Incorporated into and forming an integral
part of this Annual Report on Form 10-K are the audited financial statements for the Company for the years ended January 31, 2016
and 2015. The financial statements included in this Annual Report on Form 10-K have been audited by MaloneBailey LLP, independent
registered public accountants, as set forth in their report. The financial statements have been included in reliance upon the authority
of them as experts in accounting and auditing.
The Accompanying Notes are an Integral Part
of these consolidated Financial Statements.
The Accompanying Notes are an Integral Part
of these consolidated Financial Statements.
The Accompanying Notes are an Integral Part
of these Consolidated Financial Statements.
The Accompanying Notes are an Integral Part
of these consolidated Financial Statements.
Notes to Financial Statements
January 31, 2016 and 2015
NOTE 1 – NATURE OF ACTIVITIES AND
SIGNIFICANT ACCOUNTING POLICIES
Nature of Activities,
History and Organization
– The Company was formed as RX Scripted, LLC on December 30, 2004 as a North Carolina
limited liability company and converted to a Nevada corporation as RX Scripted, Inc. on December 5, 2007 and 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.
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.
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
approximates fair market value.
Income Taxes:
Income from the corporation
is taxed at regular corporate rates per the Internal Revenue Code. Although the Company has tax loss carry-forwards (see
Note 7), there is uncertainty as to utilization prior to their expiration. Accordingly, the future income tax asset amounts
have been fully reserved by a valuation allowance.
Income taxes are accounted
for under the asset and liability method. Deferred tax assets and liabilities are recognized when items of income and expense are
recognized in the financial statements in different periods than when recognized in the tax return. Deferred tax assets arise when
expenses are recognized in the financial statements before the tax returns or when income items are recognized in the tax return
prior to the financial statements. Deferred tax assets also arise when operating losses or tax credits are available to offset
tax payments due in future years. Deferred tax liabilities arise when income items are recognized in the financial statements before
the tax returns or when expenses are recognized in the tax return prior to the financial statements. Deferred tax assets and liabilities
are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are
expected to be recovered or settled. The effect on deferred tax assets and liabilities of a change in tax rates is recognized in
income in the period that includes the enactment date.
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.
Fair Value of Financial
Instruments:
Pursuant to ASC No.
820, “Fair Value Measurements and Disclosures”, the Company is required to estimate the fair value of all financial
instruments included on its balance sheet as of January 31, 2015. 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.
The ASC guidance for fair value measurements and disclosure establishes
a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value. The hierarchy gives the
highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the
lowest priority to unobservable inputs (Level 3 measurements). The three levels of the fair value hierarchy are described
below:
Level 1 Inputs
– Quoted prices for identical instruments
in active markets.
Level 2 Inputs
– Quoted prices for similar instruments
in active markets; quoted prices for identical or similar instruments in markets that are not active; and model-derived valuations
whose inputs are observable or whose significant value drivers are observable.
Level 3 Inputs
– Instruments with primarily unobservable
value drivers.
As of January 31, 2016 and 2015, the Company’s derivative
liabilities were measured at fair value using Level 3 inputs, with the exception of cash, which was valued using Level 1 inputs.
See Note 8.
Policy on 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 (including all of Medcareer’s directors and executive officers) has a direct or indirect material interest,
other than ordinary course, arms-length transactions of less than 1% of the revenue of the counterparty. Any transaction exceeding
the 1% threshold, and any transaction involving consulting, financial advisory, legal or accounting services that could impair
a director’s independence, must be approved by the CEO. Any related party transaction in which an executive officer or a
Director has a personal interest, or which could present a possible conflict under the Guide to Ethical Conduct, must be approved
by Board of Directors, following appropriate disclosure of all material aspects of the transaction.
Derivative Liability:
The derivative liabilities are valued as a level 3 input for valuing
financial instruments. The derivatives arise from convertible debt where the debt is convertible into common stock at variable
conversion prices. 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 Black-Scholes option-pricing 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.
Revenue Recognition:
Revenue from sales
are recognized as the services are performed and amounts are earned. 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. The Company recognizes revenue in accordance with ASC 605-10, "
Revenue Recognition in Financial Statements
",
(formerly Staff Accounting Bulletin No. 104 (“SAB 104”)). 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.
Stock-Based
Compensation:
The Company
accounts for stock options at fair value as prescribed in ASC 718. 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.
