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 quarterly period ended May 31, 2013

[     ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE EXCHANGE ACT

For the transition period from ______ to _______

Commission File Number: 000-54880

SECURE DIGITAL, INC.

(Exact name of registrant as specified in its charter)

 

Nevada		81-0653420
(State of incorporation)		(I.R.S. Employer Identification No.)

2 Glenwood Lane

Huntington New York 11743

(Address of principal executive offices)

631-662-6674

(Registrant’s telephone number)

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 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      No

 

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files).  Yes     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 the definitions of "large accelerated filer," "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act.

Large Accelerated Filer

Accelerated Filer  

Non-Accelerated Filer

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

As of May 31, 2013, there were 18,312,500 shares of the Registrant’s $0.001 par value common stock issued and outstanding.

SECURE DIGITAL,INC.

TABLE OF CONTENTS

				PAGE
PART I		FINANCIAL INFORMATION
ITEM 1.		FINANCIAL STATEMENTS		1-7
ITEM 2.		MANAGEMENT’S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS		8-12
ITEM 3.		QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK		13
ITEM 4.		CONTROLS AND PROCEDURES		13
PART II		OTHER INFORMATION
ITEM 1.   ITEM 1A.		LEGAL PROCEEDINGS   RISK FACTORS		13 13
ITEM 2.		UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS		13
ITEM 3.		DEFAULTS UPON SENIOR SECURITIES		14
ITEM 4.		[REMOVED AND RESERVED]		14
ITEM 5.		OTHER INFORMATION		14
ITEM 6.		EXHIBITS		14

Special Note Regarding Forward-Looking Statements

Information included in this Form 10-Q contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended (“Securities Act”), and Section 21E of the Securities Exchange Act of 1934, as amended (“Exchange Act”). This information may involve known and unknown risks, uncertainties and other factors which may cause the actual results, performance or achievements of Secure Digital, Inc. (the “Company”), to be materially different from future results, performance or achievements expressed or implied by any forward-looking statements. Forward-looking statements, which involve assumptions and describe future plans, strategies and expectations of the Company, are generally identifiable by use of the words “may,” “will,” “should,” “expect,” “anticipate,” “estimate,” “believe,” “intend,” or “project” or the negative of these words or other variations on these words or comparable terminology. These forward-looking statements are based on assumptions that may be incorrect, and there can be no assurance that these projections included in these forward-looking statements will come to pass. Actual results of the Company could differ materially from those expressed or implied by the forward-looking statements as a result of various factors. Except as required by applicable laws, the Company has no obligation to update publicly any forward-looking statements for any reason, even if new information becomes available or other events occur in the future.

*Please note that throughout this Quarterly Report, and unless otherwise noted, the words "we," "our," "us," the "Company," or "Secure Digital" refers to Secure Digital, Inc.

PART I - FINANCIAL INFORMATION

 

ITEM 1.

FINANCIAL STATEMENTS (UNAUDITED)

Index

Condensed Balance Sheets

...1

Condensed Statements of Operations

2

Condensed Statements of Cash Flows

3

Notes to the Financial Statements

4-7

SECURE DIGITAL, INC.

(ADevelopment Stage Company)

CONDENSED BALANCE SHEETS

			May 31,		November 30,
			2013		2012
			(unaudited)		(audited)
	ASSETS
Current assets:
	Cash	$	646	$	8,436
	Total assets	$	646	$	8,436
	LIABILITIES AND STOCKHOLDERS' DEFICIT
Current liabilities:
	Loan and advances	$	88,979	$	88,979
	Total current liabilities		88,979		88,979
Stockholders' deficit:
	Preferred stock; 10,000,000 shares authorized, $0.001 par value,
	nil shares issued and outstanding		-		-
	Common stock; 125,000,000 shares authorized, $0.001 par value,
	18,312,500 shares issued and outstanding		18,313		18,313
	Paid-in capital		61,437		61,437
	Deficit accumulated during the development stage		(168,083)		(160,293)
	Total stockholders' deficit		(88,333)		(80,543)
	Total liabilities and stockholders' deficit	$	646	$	8,436

(1)

All shares presented in these condensed financial statements and accompanying footnotes have been retroactively adjusted to reflect the five to one forward spilt and two to one reverse spilt.

