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ETAH > SEC Filings for ETAH > Form 10-Q on 13-Mar-2013All Recent SEC Filings

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Quarterly Report

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

Forward-Looking Statements

This quarterly report on Form 10-Q and other reports filed by our company from time to time with the United States Securities and Exchange Commission (the "SEC") contain or may contain forward-looking statements (collectively the "Filings") and information that are based upon beliefs of, and information currently available to, our company's management as well as estimates and assumptions made our company's management. Readers are cautioned not to place undue reliance on these forward-looking statements, which are only predictions and speak only as of the date hereof. When used in the filings, the words "anticipate," "believe," "estimate," "expect," "future," "intend," "plan," or the negative of these terms and similar expressions as they relate to our company or our company's management identify forward-looking statements. Such statements reflect the current view of our company with respect to future events and are subject to risks, uncertainties, assumptions, and other factors, including the risks contained in the "Risk Factors" section of our company's Annual Report on Form 10-K for the fiscal year ended April 30, 2012, filed with the SEC, relating to our company's industry, our company's operations and plan of operations, and any businesses that our company may acquire. Should one or more of these risks or uncertainties materialize, or should the underlying assumptions prove incorrect, actual results may differ significantly from those anticipated, believed, estimated, expected, intended, or planned.

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

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

In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars unless otherwise state. All references to "common stock" refer to the common shares in our capital stock.

As used in this quarterly report, the terms, "we", "us", "our" and "our company" refer to Eternity Healthcare Inc. and our wholly owned subsidiary Eternity Healthcare Inc., a British Columbia corporation, unless the context clearly requires or states otherwise.

General Overview

We were incorporated in the State of Nevada on October 24, 2007 as an online services company under the name Kid's Book Writer, Inc. On September 23, 2010, we changed our name to Eternity Healthcare Inc., and we effected a reverse split of our issued and outstanding common stock on a 10 old shares for 1 new share basis. Our business offices are located at 8755 Ash Street, Suite 1, Vancouver, BC V6P 6T3. Our telephone number is (855) 324-1110.

From inception to December 13, 2010, we planned to develop a website for children to create their own books. We intended to offer a pure online service designed to offer children and parents an ability to create their own book. Customers were to be able to log on to the service, pick a theme (i.e. birthday, family outing, vacation, special occasion such as Christmas / Easter, sporting event, summer camp, etc.), and the software would offer several options, including various book templates, backgrounds, page sizes, the ability to write your own story or have some guidance, etc. We were unable to find sufficient financing for this business model.

On December 10, 2010 we entered into and completed a share exchange agreement with Eternity Healthcare Inc, a British Columbia corporation, wherein we acquired Eternity BC as our wholly owned subsidiary and abandoned our former business to focus on the operations of Eternity BC.

Our Current Business

We are a medical device company that, subject to government approval, plans to distribute Needle-free Injection system throughout North America. Since we have not yet been granted such approvals, we cannot currently offer any products. The products which we hope to distribute differ from other current offerings by allowing ordinary people who are afraid of needles ("needle phobia") to use a non-needle injection system. Also, our needle-free injection device will allow people to inject medicines such as insulin, anesthetics, hormones and many more.

Further on June 25, 2012 we entered into a marketing agreement to sell a device which does not require a needle for injection of medicine to the body from Mike Medical Company and its affiliate MK Global both of South Korea. We have the exclusive marketing rights for this device throughout North America.

Over the next 12 months, we plan to obtain regulatory approvals for the products licensed from the above companies and enter into distribution agreements with various retailers. We plan to expand our website to include the option to purchase our products online. We anticipate producing promotional materials and advertising in medical journals as well as consumer magazines. In order to carry out these plans, we anticipate hiring a marketing manager, a quality control manager and 3 people for packaging and shipping. We will require approximately $500,000 in order to achieve these objectives and there can be no assurance that we will be able to raise the required funds.

Results of Operations for the Three and Nine Months Ended January 31, 2013 and 2012

The following summary of our results of operations should be read in conjunction with our unaudited interim consolidated financial statements for the quarter ended January 31, 2013 which are included herein.

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

Our operating results for the three month periods ended January 31, 2013 and 2012 and the changes between those periods for the respective items are summarized as follows:

                                                                     Change Between
                                                                      Three Month
                        Three Month           Three Month            Periods Ended
                       Period Ended          Period Ended           January 31, 2012
                     January 31, 2013      January 31, 2012       and January 31, 2013
Sales                $           3,039     $             Nil     $                3,039
Cost of goods sold   $           1,096     $             Nil     $                1,096
Operating expenses   $          59,150     $          34,772     $               24,378
Net loss             $         (57,207 )   $         (34,772 )   $               22,435

Our expenses increased during the three month period ended January 31, 2013 compared to the same period in 2012 primarily as a result of increased general and administrative expenses and salaries.

                                                                      Change Between
                                                                        Nine Month
                         Nine Month            Nine Month             Periods Ended
                        Period Ended          Period Ended           January 31, 2012
                      January 31, 2013      January 31, 2012       and January 31, 2013
Sales                $            3,039     $             Nil     $                3,039
Cost of goods sold   $            1,096     $             Nil     $                1,096
Operating expenses   $          146,767     $          83,803     $               62,964
Net loss             $         (144,824 )   $         (83,803 )   $               61,021

Our expenses increased during the nine month period ended January 31, 2013 compared to the same period in 2012 primarily as a result of increased general and administrative expenses, professional fees and salaries.


We have earned revenues of $3,039 from December 10, 2009 (date of inception) through January 31, 2013. We have incurred $462,403 in expenses from December 10, 2009 (date of inception) through January 31, 2013.


