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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-K
 
(Mark One)
 
x ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934
 
For the fiscal year ended  April 30, 2014
 
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)
 
(I.R.S. Employer
Identification No.)

8755 Ash Street, Suite 1, Vancouver, British Columbia, Canada
 
V6P 6T3
(Address of principal executive offices)
 
(Zip Code)
 
Registrant's telephone number, including area code:  (855) 324-1110
 
Securities registered pursuant to Section 12(b) of the Act:
 
Title of Each Class
 
Name of Each Exchange On Which Registered
N/A
 
N/A

Securities registered pursuant to Section 12(g) of the Act:
 
Common Stock, Par Value of $0.001 Per Share
(Title of class)
 
Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 the Securities Act. Yes o  No x
 
Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or Section 15(d) of the Act. Yes o  No x
 
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 last 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-K (§229.405 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 x  No o
 
Indicate by check mark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter)  is not contained herein, and will not be contained, to the best of registrant's knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K. o
 
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 definition 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
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
 
The aggregate market value of Common Stock held by non-affiliates of the Registrant on October 31, 2013 was $1,481,743.25 based on a $0.65 average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter.

Indicate the number of shares outstanding of each of the registrant’s classes of common stock as of the latest practicable date.
66,299,868 common shares as of July 14, 2014.
 

DOCUMENTS INCORPORATED BY REFERENCE

None.
 


 
 

 
 
TABLE OF CONTENTS
 
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PART I
 
 
This annual report contains forward-looking statements. These statements relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may”, “should”, “expects”, “plans”, “anticipates”, “believes”, “estimates”, “predicts”, “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties and other factors, including the risks in the section entitled “Risk Factors”, that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.
 
Although we believe that the expectations reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.
 
Our consolidated financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles.
 
In this annual report, unless otherwise specified, all dollar amounts are expressed in United States dollars and all references to “common shares” refer to the common shares in our capital stock.
 
As used in this annual report, the terms we", "us", "our" and "our company" mean Eternity Healthcare Inc. and our wholly owned subsidiary Eternity Healthcare Inc., a British Columbia corporation, unless otherwise indicated.
 
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.
 
From inception to October 24, 2007, 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 manufacture and market medical devices. Our first product to be marketed is a needle-free injection system throughout the world. The products which we hope to distribute differ from other current offerings by allowing ordinary people to perform injection of medication without the need for professionals.
 
 
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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 Mika Medical Company and its affiliate MK Global, both of South Korea. We have the exclusive marketing rights for this device throughout North America, Germany, France and Spain and non-exclusive rights for the world market. Currently we are the sole marketer of the product.
 
The product has received regulatory approval for Europe, Canada and many other countries and US regulatory approval is underway. We plan to enter distribution agreements with several companies worldwide and enter into distribution agreements with various retailers. We anticipate producing promotional materials and advertising in medical journals as well as consumer magazines. In order to carry out these plans we have hired a marketing manager and anticipate hiring a quality control manager and three people for packaging and shipment positions. We will require approximately $1,500,000 in order to achieve these objectives and there can be no assurance that we will be able to raise the required funds.
 
On August 26, 2013, our company completed an agreement with existing shareholders to exchange outstanding loans to related parties for common shares at a rate of 1 common share per $0.50 of debt. The total number of shares issued under the agreement was 1,724,868 to settle amounts due to related parties of $862,434, causing a loss on settlement of debt of $172,487. Additionally, our company completed a non-brokered private placement for 1,000,000 common shares at a price of $500,000.
 
On October 30, 2013, we announced that our company had reached an agreement with Phoenix-based Global Medical Equipment of America (GMEA) pursuant to which our company will acquire 100% of our GMEA through a share exchange agreement. As a confirmation of intent to merge, our company advanced funds in the amount of $60,000 to GMEA. Our company was unable to reach a final agreement with GMEA and on January 31, 2014 we provided notice demanding repayment of the note receivable.
 
Principal Product
 
Currently, our company is focused on a new needle-free injection device technology (“Comfort-inTM) that our company is in the process of launching to the consumer market. Devices for delivery of medication subcutaneously, are being developed. The subcutaneous delivery technology has already been approved by regulatory bodies in Europe, Canada and submitted for approval with United States Food and Drug Administration (“FDA”). While initially we plan to market the device without medication, the long term objective is to launch pre-filled biologics medicine for a number of therapeutic fields. The needle free injection device is trade-marked as “Comfort-in” and is currently available for purchase through our company’s website (www.eternityhealthcare.com) and selective wholesalers.
 
Comfort-inTM Applications
 
Diabetes - It is estimated there are 50 million diabetics in North America with 8.3% of the total population actually diagnosed. Of the diagnosed diabetic patients approximately 6 million patients (20%) are receiving insulin on a daily basis. The fear surrounding their daily injection is needless; there is technology available to deliver the insulin below the skin that does not require a needle. This option results in a soft injection system that is less painful and less intimidating.
 
Pediatric Oncology – It is well known that children are horrified of the needle and as result sometime parents are giving up the use of those drugs that has to be injected towards more oral drugs (though that is also horrible due to taste barrier), or go for intravenous catheters. There are about 20 anti-cancer drugs are injectable that Comfort-inTM can be used instead of needle. Approximately 10 million children and adolescence receive injectable annually.
 
MS – Multiple sclerosis is a neurological disease affecting almost 400,000 people in the United States. Most patients receive different forms of interferons under various brand names. Most are injected subcutaneously, day, by day or other regiments. Comfort-inTM could be used for these people as they are tired of needle injection.
 
 
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Growth Hormones - Human growth hormone is used for children suffering from lack of growth height and various other conditions. Also, growth hormones are used in adults for work performance, sport performance and losing fat, etc. The hormone which is presently injected has been a cause of mental barrier for people. Comfort-inTM should be an excellent choice for those who do not like needle injection
 
Anesthetics – Local anesthetics such as lidocane are used routinely for surface surgery, dental work and cosmetic playground. Patients are unhappy to see needles going through their skin for desensitization, particularly those involve face or dental work. Comfort-inTM can deliver local anesthetics and pain killer conveniently. Over 20 million injections for local anesthetics are performed annually.
 
Vaccine - Vaccination involving whole range of products is a major healthcare activity. Globally over 1 billion vaccination of different kind is performed annually and it is estimated in the US to be about 20 million per annum. Some vaccines are given subcutaneously, some intramuscularly and some intradermal. Most vaccination (about 90%) is carried out in children. Children are not happy to receive needles for their vaccination. Comfort-inTM will be a darling for vaccination of children.
 
Cardiovascular - Death due to cardiovascular diseases and stroke today bypasses the death due to cancer. There are approximately 30 million deaths as result of cardiovascular failures in the US. Often oral medications fail to act due to the time which it requires a drug to get from digestive organs to the blood. Injectable medications are clearly the better choice. Healthcare professionals are always worried of self-contamination and other inconveniences. Use of Comfort-inTM for injecting cardiovascular medication is highly appreciated.
 
Migraine – Migraine, along certain sever pain conditions, are highly common among adult population. A quick injection of anti-migraine drugs or other sorts of pain killers including opiates are often used. Needles are not desirable tools for the patients and these people prefer to use non-injections approach. Once again Comfort-inTM can alleviate the inconveniences of needle while providing similar benefits.
 
Market
 
Intended and Current
 
Retail Pharmacies
 
Currently, in both Canada and the United States, needle-free injectors are not available for sale to individuals. The pharmacists in both countries do not acknowledge a demand for the product. There appears to be a complete lack of knowledge of these devices at the retail level.
 
Hospitals
 
Hospitals contain trained professionals who are expected to handle sharps. The pricing model of the two modalities (needle/injector) will need to be much closer together before hospitals in Canada will agree to use injectors. The US hospital system lends itself well to new technologies and this offers us a huge opportunity in that country.
 
Physician Offices
 
Physicians are looking for anything that saves them time. The needle-free injectors offer patients an option and may be considered in this setting. Children have a high level of anxiety with needles.
 
Corrections
 
The ability to remove sharps in correctional facilities is considered a major advantage.
 
 
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Military
 
The military tends to have mass injection programs and if the injectors can prove to reduce injection time, increase personnel safety or reduce cost, it would be considered as a primary vehicle for vaccine injections.
 
Corporate Health
 
This is an upscale market that may appreciate the perceived benefit and advancement that injectors convey.
 
US Public Health
 
Public health clinics serve 87 million citizens in the United States and handle most of the immunization needs for these patients. Competitors, such as PharmaJet, got their start in the public health arena in 2009 by providing needle-free injections for the broad H1N1 flu shot campaign in the state of New Jersey. This led to interest from other locations, including Los Angeles County, which is standardizing the PharmaJet needle-free system.
 
Cosmetic Applications
 
There may be opportunities with dermatologists, clinics and other health care professionals that perform plastic and/or Botox surgeries.
 
Veterinary Medicine
 
There are also applications for veterinary medicine. Currently, more robust “backpack” versions of injectors using hoses are used with large animals/herds. A small unit such as the Comfort-inTM (with another brand name) may be useful in a local veterinarian office. This can be investigated when resources and/or the market warrants the focus.
 
Conclusions:
 
The needle-free market has advantages;
There are specific areas where needle-free holds important advantages;
Professional support will be crucial to success;
There are many applications for needle-free technology, although each must be investigated and the largest payoff areas will be attempted first.
 
Unintended Markets:
 
It appears that there are other groups of patients that may try to use the Comfort-inTM in areas it is not intended for. Chat rooms for bodybuilders discuss various methods of steroid injection and needle-free technology is discussed. As we move into the marketplace we need to be aware that the product may not be used according to manufacturer’s intentions. There may also be applications around tattoo parlors and piercings.
 
Patient Barriers to Needles
 
Increasing demand for painless drug delivery will drive the growth of this market. The advent of biologics and biotechnology-based compounds that need to be delivered using specialized delivery systems has also fuelled the demand for innovative and effective delivery devices. Needles have one advantage, cost. With increased demand for needle-free technology, new materials discovered and increased production volumes, the costs will drop and that advantage will be lost.
 
 
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Competition
 
Around the world, needle-free jet injectors have an established market among diabetic patients. In the United States, more than a dozen needle-free jet injectors have been licensed by the FDA and are on the market. A few of these devices are being used in physicians’ offices. In Europe, needle-free injectors have become very popular with about 50% of insulin users utilizing needle-free jet injectors. Currently, each manufacturer makes its own type of cartridge that holds the vaccine which is attached to the device before injection. None of these cartridges are interchangeable, and that is thought to be a major limitation to their widespread use in physicians’ offices in the US.
 
AdvantaJet
 
The AdvantaJet is in its 25th year of production. They claim a durable life-long device with clients still using the jet injector after 20 years of use. They also claim they have studies and have shown increased efficacy over needle injections. Specifically:
 
It is the most economical delivery system for insulin for all type 1 diabetics;
It is the only system that provides a lifetime commitment to replace and repair the product;
It is the most accurate delivery system providing the most precise dosage;
It is the most comfortable system with the least skin abrasions and contusions.
 