Earnings per Common
Share:
Earnings (loss) per share
are calculated in accordance with ASC 260 “
Earnings per Share
”. The weighted average number of common
shares outstanding during each period is used to compute basic earnings (loss) per share. Diluted earnings per share
are computed using the weighted average number of shares and potentially dilutive common shares outstanding. Dilutive
potential common shares are additional common shares assumed to be exercised. Potentially dilutive
common shares consist of stock options and are excluded from the diluted earnings per share computation in periods where the Company
has incurred a net loss, as their effect would be considered anti-dilutive.
The Company had 6,982,500
options and warrants outstanding at January 31, 2016 which were potentially dilutive common stock equivalents but would be antidilutive
and are not included, therefore basic earnings per share equals diluted earnings per share for the year ended January 31, 2016.
As the Company incurred a net loss during the year ended January 31, 2016, the basic and diluted loss per common share is the same
amount, as any common stock equivalents would be considered anti-dilutive.
Recently Issued Accounting
Pronouncements:
On June 10, 2014, FASB
issued Accounting Standards Update No. 2014-10, Development Stage Entities. The update removes the definition of a development
stage entity from FASB ASC 915 and eliminates the requirement for development stage entities to present inception-to-date information
on the statements of operations, cash flows and stockholders’ deficit. The Company early adopted this standard for the period
covered by the report herein.
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. Early adoption is not permitted. The standard will be effective for the Company's fiscal year beginning
January 1, 2017, including interim reporting periods within that year. The new guidance is not expected to have an impact
on the Company's consolidated financial statements.
NOTE 2 - NOTES
PAYABLE
The components of the Company’s
debt as of January 31, 2016 and 2015 were as follows:
The components of the Company’s
debt as of January 31, 2016 and 2015 were as follows:
|
Jan 2016
|
|
Jan 2015
|
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
|
|
|
20,000
|
Note Payable - $490,150, 12% interest payable monthly or accrued, due Oct 29, 2013
|
479,150
|
|
|
490,150
|
Note Payable - $4,000, 12% interest added to note quarterly, due April 30, 2013
|
4,000
|
|
|
4,000
|
Note Payable - $25,000, 12% interest added to note quarterly, due April 30, 2013
|
25,000
|
|
|
25,000
|
Note Payable - $50,000, 8% interest payable accrued until maturity, due Jan 27, 2016
|
-
|
|
|
50,000
|
Note Payable - $5,000, 12% interest added to note quarterly, due Nov 5, 2013
|
30,000
|
|
|
30,000
|
Note Payable - $42,500, 8% interest payable accrued until maturity, due Nov 20, 2014
|
-
|
|
|
42,500
|
Note Payable - $32,500, 8% interest payable accrued until maturity, due Jan 22, 2015
|
-
|
|
|
22,920
|
Note Payable - $32,500, 8% interest payable accrued until maturity, due June 2, 2015
|
-
|
|
|
32,500
|
Note Payable - $33,000, 8% interest payable accrued until maturity, due Nov 23, 2014
|
-
|
|
|
8,703
|
Note Payable - $32,000, 8% interest payable accrued until maturity, due Nov 1, 2014
|
-
|
|
|
25,126
|
Note Payable - $75,000, 8% interest payable accrued until maturity, due July 1, 2015
|
-
|
|
|
72,500
|
Note Payable - $25,000, 8% interest payable accrued to maturity, due Sept 24, 2016
|
-
|
|
|
25,000
|
Note Payable - $5,000, 8% interest payable accrued to maturity, due Nov 25, 2015
|
5,000
|
|
|
-
|
Note Payable - $57,958, 8% interest payable accrued to maturity, due Sept 10, 2017
|
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
|
|
|
-
|
Note Payable - $12,355 8% interest payable accrued to maturity, due Sept 10, 2017
|
12,355
|
|
|
-
|
Note Payable - $34,280, 8% interest payable accrued to maturity, due Sept 10, 2017
|
27,450
|
|
|
-
|
Note Payable - $38,677, 8% interest payable accrued to maturity, due Sept 10, 2017
|
38,677
|
|
|
-
|
Note Payable - $25,000, 8% interest payable accrued to maturity, due Dec 7, 2017
|
25,000
|
|
|
-
|
Deferred Financing Costs
|
(8,240
|
)
|
|
-
|
Debt Discount
|
(104,900
|
)
|
|
(92,980)
|
Subtotal
|
799,572
|
|
|
921,419
|
Related Party Debt
|
|
|
|
|
Note Payable - $19,500, 8% interest payable accrued until maturity, due Jan 2, 2015
|
-
|
|
|
19,500
|
|
|
|
|
|
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
|
|
|
0
|
Debt Discount – Related Party
|
-
|
|
|
(21,174)
|
Subtotal – Related Party Debt
|
72,500
|
|
|
65,826
|
Total
|
$
|
872,072
|
|
|
$
|
987,245
|
The Company had accrued
interest payable of $290,682 and $216,994 interest on the notes at January 31, 2016 and 2015, respectively.
