##### Table of Contents



UNITED STATESSECURITIES AND EXCHANGE COMMISSION
 Washington, DC. 20549
 FORM 10-Q
  þ
    
    Quarterly Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
 for the Quarterly Period ended September 30, 2009
 or
 o
    
    Transition Report Pursuant to Section 13 or 15 (d) of the Securities Exchange Act of 1934
 for the Transition Period from _______________ to ____________________
 Commission File Number 0-19437
 SAFESTITCH MEDICAL, INC.
  Delaware
    
    11-2962080(State or other jurisdiction of 
incorporation or organization)
    
    (I.R.S. employer identification no.)4400 Biscayne Blvd., Suite A-100, Miami, Florida
    
    33137(Address of principal executive offices)
    
    (Zip code)
 (305) 575-4145
 þ o
 Yes o No o
  Large accelerated filer o
    
    Accelerated filer o
    
    Non-accelerated filer o
    
    Smaller reporting company þ
 Yes o No þ




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##### 



SAFESTITCH MEDICAL, INC.
(A Developmental Stage Company)
 TABLE OF CONTENTS FOR FORM 10-Q
 PART I. FINANCIAL INFORMATIONITEM 1. FINANCIAL STATEMENTS
    
    
    3Condensed Consolidated Balance Sheets as of September 30, 2009 (unaudited) and December 31, 2008
    
    
    3Unaudited Condensed Consolidated Statements of Operations for the Three and Nine Months ended September 30, 2009 and 2008, and for the period from September 15, 2005 (inception) to September 30, 2009
    
    
    4Condensed Consolidated Statements of Stockholders Equity (Deficit) for the period from September 15, 2005 (inception) through September 30, 2009 (unaudited)
    
    
    5Unaudited Condensed Consolidated Statements of Cash Flows for the Nine Months ended September 30, 2009 and 2008, and for the period from September 15, 2005 (inception) to September 30, 2009
    
    
    6Notes to unaudited condensed consolidated financial statements
    
    
    7ITEM 2. MANAGEMENTS DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS
    
    
    18ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK.
    
    
    21ITEM 4. CONTROLS AND PROCEDURES
    
    
    21PART II. OTHER INFORMATIONITEM 1. LEGAL PROCEEDINGS
    
    
    22ITEM 1A. RISK FACTORS
    
    
    22ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS
    
    
    22ITEM 3. DEFAULTS UPON SENIOR SECURITIES
    
    
    22ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
    
    
    22ITEM 5. OTHER INFORMATION
    
    
    22ITEM 6. EXHIBITS
    
    
    23SIGNATURES
    
    
    24Exhibit 31.1Exhibit 31.2Exhibit 32.1Exhibit 32.2
   2




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##### Table of Contents



SAFESTITCH MEDICAL, INC.
 (A Developmental Stage Company)
 
 CONDENSED CONSOLIDATED BALANCE SHEETS
  September 30,
    
    
    December 31,2009
    
    
    2008(Unaudited)ASSETSCURRENT ASSETSCash and cash equivalents
    
    $
    579
    
    
    $
    561Other receivable  related-party
    
    
    5
    
    
    
    13Prepaid expenses
    
    
    51
    
    
    
    151Total Current Assets
    
    
    635
    
    
    
    725FIXED ASSETSProperty and equipment, net
    
    
    162
    
    
    
    168OTHER ASSETSSecurity deposits
    
    
    2
    
    
    
    2Deferred financing costs, net
    
    
    384
    
    
    
    851Total Other Assets
    
    
    386
    
    
    
    853LONG-TERM INVESTMENT, net of valuation adjustment of $1,754
    
    
    
    
    
    
    TOTAL ASSETS
    
    $
    1,183
    
    
    $
    1,746LIABILITIES AND STOCKHOLDERS (DEFICIT) EQUITYCURRENT LIABILITIESAccounts payable and accrued liabilities
    
    $
    200
    
    
    $
    273Stockholder loans
    
    
    
    
    
    
    Total Current Liabilities
    
    
    200
    
    
    
    273Commitments and contingencies (Note 9)STOCKHOLDERS EQUITYPreferred Stock, $.01 par value per share, 25,000,000 shares authorized,
2,000,000 and zero shares issued and outstanding
    
