United States

Securities and Exchange Commission

Washington, D.C. 20549

 

FORM 10-Q

 

(Mark One)

 

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

 

For the quarterly period ended July 31, 2018

 

OR

 

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

 

From the transition period ___________ to ____________.

 

Commission File Number 333-152444

 

MEDCAREERS GROUP, INC .

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

 

Nevada

7389

26-1580812

(State or jurisdiction of
incorporation or organization) 

(Primary Standard Industrial
Classification Code Number)

(IRS Employer
Identification No.) 

 

6515 Goodman Rd., #258, Olive Branch, MS 38654

(Address of principal executive offices)

 

(662) 510-8992

(Issuer’s telephone number)

 

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

Yes [X]   No [_]

 

Indicate by check mark whether the registrant has submitted electronically 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 [X]   No [_].

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, a 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 Accelerated Filer  [_]      Accelerated Filer  [_]

 

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

 

Yes [_]   No [X].

 

As of November 6, 2018, there were 1,064,651,043 shares of Common Stock of the issuer outstanding.

 



TABLE OF CONTENTS

 

PART I.

FINANCIAL STATEMENTS (Unaudited)

3

 

 

 

ITEM 1.

Consolidated Financial Statements (Unaudited)

3

 

 

 

 

Notes to Consolidated Financial Statements (Unaudited)

6

 

 

 

ITEM 2.

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

13

 

 

 

ITEM 3.

Quantitative and Qualitative Disclosure About Market Risk

16

 

 

 

ITEM 4.

Controls and Procedures

17

 

 

 

PART II.

OTHER INFORMATION

17

 

 

 

ITEM 1.

Legal Proceedings

17

 

 

 

ITEM 1A.

Risk Factors

17

 

 

 

ITEM 2.

Unregistered Sales of Securities and Use of Proceeds

17

 

 

 

ITEM 3.

Default Upon Senior Securities

18

 

 

 

ITEM 4.

Mine Safety Disclosures

18

 

 

 

ITEM 5.

Other Information

18

 

 

 

ITEM 6.

Exhibits

18

 

- 2 -



MEDCAREERS GROUP, INC.

Consolidated Balance Sheets

July 31, 2018 and January 31, 2018

(Unaudited)


 

 

July 31, 2018

 

January 31, 2018

 

 

 

 

 

 

 

 

 

Assets

 

 

 

 

 

 

 

Current Assets

 

 

 

 

 

 

 

Cash and Cash Equivalents

 

$

15,678

 

$

2,830

 

Deposit for Planned Merger

 

 

110,000

 

 

 

 

 

 

 

 

 

 

 

Total Assets

 

$

125,678

 

$

2,830

 

 

 

 

 

 

 

 

 

Liabilities and Stockholders’ Deficit

 

 

 

 

 

 

 

Current Liabilities

 

 

 

 

 

 

 

Accounts Payable

 

$

49,150

 

$

44,342

 

Accrued Expenses

 

 

209,430

 

 

215,591

 

Accrued Expenses – Related Party

 

 

334,250

 

 

292,415

 

Deferred Revenues

 

 

10,015

 

 

14,496

 

Accrued Interest Payable

 

 

315,630

 

 

527,831

 

Derivative Liabilities

 

 

3,722,250

 

 

760,788

 

Short Term Debt, net of Debt Discount of $147,159 and $46,788, respectively

 

 

1,455,075

 

 

1,057,051

 

Total Liabilities

 

 

6,095,800

 

 

2,912,514

 

 

 

 

 

 

 

 

 

Stockholders’ Deficit

 

 

 

 

 

 

 

Preferred Stock, $0.001 par value, 19,642,880 shares authorized, 0 shares issued and outstanding

 

 

 

 

 

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

 

 

330

 

 

330

 

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

 

 

1

 

 

1

 

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

 

 

 

 

 

Common Stock, $0.001 par value, 4,000,000,000 shares authorized, 962,143,141 and 840,478,527 shares issued and outstanding

 

 

962,143

 

 

840,478

 

Additional Paid-In Capital

 

 

5,454,101

 

 

5,387,205

 

Accumulated Deficit

 

 

(12,386,697

)

 

(9,137,698

)

Total Stockholders’ Deficit

 

 

(5,970,122

)

 

(2,909,684

)

 

 

 

 

 

 

 

 

Total Liabilities and Stockholders’ Deficit

 

$

125,678

 

$

2,830

 


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


- 3 -



MEDCAREERS GROUP, INC.

