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UNITED STATES

SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 10-Q

 

x QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the quarter ended  September 30 , 2012

 

¨ TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

 

For the transition period from _____ to _____

 

Commission file number:

SAFECODE DRUG TECHNOLOGIES CORP

(Exact name of registrant as specified in its charter)

 

Delaware   99-0362482
(State of incorporation)   (I.R.S. Employer Identification No.)

 

c/o Joel Klopfer

6 Meever HaMiltah Street

Jerusalem 97761, Israel

Phone number: 972-507839976

Fax number:972-507839976 
(Former name, former address and former fiscal year, if changed since last report)

 

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes  x   No   ¨

 

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act. (Check one):

 

Large accelerated filer ¨ Accelerated filer ¨
Non-accelerated filer ¨ Smaller reporting company x
(Do not check if a smaller reporting company)      

 

Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes   ¨ No   x

 

As of September 30 2012, 50,000000 shares of common stock, par value $0.0001 per share, were issued and outstanding.

 

 
 

 

TABLE OF CONTENTS

 

  Page
PART I  
Item 1. Financial Statements F-1
Item 2. Management’s Discussion and Analysis or Plan of Operation 3
Item 3 Quantitative and Qualitative Disclosures About Market Risk 6
Item 4 Controls and Procedures 7
   
PART II  
Item 1. Legal Proceedings 7
Item IA. Risk Factors 7
Item 2. Unregistered Sales of Equity Securities and Use of Proceeds 7
Item 3. Defaults Upon Senior Securities 7
Item 4. Submission of Matters to a Vote of Security Holders 8
Item 5. Other Information 8
Item 6. Exhibits 8

 

2
 

 

PART I

FINANCIAL INFORMATION

 

Item 1. Financial Statements.

 

SAFECODE DRUG TECHNOLOGIES CORP.

(A DEVELOPMENT STAGE COMPANY)

 

INDEX TO FINANCIAL STATEMENTS

SEPTEMBER 30, 2012

 

Financial Statements-  
   
Balance Sheets as of September 30, 2012 and December 31, 2011 F-2
   
Statements of Operations for the Three Months Ended and Nine Month Ended  
September 30, 2012, and 2011 and Cumulative from Inception F-3
   
Statement of Changes in Stockholders’ Equity for the Period from Inception  
Through September 30, 2012 F-4
   
Statements of Cash Flows for the Nine Months Ended September 30, 2012  
and 2011 And Cumulative from Inception F-5
   
Notes to Financial Statements F-6

 

F-1
 

 

SAFECODE DRUG TECHNOLOGIES CORP.

(A DEVELOPMENT STAGE COMPANY)

BALANCE SHEETS

AS OF SEPTEMBER 30, 2012 AND DECEMBER 31, 2011

 

   As of   As of 
   September 30,   December 31, 
   2012   2011 
   (Unaudited)   (Audited) 
ASSETS          
Current Assets:          
Cash and cash equivalents  $103,704   $- 
Deferred offering costs   -    20,000 
           
Total current assets   103,704    20,000 
           
Total Assets  $103,704   $20,000 
           
LIABILITIES AND STOCKHOLDERS' EQUITY          
           
Current Liabilities:          
Accounts payable and accrued liabilities  $30,057   $42,481 
Loans from related parties - Directors and stockholders   81,553    28,136 
           
Total current liabilities   111,610    70,617 
           
Total liabilities   111,610    70,617 
           
Commitments and Contingencies          
           
Stockholders' Equity (Deficit):          
Common stock, par value $.0001 per share, 200,000,000 shares authorized, 50,000,000 and 30,000,000 shares issued and outstanding, respectively   5,000    3,000 
Additional paid-in capital   78,000    - 
(Deficit) accumulated during the development stage   (90,906)   (53,617)
           
Total stockholders' equity (deficit)   (7,906)   (50,617)
           
Total Liabilities and Stockholders' Equity (Deficit)  $103,704   $20,000 

 

The accompanying notes to financial statements

are an integral part of these financial statements.

 

F-2
 

 

SAFECODE DRUG TECHNOLOGIES CORP.

