ETERNITY HEALTHCARE INC. - FORM 10-Q

Attached files

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EX-31.1 - SECTION 302 CERTIFICATIONS UNDER SARBANES-OXLEY ACT OF 2002 - ETERNITY HEALTHCARE INC.	f10q1010ex31i_eternity.htm
EX-32.1 - SECTION 906 CERTIFICATIONS UNDER SARBANES-OXLEY ACT OF 2002 OF VERYL NORQUAY - ETERNITY HEALTHCARE INC.	f10q1010ex32i_eternity.htm

UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

Form 10-Q

(Mark One)

QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended

October 31, 2010

TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the transition period from

Commission File Number

000-53376

ETERNITY HEALTHCARE INC.

(Exact name of registrant as specified in its charter)

Nevada

75-3268426

(State or other jurisdiction of incorporation or organization)

(IRS Employer Identification No.)

409 Granville Street, Suite 1023, Vancouver, BC, Canada

V6C 1T2

(Address of principal executive offices)

(Zip Code)

(604) 324-4844

(Registrant’s telephone number, including area code)

N/A

(Former name, former address and former fiscal year, if changed since last report)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.

YES

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).

YES

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a small reporting company. See the definitions of “large accelerated filer”, “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.

Large accelerated filer

Accelerated filer

Non-accelerated filer

(Do not check if a smaller reporting company)

Smaller reporting company

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act

YES

APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY

PROCEEDINGS DURING THE PRECEDING FIVE YEARS

Check whether the registrant has filed all documents and reports required to be filed by Sections 12, 13 or 15(d) of the Exchange Act after the distribution of securities under a plan confirmed by a court.

YES

APPLICABLE ONLY TO CORPORATE ISSUERS

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the latest practicable date.

3,575,000 common shares issued and outstanding as of November 26, 2010.

TABLE OF CONTENTS

PART I	1
Item 1. Financial Statements	1
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations	15
Item 3. Quantitative and Qualitative Disclosures About Market Risk	20
Item 4. Controls and Procedures	20
PART II
Item 1. Legal Proceedings	21
Item 1(a) Risk Factors	21
Item 2. Unregistered Sales of Equity Securities	21
Item 3. Defaults Upon Senior Securities	21
Item 4. Removed and Reserved	21
Item 5. Other Information	21
Item 6. Exhibits	21

PART I

FINANCIAL INFORMATION

Item 1. Financial Statements

The following interim unaudited financial statements of Eternity Healthcare Inc. for the six month period ended October 31, 2010 are included with this Quarterly Report on Form 10-Q:

(a)	Balance Sheets as of October 31, 2010 and April 30, 2010;

(b)	Statements of Operations for the three months ended October 31, 2010 and October 31, 2009, for the six months ended October 31, 2010 and October 31, 2009 and for the period from October 24, 2007 (Inception) through October 31, 2010.

(c)	Statements of Cash Flows for the three months ended October 31, 2010 and October 31, 2009, for the six months ended October 31, 2010 and October 31, 2009 and for the period from October 24, 2007 (Inception) through October 31, 2010.

(d)	Statement of Changes in Stockholders’ Deficiency since inception through October 31, 2010.

(e)	Notes to Financial Statements.

Eternity Healthcare Inc.

(Formerly Kid’s Book Writer Inc.)

(A Development Stage Company)

Interim Financial Statements

(Expressed in U.S. Dollars)

(Unaudited)

31 October 2010

Eternity Healthcare Inc.

(Formerly Kid’s Book Writer Inc.)

(A Development Stage Company)

Interim Balance Sheets

(Expressed in U.S. Dollars)

(Unaudited)

	As at 31 October 2010			As at 30 April 2010 (Audited)
	$				$

Assets

Current
Cash and cash equivalents		1			-

		1			-

Liabilities

Current
Accounts payable and accrued liabilities (Note 3)		900			3,100
Due to related party (Note 4)		8,333			800

		9,233			3,900

Stockholders’ deficiency
Capital stock (Note 5)
Authorized
300,000,000 of common shares, par value $0.001 (Note 8ii)
Issued and outstanding
31 October 2010 – 3,575,000 common shares, par value $0.001
30 April 2010 – 575,000 common shares, par value $0.001		3,575			5,750
Additional paid in capital		95,170			62,995
Deficit, accumulated during the development stage		(107,977	)		(72,645	)

		(9,232	)		(3,900	)

		1			-

Nature and Continuance of Operations (Note 1) and Subsequent Events (Note 8)

The accompanying notes are an integral part of these interim financial statements.