Consolidated Statements of Operations

For the Three and Six Months Ended July 31, 2018 and 2017

(Unaudited)


 

 

Three Months Ended

 

Six Months Ended

 

 

 

July 31, 2018

 

July 31, 2017

 

July 31, 2018

 

July 31, 2017

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Revenues

 

$

7,041

 

$

9,506

 

$

14,037

 

$

18,861

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating Expenses:

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling and Advertising

 

 

2,045

 

 

858

 

 

4,151

 

 

1,269

 

General and Administrative

 

 

73,621

 

 

106,580

 

 

114,827

 

 

189,140

 

Total Operating Expenses

 

 

75,666

 

 

107,438

 

 

118,978

 

 

190,409

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Operating Loss

 

 

(68,625

)

 

(97,932

)

 

(104,941

)

 

(171,548

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Other Income (Expense)

 

 

 

 

 

 

 

 

 

 

 

 

 

Change in Fair Value of Derivatives

 

 

(1,197,386

)

 

(22,173

)

 

(2,643,405

)

 

6,507

 

Loss on Conversion of Notes Payable

 

 

(162,768

)

 

 

 

(162,768

)

 

 

Gain on Debt Extinguishment

 

 

 

 

 

 

36,837

 

 

 

Interest Expense

 

 

(301,894

)

 

(44,587

)

 

(374,722

)

 

(90,588

)

Total Other Income (Expense)

 

 

(1,662,048

)

 

(66,760

)

 

(3,144,058

)

 

(84,081

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net Loss

 

$

(1,730,673

)

$

(164,692

)

$

(3,248,999

)

$

(255,629

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Weighted Average Common Shares Outstanding - Basic and Diluted

 

 

882,389,097

 

 

561,655,477

 

 

861,781,137

 

 

561,655,477

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Loss per Common Share - Basic and Diluted

 

$

(0.00

)

$

(0.00

)

$

(0.00

)

$

(0.00

)


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


- 4 -



MEDCAREERS GROUP, INC.

Consolidated Statements of Cash Flows

For the Three Months Ended July 31, 2018 and 2017

(Unaudited)


 

 

2018

 

2017

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM OPERATING ACTIVITIES

 

 

 

 

 

 

 

Net Loss

 

$

(3,248,999

)

$

(255,629

)

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

 

 

 

 

 

 

 

Amortization of Debt Discount

 

 

105,440

 

 

34,875

 

Loss (Gain) on Change in Fair Value of Derivative Liabilities

 

 

2,643,405

 

 

(6,507

)

Additional Interest Expense from Derivative Liabilities

 

 

151,456

 

 

 

Gain on Extinguishment of Debt

 

 

(36,837

)

 

 

Loss on Conversion of Notes Payable

 

 

162,768

 

 

 

Change in Operating Assets and Liabilities:

 

 

 

 

 

 

 

Accounts Payable

 

 

4,808

 

 

8,417

 

Accrued Expenses

 

 

(6,161

)

 

30,278

 

Accrued Expenses – Related Party

 

 

41,835

 

 

132,745

 

Deferred Revenue

 

 

(4,481

)

 

55,961

 

Accrued Interest Payable

 

 

117,775

 

 

(1,296

)

CASH FLOWS USED IN OPERATING ACTIVITIES

 

 

(68,991

)

 

(1,156

)

 

 

 

 

 

 

 

 

CASH FLOWS FROM INVESTING ACTIVITIES

 

 

 

 

 

 

 

Deposit for Planned Merger

 

 

(110,000

)

 

 

CASH FLOWS USED IN INVESTING ACTIVITIES

 

 

(110,000

)

 

 

 

 

 

 

 

 

 

 

CASH FLOWS FROM FINANCING ACTIVITIES

 

 

 

 

 

 

 

Proceeds from Notes Payable, net

 

 

191,839

 

 

 

CASH FLOWS PROVIDED BY FINANCING ACTIVITIES

 

 

191,839

 

 

 

 

 

 

 

 

 

 

 

NET INCREASE (DECREASE) IN CASH

 

 

12,848

 

 

(1,156

)

 

 

 

 

 

 

 

 

CASH AT BEGINNING OF PERIOD

 

 

2,830

 

 

1,156

 

CASH AT END OF PERIOD

 

$

15,678

 

$

 

 

 

 

 

 

 

 

 

Supplemental Disclosures of Cash Flow Information:

 

 

 

 

 

 

 

Cash Paid for Interest

 

$

 

$

 

Cash Paid for Income Taxes

 

$

 

$

 

 

 

 

 

 

 

 

 

Non-Cash Financing Items:

 

 

 

 

 

 

 

Issuance of Convertible Debt to Replace Existing Debt and Accrued Interest

 

$

847,369

 

$

 

Issuance of Common Shares for Debt and Accrued Interest Conversion

 

$

25,973

 

$

 


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


- 5 -



MEDCAREERS GROUP, INC.

