Attached files

file filename
EX-23.1 - CONSENT OF JAMES STAFFORD, INC. - ETERNITY HEALTHCARE INC.fs1a32011ex23i_eternity.htm


 
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 
FORM S-1/A
Amendment #3
 
Registration Statement under the Securities Act of 1933
 
 
ETERNITY HEALTHCARE INC.
 
  (Exact name of registrant as specified in its charter)  
 
Nevada
 
5700
 
75-3268426
(State or other jurisdiction of
incorporation or organization)
 
(Primary Standard Industrial Classification Code Number)
 
(I.R.S. Employer
Identification Number)
 
 
409 Granville Street, Suite 1023,
Vancouver, BC, Canada
604-324-4843
(Address, including zip code, and telephone number, including area code, of registrant’s principal executive offices)
 
Copy of communications to:
 
Michael J. Morrison
1495 Ridgeview Drive, Suite 220
Reno, Nevada, 89518
Telephone: (775) 827-6300 Facsimile: (775) 827-6311
 
Nevada Agency and Transfer Company
50 West Liberty Street, Suite 880
Reno, NV, 89501
775-322-0626
 
(Name, address, including zip code, and telephone number, including area code, of agent for service)
 
Approximate Date of Commencement of Proposed Sale to the Public:  As soon as practicable after this Registration Statement is declared effective.
 
If any of the securities being registered on this Form are to be offered on a delayed or continuous basis pursuant to Rule 415 under the Securities Act of 1933, please check the following box. þ
 
If this Form is filed to register additional securities for an offering pursuant to Rule 462(b) under the Securities Act, please check the following box and list the Securities Act Prospectus number of the earlier effective registration statement for the same offering. £
 
If this Form is a post-effective amendment filed pursuant to Rule 462(c) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering. £
 
If this Form is a post-effective amendment filed pursuant to Rule 462(d) under the Securities Act, check the following box and list the Securities Act registration statement number of the earlier effective registration statement for the same offering.  £
 
Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company.
 
Large accelerated filer oAccelerated filer  oNon-accelerated filer oSmaller reporting company þ

 
 
 

 

 
Title of Each Class of Securities to be Registered
 
Amount to be
Registered
   
Proposed
Maximum
Offering Price
per Security (1)
($)
   
Proposed Maximum Aggregate Offering Price (1)
($)
   
Amount of Registration Fee
($)
 
Shares of Common Stock, par value $0.001
    18,484,995       0.01       184,849.95     $ 21.46(2)  
 
(1)  
Estimated for purposes of calculating the registration fee in accordance with Rule 457 of the Securities Act of 1933 and the price at which the selling security holders will be offering their shares.
 
(2)  
Previously paid
 
The registrant hereby amends this registration statement on such date or dates as may be necessary to delay its effective date until the registrant shall file a further amendment which specifically states that this registration statement shall thereafter become effective in accordance with section 8(a) of the Securities Act of 1933 or until the registration statement shall become effective on such date as the Securities and Exchange Commission, acting pursuant to said section 8(a), may determine.

 
 
 

 

PROSPECTUS
 
ETERNITY HEALTHCARE INC.
 
18,484,995 Shares of Common Stock
 
The date of this Prospectus is  June 3,  2011.
 
Eternity Healthcare Inc. (“Eternity”, “we”, “us”, “our”) is registering 18,484,995 shares of common stock held by 26 selling security holders, including a total of 7,310,005 shares held by Francine and Hassan Salari, our directors and officer.
 
The selling security holders will sell at an initial price of $0.001 per share until a market for our common stock develops on the OTC Bulletin Board, and thereafter at prevailing market prices or privately negotiated prices. However, there can be no assurance that a market for our common stock will develop on the OTC Bulletin Board.  Our stock is currently quoted on the OTC Bulletin Board under the symbol “ETAH”; however, there is no trading in, or established market for, our stock.  The purchasers in this offering may be receiving an illiquid security.
 
We will not receive any proceeds from the sale of shares of our common stock by the selling security holders, who will receive aggregate net proceeds of $184,850 if all of the shares being registered are sold at the initial price.  We will incur all costs associated with this Prospectus.
 
An investment in our securities is speculative. See the section entitled "Risk Factors" beginning on Page 8 of this Prospectus.
 
Neither the Securities and Exchange Commission nor any state securities commission has approved or disapproved of these securities or passed upon the adequacy or accuracy of this Prospectus.  Any representation to the contrary is a criminal offense.
 
The information in this Prospectus is not complete and may be changed. The selling security holders may not sell these securities until the registration statement that includes this Registration Statement is declared effective by the Securities and Exchange Commission. This Prospectus shall not constitute an offer to sell or the solicitation of an offer to buy these securities, nor shall the selling security holders sell any of these securities in any state where such an offer or solicitation would be unlawful before registration or qualification under such state's securities laws.
 
You should rely only on the information contained in this Prospectus. We have not authorized anyone to provide you with information different from that contained in this Prospectus. The selling shareholders are offering to sell, and seeking offers to buy, their common shares, only in jurisdictions where offers and sales are permitted. The information contained in this Prospectus is accurate only as of the date of this Prospectus, regardless of the time of delivery of this prospectus or of any sale of our common shares.

 
 
 

 

Table of Contents
 
   
Prospectus Summary
5
Risk Factors
8
Use of Proceeds
14
Determination of Offering Price
14
Dilution
15
Selling Security Holders
15
Plan of Distribution
17
Description of Securities to be Registered
21
Legal Matters
21
Interests of Named Experts and Counsel
22
Description of Business
22
Description of Property
31
Legal Proceedings
32
Market for Common Equity and Related Stockholder Matters
32
Financial Statements
35
Management's Discussion and Analysis of Financial Position and Results of Operations
36
Changes In and Disagreements with Accountants on Accounting and Financial Disclosure
41
Directors and Executive Officers
41
Executive Compensation
46
Security Ownership of Certain Beneficial Owners and Management
47
Certain Relationships and Related Transactions
48
Disclosure of Commission Position on Indemnification of Securities Act Liabilities
48

 
 
 

 

Prospectus Summary
 
This Prospectus, and any supplement to this Prospectus include “forward-looking statements”. To the extent that the information presented in this Prospectus discusses financial projections, information or expectations about our business plans, results of operations, products or markets, or otherwise makes statements about future events, such statements are forward-looking. Such forward-looking statements can be identified by the use of words such as “intends”, “anticipates”, “believes”, “estimates”, “projects”, “forecasts”, “expects”, “plans” and “proposes”.  Although we believe that the expectations reflected in these forward-looking statements are based on reasonable assumptions, there are a number of risks and uncertainties that could cause actual results to differ materially from such forward-looking statements.  These include, among others, the cautionary statements in the “Risk Factors” section beginning on page 8 of this Prospectus and the “Management's Discussion and Analysis of Financial Position and Results of Operations” section elsewhere in this Prospectus.
 
Our Business
 
We are a medical device company that, subject to government approval, plans to distribute in-home medical diagnostic kits throughout Canada. Our products differ from other current offerings by allowing ordinary people to perform diagnostic testing on themselves with a high degree of accuracy and without the need for the use of professionals such as nurses and technicians. Our ability to offer any test kits to potential retail customers is dependent on obtaining the required regulatory approvals.  Since we have not yet been granted such approvals, we cannot currently offer any products.
 
On March 11, 2010 we entered into a License Agreement with Valimedix Limited, a United Kingdom corporation (“Valimedix”), pursuant to which we were granted the right to market and distribute 15 unique self diagnostic products developed by Valimedix on an exclusive basis in Canada, and a on a non-exclusive basis in the United States.  We also have the right to market the products with Valimedix SELFCheck trademark.  As consideration, we paid Valimedix a onetime fee of $10,000 and agreed to a three percent royalty on net revenues from the sales of Valimedix products.  The term of the agreement is for 20 years and may be renewed for an additional 10 years if we meet specified sales targets. During the 20 year term of this agreement we are required to purchase a minimum of $1,000,000 worth of products from Valimedix. A full copy of this agreement is filed as Exhibit 10.1 to this Registration Statement on Form S-1.
 
We have no operating history, no customers and no revenues.  We have only recently begun operations with completion of a reverse merger with Eternity Healthcare Inc., a British Columbia company, and now our wholly owned subsidiary.  Our cash position, as of March 29, 2011, was approximately $34,000.  Given our anticipated expenses of approximately $40,000 a month, our present capital is not sufficient to fund our operations for one month.
 
We are not a blank check company.  Rule 419 of Regulation C under the Securities Act of 1933 defines a “blank check company” as a (i) development stage company that has no specific business plan or purpose or has indicated that its business plan is to engage in a merger or acquisition with an unidentified company or companies, or other entity or person, and (ii) is issuing a penny stock.  Accordingly, we do not believe that our Company may be classified as a “blank check company” because we intend to engage in a specific business plan and do not intend to engage in any merger or acquisition with an unidentified company or other entity.
 
Over the next 12 months, we plan to obtain regulatory approvals for the products mentioned in this Prospectus 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.  However, as provided in more detail elsewhere in this Prospectus, 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.
 
Our ability to offer the currently available test kits to potential retail customers is dependent on obtaining the required regulatory approvals. We believe we will need approximately $100,000 to undergo the regulatory review process for at least some of our products.  Our ability to offer the estimated additional 15 kits in 2011 and 2012 is entirely dependent on our ability to raise the required $500,000 in order to secure government approval and develop a distribution network for our products.  However, even if we are able to raise the required funds, there can be no assurance that we will be able to government approval and develop a distribution network for our products. Once we secure the required funds and are able to obtain governmental approval for our currently available products, and develop a distribution network, we believe we will be able to enter into additional distribution agreements with identified European developers of test kits.

 
5

 
 
The Offering
 
The 18,484,995 shares of our common stock being registered by this Prospectus represent approximately 29% of our issued and outstanding common stock as of June 3, 2011.
 
Securities Offered:
18,484,995 shares of common stock offered by 26 selling security holders, including a total of 7,310,005 shares held by Francine and Hassan Salari, our directors and officer.
   
Initial Offering Price:
The $0.01 per share initial offering price of our common stock was determined by our Board of Directors based on several factors, including our capital structure and the most recent issuance price of 3,000,000 shares of our common stock at $0.01 per share on June 14, 2010. The selling security holders will sell at an initial price of $0.01 per share until a market develops for our common stock on the OTC Bulletin Board and thereafter at prevailing market prices or privately negotiated prices.  However, there can be no assurance that a market for our common stock will ever develop on the OTC Bulletin Board.
   
Minimum Number of Securities to be Sold
in this Offering:
None
   
Securities Issued and to be Issued:
As of  June 3,  2011 we had 63,575,000 issued and outstanding shares of our common stock, and no issued and outstanding convertible securities.
 
All of the common stock to be registered under this Prospectus will be registered by existing stockholders. Even though our stock is quoted on the OTC Bulletin Board, there is no established market for the common stock being registered. The trading of securities on the OTC Bulletin Board is often sporadic and investors may have difficulty buying and selling or obtaining market quotations, which may have a depressive effect on the market price for our common stock.
   
Proceeds:
We will not receive any proceeds from the sale of our common stock by the selling security holders.
 
 
6

 
 
Financial Summary Information
 
All references to currency in this Prospectus are to U.S. Dollars, unless otherwise noted.
 
The following table sets forth selected financial information, which should be read in conjunction with the information set forth in the "Management’s Discussion and Analysis of Financial Position and Results of Operations" section and the accompanying financial statements and related notes included elsewhere in this Prospectus.

Consolidated Statement of Expenses Data
 
   
Three month period ended January 31, 2011
(unaudited)
($)
   
Period from inception on
December 10, 2009 to January 31, 2011
(unaudited)
($)
 
Revenues
    -       -  
Expenses
    26,845       93,007  
Net Loss
    26,845       175,886  
Net Loss per share
    0.00       -  

Consolidated Balance Sheet Data
 
   
April 30, 2010
($)
   
January 31, 2011
(unaudited)
($)
 
Working Capital (Deficiency)
    (30,299 )     (118,561 )
Total Assets
    5,341       19,376  
Total Liabilities
    35,640       137,290  
 

 
7

 

Risk Factors
 
Please consider the following risk factors before deciding to invest in our common stock.
 
Any investment in our common stock involves a high degree of risk. You should consider carefully the risks and uncertainties described below, and all other information contained in this prospectus, before you decide whether to purchase our common stock. The occurrence of any of the following risks could harm our business. You may lose part or all of your investment due to any of these risks or uncertainties.
 
This prospectus also contains forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these forward-looking statements as a result of certain factors, including the risks we face as described below and elsewhere in this Prospectus.
 
Risks Related to Our Business
 
Our auditors have issued a going concern opinion.
 
As at January 31, 2011, we had a working capital deficit of $118,561, had not generated revenues and had accumulated losses of $175,886 since inception. Our auditors have issued a going concern opinion. We have not generated any revenues and no revenues are anticipated until we begin operations. Accordingly, there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital. Accordingly, we must raise cash from sources other than operations. Our only other source for cash at this time is investments by others in our company. We must raise cash to implement our project and begin our operations.
 
Investors may not be able to adequately evaluate our business due to our lack of an operating history, lack of revenues and no customers. We may not be successful in developing a market for our products and the value of your investment could decline.
 
We are a development stage company in a highly competitive industry. We have no operating history, no customers and no revenues. This makes it difficult to evaluate our future performance and prospects. Our prospects must be considered in light of the risks, expenses, delays and difficulties frequently encountered in establishing a new business in an emerging and evolving industry, including the following factors:
 
·  
our business model and strategy are still evolving and are continually being reviewed and revised;
 
·  
we may not be able to raise the capital required to develop our initial client base and reputation; and
 
·  
we may not be able to successfully develop our business.
 
There is no assurance our future operations will result in profitable revenues. If we cannot generate sufficient revenues to operate profitably, we may suspend or cease operations. We cannot be sure that we will be successful in meeting these challenges and addressing these risks and uncertainties. If we are unable to do so, our business will not be successful and the value of your investment in us will decline.

 
8

 

We require additional funding in the approximate amount of $500,000 to continue our operations over the next 12 months.  If we do not secure additional funding, we may not be able to develop our business and distribute our products, which will affect our ability to generate revenues and achieve profitability.
 
We anticipate that we will require approximately $500,000 over the next 12 months in order to develop our business. Our failure to raise such additional capital or generate the cash flows necessary to finance our business could force us to limit or cease our operations.  Our business plan contemplates that we will expand our distribution throughout Canada.  Accordingly, we will need to raise additional funds, and we may not be able to obtain additional debt or equity financing on favorable terms, if at all. If we raise additional equity financing, our stockholders may experience significant dilution of their ownership interests, and the per-share value of our common stock could decline. If we engage in debt financing, we may be required to accept terms that restrict our ability to incur additional indebtedness and force us to maintain specified liquidity or other ratios.  If we need additional capital and cannot raise it on acceptable terms, we may not be able to, among other things, distribute and market our products, which would negatively impact our business and our ability to generate revenues and achieve profitability.
 
Our cash position, as of March 29, 2011, was approximately $34,000.  Given our anticipated expenses of approximately $40,000 a month, our present capital is not sufficient to fund our operations for one month.
 
The current status of our business depends on securing contracts with suppliers and orders with customers and ensuring products to sell.
 
To date, although we have entered into a distribution agreement with our supplier, we cannot guarantee that we will be able to sell specific products or maintain sufficient supply of specific products for our business.  What’s more, we have not yet sold products to any customer or developed a customer base.  If we are unable to maintain our relationship with our supplier, Valimedix, we may be forced to cease operations. Similarly, if we fail to develop a customer base we may be forced to cease operations.
 
We face competition from several companies with greater financial personnel and marketing resources than ours.

Once we obtain the necessary approvals for our products, we hope to compete with traditional providers of diagnostic services and equipment such as fully integrated pharmaceutical companies and biotechnology companies, universities and public and private medical institutions.   If we obtain the required approvals, we hope to compete with these entities by providing a similar type of service or product, in a home based diagnostic kit instead of at the location of a professional healthcare provider. Our commercial opportunities will be reduced or eliminated if our competitors develop and market products for any of the disease diagnosis that we target that:
 
·  
are more accurate;
·  
have fewer false positive;
·  
are more adaptable to various conditions;
·  
are easier to use; or
·  
are less expensive than the products we have available.
 
 
9

 
 
Even if we are successful in obtaining appropriate regulatory approvals necessary for commercializing them, our products may not compete effectively with other successful product candidates. Researchers are continually learning more about diseases, which may lead to new technologies for treatment. Our competitors may succeed in developing and marketing products that are either more effective than those that we distribute, making our products obsolete, or that are marketed before any product candidates we distribute are marketed.
 
If  we obtain the requisite regulatory approvals, the entities we hope to compete against include fully integrated pharmaceutical companies and biotechnology companies that currently have drug and target discovery efforts, as well as universities and public and private medical institutions. Many of the organizations we hope to compete with may have substantially greater capital resources, greater experience in product distribution and in obtaining regulatory approvals, and greater marketing capabilities than we do.
 
Delays in successfully obtaining government approval could jeopardize our ability to market out potential product candidates on a timely basis.
 
Our business prospects depend on our ability to obtain required regulatory approvals and to successfully commercialize our products. For new products we may need to show adequate evidence of accuracy and effectiveness in trials settings. These can be expensive and uncertain process, and delay or failure can occur at any stage of our trials testing. Any delay or significant inaccuracy of test could force us to abandon a product candidate altogether or to conduct additional clinical trials in order to obtain approval from the government regulatory body. These development efforts and testing trials are lengthy and expensive, and the outcome is uncertain. Completion of any new tests may commence, announcement of results of the trials and our ability to obtain regulatory approvals could be delayed for a variety of reasons, including:
 
·  
lower than anticipated recruitment of medical centers to participate in testing trials;
·  
serious false results related to the products;
·  
unsatisfactory results of any test trial; or
·  
different interpretations of our results with actual disease (specificity)
 
Depending on the outcome of the regulatory review process for our products, we believe that the cost of obtaining required regulatory approvals will be anywhere from $1,000 to $20,000 per product.  The large variation is due to the uncertainty whether the products’ current European approvals will be accepted in North America. Our development costs will increase if we have material delays in any clinical trial or if we need to perform more or larger clinical trials than planned. If the delays are significant, or if any of our product candidates do not prove to be safe or effective or do not receive required regulatory approvals, our financial results and the commercial prospects for our products will be harmed. Furthermore, our inability to complete our test trials in a timely manner could jeopardize our ability to obtain regulatory approval.
 
 
10

 
 
Medical device product regulatory approval is a long, expensive and uncertain process and the approval requirements for many products are still evolving.  If we are unable to successfully test product candidates in accordance with such requirements, our business will suffer.
 
