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EX-31.1 - CERTIFICATION - ETERNITY HEALTHCARE INC.f10q1012ex31i_eternityhealt.htm
EX-32.1 - CERTIFICATION - ETERNITY HEALTHCARE INC.f10q1012ex32i_eternityhealt.htm
EX-32.2 - CERTIFICATION - ETERNITY HEALTHCARE INC.f10q1012ex32ii_eternityhealt.htm
EX-31.2 - CERTIFICATION - ETERNITY HEALTHCARE INC.f10q1012ex31ii_eternityhealt.htm


UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
Form 10-Q
 
(Mark One)
x
QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the quarterly period ended
October 31, 2012
 
or
 
o
TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the transition period from
 
to
 
 
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.)
 
8755 Ash Street, Suite 1, Vancouver, British Columbia
V6P 6T3
(Address of principal executive offices)
(Zip Code)
 
(855) 324-1110
(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.
x
YES
o
NO
 
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).
 
x
YES
o
NO
 
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
o
Accelerated filer
o
Non-accelerated filer
o
(Do not check if a smaller reporting company)
Smaller reporting company
x
 
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act
                               
o
YES
x
NO
 
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.
                               
o
YES
o
NO
 
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.
 
63,575,000 common shares issued and outstanding as of December 10, 2012.

 
 

 
 
TABLE OF CONTENTS 
 
PART I – FINANCIAL INFORMATION
    3  
Item 1.  Financial Statements
    4  
Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations
    11  
Item 3.  Quantitative and Qualitative Disclosures About Market Risk
    16  
Item 4.  Controls and Procedures
    17  
PART II – OTHER INFORMATION
    17  
Item 1.  Legal Proceedings
    17  
Item 1A.  Risk Factors
    17  
Item 2.  Unregistered Sales of Equity Securities
    17  
Item 3.  Defaults Upon Senior Securities
    17  
Item 4.  Mining Safety Disclosures
    17  
Item 5.  Other Information
    17  
Item 6.  Exhibits
    18  
SIGNATURES
    19  
 
 
 

 
 
PART I – FINANCIAL INFORMATION
 
Item 1.  Financial Statements
 
The following unaudited interim condensed consolidated financial statements of Eternity Healthcare Inc. for the three and six month periods ended October 31, 2012 are included with this Quarterly Report on Form 10-Q:

 
3

 

Eternity Healthcare Inc.
(formerly Kid’s Book Writer Inc.)
(A Development Stage Company)
CONDENSED CONSOLIDATED
FINANCIAL STATEMENTS
For the six months ended October 31, 2012
(Expressed in U.S. Dollars)
 
 
4

 
 
Eternity Healthcare Inc.
(formerly Kid’s Book Writer Inc.)
(A Development Stage Company)
CONDENSED CONSOLIDATED BALANCE SHEET
(Expressed in U.S. Dollars)


   
As at
October 31,
2012
   
As at
April 30,
2012
 
   
(Unaudited)
       
ASSETS
           
             
CURRENT ASSETS
           
Cash and cash equivalents
  $ 310,663     $ 226,372  
GST/HST receivable
    4,256       11,384  
                 
Total current assets
    314,919       237,756  
                 
PROPERTY AND EQUIPMENT
    282       404  
                 
TOTAL ASSETS
  $ 315,201     $ 238,160  
                 
LIABILITIES
               
                 
CURRENT LIABILITIES
               
Accounts payable and accrued liabilities
  $     $ 3,727  
Due to related parties
    743,058       582,081  
                 
Total liabilities
    743,058       585,808  
                 
SHAREHOLDERS’ DEFICIT
               
                 
CAPITAL STOCK
               
                 
Authorized
               
300,000,000 common shares, par value $0.001
               
Issued and outstanding
               
October 31, 2012 – 63,575,000 common shares
               
April 30, 2012 – 63,575,000 common shares
    63,575       63,575  
Additional paid-in capital
    (86,073 )     (86,073 )
Accumulated other comprehensive loss
    (2,106 )     (9,514 )
Deficit, accumulated during the development stage
    (403,253 )     (315,636 )
                 
Total stockholders’ deficit
    (427,857 )     (347,648 )
                 
TOTAL LIABILITIES AND STOCKHOLDERS’ DEFICIT
  $ 315,201     $ 238,160  
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
 
 
5

 
 
