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SFBR > SEC Filings for SFBR > Form 10-Q on 21-Mar-2014All Recent SEC Filings

Show all filings for SAFEBRAIN SYSTEMS, INC.



Quarterly Report

Item 2. Management's Discussion and Analysis and Plan of Operation.

We were incorporated in Delaware in November 2003. From November 2003 to February 2010 we were inactive.

In April 2010 we changed our name to Alveron Energy Corp.

Between February 2010 and July 2011 we were involved in a joint venture which was formed to determine the feasibility of building a 48MW wind energy plant in Shandong, China. In July 2011 we discontinued our involvement in the joint venture due to our inability to further fund the project. Total loss from discontinued operation from inception to OCTOBER 31, 2012 was $589,900.

In March 2012, Michael Scott purchased 39,900,000 shares of our common stock from Sang-Ho Kim who, at that time, was our Chief Executive Officer.

In March 2012, Sang-Ho Kim and Surendran Shanmugan appointed Michael Scott as one of our directors. Following the appointment of Mr. Scott, Mr. Kim resigned as our officer. Following his resignation, Mr. Scott became our Chief Executive Officer and our Principal Financial and Accounting Officer.

In March 2012 Mr. Scott transferred 18,900,000 shares he purchased from Sang-Ho Kim to various shareholders in SafeBrain Systems, Inc. and to other third parties.

Mr. Kim and Mr. Shanmugan resigned as directors on April 15, 2012.

Acquisition of the SafeBrain Technology

On May 25, 2012, we acquired the SafeBrain System ("SafeBrain") from Rod Newlove for $900,000, of which $600,000 has been paid and the remaining $300,000 and is currently due on September 30, 2014. Any outstanding amount after October 1, 2014 will bear interest of 5% per year.

SafeBrain works in two ways:

The Cranium Impact Analyzer Sensor (the "C.I.A.") is mounted on the helmet of an athlete; and
The SafeBrain software allows in-depth analysis of any impact event and can be customized for the notification and data logging settings for each athlete.

The C.I.A. sensor was designed to ensure compatibility with a wide range of athletic helmets. The sensor is approximately the size of a quarter and weighs less than 8 grams. Even at this small size, the C.I.A. patented sensor contains a 3-axis accelerometer, based on a 16-bit microprocessor. The C.I.A. sensor contains a data-logger and real-time clock to provide time-stamped force-readings when used with the SafeBrain software.

Placed on the helmet, the small CIA sensor accurately measures G-force on all 3 -axis. An LED indicator light flashes to alert the monitor, coaching staff or an individual when an impact has occurred that has the potential to cause a concussion which requires proper assessment and perhaps medical attention.

On May 15, 2012, we entered into a consulting agreement with a company controlled by Mr. Newlove. The agreement provides that we will pay Mr. Newlove $10,000 per month for supervising the manufacturing of, and developing improvements for, the SafeBrain System. In addition, during each twelve-month period during the term of this agreement, we will provide supplies and materials to Mr. Newlove, at a cost not to exceed $5,000 during the twelve-month period, to be used by the Consultant in performing the consulting services. Based on a mutual agreement the compensation on the consulting agreement has been suspended until further notice.

The consulting agreement will expire on June 30, 2017.


We plan to market the SafeBrain System to non-professional athletes who participate in sports that require helmets such as hockey, football, biking, motor-cross, skiing and snowboarding.

There are over 1.5 million registered minor hockey players worldwide with over 71% of them being located in North America representing over 50,000 teams.

There are an estimated 1.1 million high school students playing American football and 35,000 college players currently in the USA. Studies published over the last 20 years indicate that 15-20% of high school football players or nearly 250,000 players suffer concussions each year in the United States. According to as of October 25, 2011, thirty-three states in the USA have enacted youth sports concussion related laws. Although the wording varies from state to state the focus is primarily on three main points;

Teams are to educate their players and parents about the nature of concussions and brain injury;

Coaches who suspect a player has sustained a concussion must remove the player from the game, competition and practice; and

A player removed from play due to a concussion must be evaluated by a health care provider and receive written clearance before participating in sports again.

With the demand for extreme sports related competitions growing, sports such as biking, skiing, snow-boarding, motor cross and the like are also garnering significant media exposure for head trauma related injuries most noticeably concussions.

We believe SafeBrain is currently the only product that has state of the art advancement technology with 360 degree impact gauging and monitoring in addition to indicator warning lights that flash the moment of impact.