The Company has entered in to various promissory
notes with lenders during the years ended January 31, 2016 and 2015 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. The fair value of the embedded conversion option resulted in
a full discount of $183,323 to the note on the debt modification date. The discount will be amortized over the term of the note
to interest expense.
During the year ended January 31, 2016, the
Company converted a total of $101,236 of the convertible notes plus accrued interest into 233,429,417 common shares, and the Company
also converted related party notes and accrued interest of 20,137 into 38,724,769 common shares. As of January 31, 2016, $194,711
of the discount had been amortized to interest expense.
A summary of the debt in total is as follows:
|
|
2016
|
|
2015
|
Convertible debt – fixed conversion rate
|
|
$
|
692,150
|
|
|
$
|
748,853
|
|
Convertible debt – variable conversion rates, net of debt discount
|
|
|
82,422
|
|
|
|
127,566
|
|
Convertible debt – variable conversion rates, Related Party, net of debt discount
|
|
|
72,500
|
|
|
|
65,826
|
|
Non-Convertible debt
|
|
|
25,000
|
|
|
|
45,000
|
|
Net
|
|
$
|
872,072
|
|
|
|
987,245
|
|
The Company has $692,150
and $748,853 of debt that is convertible at ranges from $0.06 to $1.00 per share and accrues interest between 8% and 12% at January
31, 2016 and 2015 respectively..
The Company has $25,000
and $45,000 of debt which has no conversion feature at January 31, 2016 and 2015 respectively
The Company has $82,422
and $127,566 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 January 31, 2016 and 2015 respectively.
The company has $72,500
and $65,826 of related party convertible debt at January 31. 2016 and 2015 respectively.
The Company entered into various note agreements
with financing entities, which provided for repayment at a premium, or if not paid, the financing entities had the right to convert
their note to common stock at a price of 50% to 52% of market price at the time of conversion. Certain of these notes were paid
off and certain notes were converted resulting in a loss on extinguishment of debt of $45,359 which is recorded as a charge to
the income statement.
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.
Series A - There
were 330,000 and 0 Series A preferred shares outstanding at January 31, 2016 and 2015, respectively.
Series B - There
were 1,000 and 0 Series B preferred shares outstanding at January 31, 2016 and 2015, respectively.
Series A Preferred Stock
SECTION 1. DESIGNATION
OF SERIES; RANK.
The series of preferred stock established hereby shall be designated "Series A Convertible Preferred
Stock" (and shall be referred to herein as the
"Series
A Preferred Shares").
The Series A Preferred
Shares shall rank senior to the Corporation's Common Stock. The Series A Preferred Shares shall, with respect to rights upon the
occurrence of a Liquidation Event (as defined in Section 6 below), rank senior to the Corporation's Common Stock. The authorized
number of Series A Preferred Shares shalt be five hundred thousand (500,000). The number of Series A Preferred Shares may be decreased
by resolution of the Board; provided, however, that no decrease shall reduce the number of Series A Preferred Shares to less than
the number of shares then issued and outstanding.
SECTION 2. DIVIDENDS.
The holders of the Series A Preferred Shares shall not be entitled to receive a dividend, As long as any Series A Preferred
Shares remain outstanding, no dividends shall be declared on any Junior Stock without the consent in writing of holders of at least
a majority of the Series A Preferred Shares then outstanding.
SECTION
3. LIQUIDATION RIGHT PREFERENCE.
In the event of the liquidation, dissolution or winding up of the Corporation, whether voluntary
or involuntary (a "Liquidation Event"), the holders of Series A Preferred Shares shall be entitled to receive in cash,
out of the assets of the Corporation available for distribution to stockholders, an amount per share for each outstanding Series
Preferred Share equal to $3.00 (the "Liquidation Value") after any payments shall be made or any assets shall be distributed
to the holders of Senior Stock, but before any payments shall be made or any assets shall be distributed to the holders of the
Corporation's Common Stock or any Junior Stock. As long as any Series A Preferred Shares remain outstanding, no amounts shall be
paid upon Liquidation Event to any Junior Stock without the consent in writing of holders of at least a majority of the Series
A Preferred Shares then outstanding. lf, upon any Liquidation Event, the assets of the Corporation are insufficient to pay the
Liquidation Value to which the holders of such Series A Preferred Shares are entitled, the holders of such Series A Preferred Shares
shall share pro rata in any such distribution in proportion to the full amounts to which they would otherwise be respectively entitled.