Notes to Consolidated Financial Statements

(Unaudited)


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 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 accounting principles generally accepted in the United States.


The accompanying unaudited consolidated financial statements and related notes have been prepared in accordance with the rules and regulations of the U.S. Securities and Exchange Commission (“SEC”) for interim unaudited consolidated financial information. Accordingly, they do not include all of the information and footnotes required by accounting principles generally accepted in the United States of America (“GAAP”) for complete consolidated financial statements. Certain information and footnote disclosure normally included in financial statements prepared in accordance with GAAP have been omitted pursuant to instructions, rules, and regulations prescribed by the SEC. The unaudited consolidated financial statements reflect all adjustments (consisting of normal recurring adjustments) which are, in the opinion of management, necessary for a fair statement of the results for the interim periods presented. Interim results are not necessarily indicative of the results for the full year. These unaudited consolidated financial statements should be read in conjunction with the audited consolidated financial statements of the Company for the year ended January 31, 2018 and notes thereto contained in the Company’s Annual Report on Form 10-K.


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.


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.


- 6 -



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.


The following table sets forth, by level within the fair value hierarchy, the Company’s financial liabilities that were accounted for at fair value on a recurring basis as of July 31, 2018:


 

 

July 31, 2018

 

Quoted Prices in
Active Markets
For Identical
Assets
(Level 1)

 

Significant
Other
Observable
Inputs
(Level 2)

 

Significant
Unobservable
Inputs
(Level 3)

 

Liabilities:

 

 

 

 

 

 

 

 

 

 

 

 

 

Derivative Liabilities – embedded redemption feature

 

$

3,722,250

 

$

 

$

 

$

3,722,250

 

Totals

 

$

3,722,250

 

$

 

$

 

$

3,722,250

 


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.


Revenue Recognition:


The Company generates revenues from job postings, banner advertisements and email campaigns. Prior to February 1, 2018, 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.


Beginning February 1, 2018, the Company analyzes contracts to determine the appropriate revenue recognition using the following steps: (i) identification of contracts with customers; (ii) identification of distinct performance obligations in the contract; (iii) determination of contract transaction price; (iv) allocation of contract transaction price to the performance obligations; and (v) determination of revenue recognition based on timing of satisfaction of the performance obligation. The Company recognizes revenues upon the satisfaction of its performance obligations (upon transfer of control of promised goods or services to customers) in an amount that reflects the consideration to which it expects to be entitled in exchange for those goods or services.


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.


- 7 -



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 loss 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 July 31, 2018 and 2017, which were potentially dilutive common stock equivalents but would be antidilutive and are not included.  As the Company incurred a net loss during the three and six months ended July 31, 2018 and 2017, the common stock equivalents were considered anti-dilutive.


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, was effective for reporting periods beginning after December 15, 2017. The Company adopted this standard as of February 1, 2018.  The new guidance did not 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


MedCareers’ financial statements are prepared using United States generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business.  The Company has incurred cumulative losses through July 31, 2018 of $12,386,697 and has a working capital deficit at July 31, 2018 of $5,970,122. As of July 31, 2018, the Company only had cash and cash equivalents of $15,678 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 within one year after the date the financial statements are 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 MedCareers 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.  MedCareers’ financial statements do not include any adjustments that might result from the outcome of this uncertainty.


NOTE 3 – DEPOSIT FOR PLANNED MERGER


On June 18, 2018, the Company entered into a Binding Letter of Intent (“Binding LOI”), with The 4Less Corp. (“4Less”). Pursuant to the agreement, the Company agreed to acquire all of the issued and outstanding shares of 4Less’ common stock by issuing (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 the Company’s common stock in exchange for 120 shares of the Company’s Series D preferred stock at the time of execution of a 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. On October 12, 2018, the parties agreed to extend the term by 30 days from 120 days to 150 days.


