UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of Earliest Event Reported): April 15, 2015 (January 27, 2015)
MEDCAREERS GROUP, INC.
(Exact name of registrant as specified in its charter)
| Nevada | 000-55089 | 26-1580812 |
| (State or other jurisdiction of incorporation) | (Commission File Number) | (I.R.S. Employer Identification No.) |
758 E Bethel School Road
Coppell, Texas 75019
(Address of principal executive offices)(Zip Code)
Registrant's telephone number, including area code: (972) 393-5892
Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:
| [_] | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
| [_] | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
| [_] | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
| [_] | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
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ITEM 1.01 ENTRY INTO A MATERIAL DEFINITIVE AGREEMENT.
On January 27, 2015, we sold $215,000 in 8% Convertible Redeemable Notes (the “Notes”) to three accredited investors. We sold the Notes in order to raise capital at a price higher than the current trading price with a fixed dilution amount in order to pay off debt, as described in the following paragraph, at a rate which gives the Company an enterprise value of $2.5 Million. The Company used $165,000 of the amount raised to pay off three convertible notes in full and $25,000 to make partial payments on certain other notes , The balance of the funds are for working capital for the Company. The debt we paid off related to funds the Company had borrowed in order to upgrade the network completely and maintain operations in 2014. These notes had conversion rights tied to the market price of the stock and the Company believes significant dilution to the shareholders was prevented by the repaying of these notes as well as selling the new notes with conversion rights much less dilutive, therefore giving the Company a higher market capitalization. Each of these notes had a principal amount of $32,500 and with payoff penalties and interest, the total was approximately $165,000. We also made partial payments of $15,000 and $10,000 on other notes with similar conversion rights. The Company is working on refinancing the Company’s remaining debt to remove notes that have significant dilution rights so that the Company can stabilize its outstanding shares, prevent further significant dilution, and allow the market for the Company’s common stock to develop.
The Notes accrue interest at the rate of 8% per annum (which is payable in cash or shares of common stock of the Company), are convertible into shares of the Company’s to be designated Series A Preferred Stock at a conversion price of $1.00 per preferred stock share, and have a maturity date of January 27, 2016. The Notes contain standard events of default, including if the Company’s common stock is delisted from an exchange, a change in a majority of the Company’s current Board of Directors, or failure to timely comply with the requirements of the Notes. Each holder can declare its applicable Note in default, upon the occurrence of an event of default and without notice, at which time the Note will accrue interest at the rate of 25% per annum until paid in full.
The Company’s to be designated Series A Preferred Stock is planned to total an aggregate of 500,000 total shares and be convertible into an aggregate of 20% of the Company’s outstanding common stock. The Company will file a Report on Form 8-K disclosing the approval of the terms of the Series A Preferred Stock by its Board of Directors and the filing of such Series A Preferred Stock with the Secretary of State of Nevada once approved and filed.
The foregoing description of the Notes are qualified in their entirety by reference to the full text thereof, a form of which is filed as Exhibit 10.1 to this Current Report on Form 8-K, and incorporated herein by reference.
ITEM 2.03 CREATION OF A DIRECT FINANCIAL OBLIGATION OR AN OBLIGATION UNDER AN OFF-BALANCE SHEET ARRANGEMENT OF A REGISTRANT.
See the discussion under Item 1.01 above with respect to the Notes, which is incorporated herein by reference.
ITEM 3.02 UNREGISTERED SALES OF EQUITY SECURITIES.
The Company claims an exemption from registration pursuant to Section 4(a)(2) and/or Rule 506 of Regulation D of the Securities Act of 1933, as amended (the “Securities Act”), and the rules and regulations promulgated thereunder in connection with the sale of the Notes as no general solicitation was made either by us or by any person acting on our behalf, the transactions were all privately negotiated, and none involved any kind of public solicitation, no underwriters or agents were involved in the foregoing sales and the Company paid no underwriting discounts or commissions, the securities sold were subject to transfer restrictions, and the certificates evidencing the securities contain an appropriate legend stating that such securities have not been registered under the Securities Act and may not be offered or sold absent registration or pursuant to an exemption therefrom, and the purchasers of the Notes were “accredited investors”.
