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ETAH > SEC Filings for ETAH > Form 10-K on 28-Jul-2014All Recent SEC Filings

Show all filings for ETERNITY HEALTHCARE INC.

Form 10-K for ETERNITY HEALTHCARE INC.


28-Jul-2014

Annual Report


Item 7. Management's Discussion and Analysis of Financial Condition and
Results of Operations

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.


Liquidity and Financial Condition

Working Deficit
                          At             At
                      April 30,      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      Year Ended
                                                 April 30,       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                Estimated     Estimated
            Completion               Completion    Expenses
               Date                     Date          ($)
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.


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.


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.


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.

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