They offer a custom made jet that can be supplied to the patient’s specific needs. Changes to orifice design and power settings decrease due to the increased absorption. There is no data to support this and it is interesting they discuss cost considering the unit cost shown below. AdvantaJet also discusses that these insulin injectors eliminate the need to buy needles and syringes, and do not incur the cost of disposing of syringes. The AdvantaJet is currently sold at $695 per piece.
 
Proven Effective
 
AdvantaJet injection technology was tested and determined to be an effective method of managing diabetes in both humans and companion animals.
 
Conclusions:
 
Price reflects their attempt to be the best quality, proven injector
 
Akra
 
Akra is a French based company selling the brand Dermojet. They claim to be in over 90,000 physicians’ offices around the world. They are squarely focused on the professional market. They have a very sleekly designed unit, almost surgical in its appearance. Although this may deter the average consumer, the look of the unit must be very tempting to professionals. The unit can also be sterilized; something an institutional setting would be interested in.
 
The Dermojet is patented and in North America is exclusively distributed by Robbins Instruments. They claim it is the finest needleless injection system available on the medical market today. “The innovative design and superior quality have made the Dermojet renowned for its usefulness in many different types of procedures and disciplines.” The Dermojet comes with a one year parts and labor warranty guaranteed against normal wear and tear. The original Dermojet model G is $550.00 US with an accompanying stand you can purchase for $24.
 
 
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Selling features:
 
Light weight around 300 gr. (Comfort-inTM is 160g);
Trustworthy;
High technology material;
Ergonomic: maneuverable, equilibrated, and allows for intensive effortless use;
Esthetic: A modern, highly polished and streamlined device;
Efficient: Incorporated reservoir allows for operation in every position;
Easy to use: The armament is activated by a simple turn of the lever, and the liquid is flushed by pressing the button on the upper part of the machine;
Sterilizable: at 134° Celsius maximum, for 18 minutes, (humid air).
 
Conclusions:
 
Price reflects focus on professional market;
Specifically designed for professional use.
 
Antares Pharma is a pharmaceutical company that focuses on self-injection pharmaceutical products and technologies and topical gel-based products. They have subcutaneous and intramuscular injection platforms that focus mostly on disposable, pressure assisted auto-injectors. Their needle-free injection units are developed with pharmaceutical companies and tend to be product specific. Examples are human growth hormones with Teva (Tjet), Ferring Pharmaceuticals (Zomajet), and JCR Pharmaceuticals (Twin-jector).
 
Antares is based in Ewing, New Jersey and has a subsidiary in Switzerland. They were formerly known as Medi-Ject Corporation and acquired the operating subsidiaries of Permatec Holding AG, headquartered in Basel, Switzerland. Medi-Ject was focused on delivering drugs across the skin using needle-free technology, and Permatec specialized in delivering drugs across the skin using gel technologies as well as developing oral disintegrating tablet technology. Upon completion of the transaction the name was changed to Antares Pharma Inc. The Parenteral Products (device) group is located in Minneapolis where they develop and manufacture, with partners, various novel pressure assisted injectors, with and without needles, which allow patients to self-inject drugs. They have entered into multiple licenses for these devices mainly in the U.S. and Canada with Teva. Several licensing agreements with pharmaceutical companies of various sizes have led to successful clinical evaluation of formulations.
 
As of 2009, Antares stopped selling the Medi-Jector Vision Injector. At that time their start-up kit could be purchased from $299.00 up to $335.00. Each Medi-Jector Vision needle-free syringe was used for up to 21 doses of insulin or 14 days before replacement.
 
The kit included:
 
Medi-Jector Vision Injector;
Injection Supply Start-up Kit - 2 nozzles and 2 vial adapters;
Carrying Case;
Instruction Manual;
Training Video
 
A kit of 6 nozzles and 2 vial adapters currently sells for $37.95 as they must service the customers who had purchased the device.
 
Conclusions:
 
Antares focuses on the larger market of needle-free that includes all modes of delivery;
They have a successful track record of pharmaceutical collaboration;
They have multiple office sites and abilities;
They are aggressively pursuing markets both collaboratively and alone.
 
 
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Zogenix
 
Zogenix is a California based company that currently markets Sumavel DosePro. This is a needle-free delivery system that requires a prescription and is used to treat adults who have been diagnosed with acute migraine or cluster headaches. Zogenix claims that DosePro is a first-in-class, easy-to-use drug delivery system designed for self-administration of a pre-filled, single dose of liquid drug, subcutaneously, without a needle. DosePro offers benefits to patients including instant, easy dosing, less anxiety over self-injection, no need for sharps disposal, no risk of needle stick injury or contamination, and reliable performance.
 
Zogenix lead investigative product is Zohydro ER and is awaiting FDA approval. They are hoping to be the first hydrocodone product to offer the benefit of less frequent dosing and the ability to treat chronic pain patients without the risk of acetaminophen-related liver injury. The second investigational product candidate they have is Relday which is a combination of their DosePro needle-free system and a proprietary, subcutaneous once-monthly formulation of risperidone for the treatment of schizophrenia.
 
Conclusions:
 
Zogenix is another successful player in this category;
Off patent pharmaceuticals seem to get a new life with novel injector technologies;
A lot of money can be raised in this area with a strong management team
 
BioJect
 
BioJect is an Oregon based company dedicated to the improvement of delivery of pharmaceuticals and biologics through the development and commercialization of advanced needle-free injection technologies. BioJect has developed a broad platform technology for delivering injectable vaccines and medications using its proprietary pressure profiles. This proprietary technology enables BioJect to provide needle-free injection systems which have a greater range of capabilities than other available devices. This places them into the traditional competitor category if Comfort-inTM is marketed as an all-purpose device to the marketplace.
 
The products as marketed are:
 
Biojector 2000 Needle-free Injection System
 
The Biojector 2000 is a durable, professional-grade injection system designed for healthcare providers. They claim that it is the only needle-free system in the world cleared by the FDA to deliver intramuscular injections. The system can also deliver subcutaneous injections, and is being used for intradermal injections in clinical trials.
 
BioJect ZetaJet
 
The ZetaJet system consists of two components, the portable injector and an auto-disabling disposable syringe. It is intended to deliver vaccines and injectable medications either subcutaneously or intramuscularly and is indicated for both professional use and home use for patients who self-inject.
 
Conclusions:
 
BioJect has a similar product to Comfort-inTM;
BioJect are not strong in the pharmaceutical development area;
They do not look healthy and can probably be beaten.
 
 
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BioValve
 
BioValve Technologies, Inc. operates as a specialty pharmaceutical and drug delivery company engaging in the development and commercialization of chemical entities for the treatment of conditions of the central nervous system. The company offers various dopamine agonists for treatment of Parkinson’s disease and schizophrenia; and novel disposable pharmaceutical delivery systems. The company, through its subsidiary, offers h-Patch and e-Patch controlled release disposable micro pump systems; Mini-Ject, a pre-filled needle-free delivery system; and the Micro-Trans, a micro needle transdermal delivery patch. Its products provide insulin management for patients. BioValve Technologies, Inc. is a private company and was founded in 1998. It is based in Parsippany, New Jersey with an additional location in Westborough, Massachusetts.
 
Conclusions:
 
BioValve is quite interesting as the principle is also involved with Valeritas;
They focus on the bigger market of needle-free delivery, not just jet injectors.
 
Injex
 
Injex Pharma AG is a wholly owned subsidiary of Paketeria AG as of December 16, 2011. It markets and sells the Injex 30 System worldwide. The Injex 30 is a syringe without a needle used in multiple medical, cosmetic and anesthetic applications. It is interesting to note that Injex is expanding into cosmetic and launching Shireen Beauty system focused on the rejuvenation of the skin. Fluid is sprayed with high pressure within a small distance of the skin via a pore-jet allowing the fluid open access to pores contained in the upper layers of the skin. Injex is casting as wide a market as possible targeting diabetes, local and dental anesthetics, allergy and fertility treatments, vaccinations, erectile dysfunction and growth hormones. Current price for Injex injector device is $999. The nozzles are sold at $2 per unit. Consumer reports, the device is noisy and causes skin bleeding.
 
In May 2012 Injex received FDA approval and in August 2012, Medical Marketing Canada announced that it had approval to market the Injex 30 in Canada. Medical Marketing Canada announced in October that it had closed a new round of financing.
 
Conclusions:
 
Injex is expensive both the device and nozzles;
Injex has an agreement for Canadian distribution;
Injex should be an immediate competitor;
Injex foray into beauty may hurt/help, further study is needed.
 
National Medical Products
 
National Medical Products is a private, closely held corporation. The company is focused on developing products that are clinically proven; they then achieve the required manufacturing capabilities, and then introduce the products into commercial distribution.
 
Currently, National Medical Products’s J-Tip uses pressurized gas to propel medication through the skin subcutaneously. The major difference is that after injection, J-Tip can simply be discarded as with normal needle disposal.
 
Conclusions:
 
Disposable device will attract some pharma companies who are interested in unit dose delivery;
They have a successful track record of pharmaceutical collaboration;
They do not appear to be a large player in the market.
 
 
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Medical International Technologies
 
This Montreal based company that produces a large handgun-type injector for both veterinary (Argo-Jet) and human (MED-JET) use. The large, high volume design has the following features:
 
More than 300 injections per hour;
Dose of 0.1 to 1cc (H-III) and 0.02 to 0.3 MBX;
Weight of 0.7 Kg;
Accuracy at 99 % at a dose of 1cc;
Robust; can easily last over 10 years
Variable injection pressure for patient comfort;
Adapter for receiving syringes or even bags.
 
Conclusions:
 
Currently this is not a competitor.
 
Eurojet Medical
 
Eurojet is based in Budapest, Hungary. In 2003 they developed the Ejet300 and are currently working on the Ejet500. It has a patent for a “pressure regulating device”.
 
Conclusions:
 
This company does not appear to be very active.
 
Pharmajet
 
Pharmajet is based in Golden, Colorado. They are focused on a safer workplace, lower needle reuse, and to help children avoid needle anxiety.
 
Pharmajet was founded by Kathy Callender who insisted her device be cost competitive with the cheapest needles. Her goal is that poor countries can afford needle free technology but this has also led to the ability to underbid rivals to supply pharmaceutical companies. She has raised $14 million from investors. In March 2011 Pharmajet completed unspecified B round financing. It seems their plan is to build sales volume in the U.S. vaccination market through public-health departments and pharmacy chains, then among consumers who self-inject at home; and doctor’s offices here and abroad. That way, PharmaJet expects to approach a production volume of 50 million cartridges a year which would allow it to compete on a price level with needles in developing countries.
 
Conclusions:
 
The founder is a dedicated supporter of helping the third world;
The focus on low cost has the ability to shrink the market if successful;
Zogenix was quoted as saying they wouldn’t survive;
They are not focused on pharmaceutical collaboration, however they have landed deals that focus on the goal of affordable expansion.
 
 
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Crossjet
 
Crossjet is a French company that successfully designs and develops innovative, needle-free, pre-filled, single-use injection systems for intradermal, subcutaneous and intramuscular applications for pharmaceutical companies. They use their single technological platform and offer exclusive partnerships to pharmaceutical companies in a given field or therapeutic class. Crossjet is based in Paris and has offices in Dijon. Crossjet technology is the outcome of research and development cooperation initiated and developed with industrial partners, each a European leader in its field.
 
