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.
MedCareers Group, Inc. (“
MedCareers
”, the “
Company
”, “
we
” or “
us
”), the Company described herein, is a Nevada corporation, with offices located at 4580 N Rancho Dr., #130, Las Vegas, NV 89130. It can be reached by phone at (662) 510-8992.
On November 29, 2018, the Company acquired The 4Less Corp. The former owners of The 4Less Corp. now control the Company. The 4Less Corp. is the owner of several branded ecommerce websites including their flagship website Liftkits4less.com. On December 12, 2018, the Company transferred the operations of Nurses Lounge, Inc. to a company owned by Timothy Armes, the Chief Executive Officer of the Company, various debt holders and Series A Preferred Stockholders.
For the three months ended October 31, 2018 and 2017, revenues were $7,787 and $7,496, respectively. Sales increased slightly as the Company continued transitioning its job board to a pay-per-click model based on location versus promotion of 60-day and unlimited job posting campaigns.
Selling and advertising expenses were $932 and $1,786 for the three months ended October 31, 2018 and 2017, respectively. This decrease of the selling and advertising expenses was mainly related to paying less commissions because more sales initiatives performed by the Company’s President.
General and administrative expenses for the three months ended October 31, 2018 and 2017 were $122,539 and $93,967, respectively. The increase was mainly resulted from the increase of the compensation to our CEO.
Other income (expense)
Interest expense on loans was $145,957 and $38,892 for the three months ended October 31, 2018 and 2017, respectively. The increase was due to the Company having more loans outstanding during the third quarter of 2018 compared to the loans outstanding in the third quarter of 2017 and many of the loans were accruing interest at a default rate which was higher than the stated rate. Also, there were other expense relating to loss on derivatives of $1,390,268 and gain on derivatives of $59,962 for the three months ended October 31, 2018 and 2017, respectively. In the three months ended October 31, 2018, the Company also recorded a loss from conversion of debt and accrued interest of $125,384 compared to $0 for the same period in 2017.
Results for the nine months ended October 31, 2018 and 2017
Revenues
For the nine months ended October 31, 2018 and 2017, revenues were $21,824 and $26,357, respectively. Sales decreased because the Company continued transitioning its job board to a pay-per-click model based on location versus promotion of 60-day and unlimited job posting campaigns.
Selling and advertising expenses
Selling and advertising expenses were $5,083 and $3,055 for the nine months ended October 31, 2018 and 2017, respectively. The increase of the selling and advertising expenses was mainly related to commissions paid on sales.
General and administrative expenses
General and administrative expenses for the nine months ended October 31, 2018 and 2017 were $237,366 and
$283,107, respectively. The decrease was mainly resulted from the decrease of the compensation to consultants.
Other income (expense)
Interest expense on loans was $520,697 and $129,480 for the nine months ended October 31, 2018 and 2017, respectively. The increase was because we had more loans outstanding during the year and many of them were accruing interest at a default rate which was higher than the stated rate. It also included amortization of debt discount of $153,902 which is added to the interest amount of $366,777 for the nine months ended October 31, 2018 compared to debt discount of$44,270 and interest of $85,457 for the same period in 2017.
Also, there were other income (expense) relating to gain (loss) on derivatives of $(4,033,673) and $66,469 for the nine months ended October 31, 2018 and 2017, respectively. In the nine months ended October 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 nine months ended October 31, 2018, the Company also recorded a loss from conversion of debt and accrued interest of $288,152 compared to $0 for the same period in 2017.
Liquidity and Capital Resources
As of October 31, 2018, the Company had negative working capital of $7,613,502, comprised of current assets of $117,234 and current liabilities of $7,730,736.
In the nine months ended October 31, 2018, net cash used by operating activities was $124,685
and
consisted of changes in working capital of $302,819, a net loss of $5,026,292, and non-cash adjustments of $4,598,788. Non-cash
adjustments consisted primarily of amortization of debt discount of $153,902, loss on change in fair value of derivative liabilities
of $4,033,673, non-cash interest expense of $159,898, and loss on conversion of notes payable of $288,152. Working capital adjustments
consisted primarily of increases in accounts payable and accrued expenses of $132,977 and accrued interest payable of $179,520.
In the nine months ended October 31, 2017, net cash used by operating activities was $1,092 and consisted
of changes in working capital of $343,923, a net loss of $322,816, and non-cash adjustments of $(22,199). Non-cash adjustments
consisted primarily of amortization of debt discount of $44,270 and a gain on change in fair value of derivative liabilities of
$66,469. Working capital adjustments consisted primarily of increases in accounts payable and accrued expenses of $259,804 and an
increase in deferred revenue of $85,456.
Net cash used in investing activities for the nine months ended October 31, 2018 was $110,000 compared to $0 for the same period in 2017. The $110,000 investment increase was part of The 4 Less Corp Acquisition compared to no investing activities in 2017.
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Net cash provided by financing activities for the nine months ended October 31, 2018 was $239,089 compared to $0 for the same period in 2017. The increase was due to the borrowings on Notes Payable in 2018 compared to no borrowings 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 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 raise 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 and Disposition
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 closed on the transaction on November 29, 2018. The former owners of The 4Less Corp. now control the Company. Additionally, on December 12, 2018, the Company transferred the operations of Nurses Lounge, Inc. to a company owned by Timothy Armes, the Chief Executive Officer of the Company, various debt holders and Series A Preferred Stockholders.