We cannot predict whether we will obtain regulatory approval for any medical device candidates pursuant to regulatory provisions. We may fail to obtain approval from regulatory authorities, or experience delays in obtaining such approvals, due to varying interpretations of approval from other countries or their data or failure to satisfy current sensitivity, efficacy and quality control requirements.  Depending on the outcome of the regulatory review process for our products, we believe that the cost of obtaining required regulatory approvals will be anywhere from $1,000 to $20,000 per product.  The large variation is due to the uncertainty whether the products’ current European approvals will be accepted in North America.  Further, our business is subject to substantial risk because the current policies of regulators may change suddenly and unpredictably and in ways that could impair our ability to obtain regulatory approval of our products. We cannot guarantee that the regulatory authorities will approve our products on a timely basis or at all.
 
We may become subject to product liability claims, which could result in significant damages.
 
We face an inherent risk of exposure to product liability suits in connection with products tested in clinic or sold commercially. We may become subject to a product liability suit if any product we distribute causes emotional or physical damage, or if individuals subsequently become infected or otherwise suffer adverse effects from our products. If a product liability claim is brought against us, the cost of defending the claim could be significant and any adverse determination could result in liabilities against our company.
 
As our business assets and our director and officer are located in Canada; investors may be limited in their ability to enforce US civil actions against our assets or our director and officer. You may not be able to receive compensation for damages to the value of your investment caused by wrongful actions by our directors.
 
Our business assets are located in Canada and our directors and officer are residents of Canada. Consequently, it may be difficult for United States investors to affect service of process upon our assets or our directors or officers.  It may also be difficult to realize upon judgments of United States courts predicated upon civil liabilities under U.S. Federal Securities Laws. A judgment of a U.S. court predicated solely upon such civil liabilities may not be enforceable in Canada by a Canadian court if the U.S. court in which the judgment was obtained did not have jurisdiction, as determined by the Canadian court, in the matter. There is substantial doubt whether an original action could be brought successfully in Canada against any of our assets or our directors or officers predicated solely upon such civil liabilities. You may not be able to recover damages as compensation for a decline in your investment.
 
Our officer and directors beneficially own approximately 82.3% of the shares of our common stock and their interest could conflict with the investors which could cause the investor to lose all or part of the investment.
 
Our directors and officer have control over, approximately 82.3% of our issued and outstanding common stock. As such, they are able to substantially influence all matters requiring stockholder approval, including the election of directors and approval of significant corporate transactions. Such concentration of ownership may also have the effect of delaying or preventing a change in control, which may be to the benefit of our management but not in the interest of the shareholders. This beneficial ownership and potential effective control on all matters relating to our business and operations could eliminate the possibility of shareholders changing the management in the event that the shareholders did not agree with the conduct of the officer and directors. Additionally, the shareholders would potentially not be able to obtain the necessary shareholder vote to affect any change in the course of our business. This lack of shareholder control could prevent the shareholders from removing from the Board of Directors any directors who are not managing the company with sufficient skill to make it profitable, which could prevent us from becoming profitable.
 
We may indemnify our directors and officers against liability to us and our stockholders, and such indemnification could increase our operating costs.
 
Our Bylaws allow us to indemnify our directors and officers against claims associated with carrying out the duties of their offices. Our Bylaws also allow us to reimburse them for the costs of certain legal defenses. Insofar as indemnification for liabilities arising under the Securities Act of 1933, as amended (the “Securities Act”), may be permitted to our directors, officers or control persons, we have been advised by the SEC that such indemnification is against public policy and is therefore unenforceable.
 
Since our sole officer and director is aware that she may be indemnified for carrying out the duties of her offices, she may be less motivated to meet the standards required by law to properly carry out such duties, which could increase our operating costs. Further, if our sole officer and director files a claim against us for indemnification, the associated expenses could also increase our operating costs.
 
 
11

 
 
Our management has concluded that our internal control over financial reporting is not effective. We have material weaknesses in internal control over financial reporting and cannot assure you that additional material weaknesses will not be identified in the future. If our internal control over financial reporting or disclosure controls and procedures are not effective, there may be errors in our financial statements that could require a restatement or our filings may not be filed on a timely basis and investors may lose confidence in our reported financial information, which could lead to a decline in our stock price.
 
We have assessed that we have material weaknesses in internal control over financial reporting. Effective internal controls are necessary for us to provide reliable financial reports and effectively prevent fraud. Any inability to provide reliable financial reports or prevent fraud could harm our business. The Sarbanes-Oxley Act of 2002 requires management and our auditors to evaluate and assess the effectiveness of our internal control over financial reporting.
 
We cannot assure you that material weaknesses in our internal control over financial reporting will not be identified in the future. Although we intend to improve our internal control processes, we may not be able to effectively and timely implement necessary control changes to ensure continued compliance with the Sarbanes-Oxley Act and other regulatory and reporting requirements. Our lack of financing and additional staff, present challenges to maintain the internal control and disclosure control standards applicable to public companies. Any failure to maintain or implement required new or improved controls, or any difficulties we encounter in their implementation, could result in significant deficiencies or material weaknesses, cause us to fail to timely meet our periodic reporting obligations, or result in material misstatements in our financial statements. Any such failure could also adversely affect the results of periodic management evaluations and the effectiveness of our internal control over financial reporting required under the Sarbanes-Oxley Act. The existence of a material weakness could result in errors in our financial statements that could result in a restatement of financial statements, cause us to fail to timely meet our reporting obligations and cause investors to lose confidence in our reported financial information, leading to a decline in our stock price. If we fail to maintain effective internal controls, we could be subject to regulatory scrutiny and sanctions and investors could lose confidence in the accuracy and completeness of our financial reports.
 
At this time, we do not have sufficient personnel to establish an adequate division of duties amongst persons involved with financial affairs of our company and we do not have sufficient resources to implement internal control over financial reporting procedures.  We believe that once we raise sufficient capital, we will be able to hire the required personnel and effect changes to our internal control over financial reporting procedures which will remediate the current weaknesses.
 
We hope to be able to hire additional staff, with US GAAP financial reporting experience, to be able to begin implementation of effective segregation of duties by October 2011.  This staff will also be responsible to implementing other financial controls procedures.  We anticipate that the cost of hiring sufficient, part-time, staff for this position will be approximately $60,000 per year.
 
Even if we are able to raise the funds necessary to hire the necessary staff, we cannot assure you that we will be able to fully comply with the requirements of the Sarbanes-Oxley Act or that management or our auditors will conclude that our internal control over financial reporting is effective in future periods.
 
We cannot assure you that we will be able to fully comply with the requirements of the Sarbanes-Oxley Act or that management or our auditors will conclude that our internal control over financial reporting is effective in future periods.
 
We are exposed to currency exchange risk which could cause our reported earnings or losses to fluctuate.
 
Although we intend to report our financial results in US dollars, a portion of our sales and operating costs may be denominated in Canadian dollars. In addition, we are exposed to currency exchange risk on any of our assets that we denominate in Canadian dollars. Since we present our financial statements in US dollars, any change in the value of the Canadian dollar relative to the US dollar during a given financial reporting period would result in a foreign currency loss or gain on the translation of our Canadian dollar assets into US dollars. Consequently, our reported earnings or losses could fluctuate materially as a result of foreign exchange translation gains or losses.
 
We have only one supplier of our medical diagnostic devices.  If our supplier ceases to exist or does not fulfill our orders, we may not be able to secure additional products and our ability to generate revenues may suffer.
 
We have a distribution agreement with Valimedix upon which we intend to rely for the supply of the products we intend to distribute. However, if Valimedix ceases to exist or terminates its supply of products to us, we would be forced to find an alternative supplier of medical diagnostic equipment.  If we are not able to secure such supply, we may not have sufficient product to sell to our intended market and consequently our ability to generate revenues may suffer.
 
On March 11, 2010 we entered into a License Agreement with Valimedix pursuant to which we were granted the right to market and distribute 15 unique self diagnostic products developed by Valimedix on an exclusive basis in Canada, and a on a non-exclusive basis in the United States.  We also have the right to market the products with Valimedix SELFCheck trademark.  As consideration, we paid Valimedix a onetime fee of $10,000 and agreed to a three percent royalty on net revenues from the sales of Valimedix products.  The term of the agreement is for 20 years and may be renewed for an additional 10 years if we meet specified sales targets.  During the 20 year term of this agreement we are required to purchase a minimum of $1,000,000 worth of products from Valimedix.  A full copy of this agreement is filed as Exhibit 10.1 to this Registration Statement on Form S-1.

 
12

 

Risks Related to the Ownership of Our Stock
 
We do not intend to pay dividends and there will thus be fewer ways in which you are able to make a gain on your investment.
 
We have never paid dividends and do not intend to pay any dividends for the foreseeable future. To the extent that we may require additional funding currently not provided for in our financing plan, our funding sources may prohibit the declaration of dividends. Because we do not intend to pay dividends, any gain on your investment will need to result from an appreciation in the price of our common stock. There will therefore be fewer ways in which you are able to make a gain on your investment.
 
Because we can issue additional shares of common stock, purchasers of our common stock may incur immediate dilution and may experience further dilution.
 
We are authorized to issue up to 300,000,000 shares of common stock, of which 63,575,000 shares are issued and outstanding. Our board of directors has the authority to cause us to issue additional shares of common stock, and to determine the rights, preferences and privileges of such shares, without consent of any of our stockholders. Consequently, the stockholders may experience more dilution in their ownership of our stock in the future.
 
Because the SEC imposes additional sales practice requirements on brokers who deal in shares of penny stocks, some brokers may be unwilling to trade our securities. This means that you may have difficulty reselling your shares, which may cause the value of your investment to decline.
 
Our shares are classified as penny stocks and are covered by Section 15(g) of the Securities Exchange Act of 1934 (the “Exchange Act”) which imposes additional sales practice requirements on brokers-dealers who sell our securities in this offering or in the aftermarket.  For sales of our securities, broker-dealers must make a special suitability determination and receive a written agreement prior from you to making a sale on your behalf.  Because of the imposition of the foregoing additional sales practices, it is possible that broker-dealers will not want to make a market in our common stock.  This could prevent you from reselling your shares and may cause the value of your investment to decline.
 
Financial Industry Regulatory Authority (FINRA) sales practice requirements may limit your ability to buy and sell our common stock, which could depress the price of our shares.
 
FINRA rules require broker-dealers to have reasonable grounds for believing that an investment is suitable for a customer before recommending that investment to the 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 and investment objectives, among other things.  Under interpretations of these rules, FINRA believes that there is a high probability such speculative low-priced securities will not be suitable for at least some customers.  Thus, 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 shares, have an adverse effect on the market for our shares, and thereby depress our share price.
 
 
13

 
 
Our security holders may face significant restrictions on the resale of our securities due to state “blue sky” laws.
 
Each state has its own securities laws, often called “blue sky” laws, which (i) limit sales of securities to a state’s residents unless the securities are registered in that state or qualify for an exemption from registration, and (ii) govern the reporting requirements for broker-dealers doing business directly or indirectly in the state.  Before a security is sold in a state, there must be a registration in place to cover the transaction, or the transaction must be exempt from registration. The applicable broker must be registered in that state.
 
We do not know whether our securities will be registered or exempt from registration under the laws of any state. A determination regarding registration will be made by those broker-dealers, if any, who agree to serve as the market-makers for our common stock.  There may be significant state blue sky law restrictions on the ability of investors to sell, and on purchasers to buy, our securities.  You should therefore consider the resale market for our common stock to be limited, as you may be unable to resell your shares without the significant expense of state registration or qualification.

Our compliance with the Sarbanes-Oxley Act and SEC rules concerning internal controls will be time-consuming, difficult, and costly.
 
Under Section 404 of the Sarbanes-Oxley Act and current SEC regulations, we will be required to furnish a report by our management on our internal control over financial reporting beginning with our Annual Report on Form 10-K for our fiscal year ending April 30, 2011.  We will soon begin the process of documenting and testing our internal control procedures in order to satisfy these requirements, which is likely to result in increased general and administrative expenses and may shift management’s time and attention from revenue-generating activities to compliance activities.  While we expect to expend significant resources to complete this important project, we may not be able to achieve our objective on a timely basis. It will be time-consuming, difficult and costly for us to develop and implement the internal controls, processes and reporting procedures required by the Sarbanes-Oxley Act.  We may need to hire additional personnel to do so, and if we are unable to comply with the requirements of the legislation we may not be able to assess our internal controls over financial reporting to be effective in compliance with the Sarbanes-Oxley Act.
 
Use of Proceeds
 
We will not receive any proceeds from the resale of the securities offered through this Prospectus by the selling security holders.  The selling security holders will receive all proceeds from this offering and if all of the shares being offered by this Prospectus are sold at $0.01 per share, those proceeds would be approximately $184,850.
 
Determination of Offering Price
 
The selling security holders will offer their shares at an initial offering price of $0.01 per share until a market for our common stock develops on the OTC Bulletin Board, and thereafter at prevailing market prices or privately negotiated prices.  However, there can be no assurance that a market for our common stock will ever develop on the OTC Bulletin Board. The initial offering price was determined by our Board of Directors, who considered several factors in arriving at the $0.01 per share figure, including the following:
 
 
our most recent issuance price of 3,000,000 shares of our common stock at $0.01 per share on June 14, 2010;
 
 
our lack of operating history;
 
 
our capital structure; and
 
 
the background of our management.
 
 
14

 
 
As a result, the $0.01 per share initial price of our common stock does not necessarily bear any relationship to established valuation criteria and may not be indicative of prices that may prevail at any time. The price is not based on past earnings, nor is it indicative of the current market value of our assets. No valuation or appraisal has been prepared for our business. You cannot be sure that a public market for any of our securities will develop.
 
If a market for the stock develops, the actual price of the shares sold by the selling security holders named in this Prospectus will be determined by prevailing market prices at the time of sale or by private transactions negotiated by the selling security holders. The number of shares that may actually be sold by a selling security holder will be determined by each selling security holder. The selling security holders are neither obligated to sell all or any portion of the shares offered under this Prospectus, nor are they obligated to sell such shares immediately hereunder. If a market for our common stock develops, security holders may sell their shares at a price different than the $0.01 per share offering price depending on privately negotiated factors such as the security holder's own cash requirements or objective criteria of value such as the market value of our assets.
 
Dilution
 
All of the 18,484,995 shares of our common stock to be sold by the selling security holders are currently issued and outstanding, and will therefore not cause dilution to any of our existing stockholders.

Selling Security Holders
 
The 26 selling security holders are offering for sale 18,484,995 shares of our issued and outstanding common stock which they obtained as part of the following issuances:
 
·  
5 of the selling shareholders received their stock from the issuance of 60,000,000 shares at the closing of our share exchange with Eternity Healthcare Inc., a British Columbia company. These selling shareholders are offering an aggregate of 18,309,995 shares; and
·  
22 of the selling shareholders received their stock from the issuance of 2,650,000 pre-split shares of our common stock at $0.01 per share in March 31, 2008.
 
All of these shares were issued in reliance upon an exemption from registration pursuant to Regulation S under the Securities Act of 1933 (the “Securities Act”).  Our reliance upon Rule 903 of Regulation S was based on the fact that the sales of the securities were completed in an "offshore transaction", as defined in Rule 902(h) of Regulation S.  We did not engage in any directed selling efforts, as defined in Regulation S, in the United States in connection with the sale of the securities. Each investor was not a U.S. person, as defined in Regulation S, and was not acquiring the securities for the account or benefit of a U.S. person.
 
The selling security holders have the option to sell their shares at an initial offering price of $0.01 per share until a market for our common stock develops on the OTC Bulletin Board, and thereafter at prevailing market prices or privately negotiated prices.
 
The following table provides information as of  June 3,  2011 regarding the beneficial ownership of our common stock by each of the selling security holders, including:
 
·  
the number of shares owned by each prior to this offering;
 
·  
the number of shares being offered by each;
 
·  
the number of shares that will be owned by each upon completion of the offering, assuming that all the shares being offered are sold;
 
·  
the percentage of shares owned by each; and
 
·  
the identity of the beneficial holder of any entity that owns the shares being offered.

 
15

 
 
Name of Selling Security Holder
Shares Owned Prior to this Offering
(1)
Percent
%
(2)
Maximum Numbers of Shares Being Offered
Beneficial Ownership After Offering
Percentage Owned upon Completion of the Offering
(2)
Merilda Bezy
1,000,000
1.6
1,000,000
0
0
Melissa Cartmell
10,000
(3)
10,000
0
0
Myrl Coulter
10,000
(3)
10,000
0
0
Donna Dorsey
10,000
(3)
10,000
0
0
Casey Kachur
20,000
(3)
20,000
0
0
Torah Kachur
10,000
(3)
10,000
0
0
David Kelcher
10,000
(3)
10,000
0
0
Carmen Kriegel
10,000
(3)
10,000
0
0
Patrick Leonard
10,000
(3)
10,000
0
0
Linda McLennan
5,000
(3)
5,000
0
0
Craig McLennan
5,000
(3)
5,000
0
0
Sheila Kelcher
10,000
(3)
10,000
0
0
Rolando Ploit
10,000
(3)
10,000
0
0
Lorne Merrick
5,000
 (3)
5,000
0
0
Netta Phillet
5,000
(3)
5,000
0
0
Hassan Salari (4)
33,310,000 (8)
52
3,310,000 (8)
30,000,000
47
Julian Salari (5)
5,009,995
7.9
5,009,995
0
0
Francine Salari (6)
19,000,005 (8)
6.3
4,000,005 (8)
15,000,000
23.5
Frederick Salari (7)
4,999,995
7.9
4,999,995
0
0
Myron Selby
5,000
(3)
5,000
0
0
Leslie Shragge
5,000
(3)
5,000
0
0
Phil Shragge
5,000
(3)
5,000
0
0
Joyce Wilde
5,000
(3)
5,000
0
0
Glen Wilde
5,000
(3)
5,000
0
0
Gordana Vilimanovich
5,000
(3)
5,000
0
0
Branislav Vilimanovich
5,000
(3)
5,000
0
0
           
Total
63,484,995
99.8
18,484,995
45,000,000
70.5

 
16

 

(1)
The number and percentage of shares beneficially owned is determined to the best of our knowledge in accordance with the Rules of the SEC and. the information is not necessarily indicative of beneficial ownership for any other purpose.  Under such rules, beneficial ownership includes any shares as to which the selling security holder has sole or shared voting or investment power and also any shares which the selling security holder has the right to acquire within 60 days of the date of this Prospectus.
(2)
The percentages are based on 63,575,000 shares of our common stock issued and outstanding and as at  June 3,  2011.
(3)
Less than 1%.
(4)
Hassan Salari is our director.  He is the spouse of Francine Salari, our director and sole officer.
(5)
Julian Salari is the son of Francine and Hassan Salari. He does not share voting or dispositive over his shares with Francine or Hassan Salari.
(6)
Francine Salari is our director and sole officer.  She is the spouse of Hassan Salari, our director.
(7)
Frederik Salari is the son of Francine and Hassan Salari. He does not share voting or dispositive control over his shares with Francine or Hassan Salari.
(8)
Francine and Hassan Salari together share voting and dispositive control over 52,310,005 shares of our common stock and 7,310,005 shares of our common stock which is being registered in this Prospectus.
 