Eternity Healthcare Inc.

(Formerly Kid’s Book Writer Inc.)

(A Development Stage Company)

Interim Statements of Operations

(Expressed in U.S. Dollars)

(Unaudited)

	For the period from the date of inception on 24 October 2007 to 31 October 2010			For the three month period ended 31 October 2010			For the three month period ended 31 October 2009			For the six month period ended 31 October 2010			For the six month period ended 31 October 2009
	$			$			$			$			$

Expenses
General and administrative (Schedule 1)		107,977			788			2,448			35,332			4,116

Net loss for the period		(107,977	)		(788	)		(2,448	)		(35,332	)		(4,116	)

Basic and diluted earnings per common share					(0.001	)		(0.004	)		(0.012	)		(0.007	)

Weighted average number of common shares used in per share calculations					3,575,000			575,000			2,841,304			575,000

The accompanying notes are an integral part of these interim financial statements.

Eternity Healthcare Inc.

(Formerly Kid’s Book Writer Inc.)

(A Development Stage Company)

Interim Statements of Cash Flows

(Expressed in U.S. Dollars)

(Unaudited)

	For the period from the date of inception on 24 October 2007 to 31 October 2010			For the three month period ended 31 October 2010			For the three month period ended 31 October 2009			For the six month period ended 31 October 2010			For the six month period ended 31 October 2009
	$			$			$			$			$

Cash flows from (used in) operating activities
Net loss for the period		(107,977	)		(788	)		(2,448	)		(35,332	)		(4,116	)
Adjustments to reconcile loss to net cash used by operating activities:
Shares issued for services (Notes 5 and 7)		30,000			-			-			30,000			-
Changes in operating assets and liabilities
Increase (decrease) in accounts payable and accrued liabilities		900			(5,100	)		-			(2,200	)		-
Increase in due to related parties		8,333			5,888			-			7,533			-

		(68,744	)		-			(2,448	)		1			(4,116	)

Cash flows from financing activities
Common shares issued for cash		42,000			-			-			-			-
Loan from related parties		26,599			-			13,200			-			15,200
Other contributed capital		146			-			-			-			-

		68,745			-			13,200			-			15,200

Increase in cash and cash equivalents		1			-			10,752			1			11,084

Cash and cash equivalents, beginning of period		-			1			400			-			68

Cash and cash equivalents, end of period		1			1			11,152			1			11,152

Supplemental Disclosures with Respect to Cash Flows (Note 7)

The accompanying notes are an integral part of these interim financial statements.

Eternity Healthcare Inc.

(Formerly Kid’s Book Writer Inc.)

(A Development Stage Company)

Interim Statement of Changes in Stockholders’ Deficiency

(Expressed in U.S. Dollars)

(Unaudited)

	Number of shares issued		Capital stock		Additional paid in capital			Deficit, accumulated during the development stage				Stockholders’ deficiency
	$		$			$			$				$

Balance at 24 October 2007 (inception)		-		-			-			-			-
Capital contributed by a director		-		-			146			-			146
Common shares issued – cash ($0.005 per share) (Note 5)		310,000		310			15,190			-			15,500
Common shares issued – cash ($0.01 per share) (Note 5)		140,000		140			13,860			-			14,000
Common shares issued – cash ($0.01 per share) (Note 5)		105,000		105			10,395			-			10,500
Common shares issued – cash ($0.01 per share) (Note 5)		20,000		20			1,980			-			2,000
Net loss for the period		-		-			-			(2,549	)		(2,549	)

Balance at 30 April 2008		575,000		575			41,571			(2,549	)		39,597
Net loss for the year		-		-			-			(40,029	)		(40,029	)

Balance at 30 April 2009		575,000		575			41,571			(42,578	)		(432	)
Contributions to capital by related parties – loan forgiveness (Note 4)		-		-			26,599			-			26,599
Net loss for the year		-		-			-			(30,067	)		(30,067	)

Balance at 30 April 2010		575,000		575			68,170			(72,645	)		(3,900	)
Common shares issued – services ($0.001 per share) (Notes 5 and 7)		3,000,000		3,000			27,000			-			30,000
Net loss for the period		-		-			-			(35,332	)		(35,332	)

Balance at 31 October 2010		3,575,000		3,575			95,170			(107,977	)		(9,232	)

The accompanying notes are an integral part of these interim financial statements.