The Zeneo is made up of three distinct subassemblies: an actuator, a pharmaceutical subassembly and a nozzle. The actuator generates sufficient pressure to inject the drug to the required depth beneath the skin, without the use of a needle. The platform can be adapted to different pharmaceutical applications:
 
the intensity of the gas generator and the nozzle can be adapted to ensure the proper penetration and optimal distribution of the drug in the target tissue;
the pharmaceutical subassembly can be aseptically filled on standard high-throughput syringe filling line;
To date, Crossjet has filed 26 patent family applications and holds over 370 patents granted worldwide.
 
Conclusions:
 
Crossjet is focused on the European market;
Crossjet has been successful with pharmaceutical collaborations;
Their perceived lack of customization in the consumers’ eyes may turn off some potential partners.
 
Valeritas
 
Valeritas develops and commercializes drug delivery solutions. The company focuses on the treatment of diabetes. Its products include V-Go, a disposable insulin delivery device that provides a preset basal rate and on-demand bolus dosing for mealtime coverage. The company’s products also include h-Patch for the delivery of various compounds; Mini-Ject pre-filled needle-free delivery system to deliver drugs ranging from molecules to proteins, fragile antibodies, and vaccines; and Micro-Trans micro needle array patch technology for drug delivery into the dermis. Valeritas, Inc. was founded in 2006 and is headquartered in Bridgewater, New Jersey. The Mini-Ject is manufactured under Biovalve and these two companies are both linked privately.
 
Conclusions:
 
Valeritas has synergy with BioValve;
Valeritas has been successful in collaborations with drug companies;
Valeritas has the ability to provide other novel drug delivery products.
 
Penjet
 
It is a single use, disposable jet injector that comes prefilled with the proper drug dose. It can be administered in a few seconds by a care giver or the patient themselves.
 
Penjets are tailored for each specific drug it delivers. Exclusive licenses for particular drugs are available. An exclusive license offers pharmaceutical firms a sustainable competitive advantage in a patented, low cost, needle-less drug delivery system.
 
Conclusions:
 
Penjet does not seem to be very active;
Penjet is disposable.
 
 
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Consort Medical plc
 
Consort Medical is the manufacturer of Bespak Injectables’ reusable needle-free jet injectors. Bespak’s innovation focus is on drug delivery and point-of-care diagnostic consumables. Their competitive product is a spring powered injector. Consort produces:
 
MHP-1 Needle-free Jet Injector which incorporates a 2-step actuation mechanism, electronic dose setting; adaptable for specific formulations, concentrations and dosing systems (e.g. volumetric or gravimetric) digital, easy-to-read dose display;
SQ-PEN Needle-free Jet Injector which incorporates push actuation mechanism, analogue dose setting;
SQ-X Needle-free Jet Injector which incorporates button-based actuation mechanism, analogue dose setting.
 
Conclusions:
 
This company is not found on the partial list of needle-free injectors and was added as an example of how many other manufacturers there are. This has led to the conclusions below.
 
Competitive Landscape Conclusions
 
Antares cites as competition, The Medical House plc. Medical House developed the Cool.clickTM2 needle-free injector for Merck Serono. However it had revenue results for the year ended April 30, 2012 of £1.4 million (USA $2,169,197) representing a growth by 25%. They are included here as an example of the many niche companies that are pairing up with pharmaceutical companies.
 
There is also competition from internal groups within large pharmaceutical companies and various design houses which complete the design of devices for companies but don’t have manufacturing management capabilities. There are a number of companies that are relatively inactive, focused on peripheral markets or concentrated on certain geographic areas.
 
This leaves us with our perceived competitors at launch. Our company will focus on diabetes and begin forging alliances to strategically place itself squarely in this area.
 
Government Regulations
 
Government authorities in the United States and Canada, at the federal, state and local levels, and other countries extensively regulate, among other things, the research, development, testing, manufacturing, labeling, promotion, advertising, distribution, marketing and export and import of medical devices such as needle-free injection systems. The process of obtaining regulatory approvals and the subsequent substantial compliance with appropriate federal, state, local and foreign statutes and regulations require the expenditure of substantial time and financial resources.
 
We are required to obtain two sets of license for the sale and marketing of medical devices. In Canada, as in the United States and Europe, needle-free injection systems are classified as medical devices and require the following licenses: 1) Product License; and 2) Establishment License.
 
Product License: Needle-free injection systems are classified internationally as Class I or II and in the United States are subject to 510-k regulatory filing fee.
 
Description of Different Classes
 
Class I includes products of which several examples are already approved and marketed in Canada or USA. As long as the basic science remains the same, the application for approval of a new product is straight forward. One product in this category would be a pregnancy test or regular needle/syringes.
 
 
14

 
 
Class II products are those which do not need to be injected (the device itself) or inserted into the patient (non-invasive). Often these products are approved and sold throughout the world. The products which we are currently focusing on distributing all belong to Class II. In order to secure the necessary license for these products, we are required to submit all the documentation which will lead to the approval of the products in other countries. In our case, our products are already approved in Europe, Canada, etc. As far as for FDA compliance is concerned, we are required to submit all of the scientific data, results, approval process and certificates of good quality management pursuant to ISO 13485. Usually, products which have the ISO accreditation and CE Mark easily obtain FDA approval.
 
Class III and IV include medical devices which use invasive techniques. If the medical device has been approved in another region, it is considered Class III. If it is brand new, it is considered Class IV. Invasive tests such as colonoscopy, endoscopy, body lesion removal etc., are all considered Class III or IV. None of our products fall within Class III or IV.
 
We are also required to obtain an establishment license for the marketing of our products. We have already obtained an establishment license for our product. Certain countries do not require an establishment license.
 
Environmental Regulations
 
We are not aware of any material violations of environmental permits, licenses or approvals that have been issued with respect to our operations. We expect to comply with all applicable laws, rules and regulations relating to our business, and at this time, we do not anticipate incurring any material capital expenditures to comply with any environmental regulations or other requirements.
 
While our intended projects and business activities do not currently violate any laws, any regulatory changes that impose additional restrictions or requirements on us or on our potential customers could adversely affect us by increasing our operating costs or decreasing demand for our products or services, which could have a material adverse effect on our results of operations.
 
Employees
 
As of April 30, 2014 we had one full time employee and two consultants, working on our business. We plan (within next six months) to hire two new full-time employees and one additional consultant to work for us on marketing, distribution, commercialization of our products.
 
REPORTS TO SECURITY HOLDERS
 
We are required to file annual, quarterly and current reports, proxy statements and other information with the Securities and Exchange Commission and our filings are available to the public over the internet at the Securities and Exchange Commission’s website at http://www.sec.gov. The public may read and copy any materials filed by us with the Securities and Exchange Commission at the Securities and Exchange Commission’s Public Reference Room at 100 F Street N.E. Washington D.C. 20549. The public may obtain information on the operation of the Public Reference Room by calling the Securities and Exchange Commission at 1-800-732-0330. The SEC also maintains an Internet site that contains reports, proxy and formation statements, and other information regarding issuers that file electronically with the SEC, at http://www.sec.gov.
 
 
Much of the information included in this annual report includes or is based upon estimates, projections or other “forward looking statements”. Such forward looking statements include any projections and estimates made by us and our management in connection with our business operations. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein.
 
 
15

 
 
Such estimates, projections or other “forward looking statements” involve various risks and uncertainties as outlined below. We caution the reader that important factors in some cases have affected and, in the future, could materially affect actual results and cause actual results to differ materially from the results expressed in any such estimates, projections or other “forward looking statements”.
 
Risks Related to Our Business
 
We have a history of losses and a limited history of revenues, which raise substantial doubt about our ability to continue as a going concern.
 
From inception to April 30, 2014, we have incurred aggregate net losses of $1,214,708. We can offer no assurance that we will ever operate profitably or that we will generate positive cash flow in the future. In addition, our operating results in the future may be subject to significant fluctuations due to many factors not within our control, such as the unpredictability of when customers will order products, the size of customers’ orders, the demand for our products, and the level of competition and general economic conditions.
 
Our company’s operations will be subject to all the risks inherent in the establishment of a developing enterprise and the uncertainties arising from the absence of a significant operating history. No assurance can be given that we may be able to operate on a profitable basis.
 
Due to the nature of our business and the early stage of our development, our securities must be considered highly speculative. We have not realized a profit from our operations to date and there is little likelihood that we will realize any profits in the short or medium term. Any profitability in the future from our business will be dependent upon the successful commercialization or licensing of our core products, which themselves are subject to numerous risk factors as set forth below.
 
We expect to continue to incur development costs and operating costs. Consequently, we expect to incur operating losses and negative cash flows until our products gain market acceptance sufficient to generate a commercially viable and sustainable level of sales, and/or additional products are developed and commercially released and sales of such products made so that we are operating in a profitable manner. Our history of losses and limited history of revenues raise substantial doubt about our ability to continue as a going concern.
 
We have had negative cash flows from operations since inception. We will require significant additional financing, the availability of which cannot be assured, and if our company is unable to obtain such financing, our business may fail.
 
To date, we have had negative cash flows from operations and have depended on sales of our equity securities and debt financing to meet our cash requirements. We may continue to have negative cash flows. We have estimated that we will require approximately $1,500,000 to carry out our business plan for the next twelve months. There is no assurance that actual cash requirements will not exceed our estimates. We will require additional financing to finance working capital and pay for operating expenses and capital requirements until we achieve a positive cash flow.
 
Our ability to market and sell our medical devices will be dependent upon our ability to raise significant additional financing. If we are unable to obtain such financing, we will not be able to fully develop our business. Specifically, we will need to raise additional funds to:
 
support our planned growth and carry out our business plan;
hire top quality personnel for all areas of our business; and
address competing technological and market developments.
 
 
16

 
 
We may not be able to obtain additional equity or debt financing on acceptable terms as required. Even if financing is available, it may not be available on terms that are favorable to us or in sufficient amounts to satisfy our requirements. Any additional equity financing may involve substantial dilution to our then existing shareholders. If we require, but are unable to obtain, additional financing in the future, we may be unable to implement our business plan and our growth strategies, respond to changing business or economic conditions, withstand adverse operating results and compete effectively. More importantly, if we are unable to raise further financing when required, we may be forced to scale down our operations and our ability to generate revenues may be negatively affected.
 
We have a limited operating history and if we are not successful in continuing to grow our business, then we may have to scale back or even cease our ongoing business operations.
 
We have a limited history of revenues from operations and have no significant tangible assets. We have yet to generate positive earnings and there can be no assurance that we will ever operate profitably. Accordingly, we must be considered in the development stage. Our success is significantly dependent on a successful commercialization of our products. Our operations will be subject to all the risks inherent in the establishment of a developing enterprise and the uncertainties arising from the absence of a significant operating history. We may be unable to develop a successful product or achieve commercial acceptance of our product or operate on a profitable basis. We are in the development stage and potential investors should be aware of the difficulties normally encountered by enterprises in the development stage. If our business plan is not successful, and we are not able to operate profitably, investors may lose some or all of their investment in our company.
 