Except as otherwise noted in the above list, the named party beneficially owns and has sole voting and investment power over all the shares or rights to the shares.  The numbers in this table assume that none of the selling security holders will sell shares not being offered in this Prospectus or will purchase additional shares, and assumes that all the shares being registered will be sold.
 
Other than as described above, none of the selling security holders or their beneficial owners has had a material relationship with us other than as a security holder at any time within the past three years, or has ever been one of our officers or directors or an officer or director of our predecessors or affiliates.
 
None of the selling security holders are broker-dealers or affiliates of a broker-dealer.
 
Plan of Distribution
 
We are registering 18,484,995 shares of our common stock on behalf of the selling security holders.  The selling security holders have the option to sell the 18,484,995 shares of our common stock at an initial offering price of $0.01 per share until a market for our common stock develops, and thereafter at prevailing market prices or privately negotiated prices.
 
Trading in stocks quoted on the OTC Bulletin Board is often thin and is characterized by wide fluctuations in trading prices due to many factors that may have little to do with a company's operations or business prospects. The OTC Bulletin Board should not be confused with the NASDAQ market. OTC Bulletin Board companies are subject to far fewer restrictions and regulations than companies whose securities are traded on the NASDAQ market. Moreover, the OTC Bulletin Board is not a stock exchange, and the trading of securities on the OTC Bulletin Board is often more sporadic than the trading of securities listed on a quotation system like the NASDAQ Small Cap or a stock exchange. In the absence of an active trading market investors may have difficulty buying and selling or obtaining market quotations for our common stock and its market visibility may be limited, which may have a negative effect on the market price of our common stock.
 
 
17

 
 
The selling security holders may sell some or all of their shares of our common stock in one or more transactions, including block transactions:
 
  
on such public markets as the securities may be trading;
 
 
in privately negotiated transactions; or
 
 
in any combination of these methods of distribution.
 
The selling security holders may offer our common stock to the public:
 
 
at an initial price of $0.01 per share until a market develops;

 
at the market price prevailing at the time of sale if a market for the stock develops on the OTC Bulletin Board;
 
 
at a price related to such prevailing market price if a market for the stock develops on the OTC Bulletin Board; or
     
 
at such other price as the selling security holders determine if a market for the stock develops on the OTC Bulletin Board.
 
We are bearing all costs relating to the registration of our common stock. The selling security holders, however, will pay any commissions or other fees payable to brokers or dealers in connection with any sale of the shares of our common stock.
 
The selling security holders must comply with the requirements of the Securities Act and the Exchange Act in the offer and sale of our common stock.  In particular, during such times as the selling security holders may be deemed to be engaged in a distribution of any securities, and therefore be considered to be an underwriter, they must comply with applicable laws and may, among other things:
 
·  
furnish each broker or dealer through which our common stock may be offered such copies of this Prospectus, as amended from time to time, as may be required by such broker or dealer;
 
·  
not engage in any stabilization activities in connection with our securities; and
 
·  
not bid for or purchase any of our securities or attempt to induce any person to purchase any of our securities other than as permitted under the Exchange Act.
 
The selling security holders and any underwriters, dealers or agents that participate in the distribution of our common stock may be deemed to be underwriters, and any commissions or concessions received by any such underwriters, dealers or agents may be deemed to be underwriting discounts and commissions under the Securities Act.  Our common stock may be sold from time to time by the selling security holders in one or more transactions at a fixed offering price, which may be changed, at varying prices determined at the time of sale or at negotiated prices if a market for the stock develops on the OTC Bulletin Board.  We may indemnify any underwriter against specific civil liabilities, including liabilities under the Securities Act.
 
The selling security holders and any broker-dealers acting in connection with the sale of the common stock offered under this Prospectus may be deemed to be underwriters within the meaning of section 2(11) of the Securities Act, and any commissions received by them and any profit realized by them on the resale of shares as principals may be deemed underwriting compensation under the Securities Act.  Neither we nor the selling security holders can presently estimate the amount of such compensation.  We know of no existing arrangements between the selling security holders and any other security holder, broker, dealer, underwriter or agent relating to the sale or distribution of our common stock.  Because the selling security holders may be deemed to be “underwriters” within the meaning of section 2(11) of the Securities Act, the selling security holders will be subject to the prospectus delivery requirements of the Securities Act.  Each selling security holder has advised us that they have not yet entered into any agreements, understandings, or arrangements with any underwriters or broker-dealers regarding the sale of their shares.  We may indemnify any underwriter against specific civil liabilities, including liabilities under the Securities Act.
 
 
18

 
 
Regulation M
 
During such time as the selling security holders may be engaged in a distribution of any of the securities being registered by this Prospectus, the selling security holders are required to comply with Regulation M under the Exchange Act.  In general, Regulation M precludes any selling security holder, any affiliated purchaser and any broker-dealer or other person who participates in a distribution from bidding for or purchasing, or attempting to induce any person to bid for or purchase, any security that is the subject of the distribution until the entire distribution is complete.
 
Regulation M defines a “distribution” as an offering of securities that is distinguished from ordinary trading activities by the magnitude of the offering and the presence of special selling efforts and selling methods.  Regulation M also defines a “distribution participant” as an underwriter, prospective underwriter, broker, dealer, or other person who has agreed to participate or who is participating in a distribution.

Regulation M prohibits, with certain exceptions, participants in a distribution from bidding for or purchasing, for an account in which the participant has a beneficial interest, any of the securities that are the subject of the distribution.  Regulation M also governs bids and purchases made in order to stabilize the price of a security in connection with a distribution of the security.  We have informed the selling security holders that the anti-manipulation provisions of Regulation M may apply to the sales of their shares offered by this Prospectus, and we have also advised the selling security holders of the requirements for delivery of this Prospectus in connection with any sales of the shares offered by this Prospectus.
 
With regard to short sales, the selling security holders cannot cover their short sales with securities from this offering.  In addition, if a short sale is deemed to be a stabilizing activity, then the selling security holders will not be permitted to engage in such an activity.  All of these limitations may affect the marketability of our common stock.
 
Penny Stock Rules
 
The SEC has adopted rules that regulate broker-dealer practices in connection with transactions in penny stocks.  Penny stocks are generally equity securities with a price of less than $5.00 (other than securities registered on certain national securities exchanges, provided that current price and volume information with respect to transactions in such securities is provided by the exchange or system).
 
The penny stock rules require a broker-dealer, prior to a transaction in a penny stock not otherwise exempt from those rules, to deliver a standardized risk disclosure document prepared by the SEC which:
 
·  
contains a description of the nature and level of risk in the market for penny stocks in both public offerings and secondary trading;
 
·  
contains a description of the broker's or dealer's duties to the customer and of the rights and remedies available to the customer with respect to violations of such duties or other requirements of federal securities laws;
 
·  
contains a brief, clear, narrative description of a dealer market, including "bid" and "ask" prices for penny stocks and the significance of the spread between the bid and ask prices;
 
·  
contains the toll-free telephone number for inquiries on disciplinary actions;
 
·  
defines significant terms in the disclosure document or in the conduct of trading in penny stocks; and
 
·  
contains such other information, and is in such form (including language, type size, and format) as the SEC shall require by rule or regulation.
 
 
19

 
 
Prior to effecting any transaction in a penny stock, a broker-dealer must also provide a customer with:
 
·  
the bid and ask prices for the penny stock;
 
·  
the number of shares to which such bid and ask prices apply, or other comparable information relating to the depth and liquidity of the market for such stock;
 
·  
the amount and a description of any compensation that the broker-dealer and its associated salesperson will receive in connection with the transaction; and
 
·  
a monthly account statement indicating the market value of each penny stock held in the customer's account.
 
In addition, the penny stock rules require that prior to effecting any transaction in a penny stock not otherwise exempt from those rules, a broker-dealer must make a special written determination that the penny stock is a suitable investment for the purchaser and receive (i) the purchaser's written acknowledgment of the receipt of a risk disclosure statement, (ii) a written agreement to transactions involving penny stocks, and (iii) a signed and dated copy of a written suitability statement.  These disclosure requirements may have the effect of reducing the trading activity in the secondary market for our securities, and therefore our stockholders may have difficulty selling their shares.

Blue Sky Restrictions on Resale
 
When a selling security holder wants to sell shares of our common stock under this Prospectus in the United States, the selling security holder will need to comply with state securities laws, also known as “blue sky laws,” with regard to secondary sales.  All states offer a variety of exemptions from registration of secondary sales.  Many states, for example, have an exemption for secondary trading of securities registered under section 12(g) of the Exchange Act or for securities of issuers that publish continuous disclosure of financial and non-financial information in a recognized securities manual, such as Standard & Poor’s.  The broker for a selling security holder will be able to advise the stockholder as to which states have an exemption for secondary sales of our common stock.
 
Any person who purchases shares of our common stock from a selling security holder pursuant to this Prospectus, and who subsequently wants to resell such shares will also have to comply with blue sky laws regarding secondary sales.
 
When this Registration Statement becomes effective, and a selling security holder indicates in which state(s) he desires to sell his shares, we will be able to identify whether he will need to register or may rely on an exemption from registration.
 
 
20

 
 
Description of Securities to be Registered
 
Our authorized capital stock consists of 300,000,000 shares of common stock, $0.001 par value.
 
Common Stock
 
As of  June 3,  2011, we had 63,575,000 shares of our common stock issued and outstanding.  We did not have any outstanding options or any other convertible securities as of  June 3,  2011.
 
Holders of our common stock have no preemptive rights to purchase additional shares of common stock or other subscription rights.  Our common stock carries no conversion rights and is not subject to redemption or to any sinking fund provisions.  All shares of our common stock are entitled to share equally in dividends from sources legally available, when, as and if declared by our Board of Directors, and upon our liquidation or dissolution, whether voluntary or involuntary, to share equally in our assets available for distribution to our stockholders.
 
Our Board of Directors is authorized to issue additional shares of our common stock not to exceed the amount authorized by our Articles of Incorporation, on such terms and conditions and for such consideration as our Board may deem appropriate without further security holder action.
 
Voting Rights
 
Each holder of our common stock is entitled to one vote per share on all matters on which such stockholders are entitled to vote.  Since the shares of our common stock do not have cumulative voting rights, the holders of more than 50% of the shares voting for the election of directors can elect all the directors if they choose to do so and, in such event, the holders of the remaining shares will not be able to elect any person to our Board of Directors.
 
Dividend Policy
 
Holders of our common stock are entitled to dividends if declared by the Board of Directors out of funds legally available for payment of dividends.  From our inception to  June 3,  2011, we did not declare any dividends.
 
We do not intend to issue any cash dividends in the future.  We intend to retain earnings, if any, to finance the development and expansion of our business.  However, it is possible that our management may decide to declare a cash or stock dividend in the future.  Our future dividend policy will be subject to the discretion of our Board of Directors and will be contingent upon future earnings, if any, our financial condition, our capital requirements, general business conditions and other factors.
 
Legal Matters
 
Michael J. Morrison, Attorney and Counselor at Law, of 1495 Ridgeview Drive, Suite 220, Reno Nevada has provided an opinion on the validity of the shares of our common stock being offered pursuant to this prospectus.

 
21

 

Interests of Named Experts and Counsel
 
No expert or counsel named in this Prospectus as having prepared or certified any part thereof or having given an opinion upon the validity of the securities being registered or upon other legal matters in connection with the registration or offering of our common stock was employed on a contingency basis or had or is to receive, in connection with the offering, a substantial interest, directly or indirectly, in us.  Additionally, no such expert or counsel was connected with us as a promoter, managing or principal underwriter, voting trustee, director, officer or employee.
 
Experts
 
Our audited financial statements for the period from December 10, 2009 to April 30, 2010 have been included in this Prospectus in reliance upon James Stafford, Inc., Chartered Accountants, an independent registered public accounting firm, as experts in accounting and auditing.
 
Description of Business
 
Forward-Looking Statements
 
This Registration Statement on Form S-1 contains forward-looking statements.  To the extent that any statements made in this report contain information that is not historical, these statements are essentially forward-looking.  Forward-looking statements can be identified by the use of words such as “expects”, “plans”, “will”, “may,”, “anticipates”, “believes”, “should”, “intends”, “estimates”, and other words of similar meaning.  These statements are subject to risks and uncertainties that cannot be predicted or quantified and, consequently, actual results may differ materially from those expressed or implied by such forward-looking statements.  Such risks and uncertainties include, without limitation, our ability to raise additional capital to finance our activities; the effectiveness, profitability and marketability of our products; legal and regulatory risks associated with the share exchange; the future trading of our common stock; our ability to operate as a public company; our ability to protect our proprietary information; general economic and business conditions; the volatility of our operating results and financial condition; our ability to attract or retain qualified senior management personnel and sales staff; and other risks detailed from time to time in our filings with the Securities and Exchange Commission (the “SEC”), or otherwise.
 
Information regarding market and industry statistics contained in this report is included based on information available to us that we believe is accurate.  It is generally based on industry and other publications that are not produced for purposes of securities offerings or economic analysis.  Forecasts and other forward-looking information obtained from these sources are subject to the same qualifications and the additional uncertainties accompanying any estimates of future market size, revenue and market acceptance of products and services.  We do not undertake any obligation to publicly update any forward-looking statements.  As a result, investors should not place undue reliance on these forward-looking statements.
 
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 at a factor of 10 old shares for 1 new share.   We maintain our statutory registered agent’s office at the Nevada Agency and Transfer Company, 50 W. Liberty Street, Suite 880, Reno, NV, 89501, our business offices are located at 409 Granville Street, Suite 1023, Vancouver, BC, V6C 1T2 and our telephone number is 604 324 4843.
 
 
22

 
 
Previous Business
 
Before we closed the transactions contemplated by the Share Exchange Agreement with Eternity BC, 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 and engaged in a change of business transaction with Eternity BC.

Current Business
 
Upon acquiring Eternity BC pursuant to the Share Exchange Agreement, we adopted the business of Eternity BC. The share exchange involved the issuance of 60,000,000 shares of our common stock to the shareholders of Eternity BC in consideration for the acquisition of all of the outstanding common shares of Eternity BC by our company.
 
The transaction has been accounted for as a business combination that is a reverse acquisition in accordance with Accounting Standards Codification (“ASC”) 805-40, Business Combinations. Application of the guidance in ASC 805-40 resulted in identifying us as the acquiree and Eternity BC as the acquirer for accounting purposes. The consolidated financial statements prepared following the transaction will represent the continuation of the financial statements of Eternity BC except for its capital structure, which will be retroactively adjusted to reflect the legal capital of Eternity. The acquisition-date fair value of the consideration transferred by Eternity BC was $60,000 and, as a result, has been recorded as an increase in our capital stock. Net liabilities assumed by Eternity BC totalled $22,879 resulting in an excess liabilities assumed by Eternity BC of $82,879 which has been recorded as a charge to deficit. The transaction had no material impact on earnings (loss) per share as the our planned principle operations have not commenced

We are a medical device company that, subject to government approval, plans to distribute in-home medical diagnostic kits throughout Canada. 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 to perform diagnostic testing on themselves with a high degree of accuracy and without the need for the use of professionals such as nurses and technicians.
 
On March 11, 2010 we entered into a License Agreement with Valimedix Limited, a United Kingdom corporation (“Valimedix”), pursuant to which we were granted the right to market and distribute 15 unique self diagnostic products developed by Valimedix on an exclusive basis in Canada, and a on a non-exclusive basis in the United States.  We also have the right to market the products with Valimedix SELFCheck trademark.  As consideration, we paid Valimedix a onetime fee of $10,000 and agreed to a three percent royalty on net revenues from the sales of Valimedix products.  The term of the agreement is for 20 years and may be renewed for an additional 10 years if we meet specified sales targets. During the 20 year term of this agreement we are required to purchase a minimum of $1,000,000 worth of products from Valimedix.  
 
Over the next 12 months, we plan to obtain regulatory approvals for the products described below 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.  However, as provided in more detail elsewhere in this Prospectus, 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.
 
 
23

 
 
Principal Products
 
Our ability to offer test kits to potential retail customers is dependent on obtaining the required regulatory approvals.  Since we have not yet been granted such approvals, we cannot currently offer any products. Subject to government approval, we will be able to offer the following in-home diagnostic test kits in Canada, with an estimated additional 15 kits being launched in 2011 and 2012.  We believe we will need approximately $100,000 to undergo the regulatory review process for at least some of our products.  Our ability to offer the estimated additional 15 kits in 2011 and 2012 is entirely dependent on our ability to raise the required $500,000 in order to secure government approval and develop a distribution network for our products.  However, even if we are able to raise the required funds, there can be no assurance that we will be able to government approval and develop a distribution network for our products.  Once we secure the required funds and are able to obtain governmental approval for our currently available products, and develop a distribution network, we believe we will be able to enter into additional distribution agreements with identified European developers of test kits.
 
Cholesterol Level Test
 
Cholesterol is produced naturally in the body. While the majority is produced in the liver, a smaller proportion is absorbed from food. The body uses cholesterol primarily for forming cell membranes, producing bile and to protect the skin. The normal total level of cholesterol in the bloodstream is <200 mg/dL. An increased level of cholesterol (>200 mg/dL) represents a risk factor for arteriosclerosis.

Arteriosclerosis can remain undetected for decades, and may only be discovered when it has reached a very advanced stage. It is one of the most significant and frequently-occurring diseases of industrialized society, leading to circulatory problems, heart attacks and arteriosclerosis combined represent almost 40% of all deaths in the industrialized world. Arteriosclerosis of the blood vessels surrounding the heart leads to a decrease in blood flow to the heart muscle, resulting in vessel blockage and, potentially, heart failure / attack. For this reason, detection of early symptoms is imperative in order for the appropriate prophylaxis (preventive measures) or treatment to be provided.
 
Early detection principally involves the determination of risk factors. Nowadays, it is generally accepted that hypercholesterolemia in particular (an abnormally high level of cholesterol) is one of the most significant risk factors in coronary heart disease.
 
This cholesterol test will enable the user to assess quickly and easily, backed up by a medical check from their doctor, whether or not their cholesterol levels are within the normal range. They will then be able to take action to reduce their personal risk of heart disease if, as a result of detecting raised levels, they seek the advice of their doctor as to further steps and treatment.
 
Cholesterol levels may be influenced by the following factors: medication, diet, stress, diabetes mellitus, serious illness and pregnancy. In order to get meaningful results you should delay testing your cholesterol level after pregnancy or serious illness for about 3 months, and after minor illness for about 3 weeks.
 
The test kit includes a foil pack with test card and desiccant, lancet, band-aid and instructions.
 
 
24

 
 
Blood Glucose Level Test
 
Glucose is the most important monosaccharide (simple sugar) in the human body. In a healthy person, blood glucose concentration on an empty stomach lies at between approximately 4 and 6 mmol/L. Hormones in the body control blood glucose levels, ensuring that they remain constant within this range. They are lowered principally through the effects of insulin, and increased by the hormones glucagon and adrenaline in conjunction with insulin.
 