(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF OPERATIONS

FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011

AND CUMULATIVE FROM INCEPTION (NOVEMBER 23, 2010)

THROUGH SEPTEMBER 30, 2012

(Unaudited)

 

   Three Months Ended   Nine Months Ended   Cumulative 
   September 30,   September 30,   From 
   2012   2011   2012   2011   Inception 
                     
Revenues  $-   $-   $-   $-   $- 
                          
Expenses:                         
Professional fees   5,000    5,299    14,987    15,949    54,843 
Consulting   10,000    -    20,000    -    23,000 
Patent   -    -    -    -    9,284 
Other   6,006    -    8,122    -    8,122 
Legal - incorporation   -    -    -    -    1,477 
                          
Total expenses   21,006    5,299    43,109    15,949    96,726 
                          
(Loss) from Operations   (21,006)   (5,299)   (43,109)   (15,949)   (96,726)
                          
Other Income (Expense)   -    -    5,820    -    5,820 
                          
Provision for income taxes   -    -    -    -    - 
                          
Net (Loss)  $(21,006)  $(5,299)  $(37,289)  $(15,949)  $(90,906)
                          
(Loss) Per Common Share:                         
(Loss) per common share - Basic and Diluted  $(0.00)  $(0.00)  $(0.00)  $(0.00)     
                          
Weighted Average Number of Common Shares                         
Outstanding - Basic and Diluted   50,000,000    30,000,000    45,255,474    30,000,000      

 

The accompanying notes to financial statements are

an integral part of these financial statements.

 

F-3
 

 

SAFECODE DRUG TECHNOLOGIES CORP.

(A DEVELOPMENT STAGE COMPANY)

STATEMENT OF CHANGES IN STOCKHOLDERS' EQUITY

FOR THE PERIOD FROM INCEPTION (NOVEMBER 23, 2010)

THROUGH SEPTEMBER 30, 2012

(Unaudited)

 

                   (Deficit)     
                   Accumulated     
           Stock   Additional   During the     
   Common stock   Subscription   Paid-in   Development     
   Shares   Amount   Receivable   Capital   Stage   Totals 
                         
Balance - at inception   -   $-        $-   $-   $- 
                   -           
Common stock issued for cash   30,000,000    3,000    (3,000)   -    -    - 
                   -           
Net (loss) for the period   -    -    -    -    (11,761)   (11,761)
                               
Balance - December 31, 2010   30,000,000   $3,000   $(3,000)  $-   $(11,761)  $(11,761)
                               
Stock subscription payment received   -    -    3,000    -    -    3,000 
                               
Net (loss) for the period   -    -    -    -    (41,856)   (41,856)
                               
Balance - December 31, 2011   30,000,000   $3,000   $-   $-   $(53,617)  $(50,617)
                               
Common stock issued for cash   20,000,000    2,000    -    78,000    -    80,000 
                               
Net (loss) for the period   -    -    -    -    (37,289)   (37,289)
                               
Balance - September 30, 2012   50,000,000   $5,000   $-   $78,000   $(90,906)  $(7,906)

 

The accompanying notes to financial statements are

an integral part of these financial statements.

 

F-4
 

 

SAFECODE DRUG TECHNOLOGIES CORP.

(A DEVELOPMENT STAGE COMPANY)

STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2012 AND 2011,

AND CUMULATIVE FROM INCEPTION (NOVEMBER 23, 2010)

THROUGH SEPTEMBER 30, 2012

(Unaudited)

 

   Nine Months Ended   Cumulative 
   September 30,   From 
   2012   2011   Inception 
             
Operating Activities:               
Net (loss)  $(37,289)  $(15,949)  $(90,906)
Adjustments to reconcile net (loss) to net cash (used in) operating activities:               
Changes in net assets and liabilities-               
Deferred offering costs   20,000    -    - 
Accounts payable and accrued liabilities   (12,424)   5,600    30,057 
                
Net Cash Used in Operating Activities   (29,713)   (10,349)   (60,849)
                
Investing Activities:   -    -    - 
                
Net Cash Used in Investing Activities   -    -    - 
                
Financing Activities:               
Loans from related parties - directors and stockholders   53,417    7,349    81,553 
Proceeds from stock issued   80,000    3,000    83,000 
                
Net Cash Provided by Financing Activities   133,417    10,349    164,553 
                
Net (Decrease) Increase in Cash   103,704    -    103,704 
                
Cash - Beginning of Period   -    -    - 
                
Cash - End of Period  $103,704   $-   $103,704 
                
Supplemental Disclosure of Cash Flow Information:               
Cash paid during the period for:               
Interest  $-   $-   $- 
Income taxes  $-   $-   $- 

 

The accompanying notes to financial statements are

an integral part of these financial statements.