The accompanying notes are an integral part of these condensed financial statements.

1

SECURE DIGITAL, INC.

(ADevelopment Stage Company)

CONDENSED STATEMENTS OF OPERATIONS

(Unaudited)

(1)

All shares presented in these condensed financial statement and accompanying footnotes have been retroactively adjusted to reflect the five to one forward spilt and two to one reverse spilt.

The accompanying notes are an integral part of these condensed financial statements.

2

SECURE DIGITAL, INC.

(ADevelopment Stage Company)

CONDENSED STATEMENTS OF CASH FLOWS

(Unaudited)

								From January 28, 2004 (Inception) to May31, 2013
				Six months ended  May 31, 2013		Six months ended  May 31, 2012
Cash flow from operating activities:
	Net loss		$	(7,790)	$	(30,880)	$	(168,083)
	Adjustments to reconcile net loss to net cash used in operating activities:
		Technology expenditure for shares		-		-		15,000
	Net cash used in operating activities			(7,790)		(30,880)		(153,083)
Cash flows from financing activities:
	Proceeds from issuance of common stock			-		-		64,750
	Proceeds from loans and advances			-		59,979		88,979
	Net cash provided by financing activities			-		59,979		153,729
Increase (decrease) in cash during the period				(7,790)		19,099		646
Cash, beginning of period				8,436		1,375		-
Cash, end of period			$	646	$	30,474	$	646
Supplemental disclosure of cash flow information:
	Cash paid during the period
		Taxes	$	-	$	-	$	-
		Interest	$	-	$	-	$	-

The accompanying notes are an integral part of these condensed financial statements

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SECURE DIGITAL, INC.

(A Development Stage Company)

NOTES TO THE CONDENSED FINANCIAL STATEMENTS

(Unaudited)

NOTE 1 - NATURE OF OPERATIONS

Secure Digital Inc. (the “Company”) was incorporated in the State of Nevada on January 28, 2004.  The Company was organized to develop software and information technology applications in North America.

NOTE 2 – GOING CONCERN

These condensed financial statements are presented on the basis that the Company is a going concern, which contemplates the realization of assets and satisfaction of liabilities in the normal course of business over a reasonable length of time. As of May 31, 2013, the Company had $646 in cash and accumulated net losses of $168,083 since inception. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern. Its continuation as a going concern is dependent upon its ability to generate sufficient cash flow to meet its obligations on a timely basis, to obtain additional financing or refinancing as may be required, to develop commercially viable  software and IT applications  and ultimately to establish profitable operations.

Management's plans for the continuation of the Company as a going concern include financing the Company's operations through issuance of its common stock. If the Company is unable to complete its financing requirements or achieve revenue as projected, it will then modify its expenditures and plan of operations to coincide with the actual financing completed and actual operating revenues. There are no assurances, however, with respect to the future success of these plans.  Unless otherwise indicated, amounts provided in these notes to the condensed financial statements pertain to continuing operations. The Company is not currently earning any revenues.

NOTE 3 - SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

These condensed financial statements and related notes are presented in accordance with accounting principles generally accepted in the United States and are expressed in United States (US) dollars. The Company has not produced any revenue from its principal business and is a development stage company.

Use of Estimates

The preparation of condensed financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, and disclosure of contingent assets and liabilities, at the date of these financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Impaired Asset Policy

The Company periodically reviews its long-lived assets when applicable to determine if any events or changes in circumstances have transpired which indicate that the carrying value of its assets may not be recoverable, The Company determines impairment by comparing the undiscounted future cash flows estimated to be generated by its assets to their respective carrying amounts. If impairment is deemed to exist, the assets will be written down to fair value.

Start-up Expenses

The Company has adopted an accounting policy which requires that costs associated with start-up activities be expensed as incurred. Accordingly, start-up costs associated with the Company's formation have been included in the Company's general and administrative expenses for the period from inception on January 28, 2004 to May 31, 2013.

Foreign Currency Translation

Assets and liabilities that are denominated in a foreign currency are translated at the exchange rate in effect at the year end and capital accounts are translated at historical rates.  Income statement accounts are translated at the average rates of exchange prevailing during

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the period.  Translation adjustments from the use of different exchange rates from period to period are included in the Comprehensive Income statement account in stockholder’s equity, if applicable.  There were no translation adjustments as of May 31, 2013.