Eternity Healthcare Inc.

(Formerly Kid’s Book Writer Inc.)

(A Development Stage Company)

Schedule 1 – Interim General and Administrative Expenses

(Expressed in U.S. Dollars)

(Unaudited)

	For the period from the date of inception on 24 October 2007 to 31 October 2010		For the three month ended 31 October 2010		For the three month ended 31 October 2009		For the six month ended 31 October 2010		For the six month ended 31 October 2009
	$		$		$		$		$

Advertising and promotion		7,950		-		-		-		-
Consulting fees		19,296		-		-		-		-
Management fees (Notes 5 and 7)		30,000		-		-		30,000		-
Professional fees		26,963		788		1,600		5,123		2,445
Stock transfer fees		20,997		-		400		209		1,200
Other general and administrative		2,771		-		448		-		471

		107,977		788		2,448		35,332		4,116

The accompanying notes are an integral part of these interim financial statements.

Eternity Healthcare Inc.

(Formerly Kid’s Book Writer Inc.)

(A Development Stage Company)

Notes to Interim Financial Statements

(Expressed in U.S. Dollars)

(Unaudited)

31 October 2010

1.	Nature and Continuance of Operations

Eternity Healthcare Inc. (the “Company”) was incorporated under the laws of the State of Nevada on 24 October 2007. The Company was incorporated for the purpose to promote and carry on any lawful business for which a corporation may be incorporated under the laws of the State of Nevada.

Effective on 1 November 2010, the Company changed its name from Kid’s Book Writer Inc. to Eternity Healthcare Inc. (Note 8i).

The Company is a development stage enterprise, as defined in Accounting Standards Codification (the “Codification” or “ASC”) 915-10, “Development Stage Entities”. The Company is focused on web-based marketing of children’s book and offering children and parents the ability to create their own book. No revenue has been derived during the organization period and the Company’s planned principle operations have not commenced.

The Company’s interim financial statements as at 31 October 2010 and for the six month period then ended have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Company has a loss of $35,332 for the six month period ended 31 October 2010 (31 October 2009 – $4,116) and has a working capital deficit of $9,232 at 31 October 2010 (30 April 2010 – $3,900).

Management cannot provide assurance that the Company will ultimately achieve profitable operations or become cash flow positive, or raise additional debt and/or equity capital. Management believes that the Company’s capital resources should be adequate to continue operating and maintaining its business strategy during the fiscal year ending 30 April 2011. However, if the Company is unable to raise additional capital in the near future, due to the Company’s liquidity problems, management expects that the Company will need to curtail operations, liquidate assets, seek additional capital on less favourable terms and/or pursue other remedial measures. These interim financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

At 31 October 2010, the Company was not engaged in a business and had suffered losses from development stage activities to date. Although management is currently attempting to implement its business plan, and is seeking additional sources of equity or debt financing, there is no assurance these activities will be successful. Accordingly, the Company must rely on its president to perform essential functions without compensation until a business operation can be commenced. These factors raise substantial doubt about the ability of the Company to continue as a going concern. The interim financial statements do not include any adjustments that might result from the outcome of this uncertainty.

2.	Significant Accounting Policies

The following is a summary of significant accounting policies used in the preparation of these interim financial statements.

The Accounting Standards Codification

In June 2009, the Financial Accounting Standards Board (“FASB”) issued Statement of Financial Accounting Standards No. 168, “The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principle – a replacement of FASB Statement No. 162”. The Codification reorganized existing U.S. accounting and reporting standards issued by the FASB and other related private sector standard setters into a single source of authoritative accounting principles arranged by topic. The Codification supersedes all existing U.S. accounting standards; all other accounting literature not included in the Codification (other than Securities and Exchange Commission guidance for publicly-traded companies) is considered non-authoritative. The Codification was effective on a prospective basis for interim and annual reporting periods ending after 15 September 2009. The adoption of the Codification changed the Company’s references to accounting principles generally accepted in the United States of America but did not impact the Company’s results of operations, financial position or liquidity.

Eternity Healthcare Inc.

(Formerly Kid’s Book Writer Inc.)

(A Development Stage Company)

Notes to Interim Financial Statements

(Expressed in U.S. Dollars)

(Unaudited)

31 October 2010

Basis of presentation

The interim financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America applicable to development stage enterprises, and are expressed in U.S. dollars. The Company’s fiscal year end is 30 April.