Neither the merger or consolidation of the Corporation into or with any other corporation nor the merger or consolidation of any
other corporation into or with the Corporation nor the sale, lease, exchange or other disposition (for cash, shares of stock, securities
or other consideration) of all or substantially all the assets of the Corporation shall be deemed to be a dissolution, liquidation
or winding up, voluntary or involuntary, of the Corporation.
SECTION 4. VOTING
RIGHTS.
The holders of Series A Preferred Shares shall have voting rights as if their Series A Preferred Stock were converted
on the record date of any vote.
SECTION 5. CONVERSION.
The holders
of Series A Preferred Shares shall have conversion rights and obligations as follows:
Conversion into Common Shares. The Series
A Preferred Shares have a forced conversion feature at the option of the Company after the following have been completed:
|
a.
|
Repurchase or extinguishment of all 'toxic debt' which notes have
conversion features tied to the market price of the stock.
|
|
b.
|
All
other significant dilutive provisions of the common stock have taken place so that
there are no other dilutive provisions for common stock of the Company other than those
that might be ordinary and customary and in the ordinary course of business. For example
— including but not limited to, stock options for salespersons and employees; or
|
|
c.
|
upon the total recapitalization of the Company, whereby
all
shareholders will be treated equally.
|
All Conversion Shares
will, upon, issuance, be duly issued, fully paid and non-assessable and free from all taxes, liens, and charges with respect to
the issuance thereof.
SECTION 6. NOTICES
OF RECORD DATE.
In the event that the Corporation shall propose at
any
time to merge or consolidate with or into any
other entity, or sell all or substantially all its property or business, or to liquidate, dissolve or wind up, then, in connection
with each such event, the Corporation Shall send to the holders of the Series A Preferred Shares reasonable prior written notice
by rust class mail, postage prepaid, addressed to the holders of Series A Preferred Shares at the address for each such holder
as shown on the books of the Corporation. Any such proposed action shall at all times be subject to the rights, preferences and
privileges of the Series A Preferred Shares.
SECTION 7. RESERVATION
OF COMMON STOCK.
The Corporation shall, at all times when the Series A Preferred Shares shall be outstanding, reserve and keep
available out of its authorized but unissued stock, for the purpose of effecting the conversion of the Series A Preferred Shares,
such number of its duly authorized shares of Common Stock as shall from time to time be sufficient to effect the conversion of
all outstanding Series A Preferred Shares
SECTION
8. CANCELLATION OF PREFERRED SHARES.
All Series A Preferred Shares surrendered for conversion shall no longer be deemed to
be outstanding and all rights with respect to such shares, including the rights,
if
any, to receive notices, shall forthwith
cease and terminate except only the right of the holders thereof to receive Conversion Shares and the Warrants, if applicable,
in exchange therefore. Any Series A Preferred Shares so converted shall be retired and canceled and shall not be reissued by the
Corporation; provided however, that each such share, after being retired and canceled, shall be restored to the status of an authorized
but unissued share of preferred stock without designation as to Series and may thereafter be issued as a share of preferred stock
not designated as Series A Preferred Shares; and
the
Corporation may from time to
time take such appropriate action as may be necessary to reduce the authorized Series A Preferred Shares accordingly.
SECTION 9. NO IMPAIRMENT.
The Corporation will not, by amendment of its Certificate of Incorporation or this Certificate of Designation or through any
reorganization, transfer of assets, merger, dissolution, issue or sale of securities or any other voluntary action, avoid or seek
to avoid the observance or performance of any of the terms to he observed or performed hereunder by the Corporation but will at
all 'times in good faith assist in the carrying out of all the provisions of this Certificate of Designation and in the taking
of all such action as may be necessary or appropriate in order to protect against impairment of the rights described herein to
of the holders of the Series A Preferred Shares.
SECTION 10. LOSS, THEFT.
DESTRUCTION.