 

F-5
 

 

SAFECODE DRUG TECHNOLOGIES CORP.

(A DEVELOPMENT STAGE COMPANY)

NOTES TO FINANCIAL STATEMENTS

 

(1)  Summary of Significant Accounting Policies

 

Basis of Presentation and Organization

 

SafeCode Drug Technologies Corp (“SafeCode” or the “Company”) is a Delaware corporation in the development stage and has not commenced operations. The Company was incorporated under the laws of the State of Delaware on November 23, 2010. The business plan of the Company is to license a commercial application of a voice enabled protector for administering medicine to third party entities interested in licensing the rights to manufacture and market the device. The accompanying financial statements of the Company were prepared from the accounts of the Company under the accrual basis of accounting.

 

Unaudited Interim Financial Statements

 

The interim financial statements of the Company as of September 30, 2012, and for the periods then ended, and cumulative from inception, are unaudited. However, in the opinion of management, the interim financial statements include all adjustments, consisting of only normal recurring adjustments, necessary to present fairly the Company’s financial position as of September 30, 2012, and the results of its operations and its cash flows for the periods ended September 30, 2012, and cumulative from inception. These results are not necessarily indicative of the results expected for the calendar year ending December 31, 2012. The accompanying financial statements and notes thereto do not reflect all disclosures required under accounting principles generally accepted in the United States. Refer to the Company’s audited financial statements as of December 31, 2011, filed with the SEC, for additional information, including significant accounting policies.

 

Cash and Cash Equivalents 

 

For purposes of reporting within the statement of cash flows, the Company considers all cash on hand, cash accounts not subject to withdrawal restrictions or penalties, and all highly liquid debt instruments purchased with a maturity of three months or less to be cash and cash equivalents.

 

Revenue Recognition

 

The Company is in the development stage and has yet to realize revenues from operations. Once the Company has commenced operations, it will recognize revenues when delivery of goods or completion of services has occurred provided there is persuasive evidence of an agreement, acceptance has been approved by its customers, the fee is fixed or determinable based on the completion of stated terms and conditions, and collection of any related receivable is probable.

 

Loss per Common Share

 

Basic loss per share is computed by dividing the net loss attributable to the common stockholders by the weighted average number of shares of common stock outstanding during the period. Fully diluted loss per share is computed similar to basic loss per share except that the denominator is increased to include the number of additional common shares that would have been outstanding if the potential common shares had been issued and if the additional common shares were dilutive. There were no dilutive financial instruments issued or outstanding for the period ended September 30, 2012.

 

Income Taxes

 

Income taxes are accounted for under the asset and liability method pursuant to FASB ASC Topic 740. Deferred tax assets and liabilities are determined based on temporary differences between the bases of certain assets and liabilities for income tax and financial reporting purposes. The deferred tax assets and liabilities are classified according to the financial statement classification of the assets and liabilities generating the differences.

 

F-6
 

 

The Company maintains a valuation allowance with respect to deferred tax assets. The Company establishes a valuation allowance based upon the potential likelihood of realizing the deferred tax asset and taking into consideration the Company’s financial position and results of operations for the current period. Future realization of the deferred tax benefit depends on the existence of sufficient taxable income within the carryforward period under the Federal tax laws.

 

Changes in circumstances, such as the Company generating taxable income, could cause a change in judgment about the realizability of the related deferred tax asset. Any change in the valuation allowance will be included in income in the year of the change in estimate.

 

Fair Value of Financial Instruments

 

The Company estimates the fair value of financial instruments using the available market information and valuation methods. Considerable judgment is required in estimating fair value. Accordingly, the estimates of fair value may not be indicative of the amounts the Company could realize in a current market exchange. The carrying value of accounts payable and accrued liabilities, and loans from directors and stockholders approximates fair value due to the short-term nature and maturity of these instruments.

 

Deferred Offering Costs

 

The Company defers as other assets the direct incremental costs of raising capital until such time as the offering is completed. If the offering is successful, these costs will be charged against the proceeds. If the offering is unsuccessful, these costs will be expensed.

 

Impairment of Long-Lived Assets

 

The Company evaluates the recoverability of long-lived assets and the related estimated remaining lives when events or circumstances lead management to believe that the carrying value of an asset may not be recoverable. For the period ended September 30, 2012, no events or circumstances occurred for which an evaluation of the recoverability of long-lived assets was required.