Cash and cash equivalents

Cash and cash equivalents include highly liquid investments with original maturities of three months or less.

Financial instruments

Fair Value

The carrying values of cash and cash equivalents, accounts payable and due to related party approximate their fair values because of the short-term maturity of these financial instruments.

Interest Rate Risk

The Company is not exposed to significant interest rate risk due to the short-term maturity of its monetary assets and liabilities.

Credit Risk

The Company’s financial instruments that are exposed to concentrations of credit risk primarily consist of its cash and cash equivalents. The Company places its cash with financial institutions of high credit worthiness. At times, its cash with a particular financial institution may exceed any applicable government insurance limits.

Currency Risk

The Company’s functional and reporting currency is the U.S. dollar. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income. Foreign currency transactions are primarily undertaken in Canadian dollars. The Company has not, to the date of these interim financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

Derivative financial instruments

The Company has not, to the date of these financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

Eternity Healthcare Inc.

(Formerly Kid’s Book Writer Inc.)

(A Development Stage Company)

Notes to Interim Financial Statements

(Expressed in U.S. Dollars)

(Unaudited)

31 October 2010

Income taxes

Deferred income taxes are reported for timing differences between items of income or expense reported in the financial statements and those reported for income tax purposes in accordance with ASC 740, “Income Taxes”, which requires the use of the asset/liability method of accounting for income taxes. Deferred income taxes and tax benefits are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and for tax losses and credit carry-forwards. 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 Company provides for deferred taxes for the estimated future tax effects attributable to temporary differences and carry-forwards when realization is more likely than not.

Basic and diluted net loss per share

The Company computes net income (loss) per share in accordance with ASC 260 “Earnings per Share”. ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excluded all dilutive potential shares if their effect is anti-dilutive.

Segments of an enterprise and related information

ASC 280, “Segment Reporting” establishes guidance for the way that public companies report information about operating segments in annual financial statements and requires reporting of selected information about operating segments in interim financial statements issued to the public. It also establishes standards for disclosures regarding products and services, geographic areas and major customers. ASC 280 defines operating segments as components of a company about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company has evaluated this Codification and does not believe it is applicable at this time.

Foreign currency translation

The Company’s functional and reporting currency is U.S. dollars. The financial statements of the Company are translated to U.S. dollars in accordance with ASC 830, “Foreign Currency Matters”. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income. The Company has not, to the date of these interim financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

Use of estimates

The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America requires management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures during the reporting period. Actual results could differ from these estimates.

Eternity Healthcare Inc.

(Formerly Kid’s Book Writer Inc.)

(A Development Stage Company)

Notes to Interim Financial Statements

(Expressed in U.S. Dollars)

(Unaudited)

31 October 2010

Recent accounting pronouncements

In January 2010, the FASB issued Accounting Standards Update 2010-06, “Improving Disclosures about Fair Value Measurements”. This update requires additional disclosure within the roll forward of activity for assets and liabilities measured at fair value on a recurring basis, including transfers of assets and liabilities between Level 1 and Level 2 of the fair value hierarchy and the separate presentation of purchases, sales, issuances and settlements of assets and liabilities within Level 3 of the fair value hierarchy. In addition, the update requires enhanced disclosures of the valuation techniques and inputs used in the fair value measurements within Levels 2 and 3. The new disclosure requirements are effective for interim and annual periods beginning after 15 December 2009, except for the disclosure of purchases, sales, issuances and settlements of Level 3 measurements. Those disclosures are effective for fiscal years beginning after 15 December 2010. As ASU 2010-06 only requires enhanced disclosures, the Company does not expect that the adoption of this update will have a material effect on its interim financial statements.

In February 2010, the FASB issued ASC No. 2010-09, “Amendments to Certain Recognition and Disclosure Requirements”, which eliminates the requirement for SEC filers to disclose the date through which an entity has evaluated subsequent events. ASC No. 2010-09 is effective for its fiscal quarter beginning after 15 December 2010. The adoption of ASC No. 2010-06 is not expected to have a material impact on the Company’s interim financial statements.

3.	Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities are non-interest bearing, unsecured and have settlement dates within one year.

4.	Due to Related Party and Related Party Transactions

As at 31 October 2010, the amount due to related party consists of $8,333 (30 April 2010 - $800) payable to a director and shareholder of the Company. This balance is non-interest bearing, unsecured and has no fixed terms of repayment.