Transactions undertaken in currencies other than the functional currency of the entity are translated using the exchange rate in effect as of the transaction date.  If applicable, exchange gains and losses are included in other income  (expense) on the statement of operations. There were no exchange gains or losses for the three and six months ended as of May 31, 2013 and 2012.

Cash and Cash Equivalents

The Company considers all highly liquid investments with an original maturity of three months or less to be cash equivalents.  

Stock-Based Compensation

The Company accounts for stock options issued to employees in accordance with generally accepted accounting principles. As such, compensation cost is measured on the date of grant as the excess of current market price of the underlying stock over the exercise price. Such compensation amounts are amortized over the respective vesting periods of the option grant.  

The Company accounts for stock options or warrants issued to non-employees for goods or services in accordance with the fair value method. Under this method, the Company records an expense equal to the fair value of the options or warrants issued.  The fair value is computed using an options pricing model.

Loss per Share

The Company computed basic and diluted loss per share amounts using generally accepted accounting principles. There are no potentially dilutive shares outstanding and, accordingly, dilutive per share amounts have not been presented in the accompanying statements of operations.

Fair Value of Financial Instruments

The Company discloses information regarding the fair value of certain financial instruments for which it is practicable to estimate the value.  For purpose of this disclosure, the fair value of a financial instrument is the amount at which the instrument could be exchanged in a current transaction between willing parties, other than in a forced sale of  liquidation.

Comprehensive Loss

As of May 31, 2013, the Company has no items that represent comprehensive loss and therefore, has not included a schedule of comprehensive loss in the condensed financial statements.  

Income Taxes

Income taxes are recognized in accordance with the liability method of accounting whereby deferred income tax liabilities or assets at the end of each period are determined using the tax rate expected to be in effect when the taxes are actually paid or recovered. A valuation allowance is recognized on deferred tax assets when it is more likely than not that some or all of these deferred tax assets will not be realized.  

Recent Accounting Pronouncements

Adopted

Effective January 2013, we adopted FASB ASU No. 2011-11, Balance Sheet (Topic 210):  Disclosures about Offsetting Assets and Liabilities (ASU 2011-11).  The amendments in ASU 2011-11 require the disclosure of information on offsetting and related arrangements for financial and derivative instruments to enable users of its financial statements to understand the effect of those arrangements on its financial position.  Amendments under ASU 2011-11 will be applied retrospectively for fiscal years, and interim periods within those years, beginning after January 1, 2013.  The adoption of this update did not have a material impact on the financial statements.  Effective January 2013, we adopted FASB ASU No. 2013-02, Reporting of Amounts Reclassified out of Accumulated Other Comprehensive (ASU 2013-02).  This guidance is the culmination of the FASB’s deliberation on reporting

5

reclassification adjustments from accumulated other comprehensive income (AOCI).  The amendments in ASU 2013-02 do not change the current requirements for reporting net income or other comprehensive income.  However, the amendments require disclosure of amounts reclassified out of AOCI in its entirety, by component, on the face of the statement of operations or in the notes thereto.  Amounts that are not required to be reclassified in their entirety to net income must be cross-referenced to other disclosures that provide additional detail.  This standard is effective prospectively for annual and interim reporting periods beginning after December 15, 2012.  The adoption of this update did not have a material impact on the financial statements.

Not Adopted

In May 2013, the FASB issued ASU No. 2013-04, Liabilities (Topic 405): Obligations Resulting from Joint and Several Liability Arrangements for Which the Total Amount of the Obligation Is Fixed at the Reporting Date. The amendments in ASU 2013-04 provide guidance for the recognition, measurement, and disclosure of obligations resulting from joint and several liability arrangements for which the total amount of the obligation within the scope of this Update is fixed at the reporting date, except for obligations addressed within existing guidance in U.S. GAAP. The guidance requires an entity to measure those obligations as the sum of the amount the reporting entity agreed to pay on the basis of its arrangement among its co-obligors and any additional amount the reporting entity expects to pay on behalf of its co-obligors. The guidance in this Update also requires an entity to disclose the nature and amount of the obligation as well as other information about those obligations. The amendment in this standard is effective retrospectively for fiscal years, and interim periods within those years, beginning after December 15, 2013. We are evaluating the effect, if any, adoption of ASU No. 2013-04 will have on our financial statements.