Glucagon is produced in the alpha cells, and insulin is produced in the so-called Islets of Langerhans (beta cells), both cell types being found in the pancreas. Insulin performs the most important role in keeping blood glucose levels normal.  Diseases affecting the pancreas and thus impairing the production of insulin lead to excessive glucose concentration and consequently to a disturbance in metabolic function. The most common and significant metabolic disturbance is diabetes mellitus. People with diabetes have too little insulin and are therefore unable to maintain stable glucose levels within the normal range. Medication, insulin injections or dietary changes may be needed.
 
According to the WHO (World Health Organization) estimates, in 2010 there are 240 million diabetics worldwide, with numbers on an upward trend. Untreated diabetes leads primarily to diseases of the blood vessels, kidney malfunction (glomeru-losclerosis), retinal damage (retinopathy, loss of sight) or blockage of major blood vessels (stroke, heart attack). For this reason, it is extremely important that diabetes be diagnosed early in order that it can be appropriately treated.
 
This test enables the user to take additional preventive action, considerably reducing their risk of suffering from diabetes without being aware of the condition. Blood sugar levels are influenced generally by various factors including: medication, alcohol, diet, stress, raised blood pressure, smoking, etc.
 
The test is comprised of 2 foil packs each with test strip and desiccant, 2 color charts, 2 lancets, 2 band-aids and instructions.
 
Bowel Health Test
 
Colon cancer is one of the most common forms of cancer and early detection is vital. The sooner it is detected, the greater are the chances of successful treatment. If it is treated at an early stage, the survival rate exceeds 90%.
 
95% of cases of colon cancer develop from polyps, which are benign tumors growing inside the colon. Typically, they do not cause any pain, and often remain undetected for many years before becoming malignant. At this stage, the hidden early stages of colon cancer can be detected by a simple test for blood in the stool.
 
Above the age of 40, if not sooner, everyone should perform an annual test for blood in the stool. It may be better to start testing before reaching 40 if for example, there is a history of colon cancer or polyps in your family. The test serves to identify blood in the stool which is not yet visible. Colon polyps bleed occasionally, and colon cancer will reveal blood at a very early stage. If, when performing this test, the user detects blood in your stool, the user should see their doctor in order for the medical reasons to be identified. What makes this test unique is that the user does not need to restrict their eating habits in any way in order to perform it, and it can be conducted simply and easily at any time of day, giving results within just a few minutes.
 
The test kit includes a sample container with buffer solution and collection stick, sealed foil pack with test cassette and desiccant, and instructions.
 
 
25

 
 
Prostate Health Test
 
Prostate cancer occurs when the cells of the prostate begin to grow uncontrollably. When caught and treated early, prostate cancer has a cure rate of over 90%.* PSA is a protein produced by the prostate and released in very small amounts into the bloodstream. When there is a problem with the prostate, such as enlarged prostate, prostatitis or development of prostate cancer, more and more PSA is released, until it reaches a level where it can be easily detected in the blood.
 
This test is sensitive and allows early detection of heightened levels of PSA in the blood, giving the user the opportunity to take early action and request further tests from their doctor should the levels be elevated.
 
*(Information provided by Prostate Cancer Foundation)
 
The test kit package includes: foil package (contains: test device and dropper), vial of test solution, lancet, alcohol swabs and instructions for use.
 
Multi Drug Test
 
This is a testing kit for testing of any combination of the following drugs:
Cocaine (COC), Amphetamine (AMP), Methamphetamine inc. Ecstasy (mAMP), Cannabis (THC), Opiates inc. Heroin (OPI), and Benzodiazepines (BZO).
 
It is a one-step screen test for the simultaneous, qualitative detection of multiple drugs and metabolites in human urine.  This test provides a preliminary analytical test result, providing the concentration of the drug present in urine sample is above a set level. A more specific alternate chemical method must be used in order to obtain a confirmed analytical result.
 
The test package kit contains a test panel for 6 different drug groups and an instruction leaflet.
 
Gluten Intolerance Test
 
Gluten intolerance (or coeliac disease) is a lifelong genetically inherited intestinal disorder.
Damage to the inner surface of the small intestine is caused by a reaction to the ingestion of gluten. Gluten is the most common name for specific proteins found in all forms of wheat, rye and barley that are harmful to persons with coeliac disease. The SELFCheck Gluten Intolerance Test can aid in diagnosing coeliac disease, but the final diagnosis must be confirmed by a doctor.
Gluten intolerance is manifested by a broad range of symptoms and coeliac disease can be difficult to diagnose. The symptoms can range from mild weakness, bone pain, aphtous stomatitis to chronic diarrhea, abdominal bloating, and progressive weight loss. Skin disorders and disorders of the central nervous system can also exist.
 
Studies show that continuous consumption of gluten by diagnosed coeliacs increases the chance of stomach or colon cancer 40 to 100 times of that of the unaffected population (Goggins et al.: The American Journal of Gastroenterology. 1994, Vol.89,(8), 2-13.). Gluten intolerance can be diagnosed by relatively simple diagnostic tests. The testing can be done by screening the patient’s blood for antitissue transglutaminase (tTGA), antigliadin (AGA) and endomysium antibodies (EmA) and doing a biopsy on the injured areas of the intestines.

Our Gluten Intolerance Test Kit is a simple blood test for detecting antibodies associated with gluten intolerance. The test performance has been studied at the University of Tampere by comparing the result to the biopsy proven clinical diagnosis. The kit includes an alcohol-soaked swab, a lancet, a tube with glass capillary, a foil pouch containing the test strip, sample buffer solution and an instruction leaflet.
 
 
26

 
 
Menopause Test
 
Menopause occurs when a woman’s ovaries stop releasing eggs. At this time estrogen and progesterone levels also drop (estrogen and progesterone are female hormones that prepare the body for a possible pregnancy). Experts believe it is these changes to the body’s chemistry which cause menopausal symptoms.
 
This test measures the follicle stimulating hormone (FSH) in urine. If FSH levels are elevated, it is very likely that post-menopause was entered.  FSH in the female stimulates the growth of ovarian follicles and promotes follicular steroidogenesis. This stimulates luteinizing hormone (LH) production and leads to an LH surge, which in turn is the trigger for ovulation.  LH and FSH (among others) play important roles in regulating ovarian functions and menstrual cycle. The hormone levels are used to assess menstrual cycle, ovulation or the determination of menopause.   A change in the hormone production is responsible for menopause.  FSH levels usually (before Menopause) are between 2 and 20 IU/L (International Units per Liter), but rise and remain elevated (>25 IU/L) in Post-menopause.
 
Stomach Ulcer Test
 
An ulcer is damage to the inner lining of the stomach or the upper part of the intestine (duodenum).  The most common cause is infection with Helicobacter pylori and this is responsible for up to 90 per cent of all cases of peptic ulceration.  Helicobacter pylori is a minute bacteria living inside and under the lining of the stomach. The groups most often affected are elderly people and people in developing countries. Those who carry these bacteria have most probably been infected during childhood. The risk of acquiring infection for an adult is modest - less than 1 per cent every year.
 
The Stomach Ulcer Test is an immunochromatographic assay for qualitative determination of antibodies to Helicobacter pylori in whole blood. The test incorporates multilayer filtration and sandwich immunoassay systems in a single module, allowing both the pretreatment of whole blood sample and the immunochromatographic detection assay to be performed in one step.
 
Urine Infection Test
 
Urinary tract infections cause a frequent desire to urinate. Often only a small amount of urine is passed but there is a burning or scalding pain whilst urinating. It sometimes includes the involuntary passing of a small squirt of urine on coughing or laughing (stress incontinence).  Sometimes a little blood is passed in the urine, and affected people often have to get up during the night. Occasionally, there are other symptoms including fever, shivering, pain in the groin and a general feeling of being unwell. This may mean that the infection has spread to the kidneys (Pyelonephritis).
 
Urinary infections are caused by a number of germs. The most common germ is known as Escherichia coli, which normally lives in the bowel without causing harm. The infection may also be caused by other germs, including those acquired during sexual intercourse such as Chlamydia trachomatis, Trichomonas vaginalis, Haemophilus vaginalis or Candida albicans.
 
The Urinary Health Care Test provides a preliminary qualitative indication of a urinary tract infection. It was designed as a simple, cost effective solution to screen for reliable signs (3 parameters) of a urinary tract infection without the use of instrumentation.
 
The PROTEIN parameter is used for indication of protein, especially albumin, and serves for diagnosis of cardinal symptom for kidney disorders or illness of the urinary tract (mainly due to bacterial infections). The NITRITE parameter is used for indication of nitrate reducing bacteria und serves for diagnosis of bacterial infection of kidneys and urinary passages. The LEUCOCYTES parameter is used for indication of granulocyte-esterases and serves as diagnosis of inflammation of kidneys and/or urinary passages.

 
27

 

Female Chlamydia Test
 
Chlamydia is the most common and easily treatable STI.  It can be transmitted by sexual intercourse and oral sex by both men and women.  It often presents no symptoms in men or women unless it leads to complications – when treatment can sometimes be too late to stop permanent damage.
 
Apart from sexual health experts, certain doctors don't have sufficient knowledge to suspect Chlamydia when assessing a person's symptoms, and may not do an appropriate test.  Healthcare professionals are often unaware of how common the problem is and that it can be present without causing symptoms.
 
Our test is able to detect the bacteria which cause Chlamydia even if there are no symptoms; allowing the user to take pro-active steps in treating it.  A visible result from the test is achieved within 10 minutes.
 
Markets, Customers and Distribution
 
We are attempting to provide a partial solution to the increasing cost of healthcare in Canada.  We are initially going to limit our products to distribution in Canada, but may look at expanding into the US in the future.  Our management believes that the most likely marketplace for our products will be community based healthcare providers whose role will be to deliver more cost effective services and management to reduce the work load on centralized district general hospital facilities. We believe that acceptance and implementation of in-home screening tests offers direct savings in terms of early detection of disease and consequently faster clinical and medical interventions where abnormal outcomes occur.
 
We believe that individual doctors’ offices, drop-in clinics and pharmacy based medical services will serve as a market for our products. In addition, we market specific product packages to Hotel/Spa clinics, health clubs as well as the occupational health sector, universities and schools.
 
We anticipate that the following consumer groups will make up the majority of our market:
 
1.  
Individuals in their 50s and 60s who are seeking to maximize their retirement assets.  These are generally well educated, technology and health conscious and looking to limit their healthcare costs and achieve early detection of late onset diseases to ensure prompt intervention and treatment.
 
2.  
Females over the age of 25 - These are generally aware individuals, who have not yet had children.  With frequent coverage in the media of issues such as STDs and infertility, they may be more apt to invest in home screening products to stay up to date on their health status.
 
3.  
Individuals who consider wellness a lifestyle.  They are generally early middle aged, well educated, and prepared to use in home screening tests as part of their health and lifestyle program.  This may include cholesterol assessment as well as screening for food allergies and season disorders like asthma.
 
4.  
Individuals in need of chronic disease management and monitoring such as diabetes, heart disease, and osteoporosis.  Such diseases are often complex as serious secondary health issues can develop; diabetics need to monitor renal function and cholesterol regularly as part of the ongoing management.
 
 
28

 
 
Competition
 
We do not believe that there are direct competitors for our in home screening products in the market at the present time.  However, once we obtain the requisite regulatory approvals for our products and are able to begin sales, we hope to compete with standard diagnostic facilities such as medical or clinical laboratories as well as doctors’ offices.  These competitors have longer operating histories, better industry recognition and, in many cases, greater financial resources than we do.  Additionally, they are the established choice for diagnostics and consumers likely will have more confidence in them. In order for us to successfully compete in our industry we will need to:
 
·  
Establish the accuracy of our products;
 
·  
Build our brand recognition;
 
·  
Establish and develop relationships with distributors and retailers; and
 
·  
Increase our financial resources.
 
However, there can be no assurance that, even if we do these things, we will be able to compete effectively with the other companies in our industry. Nor can there be any assurance that we will receive the required government approvals.

Once we obtain the requisite regulatory approvals, we believe that we will be able to compete effectively in our industry because:
 
·  
standard diagnostics test at established providers are costly;
 
·  
our products can eliminate the requirement to travel in order to have tests performed;
 
·  
our products can eliminate the need to see general physicians before tests can be performed; and
 
·  
our products allow the consumer more privacy in matters which they do not wish to share with their physicians.
 
As we are a newly-established company, we face the same problems as other new companies starting up in an industry, such as lack of available funds. Our competitors may be substantially larger and better funded than us, and have significantly longer operating histories than us. In addition, they may develop similar technologies to ours and use the same methods as we do and generally be able to respond more quickly to new or emerging technologies and changes in legislation and regulations relating to the industry. Additionally, our competitors may devote greater resources to the development, promotion and sale of their products or services than we do. Increased competition could also result in loss of key personnel, reduced margins or loss of market share, any of which could harm our business.
 
Intellectual Property
 
We have not filed for any protection of our name or trademark.  As a distribution company we do not directly own any of the intellectual property rights attached to any of the products we distribute.  Valimedix has trademarked “SELFCheck” – a series of products which we distribute.
 
Research and Development
 
For the year ended April 30, 2010 we did not incur any research and development expenses.
 
 
29

 
 
Reports to Security Holders
 
We are subject to the reporting and other requirements of the Exchange Act and we intend to furnish our shareholders with annual reports containing financial statements audited by our independent auditors and to make available quarterly reports containing unaudited financial statements for each of the first three quarters of each year.
 
The public may read and copy any materials that we file with the SEC at the SEC's Public Reference Room at 100 F Street, NE, Washington, D.C. 20549.  The public may obtain information on the operation of the Public Reference Room by calling the SEC at 1-800-SEC-0330.  The SEC maintains an Internet site that contains reports, proxy and information statements, and other information regarding issuers that file electronically with the SEC.  The address of that site is www.sec.gov.
 
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 diagnostic kits and tools; products which we are distributing. 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 our diagnostic kits.  In Canada, as in the United States and Europe, diagnostic test kits are classified as medical devices and require the following licenses: 1) Product License; and 2) Establishment License.
 
Product License: Diagnostic tests kits are classified under 4 different classes. Class I, II, III, and IV.
 
Class I includes products of which several examples are already approved and marketed in Canada. 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. We are not marketing pregnancy test and therefore, we do not need to apply for approval under this class of products.
 
Class II products are those which do not need to be injected or inserted into the patient (non-invasive).  Often these tests kits are approved and sold in other parts of the world, but yet to be sold in Canada. The products which we are current focusing on distributing, and which are mentioned in this Prospectus, all belong to Class II. In order to secure the necessary license for these products, we are required to submit all the documentation which lead to the approval of the products in other countries. In our case, all of our products are already approved in Europe. Coinsequently, we are required to submit to the Canadian regulatory agency all the scientific data, results, approval process and certificates of good quality management, ISO 13485. Usually, products which have the ISO accreditation and approved by FDA or the European Union will qualify for approval in Canada. We anticipate that it will take 3-4 months following submission of the material to the Canadian Health Agency to obtain the license for marketing of the diagnostic tests in Canada.
 
Class III and IV include medical device 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.
 
 
30

 
 
Establishment License:  We are also required to obtain an establishment license for the marketing of our products. The intent of the medical device establishment licensing requirements is:
 
1-  
To ensure that the inspectorate is made aware of:
 
a)  
Who is importing and/or selling medical devices in Canada,
 
b)  
The identity of the manufacturers of the devices sold by the holder of the license holder, as well as the classification of those devices,
 
c)  
The identity of manufacturers of Class I and II devices
 
2-  
To require license holders to provide some assurance to the Inspectorate that they have met the regulatory requirements and have documented procedures in place, where applicable, related to distribution record, complaint handling, recalls, mandatory problem reporting and for handling, storage, delivery, installation, and servicing, with respect to the medical devices they sell.
 
Depending on the outcome of the regulatory review process for our products, we believe that the cost of obtaining required regulatory approvals will be anywhere from $1,000 to $20,000 per product.  The large variation is due to the uncertainty whether the products’ current European approvals will be accepted in North America.
 
We are required to have a facility, where we stare the products, and distribute from that site. We are required to provide the name of contact and the physical address of the warehouse that if the authorities decided to inspect that can be done. The facility requires a safe lock –up a person with complete documentation of the import export.

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  June 3,  2011 we had one employee, and 5 people working on a consulting basis. We plan to hire 4 new full time consultants or employees for marketing, distribution, commercialization and regulatory approvals in 2011 if we have sufficient capital.
 
Description of Property
 
We currently rent an office totaling approximately 200 square feet in downtown Vancouver and an assembly space of about 5,000 square feet in a warehouse location in Vancouver. For our office we pay approximately $250 per month. For our assembly area we pay approximately $5,000 per month. Our leases are for one year but can be extended on a similar basis.
 
 
31

 
 
Legal Proceedings
 
We are not aware of any pending or threatened legal proceedings which involve us or any of our subsidiaries, products or services.
 
Market for Common Equity and Related Stockholder Matters
 
Market Information
 
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.
 
The high and low bid prices of our common stock for the periods indicated below are as follows:
 
OTC Bulletin Board
 
Quarter Ended(1)
 
High
   
Low
 
                 
January 31, 2011
   
-
     
-
 
October 31, 2010
   
-
     
-
 
July 31, 2010
   
-
     
-
 
April 30, 2010
 
$
3.90
   
$
2.00
 
 
(1)  
The first trade of our common stock on the OTC Bulletin Board occurred on March 5, 2010.  There have been no trades since March 25, 2010.
 
Rule 144
 
None of our issued and outstanding common stock is currently eligible for sale pursuant to Rule 144 under the Securities Act of 1933, as amended. The SEC has recently adopted amendments to Rule 144 which became effective on February 15, 2008, and will apply to securities acquired both before and after that date. Under these amendments, and subject to the special provisions for a “shell company” as described below, a person who has beneficially owned restricted shares of our common stock for at least six months would be entitled to sell their securities provided that (i) such person is not deemed to have been one of our affiliates at the time of, or at any time during the three months preceding, a sale and (ii) we are subject to the periodic reporting requirements of the Securities Exchange Act of 1934 for at least three months before the sale.
 
 
32

 
 
Sales under Rule 144 by Affiliates
 
Subject to the special provisions for a “shell company” as described below, Persons who have beneficially owned restricted shares of our common stock for at least six months but who are our affiliates at the time of, or at any time during the three months preceding, a sale, would be subject to additional restrictions, by which such person would be entitled to sell within any three-month period only a number of securities that does not exceed the greater of either of the following:
 
·  
1% of the number of shares of common stock then outstanding; and
 
·  
the average weekly trading volume of the common stock during the four calendar weeks preceding the filing of a notice on Form 144 with respect to the sale.
 
·  
Sales under Rule 144 by our affiliates are also limited by manner of sale provisions and notice requirements and to the availability of current public information about us.
 