- 8 -



NOTE 4 – SHORT-TERM DEBT


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


 

 

 

Outstanding Principal at

 

Maturity Date

Interest Rate

Conversion Price

July 31, 2018

 

January 31, 2018

 

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

 

April 24, 2020

15%

(3)

 

69,730

 

 

 

July 31, 2013

12%

$0.06

 

5,000

 

 

5,000

 

Nov 30, 2014

12%

Not convertible

 

 

 

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

 

 

27,361

 

Sep 10, 2017

8%

(2)

 

23,863

 

 

23,863

 

Sep 10, 2017

8%

(2)

 

8,395

 

 

12,355

 

Sep 10, 2017

8%

(2)

 

26,697

 

 

26,697

 

Sep 10, 2017

8%

(2)

 

38,677

 

 

38,677

 

Dec 4, 2017

8%

(7)

 

25,000

 

 

25,000

 

Feb 3, 2017

8%

(7)

 

25,000

 

 

25,000

 

Mar 3, 2017

8%

(8)

 

30,000

 

 

30,000

 

Mar 24, 2017

8%

(8)

 

25,000

 

 

25,000

 

Jan 2014 to Jan 2018

12%

$0.07 to $0.10

 

 

 

454,650

 

April 24, 2020

15%

(3)

 

738,936

 

 

 

July 8, 2015

8%

(1)

 

5,500

 

 

5,500

 

May 5, 2015

8%

(3)

 

4,500

 

 

4,500

 

May 14, 2015

8%

(1)

 

23,297

 

 

23,297

 

May 19, 2015

8%

(1)

 

 

 

7,703

 

June 12, 2015

8%

(1)

 

 

 

26,500

 

April 24, 2020

15%

(3)

 

34,203

 

 

 

July 19, 2016

8%

(1)

 

5,000

 

 

5,000

 

Mar 3, 2017

8%

(8)

 

30,000

 

 

21,500

 

Feb 3, 2017

8%

(7)

 

25,000

 

 

7,161

 

Dec 27, 2018

15%

(4)

 

64,250

 

 

51,750

 

Jan 5, 2019

15%

(4)

 

18,325

 

 

18,325

 

Mar 23, 2019

15%

(3)

 

10,000

 

 

 

June 20, 2019

15%

(3)

 

25,000

 

 

 

June 6, 2019

12%

(5)

 

82,500

 

 

 

February 20, 2019

15%

(6)

 

55,000

 

 

 

Debt Discount

 

(147,159

)

 

(46,788

)

Total

$

1,455,075

 

$

1,057,051

 

_________

(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)

52% of the lowest trading price for the twenty trading days prior to conversion day. Upon default, the conversion price change to 35% of the lowest trading price for the twenty trading days prior to conversion day.

(6)

60% of the lowest trading price for the twenty trading days prior to conversion day. 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.

(7)

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

(8)

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


- 9 -



The Company had accrued interest payable of $315,630 and $527,831 at July 31, 2018 and January 31, 2018, 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 inception date. For the six months ended July 31, 2018 and 2017, the Company recorded amortization expense of $105,440 and $34,875, respectively.


As of July 31, 2018, the Company had $525,037 of aggregate debt in default. The agreements 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. As the conversion option is bifurcated and accounted for at fair value both before and after the exchange, the debt instrument without the conversion option is evaluated under the guidance in ASC 470-50 for nonconvertible debt using the 10% cash flow test. The bifurcated conversion option is accounted for at fair value both before and after the modification with any changes in the fair value of the conversion option reflected in earnings. Upon the replacement of the convertible notes, the Company recognized the fair value of the new embedded conversion feature of $1,917,387 as a derivative liability, resulting in a loss on change in fair value of the derivative liabilities of $1,841,053.


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, and the Company recorded a gain on debt extinguishment.


NOTE 5 – DERIVATIVE LIABILITIES


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.


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 July 31, 2018, volatility ranged from 178% to 268%, the term ranged from 0.25 to 2.44 year, and the risk free interest rate was from 1.38% to 2.47%. At January 31, 2018, volatility ranged from 242% to 288%, the term ranged from 0.66 to 2.94 years, and the average risk free interest rate was from 1.88% to 2.03%.