In April 2013, the FASB issued ASU No. 2013-07, Presentation of Financial Statements (Top 205): Liquidation Basis of Accounting. The objective of ASU No. 2013-07 is to clarify when an entity should apply the liquidation basis of accounting and to provide principles for the measurement of assets and liabilities under the liquidation basis of accounting, as well as any required disclosures. The amendments in this standard is effective prospectively for entities that determine liquidation is imminent during annual reporting periods beginning after December 15, 2013, and interim reporting periods therein. We are evaluating the effect, if any, adoption of ASU No. 2013-07 will have on our financial statements.  

Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the American Institute of Certified Public Accountants, and the United States Securities and Exchange Commission did not or are not believed by management to have a material impact on the Company’s present or future financial statements.

NOTE 4 – TECHNOLOGY PURCHASE AGREEMENT

On July 18, 2007, the Company acquired all the Commguard digital security products in their entirety from Commguard, Inc. for the purchase price of 500,000 shares of the Company’s common stock. The acquisition was valued at $.03 per share or $15,000. This asset was fully impaired as of December 31, 2007.

NOTE 5- THE JUMPSTART OUR BUSINESS STARTUPS ACT OF 2012

The Company is an “emerging growth company,” as defined in the Jumpstart our Business Startups Act of 2012 or JOBS Act, and the Company may take advantage of certain exemptions from various reporting requirements that are applicable to other public companies that are not “emerging growth companies” including not being required to comply with the auditor attestation requirements of section 404 of the Sarbanes-Oxley Act, reduced disclosure obligations regarding executive compensation in our periodic reports and exemptions from the requirements of holding a nonbinding advisory vote on executive compensation and shareholder approval of any golden parachute payments not previously approved.

In addition, Section 107 of the JOBS Act also provides that an “emerging growth company” can take advantage of the extended transition period provided in Section 7(a)(2)(B) of the Securities Act for complying with new or revised accounting standards. An “emerging growth company” can therefore delay the adoption of certain accounting standards until those standards would otherwise apply to private companies.   We have elected  not to use the extended transition period for complying with new or revised accounting standards under Section 102(b)(1), and understand that this election is irrevocable.

As a public company and particularly after the Company ceases to be an “emerging growth company,” the Company will incur significant legal, accounting and other expenses that the Company did not incur as a private company, including costs associated with public company reporting and corporate governance requirements. These requirements include compliance with Section 404 and other provisions of the Sarbanes-Oxley Act of 2002, or the Sarbanes-Oxley Act, as well as rules implemented by the SEC. In addition, the

6

Company’s management team will also have to adapt to the requirements of being a public company.  The Company expects that compliance with these rules and regulations will substantially increase their legal and financial compliance costs and will make some activities more time-consuming and costly.

The increased costs associated with operating as a public company will decrease our net income or increase our net loss, and may require them to reduce costs in other areas of our business or increase the prices of our products or services. Additionally, if these requirements divert management’s attention from other business concerns, they could have a material adverse effect on our results of operations, financial condition, business and prospects.

They will remain an “emerging growth company” for up to five years, although if the market value of their common stock that is held by non-affiliates exceeds $700 million as of any June 30 before that time, they would cease to be an “emerging growth company” as of the following December 31, or if they issue more than $1 billion in non-convertible debt in a three-year period, we would cease to be an “emerging growth company” immediately.

 

The Company is not currently required to comply with the SEC rules that implement Sections 302 and 404 of the Sarbanes-Oxley Act, and are therefore not required to make a formal assessment of the effectiveness of our internal controls over financial reporting for that purpose. Upon becoming a public company, we will be required to comply with certain of these rules, which will require management to certify financial and other information in our quarterly and annual reports and provide an annual management report on the effectiveness of our internal control over financial reporting. Though we will be required to disclose changes made in our internal control procedures on a quarterly basis, we will not be required to make their first annual assessment of our internal control over financial reporting pursuant to Section 404 until our second annual report required to be filed with the SEC, or the date we are no longer an “emerging growth company” or smaller reporting company as defined in the JOBS Act.

