The components of the Company’s debt as of October 31, 2016 and January 31, 2016 were as follows:
|
|
|
|
|
|
|
|
|
|
October 2016
|
|
January 2016
|
|
Note Payable - $100,000, 12% interest payable monthly or accrued, due Nov 4, 2013
|
|
$
|
100,000
|
|
$
|
100,000
|
|
Note Payable - $16,000, 12% interest added to note quarterly, due January 31, 2014
|
|
|
16,000
|
|
|
16,000
|
|
Note Payable - $45,000, 12% interest added to note quarterly, due Nov 5, 2013
|
|
|
45,000
|
|
|
45,000
|
|
Note Payable - $5,000, 12% interest added to note quarterly, due Nov 5, 2013
|
|
|
5,000
|
|
|
5,000
|
|
Note Payable - $40,000, 12% interest added to note quarterly, due April 28, 2013
|
|
|
18,000
|
|
|
18,000
|
|
Note Payable - $490,150, 12% interest payable monthly or accrued, due Oct 29, 2013
|
|
|
479,150
|
|
|
479,150
|
|
Note Payable - $4,000, 12% interest added to note quarterly, due April 30, 2013
|
|
|
—
|
|
|
4,000
|
|
Note Payable - $25,000, 12% interest added to note quarterly, due April 30, 2013
|
|
|
25,000
|
|
|
25,000
|
|
Note Payable - $5,000, 12% interest added to note quarterly, due Nov 5, 2013
|
|
|
30,000
|
|
|
30,000
|
|
Note Payable - $5,000, 8% interest payable accrued to maturity, due Nov 25, 2015
|
|
|
5,000
|
|
|
5,000
|
|
Note Payable - $57,958, 8% interest payable accrued to maturity, due Sept 10, 2017
|
|
|
57,958
|
|
|
57,958
|
|
Note Payable - $57,958, 8% interest payable accrued to maturity, due Sept 10, 2017
|
|
|
—
|
|
|
259
|
|
Note Payable - $23,863, 8% interest payable accrued to maturity, due Sept 10, 2017
|
|
|
23,863
|
|
|
23,863
|
|
Note Payable - $12,355 8% interest payable accrued to maturity, due Sept 10, 2017
|
|
|
12,355
|
|
|
12,355
|
|
Note Payable - $34,280, 8% interest payable accrued to maturity, due Sept 10, 2017
|
|
|
7,167
|
|
|
27,450
|
|
Note Payable - $38,677, 8% interest payable accrued to maturity, due Sept 10, 2017
|
|
|
38,677
|
|
|
38,677
|
|
Note Payable - $25,000, 8% interest payable accrued to maturity, due Dec 7, 2017
|
|
|
25,000
|
|
|
25,000
|
|
Note Payable - $25,000, 8% interest payable accrued to maturity, due Feb 3, 2018
|
|
|
25,000
|
|
|
—
|
|
Note Payable - $30,000, 8% interest payable accrued to maturity, due March 3, 2018
|
|
|
30,000
|
|
|
—
|
|
Note Payable - $25,000, 8% interest payable accrued to maturity, due March 24, 2018
|
|
|
25,000
|
|
|
—
|
|
Note Payable - $25,000, 8% interest payable accrued to maturity, due March 24, 2018
|
|
|
25,000
|
|
|
—
|
|
Deferred Financing Costs
|
|
|
(4,516
|
)
|
|
(8,240
|
)
|
Debt Discount
|
|
|
(77,618
|
)
|
|
(104,900
|
)
|
Subtotal
|
|
$
|
911,036
|
|
$
|
799,572
|
|
Related Party Debt
|
|
|
|
|
|
|
|
Note Payable - $19,500, 8% interest payable accrued until maturity, due Jan 2, 2015
|
|
|
|
|
|
|
|
Note Payable - $5,500, 8% interest payable accrued until maturity, due July 8, 2015
|
|
|
5,500
|
|
|
5,500
|
|
Note Payable - $4,500, 8% interest payable accrued to maturity, due May 5, 2015
|
|
|
4,500
|
|
|
4,500
|
|
Note Payable - $24,297, 8% interest payable accrued to maturity, due May 14, 2015
|
|
|
23,297
|
|
|
23,297
|
|
Note Payable - $7,703, 8% interest payable accrued to maturity, due May 19, 2015
|
|
|
7,703
|
|
|
7,703
|
|
Note Payable - $26,500, 8% interest payable accrued to maturity, due June 12, 2015
|
|
|
26,500
|
|
|
26,500
|
|
Note Payable - $5,000, 8% interest payable accrued until maturity, due July 19, 2016
|
|
|
5,000
|
|
|
5,000
|
|
Subtotal – Related Party Debt
|
|
|
72,500
|
|
|
72,500
|
|
Total
|
|
$
|
983,536
|
|
$
|
872,072
|
|
The Company had accrued interest payable of $369,711 and $290,682 interest on the notes at October 31, 2016 and January 31, 2016, respectively.