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In the first quarter of 2015, the Company issued 127,706,486 shares of restricted common stock pursuant to the conversion of various outstanding convertible promissory notes. The Notes provided a conversion feature which was tied to the market price of the Company’s common stock. One of the converted notes was with the Company’s President which was in the amount of $19,500 plus interest and converted into 38,724,769 shares.
All of the shares of common stock issuable upon conversion of the notes were exempt from registration pursuant to an exemption from registration afforded by Section 3(a)(9) of the Securities Act.
ITEM 4.01 CHANGE IN REGISTRANT’S CETIFYING ACCOUNTANT.
On March 26, 2015, the Company dismissed The Hall Group, CPAs (“The Hall Group”) as the Company’s independent auditors through and with the approval of our Board of Directors. The Hall Group’s reports on the Company’s financial statements as of and for the years ended January 31, 2014 and 2013 did not contain any adverse opinion or disclaimer of opinion, or qualification or modification as to uncertainty, audit scope, or accounting principles. However, their reports contained an explanatory paragraph disclosing the uncertainty regarding the ability of the Company to continue as a going concern.
During the fiscal years ended January 31, 2014 and 2013, and the subsequent interim period through the date that The Hall Group was dismissed, there were: (i) no “disagreements” (within the meaning of Item 304(a) of Regulation S-K) with The Hall Group on any matter of accounting principles or practices, financial statement disclosure or auditing scope or procedure, which disagreements, if not resolved to the satisfaction of The Hall Group, would have caused it to make reference to the subject matter of the disagreements in its report on the consolidated financial statements of the Company; and (ii) no “reportable events” (as such term is defined in Item 304(a)(1)(v) of Regulation S-K), except for material weaknesses in the Company’s internal control over financial reporting as described in the Company’s Annual Reports on Form 10-K for the years ended January 31, 2014 and 2013, which have not been corrected as of the date of this filing.
The Company has provided The Hall Group with a copy of this Form 8-K prior to its filing with the U.S. Securities and Exchange Commission (“SEC”) and requested The Hall Group to furnish to the Company a letter addressed to the SEC stating that it agrees with the statements made above; however The Hall Group has failed to provide the requested letter. If such a response is received, it will be filed with an amendment to this Current Report.
On March 26, 2015, the Company engaged MaloneBailey, LLP as the Company’s principal independent auditors to audit the financial statements of the Company. The decision to change independent auditors was approved by the Board of Directors of the Company.
During the Company’s two most recent fiscal years and the subsequent interim period preceding MaloneBailey, LLP’s engagement, neither the Company nor anyone on its behalf consulted MaloneBailey, LLP regarding either: (i) the application of accounting principles to a specified transaction, either completed or proposed, or the type of audit opinion that might be rendered on the Company’s financial statements, and no written report or oral advice was provided to the Company that MaloneBailey, LLP concluded was an important factor considered by the Company in reaching a decision as to the accounting, auditing or financial reporting issue; or (ii) any matter that was the subject of a “disagreement” or “reportable event” (within the meaning of Item 304(a) of Regulation S-K and Item 304(a)(1)(v) of Regulation S-K, respectively).
ITEM 4.02. Non-Reliance on Previously Issued Financial Statements or a Related Audit Report or Completed Interim Review.
Additionally, on April 9, 2015, the Company received a letter from the SEC stating that Thakker CPA, PLLC, doing business as The Hall Group, CPA’s, issued opinions on the Company’s financial statements after January 6, 2014 and Thakker CPA, PLLC was not registered with the PCAOB and not eligible to audit or review financial statements included in filings with the SEC after such date. The SEC requires our audit for the year ended January 31, 2014 to be audited by a PCAOB registered firm and as such, such we are having such financial statements re-audited by MaloneBailey, LLP in conjunction with their audit of our financial statements as of January 31, 2015, and plan to file an Amended Form 10-K subsequent to the date of this filing with such re-audited financial statements.
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ITEM 9.01. FINANCIAL STATEMENTS AND EXHIBITS.
(c) Exhibits:
| Exhibit No. | Description | ||
| 10.1 | Form of Loan Agreement | ||
| 16.1 | Letter from The Hall Group, CPAs* |
* To be filed by amendment.