 

 

Level 3

 

 

Derivatives

Balance, January 31, 2018

 

$

760,788

 

Derivative Liabilities due to New Convertible Debt

 

 

337,767

 

Due to Conversion of Convertible Debt

 

 

(19,710

)

Loss on Change in Fair Value of Derivative Liabilities

 

 

2,643,405

 

Balance, July 31, 2018

 

$

3,722,250

 


For the three months ended July 31, 2018 and 2017, the Company recorded loss from the change in the fair value of derivative liabilities of $1,197,386 and $22,173, respectively.


For the six months ended July 31, 2018 and 2017, the Company recorded gain (loss) from the change in the fair value of derivative liabilities of $(2,643,405) (including loss on change in the fair value of derivative liabilities due to the replacement of convertible notes of $1,841,053) and $6,507, respectively.


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NOTE 6 – 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 has 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. As of July 31, 2018, the Company had 330,000 shares of Series A Preferred issued and outstanding.


Holders of the Series B Preferred Stock has voting rights equal to 51% of the total voting rights at any time.  There are no conversion rights granted holders of Series B Preferred shares. As of July 31, 2018, the Company had 1,000 shares of Series B Preferred Stock issued, outstanding and held by Timothy Armes, CEO of the Company.


Holders of the Series C Preferred Stock have the right to convert into the common stock of the Company at any time at the holder’s option by multiplying the number of issued and outstanding shares of the common stock by 2.63 on conversion date.  The holders of Series C Preferred shares, they are not entitled to dividends, and the Company does not have the right of redemption. At July 31, 2018, there are 0 shares issued and outstanding of the Series C Preferred Stock.


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.


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.  During the three months ended July 31, 2018, the Company issued the following common stock:


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 feature at 50% of the market price per share.


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 feature at 50% of the market price per share.


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Warrants:


The Company had the following warrants activity for the six months ended July 31, 2018:


 

 

Number of
Warrants

 

Weighted
Average
Exercise
Price
For Share

 

Weighted
Average
Remaining
Contractual
Term (Years)

 

Aggregate
Intrinsic
Value

 

 

 

 

 

 

 

 

 

Outstanding and exercisable at January 31, 2018

 

37,500,000

 

$ 0.01

 

2.79

 

$ —

Grant

 

 

    —

 

 

 

 

Outstanding and exercisable at July 31, 2018

 

37,500,000

 

$ 0.01

 

2.30

 

$ —


NOTE 7 – RELATED PARTY TRANSACTIONS


As of July 31, 2018 and January 31, 2018, the Company had $334,250 and $292,415, respectively, of related party accrued expenses related to accrued compensation for employees and consultants.


The Company maintained 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 8 – 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 was 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.


NOTE 9 – SUBSEQUENT EVENTS


Conversion of notes


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.


On October 22, 2018, 49,622,751 shares were issued for the conversion of a $1,540 note and $941 interest that had a default 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 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.


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


FORWARD-LOOKING STATEMENTS


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


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


Company


MedCareers Group, Inc. (“ MedCareers ”, the “ Company ”, “ we ” or “ us ”), the Company described herein, is a Nevada corporation, with offices located at 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:


According to the Bureau of Labor Statistics’ Employment Projections 2010-2020 released in February 2012, the Registered Nursing workforce is the top occupation in terms of job growth through 2020. It is expected that the number of employed nurses will grow from 2.74 million in 2010 to 3.45 million in 2020, an increase of 712,000 or 26%.

 

 

Based on findings from the Nursing Management Aging Workforce Survey released in the July 2006 issue of Nursing Management magazine, 55% of surveyed nurses reported their intention to retire between 2011 and 2020.

 

 

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).

 

 

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

 

 

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


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


Results for the three months ended July 31, 2018 and 2017


Revenues


For the three months ended July 31, 2018 and 2017, revenues were $7,041 and $9,506, 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 expenses


Selling and advertising expenses were $2,045 and $858 for the three months ended July 31, 2018 and 2017, respectively. This increase of the selling and advertising expenses was mainly related to more sales presentations performed by the Company’s President.


General and administrative expenses


General and administrative expenses for the three months ended July 31, 2018 and 2017 were $73,621 and $106,580, respectively. The decrease was mainly resulted from the decrease of the compensation to consultants.


Other income (expense)


Interest expense on loans was $301,894 and $44,587 for the three months ended July 31, 2018 and 2017, respectively. Also, there were other expense relating to loss on derivatives of $1,197,386 and $22,173 for the three months ended July 31, 2018 and 2017, respectively. In the three months ended July 31, 2018, the Company also recorded a loss from conversion of debt and accrued interest of $162,768 compared to $0 for the same period in 2017.