The Company has entered in to various promissory notes with lenders during the periods ended October 31, 2016 and the year ended January 31, 2016 bearing interest at between 8% and 12% rate per annum, unsecured, payable on demand and convertible into the Company’s common stock. The conversion price ranges from 52% to 50% of the average of the three lowest closing bid prices of the common stock during the 10 or 25 trading days prior to conversion.
The Company analyzed the conversion option for derivative accounting consideration under ASC 815-15 “Derivatives and Hedging” and determined that the instrument 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 instrument is 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.
During the nine months ended October 31, 2016, the Company converted a total of $23,421 of the convertible debt plus accrued interest into 106,817,377 common shares.
A summary of the debt in total is as follows:
|
|
|
|
|
|
|
|
|
|
2016
|
|
2015
|
|
Convertible debt – fixed conversion rate
|
|
$
|
693,150
|
|
$
|
692,150
|
|
Convertible debt – variable conversion rates, net of debt discount
|
|
|
192,886
|
|
|
82,422
|
|
Convertible debt – variable conversion rates, Related Party, net of debt discount
|
|
|
72,500
|
|
|
72,500
|
|
Non-Convertible debt
|
|
|
25,000
|
|
|
25,000
|
|
Net
|
|
$
|
983,536
|
|
$
|
872,072
|
|
The Company has $693,150 and $692,150 of debt that is convertible at ranges from $0.06 to $1.00 per share and accrues interest between 8% and 12% at October 31, 2016 and January 31, 2016 respectively.
The Company has $25,000 and $25,000 of debt which has no conversion feature at October 31, 2016 and January 31, 2016 respectively.
The Company has $192,886 and $82,422 of debt (net of debt discount) with variable conversion price ranges from 52% to 50% of the average of the three lowest closing bid prices of the common stock during the 10 or 25 trading days prior to conversion as of October 31, 2016 and January 31, 2016 respectively.
The company has $72,500 of related party convertible debt at October 31, 2016 and January 31, 2016.
The Company is in default on a number of its promissory notes which provide legal remedies for satisfaction of defaults, none of which 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. Accordingly, the Company has classified the entire loan amounts as a current liability.
NOTE 3 - 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, of which 500,000 are designated as Series A and 1,000 are designated as Series B.
On April 27, 2016, the Company filed a designation of 500,000 shares of Series A Preferred Stock and 1,000 shares of Series B Preferred Stock.
The Series A Preferred Stock have an automatic forced conversion upon the completion of the repurchase or extinguishing of all “toxic” debt, the extinguishing of all other existing dilutive debt or equity structures, and total recapitalization of the Company. For more information regarding the Series A Preferred Stock, please see Exhibit 3.1 Currently there are 330,000 Series A Preferred Shares issued.
The Series B Preferred 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. For more information regarding the Series B Preferred Stock, please see Exhibit 3.1. Currently, there are 1,000 shares issued and outstanding of the Series B Preferred Stock, held by Timothy Armes.
There were 330,000 Series A preferred shares outstanding at October 31, 2016 and January 31, 2016.
There were 1,000 Series B preferred shares outstanding at October 31, 2016 and January 31, 2016.
- 9 -
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 October 31, 2016 and January 31, 2016, there were 561,655,477 and 454,838,100 shares outstanding, respectively. No dividends were paid in the period ended October 31, 2016 or in the year ended January 31, 2016.
The Company issued the following shares of common stock in the nine months ended October 31, 2016:
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.
Options and Warrants:
The Company recorded option and warrant expense of $0 in the period ended October 31, 2016 and the year ended January 31, 2016.
The Company had the following options or warrants outstanding at October 31, 2016:
|
|
|
|
|
Issued To
|
# Options
|
Dated
|
Expire
|
Strike Price
|
Shareholder
|
127,500
|
04/29/2012
|
04/29/2017
|
$0.10 per share
|
Shareholder
|
127,500
|
07/31/2013
|
07/31/2017
|
$0.10 per share
|
Shareholder
|
2,000,000
|
01/18/2013
|
01/18/2018
|
$0.05 per share
|
Lender
|
3,500,000
|
07/02/2015
|
07/01/2019
|
$0.10 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 October 31, 2016
|
|
—
|
|
$
|
—
|
|
5,755,000
|
|
$
|
0.08
|
|
Summary of warrants outstanding and exercisable as of October 31, 2016 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
|
|
1.36
|
|
5,755,000
|
|
5,755,000
|
NOTE 4 – 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 is 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 5 – GOING CONCERN AND FINANCIAL POSITION
MedCareers’ financial statements are prepared using United States generally accepted accounting principles applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business. The Company has incurred cumulative losses through October 31, 2016 of $8,062,218 and has a working capital deficit at October 31, 2016 of $(1,945,606).
