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EX-31.1 - ENHANCE SKIN PRODUCTS 10Q, CERTIFICATION 302 - Enhance Skin Products Incenhanceskinexh31_1.htm
EX-32.1 - ENHANCE SKIN PRODUCTS 10Q, CERTIFICATION 906 - Enhance Skin Products Incenhanceskinexh32_1.htm


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM 10-Q
 
x   QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
        For the quarter ended October 31, 2012
 
OR
 
o   TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
        For the transition period from __________ to _____________
 
Commission File Number 000-52755
 
ENHANCE SKIN PRODUCTS INC.
(Exact name of registrant as specified in its charter)
 
Nevada
84-1724410
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.) 

695 South Colorado Boulevard, Suite 400, Denver, Colorado 80246
(Address of principal executive offices)             (Zip Code)
 
Registrant's telephone number, including area code:    416-644-8318
 
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 x     No o
 
Indicate by check mark whether the registrant has submitted electronically and posted on its corporate website, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files.     Yes o     No o (Not Required)

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.  See 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).     Yes o   No x
 
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:

Number of shares outstanding of the registrant's class of common stock as of October 31, 2012: 53,250,000.
 
 
 
 
 
ENHANCE SKIN PRODUCTS INC.
 
INDEX
 
 
 
 
 
 
 



 
 
PART I - FINANCIAL INFORMATION
 
ITEM 1.   Condensed Consolidated Financial Statements.
 
 
 
 
 
 
 
 
 
 
 
 
 






 
ENHANCE SKIN PRODUCTS INC.
 
             
CONDENSED CONSOLIDATED BALANCE SHEETS
 
   
             
   
(Unaudited)
       
   
As at
October 31,
   
As at
April 30,
 
   
2012
   
2012
 
             
ASSETS
           
Current
           
Cash
 
$
657
   
$
1,075
 
Prepaid and deposits
   
-
     
-
 
                 
Total current assets
   
657
     
1,075
 
                 
Other assets
               
Sales tax receivable
   
-
     
-
 
                 
Total other assets
   
-
     
-
 
                 
Total assets
 
$
657
   
$
1,075
 
                 
LIABILITIES AND STOCKHOLDERS' EQUITY
               
Current liabilities
               
Accounts payable and accrued liabilities
 
$
214,216
   
$
179,806
 
Accounts payable to related parties
   
1,555,693
     
1,555,693
 
Advances from related parties
   
200,152
     
173,105
 
                 
Total current liabilities
   
1,970,061
     
1,908,604
 
                 
                 
Stockholders' equity (deficit)
               
Authorized:
               
200,000,000 common shares par value $0.001
               
as of October 31, 2012 and April 30, 2012, respectively
               
Issued and outstanding 53,250,000 as of
               
October 31, 2012 and April 30, 2012
   
53,250
     
53,250
 
Additional paid-in capital
   
1,510,182
     
1,498,055
 
Accumulated other comprehensive income
   
(3,288
)
   
(3,303
)
Deficit
   
(3,529,548
)
   
(3,455,531
)
                 
Total stockholders' deficit
   
(1,969,404
)
   
(1,907,529
)
                 
Total liabilities and stockholders' deficit
 
$
657
   
$
1,075
 
 
 
The accompanying notes are an integral part of these consolidated financial statements.
 
 
 
ENHANCE SKIN PRODUCTS INC.
 
                         
CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
 
For the three and six months ended October 31, 2012 and 2011
 
(Unaudited)
 
   
                         
   
Three Months
   
Six Months
 
   
Ended
   
Ended
 
   
October 31,
   
October 31,
 
   
2012
   
2011
   
2012
   
2011
 
                         
Revenue
 
$
-
   
$
-
   
$
-
   
$
294
 
                                 
Cost of goods sold
   
-
     
-
     
-
     
-
 
                                 
Gross profit
   
-
     
-
     
-
     
294
 
                                 
EXPENSES
                               
                                 
General and administrative
   
6,411
     
158,651
     
14,652
     
319,705
 
Professional fees
   
6,500
     
7,255
     
59,023
     
22,998
 
Marketing
   
-
     
607
     
342
     
1,144
 
                                 
     