    
    20
    
    
    
    Common Stock, $.001 par value per share, 225,000,000 shares authorized,
17,962,718 shares issued and outstanding
    
    
    18
    
    
    
    18Additional Paid-in Capital
    
    
    12,921
    
    
    
    10,817Deficit accumulated during the development stage
    
    
    (11,976
    )
    
    
    (9,362
    )Total Stockholders Equity
    
    
    983
    
    
    
    1,473TOTAL LIABILITIES AND STOCKHOLDERS EQUITY
    
    $
    1,183
    
    
    $
    1,746
   3




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##### Table of Contents



SAFESTITCH MEDICAL, INC.
 (A Developmental Stage Company)
 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF OPERATIONS
  September 15,2005Three Months Ended
    
    
    Nine Months Ended
    
    
    (Inception) toSeptember 30,
    
    
    September 30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009
    
    
    2008
    
    
    2009Revenues
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Costs and expensesResearch and development
    
    
    258
    
    
    
    494
    
    
    
    1,056
    
    
    
    2,111
    
    
    
    6,643General and administrative
    
    
    324
    
    
    
    405
    
    
    
    1,072
    
    
    
    1,211
    
    
    
    3,745Total costs and expenses
    
    
    582
    
    
    
    899
    
    
    
    2,128
    
    
    
    3,322
    
    
    
    10,388Loss from operations
    
    
    (582
    )
    
    
    (899
    )
    
    
    (2,128
    )
    
    
    (3,322
    )
    
    
    (10,388
    )Other income and expenseInterest income
    
    
    
    
    
    
    7
    
    
    
    
    
    
    
    19
    
    
    
    77Amortization of debt issuance expense
    
    
    (127
    )
    
    
    (213
    )
    
    
    (467
    )
    
    
    (638
    )
    
    
    (1,601
    )Interest expense
    
    
    (6
    )
    
    
    
    
    
    
    (19
    )
    
    
    (24
    )
    
    
    (64
    )Total other income and expense
    
    
    (133
    )
    
    
    (206
    )
    
    
    (486
    )
    
    
    (643
    )
    
    
    (1,588
    )Loss before income tax
    
    
    (715
    )
    
    
    (1,105
    )
    
    
    (2,614
    )
    
    
    (3,965
    )
    
    
    (11,976
    )Provision for income tax
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    Net loss
    
    $
    (715
    )
    
    $
    (1,105
    )
    
    $
    (2,614
    )
    
    $
    (3,965
    )
    
    $
    (11,976
    )Loss attributable to common stockholders and loss per
common share:Deemed dividend  Series A Preferred Stock
    
    
    (200
    )
    
    
    
    
    
    
    (200
    )
    
    
    
    
    
    
    (200
    )Net loss attributable to common stockholders
    
    
    (915
    )
    
    
    (1,105
    )
    
    
    (2,814
    )
    
    
    (3,965
    )
    
    $
    (12,176
    )Weighted average shares outstanding, basic and diluted
    
    
    17,963
    
    
    
    17,955
    
    
    
    17,963
    
    
    
    16,967Net loss per basic and diluted share
    
    $
    (0.05
    )
    
    $
    (0.06
    )
    
    $
    (0.16
    )
    
    $
    (0.23
    )
   4




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##### Table of Contents



SAFESTITCH MEDICAL, INC.
 (A Developmental Stage Company)
 
 CONDENSED CONSOLIDATED STATEMENTS OF STOCKHOLDERS EQUITY (DEFICIT)
 FOR THE PERIOD SEPTEMBER 15, 2005 (INCEPTION) THROUGH SEPTEMBER 30, 2009
  DeficitAccumulatedAdditional
    
    
    During thePreferred Stock
    
    
    Common Stock
    
    
    Paid-in
    
    
    DevelopmentShares
    
    
    Amount
    
    
    Shares
    
    
    Amount
    
    
    Capital
    
    
    Stage
    
    
    TotalInception  September 15, 2005
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    $
    
    
    
    $
    
    
    
    $
    Capital contributed
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1
    
    
    
    
    
    
    
    1Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (76
    )
    
    
    (76
    )Balance at December 31, 2005
    
    
    
    
    
    $
    
    
    
    
    
    
    
    $
    
    
    