Upon receipt of evidence satisfactory to the Corporation of the loss, theft, destruction or mutilation of certificates
representing Series A Preferred Shares and, in the case of any such loss, theft or destruction, upon receipt of indemnity or security
reasonably satisfactory to the Corporation, or, in the case of any such mutilation, upon surrender and cancellation of the Series
A Preferred Shares, the Corporation shall make, issue end deliver, in lieu of such lost, stolen, destroyed or mutilated certificates
representing Series A Preferred Shares, new certificates representing Series .B Preferred Shares of like tenor.,
Series B Preferred Stock
SECTION
1. DESIGNATION OF SERIES; RANK.
The shares of such series of Series B Preferred Stock shall be designated as the
"Series
B Preferred Stock"
and the number of shares initially constituting such series shall be One Thousand (1,000) shares.
SECTION 2. DIVIDENDS.
The Holder(s) of the Series B Preferred Stock shall not be entitled to receive dividends paid
on the Company's common
stock
("Common Stock"). "Holder"
shall mean the person or entity in which the Series B Preferred
Stock is registered on the books of the Company.
SECTION 3. LIQUIDATION
PREFERENCE.
The Holder(s) of the Series B Preferred Stock shall not be entitled to any liquidation preference.
SECTION
4. VOTING.
4.1 Voting Rights.
The Holders of the Series B Preferred Stock will have the voting rights as described in this Section 4 or as required by
law. For so long as any shares of the Series B Preferred Stock remain issued and outstanding, the Holders thereof, voting separately
as a class, shall have the right to vote on all shareholder matters (including, but not limited to at every meeting of the stockholders
of the Company and upon any action taken by stockholders of the Company with or without a meeting) equal to fifty-one percent (51%)
of the total vote. For example, if there are 10,000 shares of the Company's common stock issued and outstanding at the time of
a shareholder vote, the Holders of the Series B Preferred Stock, voting separately as a class, will have the right to vote an aggregate
of 10,400 shares, out of a total number of 20,400 shares voting. For the sake of clarity and in an abundance of caution, the total
voting shares outstanding at the time of any and all shareholder votes (i.e., the total shares eligible to vote on any and all
shareholder matters) shall be deemed to include (a) the total Common Stock shares outstanding; (b) the voting rights applicable
to any outstanding shares of preferred stock, other than the Series B Preferred Stock, if any; and (c) the voting rights attributable
to the Series B Preferred Stock, as described herein, whether such Series B Preferred Stock shares are voted or not.
4.2 Amendments to Articles
of Incorporation and Bylaws.
So long as the Series B Preferred Stock is outstanding, the Company shall not, without the
affirmative vote of the Holders of at least 66-2/3% of all outstanding shares of Series B Preferred Stock, voting separately as
a class (i) amend, alter or repeal any provision of the Articles of Incorporation or the Bylaws of the Company so as to adversely
affect the designations, preferences, limitations and relative rights of the Series B Preferred Stock, (ii) effect any reclassification
of the Series B Preferred Stock, or (iii) designate any additional series of preferred stock, the designation of which adversely
effects the rights, privileges, preferences or limitations of the Series B Preferred Stock set forth herein.
4.3 Amendment
of Rights of Series B Preferred Stock.
The Company shall not, without the affirmative vote of the Holders of at least 66-2/3%
of all outstanding shares of the Series
B
Preferred Stock, amend, alter or repeal any provision of this Certificate of Designation,
PROVIDED, HOWEVER, that the Company may, by any means authorized by law and without any vote of the Holders of shares of the Series
B Preferred Stock, make technical, corrective, administrative or similar changes in this Certificate of Designation that do not,
individually or in the aggregate, adversely affect the rights or preferences of the Holders of shares of the Series B Preferred
Stock.
SECTION 5. CONVERSION RIGHTS.
The
shares of the Series B Preferred Stock shall have no conversion rights.
SECTION 6. RESERVED.
SECTION 7. NOTICES.
Any notice required
hereby to be given to the Holders of shares of the Series B Preferred Stock
shall be deemed given
if deposited in the United States mail, postage prepaid, and addressed to each Holder of record at his, her or its address appearing
on the books of the Company.
SECTION 8. PROTECTIVE
PROVISIONS.
Subject to the rights of series of Series B Preferred Stock which may from time to time come into existence, so
long as any shares of Series B Preferred Stock are outstanding, this Company shall not without first obtaining the approval (by
written consent, as provided by law) of the Holders of a majority of the then outstanding shares of Series B Preferred Stock, voting
together as a class:
(a)
Increase or decrease the total number of authorized or designated
shares of Series B Preferred Stock;
(b)
Effect an exchange, reclassification, or cancellation of all or a part of the Series B Preferred
Stock;
(c)
Effect an exchange, or create a right of exchange, of all or part
of the shares of another class of
shares into shares of Series B Preferred Stock; or
(d)
Alter or change the rights, preferences or privileges of the shares of Series B Preferred
Stock so as to affect adversely the shares of such series, including the rights set forth in this Certificate of Designations.