SafeBrain will be marketed to all amateur football and hockey teams starting at the novice level through major junior and professional levels. In addition SafeBrain will also be marketed to individuals and teams in other sports such as skateboarding, skiing, biking, bmx freestyle, motor cross, sport racing and lacrosse. The primary focus for the first eighteen to twenty-four months will be the North American football and hockey markets although there will be no limitations placed on sales in other markets.

Although SafeBrain will benefit from the ongoing media print and television exposure to sports related concussions, to help drive awareness for SafeBrain, the marketing approach will be multifaceted. We will hire a dedicated sales team to assist in generating interest from teams and individuals throughout Canada and the United States. The sales team will be responsible for to following up with teams currently pilot testing the product, setting up media events and interviews, directing targeted traffic to our website, print and content publications as well as organizing booths and displays at all the large sports shows and youth development camps in North America.

We expect our revenues will be derived from three components.

Unit sales: Football/Cost $4,995.00

Each SafeBrain System will contain a Team Kit which consists of: 52 C.I.A. Sensors, Safe Brain Software, Netbook PC, Storage Case, Instruction Manual, two data transfer interface cables and 2 C.I.A. emergency replacement sensors.

Unit sales: Hockey/Cost $2,995.00

Each SafeBrain System will contain a Team Kit which consists of: 22 C.I.A. Sensors, Safe Brain Software, Netbook PC, Storage Case, Instruction Manual, two data transfer interface cables and 2 C.I.A. emergency replacement sensors.

Maintenance Agreement and Team Maintenance/Cost $499.00.

The annual maintenance agreements for teams or individuals will include complete battery replacement on all Units as needed, testing, verification and calibration certification on all CIA devices. Data storage is also included to record and store downloaded user data safely and effectively for the entire time any one specific user or team is using the device. A satisfaction guaranteed lifetime warranty also enables easy repair or replacement on any Units sold.

We will also sell individual Units at a cost of $149.99 and annual maintenance costs $49.99 per year.


We do not own any manufacturing facilities. Accordingly, we will use unrelated third parties to manufacture our SafeBrain System. We do not have any written agreements with any person regarding the manufacture of the SafeBrain system or its components.

Plan of Operation

As of January 31, 2014 we had generated no revenue from sales of SafeBrain systems.

As of January 31, 2014 we had cash on hand of approximately $158,259. We have never earned a profit and we expect to incur losses during the foreseeable future and may never be profitable. We will need to earn a profit or obtain additional financing until we are able to earn a profit. We do not know what the terms of any future financing may be, but any future sale of equity securities would dilute the ownership of existing stockholders. The failure to obtain the capital we require will result in a slower implementation of our business plan. There can be no assurance that we will be able to obtain any capital which is needed. We do not have any commitments from any person to provide us with any additional capital.

Our plan of operation and capital requirements for the twelve months ending January 31, 2014 are shown below.

Activity                   Estimated Completion Date    Estimated Cost

Production                     January 31, 2014                 100,000
Research and Development       January 31, 2014                  50,000
Marketing                      January 31, 2014                 150,000
Working Capital                January 31, 2014                 390,000
Total                          January 31, 2014                 690,000


Our principal offices are located at 1600 - 144 4 Avenue SW, Calgary, Alberta, T2P 3N4. Our lease payments for the location are $1294.57 per month.

Our website is and our telephone number is (587) 702-5809.

As of March 21, 2014 we did not employ any persons on a full time basis.

Results of Operation

The Company did not have any operating income from inception (November 18, 2003) through January 31, 2014.

The company had $99,323 in consulting expenses during the three months ended January 31, 2014 compared to $20,092 for the three months ended January 31, 2013.

During the three months ended January 31, 2014, the company had $69,927 of professional fees as compared to the three months ended January 31, 2013, where the company had $8,780 of professional.

During the three months ended January 31, 2014, the company had office and administrative expenses of $19,889 as compared to the three months ended January 31, 2013, where the company had $1,766 of office and administrative expenses.

The company had $4,863 in travel and vehicle expenses during the three months ended January 31, 2014 compared to $1,772 for the three months ended January 31, 2013.

The company had interest expense $27,066 during the three months ended January 31, 2014 compared to $11,513 for the three months ended January 31, 2013.

Operating expenses in general increased in the quarter ended January 31, 2014 due to increased company activity.

Critical Accounting Policies

Our most critical accounting policies, can be found in our Annual Report on Form 10-K for the fiscal year ended October 31, 2013. There have been no material changes in our existing accounting policies from the disclosures included in our 2013 Form 10-K.

Off-Balance Sheet Arrangements

We do not have any off-balance sheet guarantees, interest rate swap transactions or foreign currency contracts. We do not engage in trading activities involving non-exchange traded contracts.

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