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 September 30, 2013

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

Commission file number 333-150954

GUARDIAN 8 HOLDINGS
(Exact name of registrant as specified in its charter)

Nevada
26-0674103
(State or other jurisdiction of incorporation or organization)
(I.R.S. Employer Identification No.)

15230 N. 75th Street
Suite 1002
Scottsdale, Arizona
 
 
85260
(Address of principal executive offices)
(Zip Code)

(913) 317-8887
(Registrant’s telephone number, including area code)

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 x    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 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 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 ¨  (Do not check if a smaller reporting company) 
Smaller reporting company x
                                         
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).  Yes  ¨    No x

The number of shares of Common Stock, $0.001 par value, outstanding on November 12, 2013, was 35,774,292, not including 2,677,750 shares authorized but unissued. 
 
 
 
 
TABLE OF CONTENTS
 
Part I - Financial Information
Page
     
Item 1.
1
Item 2.
18
Item 3. 
23
Item 4.
23
     
Part II - Other Information
  
     
Item 1. 
24
Item 1A. 
24
Item 2. 
24
Item 3.  
25
Item 4. 
25
Item 5.
26
Item 6.
27
 
30
 
 
 
 
 
PART I - FINANCIAL INFORMATION
 
Item 1. Financial Statements
 
GUARDIAN 8 HOLDINGS
Condensed Consolidated Balance Sheets
Unaudited
 
   
September 30,
    
December 31,
  
   
2013
    
2012
  
Assets
            
             
Current assets:
            
Cash
  
$
202,961
    
$
41,855
  
Accounts receivable, net of allowance for doubtful accounts of
  $952 and $0 as of September 30, 2013 and December 31, 2012
    
12,035
      
-
  
Prepaid expenses
    
384,199
      
83,508
  
Deposits on inventory
    
89,478
      
-
  
Inventory
                
   Finished goods
    
63,736
      
-
  
   Finished goods on consignment
    
2,238
      
-
  
     Total current assets
    
754,647
      
125,363
  
                 
Fixed assets, net of accumulated depreciation of $28,117 and $918
   as of September 30, 2013 and December 31, 2012
    
218,847
      
90,297
  
                 
Website, net of accumulated amortization of $16,273 and $10,415
   as of September 30, 2013 and December 31, 2012
    
7,160
      
13,019
  
                 
Patent, net of accumulation amortization of $3,286 and $2,502
   as of September 30, 2013 and December 31, 2012
    
16,571
      
7,883
  
                 
          Total assets
  
$
997,225
    
$
236,562
  
                 
Liabilities and Stockholders’ Deficit
                
                 
Current liabilities:
                
Accounts payable and accrued expenses
  
$
103,300
    
$
82,037
  
Deferred revenue
    
1,050
      
-
  
Accrued payroll expenses
    
224,581
      
-
  
Accrued interest, related party
    
8,162
      
2,038
  
Insurance Payable
    
66,412
      
-
  
Notes payable
                
  Related
    
1,023,933
      
200,000
  
  Unrelated
    
100,000
      
-
  
     Total current liabilities
    
1,527,438
      
284,075
  
                 
Stockholders’ deficit:
                
Preferred stock, $0.001 par value, 10,000,000 shares
  authorized, no shares issued and outstanding
    
-
      
-
  
Common stock, $0.001 par value, 100,000,000 shares
  Authorized; issued and outstanding of 35,742,792 and 30,874,508
  At September 30, 2013 and December 31, 2012, respectively
    
35,742
      
30,874
  
Common stock owed but not issued: 385,500 and 1,225,994
  at September 30, 2013 and December 31, 2012
    
386
      
 1,226
  
Paid in capital
    
4,973,390
      
3,299,780
  
Accumulated deficit
    
( 5,539,731
)
    
(3,379,393
 )
     Total stockholders’ deficit
    
(530,213
)
    
(47,513
)
                 
          Total liabilities and stockholders’ deficit
  
$
997,225
    
$
236,562
  
 
The accompanying notes are an integral part of the condensed financial statements.
 