NOTE 6 – STOCKHOLDERS’ EQUITY

Between January 28, 2004 and March 31, 2004, the Company received two subscriptions from the company’s officers and directors totaling cash proceeds of $3,500 and the issuance of 8,750,000 common shares.

Between January 28, 2004 and March 31, 2004, the Company received subscriptions from non-affiliate shareholders, totaling cash proceeds of $21,250 and the issuance of 5,312,500 common shares.

Between January 28, 2004 and March 31, 2004, the Company received subscriptions from non-affiliate shareholders, totaling cash proceeds of $30,000 and the issuance of 2,500,000 common shares.

In November 2006, the Company initiated a forward split of 5-1 bringing the total issued and outstanding shares in the Company to 33,125,000.

On June 25, 2007, the Company initiated a reverse split on a 2-1 basis, bringing the total issued and outstanding shares to 16,562,500.

All shares presented in thesecondensed financial statements and accompanying footnotes have been retroactively adjusted to reflect the five to one forward spilt and two to one reverse spilt.

On July, 2007, two former Directors of the Company cancelled a total of 8,750,000 shares bringing the total issued and outstanding shares to 7,812,500.

On July 18, 2007, the Company issued a total of 500,000 shares to Commguard, Inc. for the purchase of the Commguard Digital Security Products, bringing the total issued and outstanding shares to 8,312,500.

On March 28, 2008, the Company received one subscription from the Company’s sole officer and director totaling cash proceeds of $10,000 and the issuance of 10,000,000 common shares, bringing the total issued and outstanding shares to 18,312,500.Upon the resignation of the Company’s Sole officer and Director the shares were subsequently transferred to the new sole officer and director.

NOTE 7 – ADVANCES

As of May 31, 2013 and November 30, 2012, the Company has received advances from unrelated third parties in the amounts of $88,979. These advances are non-interest bearing, unsecured, and have no fixed terms of repayment.

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ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND

RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

This Management's Discussion and Analysis of Financial Condition and Results of Operations (MD&A) contains forward-looking statements that involve known and unknown risks, significant uncertainties and other factors that may cause our 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 those forward-looking statements.  You can identify forward-looking statements by the use of the words may, will, should, could, expects, plans, anticipates, believes, estimates, predicts, intends, potential, proposed, or continue or the negative of those terms.  These statements are only predictions. In evaluating these statements, you should consider various factors which may cause our actual results to differ materially from any forward-looking statements.  Although we believe that the exceptions reflected in the forward-looking statements are reasonable, we cannot guarantee future results, levels of activity, performance or achievements.  Therefore, actual results may differ materially and adversely from those expressed in any forward-looking statements.  We undertake no obligation to revise or update publicly any forward-looking statements for any reason.

Plan of Operation

Financial Plan

As of May 31, 2013, we had a cash balance of $646and have earned no revenue from operations. Since our inception on January 28, 2004 to May 31, 2013, we have raised $79,750 in equity financing via distributions of unregistered securities to Canadian investors using exemptions provided under Regulation S and under Multilateral Instrument 45-103 Part 2 in Canada. During the next twelve months, we will need additional funds and we are seeking these additional funds via private placements or loans from our sole officer and director or current shareholders or potentially an initial public offering. No arrangements for additional funds have been completed.

Product Development Plan

Effective July 18, 2007, we entered into an agreement and acquired the prior development and designs of Commguard Inc. in consideration for a purchase price of 500,000 common shares.Upon completion of programming and testing our principal business productwillbe the production, marketing and sales of digital security products. Our plan is to commercialize solutions for a range of businesses and consumer oriented Internet security problems.

During 2009, when attempting to upgrade the Commguard digital security products it was found that the Commguard digital security products were no longer compatible with the updated PKI infrastructure and it was cost prohibitive to upgrade the Commguard digital security products as much of the programming language and software used in creating the Commguard digital security products were outdated.

Currently, Secure Digital has embarked on creating its own brand of Digital Security products using the most up to date programming language (Ruby). To date we have completed our website which was posted online on June 2, 2011 www.sd-securitysystems.com, and we anticipate spending approximately $5,000 on further website development when programming is complete. This involves the incorporation of our Certificate Manager/ Certificate Issuer to our website, as well as incorporating an E-Commerce program. This will occur when programming, alpha and beta testing are complete and will allow our customers to purchase online as well as try out the product prior to purchasing.