Eternity Healthcare Inc.
(formerly Kid’s Book Writer Inc.)
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF LOSS AND COMPREHENSIVE LOSS
(Expressed in U.S. Dollars)
(Unaudited)


   
For the three
 month period
ended
October 31, 2012
   
For the three
month period
ended
October 31, 2011
   
 
For the six
 month period
ended
October 31,  2012
   
 
For the six
month period
ended
October 31, 2011
   
From inception on December 10,
2009 through 
October 31, 2012
 
                               
EXPENSES
                             
Depreciation
  $ 61     $ 61     $ 122     $ 126     $ 445  
General and administrative
    30,258       5,855       44,487       10,472       84,747  
Professional fees
    27,668       28,132       43,008       38,433       208,701  
Research and development
                            109,360  
                                         
NET LOSS FOR THE PERIOD
  $ (57,987 )   $ (34,048 )     (87,617 )   $ (49,031 )   $ (403,253 )
                                         
COMPREHENSIVE LOSS
                                       
Net loss for the period
  $ (57,987 )   $ (34,048 )     (87,617 )   $ (49,031 )   $ (403,253 )
Foreign currency translation adjustments
    (408 )     10,974       7,408       (2,013 )     (2,106 )
                                         
COMPREHENSIVE LOSS FOR THE PERIOD
  $ (58,395 )   $ (23,074 )     (80,209 )   $ (51,044 )   $ (405,359 )
                                         
NET LOSS PER SHARE – BASIC AND DILUTED
  $ (0.001 )   $ (0.000 )     (0.001 )   $ (0.000 )        
                                         
WEIGHTED AVERAGE NUMBER  OF COMMON SHARES OUTSTANDING – BASIC AND DILUTED
      63,575,000         63,575,000         63,575,000         63,575,000          
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
 
6

 
 
Eternity Healthcare Inc.
(formerly Kid’s Book Writer Inc.)
(A Development Stage Company)
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
(Expressed in U.S. Dollars)
(Unaudited)


   
For the six
month period
ended
October 31, 2012
   
For the six
month period
ended
October 31, 2011
   
From inception on December 10,
2009 through
October 31, 2012
 
                   
OPERATING ACTIVITIES
                 
Net loss for the period
  $ (87,617 )   $ (49,031 )   $ (403,253 )
Adjustments to reconcile net cash provided by operating activities:
                       
Depreciation
    122       126       445  
Expenses paid on behalf of the Company by related parties
                7,308  
Changes in operating assets and liabilities:
                       
Accounts payable and accrued liabilities
    (3,660 )           1,573  
HST/GST receivable
    (6,923 )     (2,297 )     (4,461 )
                         
Net cash used in operating activities
    (84,232 )     (51,202 )     (398,388 )
                         
INVESTING ACTIVITIES
                       
Purchase of equipment
                (727 )
                         
Net cash used in investing activities
                (727 )
                         
FINANCING ACTIVITIES
                       
Common shares issued for cash
                380  
Proceeds from related party payables
    171,321       73,884       759,489  
Repayments on related party payables
                (31,673 )
                         
Net cash provided by financing activities
    171,321       73,884       728,196  
                         
EFFECT OF EXCHANGE RATE CHANGES ON CASH
    (2,798 )     2,694       (18,418 )
                         
INCREASE IN CASH
    84,291       25,376       310,663  
                         
CASH, beginning of period
    226,372       58,600        
                         
CASH, end of period
  $ 310,663     $ 83,976     $ 310,663  
 
The accompanying notes are an integral part of these condensed consolidated financial statements.

 
 
7

 
 
Eternity Healthcare Inc.
(formerly Kid’s Book Writer Inc.)
(A Development Stage Company)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Six months ended October 31, 2012
(Expressed in U.S. Dollars)
(Unaudited)


1.             NATURE AND CONTINUANCE OF OPERATIONS

Eternity Healthcare Inc. (the “Company”) was incorporated under the laws of the State of Nevada on October 24, 2007 under the name Kid’s Book Writer, Inc.  On September 23, 2010, the Company changed its name to Eternity Healthcare Inc., and affected a reverse stock split of the issued and outstanding common stock at a factor of 10 old shares for 1 new share.  The Company is focused on offering new needle free injection device for delivery of pharmaceuticals and medicinal products to human body. Additional, the Company offers some new digital based diagnostic devices for general lifestyle.