    $
    1
    
    
    $
    (76
    )
    
    $
    (75
    )Capital contributed
    
    
    
    
    
    
    
    
    
    
    11,256
    
    
    
    11
    
    
    
    1,493
    
    
    
    
    
    
    
    1,504Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (1,060
    )
    
    
    (1,060
    )Balance at December 31, 2006
    
    
    
    
    
    $
    
    
    
    
    11,256
    
    
    $
    11
    
    
    $
    1,494
    
    
    $
    (1,136
    )
    
    $
    369Exercise of options (CTS)September
23, 2007 at $0.79 per share
    
    
    
    
    
    
    
    
    
    
    42
    
    
    
    
    
    
    
    35
    
    
    
    
    
    
    
    35Stock-based compensation-September 4, 2007
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    77
    
    
    
    
    
    
    
    77Issuance of shares in recapitalization 
September 4, 2007 at $0.64 per share
    
    
    
    
    
    
    
    
    
    
    4,795
    
    
    
    5
    
    
    
    3,078
    
    
    
    
    
    
    
    3,083SafeStitch expenses associated with
recapitalization
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (156
    )
    
    
    
    
    
    
    (156
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    65
    
    
    
    
    
    
    
    65Warrants issued in connection with credit
facility-September 4, 2007 at $2.46 per
share
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    1,985
    
    
    
    
    
    
    
    1,985Rule 16 payment received
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    4
    
    
    
    
    
    
    
    4Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (3,041
    )
    
    
    (3,041
    )Balance at December 31, 2007
    
    
    
    
    
    $
    
    
    
    
    16,093
    
    
    $
    16
    
    
    $
    6,582
    
    
    $
    (4,177
    )
    
    $
    2,421Issuance of common shares in private
offering  May 2008 at $2.15 per share,
net of offering costs
    
    
    
    
    
    
    
    
    
    
    1,862
    
    
    
    2
    
    
    
    3,986
    
    
    
    
    
    
    
    3,988Issuance of common shares as repayment of
stockholder note-December 30, 2008 at
$1.22 per share
    
    
    
    
    
    
    
    
    
    
    8
    
    
    
    
    
    
    
    10
    
    
    
    
    
    
    
    10Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    239
    
    
    
    
    
    
    
    239Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (5,185
    )
    
    
    (5,185
    )Balance at December 31, 2008
    
    
    
    
    
    $
    
    
    
    
    17,963
    
    
    $
    18
    
    
    $
    10,817
    
    
    $
    (9,362
    )
    
    $
    1,473Issuance of Series A Preferred Stock in
July 2009 at $1.00 per share
    
    
    2,000
    
    
    
    20
    
    
    
    
    
    
    
    
    
    
    
    1,962
    
    
    
    
    
    
    
    1,982Fair value of beneficial conversion
feature of Series A Preferred Stock
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    200
    
    
    
    
    
    
    
    200Deemed dividend to Series A Preferred
Stockholders, charged to additional
paid-in capital in the absence of
retained earnings
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (200
    )
    
    
    
    
    
    
    (200
    )Stock-based compensation
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    142
    
    
    
    
    
    
    
    142Net loss
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    
    (2,614
    )
    
    
    (2,614
    )Balance at September 30, 2009 (unaudited)
    
    
    2,000
    
    
    $
    20
    
    
    
    17,963
    
    
    $
    18
    
    
    $
    12,921
    
    
    $
    (11,976
    )
    
    $
    983
   5




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##### Table of Contents



SAFESTITCH MEDICAL, INC.
 (A Developmental Stage Company)
 
 UNAUDITED CONDENSED CONSOLIDATED STATEMENTS OF CASH FLOWS
  September 15,2005Nine Months Ended
    
    
    (Inception) toSeptember  30,
    
    
    September 30,2009
    
    
    2008
    
    
    2009OPERATING ACTIVITIESNet loss
    
    $
    (2,614
    )
    
    $
    (3,965
    )
    
    $
    (11,976
    )Adjustments to reconcile net loss to net cash used in operating activities:Amortization of deferred finance costs
    
    
    467
    
    
    
    638
    
    
    
    1,601Stock-based compensation expense
    
    
    142
    
    
    
    204
    
    
    
    446Stock-based compensation expense related to Share Exchange
    
    
    