During the year ended 30 April 2010, a former officer and director of the Company forgave loans to the Company totaling $24,499. This loan forgiveness has been recorded as contributions to capital (Note 7).

During the year ended 30 April 2010, a shareholder of the Company forgave loans to the Company totaling $2,100. This loan forgiveness has been recorded as contributions to capital (Note 7).

5.	Capital Stock

Authorized

The total authorized capital is 300,000,000 common shares with a par value of $0.001 per common share (Note 8ii).

Issued and outstanding

The total issued and outstanding capital stock is 3,575,000 common shares with a par value of $0.001 per common share.

During the year ended 30 April 2008, the Company issued 310,000 common shares valued at $0.005 per share for $15,500 in cash payments.

Eternity Healthcare Inc.

(Formerly Kid’s Book Writer Inc.)

(A Development Stage Company)

Notes to Interim Financial Statements

(Expressed in U.S. Dollars)

(Unaudited)

31 October 2010

During the year ended 30 April 2008, the Company issued 140,000 common shares valued at $0.01 per share for $14,000 in cash payments.

During the year ended 30 April 2008, the Company issued 105,000 common shares valued at $0.01 per share for $10,500 in cash payments.

During the year ended 30 April 2008, the Company issued 20,000 common shares valued at $0.01 per share for $2,000 in cash payments.

During the six month period ended 31 October 2010, the Company issued a total of 3,000,000 common shares of the Company with a value of $30,000 for management services (Note 7).

Effective on 1 November 2010, the Board of Directors approved a 1:10 reverse stock split and decreased the issued and outstanding share capital from 35,750,000 to 3,575,000 with the same par value of $0.001 (Note 8iii). Unless otherwise noted, all references herein to the number of common shares, price per common share or weighted average number of common shares outstanding have been adjusted to reflect this reverse stock split on a retroactive basis.

6.	Income Taxes

The Company has losses carried forward for income tax purposes to 31 October 2010. There are no current or deferred tax expenses for the period ended 31 October 2010 due to the Company’s loss position. The Company has fully reserved for any benefits of these losses. The deferred tax consequences of temporary differences in reporting items for financial statement and income tax purposes are recognized, as appropriate. Realization of the future tax benefits related to the deferred tax assets is dependent on many factors, including the Company’s ability to generate taxable income within the net operating loss carryforward period. Management has considered these factors in reaching its conclusion as to the valuation allowance for financial reporting purposes.

The provision for refundable federal income tax consists of the following:

	For the six month period ended 31 October 2010			For the six month period ended 31 October 2009
	$			$

Deferred tax asset attributable to:
Current operations		(12,013	)		(1,399	)
Non-deductible items		10,200			-
Less: Change in valuation allowance		1,813			1,399

Net refundable amount		-			-

Eternity Healthcare Inc.

(Formerly Kid’s Book Writer Inc.)

(A Development Stage Company)

Notes to Interim Financial Statements

(Expressed in U.S. Dollars)

(Unaudited)

31 October 2010

The composition of the Company’s deferred tax assets as at 31 October 2010 and 30 April 2010 are as follows:

	As at 31 October 2010			As at 30 April 2010 (Audited)
	$			$

Net income tax operating loss carryforward		51,378			46,046

Statutory federal income tax rate		34	%		34	%
Effective income tax rate		0	%		0	%

Deferred tax asset		17,469			15,656
Less: Valuation allowance		(17,469	)		(15,656	)

Net deferred tax asset		-			-

The potential income tax benefit of these losses has been offset by a full valuation allowance.

As at 31 October 2010, the Company has an unused net operating loss carry-forward balance of approximately $51,378 that is available to offset future taxable income. This unused net operating loss carry-forward balance expires between the years 2028 to 2031.

7.	Supplemental Disclosures with Respect to Cash Flows

For the period from the date of inception on 24 October 2007 to 31 October 2010

For the three month period ended 31 October 2010

For the three month period ended 31 October 2009

For the six month period ended 31 October 2010

For the six month period ended 31 October 2009

Cash paid during the year for interest

Cash paid during the year for income taxes

During the six month period ended 31 October 2010, the Company issued a total of 3,000,000 common shares of the Company with a value of $30,000 for management services (Note 5).

During the year ended 30 April 2010, a shareholder of the Company forgave loans to the Company totaling $2,100. This loan forgiveness has been recorded as contributions to capital (Note 4).

Eternity Healthcare Inc.

(Formerly Kid’s Book Writer Inc.)