Sales Under Rule 144 by Non-Affiliates
 
Under Rule 144, subject to the special provisions for a “shell company” as described below, a person who is not deemed to have been one of our affiliates at the time of or at any time during the three months preceding a sale, and who has beneficially owned the restricted ordinary shares proposed to be sold for at least six (6) months, including the holding period of any prior owner other than an affiliate, is entitled to sell their shares of common stock without complying with the manner of sale and volume limitation or notice provisions of Rule 144. We must be current in our public reporting if the non-affiliate is seeking to sell under Rule 144 after holding his, her, or its shares of common stock between 6 months and one year. After one year, non-affiliates do not have to comply with any other Rule 144 requirements.
 
Special Provisions for “Shell Companies”
 
The provisions of Rule 144 providing for the six month holding period are not available for the resale of securities initially issued by a "shell company" which is defined as an issuer, other than a business combination related shell company, as defined in Rule 405, or an asset-backed issuer, as defined in Item 1101(b) of Regulation AB, that has no or nominal operations; and either no or nominal assets; assets consisting solely of cash and cash equivalents; or assets consisting of any amount of cash and cash equivalents and nominal other assets; or an issuer that has been at any time previously an issuer described in paragraph (i)(1)(i) of Rule 144. Notwithstanding paragraph (i)(1) of Rule 144, if the issuer of the securities previously had been an issuer described in paragraph (i)(1)(i) but has ceased to be an issuer described in paragraph (i)(1)(i); is subject to the reporting requirements of Section 13 or 15(d) of the Exchange Act; has filed all reports and other materials required to be filed by Section 13 or 15(d) of the Exchange Act, as applicable, during the preceding 12 months (or for such shorter period that the issuer was required to file such reports and materials), other than Form 8-K reports, and has filed current "Form 10 information" with the SEC reflecting its status as an entity that is no longer an issuer described in paragraph (i)(1)(i), then those securities may be sold subject to the requirements of Rule 144 after one year has elapsed from the date that the issuer filed "Form 10 information" with the SEC. The term "Form 10 information" means the information that is required by SEC Form 10, to register under the Exchange Act each class of securities being sold under Rule 144. The Form 10 information is deemed filed when the initial filing is made with the SEC. In order for Rule 144 to be available, we must have certain information publicly available. We plan to publish information necessary to permit transfer of shares of our common stock in accordance with Rule 144 of the Securities Act, inasmuch as we have filed the registration statement with respect to this prospectus. 

Holders
 
As of  June 3,  2011, there were 39 holders of record of our common stock.
 
 
33

 
 
Dividends
 
To date, we have not paid dividends on shares of our common stock and we do not expect to declare or pay dividends on shares of our common stock in the foreseeable future.  The payment of any dividends will depend upon our future earnings, if any, our financial condition, and other factors deemed relevant by our Board of Directors.
 
Equity Compensation Plans
 
As of  June 3,  2011, we did not have any equity compensation plans.
 
 
34

 

Financial Statements and Supplementary Data
 
Eternity Healthcare Inc.
Financial Statements
(Expressed in US dollars)
January 31, 2011
(unaudited)
 
Interim Consolidated Balance Sheets as of January 31, 2011 and April 30, 2010;
F–1
   
Interim Consolidated Statements of Loss and Comprehensive Loss for the three months ended January 31, 2011 and January 31, 2010, for the nine months ended January 31, 2011 and January 31, 2010 and for the period from December 10, 2009 (Inception) through January 31, 2011.
F–2
   
Interim Consolidated Statements of Cash Flows for the three months ended January 31, 2011 and January 31, 2010, for the nine months ended January 31, 2011 and January 31, 2010 and for the period from December 10, 2009 (Inception) through January 31, 2011.
F–3
   
Interim Consolidated Statements of Changes in Stockholders’ Equity (Deficiency) since inception through January 31, 2011.
F–4
   
Notes to Interim Consolidated Financial Statements
F–5
   
 
Eternity Healthcare Inc.
Financial Statements
(Expressed in US dollars)
April 30, 2010
 
Report of Independent Registered Public Accounting Firm
F–16
   
Balance Sheet as of April 30, 2010
F–17
   
Statements of Loss and Comprehensive Loss and Deficit for the period from December 10, 2009 (inception) to April 30, 2010
F–18
   
Statement of Cash Flows for the period from December 10, 2009 (inception) to April 30, 2010
F–19
   
Statement of Changes in Stockholders’ Deficiency as at April 30, 2010
F–20
   
Notes to the Financial Statements
F–21
 
 
35

 
 
Eternity Healthcare Inc.
(formerly Kid’s Book Writer Inc.)
(A Development Stage Company)
Interim Consolidated Balance Sheets
(Expressed in U.S. Dollars)
(Unaudited)
 
 
   
As at 31 January 2011
(Restated)
   
As at 30 April
2010
(Audited)
 
     $        $  
               
Assets
             
               
Current
             
Cash and cash equivalents
    18,729       5,341  
                 
Equipment (Note 4)
    647       -  
                 
      19,376       5,341  
                 
Liabilities
               
                 
Current
               
Accounts payable and accrued liabilities (Note 5)
    9,381       4,943  
Due to related parties (Note 6)
    127,909       30,697  
                 
      137,290       35,640  
                 
Stockholders’ deficiency
               
Capital stock (Note 7)
               
Authorized
               
300,000,000 common shares, par value $0.001
               
Issued and outstanding
               
31 January 2011 – 63,575,000 common shares
               
30 April 2010 – 575,000 common shares
    60,380       380  
Accumulated other comprehensive loss
    (2,408 )     (914 )
Deficit, accumulated during the development stage
    (175,886 )     (29,765 )
                 
      (117,914 )     (30,299 )
                 
      19,376       5,341  
 
Nature and Continuance of Operations (Note 1), Commitment (Note 8) and Subsequent Events (Note 11)
 
The accompanying notes are an integral part of these interim consolidated financial statements.
 
 
F-1

 
 
Eternity Healthcare Inc.
(formerly Kid’s Book Writer Inc.)
(A Development Stage Company)
Interim Consolidated Statements of Loss and Comprehensive Loss
(Expressed in U.S. Dollars)
(Unaudited)
 
 
   
For the period from the date of inception on 10 December 2009 to 31 January 2011
   
For the three month period ended 31 January 2011
(Restated)
   
For the nine month period ended 31 January 2011
(Restated)
   
For the period from the date of inception on 10 December 2009 to 31 January 2010
 
      $       $       $       $  
                                 
Expenses
                               
Bank charges and interest
    495       125       343       6  
Consulting fees
    5,302       2,916       5,302       -  
Depreciation
    80       60       80       -  
Legal and accounting
    46,524       22,984       26,911       -  
License fee
    10,000       -       -       -  
Office and miscellaneous
    1,607       760       1,607       -  
Research and development
    28,999       -       28,999       -  
                                 
Net loss before other items
    (93,007 )     (26,845 )     (63,242 )     (6 )
                                 
Other items
                               
Excess of consideration over net assets purchased from Eternity BC (Note 1)
    (82,879 )     -       -       -  
                                 
Net loss for the period
    (175,886 )     (26,845 )     (63,242 )     (6 )
                                 
Net loss per share – Basic and diluted
            (0.000 )     (0.001 )     (0.000 )
                                 
Weighted average number of common shares outstanding
            61,904,076       60,634,692       60,000,000  
                                 
Comprehensive loss
                               
Net loss for the period
    (175,886 )     (26,845 )     (63,242 )     (6 )
Foreign currency translation adjustment
    (2,408 )     (573 )     (1,494 )     -  
                                 
Comprehensive loss for the period
    (178,294 )     (27,418 )     (64,736 )     (6 )
                                 
Comprehensive loss per share – Basic and diluted
            (0.000 )     (0.001 )     (0.000 )
 
The accompanying notes are an integral part of these interim consolidated financial statements.
 
 
F-2

 
 
Eternity Healthcare Inc.
(formerly Kid’s Book Writer Inc.)
(A Development Stage Company)
Interim Consolidated Statements of Cash Flows
(Expressed in U.S. Dollars)
(Unaudited)
 
   
For the period from the date of inception on 10 December 2009 to 31 January 2011
   
For the three month period ended 31 January 2011
(Restated)
   
For the nine month period ended 31 January 2011
(Restated)
   
For the period from the date of inception on 10 December 2009 to 31 January 2010
 
      $       $       $       $  
                                 
Cash flows used in operating activities
                               
Net loss for the period
    (175,886 )     (26,845 )     (63,242 )     (6 )
Adjustments to reconcile loss to net cash used by operating activities:
                               
Depreciation
    80       60       80       -  
Excess of consideration over net assetspurchased from Eternity BC (Note 1)
    82,879       -       -       -  
Changes in operating assets and liabilities:
                               
   Decrease in amounts receivable
    -       848       -       -  
Increase in accounts payable and accruedliabilities
    8,481       961       3,538       -  
Increase (decrease) in due to related parties
    28,941       12,211       4,966       -  
                                 
      (55,505 )     (12,765 )     (54,658 )     (386 )
                                 
Cash flows used in investing activities
                               
Purchase of equipment (Note 4)
    (727 )     -       (727 )     -  
                                 
Cash flows from financing activities
                               
Common shares issued for cash
    380       -       -       380  
Bank indebtedness
    -       -       -       6  
Increase in due to related parties
    76,989       26,653       70,267       -  
                                 
      77,369       26,653       70,267       386  
                                 
Effect of exchange rate changes on cash and cash equivalents
    (2,408 )     (573 )     (1,494 )     -  
                                 
Increase in cash and cash equivalents
    18,729       13,315       13,388       -  
                                 
Cash and cash equivalents, beginning of period
    -       5,414       5,341       -  
                                 
Cash and cash equivalents, end of period
    18,729       18,729       18,729       -  
 
Supplemental Disclosures with Respect to Cash Flows (Note 10)
 
The accompanying notes are an integral part of these interim consolidated financial statements.
 
 
F-3

 

Eternity Healthcare Inc.
(A Development Stage Company)
Interim Statements of Changes in Stockholders’ Equity
(Expressed in U.S. Dollars)
(Unaudited)
 
   
Number of
shares issued
   
Capital Stock
   
Accumulated other comprehensive loss
   
Deficit accumulated during the development stage
   
Stockholders’ deficiency
 
            $       $       $       $  
Balance at 10 December 2009 (inception)
                                     
Retroactive adjustment - reverse acquisition
   (Note 1)
    575,000       380       -       -       380  
Foreign currency translationadjustment
    -       -       (914 )     -       (914 )
Net loss for the period
    -       -       -       (29,765 )     (29,765 )
                                         
Balance at 30 April 2010
    575,000       380       (914 )     (29,765 )     (30,299 )
Recapitalization - reverse acquisition (Note 1)
    3,000,000       -       -       -       -  
Common shares issued - reverse acquisition(Notes 1 and 7)
    60,000,000       60,000       -       (82,879 )     (22,879 )
Foreign currency translationadjustment
    -       -       (1,494 )     -       (1,494 )
Net loss for the period
    -       -       -       (63,242 )     (63,242 )
                                         
Balance at 31 January 2011
    63,575,000       60,380       (2,408 )     (175,886 )     (117,914 )
 
The accompanying notes are an integral part of these interim consolidated financial statements.
 
 
F-4

 
 
 
1.            Nature and Continuance of Operations
 
Eternity Healthcare Inc. (the “Company”) was incorporated under the laws of the State of Nevada on 24 October 2007 under the name Kid’s Book Writer, Inc.  On 23 September 2010, the Company changed its name to Eternity Healthcare Inc., and effected a reverse 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 an extensive range of diagnostic kits, general lifestyle supplements and many other management products and resources.
 
On 13 December 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 10 December 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 7).
 
The Share Exchange Agreement, which represented 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 (Note 3).
 
Accordingly, the assets and liabilities of Eternity BC are reported at 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 13 December 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 value of the net assets of the Company acquired by Eternity BC was the same as their historical book value, being a deficiency of $22,879.
 
The Company is a development stage enterprise, as defined in ASC 915-10, “Development Stage Entities”. The Company is devoting all of its present efforts in securing and establishing a new business, and its planned principle operations have not commenced, and, accordingly, no revenue has been derived during the organization period.
 
On 11 March 2010, the Company entered into a distribution and sale agreement (the “Distribution Agreement”) with ValiMedix Limited (“ValiMedix”).  ValiMedix is incorporated under the laws of the United Kingdom as a private limited company. ValiMedix is a wholly-owned subsidiary of ValiRx PLC (“ValiRx”), a company incorporated under the laws of United Kingdom and listed on the AIM market of the London Stock Exchange PLC.  Under the terms of the Distribution Agreement, the Company has the exclusive and non-exclusive distribution rights to distribute, market, promote, detail, advertise and sell certain products (the “Licensed Products”) in Canada and the United States as defined in the agreement (Note 8).
 
 
F-5

 
 
Since signing the Distribution Agreement with ValiMedix, the Company has engaged in organizational and start up activities, including developing a new business plan, making arrangements for office space and raising additional capital.  The Company has generated no revenue from product sales and does not have any pharmaceutical products currently available for sale.
 
The Company’s interim consolidated financial statements as at 31 January 2011 and for the nine month period then ended 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 $63,242 for the nine month period ended 31 January 2011 (cumulative – $175,886) and has a working capital deficit of $118,561 as at 31 January 2011 (30 April 2010 – $30,299).
 
Management cannot provide assurance that the Company will ultimately achieve profitable operations or become cash flow positive, or raise additional debt and/or equity capital.  Management believes that the Company’s capital resources should be adequate to continue operating and maintaining its business strategy during the fiscal year ending 30 April 2011.  However, if the Company is unable to raise additional capital in the near future, due to the Company’s liquidity problems, management expects that the Company will need to curtail operations, liquidate assets, seek additional capital on less favorable terms and/or pursue other remedial measures.  These interim consolidated financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
 
As at 31 January 2011, the Company has suffered losses from development stage activities to date.  Although management is currently attempting to implement its business plan, and is seeking additional sources of equity or debt financing, there is no assurance these activities will be successful.  These factors raise substantial doubt about the ability of the Company to continue as a going concern.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
 
2.            Significant Accounting Policies
 
The following is a summary of significant accounting policies used in the preparation of these 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.
 
 
F-6

 
 
Cash and cash equivalents
 
Cash and cash equivalents include highly liquid investments with original maturities of three months or less.
 
Foreign currency translation
 
The Company’s functional currency is the Canadian dollar and reporting currency is the U.S. dollar.  All transactions initiated in other currencies are translated into the reporting currency in accordance with ASC 830, “Foreign Currency Matters” as follows:
 
i)  
Assets and liabilities at the rate of exchange in effect at the balance sheet date, and
ii)  
Revenue and expense items at rate of exchange at the dates on which those elements are recognized.
 
Gains and losses on translation are included in other comprehensive income (loss) in stockholders’ deficiency for the period.
 
Financial instruments
 
Fair Value
 
The carrying values of cash and cash equivalents, 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
 
The Company’s financial instruments that are exposed to concentrations of credit risk primarily consist of its cash and cash equivalents. The Company places its cash with financial institutions of high credit worthiness. At times, its cash with a particular financial institution may exceed any applicable government insurance limits.
 
Currency Risk
 
The Company’s functional currency is Canadian dollars and reporting currency is the U.S. dollar. Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income. Foreign currency transactions are primarily undertaken in Canadian dollars. The Company has not, to the date of these interim consolidated financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.
 
 
F-7

 
 
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 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. 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.
 
Comprehensive loss
 
ASC 220, “Comprehensive Income”, establishes standards for the reporting and display of comprehensive loss and its components in the financial statements. As at 30 April 2010, 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 39 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.
 
 
F-8

 
 
 
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.
 
Comparative information
 
Certain comparative figures have been reclassified in accordance with the current period’s presentation.
 
Recent accounting pronouncements
 
In January 2010, the Financial Accounting Standards Board (“FASB”) issued ASU 2010-06, “Improving Disclosures about Fair Value Measurements. This update requires additional disclosure within the roll forward of activity for assets and liabilities measured at fair value on a recurring basis, including transfers of assets and liabilities between Level 1 and Level 2 of the fair value hierarchy and the separate presentation of purchases, sales, issuances and settlements of assets and liabilities within Level 3 of the fair value hierarchy. In addition, the update requires enhanced disclosures of the valuation techniques and inputs used in the fair value measurements within Levels 2 and 3. The new disclosure requirements are effective for interim and annual periods beginning after 15 December 2009, except for the disclosure of purchases, sales, issuances and settlements of Level 3 measurements. Those disclosures are effective for fiscal years beginning after 15 December 2010. As ASU 2010-06 only requires enhanced disclosures, the Company does not expect that the adoption of this update will have a material effect on its financial statements.
 
In February 2010, the FASB issued ASU No. 2010-09, “Amendments to Certain Recognition and Disclosure Requirements”, which eliminates the requirement for SEC filers to disclose the date through which an entity has evaluated subsequent events.  ASU No. 2010-09 is effective for fiscal quarters beginning after 15 December 2010.  The adoption of ASU No. 2010-09 will not have a material impact on the Company’s financial statements.
 
 
F-9

 
 
3.            Restatement of the Financial Statements
 
The interim consolidated financial statements of the Company as at 31 January 2011 and for the three and nine month period ended 31 January 2011 have been restated to account for the Share Exchange Transaction as a reverse acquisition in accordance with the guidance provided in ASC 805-40, “Business Combinations” (Notes 1 and 7).   The Company originally accounted for the Share Exchange Transaction as a business combination rather than a reverse merger.
 
The restated interim consolidated financial statements correctly represent the continuation of the financial statements of Eternity BC except for its capital structure, which has been retroactively adjusted to reflect the legal capital of the Company in accordance with ASC 805-40.  The original interim consolidated financial statements incorrectly presented the consolidated financial statements as continuation of the financial statements of the Company while Eternity BC was presented as a wholly-owned subsidiary.  The following adjustments reflect the changes necessary to apply the guidance in ASC 805-40 for a reverse merger.
 