Our expenses for the three and nine months ended January 31, 2013 and 2012 and
for the period from December 10, 2009 (inception) through January 31, 2013 are
outlined in the table below:

                                                                                                                 For the
                                                                                                               Period from
                                                                                                              December 10,
                                              Three Month                                                      (Inception)
                          Three Month         Period Ended          Nine Month             Nine Month            through
                          Period Ended         January 31,         Period Ended           Period Ended         January 31,
                        January 31, 2013          2012           January 31, 2013       January 31, 2012          2013
                              ($)                  ($)                 ($)                    ($)                  ($)
Depreciation           $               61     $          57     $              183     $              183     $         506
General and
administrative         $           20,438     $       5,494     $           64,925     $           15,966     $     105,185
Professional fees      $           27,579     $      29,221     $           70,587     $           67,654     $     236,280
Research and
development                          $Nil              $Nil                   $Nil                   $Nil     $     109,360
Salaries               $           11,072              $Nil     $           11,072                   $Nil     $      11,072

Professional Fees

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

Liquidity and Financial Condition

Working Capital

                                  At                    At
                           January 31, 2013       April 31, 2012
                                 ($)                   ($)
Current Assets            $          285,849     $        237,756
Current Liabilities       $          770,380     $        585,808
Working Capital Deficit   $         (484,531 )   $       (348,052 )

Cash Flows

                                                                                          For the Period
                                                 Nine Month                             from December 10,
                                                Period Ended         Nine Month          2009 (Inception)
                                                January 31,         Period Ended             through
                                                    2013          January 31, 2012       January 31, 2013
                                                    ($)                  ($)                   ($)
Cash Flows used in Operating Activities             (156,911 )              (89,360 )             (471,067 )
Cash Flows used in Investing Activities                  Nil                    Nil                   (727 )
Cash Flows provided by Financing Activities          197,682                132,312                754,557
Effect of Exchange Rate Changes on Cash               (2,648 )                1,812                (18,268 )
Net Increase (Decrease) in Cash During Period         38,123                 44,764                264,495

As of January 31, 2013, our total assets were $286,070 and our total liabilities were $770,380 and we had a working capital deficit of $484,531. Our unaudited financial statements report a net loss of $144,824 for the nine months ended January 31, 2013 compared to a net loss of $83,803 for the same period in 2012 and a net loss of $460,460 for the period from December 10, 2009 (inception) to January 31, 2013.

Plan of Operation

The following discussion of our financial condition and results of operations should be read together with our unaudited financial statements and the notes thereto included elsewhere in this filing. Our unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States. This discussion contains forward-looking statements that reflect our plans, estimates and beliefs. Our actual results could differ materially from those anticipated in these forward-looking statements.

Anticipated Cash Requirements

We estimate that our expenses over the next 12 months will be approximately $500,000 as described in the table below. These estimates may change significantly depending on the nature of our future business activities and our ability to raise capital from shareholders or other sources.

                                         Estimated       Estimated Expenses
Description                           Completion Date           ($)
Legal and accounting fees                12 months                   100,000
Marketing and advertising                12 months                    50,000
Management and operating costs           12 months                   100,000
Salaries and consulting fees             12 months                   200,000
Fixed asset purchases                    12 months                    30,000
General and administrative expenses      12 months                    20,000
Total                                                                500,000

We intend to meet our cash requirements for the next 12 months through a combination of debt financing and equity financing by way of private placements. We currently do not have any arrangements in place to complete any private placement financings and there is no assurance that we will be successful in completing any such financings on terms that will be acceptable to us.

Going Concern

The interim consolidated financial statements accompanying this report have been prepared on a going concern basis, which implies that our company will continue to realize its assets and discharge its liabilities and commitments in the normal course of business. Our company has not generated revenues since inception and has never paid any dividends and is unlikely to pay dividends or generate earnings in the immediate or foreseeable future. The continuation of our company as a going concern is dependent upon the continued financial support from our shareholders, the ability of our company to obtain necessary equity financing to achieve our operating objectives, and the attainment of profitable operations. As of January 31, 2013, our company has accumulated losses of $460,460 since inception. We do not have sufficient working capital to enable us to carry out our stated plan of operation for the next twelve months. These interim consolidated financial statements do not include any adjustments to the recoverability and classification of recorded asset amounts and classification of liabilities that might be necessary should our company be unable to continue as a going concern.

Our interim consolidated financial statements contain additional note disclosures describing the circumstances related to the uncertainty of our ability to continue as a going concern.

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

Future Financings

We anticipate continuing to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to our existing stockholders. There is no assurance that we will achieve any additional sales of our equity securities or arrange for debt or other financing to fund our planned activities.

Off-Balance Sheet Arrangements

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

Critical Accounting Policies

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

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

Use of Estimates

The preparation of financial statements in conformity with U.S. GAAP requires management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenditures during the reporting period. Actual results could differ from these estimates.

Recent Accounting Pronouncements

Our company has evaluated recent accounting pronouncements and their adoption has not had or is not expected to have material impact on our company's financial position or statements.

Basis of Presentation

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

Principles of Consolidation

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

Cash and Cash Equivalents

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

Basic and Diluted Loss Per Share

The computation of basic earnings per share of common stock is based on the weighted average number of shares outstanding during the periods presented. The computation of fully diluted earnings per share includes common stock equivalents outstanding at the balance sheet date. Our company had no stock options and warrants that would have been included in the fully diluted earnings per share as of January 31, 2012 and 2011, respectively.

Foreign Currency Translation

Our company's functional currency is the Canadian dollar and reporting currency is the U.S. dollar. All transactions initiated in other currencies are translated into the reporting currency in accordance with ASC 830, "Foreign Currency Matters" as follows:

i) Assets and liabilities at the rate of exchange in effect at the balance sheet date, and

ii) Revenue and expense items at rate exchange at the dates on which those elements are recognized.

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