    
    
    
    
    
    
    
    77Depreciation and amortization
    
    
    42
    
    
    
    42
    
    
    
    101Changes in operating assets and liabilitiesOther current assets
    
    
    108
    
    
    
    33
    
    
    
    (36
    )Other assets
    
    
    
    
    
    
    20
    
    
    
    2Accounts payable and accrued liabilities
    
    
    (73
    )
    
    
    (99
    )
    
    
    (85
    )NET CASH USED IN OPERATING ACTIVITIES
    
    
    (1,928
    )
    
    
    (3,127
    )
    
    
    (9,874
    )INVESTING ACTIVITIESPurchase of equipment
    
    
    (36
    )
    
    
    (25
    )
    
    
    (263
    )Payment received under Rule 16b
    
    
    
    
    
    
    
    
    
    
    4NET CASH USED IN INVESTING ACTIVITIES
    
    
    (36
    )
    
    
    (25
    )
    
    
    (259
    )FINANCING ACTIVITIESNet cash provided in connection with the acquisition of SafeStitch LLC
    
    
    
    
    
    
    
    
    
    
    3,192Issuance of Common Stock, net of offering costs
    
    
    
    
    
    
    3,988
    
    
    
    3,988Issuance of Preferred Stock, net of offering costs
    
    
    1,982
    
    
    
    
    
    
    
    1,982Capital Contributions
    
    
    
    
    
    
    
    
    
    
    1,431Proceeds from stockholder loans
    
    
    900
    
    
    
    1,000
    
    
    
    2,860Repayment of stockholder loans
    
    
    (900
    )
    
    
    (1,000
    )
    
    
    (2,776
    )Exercise of options
    
    
    
    
    
    
    
    
    
    
    35NET CASH PROVIDED BY FINANCING ACTIVITIES
    
    
    1,982
    
    
    
    3,988
    
    
    
    10,712NET (DECREASE) INCREASE IN CASH AND CASH EQUIVALENTS
    
    
    18
    
    
    
    836
    
    
    
    579CASH AND CASH EQUIVALENTS AT BEGINNING OF PERIOD
    
    
    561
    
    
    
    631
    
    
    
    CASH AND CASH EQUIVALENTS AT END OF PERIOD
    
    $
    579
    
    
    $
    1,467
    
    
    $
    579Supplemental disclosures:Cash paid for interest
    
    $
    19
    
    
    $
    24
    
    
    $
    64Non cash activities:Stockholder loans contributed to capital
    
    $
    
    
    
    $
    
    
    
    $
    84Warrants issued in connection with credit facility
    
    $
    
    
    
    $
    
    
    
    $
    1,985
   6




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##### Table of Contents



SAFESTITCH MEDICAL, INC.
 (A Developmental Stage Company)
 
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 1  BASIS OF PRESENTATION AND LIQUIDITY
      7




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##### Table of Contents



SAFESTITCH MEDICAL, INC.
 (A Developmental Stage Company)
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 2  SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 Consolidation.
 Use of estimates.
 Cash and cash equivalents.
 Property and equipment.
 Research and development.
 Patent costs.
 Stock-based compensation.
 Fair value of financial instruments.
 Long-lived assets.
 Income taxes.
 Comprehensive income (loss).
 Subsequent events.
  8




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##### Table of Contents



SAFESTITCH MEDICAL, INC.
 (A Developmental Stage Company)
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 3  PROPERTY AND EQUIPMENT
  Estimated Useful Lives
    
    September 30, 2009
    
    
    December 31, 2008Machinery and equipment
    
    5 years
    
    $
    189,000
    
    
    $
    153,000Furniture and fixtures
    
    3-5 years
    
    
    37,000
    
    
    
    37,000Software
    
    3-5 years
    
    
    37,000
    
    
    
    37,000263,000
    
    
    
    227,000Accumulated depreciation and amortization
    
    
    
    
    (101,000
    )
    
    
    (59,000
    )Property and equipment, net
    
    
    
    $
    162,000
    
    
    $
    168,000
  NOTE 4  LONG-TERM INVESTMENT
  NOTE 5  STOCK-BASED COMPENSATION
    9




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##### Table of Contents



SAFESTITCH MEDICAL, INC.
 (A Developmental Stage Company)
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  Nine months ended
    