To date, we have received the latest version of the PKI (Public Key Infrastructure) from EJBCA and have completed our design and architecture and have commenced programming.  We estimate that we have approximately 10 programming days until completion and have spent a total of $55,000 to date of an estimated cost of $75,000, and once complete we will be in a position to commence alpha and beta testing the new digital security products. We are in the pre-marketing stages for our products application and infrastructure build out. The performance of our products iscurrently based on our expectations and cannot be assured, and to date we have not developed a prototype and may not be able to develop or market a commercially viable product, and we have not as yet engaged in revenue producing activities. Upon completion of programming and testing we will be able provide products and services to enable an enterprise's staff to more effectively manage and share information, customer relations, service and support activities, marketing and

8

document or data management.  Our objective is to complete pre-marketing activities and to actively market and support a commercial product and to earn revenues from businesses or other organizations via the Internet from our website at www.sd-securitysystems.com. Our sources of revenue will come from subscriptions for our products, product licensing fees and through support service charges and fees. The Company's solutions will be founded on its ability to provide digital certificate services.

Digital certificates are used for digital signatures, authentication of devices or people, web site security and encryption. Since our acquisition, management has continued to implement our business plan.  We have focused our limited resources to develop our products.  Upon completion of programming and testing, our objective is to maintain a test and demonstration site for the implementation of our products, which will be maintained on our servers that will be situated at a data hosting service in the US.

Our business plan can be summarized in four principal categories as outlined below.  We estimate the development period required to complete a commercial implementation of the Secure Digital products and develop commercial sales would be three months at an estimated cost of $20,000. At present we do not have sufficient funds and have engaged programmers to acceleratethe implementation of our business plan.  While we have limited funding and are in the preliminary state of commercialization of our products and services, management's objective is to successfully implement the plan without significant additional funding.  We have no intent or plan to engage in a merger or acquisition with an unidentified company or companies.

Website Development Plan

Our website is currently online at www.sd-securitysystems.com. We anticipate spending approximately $5,000 on further website development when programming is complete. This involves the incorporation of our Certificate Manager/ Certificate Issuer to our website, as well as incorporating an E-Commerce program. This will occur when programming, alpha and beta testing are complete, and will allow our customers to purchase online as well as try out the products prior to purchasing. Unfortunately, we will not offer our products until such time as we have completed our developmentto ensure our customers will be getting a finished product. Customers will be able select either US or Canadian funds to pay for their purchase. We will offer payment options by check/money order or online credit card processing such as PayPal. PayPal is an online payment service owned by eBay Inc. PayPal's website is located on the Internet at http://www.paypal.com. Once completed, we do not anticipate having to develop our website further within the next twelve months.

Website Hosting Plan

Our website is hosted by eHosting, who will be charging us approximately $5 per month to host our website. Over the next twelve months the cost of hosting our website will be $60.

Marketing Plan

We intend to market our website using Google AdWords. Google AdWords is a way to purchase highly targeted cost-per-click advertising. AdWords ads are displayed along with search results on Google, as well as on search and content sites in an ad network operated by Google Inc. a leader on Internet search. We estimate this cost to be estimated at $20,000 for the next year. Additionally, we will implement our demonstration systems and survey user and market acceptance of our products in order to target potential customers.

Purchase Plan

Once Secure Digitaldigital security productsare ready for sale, purchasers may download them directly from our website. Upon receipt of the purchase price, the purchaser will be issued a product key code (license) to activate their product.

Secure Digital Obsolescence Plan

As of this date, the performance of our products is currently based on our expectations and cannot be assured, as we have not developed a prototype and may not be able to develop or market a commercially viable product. Upon completion of programming and testing we will be able to offer web-based downloadable products. This does not represent a serious risk of obsolescence due to the fact that products would be continually updated when and if required, and any updated products would be available to our customers to download through our website.

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Development Costs

During the next twelve months, we anticipate spending $5,000 on further website development which was posted on line on June 2, 2011; $20,000 on programming and product development of which we have spent $55,000 to date, with completion anticipated during the Fall or Winter of 2013; marketing in the amount of $20,000 with commencement estimated in January 2014; and website hosting at a cost of $60 per annum, for a total of $45,060 in business expenditures for the year.