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this Report to be signed on its behalf by the undersigned, hereunto duly authorized.
| MEDCAREERS GROUP, INC. | |
| /s/ Timothy Armes | |
| By: Timothy Armes, President | |
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EXHIBIT INDEX
| Exhibit No. | Description | ||
| 10.1 | Form of Loan Agreement | ||
| 16.1 | Letter from The Hall Group, CPAs* |
* To be filed by amendment.
Exhibit 10.1
THE SECURITIES OFFERED HEREBY HAVE NOT BEEN AND WILL NOT BE REGISTERED WITH THE UNITED STATES SECURITIES AND EXCHANGE COMMISSION OR THE SECURITIES COMMISSION OF ANY STATE PURSUANT TO AN EXEMPTION FROM REGISTRATION PROVIDED BY SECTION 3(b) OF THE SECURITIES ACT OF 1933, AS AMENDED, AND THE RULES AND REGULATIONS PROMULGATED THEREUNDER (THE "1933 ACT)
US $50,000.00
Dated: January 27, 2015
MEDCAREERS GROUP, INC.
8% CONVERTIBLE REDEEMABLE NOTE
DUE JANUARY 27, 2016
FOR VALUE RECEIVED, MedCareers Group, Inc. (the “Company”) promises to pay to the order of MISTER INVESTOR and its authorized successors and permitted assigns ("Holder"), the aggregate principal face amount of Fifty Thousand dollars (U.S. $50,000.00) on January 27, 2016 ("Maturity Date") and to pay interest on the principal amount outstanding hereunder at the rate of 8% per annum commencing on January 28, 2015. The interest will be paid to the Holder in whose name this Note is registered on the records of the Company regarding registration and transfers of this Note. The principal of, and interest on, this Note are payable at Mister Investor’s Address, initially, and if changed, last appearing on the records of the Company as designated in writing by the Holder hereof from time to time. The Company will pay each interest payment and the outstanding principal due upon this Note before or on the Maturity Date, less any amounts required by law to be deducted or withheld, to the Holder of this Note by check or wire transfer addressed to such Holder at the last address appearing on the records of the Company. The forwarding of such check or wire transfer shall constitute a payment of outstanding principal hereunder and shall satisfy and discharge the liability for principal on this Note to the extent of the sum represented by such check or wire transfer.
This Note is subject to the following additional provisions:
1. This Note is exchangeable for an equal aggregate principal amount of Notes of different authorized denominations, as requested by the Holder surrendering the same. No service charge will be made for such registration or transfer or exchange, except that Holder shall pay any tax or other governmental charges payable in connection therewith.
2. The Company shall be entitled to withhold from all payments any amounts required to be withheld under applicable laws.
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3. This Note may be transferred or exchanged only in compliance with the Securities Act of 1933, as amended ("Act") and applicable state securities laws. Any attempted transfer to a non-qualifying party shall be treated by the Company as void. Prior to due presentment for transfer of this Note, the Company and any agent of the Company may treat the person in whose name this Note is duly registered on the Company's records as the owner hereof for all other purposes, whether or not this Note be overdue, and neither the Company nor any such agent shall be affected or bound by notice to the contrary. Any Holder of this Note electing to exercise the right of conversion set forth in Section 4(a) hereof, in addition to the requirements set forth in Section 4(a), and any prospective transferee of this Note, also is required to give the Company written confirmation that this Note is being converted ("Notice of Conversion") in the form annexed hereto as Exhibit A. The date of receipt (including receipt by telecopy) of such Notice of Conversion shall be the Conversion Date.