 

Estimates

 

The financial statements are prepared on the basis of accounting principles generally accepted in the United States. The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets, liabilities and expenses. Actual results could differ from those estimates made by management.

 

Fiscal Year End

 

The Company has adopted a fiscal year end of December 31.

 

Recent Accounting Pronouncements

 

In May 2011, the FASB issued ASU 2011-04, "Fair Value Measurement (Topic 820): Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and International Financial Reporting Standards ("IFRSs")." Under ASU 2011-04, the guidance amends certain accounting and disclosure requirements related to fair value measurements to ensure that fair value has the same meaning in U.S. GAAP and in IFRS and that their respective fair value measurement and disclosure requirements are the same. ASU 2011-04 is effective for public entities during interim and annual periods beginning after December 15, 2011. Early adoption is not permitted. The Company does not believe that the adoption of ASU 2011-04 will have a material impact on the Company's results of operation and financial condition.

 

F-7
 

 

In June 2011, the FASB issued ASU No. 2011-05, "Comprehensive Income (ASC Topic 220): Presentation of Comprehensive Income," ("ASU 2011-05") which amends current comprehensive income guidance. This accounting update eliminates the option to present the components of other comprehensive income as part of the statement of shareholders' equity. Instead, comprehensive income must be reported in either a single continuous statement of comprehensive income which contains two sections, net income and other comprehensive income, or in two separate but consecutive statements. ASU 2011-05 will be effective for public companies during the interim and annual periods beginning after Dec. 15, 2011 with early adoption permitted. The Company does not believe that the adoption of ASU 2011-05 will have a material impact on the Company's results of operation and financial condition.

 

There were various other updates recently issued, most of which represented technical corrections to the accounting literature or application to specific industries.  None of the updates are expected to a have a material impact on the Company's financial position, results of operations or cash flows.

 

(2)  Development Stage Activities and Going Concern

 

The Company is currently in the development stage, and has no operations. The business plan of the Company is to patent and develop a commercial application of a voice enabled protector for administering medicine and seek third party entities interested in licensing the rights to manufacture and market the device.

 

The Company commenced a capital formation activity by filing a Registration Statement on Form S-1 to the SEC to register and sell in a self-directed offering 20,000,000 shares of newly issued common stock at an offering price of $0.005 per share for proceeds of up to $100,000. The Registration Statement was declared effective on December 27, 2011. On March 6, 2012, the Company issued 20,000,000 shares of common stock pursuant to the Registration Statement on Form S-1 for proceeds of $100,000. The offering costs of $20,000 related to this capital formation activity were charged against the capital raised.

 

The accompanying financial statements have been prepared in conformity with accounting principles generally accepted in the United States of America, which contemplate continuation of the Company as a going concern. The Company has not established any source of revenue to cover its operating costs, and as such, has incurred an operating loss since inception. Further, as of September 30, 2012, the cash resources of the Company were insufficient to meet its current business plan. These and other factors raise substantial doubt about the Company’s ability to continue as a going concern. The accompanying financial statements do not include any adjustments to reflect the possible future effects on the recoverability and classification of assets or the amounts and classification of liabilities that may result from the possible inability of the Company to continue as a going concern.

 

(3)  Commitment

 

On December 15, 2010, the Company entered into an Assignment Agreement whereby the Company acquired all of the rights, title and interests in the invention known as the “Voice enabled protector for administering medicine” for consideration of a 10% royalty on sales related to the invention net of excise taxes and duties.

 

(4)  Loans from Related Parties - Directors and Stockholders

 

As of September 30, 2012, loans from related parties amounted to $81,553 and represented working capital advances from Directors who are also stockholders of the Company. The loans are unsecured, non-interest bearing, and due on demand.

 

(5)  Common Stock

 

On November 24, 2010, the Company issued 30,000,000 shares of its common stock to individuals who are Directors and officers of the company for $3,000 or $0.0001 per share.

 

F-8
 

 

The Company commenced a capital formation activity by filing a Registration Statement on Form S-1 to the SEC to register and sell in a self-directed offering 20,000,000 shares of newly issued common stock at an offering price of $0.005 per share for proceeds of up to $100,000. The Registration Statement was declared effective on December 27, 2011. On March 6, 2012, the Company issued 20,000,000 shares of common stock pursuant to the Registration Statement on Form S-1 for proceeds of $100,000. The offering costs of $20,000 related to this capital formation activity were charged against the capital raised.

