ITEM 2. MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.
FORWARD-LOOKING STATEMENTS
This quarterly report on Form 10-Q includes forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, which we refer to in this quarterly report as the Securities Act, and Section 21E of the Securities Exchange Act of 1934, as amended, which we refer to in this quarterly report as the Exchange Act. Forward-looking statements are not statements of historical fact but rather reflect our current expectations, estimates and predictions about future results and events. These statements may use words such as “anticipate,” “believe,” “estimate,” “expect,” “intend,” “predict,” “project” and similar expressions as they relate to us or our management. When we make forward-looking statements, we are basing them on our management’s beliefs and assumptions, using information currently available to us. These forward-looking statements are subject to risks, uncertainties and assumptions, including but not limited to, risks, uncertainties and assumptions discussed in this quarterly report. Factors that can cause or contribute to these differences include those described under the headings “Risk Factors” and “Management Discussion and Analysis and Plan of Operation.”
If one or more of these or other risks or uncertainties materialize, or if our underlying assumptions prove to be incorrect, actual results may vary materially from what we projected. Any forward-looking statement you read in this quarterly report reflects our current views with respect to future events and is subject to these and other risks, uncertainties and assumptions relating to our operations, results of operations, growth strategy and liquidity. All subsequent written and oral forward-looking statements attributable to us or individuals acting on our behalf are expressly qualified in their entirety by this paragraph. You are cautioned not to place undue reliance on forward-looking statements, which speak only as of the date of this quarterly report. The Company expressly disclaims any obligation to release publicly any updates or revisions to these forward-looking statements to reflect any change in its views or expectations. The Company can give no assurances that such forward-looking statements will prove to be correct.
Company
MedCareers Group, Inc. (“
MedCareers
”, the “
Company
”, “
we
” or “
us
”), the Company described herein, is a Nevada corporation, with offices located at 6515 Goodman Rd., #258, Olive Branch, Mississippi 38654. It can be reached by phone at (972) 393-5892.
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 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.
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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.
Competition
While there are various online community forums and nurse portals, Nurses Lounge does not believe that there is a direct competitor designed from the ground up as a professional network for nurses and to solve many of the day-to-day communications problems nursing organizations have. The largest competitors of Nurses Lounge bill themselves as “
communities
” that claim to provide news, career advice and social interaction, and include Nurse.com - owned by Gannett; NurseConnect - owned and operated by AMN healthcare, a large travel firm; NurseZone - also owned and operated by AMN healthcare; and Allnurses – a nursing forum and discussion board. Additionally, and to a lesser extent, Nurses Lounge indirectly competes with other websites that encourage users to create connections with other colleagues and persons with similar interests such as Linkedin and Facebook, however, unlike like these websites which have very broad general appeal, Nurses Lounge focuses solely on the nursing pro and the organizations which support them.
Proprietary Rights
We plan to rely on a combination of copyright, trade secret and trademark laws, and non-disclosure and other contractual arrangements to protect our proprietary rights moving forward. There can be no assurance that the steps we plan to take in the future to protect our future proprietary rights, however, will be adequate to deter misappropriation of proprietary information, and we may not be able to detect unauthorized use and take appropriate steps to enforce our intellectual property rights. Although we believe that our websites and services will not infringe upon the intellectual property rights of others and that we have all rights necessary to utilize our intellectual property, we are subject to the risk of claims alleging infringement of third-party intellectual property rights. Any such claims could require us to spend significant sums on litigation, pay damages, delay our products and software, develop non-infringing intellectual property or acquire licenses to intellectual property that are the subject of any such infringement. Therefore, such claims could have a material adverse effect on our planned business, operating results and financial condition.
Nursing Profession Overview
From Nurses Lounge business viewpoint, the nursing profession is broken down into the individual registered nurses (RNs) and the professions stake holder organizations consisting of nursing schools, associations and employers.
Throughout their career, nurses need to be connected with numerous organizations in order to simply stay up to date with basic continuing education requirements which they need to meet state guidelines and/or employers qualification to maintain employment.