If we fail to effectively manage the growth of our company and the commercialization of our product, our future business results could be harmed and our managerial and operational resources may be strained.
 
As we proceed with the commercialization of our product and the expansion of our marketing and commercialization efforts, we expect to experience significant growth in the scope and complexity of our business. We will need to add staff to market our services, manage operations, handle sales and marketing efforts and perform finance and accounting functions. We anticipate that we will be required to hire a broad range of additional personnel in order to successfully advance our operations. This growth is likely to place a strain on our management and operational resources. The failure to develop and implement effective systems, or to hire and retain sufficient personnel for the performance of all of the functions necessary to effectively service and manage our potential business, or the failure to manage growth effectively, could have a material adverse effect on our business and financial condition.
 
Our by-laws contain provisions indemnifying our officers and directors against all costs, charges and expenses incurred by them.
 
Our by-laws contain provisions with respect to the indemnification of our officers and directors against all expenses, liability and loss (including attorneys’ fees, judgments, fines and amounts paid or to be paid in settlement) reasonably incurred or suffered by him or her in connection with any action, suit or proceeding to which they were made parties by reason of his or her being or having been one of our directors or officers.
 
 
17

 
 
Risks Related to Our Common Stock
 
A decline in the price of our common stock could affect our ability to raise further working capital, it may adversely impact our ability to continue operations and we may go out of business.
 
A prolonged decline in the price of our common stock could result in a reduction in the liquidity of our common stock and a reduction in our ability to raise capital. Because we may attempt to acquire a significant portion of the funds we need in order to conduct our planned operations through the sale of equity securities, a decline in the price of our common stock could be detrimental to our liquidity and our operations because the decline may cause investors to not choose to invest in our stock. If we are unable to raise the funds we require for all of our planned operations, we may be forced to reallocate funds from other planned uses and may suffer a significant negative effect on our business plan and operations, including our ability to develop new products and continue our current operations. As a result, our business may suffer and not be successful and we may go out of business. We also might not be able to meet our financial obligations if we cannot raise enough funds through the sale of our common stock and we may be forced to go out of business.
 
If we issue additional shares in the future, it will result in the dilution of our existing shareholders.
 
We are authorized to issue up to 300,000,000 shares of common stock with a par value of $0.001. Our board of directors may choose to issue some or all of such shares to acquire one or more businesses or to provide additional financing in the future. The issuance of any such shares will result in a reduction of the book value and market price of the outstanding shares of our common stock. If we issue any such additional shares, such issuance will cause a reduction in the proportionate ownership and voting power of all current shareholders. Further, such issuance may result in a change of control of our company.
 
Trading of our stock may be restricted by the Securities Exchange Commission's penny stock regulations, which may limit a stockholder's ability to buy and sell our stock.
 
The Securities and Exchange Commission has adopted regulations which generally define "penny stock" to be any equity security that has a market price (as defined) less than $5.00 per share or an exercise price of less than $5.00 per share, subject to certain exceptions. Our securities are covered by the penny stock rules, which impose additional sales practice requirements on broker-dealers who sell to persons other than established customers and "accredited investors". The term "accredited investor" refers generally to institutions with assets in excess of $5,000,000 or individuals with a net worth in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly with their spouse. The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from the rules, to deliver a standardized risk disclosure document in a form prepared by the Securities and Exchange Commission, which provides information about penny stocks and the nature and level of risks in the penny stock market. The broker-dealer also must provide the customer with current bid and offer quotations for the penny stock, the compensation of the broker-dealer and its salesperson in the transaction and monthly account statements showing the market value of each penny stock held in the customer's account. The bid and offer quotations, and the broker-dealer and salesperson compensation information, must be given to the customer orally or in writing prior to effecting the transaction and must be given to the customer in writing before or with the customer's confirmation. In addition, the penny stock rules require that prior to a transaction in a penny stock not otherwise exempt from these rules, the broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive the purchaser's written agreement to the transaction. These disclosure requirements may have the effect of reducing the level of trading activity in the secondary market for the stock that is subject to these penny stock rules. Consequently, these penny stock rules may affect the ability of broker-dealers to trade our securities. We believe that the penny stock rules discourage investor interest in and limit the marketability of our common stock.
 
 
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FINRA sales practice requirements may also limit a stockholder's ability to buy and sell our stock.
 
In addition to the "penny stock" rules described above, the Financial Industry Regulatory Authority (FINRA), formerly the National Association of Securities Dealers or NASD, has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information. Under interpretations of these rules, the FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.
 
 
As a “smaller reporting company”, we are not required to provide the information required by this Item.
 
 
We currently rent a warehouse and an assembly space of about 2,500 square feet at 8755 Ash Street, Suite 1, Vancouver, British Columbia, Canada, V6P 6T3. Our office is also in the same location. Effective July 1, 2014, we are required to pay $4,585.86 per month rent. Our lease is for one year but can be extended on a similar basis.
 
 
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 or beneficial stockholder, is an adverse party or has a material interest adverse to our interest.
 
 
Not applicable.
 
PART II
 
Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities
 
Our common stock is not traded on any exchange. Our common stock is quoted on OTC Bulletin Board, under the trading symbol “ETAH”. We cannot assure you that there will be a market in the future for our common stock.
 
OTC Bulletin Board securities are not listed and traded on the floor of an organized national or regional stock exchange. Instead, OTC Bulletin Board securities transactions are conducted through a telephone and computer network connecting dealers. OTC Bulletin Board issuers are traditionally smaller companies that do not meet the financial and other listing requirements of a national or regional stock exchange.
 
The following table reflects the high and low bid information for our common stock obtained from Stockwatch and reflects inter-dealer prices, without retail mark-up, markdown or commission, and may not necessarily represent actual transactions.
 
 
19

 
 
The high and low bid prices of our common stock for the periods indicated below are as follows:
 
OTC Bulletin Board
 
Quarter Ended
 
High
   
Low
 
April 30, 2014
  $ 1.17     $ 0.2021  
January 31, 2014
  $ 0.89     $ 0.65  
October 31, 2013
  $ 0.65     $ 0.55  
July 31, 2013
  $ 0.60     $ 0.55  
April 30, 2013
  $ 0.82     $ 0.50  
January 31, 2013
  $ 0.80     $ 0.75  
October 31, 2012
  $ 1.10     $ 0.75  
July 31, 2012
  $ 1.10     $ 1.07  
April 30, 2012
  $ 1.05     $ 0.50  
 
As of July 14, 2014, there were approximately 20 holders of record of our common stock. As of such date, 66,299,868 common shares were issued and outstanding.
 
Our common shares are issued in registered form. Island Stock Transfer, 15500 Roosevelt Blvd. Suite 301, Clearwater, FL 33760, (Telephone: (727) 289-0010) is the registrar and transfer agent for our common shares.
 
Dividend Policy
 
We have not paid any cash dividends on our common stock and have no present intention of paying any dividends on the shares of our common stock. Our current policy is to retain earnings, if any, for use in our operations and in the development of our business. Our future dividend policy will be determined from time to time by our board of directors.
 
Equity Compensation Plan
 
On January 15, 2013, our directors approved the adoption of the 2013 Stock Option Plan which permits our company to issue up to 6,300,000 shares of our common stock to directors, officers, employees and consultants of our company upon the exercise of stock options granted under the 2013 Stock Option Plan.
 
 
20

 
 
The following table summarizes certain information regarding our equity compensation plans as at April 30, 2014:
 
Plan category
 
Number of securities to
be issued upon exercise
of outstanding options,
warrants and rights
(a)
   
Weighted-average
exercise price of
outstanding options,
warrants and rights
(b)
   
Number of securities
remaining available for
future issuance under equity
compensation plans
(excluding securities
reflected in column (a))
(c)
 
Equity compensation plans approved by security holders
 
Nil
   
Nil
   
Nil
 
Equity compensation plans not approved by security holders
    200,000 (1)   $ 0.80       6,100,000  
Total
    200,000     $ 0.80       6,100,000  
 
(1)  
Includes 100,000 unexercised stock options issued on January 15, 2013 and 100,000 unexercised stock options issued on January 18, 2013.
 
Convertible Securities

As of April 30, 2014, we had outstanding options to purchase 200,000 shares of our common stock exercisable at $0.80.

On January 15, 2013 our director, Bin Huang, was granted 100,000 stock options exercisable at a price of $0.80 per share for a period of five years from the date of grant. The vesting schedules for the stock options are 12,500 options every quarter from January 15, 2013.

On January 18, 2013 our director, Dominique F. Borrelly, was granted 100,000 stock options exercisable at a price of $0.80 per share for a period of five years from the date of grant. The vesting schedules for the stock options are 12,500 options every quarter from January 18, 2013.

Recent Sales of Unregistered Securities; Use of Proceeds from Registered Securities

We did not sell any equity securities which were not registered under the Securities Act during the year ended April 30, 2014 that were not otherwise disclosed on our quarterly reports on Form 10-Q or our current reports on Form 8-K filed during the year ended April 30, 2014.

Purchase of Equity Securities by the Issuer and Affiliated Purchasers

We did not purchase any of our shares of common stock or other securities during our fourth quarter of our fiscal year ended April 30, 2014.


As a “smaller reporting company”, we are not required to provide the information required by this Item.
 
 
21

 


The following discussion should be read in conjunction with our audited financial statements and the related notes for the years ended April 30, 2014 and April 30, 2013 that appear elsewhere in this annual report. The following discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those discussed in the forward looking statements. Factors that could cause or contribute to such differences include, but are not limited to those discussed below and elsewhere in this annual report, particularly in the section entitled "Risk Factors" beginning on page 15 of this annual report.

Our audited financial statements are stated in United States Dollars and are prepared in accordance with United States Generally Accepted Accounting Principles.

Purchase of Significant Equipment

We do not intend to any significant equipment over the next twelve months.

Personnel Plan

We plan to hire two new full-time employees and one additional consultant to work on marketing, distribution, commercialization and regulatory approvals our products in 2014 if we have sufficient capital.

Results of Operations

For the Year Ending April 30, 2014 and 2013
 
   
Year Ended
April 30,
 
   
2014
   
2013
 
Revenue
 
$
54,536
   
$
16,175
 
Cost of goods sold
 
$
18,021
   
$
5,633
 
Operating expenses
 
$
451,061
   
$
262,581
 
Loss on settlement of debt
 
$
172,487
   
$
Nil
 
Loss on note receivable
 
$
60,000
   
$
Nil
 
Net loss
 
$
(647,033
)
 
$
(252,039
)
 
Expenses

Our operating expenses for our years ended April 30, 2014 and 2013 are outlined in the table below:
 
   
Year Ended
April 30,
 
   
2014
   
2013
 
Depreciation
 
$
165
   
$
239
 
General and administrative
 
$
118,302
   
$
91,021
 
Professional fees
 
$
79,351
   
$
127,518
 
Salaries
 
$
253,243
   
$
43,803
 
 
Operating expenses for year ended April 30, 2014 increased by $188,480 as compared to the comparative period in 2013 primarily as a result of increases in general and administrative expenses and salaries.

Revenue

We have earned $70,711 in revenue since our inception on December 10, 2009.
 