On December 13, 2010, pursuant to the terms of a share exchange agreement, the Company acquired 100% of the issued and outstanding common stock of Eternity Healthcare Inc., a company incorporated under the laws of the Province of British Columbia on December 10, 2009 (“Eternity BC”), for 60,000,000 shares of its own common stock, which were distributed to the shareholders of Eternity BC (the “Share Exchange Agreement”) (Note 6).

The Share Exchange Agreement, which represents a majority of the then issued and outstanding shares of the Company, constituted a change in control of the Company.  The acquisition of Eternity BC was accounted for as a reverse acquisition in accordance with Accounting Standards Codification (“ASC”) 805-40, “Business Combinations”.  The Company determined for accounting and reporting purposes that Eternity BC is the acquirer because of the significant holdings and influence of the control group of the Company before and after the acquisition.  As a result of the transaction, Eternity BC shareholders own approximately 94.4% of issued and outstanding common stock of the Company on a diluted basis.

According, the assets and liabilities of Eternity BC are reported as historical costs and the historical results of operations of Eternity BC are reflected in this and future filings as a change in reporting entity.  The assets and liabilities of the Company are reported at their carrying values, which approximate fair value, on the date of the acquisition and results of operations are reported from the date of acquisition of December 13, 2010.  The transaction was accounted for as a recapitalization of Eternity BC and the issuance of stock by Eternity BC for the assets and liabilities of the Company.  The transaction was accounted for as a recapitalization of Eternity BC and the issuance of stock by Eternity BC for the assets and liabilities of the Company.

The Company is a development stage enterprise, as defined in ASC 915-10 “Development Stage Entities”.  The Company is devoting all of its present efforts in securing and establishing a new business, and its planned principle operations have not commenced, and, accordingly, no revenue has been derived during the organization period.

On May 11, 2010, the Company entered into a distribution and sale agreement (the “Distribution Agreement”) with ValiMedix Limited (“ValiMedix”).  ValiMedix is incorporated under the laws of the United Kingdom as a private limited company.  ValiMedix is a wholly-owned subsidiary of ValiRx PLC (“ValiRx”), a company incorporated under the laws of United Kingdom and listed on the AIM market of the London Stock Exchange PLC.  ValiMedix is no longer in operation and as result the Company has focused its business and operation on a new line of medical device, known as needle free injection system. The Company obtained the rights for North America from the manufacture, Mika Medicals in Korea. The Company has dropped its diagnostic business as the needle free injection system has taken considerable time and effort and the management believes it will be a far more lucrative market.
 
 
8

 
 
Eternity Healthcare Inc.
(formerly Kid’s Book Writer Inc.)
(A Development Stage Company)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Six months ended October 31, 2012
(Expressed in U.S. Dollars)
(Unaudited)


1.             NATURE AND CONTINUANCE OF OPERATIONS - continued

Since signing the marketing agreement with Mika Medicals, the Company has emerged in organizational and start up activities, including developing a new business plan, making arrangements for office space and raising additional capital.  The Company has generated no revenue from product sales and does not have any pharmaceutical products currently available for sale.

2.             CONDENSED FINANCIAL STATEMENTS

The accompanying financial statements have been prepared by the Company without audit.  In the opinion of management, all adjustments (which include only normal recurring adjustments) necessary to present fairly the financial position, result of operations, and cash flows at October 31, 2012, and for all periods presented herein, have been made.

Certain information and footnote disclosures normally included in financial statements prepared in accordance with accounting principles generally accepted in the United States of America have been condensed or omitted.  It is suggested that these condensed financial statements be read in conjunction with the financial statements and notes thereto included in the Company’s April 30, 2012 audited financial statements.  The results of operations for the period ended October 31, 2012 and 2011 are not necessarily indicative of the operating results for the full year.

3.             GOING CONCERN

The Company’s financial statements are prepared using generally accepted accounting principles in the United States of America applicable to a going concern which contemplates the realization of assets and liquidation of liabilities in the normal course of business.  The Company has not yet established an ongoing source of revenues sufficient to cover its operating costs and allow it to continue as a going concern.  The ability of the Company to continue as a going concern is dependent on the Company obtaining adequate capital to fund operating losses until it becomes profitable.  If the Company is unable to obtain adequate capital, it could be forced to cease operations.