As such, we believe that there is an opportunity to unite the industry on one simple to use communication platform that can upgrade, simplify and reduce the cost of communications used by stakeholder organizations while providing nurses quick access to the information important to their careers. The market for nurses is growing in the United States and we believe that our website has a significant number of potential users based on the following:
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According to the Bureau of Labor Statistics’ Employment Projections 2010-2020 released in February 2012, the Registered Nursing workforce is the top occupation in terms of job growth through 2020. It is expected that the number of employed nurses will grow from 2.74 million in 2010 to 3.45 million in 2020, an increase of 712,000 or 26%.
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Based on findings from the Nursing Management Aging Workforce Survey released in the July 2006 issue of Nursing Management magazine, 55% of surveyed nurses reported their intention to retire between 2011 and 2020.
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Approximately 660 4-year schools offer a Bachelor of Science in Nursing (BSN) and other advanced degrees such as Masters and PhD.
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Approximately 2,500 community college type schools offer a 2 year Associate Degree in Nursing (ADN).
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Approximately 5,000 hospitals are located across the U.S. where approximately 60% of all nurses are employed, according to American Association Colleges of Nursing (AACN).
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An approximate 250,000 shortage in nurses has been predicted by 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 SIMPLYHIRED AND OTHER INTERNET JOB POSTING WEBSITES.
”, there will be room in the global marketplace for website posting, recruiting and job placement services for the Company’s niche healthcare related websites.
Results for the three months ended April 30, 2018 and 2017
Revenues
Revenue for the three months ended April 30, 2018 and 2017 was $6,996 and $9,355, respectively. Sales decreased because the Company has been transitioning its job board to a pay-per-click model based on location versus promotion of 60-day and unlimited job posting campaigns. The income decreased due to less marketing and therefore less job postings.
Selling and Advertising Expense
Selling and advertising expenses for the three months ended April 30, 2018 and 2017 were $2,106 and $411, respectively. The increase of the selling and advertising expenses was mainly related to a trade show expense of $1,600.
General and Administrative Expense
General and administrative expenses for the three months ended April 30, 2018 and 2017 were $41,206 and $82,560, respectively. The decrease was mainly resulted from the decrease of the compensation to consultants.
Other Income (Expense)
Interest expense on loans was $72,828 and $46,001 for the three months ended April 30, 2018 and 2017, respectively.
Also, there were other income relating to gain (loss) on derivatives of $(1,446,019) and $28,680 for the three months ended April
30, 2018 and 2017, respectively. In the three months ended April 30, 2018, the Company also recorded a gain from extinguishment
of debt of $36,837 compared to $0 for the same period in 2017.
Liquidity and Capital Resources
As of April 30, 2018, the Company had cash of $0 and negative working capital of $4,428,010.
Net cash used in operations for the three months ended April 30, 2018 was $14,348 as compared to $1,068 for the three months ended April 30, 2017. Net cash provided by financing activities for the three months ended April 30, 2018 was $11,518 as compared to $0 for the same period in 2017.
The Company does not have sufficient cash reserves or revenues to meet its contractual obligations under its outstanding notes payable and to pay its ongoing monthly expenses, which the Company anticipates totaling approximately $300,000 over the next 12 months. The Company has been able to continue operating to date largely from loans made by its shareholders and other debt financings to date. The Company is currently looking at either short-term and more permanent financing opportunities, including debt or equity funding, bridge or short-term loans, and/or traditional bank funding, but we have not decided on any specific path moving forward. Unless we have raised sufficient funding to pay our ongoing expenses associated with being a public company, and we have sufficient funds to support our planned operations, the Company can provide no assurances that it will be able to meet its short and long term liquidity needs. The Company continues to generate revenue from the Nurses Lounge business, which the Company believes will increase to the point where the Company can cover its basis monthly obligations, of which there can be no assurance. Our financial statements contain information expressing substantial doubt about our ability to continue as a going concern.
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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.