4. (a) The Holder of this Note is entitled, at its option, at any time, and after full cash payment for the shares convertible hereunder, to convert all or any amount of the principal face amount of this Note then outstanding into shares of the Company's preferred stock (the "Preferred Stock"), at a price ("Conversion Price") for each share of One Dollar ($1.00). If the shares have not been delivered within 3 business days, the Notice of Conversion may be rescinded. Such conversion shall be effectuated by the Company delivering the shares of Preferred Stock to the Holder within 3 business days of receipt by the Company of the Notice of Conversion. Once the Holder has received such shares of Preferred Stock, the Holder shall surrender this Note to the Company, executed by the Holder evidencing such Holder's intention to convert this Note or a specified portion hereof, and accompanied by proper assignment hereof in blank. Accrued but unpaid interest shall be subject to conversion. No fractional shares or scrip representing fractions of shares will be issued on conversion, but the number of shares issuable shall be rounded to the nearest whole share. The Company is issuing up to 500,000 Preferred Shares which are convertible in aggregate in to 20% of the Common Stock of the Company. For example, 100,000 shares of Preferred Stock will convert in to 4% of the Company. An example of the Preferred Stock subscription is attached hereto as Exhibit B. See example of the Preferred Stock certificate for all terms and conditions.
(b) Interest on any unpaid principal balance of this Note shall be paid at the rate of 8% per annum. Interest shall be paid by the Company in Common Stock ("Interest Shares") or added to the principal and converted into Preferred Stock.
(c) In case of any Sale Event in connection with which this Note is not redeemed or converted, the Company shall cause effective provision to be made so that the Holder of this Note shall have the right thereafter, by converting this Note, to purchase or convert this Note into the kind and number of shares of stock or other securities or property (including cash) receivable upon such reclassification, capital reorganization or other change, consolidation or merger by a holder of the number of shares of Common Stock that could have been purchased upon exercise of the Note and at the same Conversion Price, as defined in this Note, immediately prior to such Sale Event. The foregoing provisions shall similarly apply to successive Sale Events. If the consideration received by the holders of Common Stock is other than cash, the value shall be as determined by the Board of Directors of the Company or successor person or entity acting in good faith.
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5. No provision of this Note shall alter or impair the obligation of the Company, which is absolute and unconditional, to pay the principal of, and interest on, this Note at the time, place, and rate, and in the form, herein prescribed.
6. The Company hereby expressly waives demand and presentment for payment, notice of non-payment, protest, notice of protest, notice of dishonor, notice of acceleration or intent to accelerate, and diligence in taking any action to collect amounts called for hereunder and shall be directly and primarily liable for the payment of all sums owing and to be owing hereto.
7. The Company agrees to pay all costs and expenses, including reasonable attorneys' fees and expenses, which may be incurred by the Holder in collecting any amount due under this Note.
8. If one or more of the following described "Events of Default" shall occur:
(a) The Company shall default in the payment of principal or interest on this Note or any other note issued to the Holder by the Company; or
(b) Any of the representations or warranties made by the Company herein or in any certificate or financial or other written statements heretofore or hereafter furnished by or on behalf of the Company in connection with the execution and delivery of this Note, or the Securities Purchase Agreement under which this note was issued shall be false or misleading in any respect; or
(c) The Company shall fail to perform or observe, in any respect, any covenant, term, provision, condition, agreement or obligation of the Company under this Note or any other note issued to the Holder; or
(d) The Company shall (1) become insolvent; (2) admit in writing its inability to pay its debts generally as they mature; (3) make an assignment for the benefit of creditors or commence proceedings for its dissolution; (4) apply for or consent to the appointment of a trustee, liquidator or receiver for its or for a substantial part of its property or business; (5) file a petition for bankruptcy relief, consent to the filing of such petition or have filed against it an involuntary petition for bankruptcy relief, all under federal or state laws as applicable; or
(e) A trustee, liquidator or receiver shall be appointed for the Company or for a substantial part of its property or business without its consent and shall not be discharged within thirty (30) days after such appointment; or
(f) Any governmental agency or any court of competent jurisdiction at the instance of any governmental agency shall assume custody or control of the whole or any substantial portion of the properties or assets of the Company; or
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(g) One or more money judgments, writs or warrants of attachment, or similar process, in excess of fifty thousand dollars ($50,000) in the aggregate, shall be entered or filed against the Company or any of its properties or other assets and shall remain unpaid, unvacated, unbonded or unstayed for a period of fifteen (15) days or in any event later than five (5) days prior to the date of any proposed sale thereunder; or
(h) defaulted on or breached any term of any other note of similar debt instrument into which the Company has entered and failed to cure such default within the appropriate grace period; or
(i) The Company shall have its Common Stock delisted from an exchange (including the OTCBB exchange) or, if the Common Stock trades on an exchange, then trading in the Common Stock shall be suspended for more than 10 consecutive days;
(j) If a majority of the members of the Board of Directors of the Company on the date hereof are no longer serving as members of the Board;
(k) The Company shall not deliver to the Holder the Common Preferred pursuant to paragraph 4 herein within 3 business days of its receipt of a Notice of Conversion; or
Then, or at any time thereafter, unless cured, and in each and every such case, unless such Event of Default shall have been waived in writing by the Holder (which waiver shall not be deemed to be a waiver of any subsequent default) at the option of the Holder and in the Holder's sole discretion, the Holder may consider this Note immediately due and payable, without presentment, demand, protest or (further) notice of any kind (other than notice of acceleration), all of which are hereby expressly waived, anything herein or in any note or other instruments contained to the contrary notwithstanding, and the Holder may immediately, and without expiration of any period of grace, enforce any and all of the Holder's rights and remedies provided herein or any other rights or remedies afforded by law. Upon an Event of Default, interest shall be accrue at a default interest rate of 24% per annum or, if such rate is usurious or not permitted by current law, then at the highest rate of interest permitted by law.