(A Development Stage Company)

Notes to Interim Financial Statements

(Expressed in U.S. Dollars)

(Unaudited)

31 October 2010

8.	Subsequent Events

The following events occurred during the period ended 31 October 2010 to the date the interim financial statements were available to be issued on 17 November 2010.

i.	Effective on 1 November 2010, the Company changed its name from Kid’s Book Writer Inc. to Eternity Healthcare Inc. (Note 1).

ii.	Effective on 1 November 2010, the Company increased the number of authorized share capital from 75,000,000 to 300,000,000 with a par value of $0.001 per common share (Note 5).

iii.	Effective on 1 November 2010, the Board of Directors approved a 1:10 reverse stock split and decreased the issued and outstanding share capital from 35,750,000 to 3,575,000 with the same par value of $0.001 (Note 5).

Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations

This quarterly report on Form 10-Q and other reports filed by the Company from time to time with the United States Securities and Exchange Commission (the “SEC”) contain or may contain forward-looking statements (collectively the “Filings”) and information that are based upon beliefs of, and information currently available to, the Company’s management as well as estimates and assumptions made by Company’s management. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When used in the filings, the words “anticipate,” “believe,” “estimate,” “expect,” “future,” “intend,” “plan,” or the negative of these terms and similar expressions as they relate to the Company or the Company’s management identify forward-looking statements. Such statements reflect the current view of the Company with respect to future events and are subject to risks, uncertainties, assumptions, and other factors, including the risks contained in the “Risk Factors” section of the Company’s Annual Report on Form 10-K for the fiscal year ended April 30, 2010, filed with the SEC, relating to the Company’s industry, the Company’s operations and plan of operations, and any businesses that the Company may acquire. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned.

Although the Company believes that the expectations reflected in the forward-looking statements are reasonable, the Company cannot guarantee future results, levels of activity, performance, or achievements. Except as required by applicable law, including the securities laws of the United States, the Company does not intend to update any of the forward-looking statements to conform these statements to actual results.

Our financial statements are prepared in accordance with accounting principles generally accepted in the United States (“GAAP”). These accounting principles require us to make certain estimates, judgments and assumptions. We believe that the estimates, judgments and assumptions upon which we rely are reasonable based upon information available to us at the time that these estimates, judgments and assumptions are made. These estimates, judgments and assumptions can affect the reported amounts of assets and liabilities as of the date of the financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our financial statements would be affected to the extent there are material differences between these estimates and actual results. In many cases, the accounting treatment of a particular transaction is specifically dictated by GAAP and does not require management’s judgment in its application. There are also areas in which management’s judgment in selecting any available alternative would not produce a materially different result. The following discussion should be read in conjunction with our financial statements and notes thereto appearing elsewhere in this report.

As used in this prospectus, unless the context otherwise requires, “we”, “us”, “our” Eternity” or “Eternity Healthcare” refers to Eternity Healthcare Inc. All dollar amounts in this prospectus are in U.S. dollars unless otherwise stated. The following summary is not complete and does not contain all of the information that may be important to you. You should read the entire prospectus before making an investment decision to purchase our common shares.

General Overview

We were incorporated on October 24, 2007 under the laws of the State of Nevada a development stage company. The company was created to offer a pure online service designed to offer kids / children an ability to create their own book. The process will be simple –log on to the service, pick a theme and the software will offer several options, including different book templates, storylines, backgrounds, page sizes, and able to access artwork and / or upload their pictures and make it part of the storyline. More advanced options that will allow the customer an ability to have more control over the various aspects of the process.

On September 23, 2010, our sole director and holder of the majority of our stock approved a one for ten reverse stock split of our issued and outstanding shares of common stock. On November 1, 2010, the Nevada Secretary of State accepted for filing of a Certificate of Amendment, wherein we have effected an amendment to our Articles of Incorporation to change our name from Kid’s Book Writer Inc. to Eternity Healthcare Inc. and to increase the authorization number of shares of our common stock from 75,000,000 to 300,000,000 shares, par value of $0.001. The name change and the increase of our authorized common stock were approved on September 23, 2010 by a holder of 92.6% of our common stock by way of a written consent resolution.

Effective November 15, 2010, our issued and outstanding shares decreased from 35,750,000 shares of common stock to 3,575,000 shares of common stock, all with a par value of $0.001. The name change and forward stock split became effective with the Over-the-Counter Bulletin Board at the opening of trading on November 15, 2010 under our new symbol “ETAH”. Our new CUSIP number is 29760J107.