 
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Liquidity and Financial Condition
 
Working Deficit
           
   
At
April 30,
   
At
April 30,
 
   
2014
   
2013
 
Current Assets
 
$
430,220
   
$
189,440
 
Current Liabilities
 
$
96,152
   
$
767,211
 
Working Capital
 
$
334,068
   
$
(577,771
)
 
Cash Flows
           
   
Year Ended
April 30,
   
Year Ended
April 30,
 
   
2014
   
2013
 
Net Cash Used In Operating Activities
 
$
(340,881
)
 
$
(260,441
)
Net Cash Used In Investing Activities
 
$
Nil
   
$
Nil
 
Net Cash Provided by Financing Activities
 
$
595,900
   
$
195,691
 
Effect of Rates on Cash
 
$
(7,970
)
 
$
(5,078
)
Increase (Decrease) in Cash During the Period
 
$
247,049
   
$
(69,818
)
 
Anticipated Cash Requirements

We estimate that our expenses over the next 12 months (beginning May 2014) will be approximately $1,500,000 as described in the table below. These estimates may change significantly depending on the performance of our products in the marketplace and our ability to raise capital from shareholders or other sources.
 
Estimated
Completion
Date
 
Estimated
Completion
Date
 
Estimated
Expenses
($)
 
Legal and accounting fees
 
12 months
    100,000  
Marketing and advertising
 
12 months
    800,000  
Employees
 
12 months
    200,000  
Consulting fees
 
12 months
    200,000  
Travel and administrative expenses
 
12 months
    200,000  
Total
        1,500,000  
 
We intend to meet our cash requirements for the next 12 months through product sales and 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 private placement financings on terms that will be acceptable to us. We may not raise sufficient funds to fully carry out our business plan.

Future Financings

We will require additional financing in order to enable us to proceed with our plan of operations, as discussed above, including approximately $1,500,000 over the next 12 months to pay for our ongoing expenses. These expenses include legal, accounting and audit fees as well as general and administrative expenses. These cash requirements are in excess of our current cash and working capital resources. Accordingly, we will require additional financing in order to continue operations and to repay our liabilities. There is no assurance that any party will advance additional funds to us in order to enable us to sustain our plan of operations or to repay our liabilities.
 
 
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We anticipate continuing to rely on equity sales of our common stock 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 business activities.

Contractual Obligations

As a “smaller reporting company”, we are not required to provide tabular disclosure obligations.

Going Concern

We have not generated any revenue since inception and are dependent upon obtaining outside financing to carry out our operations and pursue our pharmaceutical research and development activities. If we are unable to generate future cash flows, raise equity or secure alternative financing, we may not be able to continue our operations and our business plan may fail. You may lose your entire investment.

If our operations and cash flow improve, management believes that we can continue to operate. However, no assurance can be given that management's actions will result in profitable operations or an improvement in our liquidity situation. The threat of our ability to continue as a going concern will cease to exist only when our revenues have reached a level able to sustain our business operations.

Off-Balance Sheet Arrangements

We have no 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 is material to stockholders.

Critical Accounting Policies

The discussion and analysis of our financial condition and results of operations are based upon our consolidated financial statements, which have been prepared in accordance with the accounting principles generally accepted in the United States of America. Preparing financial statements requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities, revenue, and expenses. These estimates and assumptions are affected by management’s application of accounting policies. We believe that understanding the basis and nature of the estimates and assumptions involved with the following aspects of our financial statements is critical to an understanding of our financial statements.

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.

Inventory

Inventory is stated at the lower of cost or market with cost determined under the weighted average cost method.
 
 
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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 of exchange at the dates on which those elements are recognized.
 
Fair Value

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

Interest Rate Risk

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

Credit Risk

Credit risk is the risk of loss associated with counterparty’s inability to fulfill its payment obligations. Our company’s credit risk is primarily attributable to cash and accounting receivable. Management believes that the credit risk concentration with respect to financial instruments included in cash and accounts receivable is remote.

Currency Risk

Our company’s operating expenses are primarily incurred in Canadian dollars, and fluctuation of the Canadian dollar in relation to the United States dollar will have an impact upon the profitability of our company and may also have an effect of the value of our company’s. Our company has not entered into any agreements or purchased any instruments to hedge possible currency risk. At April 30, 2014, 1 United States dollar was equal to 1.0957 Canadian dollars.

Basic and Diluted Net Income (Loss) Per Share

Our 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 stockholders (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.
 
 
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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. Our 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.

Comprehensive Loss

ASC 22, “Comprehensive Income”, establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at April 30, 2014, our company has items that represent a comprehensive income (loss) and, therefore, has included a schedule of comprehensive income (loss) in the financial statements.

Equipment and Depreciation

Equipment has been recorded at cost, net of accumulated depreciation (Note 4). Improvements are capitalized and maintenance, repairs and minor replacements are expensed as incurred. Depreciation is determined using a straight-line method over its estimated useful life of 36 months for its computer equipment.

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.

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. Our company has evaluated this Codification and does not believe it is applicable at this time.

Recent Accounting Pronouncements

Our company has implemented all new accounting pronouncements that are in effect and that may impact its financial statements and does not believe that there are any other new accounting pronouncements that have been issued that might have a material impact on our financial position or results of operations.


As a “smaller reporting company”, we are not required to provide the information required by this Item.
 
 
26

 

 
 
 
 
REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors
Eternity Healthcare, Inc.

We have audited the accompanying consolidated balance sheets of Eternity Healthcare, Inc. (the Company) as of April 30, 2014 and 2013 and the related consolidated statements of operations, stockholders’ equity, and cash flows for the years then ended and for the cumulative period from December 10, 2009 (date of inception) through April 30, 2014.  These consolidated financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these consolidated financial statements based on our audits.   

We conducted our audits in accordance with the standards of the Public Company Accounting Oversight Board (United States). Those standards require that we plan and perform the audits to obtain reasonable assurance about whether the consolidated financial statements are free of material misstatement. The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting. Our audits included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting. Accordingly, we express no such opinion. An audit also includes examining, on a test basis, evidence supporting the amounts and disclosures in the consolidated financial statements, assessing the accounting principles used and significant estimates made by management, as well as evaluating the overall financial statement presentation. We believe that our audits provide a reasonable basis for our opinion.

In our opinion the consolidated financial statements referred to above present fairly, in all material respects, the financial position of Eternity Healthcare, Inc. as of April 30, 2014 and 2013, and the results of their operations and cash flows for the years then ended and for the cumulative period from December 10, 2009 (date of inception) through April 30, 2014, in conformity with U.S. generally accepted accounting principles.

The accompanying consolidated financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the consolidated financial statements, the Company has not yet established an ongoing source of revenue sufficient to cover operating costs as of April 30, 2014, which raises substantial doubt about its ability to continue as a going concern. Management’s plans concerning these matters are also described in Note 2. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.


/s/ Sadler, Gibb & Associates, LLC

Salt Lake City, UT
July 25, 2014
 
 
 
 
27

 
 
 
 
 
 

 
Eternity Healthcare Inc.
(A Development Stage Company)
Consolidated Financial Statements
Years ended April 30, 2014 and 2013
(Expressed in U.S. Dollars)
 
 

 
 
 
 
 
 
 
 
28

 

Eternity Healthcare Inc.
(A Development Stage Company)
Consolidated Balance Sheets
(Expressed in U.S. Dollars) 

 
   
April 30,
   
April 30,
 
   
2014
   
2013
 
    $     $  
                 
Assets
               
Current assets
               
Cash and cash equivalents
    403,603       156,554  
Accounts receivable
    38       297  
Prepaid expenses
    3,000       16,038  
GST/HST receivable
    891       3,729  
Inventory (Note 4)
    22,688       12,822  
Total Current Assets
    430,220       189,440  
                 
Equipment, net (Note 5)
    -       165  
                 
Total assets
    430,220       189,605  
                 
Liabilities
               
Current liabilities
               
Accounts payable and accrued liabilities (Note 6)
    89,935       4,532  
Due to related parties (Note 7)
    6,217       762,679  
Total Liabilities
    96,152       767,211  
                 
Shareholders’ deficiency
               
Capital stock (Note 8)
               
                 
Authorized
               
300,000,000 common shares, par value $ 0.001
               
Issued and outstanding
               
April 30, 2014 - 66,299,868 common shares
               
April 30, 2013 - 63,575,000 common shares
    66,300       63,575  
Additional paid-in capital
    1,500,679       (73,816 )
Accumulated other comprehensive gain (loss)
    (18,203 )     310  
Deficit, accumulated during the development stage
    (1,214,708 )     (567,675 )
                 
Total stockholders’ equity (deficit)
    334,068       (577,606 )
                 
Total liabilities and stockholders’ equity (deficit)
    430,220       189,605  
 
The accompanying notes are an integral part of these consolidated financial statements.
 
29

 
 
Eternity Healthcare Inc.
(A Development Stage Company)
Consolidated Statements of Loss and Comprehensive Loss
(Expressed in U.S. Dollars) 

 
               
From
 
               
inception on
 
               
December 10,
 
   
Year ended
   
Year ended
   
2009 to
 
   
April 30,
2014
   
April 30,
2013
   
April 30,
2014
 
    $     $     $  
                         
Sales
                       
Product sales
    54,536       16,175       70,711  
Cost of goods sold
    18,021       5,633       23,654  
Gross Profit
    36,515       10,542       47,057  
                         
Expenses
                       
Depreciation
    165       239       727  
General and administrative
    118,302       91,021       249,583  
Professional fees
    79,351       127,518       372,562  
Research and development
    -       -       109,360  
Salaries
    253,243       43,803       297,046  
Total expenses
    451,061       262,581       1,029,278  
                         
Other expenses
                       
Loss on settlement of debt
    172,487       -       172,487  
Loss on note receivable (Note 11)
    60,000       -       60,000  
Total other expenses
    232,487       -       232,487  
                         
Net loss for the period
    (647,033 )     (252,039 )     (1,214,708 )
                         
Comprehensive loss
                       
Net loss for the period
    (647,033 )     (252,039 )     (1,214,708 )
Foreign currency translation adjustments
    (18,513 )     9,824       (18,203 )
                         
Comprehensive loss for the period
    (665,546 )     (242,215 )     (1,232,911 )
                         
Comprehensive loss per share - basic and diluted
    (0.0102 )     (0.004 )        
                         
Net loss per share - basic and diluted
    (0.0099 )     (0.004 )        
                         
Weighted average number of common shares
                       
Outstanding – basic and diluted
    65,465,388       63,575,000          
 
The accompanying notes are an integral part of these consolidated financial statements.
 