    Nine months endedSeptember 30, 2009
    
    September 30, 2008Expected volatility
    
    74.59%  86.43%
    
    63.05%  94.46%Expected dividend yield
    
    0.00%
    
    0.00%Risk-free interest rate
    
    1.39%  1.79%
    
    1.96%  3.35%Expected life
    
    4.0  5.5 years
    
    3.5  5.5  yearsForfeiture rate
    
    2.50%
    
    2.50%
  WeightedWeighted
    
    
    AverageAverage
    
    
    Remaining
    
    
    AggregateExercise
    
    
    Contractual
    
    
    IntrinsicShares
    
    
    Price
    
    
    Term (Years)
    
    
    ValueOutstanding at December 31, 2008
    
    
    256,667
    
    
    $
    2.80
    
    
    
    7.12Granted
    
    
    358,500
    
    
    $
    0.80
    
    
    
    6.10Exercised
    
    
    
    
    
    
    
    
    
    
    Canceled or expired
    
    
    
    
    
    
    
    
    
    
    Outstanding at September 30, 2009
    
    
    615,167
    
    
    $
    1.63
    
    
    
    6.23
    
    
    $
    53,775Exercisable at September 30, 2009
    
    
    167,001
    
    
    $
    2.89
    
    
    
    5.94
    
    
    $
    Vested and expected to vest at
September 30, 2009
    
    
    592,826
    
    
    $
    1.65
    
    
    
    6.23
    
    
    $
    51,049
  10




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##### Table of Contents



SAFESTITCH MEDICAL, INC.
 (A Developmental Stage Company)
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  Weighted Average GrantStock Options
    
    
    Date Fair ValueNon-Vested at December 31, 2008
    
    
    146,833
    
    
    $
    2.00Options Granted
    
    
    358,500
    
    
    
    0.50Options Vested
    
    
    (57,167
    )
    
    
    1.50Non-Vested at September 30, 2009
    
    
    448,166
    
    
    $
    0.79
   NOTE 6  CREDIT FACILITY
     11




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##### Table of Contents



SAFESTITCH MEDICAL, INC.
 (A Developmental Stage Company)
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 7  CAPITAL TRANSACTIONS
 2008 Private Placement of Common Stock.
 2009 Issuance of Series A Preferred Stock.
     12




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##### Table of Contents



SAFESTITCH MEDICAL, INC.
 (A Developmental Stage Company)
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
   NOTE 8  BASIC AND DILUTED NET LOSS PER SHARE
   September 30, 2009
    
    
    September 30, 2008Stock options
    
    
    615,167
    
    
    
    243,167Stock warrants
    
    
    805,521
    
    
    
    805,521Series A Preferred Stock
    
    
    2,000,000
    
    
    
    Total
    
    
    3,420,688
    
    
    
    1,048,688
  13




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SAFESTITCH MEDICAL, INC.
 (A Developmental Stage Company)
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 9  COMMITMENTS AND CONTINGENCIES
   nd
 NOTE 10  AGREEMENT WITH CREIGHTON UNIVERSITY
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SAFESTITCH MEDICAL, INC.
 (A Developmental Stage Company)
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
 NOTE 11  INCOME TAXES
    NOTE 12  CERTAIN RELATIONSHIPS AND RELATED PARTY TRANSACTIONS
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SAFESTITCH MEDICAL, INC.
 (A Developmental Stage Company)
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
  NOTE 13  EMPLOYEE BENEFIT PLANS
  NOTE 14  FINANCIAL INSTRUMENTS
  NOTE 15  RECENT ACCOUNTING PRONOUNCEMENTS
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SAFESTITCH MEDICAL, INC.
 (A Developmental Stage Company)
 NOTES TO UNAUDITED CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
         17




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##### Table of Contents



Item 2.
    
