% per annum and were due immediately. The note can be converted at a price equal to 50% of the lowest bid price of common stock reported on the National Quotations Bureau OTC Markets for the 15 prior days, but not higher than $0.005.


On June 21, 2018, the Company received $17,839 (net proceeds of $15,839) for the backend note entered in February 2016. The note bears interest at 24% per annum and was due immediately. The note can be converted at a price equal to 50% of the lowest bid price of common stock reported on the National Quotations Bureau OTC Markets for the 15 days prior to the conversion, but not higher than $0.001.


On October 22, 2018, the Company issued a convertible note with principal of $47,250 and net proceed of $45,000. The note bears interest at 8% per annum and mature in eight months from the issuance date. The note can be converted at a price equal to 50% of the lowest bid price of common stock reported on the National Quotations Bureau OTC Markets for the 15 days prior to the conversion, but not higher than $0.005.


Issuance of replacement notes


On April 25, 2018, the Company entered into replacement notes with 4 existing note holders including Larry Glenn, Jr., Charles Hickle, Dynacap Global Capital Fund II, LP., and Phenix Suites, LLC. The new notes combined the principle amounts of each of their existing notes along with each note’s accrued interest, extended the maturity dates to April 24, 2020 with an interest rate per annum of 15%.


Each note is convertible with a conversion price for each share equal to the lower of: (a) 50% lowest bid price of the common stock, as reported on the National Quotations Bureau OTC Markets which the Company’s shares are traded or any exchange upon which the common stock may be traded in the future, for the 20 (twenty) prior trading days including the day of issuance of this herein Note or (b) 50% lowest bid price of the common stock, as reported on the National Quotations Bureau OTC Markets which the Company’s shares are traded or any exchange upon which the common stock may be traded in the future, for the 20 (twenty) prior trading days including the day upon which a Notice of Conversion of the Note, is received by the Company. The total principal and accrued interest replaced were $538,353 and $308,976, respectively.


Cancellation of convertible notes


On February 1, 2018, the Company entered a loan cancellation agreement with Optimum MCGI Holdings LLC. An aggregate total amount of $36,837 was cancelled and released.


F-15



Modification to rights of security holders


On June 8, 2018, the Company filed a Certificate of Designation for its Series D Preferred Stock with the Secretary of State of Nevada designating 870 shares of its authorized preferred stock as Series D Preferred Stock (“Series D”). The shares of Series D have a par value of $0.001 per share. The shares of Series D do not have any dividend rights, voting rights or pre-emptive rights and are redeemable by either the Company or the holder at an amount of $1,000 per share.


On June 8, 2018, the Company, after having obtained requisite shareholder approval, filed amendments to its Certificate of Designation with the Secretary of State of Nevada, increased the designated Series B Preferred Stock to 20,000 shares from 1,000 shares and modified certain rights and preferences. Pursuant to the amendment, the Series B Preferred Stock has voting rights equal to 66.7% of the total voting rights at any time.


On June 8, 2018, the Company, after having obtained requisite shareholder approval, filed amendments to its Certificate of Designation with the Secretary of State of Nevada, to modify certain rights and preferences of Series C Preferred Stock. Pursuant to the amendment, 7,250 shares were designated as Series C Convertible Preferred Stock. Any issued and outstanding shares of Series C Convertible Preferred Stock shall automatically convert at $2.63 per share on December 31, 2021. Prior to the conversion, the holders do not have any dividend right, voting right. The holders also have no redemption right.


On June 13, 2018, the Company, after having obtained requisite shareholder approval, filed amendments to its Certificate of Designation with the Secretary of State of Nevada, decreased the designated Series A Preferred Stock to 330,000 shares from 500,000 shares and modified certain rights and preferences. Pursuant to the amendment, any issued and outstanding shares of Series A Convertible Preferred Stock shall automatically convert at $0.152 per share on December 31, 2018. The Company has the option to force a conversion at any time after issuance. Prior to the conversion, the holders do not have any liquidation and voting right.


Acquisition


On June 18, 2018, the Company entered into a Binding Letter of Intent (“Binding LOI”), with The 4Less Corp. (“4Less”). The Company will acquire all of the issued and outstanding shares of common stock of 4Less. The Company shall issue (1) 19,000 shares of Series B preferred stock (2) 6,750 shares of Series C preferred stock (3) 750 shares of Series D preferred stock to shareholders and pay $150,000 to 4Less within 15 days of execution of this Binding LOI. The amount was subsequently reduced to $110,000 by verbal agreement between the parties. The Company paid the $110,000 in June 2018. Timothy Armes, CEO of the Company, agreed to return 60,000,000 shares of common stock of the Company in exchange for 120 shares of Series D preferred stock at the time of execution of the definitive agreement.


On October 12, 2018 section 8 of the Binding Letter of Intent (LOI) was replaced in its entirety to reflect the extension of the term of the LOI by 30 days.


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