We have not earned any revenues to date. We do not anticipate earning revenues until such time as we have completed our website and are able to accept business.

Our fiscal year ended is April 30.

We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive business activities. For these reasons our auditors stated in their report on our audited financial statements that they have substantial doubt we will be able to continue as a going concern.

We did not earn any revenues from inception through October 31, 2010. We do not anticipate earning revenues until such time as our website is fully operational. We are presently in the development stage of our business and we can provide no assurance that we will generate any revenue or attain profitability.

We incurred operating expenses in the amount of $107,977 from inception on October 24, 2007 through October 31, 2010. These operating expenses were composed of professional fees, and other administrative expenses.

Results of Operations for the Three Months Ended October 31, 2010 and 2009

The following summary of our results of operations should be read in conjunction with our unaudited financial statements for the quarter ended October 31, 2010 which are included herein.

We have not generated any revenue since inception and are dependent upon obtaining financing to pursue our business activities. For these reasons, our auditors believe that there is substantial doubt that we will be able to continue as a going concern.

Our operating results for the three month periods ended October 31, 2010 and 2009 and the changes between those periods for the respective items are summarized as follows:

	Three Month Period Ended October 31, 2010		Three Month Period Ended October 31, 2009		Change Between Three Month Periods Ended October 31, 2010 and October 31, 2009
Revenue	$Nil		$Nil		$Nil
Operating Expenses	$	788	$	2,448	$	1,660
Net loss	$	788	$	2,448	$	1,660

Our expenses decreased during the three month period ended October 31, 2010 compared to the same period in 2009 primarily as a result of a decrease in professional fees.

Results of Operations for the Six months Ended October 31, 2010 and 2009

The following summary of our results of operations should be read in conjunction with our financial statements for the six month period ended October 31, 2010 and 2009.

Our operating results for the six month period ended October 31, 2010 and 2009 and the changes between those periods for the respective items are summarized as follows:

	Six month Period Ended October 31, 2010		Six month Period Ended October 31, 2009		Change Between Six month Period Ended October 31, 2010 and October 31, 2009
Revenue	$Nil		$Nil		$Nil
Operating Expenses	$	35,332	$	4,116	$	31,216
Net loss	$	35,332	$	4,116	$	31,216

Our expenses increased during the six month period ended October 31, 2010 over the same period in 2009, primarily as a result of shares issued for services.

Revenues

We have not earned any revenues to date, and do not anticipate earning revenues until such time as our website has become fully operational.

Expenses

Our expenses for the three and six months ended October 31, 2010 and 2009 and for the period from October 24, 2007 through October 31, 2010 are outlined in the table below:

	Three Month Period Ended October 31, 2010		Three Month Period Ended October 31, 2009		Six Month Period Ended October 31, 2010		Six Month Period Ended October 31, 2009		For the Period from October 24, 2007 through October 31, 2010
Advertising & Promotion	$Nil		$Nil		$Nil		$Nil		$	7,950
Consulting Expenses	$Nil		$Nil		$Nil		$Nil		$	19,296
Management Fees	$Nil		$Nil		$	30,000	$Nil		$	30,000
Professional Fees	$	788	$	1,600	$	5,123	$	2,445	$	26,963
Stock Transfer Fees	$Nil		$	400	$	209	$	1,200	$	20,997
Other General and Administrative	$Nil		$	448	$Nil		$	471	$	2,771
Total Expenses	$	788	$	2,448	$	35,332	$	4,116	$	107,997

General and Administrative

The decrease in our expenses for the quarter ended October 31, 2010 compared to the period from October 24, 2007 through October 31, 2010, was primarily due to a decrease in professional fees.

Professional Fees

Professional fees include our accounting and auditing expenses incurred in connection with the preparation and audit of our financial statements and professional fees that we pay to our legal counsel. Our accounting and auditing expenses were incurred in connection with the preparation of our audited financial statements and unaudited interim financial statements and our preparation and filing of a registration statement with the SEC. Our legal expenses represent amounts paid to legal counsel in connection with our corporate organization.