If the Holder shall commence an action or proceeding to enforce any provisions of this Note, including without limitation engaging an attorney, then the Holder shall be reimbursed by the Company for its attorneys’ fees and other costs and expenses incurred in the investigation, preparation and prosecution of such action or proceeding.
10. In case any provision of this Note is held by a court of competent jurisdiction to be excessive in scope or otherwise invalid or unenforceable, such provision shall be adjusted rather than voided, if possible, so that it is enforceable to the maximum extent possible, and the validity and enforceability of the remaining provisions of this Note will not in any way be affected or impaired thereby.
11. Neither this Note nor any term hereof may be amended, waived, discharged or terminated other than by a written instrument signed by the Company and the Holder.
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12. The Company represents that it is not a “shell” issuer and has never been a “shell” issuer or that if it previously has been a “shell” issuer that at least 12 months have passed since the Company has reported form 10 type information indicating it is no longer a “shell issuer. Further. The Company will instruct its counsel to either (i) write a 144- 3(a)(9) opinion to allow for salability of the conversion shares or (ii) accept such opinion from Holder’s counsel.
13. The Company will give the Holder direct notice of any corporate actions including but not limited to name changes, stock splits, recapitalizations etc. This notice shall be given to the Holder as soon as possible under law.
14. This Note shall be governed by and construed in accordance with the laws of Texas applicable to contracts made and wholly to be performed within the State of Texas and shall be binding upon the successors and assigns of each party hereto. The Holder and the Company hereby mutually waive trial by jury and consent to exclusive jurisdiction and venue in the courts of the State of Texas. This Agreement may be executed in counterparts, and the facsimile transmission of an executed counterpart to this Agreement shall be effective as an original.
IN WITNESS WHEREOF, the Company has caused this Note to be duly executed by an officer thereunto duly authorized.
Dated: January 27, 2015
| MEDCAREERS GROUP, INC. | |
| By: Timothy Armes, President | |
| Title: President |
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EXHIBIT A
NOTICE OF CONVERSION
(To be Executed by the Registered Holder in order to Convert the Note)
The undersigned hereby irrevocably elects to convert $___________ of the above Note into _________ Shares of Preferred Stock of MedCareers Group, Inc. (“Shares”) according to the conditions set forth in such Note, as of the date written below.
If Shares are to be issued in the name of a person other than the undersigned, the undersigned will pay all transfer and other taxes and charges payable with respect thereto.
Date of Conversion: ________________________________________________________________
Applicable Conversion Price: _________________________________________________________
Signature:
[Print Name of Holder and Title of Signer]
Address: ________________________________________________________________________
_______________________________________________________________
SSN or EIN:______________________________
Shares are to be registered in the following name:__________________________________________
Name:: _________________________________________________________________________
Address: _______________________________________________________________________
Tel: ________________________________
Fax::________________________________
SSN or EIN: __________________________
Shares are to be sent or delivered to the following account:
Account Name:___________________________________________________________________
Address:________________________________________________________________________
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