4.             SIGNIFICANT ACCOUNTING POLICIES

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

Use of estimates
The preparation of financial statements in conformity with U.S. GAAP 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.

Recent accounting pronouncements
The Company has evaluated recent accounting pronouncements and their adoption has not had or is not expected to have material impact on the Company’s financial position or statements.
 
 
9

 
 
Eternity Healthcare Inc.
(formerly Kid’s Book Writer Inc.)
(A Development Stage Company)
NOTES TO THE CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
Six months ended October 31, 2012
(Expressed in U.S. Dollars)
(Unaudited)


4.             SIGNIFICANT ACCOUNTING POLICIES - continued

Basis of presentation
These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and are expressed in U.S. dollars.

Principles of consolidation
The consolidated financial statements include the accounts of the Company and its wholly-owned subsidiary, Eternity BC.  All significant intercompany balances and transactions have been eliminated in consolidation.

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

Foreign currency translation
The Company’s functional currency is the Canadian dollar and reporting currency is the U.S. dollar.  All transactions initiated in other currencies are translated into the reporting currency in accordance with ASC 830, “Foreign Currency Matters” as follows:

i)      Assets and liabilities at the rate of exchange in effect at the balance sheet date, and
ii)     Revenue and expense items at rate exchange at the dates on which those elements are recognized.

5.             EQUIPMENT

               
Net book value
 
   
Cost
   
Accumulated
depreciation
   
October 31,
2012
   
April 30, 2012
 
                         
Computer equipment
  $ 728     $ 446     $ 282     $ 404  

6.             DUE TO RELATED PARTIES AND RELATED PARTY TRANSACTIONS

During the six months ended October 31, 2012, the Company received $171,047 in additional cash loans from related parties. The total amount of $741,879 is non-interest bearing, unsecured and has no fixed terms of repayment.

7.             SUBSEQUENT EVENTS

There are no subsequent events to be reported that occurred during the six months ended October 31, 2012 to the date the financial statements were available.
 
 
10

 
 
Item 2.  Management’s Discussion and Analysis of Financial Condition and Results of Operations
 
Forward-Looking Statements
 
This quarterly report on Form 10-Q and other reports filed by our 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, our company’s management as well as estimates and assumptions made our 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 our company or our company’s management identify forward-looking statements. Such statements reflect the current view of our 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 our company’s Annual Report on Form 10-K for the fiscal year ended April 30, 2012, filed with the SEC, relating to our company’s industry, our company’s operations and plan of operations, and any businesses that our 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 we believe that the expectations reflected in the forward-looking statements are reasonable, our 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, our company does not intend to update any of the forward-looking statements to conform these statements to actual results.
 
Our interim consolidated 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 interim consolidated financial statements as well as the reported amounts of revenues and expenses during the periods presented. Our interim consolidated 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.
 
In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars unless otherwise state. All references to “common stock” refer to the common shares in our capital stock.
 
As used in this quarterly report, the terms, “we”, “us”, “our” and “our company” refer to Eternity Healthcare Inc. and our wholly owned subsidiary Eternity Healthcare Inc., a British Columbia corporation, unless the context clearly requires or states otherwise.
 
General Overview
 
We were incorporated in the State of Nevada on October 24, 2007 as an online services company under the name Kid’s Book Writer, Inc. On September 23, 2010, we changed our name to Eternity Healthcare Inc., and we effected a reverse split of our issued and outstanding common stock on a 10 old shares for 1 new share basis.  Our business offices are located at 8755 Ash Street, Suite 1, Vancouver, BC V6P 6T3. Our telephone number is (855) 324-1110.
 
 
11

 
 
From inception to December 13, 2010, we planned to develop a website for children to create their own books.  We intended to offer a pure online service designed to offer children and parents an ability to create their own book. Customers were to be able to log on to the service, pick a theme (i.e. birthday, family outing, vacation, special occasion such as Christmas / Easter, sporting event, summer camp, etc.), and the software would offer several options, including various book templates, backgrounds, page sizes, the ability to write your own story or have some guidance, etc.  We were unable to find sufficient financing for this business model.
 
On December 10, 2010 we entered into and completed a share exchange agreement with Eternity Healthcare Inc, a British Columbia corporation, wherein we acquired Eternity BC as our wholly owned subsidiary and abandoned our former business to focus on the operations of Eternity BC.
 