Going Concern

The financial statements accompanying this report have been prepared on a going concern basis, which implies that our company will continue to realize its assets and discharge its liabilities and commitments in the normal course of business. Our company has not generated revenues since inception and has never paid any dividends and is unlikely to pay dividends or generate earnings in the immediate or foreseeable future. The continuation of our company as a going concern is dependent upon the continued financial support from our shareholders, the ability of our company to obtain necessary equity financing to achieve our operating objectives, and the attainment of profitable operations. As of October 31, 2010, our company has accumulated losses of $107,977 since inception. We do not have sufficient working capital to enable us to carry out our stated plan of operation for the next twelve months. These financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should our company be unable to continue as a going concern.

Due to the uncertainty of our ability to meet our current operating expenses and the capital expenses noted above in their report on the financial statements for the quarter ended October 31, 2010, our independent auditors included an explanatory paragraph regarding concerns about our ability to continue as a going concern. Our financial statements contain additional note disclosures describing the circumstances that lead to this disclosure by our independent auditors.

The continuation of our business is dependent upon us raising additional financial support. The issuance of additional equity securities by us could result in a significant dilution in the equity interests of our current stockholders. Obtaining commercial loans, assuming those loans would be available, will increase our liabilities and future cash commitments.

Future Financings

We anticipate continuing to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to our existing stockholders. There is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing to fund our planned activities. Mr. Salari has agreed to provide loans to a minimal amount to carry on our legal, accounting and reporting needs.

Off-Balance Sheet Arrangements

We have no significant off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to stockholders.

Application of Critical Accounting Estimates

The financial statements of our company have been prepared in accordance with generally accepted accounting principles in the United States. Because a precise determination of many assets and liabilities is dependent upon future events, the preparation of financial statements for a period necessarily involves the use of estimates which have been made using careful judgment.

The Accounting Standards Codification

Basis of presentation

Cash and cash equivalents

Cash and cash equivalents include highly liquid investments with original maturities of three months or less.

Financial instruments

Fair Value

The carrying values of cash and cash equivalents, accounts payable and due to related party approximate their fair values because of the short-term maturity of these financial instruments.

Interest Rate Risk

The Company is not exposed to significant interest rate risk due to the short-term maturity of its monetary assets and liabilities.

Credit Risk

Currency Risk

Derivative financial instruments

The Company has not, to the date of these financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

Income taxes

Basic and diluted net loss per share

Segments of an enterprise and related information

Foreign currency translation

Use of estimates

Item 3. Quantitative and Qualitative Disclosures About Market Risk

As a “small reporting company”, we are not required to provide the information required by this Item.

Item 4. Controls and Procedures

Disclosure Controls

We carried out an evaluation, under the supervision and with the participation of our management, including our president and chief executive officer and our chief financial officer, of the effectiveness of our disclosure controls and procedures for the period covered in this report. Based upon that evaluation, our president, chief executive officer and our chief financial officer concluded that, as of the end of the period covered in this report, our disclosure controls and procedures were not effective to ensure that information required to be disclosed in reports filed under the Securities Exchange Act of 1934, as amended is recorded, processed, summarized and reported within the required time periods and is accumulated and communicated to our management, including our president and chief executive officer and our chief financial officer, as appropriate to allow timely decisions regarding required disclosure.

Changes in internal controls

During the period covered by this report, there were no changes in our internal control over financial reporting that materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

PART II

OTHER INFORMATION

Item 1. Legal Proceedings

We know of no material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which any of our directors, officers or affiliates, or any registered beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

Item 1(a) Risk Factors

There have been no material changes from the risk factors previously disclosed in the company’s annual report on Form 10-K for the fiscal year ended April 30, 2010, filed with the SEC on July 29, 2010.

Item 2. Unregistered Sales of Equity Securities

None.

Item 3. Defaults Upon Senior Securities

None.

Item 4. Removed and Reserved

Item 5. Other Information

None.

Item 6. Exhibits

Exhibit No.	Description

(3)	(i) Articles of Incorporation (ii) Bylaws
3.01	Certificate of Amendment (Incorporated by reference to our Current Report on Form 8-K filed on November 16, 2010).

(31)	Rule 13a-14(a)/15d-14(a) Certifications
31.1*	Section 302 Certifications under Sarbanes-Oxley Act of 2002

(32)	Section 1350 Certifications
32.1*	Section 906 Certifications under Sarbanes-Oxley Act of 2002 of Veryl Norquay

* Filed herewith.

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 thereunto duly authorized.

	ETERNITY HEALTHCARE INC.

Date: November 26, 2010	/s/ Hassan Salari
	Hassan Salari
	Chairman, President, Chief Executive Officer and Director
	(Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)

Attached files

ETERNITY HEALTHCARE INC. Reports

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