12,911
     
166,513
     
74,017
     
343,847
 
                                 
Loss before other items
   
(12,911
)
   
(166,513
)
   
(74,017
)
   
(343,553
)
                                 
Loss before income taxes
   
(12,911
)
   
(166,513
)
   
(74,017
)
   
(343,553
)
                                 
Provision for income taxes
   
-
     
-
     
-
     
-
 
                                 
Net loss
 
$
(12,911
)
 
$
(166,513
)
 
$
(74,017
)
 
$
(343,553
)
                                 
 Other comprehensive (loss)/gain
   
(1) 
     
(78) 
     
15 
     
(199) 
 
                                 
Comprehensive  loss
 
$
(12,912
)
 
$
(166,591
)
 
$
(74,002
)
 
$
(343,752
)
                                 
Basic and diluted loss per common share   $ (0.00)      $ (0.00)      $  (0.00)      $ (0.01)   
                                 
Weighted average number of common
                               
shares outstanding
   
53,250,000
     
53,250,000
     
53,250,000
     
53,250,000
 
 
 
The accompanying notes are an integral part of these consolidated financial statements.
 
 


ENHANCE SKIN PRODUCTS INC.
 
                                     
CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS' EQUITY
 
For the six months ended October 31, 2012 and the year ended April 30, 2012
 
(Unaudited)
 
   
                                     
                     
    Accumulated
       
               
Additional
   
Other
         
Total
 
   
Common Stock
   
Paid-in
   
   Comprehensive
   
Stockholders
 
   
Shares
   
Amount
   
Capital
   
Income
   
Deficit
   
Equity
 
                                     
Balance April 30, 2011
   
53,250,000
    $
53,250
   
 $
1,498,055
    $
(3,149)
   
(2,652,300
)
 
 $
(1,104,144
)
Translation adjustment
   
       
   
     
(154
)
     
   
(154
)
Net loss for the  year
   
       
   
             
(803,231
)
   
(803,231
)
                                                 
Balance April 30, 2012
   
53,250,000
   
$
53,250
   
$
1,498,055
   
$
(3,303
)
 
$
(3,455,531
)
 
$
(1,907,529
)
Translation adjustment
   
       
   
     
15
       
   
15
 
Contributed capital (Note 8)
   
       
   
12,127 
     
     
-
     
12,127
 
Net loss for the  period
   
       
   
             
(74,017
)
   
(74,017
)
                                                 
Balance October  31, 2012
   
53,250,000
   
$
53,250
   
$
1,510,182
   
$
(3,288
)
 
$
(3,529,548
)
 
$
(1,969,404
)
 
 
 
 
 
 
 
 
 
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
 
 
 
ENHANCE SKIN PRODUCTS INC.
 
             
CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
 
For the six months ended October 31, 2012 and 2011
 
(Unaudited)
 
   
             
   
Six Months Ended
 
   
October 31,
   
October 31,
 
   
2012
   
2011
 
             
CASH FLOWS FROM OPERATING ACTIVITIES
           
Net loss for the period
 
$
(74,017
)
 
$
(343,553
)
Adjustment – Non-cash item:
               
Contributed capital (Note 8)
   
12,127
     
-
 
Changes in operating assets and liabilities:
               
Sales tax recoverable
   
-
     
143
 
Prepaid and deposits
   
-
     
83
 
Accounts payable and accrued liabilities
   
34,410
     
2,644
 
Accounts payable to related parties
   
-
     
302,805
 
Cash flows from operating activities
   
(27,480
)
   
(37,878
)
                 
CASH FLOWS FROM FINANCING ACTIVITIES
               
Proceeds from related party advances
   
27,047
     
37,573
 
Cash flows from financing activities
   
27,047
     
37,573
 
                 
NET DECREASE IN CASH
   
(433
)
   
(305
)
Effect of foreign currency translation adjustments
   
15
     
(199
)
                 
Cash, beginning of the period
   
1,075
     
1,753
 
                 
Cash, end of the period
 
$
657
   
$
1,249
 
                 
Included in changes to accounts payable related party are non cash items of $nil and $63,427 at October 31, 2012 and 2011, respectively.
 
