The Accompanying Notes are an Integral Part
of these Unaudited Consolidated Financial Statements.
The Accompanying Notes are an Integral Part
of these Unaudited Consolidated Financial Statements.
Notes to Financial Statements
April 30, 2016 and 2015 (Unaudited)
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.
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.
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 Medcareers’ 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.
Recently Issued Accounting
Pronouncements:
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 April 30, 2016 and January 31, 2016 were as follows:
|
|
Apr 2016
|
|
Jan 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
|
|
|
|
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
|
|
|
10,950
|
|
|
|
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
|
|
|
|
—
|
|
Deferred Financing Costs
|
|
|
(5,751
|
)
|
|
|
(8,240
|
)
|
Debt Discount
|
|
|
(147,731
|
)
|
|
|
(104,900
|
)
|
Subtotal
|
|
$
|
822,471
|
|
|
$
|
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
|
|
$
|
894,971
|
|
|
$
|
872,072
|
|
|
|
|
|
|
|
|
|
|
The Company had accrued
interest payable of $317,711 and $290,682 interest on the notes at April 30, 2016 and January 31, 2016, respectively.
The Company has entered in to various promissory
notes with lenders during the three months ended April 30, 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 three months ended April 30, 2016,
the Company converted a total of $17,127 of the convertible debt plus accrued interest into 70,854,634 common shares.
A summary of the debt in total is as follows:
|
|
2016
|
|
2015
|
Convertible debt – fixed conversion rate
|
|
$
|
692,150
|
|
|
$
|
692,150
|
|
Convertible debt – variable conversion rates, net of debt discount
|
|
|
105,321
|
|
|
|
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
|
|
$
|
894,971
|
|
|
|
872,072
|
|
The Company has $692,150
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 April
30,2016 and January 31, 2016 respectively.
The Company has $25,000
and $25,000 of debt which has no conversion feature at April 30, 2016 and January 31, 2016 respectively.
The Company has $105,321
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 April 30, 2016 and January 31,
2016 respectively.
The company has $72,500
of related party convertible debt at April 30, 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.
There
were 330,000 Series A preferred shares outstanding at April 30, 2016 and January 31, 2016.
There were 1,000 Series
B preferred shares outstanding at April 30, 2016 and January 31, 2016.
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 April
30, 2016 and January 31, 2016, there were 525,692,734 and 454,838,100 shares outstanding, respectively. No dividends were
paid in the period ended April 30, 2016 or in the year ended January 31, 2016.
The Company issued the following shares of common stock in the year ended April 30, 2016:
|
|
|
|
Conversion of Notes Payable to Common Stock
|
|
|
70,854,634
|
The company issued 70,854,634 shares of common stock for the conversion of Notes payable and accrued interest in the amount of $17,127.
|
|
|
|
|
|
|
|
Options and Warrants:
The Company recorded option and warrant expense of $0 in the period
ended April 30, 2016 and the year ended January 31, 2016.
The Company had the following options or warrants outstanding at
April 30, 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
|
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, 2016
|
|
|
-
|
|
|
$
|
|
0.25
|
|
|
|
6,982,500
|
|
$
|
0.09
|
|
Granted
|
|
|
-
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Exercised
|
|
|
-
|
|
|
|
|
—
|
|
|
|
—
|
|
|
—
|
|
Forfeited and canceled
|
|
|
-
|
|
|
|
|
|
|
|
|
100,000
|
|
|
|
|
Outstanding at April 30, 2016
|
|
|
-
|
|
|
$
|
|
—
|
|
|
|
6,882,500
|
|
$
|
0.13
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
Summary of warrants outstanding and exercisable as of April 30, 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
|
|
|
1.86
|
|
|
|
6,882,500
|
|
|
6,882,500
|
|
|
|
|
|
|
|
|
|
|
|
|
0
|
|
|
$ 0.05 to $ 0.12
|
|
|
1.86
|
|
|
|
6,882,500
|
|
|
6,882,500
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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.
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 April 30, 2016 of $8,397,741 and has a working capital deficit at April 30, 2016 of $(2,290,013).
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 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 April 30, 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 April 30, 2016
Using:
|
|
April 30, 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
|
|
$
|
983,147
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
983,147
|
|
Totals
|
|
$
|
983,147
|
|
|
$
|
—
|
|
|
$
|
—
|
|
|
$
|
983,147
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
|
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 April 30, 2016 and January 31,
2016 the company had $983,147 and $745,129 recorded as derivative liabilities. During the periods ended April 30, 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.
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 April 30, 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
|
$
|
210,460
|
|
Reclassification of Derivative Liabilities to Additional Paid in Capital
|
|
|
|
Due to Conversion of Notes Payable
|
$
|
(52,442
|
)
|
Market to Market adjustment of Derivatives
|
$
|
80,000
|
|
Ending Balance, April 30, 2016
|
$
|
983,147
|
|
|
|
|
|
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.
NOTE 8 - SUBSEQUENT EVENTS
Subsequent to April 30, 2016, the Company borrowed $25,000 on a
Convertible Notes:
Note Payable: $4,000.00 Unruh note plus interest was assigned to
Blackbridge Capital Growth Fund, LLC
Note Payable - $25,000, 9% interest payable accrued until maturity, due Feb 5, 2017
|
$25,000
|
In the period since April 30, 2016, the Company issued 35,962,743
shares of restricted common stock pursuant to the conversion of $6,293.48 of the Unruh convertible promissory note and interest.
The Notes provided conversion features which was tied to the market price of the Company’s common stock.