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ANPATH GROUP, INC. - 10-K - : MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

July 15, 2014

Forward-looking Statements

Statements made in this Annual Report which are not purely historical are forward-looking statements with respect to the goals, plan objectives, intentions, expectations, financial condition, results of operations, future performance and business of our Company and our wholly-owned subsidiary, ESI, including, without limitation, (i) our ability to raise capital, and (ii) statements preceded by, followed by or that include the words "may," "would," "could," "should," "expects," "projects," "anticipates," "believes," "estimates," "plans," "intends," "targets" or similar expressions.

Forward-looking statements involve inherent risks and uncertainties, and important factors (many of which are beyond our control) that could cause actual results to differ materially from those set forth in the forward-looking statements, including the following, general economic or industry conditions, nationally and/or in the communities in which we may conduct business, changes in the interest rate environment, legislation or regulatory requirements, conditions of the securities markets, our ability to raise capital, changes in accounting principles, policies or guidelines, financial or political instability, acts of war or terrorism, other economic, competitive, governmental, regulatory and technical factors affecting our current or potential business and related matters. Accordingly, results actually achieved may differ materially from expected results in these statements.

Forward-looking statements speak only as of the date they are made. We do not undertake, and specifically disclaim, any obligation to update any forward-looking statements to reflect events or circumstances occurring after the date of such statements. We have no obligation to update any of our forward-looking statements other than as required by law.

Management's Discussion and Analysis of Financial Condition and Results of Operations

Plan of Operation



Subject to raising a sufficient amount of working capital either through equity offerings, debt offerings or a combination thereof, estimated to be $2 million, the Company, through its wholly-owned subsidiary, ESI, plans to begin producing disinfecting, biocidal, disinfecting and cleaning products designed to help prevent the spread of infectious microorganisms and control the growth of these disease-causing microbes, while minimizing the harmful effects to people, animals, surfaces and the environment. In furtherance of this goal, on May 14, 2013, we issued to one accredited investor a Secured Promissory Note in the principal amount of $205,000, and in June 3013, a note holder converted $25,000 of his note payable into 31,250 "unregistered" and "restricted" shares of our common stock. In addition, in August , 2013, we sold to an accredited investor a total of 31,250 "unregistered" and "restricted" shares of our common stock at a price of $0.80 per share, for aggregate gross proceeds of $25,000. On July 2, 2014, we closed a financing by which one accredited investor purchased two Original Issue Discount Senior Secured Convertible Debentures due March 31, 2015 (the "Debentures") and a Common Stock Purchase Warrant to purchase a total of 2,905,000 shares of the Company's common stock at a price of $0.35 per share, exercisable for a period of five years (the "Warrant"). The first Debenture, in the principal amount of $215,250 was issued in exchange for the Company's Secured Promissory Note in the principal amount of $205,000 in reliance on Sections 3(a)(9) and 4(a)(2) of the Securities Act of 1933, as amended, and the second Debenture, in the principal amount of $220,500, was issued in consideration of the sum of $210,000. See our Current Report on Form 8-K dated June 27, 2014, and filed with the SEC on July 2, 2014, and the subheading "Recent Sales of Unregistered Securities," Part II, Item 5 of this Annual Report. We have not yet entered into any arrangements for the manufacture of our products.

Liquidity



Cash on hand totaled $395 at March 31, 2014, a decrease of $1,647 from cash on hand of $2,042 at March 31, 2013. This decrease was the result of our operations. Cash was received from the sale of an Original Issue Discount Promissory Note (the "Note") in the principal amount of $205,000 in the first quarter of our 2014 fiscal year and the sale of shares of common stock at a price of $0.80 per share during the second quarter of fiscal 2014. Gross proceeds from these offerings were $200,000 and $50,000, respectively. In addition, during the fiscal year ended March 31, 2014, we received advances totaling $11,000 from a stockholder.

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The Note was initially due and payable on June 14, 2013, but the maturity date was extended to June 30, 2014, under the terms of a Note Extension Agreement executed by the parties on February 10, 2014. On July 2, 2014, the Note was exchanged for the Company's Original Issue Discount Senior Secured Convertible Debenture due March 31, 2015. See footnote 4 under the subheading "Recent Sales of Unregistered Securities," Part II, Item 5 of this Annual Report.

Results of Operations

Fiscal Year Ended March 31, 2014, Compared to Fiscal Year Ended March 31, 2013.

During the fiscal year ended March 31, 2014 and 2013, Anpath recorded revenues of $-0- and $3,608 The decline in revenues was a result of ESI ceasing normal operations in October, 2011, because cash provided by operations was not sufficient for ESI to pay for its continuing expenses. Cost of sales during these periods were $-0- and $1,036, respectively, during these periods, and reflect the decline in revenue from the 2013 period to the 2014 period. We posted a gross profit of $-0- in fiscal 2014, as compared to gross profit of $2,572 in the prior year. Gross profit margins in 2013 were 71.3%.

Anpath recorded total expenses of $4,746,495 in fiscal 2014, an increase of $4,505,549, from our total expenses of $240,946 in the year-ago period. Payroll increased to $4,420,453 in 2014, from $1,551 in the prior year. This increase is due to the issuance of 5,375,000 common stock shares to employees, officers, directors and consultants during this current year. In addition, the Company incurred $120,453 of salary and related expenses during the current year. Likewise, professional fees increased to $89,329 from $28,224 in the prior year. This increase is related to legal and accounting services for filing forms with the Securities and Exchange Commission. Product development and regulatory expenses increased to $12,879 from $9,300; directors' and officers' insurance to $12,093 from $6,557; office expense decreased to $2,462 from $5,171 ; and depreciation expense decreased to $-0-, from $16,538. In 2013, we recognized a loss of $170,292 on a contractual agreement, versus $0 in 2014. This loss stemmed from the cancellation of our manufacturing agreement with Minntech Corp. and the forfeiture of deposits associated with the agreement by the terms thereof.

Anpath incurred a net loss of $4,746,495 or $0.44 per share , in fiscal 2014, as compared to net loss of $238,374, or $0.04 per share, in fiscal 2013.

Off-Balance Sheet Arrangements

We have no off-balance sheet arrangements of any kind.


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Source: Edgar Glimpses


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