PROVIDED, HOWEVER,
that
the Company may, by any means authorized by law and without any vote of the Holders of shares of the Series B Preferred Stock,
make technical, corrective, administrative or similar changes in this Certificate of Designation that do not, individually or in
the aggregate, adversely affect the rights or preferences of the Holders of shares of the Series B Preferred Stock.
SECTION 9. NO OTHER
RIGHTS OR PRIVILEGES.
Except as specifically set forth herein, the Holders of the Series B Preferred Stock shall have no other
rights, privileges or preferences with respect to the Series B Preferred Stock.
SECTION 10. MISCELLANEOUS.
(a)
The headings of the various sections and subsections of this Certificate of Designation are
for convenience of reference only and shall not affect the interpretation of any of the provisions of this Certificate of Designation.
(b)
Whenever possible, each provision of this Certificate of Designation shall be interpreted
in a manner as to be effective and valid under applicable law and public policy. If any provision set forth herein is held to be
invalid, unlawful or incapable of being enforced by reason of any rule of law or public policy, such provision shall be ineffective
only to the extent of such prohibition or invalidity, without invalidating or otherwise adversely affecting the remaining provisions
of this Certificate of Designation. No provision herein set forth shall be deemed dependent upon any other provision unless so
expressed herein. If a court of competent jurisdiction should determine that a provision of this Certificate of Designation would
be valid or enforceable if a period of time were extended or shortened, then such court may make such change as shall be necessary
to render the provision in question effective and valid under applicable law.
(c)
Except as may otherwise be required by law, the shares of the Series
B Preferred Stock shall not have any powers, designations, preferences or other special rights, other than those specifically set
forth in this Certificate of Designation.
The Company sold 50,000
shares of Series A Preferred Stock for $50,000 cash.
The Company issued 280,000
shares of Series A Preferred Stock for conversion of debt of $290,103.
Common Stock:
The Company is authorized
to issue 4,000,000,000 common shares at a par value of $0.001 per share. These shares have full voting rights. At January
31, 2016 and 2015, there were 454,838,100 and 95,683,914 shares outstanding, respectively. No dividends were paid in the
years ended January 31, 2016 or 2015.
The Company issued the following shares of common stock in the year ended January 31, 2015:
|
|
|
|
Conversion of Accrued Expenses to Common Stock
|
|
|
6,721,875
|
Conversion of Notes Payable to Common Stock
|
|
|
23,246,671
|
The company issued 29,968,546 shares of common stock for the conversion of Notes payable and accrued interest in the amount of $410,562.
|
|
|
|
|
|
|
|
The Company issued the following shares of common stock in the year ended January 31, 2016:
|
|
|
|
Issuance of Common Shares to Related Parties for Services with a market value of $34,800
|
|
|
87,000,000
|
Conversion of Notes Payable to Common Stock
|
|
|
233,429,417
|
Conversion of Notes Payable to Common Stock – Related Party
|
|
|
38,724,769
|
The company issued 233,429,417
shares of common stock for the conversion of Notes payable and accrued interest in the amount of $101,236.
The company issued 38,724,769
shares of common stock for the conversion of related party notes payable and accrued interest in the amount of $20,137.
Options and Warrants:
The Company recorded option and warrant expense of $0 and $35,000
in the years ended January 31, 2016 and 2015, respectively.