30

 
 
Eternity Healthcare Inc.
(A Development Stage Company)
Consolidated Statements of Cash Flows
(Expressed in U.S. Dollars) 

 
               
From
 
               
inception on
 
               
December 10,
 
   
Year ended
   
Year ended
   
2009 to
 
   
April 30,
2014
   
April 30,
2013
   
April 30,
2014
 
    $     $     $  
                         
Operating activities
                       
                         
Net loss income for the period
    (647,033 )     (252,039 )     (1,214,708 )
Items not affecting cash
                       
Depreciation
    165       239       727  
Expenses paid on behalf of the Company by related parties
    328       -       7,636  
Stock options issued for services
    42,299       12,257       54,556  
Loss on settlement of debt
    172,487       -       172,487  
Changes in non-cash working capital
                       
Decrease (increase) in
                       
Inventory
    (9,409 )     (12,822 )     (22,231 )
Changes in operating assets and liabilities
                       
Prepaid expenses
    11,743       (16,038 )     (4,295 )
Accounts payable and accrued liabilities
    85,769       903       91,913  
Accounts receivable
    234       (297 )     (63 )
GST/HST receivable
    2,536       7,356       (1,492 )
                         
Net cash used in operating activities
    (340,881 )     (260,441 )     (915,470 )
                         
Investing activity
                       
Purchase of equipment
    -       -       (727 )
Net cash provided by investing activities
    -       -       (727 )
                         
Financing activities
                       
Common shares issued for cash
    500,000       -       500,380  
Proceeds from related party payables
    95,900       195,691       879,759  
Repayments on related party payables
    -       -       (31,673 )
                         
Net cash provided by financing activities
    595,900       195,691       1,348,466  
                         
Effect of exchange rate changes on cash
    (7,970 )     (5,078 )     (28,668 )
                         
Increase (decrease) in cash
    247,049       (69,818 )     403,603  
                         
Cash, beginning of period
    156,554       226,372       -  
                         
Cash, end of period
    403,603       156,554       403,603  
                         
Noncash investing/financing activities
                       
                         
Common stock issued for debt
    862,434       -       862,434  
 
The accompanying notes are an integral part of these consolidated financial statements
 
 
31

 

Eternity Healthcare Inc.
(A Development Stage Company)
Consolidated Statements of Stockholders’ Equity (deficit)
(Expressed in U.S. Dollars)

 
         
Amount
   
Additional
   
Accumulated
   
Accumulated
       
   
Number
   
($ 0.001 par)
   
paid-in capital
   
OCI
   
deficit
   
Total
 
   
of shares
    $     $     $     $     $  
Balance as at December 10, 2009 (inception)
    -       -       -       -       -       -  
                                                 
Common shares issued for cash on December 10, 2009 (Notes 1 and 8)
    60,000,000       60,000       (59,620 )     -       -       380  
Currency translation adjustment
    -       -       -       (914 )     -       (914 )
Net loss for the period ended April 30, 2010
    -       -       -       -       (29,765 )     (29,765 )
                                                 
Balance as at April 30, 2010
    60,000,000       60,000       (59,620 )     (914 )     (29,765 )     (30,299 )
                                                 
Recapitalization (Notes 1 and 8)
    3,575,000       3,575       (26,453 )     -       -       (22,878 )
Currency translation adjustment
    -       -       -       3,543       -       3,543  
Net loss for the year ended April 30, 2011
    -       -       -       -       (101,221 )     (101,221 )
                                                 
Balance as at April 30, 2011
    63,575,000       63,575       (86,073 )     2,629       (130,986 )     (150,855 )
                                                 
Currency translation adjustment
    -       -       -       (12,143 )     -       (12,143 )
Net loss for the year ended April 30, 2012
    -       -       -       -       (184,650 )     (184,650 )
                                                 
Balance as at April 30, 2012
    63,575,000       63,575       (86,073 )     (9,514 )     (315,636 )     (347,648 )
                                                 
Value of options issued for services
    -       -       12,257       -       -       12,257  
Currency translation adjustment
    -       -       -       9,824       -       9,824  
Net loss for the year ended April 30, 2013
    -       -       -       -       (252,039 )     (252,039 )
                                                 
Balance as at April 30, 2013
    63,575,000       63,575       (73,816 )     310       (567,675 )     (577,606 )
                                                 
Common stock issued for cash (Note 8)
    1,000,000       1,000       499,000       -       -       500,000  
Common stock issued on debt settlement (Note 8)
    1,724,868       1,725       1,033,196       -       -       1,034,921  
Value of options issued for services
    -       -       42,299       -       -       42,299  
Currency translation adjustment
    -       -       -       (18,513 )     -       (18,513 )
Net loss for the year ended April 30, 2014
    -       -       -       -       (647,033 )     (647,033 )
                                                 
      66,299,868       66,300       1,500,679       (18,203 )     (1,214,708 )     334,068  
 
The accompanying notes are an integral part of these consolidated financial statements.
 
 
32

 
 
Eternity Healthcare Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
April 30, 2014
(Expressed in U.S. Dollars) 

 
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 a range of medical devices and diagnostics.

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 8).

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.

Accordingly, 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 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, a small amount of revenue has been derived during the organization period.

On June 25, 2012, the Company entered into a marketing agreement with Mika Medical Company of Korea, to be the sole marketer of a new line of needle-free injection product for North America.  Furthermore, the marketing agreement was extended to some European countries (Germany, France and Spain) in December 2012.  Additionally, the Company obtained the rights to market the products throughout the world with an Amendment dated December 20, 2012.

Since signing the Distribution 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 is generating revenue from product sales.
 

 
 
33

 
 
Eternity Healthcare Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
April 30, 2014
(Expressed in U.S. Dollars) 


1.             Nature and continuance of operations - continued

The Company’s consolidated financial statements as at April 30, 2014 have been prepared on a going concern basis, which contemplates the realization of assets and settlement of liabilities and commitments in the normal course of business.  The Company has net loss of $ 647,033 for the year ended April 30, 2014 (April 30, 2013 - $ 252,039) and has a working capital surplus of $ 334,068 as at April 30, 2014 (April 30, 2013 - $ 577,771 deficit).

2.             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.

3.             Significant accounting policies

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

Inventory
Inventory is stated at the lower of cost or market with cost determined under the weighted average cost method.

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 of exchange at the dates on which those elements are recognized.

 
34

 
 
Eternity Healthcare Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
April 30, 2014
(Expressed in U.S. Dollars) 

 
3.             Significant accounting policies - continued

Gains and losses on translation are included in other comprehensive income (loss) in stockholders’ deficiency for the period.

Financial instruments

Fair value
The carrying value of cash and cash equivalents, accounts receivable, accounts payable and due to related parties 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
Credit risk is the risk of loss associated with counterparty’s inability to fulfill its payment obligations.  The Company’s credit risk is primarily attributable to cash and accounting receivable.  Management believes that the credit risk concentration with respect to financial instruments included in cash and accounts receivable is remote.

Currency risk
The Company’s operating expenses are primarily incurred in Canadian dollars, and fluctuation of the Canadian dollar in relation to the United States dollar will have an impact upon the profitability of the Company and may also have an effect of the value of the Company’s.  The Company has not entered into any agreements or purchased any instruments to hedge possible currency risk.  At April 30, 2014 1 United States dollar was equal to 1.0957 Canadian dollars.

Basic and diluted net income (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 stockholders (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 excludes all dilutive potential shares if their effect is anti-dilutive.

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.
 
 
35

 
 
Eternity Healthcare Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
April 30, 2014
(Expressed in U.S. Dollars) 

 
3.             Significant accounting policies - continued
 
Comprehensive loss
ASC 22, “Comprehensive Income”, establishes standards for the reporting and display of comprehensive loss and its components in the financial statements.  As at April 30, 2014, the Company has items that represent a comprehensive income (loss) and, therefore, has included a schedule of comprehensive income (loss) in the financial statements.

Equipment and depreciation
Equipment has been recorded at cost, net of accumulated depreciation (Note 4).  Improvements are capitalized and maintenance, repairs and minor replacements are expensed as incurred.  Depreciation is determined using a straight-line method over its estimated useful life of 36 months for its computer equipment.

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.

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.

4.             Inventory

Inventory consists of needle free injection products that are held for resale.  Inventory is stated at the lower of cost or market with cost determined under the weighted average cost method.  As of April 30, 2014 and April 30, 2013 inventory consisted of the following:
 
   
April 30,
   
April 30,
 
   
2014
$
   
2013
$
 
             
Raw Material
    -       -  
Work in progress
    -       -  
Finished goods
    22,688       12,822  
Reserve for obsolescence
    -       -  
      22,688       12,822  
 
 
36

 

Eternity Healthcare Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
April 30, 2014
(Expressed in U.S. Dollars) 


5.             Equipment  
 
   
April 30,
2014
$
 
          Accumulated        
   
Cost
   
depreciation
   
Net
 
                         
Computer equipment
    727       727       -  
 
   
April 30,
2013
$
 
            Accumulated        
    Cost    
depreciation
     Net  
                   
Computer equipment
    727     562       165  
 
6.             Accounts payable and accrued liabilities

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

7.             Due to related parties and related party transactions

During the fiscal year ended April 30, 2014, the Company received to $ 95,900 additional cash loans from related parties of the Company.  On August 26, 2013 the Company exchanged $ 862,434 in related party notes payable held by Eternity BC for 1,724,868 common shares of the Company.   Total related party notes payable as of April 30, 2014 were $ 6,217.  This balance is non-interest bearing, unsecured and has no fixed terms of repayment.

8.             Capital stock

Authorized
The total authorized capital is 300,000,000 common shares with a par value of $ 0.001 per common share.

Issued and outstanding
Effective on November 1, 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 per share.  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.

On December 13, 2010, the Company issued 60,000,000 common shares of the Company with a value of $ 60,000 related to the Share Exchange Transaction (Note 1).

On August 26, 2013 the Company completed an agreement with existing shareholders to exchange outstanding loans to related parties for common shares at a rate of 1 common share per $ 0.50 of debt.  The total number of shares issued under this agreement was 1,724,868 to settle amounts due to related parties of $ 862,434, causing a loss on settlement of debt of $ 172,487.  Additionally, the Company completed a non-brokered private placement for 1,000,000 common shares at a price of $500,000.
 
 
37

 
 
Eternity Healthcare Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
April 30, 2014
(Expressed in U.S. Dollars) 


9.             Stock options

During the fiscal year ended April 30, 2013, the Company granted 200,000 stock options for services.  The fair value of the stock options granted were estimated on the date granted using the Black-Scholes pricing model, with the following assumptions used for the valuation: exercise price of $0.55 per share, average risk-free interest rate of 0.79%, expected dividend yield of zero, expected lives of five years and an average expected volatility of 2.99%.  During the fiscal year ended April 30, 2014 and 2013, the Company recognized expense of $ 42,299 and $ 12,257 related to options that vested, respectively

We recognize stock-based compensation expense (net of an estimated forfeiture rate) for those awards which are expected to vest on a straight-line basis over the requisite service period. We estimate the forfeiture rate based on our historical experience and expectations about future forfeitures. As of April 30, 2014 and 2013, the total remaining unrecognized compensation cost related to non-vested stock options, net of expected forfeitures, was $23,701 and $53,743, respectively.