 

(6)  Income Taxes

 

The provision (benefit) for income taxes for the periods ended September 30, 2012 and 2011, was as follows (assuming a 23% effective tax rate):

 

   2012   2011 
         
Current Tax Provision:          
Federal-          
Taxable income  $-   $- 
           
Total current tax provision  $-   $- 
           
Deferred Tax Provision:          
Federal-          
Loss carryforwards  $8,576   $3,668 
Amortization deduction   107    107 
Change in valuation allowance   (8,683)   (3,775)
           
Total deferred tax provision  $-   $- 
           

 

The Company had deferred income tax assets as of September 30, 2012 and December 31, 2011 as follows:

 

   2012   2011 
         
Loss carryforwards  $19,034   $10,351 
Less - Valuation allowance   (19,034)   (10,351)
           
Total net deferred tax assets  $-   $- 

 

The Company provided a valuation allowance equal to the deferred income tax assets for the periods ended September 30, 2012 and December 31, 2011, because it is not presently known whether future taxable income will be sufficient to utilize the loss carryforwards.

 

As of September 30, 2012, the Company had approximately $82,800 in tax loss carryforwards that can be utilized in future periods to reduce taxable income, and expire by the year 2032.

 

The Company did not identify any material uncertain tax positions.  The Company did not recognize any interest or penalties for unrecognized tax benefits.

 

The Company will file income tax returns in the United States. All tax years are closed by expiration of the statute of limitations.

 

(7)  Related Party Transactions

 

As described in Note 4, as of June 30, 2012, the Company owed $81,553 to Directors, officers, and principal stockholders of the Company for working capital loans.

 

As described in Note 5, on November 24, 2010, the Company issued 30,000,000 shares of its common stock to Directors and officers for $3,000 or $0.0001 per share. 

 

F-9
 

 

Item 2. Management’s Discussion and Analysis or Plan of Operations.

 

As used in this Form 10-Q, references to the “SafeCode Drug Technologies Corp ,” Company,” “we,” “our” or “us” refer to SafeCode Drug Technologies Corp .  Unless the context otherwise indicates.

 

Forward-Looking Statements

 

The following discussion should be read in conjunction with our financial statements, which are included elsewhere in this Form 10-Q (the “Report”). This Report contains forward-looking statements which relate to future events or our future financial performance. In some cases, you can identify forward-looking statements by terminology such as “may,” “should,” “expects,” “plans,” “anticipates,” “believes,” “estimates,” “predicts,” “potential” or “continue” or the negative of these terms or other comparable terminology. These statements are only predictions and involve known and unknown risks, uncertainties, and other factors that may cause our or our industry’s actual results, levels of activity, performance or achievements to be materially different from any future results, levels of activity, performance or achievements expressed or implied by these forward-looking statements.

 

For a description of such risks and uncertainties refer to our Registration Statement on Form S-1, filed with the Securities and Exchange Commission. While these forward-looking statements, and any assumptions upon which they are based, are made in good faith and reflect our current judgment regarding the direction of our business, actual results will almost always vary, sometimes materially, from any estimates, predictions, projections, assumptions or other future performance suggested herein. Except as required by applicable law, including the securities laws of the United States, we do not intend to update any of the forward-looking statements to conform these statements to actual results.

 

Corporate Background

 

We were incorporated in Delaware on November 23, 2010 and are a development stage company. On December 15, 2010, we entered into an exclusive Assignment agreement with Mr. Uri Tagger, inventor, in relation to a patent-pending invention for a voice-enabled protector for administering medicine. The assigned technology has the potential to be adopted as a standard in all hospitals and care centers, for improving the safety of medication administration. Specifically, the invention is intended to match drug name voice templates as a threshold mechanism for unlocking a medication container such as a syringe or pill box. This invention is intended to help minimize accidentally administering the wrong medication to a patient by requiring a care-giver, such as a doctor or a nurse, to verbally announce the name of the medication that should be administered. If the medicine does not match the verbally announced name of the medication the medicine cannot be administered.

 

The patent-pending technology was transferred to SafeCode Drug Technologies Corp. by Mr. Uri Tagger (inventor), in exchange  for a commitment to pay 10% of future royalties on any revenues we may derive from the patent. This agreement was executed on December 15, 2010.