 
 
 
 
 
 
The accompanying notes are an integral part of these consolidated financial statements.
 
 
ENHANCE SKIN PRODUCTS INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
October 31, 2012
(Unaudited)
 
 
NOTE 1.   BASIS OF PRESENTATION
 
The accompanying unaudited interim condensed consolidated 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 positions, results of operations, and cash flows at October 31, 2012 and 2011, 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 interim condensed consolidated financial statements be read in conjunction with the financial statements and notes thereto included in the Company's April 30, 2012 and 2011 audited financial statements. The results of operations for the periods ended October 31, 2012 and 2011 are not necessarily indicative of the operating results for the full year.

NOTE 2.   RECENT ACCOUNTING PRONOUNCEMENTS
 
The Company’s management has evaluated all the recently issued accounting pronouncements through the filing date of these financial statements and does not believe that they will have a material effect on the company’s financial position and results of operations.

NOTE 3.   GOING CONCERN
 
The accompanying condensed consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates, among other things, the realization of assets and satisfaction of liabilities in the normal course of business. The Company has net losses for the six months ended October 31, 2012 of $74,017, and a working capital deficit of $1,969,404.  The Company has relied on advances from the CEO, director and a related party to meet the working capital requirements.
 
The ability of the Company to become a profitable entity is dependent upon the Company’s successful efforts to generate sales and then attain profitable operations.  In response to these problems, management has planned the following action:
 
 
Management is presently seeking financing to fund its direct to consumer sales campaign.  There can be no assurances, however, that management’s expectations of future sales will be realized.
 
These factors, among others, raise substantial doubt about the Company’s ability to continue as a going concern. These financial statements do not include any adjustments that might result from the outcome of this uncertainty.

On June 19, 2012, the Company entered into a written Agreement and Plan of Merger (the “Merger Agreement”) with Age Reversal, Inc., a Maryland corporation (“ARI”)  as disclosed in Note 12 to the financial statements for the year ended April 30, 2012.

 
 
 
ENHANCE SKIN PRODUCTS INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
October 31, 2012
(Unaudited)


NOTE 4.   RELATED PARTY TRANSACTIONS AND BALANCES
 
On May 12, 2010 Biostrategies Consulting Group Inc. the holder of 27,500,000 shares of common stock of the Company transferred 9,166,666 of these shares to Drasko Puseljic.  Biostrategies Consulting Group Inc. is 100% privately owned by Dr Samuel Asculai the CEO and a director of the Company.  Mr. Puseljic has a 10-year service agreement with the company to assist in business development, contract administration and co-ordination of SEC filings with management and the Company’s SEC counsel.   With his holdings, Mr. Puseljic has more than 5% of the outstanding equity of the Company and has become a “related party”.  Mr Puselic billed the Company $150,000 each during the previous fiscal years ended April 30, 2012 and 2011.    At October 31, 2012 Mr. Puselic was owed $400,625 in unpaid fees.  No such expenses incurred during the three and six months ended October 31, 2012 pursuant to the termination agreement with the Company.

Accounts Payable to Related Party.

On July 12, 2010 the Company entered into a Termination and Settlement Agreement (the "Settlement Agreement") with Mercuriali Ltd., a company controlled by Donald Nicholson, a director of the Company (“Mercuriali”).  The Settlement Agreement terminated a Letter of Intent between the Company and Mercuriali regarding a proposed merger between the Company and Mercuriali as part of a larger transaction involving the reverse merger of the Company into a company listed on AIM, a sub-market of the London Stock Exchange.  Neither the merger between Mercuriali and the Company, nor the reverse merger of the Company and the AIM listed company took place.  Under the Settlement Agreement, the Company agreed to pay Mercuriali expenses incurred pursuant to the Letter of Intent of GBP22,082 payable at a rate of 5% of gross funds raised by the Company. After receiving proceeds from financing the Company will pay 5% of the gross proceeds to Mercuriali until the obligation has been paid.  Other than the items provided for in the Termination Agreement, the Company and Mercuriali released each other from all claims relating to the Letter of Intent.  Through the previous year ended April 30, 2012 the Company has raised $60,000 of funds from the issuance of Common Stock, 5% of this or $3,000 should have been paid to satisfy this obligation; however, only $1,500 was paid during the previous fiscal year ended April 30, 2012. As of October 31, 2012 the balance owed to Mercuriali is $33,188.