The Company had the following options or warrants outstanding at
January 31, 2016:
Issued To
|
# Options
|
Dated
|
Expire
|
Strike Price
|
|
Shareholder
|
127,500
|
08/28/2011
|
08/28/2016
|
$0.10 per share
|
|
Shareholder
|
127,500
|
04/29/2012
|
04/29/2017
|
$0.10 per share
|
|
Shareholder
|
100,000
|
03/29/2013
|
03/29/2016
|
$0.10 per share
|
|
Shareholder
|
127,500
|
07/31/2013
|
07/31/2017
|
$0.10 per share
|
|
Shareholder
|
1,000,000
|
08/31/2012
|
08/31/2016
|
$0.12 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
|
|
|
Warrants
|
|
Weighted Average
|
Exercise
|
Exercise
|
Price
|
Price
|
Outstanding at January 31, 2013
|
|
|
6,000,000
|
|
|
$
|
|
0.25
|
|
|
|
3,482,500
|
|
$
|
0.08
|
Year ended January 31, 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Granted
|
|
|
2,000,000
|
|
|
|
|
0.25
|
|
|
|
3,500,000
|
|
|
0.10
|
Exercised
|
|
|
0
|
|
|
|
|
—
|
|
|
|
0
|
|
|
—
|
Forfeited and canceled
|
|
|
0
|
|
|
|
|
|
|
|
|
0
|
|
|
|
Outstanding at January 31, 2015
|
|
|
8,000,000
|
|
|
$
|
|
0.25
|
|
|
|
6,982,500
|
|
$
|
0.09
|
Granted
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
0
|
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
Forfeited and canceled
|
|
|
8,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
Outstanding at January 31, 2016
|
|
|
0
|
|
|
$
|
|
—
|
|
|
|
6,982,500
|
|
$
|
0.13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary of options outstanding and exercisable as of January 31, 2015 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Range of Exercise
|
|
Weighted Average
|
|
|
|
Number of Options
|
Number of Options
|
|
|
Prices
|
Remaining Contractual
|
|
|
Outstanding
|
Exercisable
|
|
|
|
Life (years)
|
|
|
|
|
|
|
$0.25
|
|
|
0.625
|
|
|
|
6,000,000
|
|
|
6,000,000
|
|
|
$0.25
|
|
|
0.625
|
|
|
|
2,000,000
|
|
|
2,000,000
|
|
|
$0.25
|
|
|
0.625
|
|
|
|
8,000,000
|
|
|
8,000,000
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary of warrants outstanding and exercisable as of January 31, 2015 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Range of Exercise
|
|
Weighted Average
|
|
|
|
Number of Warrants
|
Number of Warrants
|
|
|
Prices
|
Remaining Contractual
|
|
|
Outstanding
|
Exercisable
|
|
|
|
Life (years)
|
|
|
|
|
|
|
$ 0.05 to $ 0.12
|
|
|
3.11
|
|
|
|
6,982,500
|
|
|
6,982,500
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
$ 0.05 to $ 0.12
|
|
|
3.11
|
|
|
|
6,982,500
|
|
|
6,982,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary of options outstanding and exercisable as of January 31, 2016 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Range of Exercise
|
|
Weighted Average
|
|
|
|
Number of Options
|
Number of Options
|
|
|
Prices
|
Remaining Contractual
|
|
|
Outstanding
|
Exercisable
|
|
|
|
Life (years)
|
|
|
|
|
|
|
$0.00
|
|
|
0.00
|
|
|
|
0
|
|
|
0
|
|
|
$0.00
|
|
|
0.00
|
|
|
|
0
|
|
|
0
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary of warrants outstanding and exercisable as of January 31, 2016 is as follows:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Range of Exercise
|
|
Weighted Average
|
|
|
|
Number of Warrants
|
Number of Warrants
|
|
|
Prices
|
Remaining Contractual
|
|
|
Outstanding
|
Exercisable
|
|
|
|
Life (years)
|
|
|
|
|
|
|
$ 0.05 to $ 0.12
|
|
|
2.11
|
|
|
|
6,982,500
|
|
|
6,982,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
$ 0.05 to $ 0.12
|
|
|
2.11
|
|
|
|
6,982,500
|
|
|
6,982,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
NOTE 4 –
EMPLOYEE BENEFIT PLANS
During the years ended
January 31, 2016 and 2015, there were no qualified or non-qualified employee pension, profit sharing, stock option, or other plans
authorized for any class of employees.
As of January 31, 2016
and 2015 the Company had $0 and $0 of related party accrued expenses related to accrued compensation for two employees.
NOTE 5 –
INCOME TAXES
The Company has adopted
ASC 740-10, “
Income Taxes”
, which requires the use of the liability method in the computation of income tax
expense and the current and deferred income taxes payable (deferred tax liability) or benefit (deferred tax asset). Valuation
allowances are established when necessary to reduce deferred tax assets to the amount expected to be realized.