The effect of the restatement on the interim consolidated balance sheet as at 31 January 2011 is as follows:
 
   
Formerly Reported
   
Increase (Decrease)
   
As
Restated
 
      $       $       $  
                         
Assets
                       
Cash and cash equivalents
    18,730       (1 )     18,729  
Equipment
    647       -       647  
License
    201,425       (201,425 )     -  
                         
Total assets
    220,802       (201,426 )     19,376  
                         
Liabilities
                       
Accounts payable and accrued liabilities
    9,381       -       9,381  
Due to related parties
    127,909       -       127,909  
Future income tax liability
    68,485       (68,485 )     -  
                         
      205,775       (68,485 )     137,290  
                         
Shareholders’ deficiency
                       
Capital stock
    63,575       (3,195 )     60,380  
Additional paid-in capital
    95,170       (95,170 )     -  
Accumulated other comprehensive loss
    -       (2,408 )     (2,408 )
Deficit
    (143,718 )     (32,168 )     (175,886 )
                         
      15,027       (132,941 )     (117,914 )
                         
Total liabilities and shareholders’ deficiency
    220,802       (201,426 )     19,376  
 
 
F-10

 
 
The effect of the restatement on the interim consolidated statement of loss and comprehensive loss for the three month period ended 31 January 2011 is as follows:
 
   
Formerly Reported
   
Increase (Decrease)
   
As
Restated
 
      $       $       $  
                         
Expenses
                       
Bank charges and interest
    68       57       125  
Consulting fees
    1,137       1,779       2,916  
Depreciation
    61       (1 )     60  
Legal and accounting
    33,918       (10,934 )     22,984  
Office and miscellaneous
    557       203       760  
                         
Net loss
    35,741       (8,896 )     26,845  
                         
Basic and diluted loss per share
    (0.00 )     (0.00 )     (0.00 )
                         
Weighted average number of shares outstanding
    35,882,692       26,021,384       61,904,076  
 
The effect of the restatement on the interim consolidated statement of loss and comprehensive loss for the nine month period ended 31 January 2011 is as follows:
 
   
Formerly Reported
   
Increase (Decrease)
   
As
Restated
 
      $       $       $  
                         
Expenses
                       
Bank charges and interest
    68       275       343  
Consulting fees
    1,137       4,165       5,302  
Depreciation
    61       19       80  
Legal and accounting
    39,250       (12,339 )     26,911  
Management fees
    30,000       (30,000 )     -  
Office and miscellaneous
    557       1,050       1,607  
Research and development
    -       28,999       28,999  
                         
Net loss
    71,073       (7,831 )     63,242  
                         
Basic and diluted loss per share
    (0.01 )     0.00       (0.00 )
                         
Weighted average number of shares outstanding
    13,785,909       46,848,783       60,634,692  
 
 
F-11

 
 
The effect of the restatement on the interim consolidated statements of cash flows for the three and nine month period ended 31 January 2011 is as follows:
 
   
Formerly Reported
   
Increase (Decrease)
   
As
Restated
 
      $       $       $  
                         
For the three month period ended 31 January 2011
                       
Cash flows used in operating activities
    (10,129 )     (2,636 )     (12,765 )
Cash flows used in investing activities
    14,368       (14,368 )     -  
Cash flows from financing activities
    14,490       12,163       26,653  
Effect of exchange rate changes on cash and cash equivalents
    -       (573 )     (573 )
                         
Increase in cash and cash equivalents
    18,729       (5,414 )     13,315  
                         
For the nine month period ended 31 January 2011
                       
Cash flows used in operating activities
    (10,128 )     (44,530 )     (54,658 )
Cash flows used in investing activities
    14,368       (15,095 )     (727 )
Cash flows from financing activities
    14,490       55,777       70,267  
Effect of exchange rate changes on cash and cash equivalents
    -       (1,494 )     (1,494 )
                         
Increase in cash and cash equivalents
    18,730       (5,342 )     13,388  
 
4.             Equipment
 
                Net book value  
   
Cost
   
Accumulated
depreciation
   
31 January
2011
   
30 April 2010
(Audited)
 
      $       $       $       $  
                                 
Computer equipment
    727       80       647       -  
 
During the nine month period ended 31 January 2011, total additions to equipment were $727 (30 April 2010 – $Nil).
 
5.             Accounts Payable and Accrued Liabilities
 
Accounts payable and accrued liabilities are non-interest bearing, unsecured and have settlement dates within one year.
 
 
F-12

 
 
6.            Due to Related Parties and Related Party Transactions
 
i.  
As at 31 January 2011, $8,781 is payable to the President of the Company related to cash advances provided to the Company (30 April 2010 – receivable of $198). This balance is non-interest bearing, unsecured and has no fixed terms of repayment.
 
ii.  
As at 31 January 2011, $Nil is receivable from a company controlled by the Chief Executive Officer of the Company related to operating expenses paid by the Company on its behalf (30 April 2010 – $816). This balance is non-interest bearing, unsecured and has no fixed terms of repayment.
 
iii.  
As at 31 January 2011, $119,128 is payable to the Chief Executive Officer of the Company related to operating expenses paid on behalf of the Company and cash advances provided to the Company in the amount of $35,028 and $84,100, respectively (30 April 2010 – $24,989 and $6,722, respectively). This balance is non-interest bearing, unsecured and has no fixed terms of repayment.
 
7.            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 1 November 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.  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 13 December 2010, the Company issued 60,000,000 common shares of the Company with a value of $60,000 related to the Share Exchange Transaction (Notes 1 and 3).
 
8.            Commitment
 
On 11 March 2010, the Company entered into a Distribution Agreement with ValiMedix (Note 1).
 
The basic terms of the Distribution Agreement are as follows:
 
i.  
ValiMedix has granted exclusive distribution rights to the Company to distribute, market, promote, advertise and sell the Licensed Products, as defined in the Distribution Agreement, which consists of In Vitro diagnostic products, exclusively in Canada and non-exclusively in the United States;
 
ii.  
The Company paid ValiMedix $10,000 upon the signing of the Distribution Agreement;
 
 
F-13

 
 
iii.  
The Company is required to pay ValiMedix a 3% royalty on net sales of the Licensed Products as set out in the Distribution Agreement;
 
iv.  
ValiMedix will supply all Licensed Products to the Company under the Distribution Agreement;
 
v.  
ValiMedix is responsible for all liabilities in respect to the Licensed Products for any and all matters arising out of the manufacturing of the Licensed Products; and
 
vi.  
The Distribution Agreement shall remain in effect for a period of 20 years from the Commencement Date and may be renewed for an additional 10 year term provided that the Company meets its minimum purchase quota. The Company may further renew the Distribution Agreement for successive one year terms, unless at least 30 days prior to the renewal date, as defined in the Distribution Agreement, the Company notifies ValiMedix that it elects not to permit the extension of the term.
 
9.             Income Taxes
 
The Company has losses carried forward for income tax purposes to 31 January 2011. There are no current or deferred tax expenses for the nine month period ended 31 January 2011 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 provision for refundable federal income tax consists of the following:
 
   
For the nine month period ended 31 January 2011
(Restated)
 
      $  
Deferred tax asset attributable to:
       
Current operations
    17,748  
Non-deductible items
    -  
Change in foreign exchange rate
    165  
Change in tax rates
    1,837  
Change in valuation allowance
    (19,750 )
         
Net refundable amount
    -  
 
 
F-14

 
 
The composition of the Company’s deferred tax asset as at 31 January 2011 and 30 April 2010 is as follows:
 
   
As at
31 January 2011
(Restated)
   
As at
30 April 2010
(Audited)
 
      $       $  
Net operating loss carryforward
    23,748       4,018  
Equipment
    20       -  
                 
Less: Valuation allowance
    (23,768 )     (4,018 )
                 
Net deferred tax asset (liability)
    -       -  
 
As at 31 January 2011, the Company has unused non-capital losses for Canadian tax purposes and net operating losses for US tax purposes of approximately $91,787 and $2,358, respectively, that are available to offset future taxable income.  These losses expire as follows:
 
Year
 
Canadian
   
US
   
Total
 
      $       $       $  
                         
2030
    30,983       -       30,983  
2031
    60,804       2,358       63,162  
                         
      91,787       2,358       94,145  
 
10.          Supplemental Disclosures with Respect to Cash Flows
 
   
For the period from the date of incorporation on 10 December 2009 to 31 January 2011
   
For the three month period ended 31 January 2011
   
For the nine month period ended 31 January 2011
 
      $       $       $  
                         
Cash paid during the period for interest
    -       -       -  
Cash paid during the period for income taxes
    -       -       -  
 
11.          Subsequent Events
 
There are no subsequent events to be reported that occurred during the period from the period ended 31 January 2011 to the date the financial statements were available to be issued on 31 March 2011.
 
 
F-15

 
 
James Stafford
   
   
    
    James Stafford, Inc.
Chartered Accountants
Suite 350 – 1111 Melville Street
Vancouver, British Columbia
Canada V6E 3V6
Telephone +1 604 669 0711
Facsimile +1 604 669 0754
 
 
 
Report of Independent Registered Public Accounting Firm
 
To the Board of Directors and Stockholders of
Eternity Healthcare Inc.
(A Development Stage Company)
 
We have audited the balance sheet of Eternity Healthcare Inc. (A Development Stage Company) (the “Company”) as of 30 April 2010, and the related statements of loss, comprehensive loss and deficit, cash flows and changes in stockholders’ deficiency for the period from the date of incorporation on 10 December 2009 to 30 April 2010.  These financial statements are the responsibility of the Company’s management. Our responsibility is to express an opinion on these financial statements based on our audit.
 
We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States of America).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the 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 audit 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 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 audit provides a reasonable basis for our opinion.
 
In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of the Company as of 30 April 2010 and the results of its operations and its cash flows for the period from the date of incorporation on 10 December 2009 to 30 April 2010 in conformity with accounting principles generally accepted in the United States of America.
 
The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  As discussed in Note 1 to the financial statements, conditions exist which raise substantial doubt about the Company’s ability to continue as a going concern unless it is able to generate sufficient cash flows to meet its obligations and sustain its operations.  Management’s plans in regard to these matters are also described in Note 1. The financial statements do not include any adjustments that might result from the outcome of this uncertainty.
 
 
/s/ James Stafford.
Chartered Accountants
 
 
Vancouver, Canada
 
3 December 2010

 
 
F-16

 

Eternity Healthcare Inc.
(A Development Stage Company)
Balance Sheet
(Expressed in U.S. Dollars)
As at 30 April 2010
 
       
      $  
         
Assets
       
         
Current
       
Cash and cash equivalents
    5,341  
         
Liabilities
       
         
Current
       
Accounts payable and accrued liabilities (Note 4)
    4,943  
Due to related parties (Note 5)
    30,697  
         
      35,640  
         
Stockholders’ deficiency
       
Capital stock (Note 6)
       
Authorized
       
Unlimited number of common shares without par value
       
Issued and outstanding
       
30 April 2010 – 4,000,000 common shares
    380  
Accumulated other comprehensive loss
    (914 )
Deficit, accumulated during the development stage
    (29,765 )
         
      (30,299 )
         
      5,341  
Nature and Continuance of Operations (Note 1), Commitment (Note 7) and Subsequent Events (Note 10)
 
The accompanying notes are an integral part of these financial statements.
 
 
F-17

 

Eternity Healthcare Inc.
(A Development Stage Company)
Statement of Loss, Comprehensive Loss and Deficit
(Expressed in U.S. Dollars)
For the period from the date of incorporation on 10 December 2009 to 30 April 2010
 
      $  
         
Expenses
       
Bank charges and interest
    152  
Legal and accounting
    19,613  
License fee (Note 7)
    10,000  
         
Net loss for the period, being deficit end of period
    (29,765 )
         
Loss per share – Basic and diluted
    (0.007 )
         
Weighted average number of shares outstanding
    4,000,000  
         
Comprehensive loss
       
Net loss for the period
    (29,765 )
Foreign currency translation adjustment
    (914 )
         
Comprehensive loss for the period
    (30,679 )
         
Comprehensive loss per share – Basic and diluted
    (0.008 )
 
The accompanying notes are an integral part of these financial statements.
 
 
 
F-18

 

Eternity Healthcare Inc.
(A Development Stage Company)
Statement of Cash Flows
(Expressed in U.S. Dollars)
For the period from the date of incorporation on 10 December 2009 to 30 April 2010
 
      $  
         
Cash flows used in operating activities
       
Net loss for the period
    (29,765 )
Changes in operating assets and liabilities
       
Increase in accounts payable and accrued liabilities
    4,943  
Increase in due to related parties
    23,975  
         
      (847 )
         
Cash flows from financing activities
       
Common shares issued for cash
    380  
Increase in due to related parties
    6,722  
         
      7,102  
         
Effect of exchange rate changes on cash and cash equivalents
    (914 )
         
Increase in cash and cash equivalents, being cash and cash equivalents, end of period
    5,341  
 
Supplemental Disclosures with Respect to Cash Flows (Note 9)
 
The accompanying notes are an integral part of these financial statements.

 
 
F-19

 

Eternity Healthcare Inc.
(A Development Stage Company)
Statements of Changes in Stockholders’ Deficiency
(Expressed in U.S. Dollars)
 
   
Number of shares issued
   
Capital stock
   
Accumulated other comprehensive loss
   
Deficit, accumulated during the development stage
   
Stockholders’ deficiency
 
            $       $       $       $  
Balance at 10 December 2009 (incorporation)
                                     
Common shares issued – cash($0.000095 per share) (Note 6)
    4,000,000       380       -       -       380  
Foreign currency translation adjustment
    -       -       (914 )     -       (914 )
Net loss for the period
    -       -       -       (29,765 )     (29,765 )
                                         
Balance at 30 April 2010
    4,000,000       380       (914 )     (29,765 )     (30,299 )
 
The accompanying notes are an integral part of these financial statements.

 
 
F-20

 
 
 
Eternity Healthcare Inc.
(A Development Stage Company)
Notes to Financial Statements
(Expressed in U.S. Dollars)
30 April 2010

 
1.        Nature and Continuance of Operations
 
Eternity Healthcare Inc. (the “Company”) was incorporated under the federal laws of Canada on 10 December 2009. The Company is focused on offering an extensive range of diagnostic kits, general lifestyle supplements and many other management products and resources.
 
The Company is a development stage enterprise, as defined in Accounting Standards Codification (the “Codification” or “ASC”) 915-10, “Development Stage Entities”. The Company is devoting all of its present efforts to securing and establishing a new business, its planned principle operations have not commenced, and, accordingly, no revenue has been derived during the organization period.
 
On 11 March 2010, the Company entered into a distribution and sale agreement (the “Distribution Agreement”) with ValiMedix Limited (“ValiMedix”).  ValiMedix is incorporated under the laws of the United Kingdom as a private limited company. ValiMedix is a wholly-owned subsidiary of ValiRx PLC (“ValiRx”), a company incorporated under the laws of United Kingdom and listed on the AIM market of the London Stock Exchange PLC.  Under the terms of the Distribution Agreement, the Company has the exclusive and non-exclusive distribution rights to distribute, market, promote, detail, advertise and sell certain products (the “Licensed Products”) in Canada and the United States as defined in the agreement (Note 7).
 
Since signing the Distribution Agreement with ValiMedix, the Company has engaged in organizational and start up activities, including developing a new business plan, making arrangements for office space and raising additional capital.  The Company has generated no revenue from product sales and does not have any pharmaceutical products currently available for sale.
 
The Company’s financial statements as at 30 April 2010 and for the period from the date of incorporation on 10 December 2009 to 30 April 2010 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 a net loss of $29,765 for the period from the date of incorporation on 10 December 2009 to 30 April 2010 and has a working capital deficit of $30,299 as at 30 April 2010.
 
Management cannot provide assurance that the Company will ultimately achieve profitable operations or become cash flow positive, or raise additional debt and/or equity capital.  Management believes that the Company’s capital resources should be adequate to continue operating and maintaining its business strategy during the fiscal year ending 30 April 2011.  However, if the Company is unable to raise additional capital in the near future, due to the Company’s liquidity problems, management expects that the Company will need to curtail operations, liquidate assets, seek additional capital on less favorable terms and/or pursue other remedial measures.  These financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.
 
As at 30 April 2010, the Company has suffered losses from development stage activities to date.  Although management is currently attempting to implement its business plan, and is seeking additional sources of equity or debt financing, there is no assurance these activities will be successful.  These factors raise substantial doubt about the ability of the Company to continue as a going concern.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

 
 
F-21

 
 
 
Eternity Healthcare Inc.
(A Development Stage Company)
Notes to Financial Statements
(Expressed in U.S. Dollars)
30 April 2010

 
2.        Significant Accounting Policies
 
The following is a summary of significant accounting policies used in the preparation of these 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.
 
Cash and cash equivalents
 
Cash and cash equivalents include highly liquid investments with original maturities of three months or less.
 
Foreign currency translation
 
The Company’s functional currency is the Canadian dollar and reporting currency is the U.S. dollar.  All transactions initiated in other currencies are translated into the reporting currency in accordance with ASC 830, “Foreign Currency Matters” as follows:
 
i)  Assets and liabilities at the rate of exchange in effect at the balance sheet date, and
ii)  Revenue and expense items at the rate of exchange at the dates on which those elements are recognized.
 
Gains and losses on translation are included in other comprehensive income (loss) in stockholders’ deficiency for the period.
 
Financial instruments
 
The carrying value of cash and cash equivalents, accounts payable and due to related parties approximates their fair value because of the short maturity of these instruments.  The Company has operations in Canada that give rise to exposure to market risks from changes in foreign currency rates.  The Company’s financial risk is the risk that arises from fluctuations in foreign exchange rates and the degree of volatility of these rates.  Currently, the Company does not use derivative instruments to reduce its exposure to foreign currency risk.
 
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.

 
 
F-22

 
 
 
Eternity Healthcare Inc.
(A Development Stage Company)
Notes to Financial Statements
(Expressed in U.S. Dollars)
30 April 2010

 
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.
 
Comprehensive loss
 
ASC 220, “Comprehensive Income”, establishes standards for the reporting and display of comprehensive loss and its components in the financial statements.  As at 30 April 2010, the Company has items that represent a comprehensive loss and, therefore, has included a schedule of comprehensive loss in the 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.
 
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.

 
 
F-23

 
 
 
Eternity Healthcare Inc.
(A Development Stage Company)
Notes to Financial Statements
(Expressed in U.S. Dollars)
30 April 2010

 
 
Recent accounting pronouncements
 
In January 2010, the Financial Accounting Standards Board (“FASB”) issued ASU 2010-06, “Improving Disclosures about Fair Value Measurements. This update requires additional disclosure within the roll forward of activity for assets and liabilities measured at fair value on a recurring basis, including transfers of assets and liabilities between Level 1 and Level 2 of the fair value hierarchy and the separate presentation of purchases, sales, issuances and settlements of assets and liabilities within Level 3 of the fair value hierarchy. In addition, the update requires enhanced disclosures of the valuation techniques and inputs used in the fair value measurements within Levels 2 and 3. The new disclosure requirements are effective for interim and annual periods beginning after 15 December 2009, except for the disclosure of purchases, sales, issuances and settlements of Level 3 measurements. Those disclosures are effective for fiscal years beginning after 15 December 2010. As ASU 2010-06 only requires enhanced disclosures, the Company does not expect that the adoption of this update will have a material effect on its financial statements.
 
In February 2010, the FASB issued ASU No. 2010-09, “Amendments to Certain Recognition and Disclosure Requirements”, which eliminates the requirement for SEC filers to disclose the date through which an entity has evaluated subsequent events.  ASU No. 2010-09 is effective for fiscal quarters beginning after 15 December 2010.  The adoption of ASU No. 2010-09 will not have a material impact on the Company’s financial statements.
 