On December 20, 2010 we entered into an employment agreement with Brian Lukian, our Chief Financial Officer. The agreement has an initial term of five years, which may be renewed for additional two year periods after such initial term and provides for payment of services provided by Mr. Lukian from May 1, 2010.  Pursuant to the agreement, Mr. Lukian receives a base salary and and is eligible to participate in any bonus plan established by the company for employees and consultants. Mr. Lukian's base salary for fiscal year is $150,000.   If Mr. Lukian's employment is terminated by the Company, then Mr. Lukian shall be entitled to receive all accrued and unpaid salary plus a termination fee of $150,000. Mr Lukian billed the Company $150,000 each during the previous fiscal years ended April 30, 2012 and 2011.   The employment agreement with Mr. Brian Lukian was terminated on May 31, 2012 as a result of his resignation from the Company.  At October 31, 2012, Mr. Lukian was owed $307,047 in unpaid fees.

During the years ended April 30, 2012 and 2011, the Company incurred monthly consulting fee expenses of $12,500 to Biostrategies Consulting Group Inc., a private Ontario company wholly owned by the Company’s CEO who is also a Director.  The Company recorded $150,000 each as an expense for the years ended April 30, 2012 and 2011.  At October 31, 2012, $400,625 of these expenses are unpaid and included in the accounts payable to related party. In addition, for the year ended April 30, 2012, General and Administrative expenses amounted to $636,822, of which a total of $562,500 was for related party compensation.  No such expenses incurred during the three and six months ended October 31, 2012 pursuant to the termination agreement with the Company.


 
 
 
ENHANCE SKIN PRODUCTS INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
October 31, 2012
(Unaudited)

NOTE 4.   RELATED PARTY TRANSACTIONS AND BALANCES (continued)

The amount due to related parties consists of unpaid remuneration and unreimbursed expenses to the CEO, CFO, COO and a contract consultant.  The CEO and COO are also directors.  Also included in accounts payable related party is the balance owing to Mercuriali Ltd.  These liabilities are unsecured, non-interest bearing, and have no specific terms of repayment.

Comparative balances are:

   
October 31
   
April 30
 
   
2012
   
2012
 
                 
Unpaid remuneration
 
$
1,508,297
   
$
1,508,297
 
Balance owing to Mercuriali Ltd.
   
33,188
     
33,188
 
Unreimbursed expenses
   
14,208
     
14,208
 
   
$
1,555,693
   
$
1,555,693
 
 
NOTE 5.   ADVANCES FROM RELATED PARTIES

As of October 31, 2012 and April 30, 2012, the Company owes $200,152 and $173,105, respectively, in advances to its CEO and Director and a related party. The advances are due on demand, do not bear interest and have no specific terms or repayment.
  
NOTE 6.   STOCKHOLDERS' EQUITY
 
AUTHORIZED
 
In July 2011 the Board of Directors approved the increase of authorized common shares to 200,000,000 shares from the 100,000,000 previously authorized.  The common shares have a $0.001 par value.  All common stock shares have equal voting rights, are non-assessable and have one vote per share.  Voting rights are not cumulative and, therefore, the holders of more than 50% of the common stock could, if they chose to do so, elect all of the directors of the Company

NOTE 7.   FINANCING
 
On August 3, 2010, the Company entered into an Indirect Primary Offering Agreement (“IPOA”) and a Registration Rights Agreement (“RRA”) with Crisnic Fund S.A. (“Crisnic”).  Pursuant to the IPOA, the Company, in its sole discretion, has the right to sell to Crisnic and Crisnic has the obligation to purchase, through advances to the Company, shares of the Company’s common stock subject to the terms of those agreements and subject to a maximum aggregate purchase of Two Million Dollars ($2,000,000). Crisnic is not required to purchase those shares, unless those shares have been registered for resale and are freely tradable in accordance with the federal securities laws, including the Securities Act of 1933, as amended.  The Company is obligated to file with the Securities and Exchange Commission a registration statement on Form S-1 within thirty (30) days from the date of the RRA registering only the shares subject to registration under the IPOA and to use all commercially reasonable efforts to have such registration statement declared effective at the earliest possible date.  The Company has agreed to pay Crisnic (i) due diligence expenses of $10,000.00; (ii) 1,750,000 shares of its common stock; and (iii) 1% of the amount of each advance made by Crisnic under the IPOA.
 