Accounting and Audit Plan

We intend to continue to have our outside consultant assist in the preparation of our quarterly and annual financial statements and have these financial statements reviewed or audited by our independent auditor. We anticipate $500 to assist in the preparation of our quarterly financial statements and $1,000 to assist in the preparation of our annual financial statements. Our independent auditor charges us approximately $1,500 to review our quarterly financial statements and approximately $5,000 to audit our annual financial statements. In the next twelve months, we anticipate spending approximately $12,000 to pay for our accounting and audit requirements.

SEC Filing Plan

We are a reporting company in 2012 after our S-1was declared effective on January 15, 2013. This means that we will file documents with the US Securities and Exchange Commission on a quarterly basis. We expect to incur filing costs of approximately $2,000 per quarter to support our quarterly and annual filings. In the next twelve months, we anticipate spending approximately $10,000 for legal costs to pay for three quarterly filings and one annual filing.

Results of Operations

We have had no operating revenues since our inception on January 28, 2004 through to May 31, 2013. Our activities have been financed from the proceeds of share subscriptions. From our inception, on January 28, 2004 to May 31, 2013 we have raised a total of $79,750 from private offerings of our common stock and have received a total of $88,979in loans from third parties. For the period from inception on January 28, 2004 to May 31, 2013 we incurred total expenses of $168,083.

We anticipate that we will incur over the next twelve months the following expenses:

Category	Planned ExpendituresOverNext 12Months
Legal and accounting fees	$22,000
Programming, website development and marketing	45,060
Patent and trademark fees	20,000
TOTAL	$87,060

Our total expenditures over the next twelve months are anticipated to be approximately $87,060. Our cash on hand as of May 31, 2013 is $646. We do not have sufficient cash on hand to fund our operations for the next twelve months. We also require additional financing for the continued development of our digital security products.

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Working Capital

		May 31, 2013		November 30,2012
Current assets	$	646	$	8,436
Current liabilities		88,979		88,979
Working capital deficit	$	(88,333)	$	(80,543)

Cash Flows

		Sixmonths Ended		Sixmonths Ended
		May 31, 2013		May31, 2012
Cash Flows used in operating activities	$	(7,790)	$	(40,880)
Cash Flows used in investing activities		0		0
Cash Flows used in financing activities		0		0
Net decrease  in cash during period	$	(7,790)	$	(40,880)

Operating Revenues

We have not generated any revenues since inception.

Net Loss

Net loss for the three months ended May 31, 2013 and May 31, 2012 was $7,531 and $30,385, respectively.

Liquidity and Capital Resources

As ofMay 31, 2013 and November 30, 2012, the Company’s cash balanceswere$646and $8,436, respectively. The decrease incash was attributed to ongoing reporting requirements and continued development of the Company's products.

As ofMay 31, 2013 and November 30, 2012, the Company had total liabilities of $88,979. There were no changes in the total of liabilities.

Cashflow from Operating Activities

During the three months ended May 31, 2013 and May 31, 2012, the Company used $7,790 and $40,880of cash for operating activities, respectively.

Cashflow from Investing Activities

During the periods ended May 31, 2013 and May 31, 2012, the Company did not have any cash transactions related to investing activities.

Cash flow from Financing Activities

During the three month periods ended May 31, 2013, May 31, 2012, the Company did not receive any cash from financing activities.

Going Concern

We have not attained profitable operations and are dependent upon obtaining financing to pursue any extensive activities. For these reasons, our auditors stated in their report on our November 30, 2012 audited financial statements that they have substantial doubt that we will be able to continue as a going concern without further financing. 

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Future Financings

We will continue to rely on equity sales of our common shares in order to continue to fund our business operations. Issuances of additional shares will result in dilution to existing stockholders. There is no assurance that we will achieve any additional sales of the equity securities or arrange for debt or other financing to fund planned acquisitions and development activities.

Critical Accounting Policies

We have identified certain accounting policies, described below, that are most important to the portrayal of our current financial condition and results of operations. Our significant accounting policies are disclosed in the notes to the financial statements included in this Quarterly Report.

Use of Estimates

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 and liabilities, and disclosure of contingent assets and liabilities, at the date of these financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

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ITEM 3.

QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 4. 

CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

Disclosure controls and procedures are controls and procedures that are designed to ensure that information required to be disclosed in our reports filed under the Exchange Act is recorded, processed, summarized and reported within the time periods specified in the SEC's rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by our company in the reports that it files or submits under the Exchange Act is accumulated and communicated to our management, including its principal executive and principal financial officers, or persons performing similar functions, as appropriate to allow timely decisions regarding required disclosure. Our management carried out an evaluation under the supervision and with the participation of our Principal Executive Officer and Principal Financial Officer, of the effectiveness of the design and operation of our disclosure controls and procedures pursuant to Rules 13a-15(e) and 15d-15(e) under the Securities Exchange Act of 1934 ("Exchange Act"). Based upon that evaluation, our Principal Executive Officer and Principal Financial Officer have concluded that our disclosure controls and procedures were not effective as of May 31, 2013, due to the material weaknesses resulting from the Board of Directors not currently having any independent members and no director qualifies as an audit committee financial expert as defined in Item 407(d)(5)(ii) of Regulation S-K, and controls were not designed and in place to ensure that all disclosures required were originally addressed in our financial statements.

 

Changes in Internal Control over Financial Reporting

 

Our management has also evaluated our internal control over financial reporting, and there have been no significant changes in our internal controls or in other factors that could significantly affect those controls subsequent to the date of our last evaluation.

 

The Company is not required by current SEC rules to include, and does not include, an auditor's attestation report. The Company's registered public accounting firm has not attested to Management's reports on the Company's internal control over financial reporting.

PART II - OTHER INFORMATION

ITEM 1. 

LEGAL PROCEEDINGS

We are not aware of any material, existing or pending legal proceedings against our company, nor are we involved as a plaintiff in any material proceeding or pending litigation. There are no proceedings in which our director, officer or any affiliates, or any registered or beneficial shareholder, is an adverse party or has a material interest adverse to our interest.

ITEM 1A.

RISK FACTORS

We are a smaller reporting company as defined by Rule 12b-2 of the Securities Exchange Act of 1934 and are not required to provide the information under this item.

ITEM 2. 

UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

1.

Quarterly Issuances:

During the quarter, we did not issue any unregistered securities other than as previously disclosed.

2.

Subsequent Issuances:

Subsequent to the quarter, we did not issue any unregistered securities other than as previously disclosed.

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ITEM 3.

DEFAULTS UPON SENIOR SECURITIES

None.

ITEM 4.

[REMOVED AND RESERVED]

ITEM 5.

OTHER INFORMATION

None.

ITEM 6.

EXHIBITS

Exhibit Number	Description of Exhibit	Filing
3.01	Articles of Incorporation	Filed with the SEC on August 17, 2011 as part of our Registration Statement on Form S-1.
3.02	Bylaws	Filed with the SEC August 17, 2011 as part of our Registration Statement on Form S-1
31.01	Certification of Principal Executive Officer Pursuant to Rule 13a-14	Filed herewith.
31.02	Certification of Principal Financial Officer Pursuant to Rule 13a-14	Filed herewith.
32.01	CEO and CFO Certification Pursuant to Section 906 of the Sarbanes-Oxley Act	Filed herewith.
101.INS*	XBRL Instance Document	Filed herewith.
101.SCH*	XBRL Taxonomy Extension Schema Document	Filed herewith.
101.CAL*	XBRL Taxonomy Extension Calculation Linkbase Document	Filed herewith.
101.LAB*	XBRL Taxonomy Extension Labels Linkbase Document	Filed herewith.
101.PRE*	XBRL Taxonomy Extension Presentation Linkbase Document	Filed herewith.
101.DEF*	XBRL Taxonomy Extension Definition Linkbase Document	Filed herewith.

*Pursuant to Regulation S-T, this interactive data file is deemed not filed or part of a registration statement or prospectus for purposes of Sections 11 or 12 of the Securities Act of 1933, is deemed not filed for purposes of Section 18 of the Securities Exchange Act of 1934, and otherwise is not subject to liability under these sections.

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.

		SECURE DIGITAL,INC.
Dated: July15, 2013		By:  /s/ Peter Hodyno
			Peter Hodyno
			Chief Executive Officer, Chief Financial Officer, President, Secretary and Treasurer

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

Dated: July15, 2013

/s/Peter Hodyno

By: Peter Hodyno – Director

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