Historically, revenues have not been sufficient to cover operating costs that would permit the Company to continue as a going concern. The potential proceeds from the sale of common stock and other contemplated debt and equity financing, and increases in operating revenues from new development and business acquisitions might enable MedCareers to continue as a going concern. These conditions raise substantial doubt about the company’s ability to continue as a going concern. There can be no assurance that the Company can or will be able to complete any debt or equity financing, or develop or acquire one or more business interests on terms favorable to it. MedCareers’ financial statements do not include any adjustments that might result from the outcome of this uncertainty.
- 10 -
NOTE 6 – FAIR VALUE OF FINANCIAL INSTRUMENTS
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 October 31, 2016 and January 31, 2016, the Company’s financial assets were measured at fair value using Level 3 inputs, with the exception of cash, which was valued using Level 1 inputs.
Fair Value Measurement at October 31, 2016 Using:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
October 31, 2016
|
|
Quoted Prices in
Active Markets
For Identical
Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
None
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
Totals
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative Liabilities
|
|
$
|
403,557
|
|
$
|
—
|
|
$
|
—
|
|
$
|
403,557
|
|
Totals
|
|
$
|
403,557
|
|
$
|
—
|
|
$
|
—
|
|
$
|
403,557
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
January 31, 2016
|
|
Quoted Prices in
Active Markets
For Identical
Assets
(Level 1)
|
|
Significant
Other
Observable
Inputs
(Level 2)
|
|
Significant
Unobservable
Inputs
(Level 3)
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
None
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
Totals
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative Liabilities
|
|
$
|
745,129
|
|
$
|
—
|
|
$
|
—
|
|
$
|
745,129
|
|
Totals
|
|
$
|
745,129
|
|
$
|
—
|
|
$
|
—
|
|
$
|
745,129
|
|
Derivative Liability:
As of October 31, 2016 and January 31, 2016 the company had $403,557 and $745,129 recorded as derivative liabilities. During the periods ended October 31, 2016 and January 31, 2016 the company recorded $210,460 in loss and $633,185 in loss from the change in the fair value of derivative liabilities.
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.
- 11 -
The fair value of the derivative liability is determined using the Black-Scholes option-pricing model and 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 October 31, 2016, volatility ranged from 385% to 437%, the term ranged from 0.49 to 0.64 years, and the risk free interest rate was 6%.
|
|
|
|
|
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
|
$
|
(376,858
|
)
|
Ending Balance, October 31, 2016
|
$
|
403,557
|
|
NOTE 7 – RELATED PARTY TRANSACTIONS
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 plans to lease office space when their operations require it and funding permits.
The company has $72,500 of related party convertible debt at October 31, 2016 and January 31, 2016 as described further in Note 2.
NOTE 8 – SUBSEQUENT EVENTS
The following shares have been issued subsequent to the balance sheet date:
In November 2017, 55,938,667 shares issued for conversion of $6,050 Note and $2,341 interest that had a conversion feature at 52% of market price per share.
In November 2017, 61,429,041 shares issued for conversion of $4,400 Note and $1,743 interest that had a conversion feature at 52% of market price per share.
In December 2017, 61,455,342 shares issued for conversion of $4,400 Note and $1,745 interest that had a conversion feature at 52% of market price per share.
In January 2018, 34,000,000 shares issued for conversion of $2,250 of debt to JCC Trading, LLC.
On January 31, 2018, 1,000,000 shares were issued for services to Seaside Advisors, LLC.
On January 31, 2018, 30,000,000 shares were issued to Garret Armes to convert $2,250 , a portion of accrued deferred compensation.
On January 31, 2018, 10,000,000 shares were issued to Kate Chambrovich to convert $750, a portion of the accrued deferred compensation.
On January 31, 2018, 15,000,000 shares were issued to Lynn Management, LLC for conversion of $1,125, a portion of an accrued payable owing to them.
On January 31, 2018, 10,000,000 shares were issued to Eilers Law Group P.A. for settlement of $2,000 due to the firm services.
In December 2017, the Company issued a convertible debenture with principal amount of $51,750. The note bears 15% interest, and is due in December 2018. The note can be convertible at 50% of the lowest bid price of common stock reported on National Quotations Bureau OTC Markets for the 40 prior days. The conversion price shall not be higher than $.000075 per share. On March 7, 2018 the Company issued a Warrant to purchase 34,000,000 shares of common stock to the note holder at exercise price of $0.000075 per share. The warrant expires in March, 2021.
- 12 -