 
 
 
ENHANCE SKIN PRODUCTS INC.
NOTES TO CONSOLIDATED CONDENSED FINANCIAL STATEMENTS
October 31, 2012
(Unaudited)
 
NOTE 7.   FINANCING (continued)

On August 3, 2010, the Company entered into a Stock Purchase Agreement (“First SPA”) with Crisnic.  Pursuant to the First SPA, the Company sold 750,000 shares of the Company’s common stock to Crisnic for an aggregate purchase price of U.S.$30,000.  The sale of those shares was made in reliance on the exemption from registration provided by Regulation D to the Securities Act of 1933 as Crisnic is an accredited investor, as defined therein.
 
On November 4, 2010, the Company entered into a Stock Purchase Agreement (“Second SPA”) with Crisnic.  Pursuant to the Second SPA, the Company sold 1,500,000 shares of the Company’s common stock to Crisnic for an aggregate purchase price of U.S. $30,000.  The sale of those shares was made in reliance on the exemption from registration provided by Regulation D to the Securities Act of 1933 as Crisnic is an accredited investor as defined therein.
 
As of filing of this Form 10-Q, Crisnic has not made any additional purchases of the Company’s common stock.  The Crisnic funds available for this purpose were diverted by Crisnic for other purposes.
 
NOTE 8.   CONTRIBUTED CAPITAL
 
On August 9, 2012, the Company entered into a Memorandum of Understanding with Age Reversal Inc. (ARI), under which ARI agreed to bear certain expenses of the Company pursuant to the planned merger.  Contributed capital represents the value of such services received by the Company but paid for by ARI during the three and six months ended October 31, 2012.

NOTE 9.   SUBSEQUENT EVENTS
 
The Company’s management has evaluated subsequent events through the filing date of these financial statements and has determined that there are no material subsequent events to report.




 




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

Cautionary Note Regarding Forward-Looking Statements

This quarterly report contains “forward-looking statements” that involve risk and uncertainties.  The Company uses forward-looking statements that you can identify by words or terminology such as “may”, “should”, “could”, “predict”, “potential”, “continue”, “expect”, “anticipate”, “future”, “intend”, “plan”, “believe”, “estimate”, and similar expressions (or the negative of these expressions).  This quarterly report includes statements that are “forward-looking statements,” including statements regarding our expectations, hopes, beliefs, intentions or strategies regarding the future.  All statements regarding our financial position, business strategy and other plans and objectives for future operations, and future product demand, supply, costs, marketing, and pricing factors, are forward-looking statements.  Actual results, levels of activity, performance, achievements and events are most likely to vary materially from those implied by the forward-looking statements.  All forward-looking statements included in this quarterly report are based on information available to us on the date hereof, and we assume no obligation to update such forward-looking statements.  Although we believe that the expectations reflected in such forward-looking statements are reasonable, we can give no assurance that such expectations will prove to have been correct or that we will take any actions that may presently be planned.  Certain important factors could cause actual results to differ materially from our expectations.  Readers are cautioned not to place undue reliance on these forward-looking statements that speak only as of the date of this quarterly report.  Readers should carefully review this report in its entirety, including, but not limited to, our financial statements and the notes thereto.  Except for our ongoing obligations to disclose material information under the federal securities laws, we undertake no obligation to release publicly any revisions to any forward-looking statements, to report events or to report the occurrence of unanticipated events.

Operating Results

The following selected comparative financial information has been derived from and should be read in conjunction with the financial statements of the Company for the three and six months ended October 31, 2012 and 2011.
 