 

The assigned patent-pending technology for a voice-enabled protector for administering medicine, is intended to feature several components Including; a drug name identifier; a computer readable medium containing a stored template that identifies the drug trade name, the compound name, etc.; a processing unit capable of sending the stored voice templates to a computer, and  a software application hosted on a computer system. The computer will have standard equipment such as a motherboard, keyboard, mouse, monitor, etc. but also have a microphone capable of receiving voice commands and recording the voice templates against which the voice commands are compared.

 

The computer to be used with the technology will be required to have Internet capabilities including an internal modem or a connection to a modem and Internet access to enable the program to access a central repository of stored voice templates of drug brand names, generic brand names, or a combination of both. The audio recording program should include voice recognition software for interacting with the microphone and to record the voice templates.

 

We plan to license the patent to a third-party to design, manufacture, and market the device against an initial payment to us and a percentage licensing agreement to be paid quarterly.

 

Our Business

 

We were incorporated in Delaware on November 23, 2010 and are a development stage company. An Assignment agreement was signed between Mr. Uri Tagger (the inventor) and SafeCode Drug Technologies Corp., for a patent-pending technology for a voice-enabled protector for administering medicine on December 15, 2010. This agreement granted SafeCode Drug Technologies Corp. exclusive rights, title and interest in and to the invention. All Intellectual Property rights, free and clear of any lien, charge, claim, preemptive rights, etc. for the invention.

 

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We purchased the patent-pending technology from the inventor, an individual with limited experience in the field of medicinal devices.  The inventor is engaged in the business of web-based media applications, and due to a lack of funds and the risk that a product based on the patent application would not be commercially feasible, he has neither developed the technology that is the subject of the patent application nor attempted to commercialize the patent application prior to selling the technology to us.  A prototype of our proposed product has not yet been manufactured to test the capabilities of the potential product, and no testing has yet been performed regarding the ability of the proposed product to perform as expected or regarding the reliability or cost-effectiveness of such a product.  Except for having purchased the patent application from the inventor, we do not have any relationship with the inventor.

 

The SafeCode Drug Technologies technology has the potential to be adopted as a standard in all hospitals and care centers, for improving the safety of medication administration. Specifically, the invention is intended to match drug name voice templates as a threshold mechanism for unlocking a medication container such as a syringe or pill box. This invention is intended to help minimize accidentally administering the wrong medication to a patient by requiring a care-giver such as a doctor or a nurse, to verbally announce the name of the medication that should be administered. If the medicine does not match the verbal name the medicine cannot be administered.

 

The technology was transferred to SafeCode Drug Technologies Corp. by Mr. Uri Tagger (inventor), in exchange for 10% of future royalties on any income the company may derive from the patent.

 

The proposed product based on our invention will focus on the use of voice recognition technology to ensure the right drug / pill vial / box is being opened and administered to the patient. It will include both hardware and software components. It may include a barcode that identifies the patient for whom the medication is intended, a drug identifier, a computer readable medium containing a stored template that identifies the drug trade name, the compound name, etc. a processing unit capable of sending the stored voice templates to a computer, and a software application hosted on a computer system. The computer will have standard equipment such as a motherboard, keyboard, mouse, monitor etc. but will also have a microphone capable of receiving voice commands and recording the voice templates against which the voice commands area compared. The exact components of the final product will be determined by the manufacturer who licenses the invention from SafeCode. In the event the licensee determines it necessary or beneficial to use a barcode identification system for the patient matching safety feature in addition to the voice recognition component to ensure the right drug is being administered, that is integral to our technology offering, the manufacturer will need to license the rights to Patent # 7,347,841 from MediSafe1 Technology Corp.

 

The computer should have Internet capabilities including an internal modem or a connection to a modem and Internet access to enable the program to access a central repository of stored voice templates of drug brand names, generic brand names, or a combination of both. The audio recording program should include voice recognition software for interacting with the microphone and to record the voice templates.

 

We intend that the software will be developed by third party contractors.  Other components will either be outsourced or purchased from suppliers of standard computer equipment and configured to work with our software.

 

Though not considered part of the actual product, we envision care centers and hospitals placing our product on a mobile cart that can be moved with the nurses or caregivers as they move from room to room. Similar to blood pressure machines, our device would be taken from room to room to dispense medicine.

 

Since the software program has not yet been developed, it is not yet possible to determine the exact nature of how the protection system will work in its final development or to determine the costs involved in developing the product.  A voice detection microchip system will be included such that the caregiver will be required to state the name of the medication being administered to be matched against stored voice recognition templates within the program.