    Managements Discussion and Analysis of Financial Condition and Results of
Operations.
 This Quarterly Report on Form 10-Q contains certain forward-looking statements within the
meaning of the Private Securities Litigation Reform Act of 1995 (PSLRA), Section 27A of the
Securities Act of 1933, as amended (the Securities Act), and Section 21E of the Securities
Exchange Act of 1934, as amended, (the Exchange Act), about our expectations, beliefs or
intentions regarding our product development efforts, business, financial condition, results of
operations, strategies or prospects. You can identify forward-looking statements by the fact that
these statements do not relate strictly to historical or current matters. Rather, forward-looking
statements relate to anticipated or expected events, activities, trends or results as of the date
they are made. Because forward-looking statements relate to matters that have not yet occurred,
these statements are inherently subject to risks and uncertainties that could cause our actual
results to differ materially from any future results expressed or implied by the forward-looking
statements. Many factors could cause our actual operations or results to differ materially from
the operations and results anticipated in forward-looking statements. These factors include, but
are not limited to: our ability to obtain additional funding to continue our operations; our
ability to successfully commercialize our existing products; our ability to successfully develop,
clinically test and commercialize our product candidates; the timing and outcome of the regulatory
review process for our product candidates; changes in the regulatory environments of the United
States and other countries in which we intend to operate; our ability to attract and retain key
management and scientific personnel; competition; our ability to successfully prepare file,
prosecute, maintain, defend and enforce patent claims and other intellectual property rights; our
ability to successfully transition from a research and development company to a marketing, sales
and distribution concern, and our ability to identify and pursue development of additional product
candidates, as well as the factors contained in Item 1A  Risk Factors of our Annual Report on
Form 10-K. We do not undertake any obligation to update forward-looking statements, except as
required by applicable law. We intend that all forward-looking statements be subject to the safe
harbor provisions of PSLRA. These forward-looking statements are only predictions and reflect our
views as of the date they are made with respect to future events and financial performance.
 Overview
  in
vivo ex vivo ex vivo in
vivo TM TM
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Products
 TM TM TM TM TM TM
 Critical Accounting Policies and Estimates
  Results of Operations
  Three and Nine Months ended September 30, 2009 Compared to Three and Nine Months Ended September
30, 2008
 TM
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TM
  Liquidity and Capital Resources
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Item 3.
    
    Quantitative and Qualitative Disclosures About Market Risk.
  
 Item 4.
    
    Controls and Procedures.
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PART II. OTHER INFORMATION
 
 Item 1.
    
    Legal Proceedings.
  
 Item 1A.
    
    Risk Factors.
 Healthcare policy changes, including pending proposals to reform the U.S. healthcare system,
may have a material adverse effect on us.
    
 Item 2.
    
    Unregistered Sales of Equity Securities and Use of Proceeds.
  
 Item 3.
    
    Defaults Upon Senior Securities.
  
 Item 4.
    
    Submission of Matters to a Vote of Security Holders.
  
 Item 5.
    
    Other Information.
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Item 6.
    
    Exhibits.
 Exhibits:
 3.1
    
    
    Certificate of Designation of Series A Preferred Stock, filed as Exhibit 3.1
to our Current Report on Form 8-K filed with the SEC on July 23, 2009 and
incorporated by reference herein.4.1
    
    
    Specimen Certificate for Series A Preferred Stock, filed as Exhibit 4.2 to
our Current Report on Form 8-K filed with the SEC on July 23, 2009 and
incorporated by reference herein.10.1
    
    
    Form of Current Securities Purchase Agreement, filed as Exhibit 10.1 to our
Current Report on Form 8-K filed with the SEC on July 23, 2009 and
incorporated by reference herein.10.2
    
    
    Form of Future Securities Purchase Agreement, filed as Exhibit 10.2 to our
Current Report on Form 8-K filed with the SEC on July 23, 2009 and
incorporated by reference herein.31.1
    
    
    Certification of Chief Executive Officer pursuant to Rule 13a-14(a)/15d-14(a)31.2
    
    
    Certification of Chief Financial Officer pursuant to Rule 13a-14(a)/15d-14(a)32.1
    
    
    Certification of Chief Executive Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 200232.2
    
    
    Certification of Chief Financial Officer pursuant to Section 906 of the
Sarbanes-Oxley Act of 2002
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SIGNATURES
  SAFESTITCH MEDICAL, INC.Date: November 10, 2009
    
    By:
    
    /s/ Jeffrey G. Spragens
Jeffrey
G. SpragensPresident and Chief Executive OfficerDate: November 10, 2009
    
    By:
    
    /s/ Adam S. Jackson
Adam
S. JacksonChief Financial Officer
  24