 
Three Months Ended
   
Six Months Ended
 
   
October 31,
   
October 31,
 
   
2012
   
2011
   
2012
   
2011
 
                                 
Total Sales
 
$
-
   
$
-
   
$
-
   
$
294
 
Cost of goods sold
   
-
     
-
     
-
     
-
 
Gross profit
   
-
     
-
     
-
     
294
 
Operating expenses
   
12,911
     
166,513
     
74,017
     
343,847
 
Net loss
 
$
(12,911
)
 
$
(166,513
)
 
$
(74,017
)
 
$
(343,553
)
Net loss per share
 
$
(0.00)
   
$
(0.00)
   
$
(0.00
)
 
$
(0.01
)
                                 
Total assets
 
$
657
   
$
4,680
   
$
657
   
$
4,680
 
Working capital
 
$
(1,969,404
)
 
$
(1,451,327
)
 
$
(1,969,404
)
 
$
(1,451,428
)
 
 

 
 

ITEM 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)

Balance sheet – October 31, 2012 balances compared to April 30, 2012
 
Cash
 
At October 31, 2012 the Company had $657 of cash on hand,  a decrease of $418 from the April 30, 2012 balance of $1,075.
 
Accounts payable and accrued liabilities
 
At October 31, 2012 accounts payable and accrued liabilities was $214,216, an increase of $34,410 from the April 30, 2012 balance of $179,806.  The increase represents unpaid invoices from various consultants for the services received during the six months ended October 31, 2012 which is a result of the Company having insufficient cash.
 
Accounts payable to related parties
 
There is no change in the balance of account payable to related parties from April 30, 2012.  At April 30, 2012 this balance $1,555,693 consisted of unreimbursed $33,188 legal settlement expense to a director and $1,522,505 unpaid remuneration to the CEO, CFO and COO of the Company.
 
Advances from related parties

During the six months ended October 31, 2012, as the Company’s cash was depleted, the CEO and a related party advanced funds to the Company to pay for critical expenses.  These advances are unsecured, non- interest bearing and there are no repayment terms.  The balance at October 31, 2012 of $200,152 increased by $27,047 from the balance at April 30, 2012 of $173,105.

Common Stock

At October 31, 2012 and April 30, 2012 there were 53,250,000 shares of common stock issued out of the authorized 200,000,000 common shares.  The par value of the common shares is $0.001 resulting in common stock of $53,250.  

Additional paid-in Capital
 
At October 31, 2012 the balance of additional paid in capital was $1,510,182. Increase of $12,127 during the six months ended October 31, 2012 represented contributed services from Age Reversal Inc. (ARI) in accordance with a Memorandum of Understanding between the Company and ARI under which, effective August 9, 2012, ARI agreed to bear certain expenses of the Company pursuant to the planned merger.
 
Accumulated other comprehensive income
 
The Company has a 100% owned subsidiary in Canada.  In the consolidation of the Canadian subsidiary a translation adjustment was resulted which is not reflected in the statement of operations.  This translation adjustment is maintained in the consolidated statement of stockholders’ equity.  The balance at October 31, 2012 was $(3,288) a decrease of $15 from the April 30, 2012 balance of $(3,303).

 
 
 
ITEM 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
 
Statement of Operations - Three months ended October 31, 2012 balances compared to three months ended October 31, 2011
 
Operating Expenses
 
Operating expenses for the three months ended October 31, 2012 were $12,911 compared to $166,513 for the three months ended October 31, 2011, representing a decrease of $153,602 or 92%.   Operating expenses for the three months ended October 31, 2011 represented executive remuneration of $150,000,  professional and legal charges of $15,906 and marketing charges of $607.  The significant decrease in operating expenses for the three months ended October 31, 2012 was due to the absence of executive remuneration pursuant to the termination agreement with the Company.

Statement of Operations - Six months ended October 31, 2012 balances compared to six months ended October 31, 2011

Sales
 
Sales for the six months ended October 31, 2012 was $nil compared to the previous period of $294.  The Company is presently attempting to raise equity financing in order to increase activity in a direct to consumer marketing campaign.

Gross profit
 
No sales or purchases were made during the six months ended October 31, 2012.  There was a sale of $294 during the six months ended October 31, 2011.  