 

This system will include a microchip sensor with voice recognition software and an electromagnetic locking device that will interface with the microchip sensor.  To use our proposed product, the care provider will be required to read aloud the name of the patient and the name of the medicine.  Upon a match of the patient name with the correct medicine, the microchip sensor will send an electronic alert to the electromagnetic locking device to unlock the storage container.

 

Since different drugs would need to be stored in their own locked containers, each medication would need to be stored in a separate locked drug container, connected to the microchip sensor and electromagnetic locking device.

 

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One disadvantage of our product is that it is not intended for emergency situations in which medications must be administered without delay.  Firm instructions not to use this product in emergency situations will be included because our product is not intended for use in such an environment, both because of the time factor and because of additional pressures on staff at such times.

 

While there is always an element of human error when dealing with a system requiring human interaction, we intend for safety mechanisms to be included in the software.  For example, we intend for the product to include confirmation screens that will require the human operator to confirm stages within the operation and voice assignments.   One of the criteria for finding a proper third party partner will be whether it has prior experience in developing software for the medical industry.

 

Since the goal of the product is to help avoid error, the important element of the software will be the inclusion of safety factors to confirm that the correct medicine is being opened.

 

The design and development of a commercial product will be carried out by 3 rd party partners who agree to license the design and pay a portion of future royalties to maintain the license on an ongoing basis.

 

Our ideal third party partner will have extensive experience in software development, in the medical industry in general, and in the drug industry in particular.  We plan to initially promote our technology to drug manufacturers.  Of the top 49 drug manufacturers, almost half are located in the United States, with others located in Europe, Asia, and Israel  (source: Wikipedia).  As our Directors are located in Israel, we will also approach top Israeli drug manufacturers in an attempt to partner with them and license our technology to them.  We also intend to look to leaders in the field of Computerized Decision Support Systems (CDSS) as potential partners.  Beyond pharmaceutical companies, it is possible that insurance companies may be interested in partnering with our technology to provide value-added services to their clients by utilizing products such as ours that reduce the risk of malpractice.

 

Employees

 

Other than our current Directors and officers, we have three part-time employees.

 

Transfer Agent

 

We have engaged Nevada Agency and Trust as our stock transfer agent. Nevada Agency and Trust is located at 50 West Liberty Street, Reno, Nevada 89501. Their telephone number is (775) 322-0626 and their fax number is (775) 322-5623. The transfer agent is responsible for all record-keeping and administrative functions in connection with our issued and outstanding common stock.

 

Plan of Operation

 

We are a development stage company that has acquired a patent-pending technology for a voice-enabled protector for administering medicine. We do not have any plans to manufacture or develop our product. Rather, we plan to license the patent-pending technology to one or more third party partners who will be responsible for designing, developing, manufacturing, and selling their product, branded with their corporate identity as they determine best fits their sales program. In exchange for this licensing agreement, the partner or partners will agree to pay to SafeCode Drug Technologies Corp. an upfront fee and royalties on an ongoing basis.

 

To accomplish this, we plan to engage in a determined marketing and promotional campaign to identify and target potential partners. For this purpose, we plan:

 

Preparatory Stage (3 months): includes the development of marketing materials about the design patent; the potential benefits and market.

 

Identify Target Partners (1 month): We anticipate this stage will take approximately 1 month, as we believe it best to create a detailed priority list rather than simply target one company at a time. We will analyze the benefits of each company as potential partners measured against the efforts we believe we can expect them to take and confirm we are prepared to approach and negotiate with such partners. We may need to hire third party business consultants for this purpose or our Directors and Officers may undertake this effort.

 

Marketing to Potential 3 rd Party Partners (6 months): This will involve hiring marketing consultants and strategists to contact potential development partners and negotiate licensing agreements with them. We are open to signing many agreements in non-competing geographical areas or to signing more global cross-area agreements to cover many regions at once. We anticipate this could take up to 6 months, but may take longer or shorter depending on the efforts of the marketing team.

 

The Company in q1 2012 raised gross proceeds of $100,000 and is currently seeking currently to identify target Partners and also seeking Companies to manufacture a prototype of the patent pending technology.

 

The Company has concurrently entered into an agreement with a US - ISRAELI marketing consulting Co called, Strategic Marketing Technologies Corp, whereby they will assist Safecode Drug Technologies Corp to conceptualize and manufacture a prototype of its patent pending medical product for a demonstration and the possible market penetration into the US Department of Defence. The project is estimated to be completed over a period of 6-9 months and will cost $53,000 payable in milestones over the related period.