Our Current Business
 
We are a medical device company that, subject to government approval, plans to distribute Needle-free Injection system throughout North America.  Since we have not yet been granted such approvals, we cannot currently offer any products.  The products which we hope to distribute differ from other current offerings by allowing ordinary people who are afraid of needles (“needle phobia”) to use a non-needle injection system. Also, our needle-free injection device will allow people to inject medicines such as insulin, anesthetics, hormones and many more.
 
On March 11, 2010, we entered into a license agreement with ValiMedix Limited, a United Kingdom corporation, pursuant to which we were granted the right to market and distribute 15 unique self diagnostic products developed by ValiMedix on an exclusive basis in Canada, and a on a non-exclusive basis in the United States.  We also have the right to market the products with ValiMedix SELFCheck trademark.  As consideration, we paid ValiMedix a onetime fee of $10,000. ValiMedix is no longer in operation and as results we have abandoned the diagnostic field related to their portfolio.  On May 3, 2012, we entered into an agreement with Veda Labs of France and Healthy Europe of Italy to market a set of home-based diagnostic kits under the brand name “Prima Home Test” throughout North America. Further on June 25, 2012 we entered into a marketing agreement to sell a device which does not require a needle for injection of medicine to the body from Mike Medical Company and its affiliate MK Global both of South Korea. We have the exclusive marketing rights for this device throughout North America.
 
Over the next 12 months, we plan to obtain regulatory approvals for the products licensed from the above companies and enter into distribution agreements with various retailers. We plan to expand our website to include the option to purchase our products online.  We anticipate producing promotional materials and advertising in medical journals as well as consumer magazines. In order to carry out these plans, we anticipate hiring a marketing manager, a quality control manager and 3 people for packaging and shipping.  We will require approximately $2,000,000 in order to achieve these objectives and there can be no assurance that we will be able to raise the required funds.
 
Results of Operations for the Three and Six Months Ended October 31, 2012 and 2011
 
The following summary of our results of operations should be read in conjunction with our unaudited interim consolidated financial statements for the quarter ended October 31, 2012 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.
 
 
12

 
 
Our operating results for the three month periods ended October 31, 2012 and 2011 and the changes between those periods for the respective items are summarized as follows:
 
   
Three Month
Period Ended October 31, 2012
   
Three Month
Period Ended October 31, 2011
   
Change Between
Three Month
Periods Ended
October 31, 2012
and
October 31, 2011
 
Revenue
  $ Nil     $ Nil     $ Nil  
Operating expenses
  $ 57,987     $ 34,048     $ 23,939  
Net loss
  $ (57,987 )   $ (34,048 )   $ 23,939  
 
Our expenses increased during the three month period ended October 31, 2012 compared to the same period in 2011 primarily as a result of increased general and administrative expenses.
 
   
Six Month
Period Ended October 31, 2012
   
Six Month
Period Ended October 31, 2011
   
Change Between
Six Month
Periods Ended
October 31, 2012
and
October 31, 2011
 
Revenue
  $ Nil     $ Nil     $ Nil  
Operating expenses
  $ 87,617     $ 49,031     $ 38,586  
Net loss
  $ (87,617 )   $ (49,031 )   $ 38,586  
 
Our expenses increased during the six month period ended October 31, 2012 compared to the same period in 2011 primarily as a result of increase general and administrative expenses and professional fees.
 
Revenues
 
We have not earned any revenues to date, and have incurred $403,253 in expenses from December 10, 2009 (date of inception) through October 31, 2012.
 
Expenses
 
Our expenses for the three and six months ended October 31, 2012 and 2011 and for the period from December 10, 2009 (inception) through October 31, 2012 are outlined in the table below:
 
   
Three Month Period Ended October 31, 2012
($)
   
Three Month Period Ended October 31, 2011
($)
   
Six Month Period Ended October 31, 2012
($)
   
Six Month Period Ended October 31, 2011
($)
   
For the Period from December 10, 2009 (Inception) through October 31, 2011
($)
 
Depreciation
    61       61       122       126       445  
General and administrative
    30,258       5,855       44,487       10,472       84,747  
Professional fees
    27,668       28,132       43,008       38,433       208,701  
Research and development
 
Nil
   
Nil
   
Nil
   
Nil
      109,360  
 
 
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Professional Fees
 
Professional fees include 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 consolidated 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.
 