A summary of the status of the Company’s stock options and warrants as of April 30, 2014 and changes during the periods ended April 30, 2014 and 2013 is presented below:
 
   
Number of
 
   
shares
 
Balance of stock options and warrants at April 30, 2012
    -  
         
Warrants and options granted
    200,000  
Exercised, forfeited or expired
    -  
Balance of stock options and warrants at April 30, 2013
    200,000  
Exercisable at April 30, 2013
    29,041  
         
Warrants and options granted
    -  
Exercised, forfeited or expired
    -  
         
Balance of Stock options and warrants at April 30, 2014
    200,000  
Exercisable at April 30, 2014
    129,041  

The following table summarizes information about the stock options and warrants as of April 30, 2014:
 
   
    Option and warrants
outstanding
   
  Options and warrants
exercisable
 
Exercise
price
$
 
Number
outstanding
   
Weighted
average
remaining
contractual
life (in years)
   
Weighted
average
exercise
prices
$
   
Number
exercisable
   
Weighted
average
exercise
price
$
 
0.80
    200,000       3.71       0.80       129,041       0.80  
                                                                              
 
38

 
 
Eternity Healthcare Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
April 30, 2014
(Expressed in U.S. Dollars) 


9.             Stock options - continued

The following table summarizes information about the stock options and warrants as of April 30, 2013:
 
   
  Option and warrants
outstanding
   
  Options and warrants
exercisable
 
Exercise
price
$
 
Number
outstanding
   
Weighted
average
remaining
contractual
life (in years)
   
Weighted
average
exercise
prices
$
   
Number
exercisable
   
Weighted
average
exercise
price
$
 
0.80
    200,000       4.71       0.80       29,041       0.80  
                                                                            
10.   Income taxes

The Company has losses carried forward for income tax purposes to April 30, 2014.  There are no current or deferred tax expenses for the year ended April 30, 2014 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 provisions for refundable federal income tax consist of the following:
 
   
April 30,
   
April 30,
 
   
2014
   
2013
 
    $     $  
Deferred tax assets attributable to:
               
Current operations
    161,125       50,000  
Non-deductible items
    10,575       -  
Change in tax rates
    4,395       (1,135 )
Change in valuation allowance
    (176,095 )     (48,865 )
                 
Net refundable amount
    -       -  
 
 
39

 
 
Eternity Healthcare Inc.
(A Development Stage Company)
Notes to the Consolidated Financial Statements
April 30, 2014
(Expressed in U.S. Dollars) 


10.   Income taxes - continued

The composition of the company’s deferred tax assets as at April 30, 2014 and April 30, 2013 is as follows:
 
   
April 30,
   
April 30,
 
   
2014
$
   
2013
$
 
                 
Net operating loss carryforward
    300,591       147,397  
Equipment
    172       108  
Less:  Valuation allowance
    (300,763 )     (147,505 )
                 
      -       -  
 
11.   Note receivable

On October 25, 2013 the Company entered into a Binding Letter of Intent for Acquisition through Share Exchange with Global Medical Equipment of America (GMEA) to issued 40,000,000 shares to the shareholders of GMEA in exchange for all of the shares of GMEA.  As a confirmation of intent to merge, the Company advanced funds in the amount of $ 60,000 to GMEA.  The Company was unable to reach a final agreement with GMEA and on January 31, 2014 terminated the agreement and provided notice demanding repayment of the note receivable.  The Company recognized an impairment loss of $ 60,000 with respect to the note receivable in the current fiscal year however intends to continue to pursue the collection of this amount in full.

12.   Subsequent events

In accordance with ASC 855, the Company’s management has evaluated the subsequent events through the date the financial statements were issued and has found no subsequent events to report.
 
 
40

 
 

There were no disagreements with our accountants related to accounting principles or practices, financial statement disclosure, internal controls or auditing scope or procedure during the two fiscal years and subsequent interim periods.


Management’s Report on Disclosure Controls and Procedures

Our management, with the participation of our chief executive officer and chief financial officer (our principal executive officer, principal financial officer and principal accounting officer), evaluated the effectiveness of our disclosure controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) promulgated under the Securities Exchange Act of 1934, as amended (the “Exchange Act”)) as of the end of the period covered by this report. Based on this evaluation, our chief executive officer and chief financial officer (our principal executive officer, principal financial officer and principal accounting officer) concluded that, as of the end of such period, our disclosure controls and procedures were not effective to ensure that information that is required to be disclosed by us in the reports we file or submit under the Exchange Act is (i) recorded, processed, summarized and reported, within the time periods specified in the SEC’s rules and forms and (ii) accumulated and communicated to our management, including our chief executive officer and chief financial officer (our principal executive officer, principal financial officer and principal accounting officer), as appropriate, to allow timely decisions regarding required disclosure. The reasons for this finding were the weaknesses in our internal control over financial reporting enumerated below.

Management’s Annual Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting. Our chief executive officer and chief financial officer (our principal executive officer, principal financial officer and principal accounting officer) conducted an evaluation of the effectiveness of our internal control over financial reporting as of April 30, 2014 using the criteria established in Internal Control—Integrated Framework issued by the Committee of Sponsoring Organizations of the Treadway Commission (COSO).

A material weakness is a deficiency, or combination of deficiencies, in internal control over financial reporting, such that there is a reasonable possibility that a material misstatement of our company’s annual or interim financial statements will not be prevented or detected on a timely basis. In its assessment of the effectiveness of internal control over financial reporting as of April 30, 2014, our company determined that there were control deficiencies that constituted material weaknesses, as described below:
 
There is a lack of accounting personnel with the requisite knowledge of Generally Accepted Accounting Principles in the US (“GAAP”) and the financial reporting requirements of the Securities and Exchange Commission;
There are insufficient written policies and procedures to ensure the correct application of accounting and financial reporting with respect to the current requirements of GAAP and SEC disclosure requirements; and
There is a lack of segregation of duties, in that we only had one person performing all accounting-related duties.
 
Notwithstanding the existence of these material weaknesses in our internal control over financial reporting, our management believes that the consolidated financial statements included in its reports fairly present in all material respects our company’s financial condition, results of operations and cash flows for the periods presented.
 
 
41

 

Our company will continue its assessment on a quarterly basis and as soon as we start operations we plan to hire personnel and resources to address these material weaknesses. We believe these issues can be solved with hiring in-house accounting support and plan to do so as soon as we have funds available for this. There has been no change in its internal control over financial reporting that occurred during our company’s most recent fiscal quarter that has materially affected, or is reasonably likely to materially affect, our company’s internal control over financial reporting.

Sadler, Gibb & Associates, LLC, our independent registered public auditor, was not required to and has not issued an attestation report concerning the effectiveness of our internal control over financial reporting as of April 30, 2014 pursuant to temporary rules of the Securities and Exchange Commission that permit our company to provide only management’s report in this annual report.

Changes in Internal Controls

During the period ended April 30, 2014, 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.


None.

PART III


All directors of our company hold office until the next annual meeting of the security holders or until their successors have been elected and qualified. The officers of our company are appointed by our board of directors and hold office until their death, resignation or removal from office. Our directors and executive officers, their ages, positions held, and duration as such, are as follows:
 
Name
 
Position Held
with the Company
 
Age
 
Date First
Elected or
Appointed
Hassan Salari
 
President, Chief Executive Officer,
Chief Financial Officer,
Treasurer, Secretary and Director
 
60
 
March 16, 2010
             
Bin Huang
 
Director
 
56
 
January 15, 2013
             
Dominique F. Borrelly
 
Director
 
54
 
January 18, 2013
 
Business Experience

The following is a brief account of the education and business experience during at least the past five years of each director, executive officer and key employee of our company, indicating the person’s principal occupation during that period, and the name and principal business of the organization in which such occupation and employment were carried out.
 
 
42

 

Hassan Salari – President, Chief Executive Officer, Chief Financial Officer, Treasurer, Secretary and Director

Hassan Salari has acted as a director of our company on March 16, 2010. He was subsequently appointed as president and chief executive officer on July 26, 2012 and as chief financial officer, treasurer and secretary on January 15, 2013. Hassan Salari is an entrepreneur and scientist. Dr. Salari has over 25 years’ experience in the biotechnology field, specializing in highly sophisticated research and drug development programs and business development.

Dr. Salari was a director of Pacgen Biopharmaceuticals Inc., a public company with its shares listed on the TSX Venture Exchange. From 1998 to 2007, Dr. Salari was chief executive officer and president of Chemokine Therapeutics Corp., a company established as a focused biotechnology company to develop chemokine-based therapeutic products for human diseases. Chemokine was a public company listed on OTC Bulletin Board and the TSX. From 1992 to 1998, Dr. Salari was a chief executive officer and president of Inflazyme Pharmaceuticals Ltd., a company founded by Dr. Salari. Dr. Salari maintained the responsibility of managing the company’s business affairs as well as its drug discovery and development programs (focused on allergies and asthma). While there, he negotiated and closed several licensing deals with biotechnology and pharmaceutical companies.

We appointed Dr. Salari as president, chief executive officer, chief financial officer, treasurer, secretary and as a member of our company’s board of directors because of his experience with biotechnology and pharmaceutical companies.

Bin Huang – Director

Bin Huang was appointed as a director of our company on January 15, 2013. Bin Huang is a seasoned life-sciences executive with broad experiences in general management, business development, financing and corporate governance, in Canada and Asia.

From 2007 to December 2012, Mrs. Huang acted as president and chief executive officer of WEX Pharmaceuticals Inc. WEX is a subsidiary of CK Life Sciences Int’l., (Holdings) Inc. (“CKLS”), listed on The Stock Exchange of Hong Kong Limited (stock code: 0775). Mrs. Huang assisted WEX with completing a Canadian phase 3 trial of tetrodotoxin for cancer pain, conducted a US phase 2 trial for chemotherapy-induced neuropathic pain, and completing a $35M financing in 2010. Mrs. Huang left WEX to join our company.

Mrs. Huang earned a Bachelors’ of Science Degree in Genetics from Wuhan University, China in 1978, a PhD in Cell Biology from University of East Anglia, England in 1983 and a Masters of Business Administration Degree in 1994.

We appointed Bin Huang as a member of our company’s board of directors because of her ability to raise capital and her knowledge of the pharmaceutical industry.

Dominique F. Borrelly – Director

Dominique F. Borrelly was appointed as a director of our company on January 18, 2013. Mr. Borrelly has over 25 years of experience in sales and marketing and corporate/business development in the pharmaceutical (at Ciba-Geigy/Novartis & Sanofi-Aventis) and biotech sectors. Since 2000, he has been the president of Camargue Consulting, in Vancouver, British Columbia, Canada, wherein he specializes in assisting start-up companies - from development, evaluation and in-licensing of new technologies, through initiation of strategic alliances with multi-national corporate partners, to leading sales and marketing teams on commercial stage products.

In 2009, he was a healthcare network relationship specialist with Sanofi-Aventis Canada, Inc. in Vancouver, British Columbia, Canada, wherein he developed and managed strategic partnerships with integrated healthcare networks, teaching hospitals and regional health authorities in British Columbia.
 
 
43

 

From 2010 to 2012, Mr. Borrelly was a manager of the business development and acquisition division at Sanofi-Aventis Canada, Inc. in Montreal, Quebec, Canada, wherein he maintained the business development and acquisition activities in healthcare services/e-health solutions, oncology and diabetes (therapeutics and diagnostics) and medical devices.

We appointed Dominique F. Borrelly as a member of our company’s board of directors because of extensive marketing and business development experience the pharmaceutical and biotech sectors.