 

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General Working Capital

 

We have raised as of today $100,000 in gross proceeds  pursuant to the effective Registration Statement on Form S-1, filed with the Securities and Exchange Commission .

 

Liquidity and Capital Resources

 

Our balance sheet as September 30 2012 reflects cash in the amount of $103,704. Cash and cash equivalents from inception to date have been sufficient to provide the operating capital necessary to operate to date. The operating expenses and net loss for the nine months ended September 30 2012 and September 30 2011 amounted to $43,109 , $37,289 and $15,949, respectively .

 

Going Concern Consideration

 

Our auditors have issued an opinion on our annual financial statements which includes a statement describing our going concern status. This means that there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills and meet our other financial obligations. This is because we have not generated any revenues and no revenues are anticipated until we begin marketing the product. Accordingly, we must raise capital from sources other than the actual sale of the product. We must raise capital to implement our project and stay in business.

 

Off-Balance Sheet Arrangements

 

We have no off-balance sheet arrangements.

 

Item 3.             Quantitative and Qualitative Disclosures About Market Risk.

 

A smaller reporting company, as defined by Item 10 of Regulation S-K, is not required to provide the information required by this item.

 

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Item 4. Controls and Procedures.

 

Disclosure Controls and Procedures

 

Our disclosure controls and procedures are designed to ensure that information required to be disclosed in reports that we file or submit under the Securities Exchange Act of 1934 is recorded, processed, summarized and reported within the time periods specified in the rules and forms of the United States Securities and Exchange Commission. Our principal executive officer and principal financial and accounting officers have reviewed the effectiveness of our “disclosure controls and procedures” (as defined in the Securities Exchange Act of 1934 Rules 13(a)-15(e) and 15(d)-15(e)) within the end of the period covered by this Quarterly Report on Form 10-Q and have concluded that the disclosure controls and procedures are effective to ensure that material information relating to the Company is recorded, processed, summarized, and reported in a timely manner. There were no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the last day they were evaluated by our principal executive officer and principal financial and accounting officers.

 

Changes in Internal Controls over Financial Reporting

 

There have been no changes in the Company's internal control over financial reporting during the last quarterly period covered by this report that have materially affected, or are reasonably likely to materially affect, the Company's internal control over financial reporting.

 

PART II

OTHER INFORMATION

 

Item 1. Legal Proceedings.

 

There are no pending legal proceedings to which the Company is a party or in which any director, officer or affiliate of the Company, any owner of record or beneficially of more than 5% of any class of voting securities of the Company, or security holder is a party adverse to the Company or has a material interest adverse to the Company. The Company’s property is not the subject of any pending legal proceedings.

 

Item 1A.            Risk Factors

 

A smaller reporting company, as defined by Item 10 of Regulation S-K, is not required to provide the information required by this item.

 

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds.

 

None

 

Purchases of equity securities by the issuer and affiliated purchasers

 

None.

 

Use of Proceeds

 

None

 

Item 3.  Defaults Upon Senior Securities.

 

None.

 

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Item 4. Submission of Matters to a Vote of Security Holders.

 

There was no matters  submitted to a vote of security holders during the six months ended September 30 2012.

 

Item 5. Other Information.

 

None

 

Item 6. Exhibits

 

31.1 Certification pursuant to Section 302 of the Sarbanes-Oxley Act (filed herewith)
   
31.2 Certification pursuant to Section 302 of the Sarbanes-Oxley Act (filed herewith)
   
32.1 Certification of Principal Executive Officer pursuant to Section 906 of the Sarbanes-Oxley (filed herewith)
   
32.2 Certification of Principal Financial and Accounting Officer pursuant to Section 906 of the Sarbanes-Oxley (filed herewith)

 

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SIGNATURES

 

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

 

Date: November 9 , 2012 SAFECODE DRUG TEHCNOLOGIES
     
  By: /s/ Joel Klopfer
    Name Joel Klopfer
    Title: President and Director
    (Principal Executive Officer)

 

In accordance with the Exchange Act, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

 

Date: November 9 , 2012 By: /s/ Joel Klopfer
    Name: Joel Klopfer
    Title: President and Director
    (Principal Executive Officer)

 

Date: November 9 , 2012 By: /s/ Itamar Zer
    Name: Itamar Zer
    Title: Secretary and Director
    (Principal  Internal Accounting  and financial Officer)

 

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