Liquidity and Financial Condition
 
Working Capital
 
   
At
October 31, 2012
($)
   
At
April 31, 2012
($)
 
Current Assets
 
$
314,919
   
$
237,756
 
Current Liabilities
 
$
743,058
   
$
585,808
 
Working Capital Deficit
 
$
(428,139
)
 
$
(348,052
)
 
Cash Flows
 
   
Six Month
Period Ended October 31, 2012
($)
   
Six Month
Period Ended October 31, 2011
($)
   
For the Period from December 10, 2009 (Inception) through
October 31, 2012
($)
 
Cash Flows used in Operating Activities
   
(84,232
)
   
(51,202
)
   
(398,388
)
Cash Flows used in Investing Activities
   
Nil
     
Nil
     
(727
)
Cash Flows provided by Financing Activities
   
171,312
     
73,884
     
728,196
 
Effect of Exchange Rate Changes on Cash
   
(2,798
   
2,694
     
(18,418
Net Increase (Decrease) in Cash During Period
   
84,291
     
25,376
     
310,663
 
 
As of October 31, 2012, our total assets were $315,201 and our total liabilities were $743,058 and we had a working capital deficit of $428,139. Our unaudited financial statements report a net loss of $87,617 for the six months ended October 31, 2012 compared to a net loss of $49,031 for the same period in 2011 and a net loss of $403,253 for the period from December 10, 2009 (inception) to October 31, 2012.
 
Plan of Operation
 
The following discussion of our financial condition and results of operations should be read together with our unaudited financial statements and the notes thereto included elsewhere in this filing. Our unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States. This discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those anticipated in these forward-looking statements.
 
 
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Anticipated Cash Requirements
 
We estimate that our expenses over the next 12 months will be approximately $500,000 as described in the table below. These estimates may change significantly depending on the nature of our future business activities and our ability to raise capital from shareholders or other sources.
 
Description
Estimated
Completion Date
 
Estimated Expenses
($)
 
Legal and accounting fees
12 months
   
100,000
 
Marketing and advertising
12 months
   
50,000
 
Management and operating costs
12 months
   
100,000
 
Salaries and consulting fees
12 months
   
200,000
 
Fixed asset purchases
12 months
   
30,000
 
General and administrative expenses
12 months
   
20,000
 
Total
     
500,000
 
 
We intend to meet our cash requirements for the next 12 months through a combination of debt financing and equity financing by way of private placements. We currently do not have any arrangements in place to complete any private placement financings and there is no assurance that we will be successful in completing any such financings on terms that will be acceptable to us.
 
Going Concern
 
The interim consolidated 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, 2012, our company has accumulated losses of $403,253 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 interim consolidated 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.
 
Our interim consolidated financial statements contain additional note disclosures describing the circumstances related to the uncertainty of our ability to continue as a going concern.
 
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.
 
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.
 
 
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Critical Accounting Policies
 
The interim consolidated 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 following is a summary of significant accounting policies used in the preparation of these consolidated financial statements.
 
Use of Estimates
 
The preparation of financial statements in conformity with U.S. GAAP 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.
 
Recent Accounting Pronouncements
 
Our company has evaluated recent accounting pronouncements and their adoption has not had or is not expected to have material impact on our company’s financial position or statements.
 
Basis of Presentation
 
These financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America (“U.S. GAAP”) and are expressed in U.S. dollars.
 
Principles of Consolidation
 
The consolidated financial statements include the accounts of our company and its wholly-owned subsidiary, Eternity BC.  All significant intercompany balances and transactions have been eliminated in consolidation.
 
Cash and Cash Equivalents
 
Cash and cash equivalents include highly liquid investments with original maturities of three months or less.
 
Foreign Currency Translation
 
Our company’s functional currency is the Canadian dollar and reporting currency is the U.S. dollar.  All transactions initiated in other currencies are translated into the reporting currency in accordance with ASC 830, “Foreign Currency Matters” as follows:
 
i)          Assets and liabilities at the rate of exchange in effect at the balance sheet date, and
ii)         Revenue and expense items at rate exchange at the dates on which those elements are recognized.
 
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.
 
 
16

 
 
Item 4.  Controls and Procedures
 
Management’s Report on Disclosure Controls and Procedures
 
We maintain disclosure controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Securities Exchange Act of 1934, as amended, is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission's rules and forms, and that such information is accumulated and communicated to our management, including our chief executive officer (our principal executive officer) and chief financial officer (our principal financial officer and principle accounting officer) to allow for timely decisions regarding required disclosure.
 