Family Relationships

There are no family relationships between any of the directors and officers.

Conflicts of Interest

Our directors are not obligated to commit their full time and attention to our business and, accordingly, they may encounter a conflict of interest in allocating their time between our operations and those of other businesses. In the course of their other business activities, they may become aware of investment and business opportunities which may be appropriate for presentation to us as well as other entities to which they owe a fiduciary duty. As a result, they may have conflicts of interest in determining to which entity a particular business opportunity should be presented. They may also in the future become affiliated with entities that are engaged in business activities similar to those we intend to conduct.

In general, officers and directors of a corporation are required to present business opportunities to the corporation if:
 
the corporation could financially undertake the opportunity;
the opportunity is within the corporation’s line of business; and
it would be unfair to the corporation and its stockholders not to bring the opportunity to the attention of the corporation.
 
We have adopted a code of ethics that obligates our directors, officers and employees to disclose potential conflicts of interest and prohibits those persons from engaging in such transactions without our consent.

Involvement in Certain Legal Proceedings

To the best of our knowledge, none of our directors or executive officers has, during the past ten years:
 
1.
been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offences);
   
2.
had any bankruptcy petition filed by or against the business or property of the person, or of any partnership, corporation or business association of which he was a general partner or executive officer, either at the time of the bankruptcy filing or within two years prior to that time;
   
3.
been subject to any order, judgment, or decree, not subsequently reversed, suspended or vacated, of any court of competent jurisdiction or federal or state authority, permanently or temporarily enjoining, barring, suspending or otherwise limiting, his involvement in any type of business, securities, futures, commodities, investment, banking, savings and loan, or insurance activities, or to be associated with persons engaged in any such activity;
   
4.
been found by a court of competent jurisdiction in a civil action or by the SEC or the Commodity Futures Trading Commission to have violated a federal or state securities or commodities law, and the judgment has not been reversed, suspended, or vacated;
 
 
44

 
 
5.
been the subject of, or a party to, any federal or state judicial or administrative order, judgment, decree, or finding, not subsequently reversed, suspended or vacated (not including any settlement of a civil proceeding among private litigants), relating to an alleged violation of any federal or state securities or commodities law or regulation, any law or regulation respecting financial institutions or insurance companies including, but not limited to, a temporary or permanent injunction, order of disgorgement or restitution, civil money penalty or temporary or permanent cease-and-desist order, or removal or prohibition order, or any law or regulation prohibiting mail or wire fraud or fraud in connection with any business entity; or
   
6.
been the subject of, or a party to, any sanction or order, not subsequently reversed, suspended or vacated, of any self-regulatory organization (as defined in Section 3(a)(26) of the Exchange Act (15 U.S.C. 78c(a)(26))), any registered entity (as defined in Section 1(a)(29) of the Commodity Exchange Act (7 U.S.C. 1(a)(29))), or any equivalent exchange, association, entity or organization that has disciplinary authority over its members or persons associated with a member.
 
Compliance with Section 16(a) of the Securities Exchange Act of 1934

Section 16(a) of the Securities Exchange Act of 1934 requires our executive officers and directors and persons who own more than 10% of our common stock to file with the Securities and Exchange Commission initial statements of beneficial ownership, reports of changes in ownership and annual reports concerning their ownership of our common stock and other equity securities, on Forms 3, 4 and 5 respectively. Executive officers, directors and greater than 10% shareholders are required by the SEC regulations to furnish us with copies of all Section 16(a) reports that they file.

Based solely on the reports received by our company and on written representations from certain reporting persons, we believe that the directors, executive officers and persons who beneficially own more than 10% of our company’s common stock during the fiscal year ended April 30, 2014 have been in compliance with Section 16(a).

Code of Ethics

We have adopted a Code of Business Conduct and Ethics that applies to, among other persons, members of our board of directors, our company's officers including our president, chief executive officer and chief financial officer, employees, consultants and advisors. As adopted, our Code of Business Conduct and Ethics sets forth written standards that are designed to deter wrongdoing and to promote:

1.  
honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
 
2.  
full, fair, accurate, timely, and understandable disclosure in reports and documents that we file with, or submit to, the Securities and Exchange Commission and in other public communications made by us;
 
3.  
compliance with applicable governmental laws, rules and regulations;
 
4.  
the prompt internal reporting of violations of the Code of Business Conduct and Ethics to an appropriate person or persons identified in the Code of Business Conduct and Ethics; and
 
5.  
accountability for adherence to the Code of Business Conduct and Ethics.
 
Our Code of Business Conduct and Ethics requires, among other things, that all of our company's senior officers commit to timely, accurate and consistent disclosure of information; that they maintain confidential information; and that they act with honesty and integrity.
 
 
45

 
 
In addition, our Code of Business Conduct and Ethics emphasizes that all employees, and particularly senior officers, have a responsibility for maintaining financial integrity within our company, consistent with generally accepted accounting principles, and federal and state securities laws. Any senior officer who becomes aware of any incidents involving financial or accounting manipulation or other irregularities, whether by witnessing the incident or being told of it, must report it to our company. Any failure to report such inappropriate or irregular conduct of others is to be treated as a severe disciplinary matter. It is against our company policy to retaliate against any individual who reports in good faith the violation or potential violation of our company's Code of Business Conduct and Ethics by another.

Our Code of Business Conduct and Ethics was filed with the Securities and Exchange Commission as Exhibit 14.1 to our Annual Report on Form 10-K for our year ended April 30, 2013. We will provide a copy of the Code of Business Conduct and Ethics to any person without charge, upon request. Requests can be sent to: Eternity Healthcare Inc., 8755 Ash Street, Suite 1, Vancouver, BC V6P 6T3.

Board and Committee Meetings

All proceedings of our board of directors were conducted by resolutions consented to in writing by all the directors and filed with the minutes of the proceedings of the directors. Such resolutions consented to in writing by the directors entitled to vote on that resolution at a meeting of the directors are, according to the corporate laws of the state of Nevada and the bylaws of our company, as valid and effective as if they had been passed at a meeting of the directors duly called and held.

Our audit committee consists of our entire board of directors.

Our company currently does not have nominating, compensation committees or committees performing similar functions nor does our company have a written nominating, compensation or audit committee charter. Our board of directors does not believe that it is necessary to have such committees because it believes that the functions of such committees can be adequately performed by our directors.

Our company does not have any defined policy or procedure requirements for shareholders to submit recommendations or nominations for directors. The directors believe that, given the early stage of our development, a specific nominating policy would be premature and of little assistance until our business operations develop to a more advanced level. Our company does not currently have any specific or minimum criteria for the election of nominees to the board of directors and we do not have any specific process or procedure for evaluating such nominees. Our directors assess all candidates, whether submitted by management or shareholders, and make recommendations for election or appointment.

A shareholder who wishes to communicate with our board of directors may do so by directing a written request addressed to our president, at the address appearing on the first page of this annual report.

Audit Committee and Audit Committee Financial Expert

Our board of directors has determined that none of the members of our audit committee qualifies as an “audit committee financial expert” as defined in Item 407(d)(5)(ii) of Regulation S-K, and is “independent” as the term is used in Item 7(d)(3)(iv) of Schedule 14A under the Securities Exchange Act of 1934, as amended.
 
 
46

 

We believe that the members of our board of directors are collectively capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. We believe that retaining an independent director who would qualify as an "audit committee financial expert" would be overly costly and burdensome and is not warranted in our circumstances given the early stages of our development and the fact that we have not generated any material revenues to date. In addition, we currently do not have nominating, compensation or audit committees or committees performing similar functions nor do we have a written nominating, compensation or audit committee charter. Our board of directors does not believe that it is necessary to have such committees because it believes the functions of such committees can be adequately performed by our board of directors.


The particulars of the compensation paid to the following persons:
 
(a)
our principal executive officer;
   
(b)
each of our two most highly compensated executive officers who were serving as executive officers at the end of the years ended April 30, 2014 and 2013; and
   
(c)
up to two additional individuals for whom disclosure would have been provided under (b) but for the fact that the individual was not serving as our executive officer at the end of the years ended April 30, 2014 and 2013,
 
who we will collectively refer to as the named executive officers of our company, are set out in the following summary compensation table, except that no disclosure is provided for any named executive officer, other than our principal executive officers, whose total compensation did not exceed $100,000 for the respective fiscal year:
 
SUMMARY COMPENSATION TABLE
Name
and Principal
Position
 
Year
 
Salary
($)
 
Bonus
($)
 
Stock
Awards
($)
 
Option
Awards
($)
 
Non-Equity
Incentive Plan
Compensation
($)
 
Change in
Pension
Value and
Nonqualified
Deferred
Compensation
Earnings
($)
 
All
Other
Compensation
($)
 
Total
($)
Hassan Salari(1)
President, Chief Executive Officer, Chief Financial Officer, Treasurer, Secretary and Director
 
2014
2013
 
120,000
40,000
 
Nil
Nil
 
Nil
Nil
 
Nil
Nil
 
Nil
Nil
 
Nil
Nil
 
Nil
Nil
 
250,000
40,000
                                     
Francine Salari(2)
Former President, Chief Executive Officer, Chief Financial Officer, Treasurer, Secretary and Director
 
2014
2013
 
N/A
Nil
 
N/A
Nil
 
N/A
Nil
 
N/A
Nil
 
N/A
Nil
 
N/A
Nil
 
N/A
Nil
 
N/A
Nil

(1)
Dr. Hassan Salari was appointed as a director of our company on March 16, 2010 and as president and chief executive officer on July 26, 2012 and as chief financial officer, treasurer and secretary on January 15, 2013.
   
(2)
Mrs. Francine Salari resigned as appointed president and chief executive officer of our company on July 26, 2012 and as chief financial officer, treasurer, secretary and director of our company on January 15, 2013.
 
Other than as set out below, there are no arrangements or plans in which we provide pension, retirement or similar benefits for directors or executive officers. Our directors and executive officers may receive share options at the discretion of our board of directors in the future. We do not have any material bonus or profit sharing plans pursuant to which cash or non-cash compensation is or may be paid to our directors or executive officers, except that share options may be granted at the discretion of our board of directors.
 
 
47

 

Stock Option Plan

On January 15, 2013, our directors approved the adoption of the 2013 Stock Option Plan which permits our company to issue up to 6,300,000 shares of our common stock to directors, officers, employees and consultants of our company upon the exercise of stock options granted under the 2013 Stock Option Plan.

2014 Grants of Plan-Based Awards

During our fiscal year ended April 30, 2014 there were no grants of plan based awards to our named officers or directors.

Outstanding Equity Awards at Fiscal Year End

The particulars of unexercised options, stock that have not vested and equity incentive plan awards for our named executive officers are set out in the following table:
 
   
Options Awards
 
Stock Awards
 
Name
 
Number of
Securities
Underlying
Unexercised
Options
(#)
Exercisable
   
Number of
Securities
Underlying
Unexercised
Options
(#)
Unexercisable
   
Equity
Incentive
Plan Awards:
Number of
Securities
Underlying
Unexercised
Unearned
Options
(#)
   
Option
Exercise
Price
($)
 
Option
Expiration Date
 
Number of
<