Results for the six months ended July 31, 2018 and 2017


Revenues


For the six months ended July 31, 2018 and 2017, revenues were $14,037 and $18,861, 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 expenses


Selling and advertising expenses were $4,151 and $1,269 for the six months ended July 31, 2018 and 2017, respectively. The increase of the selling and advertising expenses was mainly related to a trade show expense of $1,600 and increase of sales presentations performed by the Company’s President.


General and administrative expenses


General and administrative expenses for the six months ended July 31, 2018 and 2017 were $114,827 and $189,140, respectively. The decrease was mainly resulted from the decrease of the compensation to consultants.


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Other income (expense)


Interest expense on loans was $374,722 and $90,588 for the six months ended July 31, 2018 and 2017, respectively. Also, there were other income (expense) relating to gain (loss) on derivatives of $(2,643,405) and $6,507 for the six months ended July 31, 2018 and 2017, respectively. In the six months ended July 31, 2018, the Company also recorded a gain from extinguishment of debt of $36,837 compared to $0 for the same period in 2017. In the six months ended July 31, 2018, the Company also recorded a loss from conversion of debt and accrued interest of $162,768 compared to $0 for the same period in 2017.


Liquidity and Capital Resources


As of July 31, 2018, the Company had negative working capital of $5,970,122, comprised of current assets of $125,678 and current liabilities of $6,095,800.


Net cash used in operations for the six months ended July 31, 2018 was $68,991 compared to $1,156 for the six months ended July 31, 2017.


Net cash used in investing activities for the six months ended July 31, 2018 was $110,000 compared to $0 for the same period in 2017.


Net cash provided by financing activities for the six months ended July 31, 2018 was $191,839 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.


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 3. Quantitative and Qualitative Disclosure about Market Risk.


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


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ITEM 4. Controls and Procedures


(a)           Evaluation of disclosure controls and procedures. Our Chief Executive Officer and Principal Financial Officer, after evaluating the effectiveness of our “ disclosure controls and procedures ” (as defined in the Securities Exchange Act of 1934 Rules 13a-15(e) and 15d-15(e)) as of the end of the period covered by this Quarterly Report on Form 10-Q (the “ Evaluation Date ”), has concluded that as of the Evaluation Date, our disclosure controls and procedures were not effective to provide reasonable assurance that information we are required to disclose in reports that we file or submit under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.  Moving forward, we hope that our Chief Executive Officer and Principal Financial Officer will be able to devote the additional time and effort required so that our disclosure controls and procedures are once again effective.  Notwithstanding the assessment that our internal controls and procedures were not effective, we believe that our financial statements contained in this Quarterly Report for the quarter ended July 31, 2018 fairly present our financial position, results of operations and cash flows for the years and months covered thereby in all material respects.


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


PART II


Item 1. Legal Proceedings


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 was never received. The Company initiated litigation to dispute the note and the 10,151,540 shares that have been issued.


Item 1A. Risk Factors


There have been no material changes from the risk factors previously disclosed in the Company’s Annual Report on Form 10-K for the year ended January 31, 2018, filed with the Commission on November 7, 2018, other than as set forth below, and investors are encouraged to review such risk factors below and in the Form 10-K, prior to making an investment in the Company.


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


Recent Sales of Unregistered Securities


 

Consideration

 

Date

 

# of Shares

Balance, Number of shares outstanding, January 31, 2018

 

 

 

 

840,478,527

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

Convert a portion of note payable

(1)

June 6, 2018

 

66,897,096

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

Convert a portion of note payable

(2)

July 30, 2018

 

54,767,518

Balance, Number of shares outstanding, July 31, 2018

 

 

 

 

962,143,141


(1)  Partial conversion of Note that had a conversion feature at 50% of the lowest market price during the period that the Company fails to make all required periodic filings with SEC. These shares were issued for the conversion of $2,200 of the note plus $1,145 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.


(2)  Partial conversion of Note that had a conversion feature at 50% of the lowest market price during the period that the Company fails to make all required periodic filings with SEC. These shares were issued for the conversion of $1,760 of the note and $978 of accrued interest.


- 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.


Item 3. Default Upon Senior Securities


None.


Item 4. Mine Safety Disclosures


Not applicable.


Item 5. Other Information


None.


Item 6. Exhibits


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


- 18 -



SIGNATURES


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


MedCareers Group, Inc.


By:   /s/ Timothy Armes

Timothy Armes

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


Date: 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.


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