In February 2010, the FASB issued ASU No. 2010-11, “Derivatives and Hedging (Topic 815): Scope Exception Related to Embedded Credit Derivatives”.  ASU No. 2010-11 clarifies the type of embedded credit derivative that is exempt from embedded derivative bifurcation requirements. Specifically, only one form of embedded credit derivative qualifies for the exemption – one that is related only to the subordination of one financial instrument to another. As a result, entities that have contracts containing an embedded credit derivative feature in a form other than such subordination may need to separately account for the embedded credit derivative feature. The amendments in ASU No. 2010-11 are effective for each reporting entity at the beginning of its first fiscal quarter beginning after 15 June 2010. Early adoption is permitted at the beginning of each entity’s first fiscal quarter beginning after 5 March 2010. The adoption of ASU No. 2010-11 is not expected to have a material impact on the Company’s financial statements.
 
3.        Financial Instruments
 
The Company’s financial instruments consist of cash and cash equivalents, accounts payable and due to related parties.  These fair value estimates are subjective in nature and involve uncertainties and matters of significant judgment, and, therefore, cannot be determined with precision.  Changes in assumptions could significantly affect these estimates.  The Company does not hold or issue financial instruments for trading purposes, nor does it utilize derivative instruments in the management of foreign exchange, commodity price or interest rate market risks.
 
Unless otherwise noted, it is management’s opinion that the Company is not exposed to significant credit, liquidity or market risk arising from these financial instruments.

 
 
F-24

 
 
Eternity Healthcare Inc.
(A Development Stage Company)
Notes to Financial Statements
(Expressed in U.S. Dollars)
30 April 2010 

 
4.        Accounts Payable and Accrued Liabilities
 
Accounts payable and accrued liabilities are non-interest bearing, unsecured and have settlement dates within one year.
 
5.        Due to Related Parties and Related Party Transactions
 
a.  
As at 30 April 2010, $198 is receivable from the President of the Company related to the issuance of shares. This balance is non-interest bearing, unsecured and has no fixed terms of repayment (Note 6).
 
b.  
As at 30 April 2010, $816 is receivable from a company controlled by the Chief Executive Officer of the Company related to operating expenses paid by the Company on its behalf. This balance is non-interest bearing, unsecured and has no fixed terms of repayment.
 
c.  
As at 30 April 2010, $31,711 is payable to the Chief Executive Officer of the Company related to operating expenses paid on behalf of the Company and cash advances provided to the Company in the amount of $24,989 and $6,722, respectively. This balance is non-interest bearing, unsecured and has no fixed terms of repayment.
 
6.        Capital Stock
 
Authorized
 
The total authorized capital consists of an unlimited number of common shares without par value.
 
Issued and outstanding
 
On 10 December 2009, the Company issued 2,000,000 common shares of the Company to the Chief Executive Officer of the Company for total proceeds of $190.
 
On 10 December 2009, the Company issued 2,000,000 common shares of the Company to the President of the Company for total proceeds of $190 (Note 5).
 
7.        Commitment
 
On 11 March 2010, the Company entered into a Distribution Agreement with ValiMedix (Note 1).
 
The basic terms of the Distribution Agreement are as follows:
 
a.  
ValiMedix has granted exclusive distribution rights to the Company to distribute, market, promote, advertise and sell certain Licensed Products, as defined in the Distribution Agreement, which consists of In Vitro diagnostic products, exclusively in Canada and non-exclusively in the United States;
 
b.  
The Company paid ValiMedix $10,000 upon the signing of the Distribution Agreement;
 
c.  
The Company is required to pay ValiMedix a 3% royalty on net sales of the Licensed Products as set out in the Distribution Agreement;
 
d.  
ValiMedix will supply all Licensed Products to the Company under the Distribution Agreement;
 
e.  
ValiMedix is responsible for all liabilities in respect to the Licensed Products for any and all matters arising out of the manufacturing of the Licensed Products; and

 
 
F-25

 
 
 
Eternity Healthcare Inc.
(A Development Stage Company)
Notes to Financial Statements
(Expressed in U.S. Dollars)
30 April 2010 

 
f.  
The Distribution Agreement shall remain in effect for a period of 20 years from the Commencement Date and may be renewed for an additional 10 year term provided that the Company meets its minimum purchase quota. The Company may further renew the Distribution Agreement for successive one year terms, unless at least 30 days prior to the renewal date, as defined in the Distribution Agreement, the Company notifies ValiMedix that it elects not to permit the extension of the term.
 
8.        Income Taxes
 
The Company has losses carried forward for income tax purposes to 30 April 2010.  There are no current or deferred tax expenses for the period from the date of incorporation on 10 December 2009 to 30 April 2010 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 carry forward period.  Management has considered these factors in reaching its conclusion as to the valuation allowance for financial reporting purposes.
 
The provision for refundable federal income tax consists of the following:
 
   
For the Period from the Date of Incorporation on 10 December 2009 to 30 April 2010
 
      $  
Deferred tax asset attributable to:
       
Net loss for the period
    29,765  
Combined income tax rate
    13.50 %
         
Current operations
    4,018  
Change in foreign exchange rate
    125  
Change in valuation allowance
    (4,143 )
         
Net refundable amount
    -  

 
 
F-26

 
 
 
Eternity Healthcare Inc.
(A Development Stage Company)
Notes to Financial Statements
(Expressed in U.S. Dollars)
30 April 2010 

 
The composition of the Company’s deferred tax asset as at 30 April 2010 is as follows:
 
   
As at
30 April 2010
 
      $  
         
Deferred tax asset:
       
Net operating loss carry forward
    4,143  
         
Less: Valuation allowance
    (4,143 )
         
Net deferred tax asset
    -  
 
The potential income tax benefit of these losses has been offset by a full valuation allowance.
 
As at 30 April 2010, the Company has unused non-capital losses for Canadian tax purposes of approximately $30,694 that are available to offset future taxable income.  These losses expire as follows:
 
Year
 
Amount
 
      $  
         
2030
    30,694  
 
9.        Supplemental Disclosures with Respect to Cash Flows
 
   
2010
 
      $  
         
Cash paid during the period for interest
    -  
Cash paid during the period for income taxes
    -  
 
10.      Subsequent Events
 
There are no subsequent events to be reported that occurred during the period from the period ended 30 April 2010 to the date the financial statements were available to be issued on 3 December 2010.
 
 
 
F-27

 

Management's Discussion and Analysis of Financial Position and Results of Operations
 
Management's Discussion and Analysis of Financial Condition and Results of Operations
 
The following is a discussion of Eternity BC’s financial statements for the period from December 10, 2009 (inception) to April 30, 2010 as well as the interim period ended January 31, 2011 which reflects the financial operations of our company following the Share Exchange with Eternity BC.  The financials of Eternity BC will be our financials going forward due to the reverse take-over accounting treatment of the Share Exchange transaction.  
 
The following discussion should be read in conjunction with our financial statements, including the notes thereto, appearing elsewhere in this Prospectus.  The discussion of results, causes and trends should not be construed to imply any conclusion that these results or trends will necessarily continue into the future.  All references to currency in this “Management’s Discussion and Analysis of Financial Condition and Results of Operations” section are to U.S. dollars, unless otherwise noted.
 
Liquidity and Capital Resources
 
For the nine months ended January 31, 2011 and the period from December 10, 2009 (inception) to January 31, 2011
 
As of January 31, 2011 we had $18,729 in cash, $19,376 in total assets and $137,290 in current liabilities.  As of January 31, 2011 we had working capital deficit of $118,561.
 
During the nine months ended January 31, 2011 we spent cash of $54,658 on operating activities.  From December 10, 2009 (inception) to January 31, 2011 we spent cash of $55,505 on operating activities.
 
From December 10, 2009 (inception) to January 31, 2011 we spent cash of $727 on investing activities for the purchase of equipment.
 
During the nine months ended January 31, 2011 we received $70,267 from financing activities, in the form of advances from related parties. From December 10, 2009 (inception) to January 31, 2011 we received cash of $77,369 in cash from financing activities, made up of $76,989 in advances from related parties and $380 from the sale of our common shares.
 
For the three months ended January 31, 2011
 
During the three months ended January 31, 2011 we spent cash of $12,765 on operating activities.
 
During the three months ended January 31, 2011 we neither received, nor spent any cash on investing activities.
 
During the three months ended January 31, 2011 we received $26,653 from financing activities in the form of advances from related parties.

 
 
36

 
 
We estimate that our expenses over the next 12 months (beginning April 2011) will be approximately $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.
 
 
Description
 
 
Estimated Completion Date
 
Estimated Expenses ($)
 
Legal and accounting fees
 
12 months
    100,000  
Marketing and advertising
 
12 months
    50,000  
Management and operating costs
 
12 months
    100,000  
Salaries and consulting fees
 
12 months
    200,000  
Fixed asset purchases
 
12 months
    30,000  
General and administrative expenses
 
12 months
    20,000  
Total
        500,000  

 
 
37

 

The expenditures described above will be necessary in order to carry out our intended business plan of distributing medical test kits.  Over the next 12 months, we plan to obtain regulatory approvals for the products mentioned in this Prospectus 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 are currently unable to meet our anticipated cash requirements for the next 12 months as we do not have sufficient cash on hand to fund our anticipated operations for even one month.
 
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 private placement or debt financings.  However, there is no assurance that any such financing will be available or if available, on terms that will be acceptable to us.  We may not be able to raise sufficient funds to fully carry out our business plan.
 
Our ability to offer the currently available test kits to potential retail customers is dependent on obtaining the required regulatory approvals. We believe we will need approximately $100,000 to undergo the regulatory review process for at least some of our products.  Our ability to offer the estimated additional 15 kits in 2011 and 2012 is entirely dependent on our ability to raise the required $500,000 in order to secure government approval and develop a distribution network for our products.  However, even if we are able to raise the required funds, there can be no assurance that we will be able to government approval and develop a distribution network for our products.  Once we secure the required funds and are able to obtain governmental approval for our currently available products, and develop a distribution network, we believe we will be able to enter into additional distribution agreements with identified European developers of test kits.
 
For the period from December 10, 2009 (inception) to April 30, 2010
 
As of April 30, 2010 we had $5,341 in cash.  Our total assets as of April 30, 2010 were $5,341 and our total liabilities were $35,640.  As of April 30, 2010 we had working capital deficit of $30,299.
 
During the period from December 10, 2009 (inception) to April 30, 2010 we spent cash of $847 on operating activities.  During the period from December 10, 2009 (inception) to April 30, 2010 we received $7,102 from investing activities in the form of $6,722 in advances from related parties and $380 in proceeds from the issuance of common shares.
 
During the period from December 10, 2009 (inception) to April 30, 2010 we recorded a loss of $914 due to exchange rates and an overall cash increase of $5,341.
 

 
 
38

 

Results of Operations
 
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, 2011 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, 2011 and 2010 and the changes between those periods for the respective items are summarized as follows:
 
   
Three Month
Period Ended
January 31, 2011
   
Three Month
Period Ended
January 31, 2010
   
Change Between
Three Month
Periods Ended
January 31, 2011
and
January 31, 2010
 
Revenue
 
$
Nil
   
$
Nil
   
$
Nil
 
Operating expenses
 
$
26,845
   
$
6
   
$
26,839
 
Net loss
 
$
(26,845
)
 
$
(6
)
 
$
(26,839
)
 
Our expenses increased during the three month period ended January 31, 2011 compared to the same period in 2010 primarily as a result of an increase in consulting, stock transfer and filing fees and professional fees.
 
 
 
39

 

 
Results of Operations for the Nine Months Ended January 31, 2011 and 2010
 
Our operating results for the nine month period ended January 31, 2011 and 2010 and the changes between those periods for the respective items are summarized as follows:
 
   
Nine Month
Period Ended
January 31, 2011
   
Nine Month
Period Ended
January 31, 2010
   
Change Between
Nine Month
Periods Ended
January 31, 2011
and
January 31, 2010
 
Revenue
 
$
Nil
   
$
Nil
   
$
Nil
 
Operating expenses
 
$
63,242
   
$
6
   
$
63,236
 
Net loss
 
$
(63,242
)
 
$
(6
)
 
$
(63,236
)
 
Our expenses increased during the nine month period ended January 31, 2011 over the same period in 2010, primarily as a result of an increase in consulting and professional fees and management fees.
 
Revenues
 
We have not earned any revenues to date, and have incurred $93,007 in expenses from December 10, 2009 (date of inception) through January 31, 2011.
 
Expenses
 
Our expenses for the three and nine months ended January 31, 2011 and 2010 and for the period from December 10, 2009 (inception) through January 31, 2011 are outlined in the table below:
 
   
Three Month
Period Ended
January 31, 2011
   
Three Month
 Period Ended
January 31, 2010
   
Nine Month
Period Ended
January 31, 2011
   
Nine Month
Period Ended
January 31, 2010
   
For the Period from December 10, 2009
(Inception) through January 31, 2011
 
Bank charges and interest
  $ 125     $ 6     $ 343     $ 6     $ 495  
Consulting expenses
  $ 2,916     $Nil     $ 5,302     $Nil     $ 5,302  
Depreciation
  $ 60     $Nil     $ 80     $Nil     $ 80  
Legal and accounting
  $ 22,484     $Nil     $ 26,911     $Nil     $ 46,524  
License fee
  $Nil     $Nil     $Nil     $Nil     $ 10,000  
Office and miscellaneous
  $ 760     $Nil     $ 1,607     $Nil     $ 1,607  
Research and development
  $Nil     $Nil     $ 28,999     $Nil     $ 28,999  
Total Expenses
  $ 26,845     $ 6     $ 63,242     $ 6     $ 93,007  
 
 
40

 
 
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 our financial condition, revenues or expenses, results of operations, liquidity, capital expenditures or capital resources that are material to our stockholders.
 
Inflation
 
The effect of inflation on our revenues and operating results has not been significant.
 
Critical Accounting Policies
 
Our financial statements are affected by the accounting policies used and the estimates and assumptions made by management during their preparation.  A complete listing of these policies is included in Note 2 of the notes to our financial statements for the period from December 10, 2009 (inception) to April 30, 2010.  We have identified below the accounting policies that are of particular importance in the presentation of our financial position, results of operations and cash flows, and which require the application of significant judgment by management.
 
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.
 
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.
 
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 the rate of exchange at the dates on which those elements are recognized.
 
Gains and losses on translation are included in other comprehensive income (loss) in stockholders’ deficiency for the period.

Changes In and Disagreements with Accountants on Accounting and Financial Disclosure
 
We have not had any changes in or disagreements with our registered independent public accounting firm.
 
Directors and Executive Officers
 
Directors and Officers
 
Our Articles state that our authorized number of directors shall be not less than one and shall be set by resolution of our Board of Directors.  Our Board of Directors has fixed the number of directors at three, and we currently have two directors.

 
 
41

 

On December 13, 2010, in conjunction with the Share Exchange, Mr. Hassan Salari resigned as our President, Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, Secretary, and Treasurer and Mrs. Francine Salari, his spouse, was appointed in his place.  Mr. Salari will remain with our company as one of our directors.
 
Our current directors and officers are as follows:
 
Name
Age
Position
Francine Salari
53
President, Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, Secretary, Treasurer, and Director
Hassan Salari
57
Director
 
Our Directors will serve in that capacity until our next annual shareholder meeting or until their successors are elected and qualified.  Officers hold their positions at the will of our Board of Directors.  There are no arrangements, agreements or understandings between non-management security holders and management under which non-management security holders may directly or indirectly participate in or influence the management of our affairs.
 
Francine Salari, President, Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, Secretary, Treasurer and Director
 
Mrs. Salari obtained her accounting diploma from Quebec, Canada. She worked for 10 years as an accounting and financial advisor with the National Bank of Canada in Montreal. She further worked at the Continental bank in the capacity of Personal banking and client response team member for 3 years. From 1990 to1993 she was the Financial Controller at Inflazyme Pharmaceuticals in Vancouver, Canada. From 1996 to 2000 she worked as controller and accountant at Neovie Biotechnology and PTM Molecular, as PTM changed its name to Chemokine Therapeutics Corp., and was listed publicly.  From 2000 to 2009 she was the Financial Controller at Posh Cosmeceuticals Inc.  She retired in 2009 and consulted for Eternity BC.  Her experience in the finance and pharmaceutical industries are the reasons we have appointed her to our board of directors.
 
Hassan Salari, Director
 
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.
 
Currently, Dr. Salari is the Chairman, President and Chief Executive Officer of Global Health Ventures Inc., a company traded on the OTC Bulletin Board (OTCBB: GHLV).  Further, Dr. Salari is a director of Neurokine Pharmaceutical Inc (OTCBB: NEUKF), a company with an emphasis in neurological diseases. Prior to that, 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 the 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 the 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.
 
From 1991 to 1998, Dr. Salari was a Professor, Department of Medicine at the University of British Columbia. From 1987 to 1990, he was an Assistant Professor at the University of British Columbia. From 1986 to 1987, he was a research associate in the Department of Medicine at the University of British Columbia. He was the lead project investigator in cytokine research and drug development. From 1984 to 1986, he worked as a research associate at the Department of Physiology, Laval University. Dr. Salari carried out research work on the biology of human blood cells and their control by cytokines. From 1981 to 1982, Dr. Salari worked at the Department of Immunology at McGill University in Montreal as a research associate. He is the author of over 200 scientific articles, abstracts and books in various subjects of medicine.

 
 
42

 

Other Directorships
 
Other than as disclosed above, during the last 5 years, none of our directors held any other directorships in any company with a class of securities registered pursuant to section 12 of the Exchange Act or subject to the requirements of section 15(d) of such Act or any company registered as an investment company under the Investment Company Act of 1940.
 
Board of Directors and Director Nominees
 
Since our Board of Directors does not include a majority of independent directors, the decisions of the Board regarding director nominees are made by persons who have an interest in the outcome of the determination.  The Board will consider candidates for directors proposed by security holders, although no formal procedures for submitting candidates have been adopted.  Unless otherwise determined, at any time not less than 90 days prior to the next annual Board meeting at which a slate of director nominees is adopted, the Board will accept written submissions from proposed nominees that include the name, address and telephone number of the proposed nominee; a brief statement of the nominee’s qualifications to serve as a director; and a statement as to why the security holder submitting the proposed nominee believes that the nomination would be in the best interests of our security holders.  If the proposed nominee is not the same person as the security holder submitting the name of the nominee, a letter from the nominee agreeing to the submission of his or her name for consideration should be provided at the time of submission.  The letter should be accompanied by a résumé supporting the nominee's qualifications to serve on the Board, as well as a list of references.
 
The Board identifies director nominees through a combination of referrals from different people, including management, existing Board members and security holders.  Once a candidate has been identified, the Board reviews the individual's experience and background and may discuss the proposed nominee with the source of the recommendation.  If the Board believes it to be appropriate, Board members may meet with the proposed nominee before making a final determination whether to include the proposed nominee as a member of the slate of director nominees submitted to security holders for election to the Board.
 
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.
 
Significant Employees
 
Other than as described above, we do not expect any other individuals to make a significant contribution to our business.
 
Legal Proceedings
 
To the best of our knowledge, none of our directors or executive officers has, during the past ten years:
 
·  
been convicted in a criminal proceeding or been subject to a pending criminal proceeding (excluding traffic violations and other minor offences);
 
 
 
43

 
 
·  
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;
 
·  
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;
 
·  
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;
 
·  
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
 
·  
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.
 