As of the end of our quarter covered by this report, we carried out an evaluation, under the supervision and with the participation of our chief executive officer (our principal executive officer) and chief financial officer (our principal financial officer and principle accounting officer), of the effectiveness of the design and operation of our disclosure controls and procedures. Based on the foregoing, our chief executive officer and chief executive officer (our principal executive officer) and chief financial officer (our principal financial officer and principle accounting officer) concluded that our disclosure controls and procedures were not effective as of the end of the period covered by this quarterly report due to the material weaknesses in our internal controls over financial reporting identified in our Annual Report on Form 10-K, filed with the Securities and Exchange Commission on July 19, 2012.
 
Changes in Internal Control over Financial Reporting
 
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 1A.  Risk Factors
 
As a “small reporting company”, we are not required to provide the information required by this Item.
 
Item 2.  Unregistered Sales of Equity Securities
 
None.
 
Item 3.  Defaults Upon Senior Securities
 
None.
 
Item 4.  Mining Safety Disclosures
 
Not applicable.
 
Item 5.  Other Information
 
None.
 
 
17

 
 
Item 6.  Exhibits
 
Exhibit Number
 
Document Description
(2)
 
Plan of acquisition, reorganization, arrangement, liquidation or succession
2.1
 
Share Exchange Agreement with Eternity Healthcare Inc., dated December 13, 2010 (incorporated by reference to our Current Report on Form 8-K filed on December 17, 2010).
(3)
 
(i) Articles of Incorporation; (ii) By-laws
3.1
 
Articles of Incorporation (incorporated by reference to our C Registration Statement on Form S-1 filed on June 25, 2008).
3.2
 
By-laws (incorporated by reference to our Registration Statement on Form S-1 filed on June 25, 2008).
3.3
 
Certificate of Amendment filed with the Nevada Secretary of State on November 1, 2010 (incorporated by reference to our Current Report on Form 8-K filed on November 16, 2010).
(10)
 
Material Contracts
10.1
 
Licensing Agreement with ValiMedix Limited, dated March 11, 2010 (incorporated by reference to our Current Report on Form 8-K filed on December 17, 2010).
10.2
 
Marketing and Distribution Agreement date May 3, 2012 between our company, Healthy Europe and Veda Lab. (incorporated by reference to our Annual Report on Form 10-K filed on July 19, 2012).
10.3
 
Revised Distribution Agreement dated June 25, 2012 between our company, our subsidiary, MK Global Co. and MIKA Medical Co. (incorporated by reference to our Annual Report on Form 10-K filed on July 19, 2012).
(14)
 
Code of Ethics
14.1
 
Code of Business Conduct and Ethics (incorporated by reference to our Annual Report on Form 10-K filed on July 19, 2012).
(21)
 
Subsidiaries of the Registrant
21.1
 
Eternity Healthcare Inc., a British Columbia corporation
(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
101**
 
Interactive Data File (Form 10-K for the year ended April 30, 2012 furnished in XBRL)
101.INS
 
XBRL Instance Document
101.SCH
 
XBRL Taxonomy Extension Schema Document
101.CAL
 
XBRL Taxonomy Extension Calculation Linkbase Document
101.DEF
 
XBRL Taxonomy Extension Definition Linkbase Document
101.LAB
 
XBRL Taxonomy Extension Label Linkbase Document
101.PRE
 
XBRL Taxonomy Extension Presentation Linkbase Document

*   
Filed herewith.

**
Furnished herewith. Pursuant to Rule 406T of Regulation S-T, the Interactive Data Files on Exhibit 101 hereto are deemed not filed or part of any registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, are deemed not filed for purposes of Section 18 of the Securities and Exchange Act of 1934, and otherwise are not subject to liability under those sections.
 
 
18

 
 
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:  December 13, 2012
/s/ Hassan Salari
 
Hassan Salari
 
President, Chief Executive Officer and Director
 
(Principal Executive Officer)
   
Date:  December 13, 2012
/s/ Francine Salari
 
Francine Salari
 
Chief Financial Officer, Secretary, Treasurer and Director
 
(Principal Financial Officer and Principal Accounting Officer)
 
 
19