 Operating Expenses

Operating expenses for the six months ended October 31, 2012 were $74,017 compared to $343,847 for the six months ended October 31, 2011, representing a decrease of $269,830 or 78%.   Operating expenses for the six months ended October 31, 2011 represented executive remuneration of $300,000, professional and legal charges of $42,703 and marketing expenses of $1,144.  The significant decrease in operating expenses for the six months ended October 31, 2012 was mainly due to the absence of executive remuneration pursuant to the termination agreement with the Company.



 
 

ITEM 2.   Management’s Discussion and Analysis of Financial Condition and Results of Operations (continued)
 
Liquidity and Capital Resources
 
During the six months ended October 31, 2012 the CEO and a related party made advances to the Company of $27,047.  At October 31, 2012 the total advances to the Company by the CEO and a related party at October 31, 2012 cumulatively were $200,152.
 
At October 31, 2012, the Company had a working capital deficit of $1,969,404 compared to a working capital deficit of $1,907,529 at April 30, 2012.  The increase in working capital deficit is due entirely to the continued losses of the Company.
 
At October 31, 2012 the total assets were $657 as compared to the total assets $1,075 at April 30, 2012.  The decrease of $418 is primarily due to reduction in cash balance.

Financing
 
On August 3, 2010, the Company entered into an Indirect Primary Offering Agreement (“IPOA”) and a Registration Rights Agreement (“RRA”) with Crisnic Fund S.A. (“Crisnic”).  Pursuant to the IPOA, the Company, in its sole discretion, has the right to sell to Crisnic and Crisnic has the obligation to purchase, through advances to the Company, shares of the Company’s common stock subject to the terms of those agreements and subject to a maximum aggregate purchase of Two Million Dollars ($2,000,000). Crisnic is not required to purchase those shares, unless those shares have been registered for resale and are freely tradable in accordance with the federal securities laws, including the Securities Act of 1933, as amended.  The Company is obligated to file with the Securities and Exchange Commission a registration statement on Form S-1 within thirty (30) days from the date of the RRA registering only the shares subject to registration under the IPOA and to use all commercially reasonable efforts to have such registration statement declared effective at the earliest possible date.  The Company has agreed to pay Crisnic (i) due diligence expenses of $10,000.00; (ii) 1,750,000 shares of its common stock; and (iii) 1% of the amount of each advance made by Crisnic under the IPOA.
 
On August 3, 2010, the Company entered into a Stock Purchase Agreement (“First SPA”) with Crisnic.  Pursuant to the First SPA, the Company sold 750,000 shares of the Company’s common stock to Crisnic for an aggregate purchase price of U.S.$30,000.  The sale of those shares was made in reliance on the exemption from registration provided by Section 4’2’ to the Securities Act of 1933.
 
On November 4, 2010, the Company entered into a Stock Purchase Agreement (“Second SPA”) with Crisnic.  Pursuant to the Second SPA, the Company sold 1,500,000 shares of the Company’s common stock to Crisnic for an aggregate purchase price of U.S. $30,000.  The sale of those shares was made in reliance on the exemption from registration provided by Regulation D to the Securities Act of 1933 as Crisnic is an accredited investor as defined therein. 
 
During the six months ended October 31, 2012 the Company relied on advances from the CEO and a related party as explained in liquidity and capital resources.
 


 
 
 
ITEM 3.   Quantitative and Qualitative Disclosures About Market Risk.

Not applicable.
  
ITEM 4T.   Controls and Procedures.
 
Evaluation of Controls and Procedures

We recently evaluated the effectiveness of our disclosure controls and procedures, as required by paragraph (b) of Rule 13a-15 or Rule 15d-15 under the Securities Exchange Act of 1934, as of the end of the period covered by this report, being July 31, 2011.  This evaluation was conducted with the participation of our principal executive officer and our principal accounting officer.

We maintain disclosure controls and procedures designed to provide reasonable assurance that material information required to be disclosed by us in the reports we file or submit under the Securities Exchange Act of 1934 (the “Exchange Act”) is recorded, processed, summarized and reported within the time periods specified in the SEC’s rules and forms, and that the information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate to allow timely decisions regarding required disclosure. We performed an evaluation, under the supervision and with the participation of our management, including our Chief Executive Officer and Chief Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures as of the end of the period covered by this report. Based on their evaluation, our management, including our Chief Executive Officer and Chief Financial Officer, concluded that our disclosure controls and procedures are effective in giving us reasonable assurance that the information we are required to disclose in the reports we file or submit under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and to ensure that such information is accumulated and communicated to our management, including our Principal Executive and Principal Financial Officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.
 