Except as set forth in our discussion below in “Certain Relationships and Related Transactions, and Director Independence – Transactions with Related Persons,” none of our directors, director nominees or executive officers has been involved in any transactions with us or any of our directors, executive officers, affiliates or associates which are required to be disclosed pursuant to the rules and regulations of the SEC.
 
Audit Committee and Charter
 
We have a separately-designated audit committee of the board.  Audit committee functions are performed by our board of directors. None of our directors are deemed independent. All directors also hold positions as our officers. Our audit committee is responsible for: (1) selection and oversight of our independent accountant; (2) establishing procedures for the receipt, retention and treatment of complaints regarding accounting, internal controls and auditing matters; (3) establishing procedures for the confidential, anonymous submission by our employees of concerns regarding accounting and auditing matters; (4) engaging outside advisors; and, (5) funding for the outside auditory and any outside advisors engagement by the audit committee.
 
Audit Committee Financial Expert
 
None of our directors or officers have the qualifications or experience to be considered a financial expert. We believe the cost related to retaining a financial expert at this time is prohibitive. Further, because of our limited operations, we believe the services of a financial expert are not warranted.
 
Code of Ethics
 
We have adopted a corporate code of ethics. We believe our code of ethics is reasonably designed to deter wrongdoing and promote honest and ethical conduct; provide full, fair, accurate, timely and understandable disclosure in public reports; comply with applicable laws; ensure prompt internal reporting of code violations; and provide accountability for adherence to the code.

 
 
44

 

Disclosure Committee and Charter
 
We have a disclosure committee and disclosure committee charter. Our disclosure committee is comprised of all of our officers and directors. The purpose of the committee is to provide assistance to the Chief Executive Officer and the Chief Financial Officer in fulfilling their responsibilities regarding the identification and disclosure of material information about us and the accuracy, completeness and timeliness of our financial reports.
 
Family Relationships
 
Hassan Salari and Francine Salari are husband and wife.  Mr. Salari is our director and Mrs. Salari is our sole officer and also a member of our board of directors.
 

 
 
45

 

Executive Compensation
 
The following summary compensation table sets forth the total annual compensation paid or accrued by us to or for the account of our principal executive officer during the last completed fiscal year and each other executive officer whose total compensation exceeded $100,000 in either of the last two fiscal years:
 
Summary Compensation Table (1)
 
Name and Principal Position
Year
Salary
($)
Total
($)
Hassan Salari (2)
2011
0
0
2010
Francine Salari (3) 2011 0 0
 
(1)
We have omitted certain columns in the summary compensation table pursuant to Item 402(a)(5) of Regulation S-K as no compensation was awarded to, earned by, or paid to any of the executive officers or directors required to be reported in that table or column in any fiscal year covered by that table.
(2)
Hassan Salari has been the President and director of Eternity BC since its inception.
(3)
Francince Salari was appointed as our sole officer and one of our directors on December 13, 2010.
 
The compensation disclosure for the year ended April 30, 2011 depends upon assumptions used in the financial statements and those financial statements have not yet been audited by our independent accounting firm.
 
Option Grants
 
As of the date of this report we had not granted any options or stock appreciation rights to our named executive officers or directors.
 
Management Agreements
 
We have not yet entered into any consulting or management agreements with any of our current executive officers or directors.
 
Compensation of Directors
 
Our directors did not receive any compensation for their services as directors from our inception to the date of this report.  We have no formal plan for compensating our directors for their services in the future in their capacity as directors, although such directors are expected in the future to receive options to purchase shares of our common stock as awarded by our Board of Directors or by any compensation committee that may be established.
 
Pension, Retirement or Similar Benefit Plans
 
There are no arrangements or plans in which we provide pension, retirement or similar benefits to our directors or executive officers.  We have no 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 stock options may be granted at the discretion of the Board of Directors or a committee thereof.
 
Compensation Committee
 
We do not currently have a compensation committee of the Board of Directors or a committee performing similar functions.  The Board of Directors as a whole participates in the consideration of executive officer and director compensation.
 

 
 
46

 

Security Ownership of Certain Beneficial Owners and Management
 
The following table sets forth the ownership, as of  June 3,  2011, of our common stock by each of our directors, by all of our executive officers and directors as a group and by each person known to us who is the beneficial owner of more than 5% of any class of our securities. As of June 3, 2011, there were 63,575,000 shares of our common stock issued and outstanding. All persons named have sole or shared voting and investment control with respect to the shares, except as otherwise noted. The number of shares described below includes shares which the beneficial owner described has the right to acquire within 60 days of the date of this Registration Statement.
 
Title of Class
Name and Address of
Beneficial Owner
Amount and Nature of 
Beneficial Ownership
Percent of Class (1)
Common 
Stock
Francine Salari (2)
409 Granville Street, Suite 1023,
Vancouver, BC, Canada, V6C 1T2
19,000,005
29.9%
       
Common 
Stock
Hassan Salari (3)
409 Granville Street, Suite 1023,
Vancouver, BC, Canada, V6C 1T2
33,310,000
52.4%
       
 
All Officers and Directors as a Group 
52,310,005
82.3%
       
Common 
Stock
Frederik Salari
2306 – 1067 Marinaside Crescent,
Vancouver, BC, V6Z 3A4
4,999,995
7.9%
       
Common 
Stock
Julian Salari
11 – 7400 Minoru Blvd.,
Richmond, BC, V6Y 3J5
5,009,995
7.9%
 
(1)  
Based on 63,575,000 issued and outstanding shares of our common stock as of December 13, 2010.
(2)  
Francine Salari is our President, Chief Executive Officer, Chief Financial Officer, Principal Accounting Officer, Secretary, Treasurer and director.
(3)  
Hassan Salari is our director.
 
Changes in Control
 
As of  June 3,  2011 we had no pension plans or compensatory plans or other arrangements which provide compensation in the event of termination of employment or a change in our control.

 
 
47

 

Certain Relationships and Related Transactions
 
On December 13, 2010, pursuant to the closing of the Share Exchange, we issued 30,000,000 shares of our common stock to Hassan Salari, our director and 19,000,005 shares to Francine Salari, our President, Chief Executive Officer and Director.
 
As at 31 January 2011, $8,781 is payable to Frederik Salari, the President of Eternity BC, our wholly owned subsidiary, related to cash advances provided to the Company (30 April 2010 – $198). This balance is non-interest bearing, unsecured and has no fixed terms of repayment.

As at 31 January 2011, $119,128 is payable to Hassan Salari, our director and former President related to operating expenses paid on our behalf and cash advances provided to us in the amount of $35,028 and $84,100, respectively (30 April 2010 – $24,989 and $6,722, respectively). This balance is non-interest bearing, unsecured and has no fixed terms of repayment.

During the year ended 30 April 2010, our former officer and director, Michael Frank Phillet, forgave loans totaling $24,499. This loan forgiveness has been recorded as contributions to capital.

During the year ended 30 April 2010, one of our shareholders, Sienna Funding Corp., forgave loans totaling $2,100. This loan forgiveness has been recorded as contributions to capital.
 
There have been no other transactions since the beginning of our last fiscal year or any currently proposed transactions in which we are, or plan to be, a participant and the amount involved exceeds $120,000 or one percent of the average of our total assets at year end for the last two completed fiscal years, and in which any related person had or will have a direct or indirect material interest.
 
Director Independence
 
We currently act with two directors. We have determined that we do not have a director that would qualify as an “independent director” as defined by Nasdaq Marketplace Rule 4200(a)(15).
 
We do not have a standing audit, compensation or nominating committee, but our entire board of directors acts in such capacities. We believe that our board of directors is capable of analyzing and evaluating our financial statements and understanding internal controls and procedures for financial reporting. The board of directors of our company does not believe that it is necessary to have a standing audit, compensation or nominating committee because we believe that the functions of such committees can be adequately performed by the board of directors.  Additionally, 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. 
 
Disclosure of Commission Position on Indemnification of Securities Act Liabilities
 
Our Bylaws provide that we will indemnify our directors and officers to the fullest extent not prohibited by Nevada law.
 
The general effect of the foregoing is to indemnify a control person, officer or director from liability, thereby making us responsible for any expenses or damages incurred by such control person, officer or director in any action brought against them based on their conduct in such capacity, provided they did not engage in fraud or criminal activity.
 
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to our directors, officers or control persons pursuant to the foregoing provisions, we have been informed that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is therefore unenforceable.

DEALER PROSPECTUS DELIVERY OBLIGATION
 
Until a date, which is 90 days after the date of this prospectus, all dealers that effect transactions in these securities whether or not participating in this offering, may be required to deliver a prospectus. This is in addition to the dealer obligation to deliver a prospectus when acting as underwriters and with respect to their unsold allotments or subscriptions.

 
 
48

 

PART II
 
Item 13.         Other Expenses of Issuance and Distribution
 
Our estimated expenses in connection with the issuance and distribution of the securities being registered in this Prospectus are as follows:
 
 
Commission filing fee
  $ 22  
Legal fees and expenses
    10,000  
Accounting fees and expenses
    4,000  
Printing and marketing expenses
    100  
Miscellaneous
    78  
Total
  $ 14,200  

{WLMLAW W0087703.DOC}55
 
49

 
 
Item 14.       Indemnification of Directors and Officers
 
The only statute, charter provision, bylaw, contract, or other arrangement under which any controlling person, director or officer of us is insured or indemnified in any manner against any liability which he may incur in his capacity as such, is as follows:
 
·  
Article VII of our Bylaws, filed as Exhibit 3.3 to this Registration Statement; and
 
·  
Chapter 78 of the Nevada Revised Statutes (the “NRS”).
 
Nevada Revised Statutes
 
Section 78.138 of the NRS provides for immunity of directors from monetary liability, except in certain enumerated circumstances, as follows:
 
“Except as otherwise provided in NRS 35.230, 90.660, 91.250, 452.200, 452.270, 668.045 and 694A.030, or unless the Articles of Incorporation or an amendment thereto, in each case filed on or after October 1, 2003, provide for greater individual liability, a director or officer is not individually liable to the corporation or its stockholders or creditors for any damages as a result of any act or failure to act in his capacity as a director or officer unless it is proven that:
 
(a)
his act or failure to act constituted a breach of his fiduciary duties as a director or officer; and
 
(b)
his breach of those duties involved intentional misconduct, fraud or a knowing violation of law.”
 
Section 78.5702 of the NRS provides as follows:
 
1.
A corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action, suit or proceeding, whether civil, criminal, administrative or investigative, except an action by or in the right of the corporation, by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise, against expenses, including attorneys’ fees, judgments, fines and amounts paid in settlement actually and reasonably incurred by him in connection with the action, suit or proceeding if he:
 
 
(a)
is not liable pursuant to NRS 78.138; or
 
 
(b)
acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation, and, with respect to any criminal action or proceeding, had no reasonable cause to believe his conduct was unlawful.
 
2.
A corporation may indemnify any person who was or is a party or is threatened to be made a party to any threatened, pending or completed action or suit by or in the right of the corporation to procure a judgment in its favor by reason of the fact that he is or was a director, officer, employee or agent of the corporation, or is or was serving at the request of the corporation as a director, officer, employee or agent of another corporation, partnership, joint venture, trust or other enterprise against expenses, including amounts paid in settlement and attorneys’ fees actually and reasonably incurred by him in connection with the defense or settlement of the action or suit if he:

 
 
50

 

 
(a)
is not liable pursuant to NRS 78.138; or
 
 
(b)
acted in good faith and in a manner which he reasonably believed to be in or not opposed to the best interests of the corporation.
 
To the extent that a director, officer, employee or agent of a corporation has been successful on the merits or otherwise in defense of any action, suit or proceeding referred to in subsections 1 and 2, or in defense of any claim, issue or matter therein, the corporation shall indemnify him against expenses, including attorneys’ fees, actually and reasonably incurred by him in connection with the defense.
 
Our Bylaws
 
Our bylaws provide that we will indemnify our directors and officers to the fullest extent not prohibited by Nevada law.
 
The general effect of the foregoing is to indemnify a control person, officer or director from liability, thereby making us responsible for any expenses or damages incurred by such control person, officer or director in any action brought against them based on their conduct in such capacity, provided they did not engage in fraud or criminal activity.
 
Item 15.          Recent Sales of Unregistered Securities
 
During the last three years, we completed the following sales of unregistered securities:
 
·  
On December 13, 2007 we issued 3,100,000 pre-split shares of common stock to our former sole officer and director, Michael Frank Phillet, at a price of $0.005 per share.  The total proceeds received from this offering were $15,500.  These shares were issued pursuant to Section 4(2) of the Securities Act of 1933 and are restricted shares as defined in the Securities Act.  We did not engage in any general solicitation or advertising.
 
·  
We completed an offering of 2,650,000 pre-split shares of our common stock at a price of $0.01 per share to a total of thirty four (34) non-US purchasers on March 31, 2008.  These shares were issued without a prospectus pursuant to Regulation S of the Securities Act.
 
·  
On June 14, 2010 we issued 3,000,000 pre-split common shares to Hassan Salari, our director, for services rendered to us.  These shares were issued without a prospectus pursuant to Regulation S of the Securities Act.
 
·  
On December 13, 2010 we issued 60,000,000 shares of our common stock in connection with the closing of the Share Exchange.  These shares were issued to 5 non-US holders without a prospectus, pursuant to the exemptions from registration found in Regulation S of the Securities Act.
 
Our reliance upon the exemption under Rule 903 of Regulation S of the Securities Act was based on the fact that the sales of the securities were completed in an "offshore transaction", as defined in Rule 902(h) of Regulation S. We did not engage in any directed selling efforts, as defined in Regulation S, in the United States in connection with the sale of the securities. Each investor was not a U.S. person, as defined in Regulation S, and was not acquiring the securities for the account or benefit of a U.S. person.
 
Since our inception we have made no purchases of our equity securities.

 
 
51

 

Item 16.           Exhibits
 
 
Exhibit No.
 
 
Description
2.1
 
Share Exchange Agreement with Eternity Healthcare Inc., dated December 13, 2010 (3)
 
3.1
 
Articles of Incorporation of Eternity Healthcare Inc. (formerly Kid’s Book Writer Inc.) (1)
 
3.2
 
Certificate of Amendment filed with the Nevada Secretary of State on November 1, 2010 (2)
 
3.3
 
Bylaws of Eternity Healthcare Inc. (formerly Kid’s Book Writer Inc.) (1)
 
4.1
 
Instrument Defining the Right of Holders – Form of Share Certificate (1)
 
5.1
 
Legal Opinion of Michael J. Morrison (4)
 
10.1
 
Licensing Agreement with Valimedix Limited, dated March 11, 2010. (3)
 
21
 
List of subsidiaries (4)
 
23.1
 
Consent of James Stafford, Inc.
 
23.2
 
Consent of Michael J. Morrison (incorporated in Exhibit 5.1) (4)
 
 
(1)           Incorporated by reference to an exhibit to our Registration Statement on Form S-1 filed on June 25, 2008.
(2)           Incorporated by reference to an exhibit to our Current Report on Form 8-K filed on November 16, 2010.
(3)           Incorporated by reference to an exhibit to our Current Report on Form 8-K filed on December 17, 2010.
(4)           Incorporated by reference to an exhibit to our Registration Statement on Form S-1 filed on February 4, 2011.
 
 
 
52

 

Item 17.          Undertakings
 
The registrant hereby undertakes:
 
1.
To file, during any period in which offers or sales are being made, a post-effective amendment to this registration statement:
 
 
(i)
To include any prospectus required by section 10(a)(3) of the Securities Act; 
 
 
(ii)
To reflect in the prospectus any facts or events arising after the effective date of the registration statement (or the most recent post-effective amendment thereof) which, individually or in the aggregate, represent a fundamental change in the information set forth in the registration statement. Notwithstanding the foregoing, any increase or decrease in volume of securities offered (if the total dollar value of securities offered would not exceed that which was registered) and any deviation from the low or high end of the estimated maximum offering range may be reflected in the form of prospectus filed with the SEC pursuant to Rule 424(b) if, in the aggregate, the changes in volume and price represent no more than 20% change in the maximum aggregate offering price set forth in the "Calculation of Registration Fee" table in the effective registration statement; and
 
 
(iii)
To include any material information with respect to the plan of distribution not previously disclosed in the registration statement or any material change to such information in the registration statement;
 
2.
That for the purpose of determining liability under the Securities Act, each post-effective amendment shall be deemed to be a new registration statement relating to the securities offered therein, and the offering of such securities at that time shall be deemed to be the initial bona fide offering thereof;
 
3.
To remove from registration by means of a post-effective amendment any of the securities being registered which remain unsold at the termination of the offering; and
 
Insofar as indemnification for liabilities arising under the Securities Act may be permitted to directors, officers and controlling persons of the registrant pursuant to the foregoing provisions, or otherwise, the registrant has been advised that in the opinion of the SEC such indemnification is against public policy as expressed in the Securities Act and is, therefore, unenforceable.
 
In the event that a claim for indemnification against such liabilities (other than the payment by the registrant of expenses incurred or paid by a director, officer or controlling person of the registrant in the successful defense of any action, suit or proceeding) is asserted by such director, officer or controlling person in connection with the securities being registered, the registrant will, unless in the opinion of its counsel the matter has been settled by controlling precedent, submit to a court of appropriate jurisdiction the question whether such indemnification by it is against public policy as expressed in the Securities Act and will be governed by the final adjudication of such issue.
 
Each prospectus filed pursuant to Rule 424(b) as part of a registration statement relating to an offering, other than registration statements relying on Rule 430B or other than prospectuses filed in reliance on Rule 430A, shall be deemed to be part of and included in the registration statement as of the date it is first used after effectiveness. Provided, however, that no statement made in a registration statement or prospectus that is part of the registration statement or made in a document incorporated or deemed incorporated by reference into the registration statement or prospectus that is part of the registration statement will, as to a purchaser with a time of contract of sale prior to such first use, supersede or modify any statement that was made in the registration statement or prospectus that was part of the registration statement or made in any such document immediately prior to such date of first use.

 
 
53

 

Signatures
 
Pursuant to the requirements of the Securities Act, the registrant has duly caused this registration statement to be signed on its behalf by the undersigned, thereunto duly authorized, in the City of Vancouver, British Columbia, Canada, on  June 3,  2011.
 
 
ETERNITY HEALTHCARE INC.
     
 
By:
/s/ Francine Salari
   
Francine Salari
   
President, Secretary, Treasurer and Director
(Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)
 
In accordance with the requirements of the Securities Act, this registration statement has been signed by the following persons in the capacities and on the dates stated.
 
SIGNATURES
 
TITLE
 
DATE
         
         
/s/ Francine Salari
 
President, Secretary, Treasurer and Director
 
June 3, 2011
Francine Salari
  (Principal Executive Officer, Principal Financial Officer and Principal Accounting Officer)    
         
/s/ Hassan Salari
 
Director
 
June 3, 2011
Hassan Salari
       
 
 
 
 
54