MedCareers Group,
Inc. has incurred losses since inception. Therefore, MedCareers has no federal tax liability. Additionally
there are limitations imposed by certain transactions which are deemed to be ownership changes. The net deferred tax
asset generated by the loss carryforward has been fully reserved. The cumulative net operating loss carryforward is
about $8,032,780 and $6,723,360 at January 31, 2016 and 2015 respectively of which $4,792,389 and $4,244,253 is available for carryforward
for federal income tax purposes respectively and will expire in fiscal years 2026 to 2031. At January 31, 2016 and 2015,
the deferred tax asset consisted of the following:
|
|
2016
|
|
2015
|
Deferred tax asset:
|
|
|
|
|
|
|
|
|
Net operating loss
|
|
$
|
1,629,412
|
|
|
$
|
1,433,046
|
|
Less valuation allowance
|
|
|
(1,629,412
|
)
|
|
|
(1,433,046
|
)
|
Net deferred tax asset
|
|
$
|
—
|
|
|
$
|
—
|
|
NOTE 6 –
COMMITMENTS AND CONTINGENCIES
There is pending litigation initiated by the Company around the
validity of a $100,000 note which the Company signed based upon representations of funding from the maker which were never received.
The Company is initiated litigation to dispute the note and the 10,151, 540 shares that have been issued.
NOTE 7 - 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 January 31, 2016 of $8,032,780 and has a working capital deficit at January 31, 2016 of
$(1,994,621).
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.
NOTE 8 – 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 January 31, 2016 and January 31,
2015, 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 January 31, 2016
Using:
|
|
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
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Fair Value Measurement at January 31, 2015:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Assets:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
None
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
|
|
—
|
|
Totals
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Liabilities:
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative Liabilities
|
|
|
363,523
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
363,523
|
|
Totals
|
|
|
363,523
|
|
|
|
—
|
|
|
|
—
|
|
|
$
|
363,523
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Derivative Liability:
As of January 31, 2016 and January 31,
2015 the company had $745,129 and $363,523 recorded as derivative liabilities. During the years ended January 31, 2016 and 2015
the company recorded $633,185 in loss and $184,717 in gain 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.
The fair value of the derivative liability is determined
using the Black-Scholes option-pricing 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 Janaury 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, 2014
|
|
$
|
0
|
|
Derivative Liabilities due to Convertible Debt
|
|
$
|
932,431
|
|
Derivative Liabilities write off due to debt repayment
|
|
$
|
(39,715)
|
|
Reclassification of Derivative Liabilities to Additional Paid in Capital
|
|
|
|
|
Due to Conversion of Notes Payable
|
|
$
|
(175,212
|
)
|
Market to Market adjustment of Derivatives
|
|
$
|
(366,427
|
)
|
Derivative Liabilities due to Tainted Warrants
|
|
$
|
12,446
|
|
Balance, January 31, 2015
|
|
$
|
363,523
|
|
Derivative Liabilities due to New Convertible Debt
|
|
$
|
1,059,944
|
|
Derivative Liabilities write off due to debt repayment
|
|
$
|
(190,433)
|
|
Reclassification of Derivative Liabilities to Additional Paid in Capital
|
|
|
|
|
Due to Conversion of Notes Payable
|
|
$
|
(389,855
|
)
|
Market to Market adjustment of Derivatives
|
|
$
|
(98,050)
|
|
Ending Balance, January 31, 2016
|
|
$
|
745,129
|
|
|
|
|
|
|
NOTE 9 – RELATED PARTY TRANSACTIONS
The
company issued 38,724,769 shares of common stock for the conversion of related party notes payable and accrued interest in the
amount of $20,137
During the year ended January 31, 2016,
the Company issued 15,000,000 shares for services to the Vice-President of the subsidiary of the Company. These shares had
a market value of $6,000.
During the year ended January 31, 2016,
the Company issued 72,000,000 shares for services to the President of the Company. These shares had a market value
of $28,800.
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.
NOTE 10 - SUBSEQUENT EVENTS
Subsequent to year end, the Company borrowed $105,000 on a Convertible
Notes:
Note Payable - $25,000, 8% interest payable accrued until maturity, due Feb 3, 2017
|
$25,000
|
Note Payable - $30,000, 8% interest payable accrued until maturity, due Mar 3, 2017
|
$30,000
|
Note Payable - $25,000, 8% interest payable accrued until maturity, due Mar 24, 2017
|
$25,000
|
Note Payable - $25,000, 8% interest payable accrued until maturity, due February 5, 2017
|
$25,000
|
In the period since January 31, 2016, the Company issued 70,854,634
shares of restricted common stock pursuant to the conversion of various outstanding convertible promissory notes. The Notes provided
conversion features which was tied to the market price of the Company’s common stock.
The Company increased its authorized common stock to 4,000,000,000.