We do not expect that our disclosure controls and procedures will prevent all errors and all instances of fraud. Disclosure controls and procedures, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the disclosure controls and procedures are met. Further, the design of disclosure controls and procedures must reflect the fact that there are resource constraints, and the benefits must be considered relative to their costs. Because of the inherent limitations in all disclosure controls and procedures, no evaluation of disclosure controls and procedures can provide absolute assurance that we have detected all our control deficiencies and instances of fraud, if any. The design of disclosure controls and procedures also is based partly on certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions.
 



 
 
Changes in Internal Control Over Financial Reporting
 
Based upon their evaluation of our controls over financial reporting, as required by paragraph (d) of Rule 13a-15 or Rule 15d-15 under the Securities Exchange Act of 1934, our principal executive officer and principal accounting officer have concluded that our disclosure controls are, and will be, effective in providing reasonable assurance that material information relating to us is accumulated and communicated to management, including our principal executive and principal financial officers(s), or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure.  There were no changes in our internal controls that occurred during the quarter covered by this report that have materially affected, or are reasonably likely to affect materially our internal controls over financial accounting.

Our management did, however, identify a significant deficiency; a significant deficiency is a deficiency, or a combination of deficiencies, that is less severe than a material weakness, yet important enough to merit attention by those responsible for oversight of our financial reporting.  Currently, we do not have sufficient in-house expertise in US GAAP reporting.  Instead, we rely very much on the expertise and knowledge of external financial advisors in US GAAP conversion.  External financial advisors have helped prepare and review our consolidated financial statements.  Although we have not identified any material errors with our financial reporting or any material weaknesses with our internal controls, no assurances can be given that there are no such material errors or weaknesses existing.  To remediate this situation, we are seeking to recruit experienced professionals to augment and upgrade our financial staff to address issues of timeliness and completeness in US GAAP financial reporting.  In addition, we do not believe we have sufficient documentation with our existing financial processes, risk assessment and internal controls.  We plan to work closely with external financial advisors to document the existing financial processes, risk assessment and internal controls systematically.
 
We believe that the remediation measures we are taking, if effectively implemented and maintained, will remediate the significant deficiency discussed above.
 
Except as described above, there have been no changes in our internal controls over financial reporting that occurred during our last fiscal quarter to which this Quarterly Report on Form 10-Q relates that have materially affected, or are reasonably likely to materially affect our internal controls over financial reporting.
 
 
 
 
 
 



 
 
PART II – OTHER INFORMATION
 
ITEM 1.   Legal Proceedings.
 
We are not aware of any material legal proceedings, other than ordinary routine litigation incidental to the business, to which the registrant or any of its subsidiaries is a party or of which any of their property is the subject.  We are not aware of any material proceedings to which any director, officer or affiliate of the registrant, any owner of record or beneficially of more than five percent of any class of voting securities of the registrant, or any associate of any such director, officer, affiliate of the registrant, or security holder is  a party adverse to the registrant or any of its subsidiaries or has a material interest  adverse to the registrant or any of its subsidiaries.

ITEM 2.   Unregistered Sales of Equity Securities and Use of Proceeds.

None.
 
ITEM 3.   Defaults Upon Senior Securities.
 
None.
 
ITEM 4.   (Removed and Reserved)
 
 
ITEM 5.   Other Information.
 
None

ITEM 6.   Exhibits.
 
(a)   Pursuant to rule 601 of Regulation S-K, the following exhibits are included herein or incorporated by reference.
 


 


 
 
SIGNATURES
 
Pursuant to the requirements of Section 13 or 15(d) 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, on this 14th day of December, 2012.
 
 
ENHANCE SKIN PRODUCTS INC.
 
       
       
Date:  December 14, 2012
By:
/s/ Dr. Samuel S. Asculai
 
   
Name:  Dr. Samuel S. Asculai
 
   
Title:    President/CEO, Chief Financial Officer and Principal Executive Officer
 
 

 
 
 
 
 
 

 











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