MCGI 10K out MEDCAREERS GROUP, INC. - 10-K/A - Management's Discussion and Analysis of Financial Condition and Results of Operations. Edgar Online "Glimpses"
Recent Activity
At the end of our fiscal year end and through our first quarter of FY 2017 we have concentrated our efforts into re-launching the employer area of our network into a talent acquisition platform for hiring nurses.
One of the goals is to have upward of 10,000 paid nursing jobs posted on our job board from healthcare systems across the country. By achieving this goal we will be one of the largest nursing job sites for direct hire employers such as hospitals as opposed to travel firms. As of April 30, 2016 we had reached 25% of our goal with 2,500 jobs posted or under contract to be posted. We believe the 10,000 jobs will be achieved with between 60 and 100 health systems under contract.
Management is still looking to add approximately 5 commission business partners to represent us in 5 of our 7 regions. These representatives will be responsible for revenue generation and membership growth in their assigned markets.
Additionally we have had some unsolicited sales from organizations wanting to purchase targeted email campaigns since year-end. The sales ranged between $1,000 and $2,500 . We believe as our membership grows there will be a tremendous sales opportunity for these transactions. As we do not sale our member lists, this transactions consist of our sending a clients email to a targeted group of nurses defined by the client through our own email service.
Our financial statements contain information expressing substantial doubt about our ability to continue as a going concern. The consolidated financial statements have been prepared "assuming that we will continue as a going concern," which contemplates that we satisfy our liabilities and commitments in the ordinary course of business.
Additionally, we plan to be current with all required filings including the January 31, 2018 Form 10- K. With the completion of this process coming to a close, we are presently looking at various strategic options to enhance shareholder value, including the option of selling our subsidiary, which could relieve the Company of much of its debt.
Results of Operations For the Year Ended January 31, 2017 compared to the year ended January 31, 2016
We had revenue of $30,414 for the year ended January 31, 2017 , compared to $50,985 for the year ended January 31, 2016 . We had total cost of revenues of $2,945 and total gross profit of $27,469 for the year ended January 31, 2017 , compared to cost of revenues of $12,973 and total gross profit of $38,012 for the year ended January 31, 2016 .
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We had total operating expenses of $312,543 for the year ended January 31, 2017 , consisting of $27,831 of selling and marketing expenses and $284,712 of general and administrative expenses. For the year ended January 31, 2016 , we had total operating expenses of $341,914 , consisting of $48,523 of selling and marketing expenses and $293,391 of general and administrative expenses, which included $36,000 of common stock issued for services.
We had total other income of $80,818 for the year ended January 31, 2017 , consisting of interest expense of $119,691 , gain on derivatives of $358,442 , amortization of debt discount of $152,940 and amortization of deferred financing costs of $4,993 .
We had total other expenses of $1,005,518 for the year ended January 31, 2016 , consisting of interest expense of $175,904 , loss on derivatives of $633,185 , amortization of debt discount of $194 ,711and amortization of deferred financing costs of $1,718 .
We had a net loss of $204,256 for the year ended January 31, 2017 , compared to a net loss of $1,309,420 for the year ended January 31, 2016 , a decrease in net loss of $1,105,164 from the prior period, due to mainly to the gain on derivatives for the period.
Liquidity and Capital Resources
As of January 31, 2017 , the Company had total current assets of $1,156 , consisting of cash and cash equivalents. We had total liabilities of $2,129,238 , made up of accounts payable of $67,423 , accrued expenses of $44,024 , accrued expenses to related parties of $145,650 , deferred revenue of $10,902 , accrued interest payable of $407,433 , derivative liabilities of $421,973 and $951,427 of short term debt net of debt discounts of $(42,278) , and $72,500 of short term debt to related parties. We had negative working capital of $2,128,082 as of January 31, 2017 .
Net cash used in operations for the year ended January 31, 2017 was $103,844 compared to $306,887 for the year ended January 31, 2016 .
Cash provided by financing activities for the year ended January 31, 2017 was $105,000 compared to $257,006 for the year ended January 31, 2016 . This is primarily due to an increase in the proceeds from notes payable.
The Company has borrowed funds and/or sold stock for working capital. These transactions are detailed in the section "Recent Sales of Unregistered Securities ".
Currently the Company does not have sufficient cash reserves to meet its contractual obligations and its ongoing monthly expenses, which the Company anticipates totaling approximately $360,000 over the next 12 months. The Company has been able to continue operating to date largely from loans made by its shareholders, other debt financings and sale of common stock. The Company is currently looking at both 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. Until we have raised sufficient funding to pay our ongoing expenses associated with being a public company, and we have sufficient funds to support our planned operations, the Company can provide no assurances that it will be able to meet its short and long term liquidity needs, until necessary financing is secured. The Company some generates revenue from the Nurses Lounge business, which the Company hopes will increase to the point where the Company can finance at least a substantial portion of the Company's obligations, of which there can be no assurance.
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.
Recent Activity
At the end of our fiscal year end and through our first quarter of FY 2017 we have concentrated our efforts into re-launching the employer area of our network into a talent acquisition platform for hiring nurses.
One of the goals is to have upward of 10,000 paid nursing jobs posted on our job board from healthcare systems across the country. By achieving this goal we will be one of the largest nursing job sites for direct hire employers such as hospitals as opposed to travel firms. As of April 30, 2016 we had reached 25% of our goal with 2,500 jobs posted or under contract to be posted. We believe the 10,000 jobs will be achieved with between 60 and 100 health systems under contract.
Management is still looking to add approximately 5 commission business partners to represent us in 5 of our 7 regions. These representatives will be responsible for revenue generation and membership growth in their assigned markets.
Additionally we have had some unsolicited sales from organizations wanting to purchase targeted email campaigns since year-end. The sales ranged between $1,000 and $2,500 . We believe as our membership grows there will be a tremendous sales opportunity for these transactions. As we do not sale our member lists, this transactions consist of our sending a clients email to a targeted group of nurses defined by the client through our own email service.
Our financial statements contain information expressing substantial doubt about our ability to continue as a going concern. The consolidated financial statements have been prepared "assuming that we will continue as a going concern," which contemplates that we satisfy our liabilities and commitments in the ordinary course of business.
Additionally, we plan to be current with all required filings including the January 31, 2018 Form 10- K. With the completion of this process coming to a close, we are presently looking at various strategic options to enhance shareholder value, including the option of selling our subsidiary, which could relieve the Company of much of its debt.
Results of Operations For the Year Ended January 31, 2017 compared to the year ended January 31, 2016
We had revenue of $30,414 for the year ended January 31, 2017 , compared to $50,985 for the year ended January 31, 2016 . We had total cost of revenues of $2,945 and total gross profit of $27,469 for the year ended January 31, 2017 , compared to cost of revenues of $12,973 and total gross profit of $38,012 for the year ended January 31, 2016 .
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We had total operating expenses of $312,543 for the year ended January 31, 2017 , consisting of $27,831 of selling and marketing expenses and $284,712 of general and administrative expenses. For the year ended January 31, 2016 , we had total operating expenses of $341,914 , consisting of $48,523 of selling and marketing expenses and $293,391 of general and administrative expenses, which included $36,000 of common stock issued for services.
We had total other income of $80,818 for the year ended January 31, 2017 , consisting of interest expense of $119,691 , gain on derivatives of $358,442 , amortization of debt discount of $152,940 and amortization of deferred financing costs of $4,993 .
We had total other expenses of $1,005,518 for the year ended January 31, 2016 , consisting of interest expense of $175,904 , loss on derivatives of $633,185 , amortization of debt discount of $194 ,711and amortization of deferred financing costs of $1,718 .
We had a net loss of $204,256 for the year ended January 31, 2017 , compared to a net loss of $1,309,420 for the year ended January 31, 2016 , a decrease in net loss of $1,105,164 from the prior period, due to mainly to the gain on derivatives for the period.
Liquidity and Capital Resources
As of January 31, 2017 , the Company had total current assets of $1,156 , consisting of cash and cash equivalents. We had total liabilities of $2,129,238 , made up of accounts payable of $67,423 , accrued expenses of $44,024 , accrued expenses to related parties of $145,650 , deferred revenue of $10,902 , accrued interest payable of $407,433 , derivative liabilities of $421,973 and $951,427 of short term debt net of debt discounts of $(42,278) , and $72,500 of short term debt to related parties. We had negative working capital of $2,128,082 as of January 31, 2017 .
Net cash used in operations for the year ended January 31, 2017 was $103,844 compared to $306,887 for the year ended January 31, 2016 .
Cash provided by financing activities for the year ended January 31, 2017 was $105,000 compared to $257,006 for the year ended January 31, 2016 . This is primarily due to an increase in the proceeds from notes payable.
The Company has borrowed funds and/or sold stock for working capital. These transactions are detailed in the section "Recent Sales of Unregistered Securities ".
Currently the Company does not have sufficient cash reserves to meet its contractual obligations and its ongoing monthly expenses, which the Company anticipates totaling approximately $360,000 over the next 12 months. The Company has been able to continue operating to date largely from loans made by its shareholders, other debt financings and sale of common stock. The Company is currently looking at both 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. Until we have raised sufficient funding to pay our ongoing expenses associated with being a public company, and we have sufficient funds to support our planned operations, the Company can provide no assurances that it will be able to meet its short and long term liquidity needs, until necessary financing is secured. The Company some generates revenue from the Nurses Lounge business, which the Company hopes will increase to the point where the Company can finance at least a substantial portion of the Company's obligations, of which there can be no assurance.
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.