 
1

GUARDIAN 8 HOLDINGS
Condensed Consolidated Statement of Operations
Unaudited
 
   
For the Three
    
For the Three
    
For the Nine
    
For the Nine
  
   
Months Ended
    
Months Ended
    
Months Ended
    
Months Ended
  
   
September 30,
    
September 30,
    
September 30,
    
September 30,
  
   
2013
    
2012
    
2013
    
2012
  
                         
Revenues
  
$
22,527
    
$
-
    
$
25,651
    
$
-
  
Cost of sales
    
5,720
      
-
      
6,696
      
-
  
Gross profit
    
16,807
      
-
      
18,955
      
-
  
Depreciation and amortization
    
16,443
      
2,875
      
33,842
      
7,585
  
General and administrative expenses
    
860,148
      
351,681
      
2,105,393
      
999,563
  
     
876,591
      
354,556
      
2,139,235
      
1,007,148
  
Loss from operations
    
(859,784
)
    
(354,556
)
    
(2,120,280
)
    
(1,007,148
)
                                 
Other (expense):
                                
Interest Expense
    
(18,195
)
    
(630
)
    
(40,058
)
    
(278,859
)
                                 
Loss before income tax
    
(877,979
)
    
(355,186
)
    
(2,160,338
)
    
(1,286,007
)
Provision for Income tax expense
    
 -
      
 -
      
 -
      
 -
  
Net loss
  
$
(877,979
)
  
$
(355,186
)
  
$
(2,160,338
)
  
$
(1,286,007
)
                                 
                                 
Net loss per share - basic and diluted
  
$
(0.03
)
  
$
(0.01
)
  
$
(0.07
)
  
$
(0.05
)
                                 
Weighted average shares outstanding - basic and diluted
    
34,857,006
      
28,661,817
      
32,383,557
      
27,755,124
  

The accompanying notes are an integral part of these condensed consolidated financial statements.
 
 
2
 
Guardian 8 Holdings
Condensed Consolidated Statement of Shareholder’s Equity
 For the period of January 1, 2012 to September 30, 2013
Unaudited
 
         
Common Stock
                    
   
Common Stock
    
Owed but Not Issued
    
Paid in
    
Accumulated
    
Total
  
   
Shares
    
Amount
    
Shares
    
Amount
    
Capital
    
Deficit
    
Equity
  
                                           
Balance, January 1, 2012
    
27,412,318
    
$
27,412
    
$
-
      
-
    
$
1,560,123
    
$
(1,610,943
)
  
 $
(23,408
)
                                                         
Common stock issued for compensation
    
330,000
      
330
      
800,000
      
800
      
407,870
      
-
      
409,000
  
Common stock issued for services
    
145,000
      
145
      
180,000
      
180
      
151,700
      
-
      
152,025
  
Common stock sold for cash
    
392,500
      
393
      
112,500
      
113
      
201,494
      
-
      
202,000
  
Exercise of warrants into common stock
    
247,000
      
247
      
-
      
-
      
61,503
      
-
      
61,750
  
Discounts on notes payable
    
-
      
-
      
-
      
-
      
226,422
      
-
      
226,422
  
Conversion of notes payable and interest
  into common stock
    
3,107,690
      
3,107
      
 
133,494
      
 
133
      
689,908
      
-
      
693,148
  
Common stock cancelled
    
(760,000
)
    
(760
)
    
-
      
-
      
760
      
-
      
-
  
Net loss for year
    
-
      
-
      
-
      
-
      
-
      
(1,768,450
)
    
(1,768,450
)
Balance, December 31, 2012
    
30,874,508
      
30,874
      
1,225,994
      
1,226
      
3,299,780
      
(3,379,393
)
    
(47,513
)
                                                         
Common stock previously owed
    
1,225,994
      
1,226
      
(1,225,994
)
    
(1,226
)
    
-
      
-
      
-
  
Common stock issued for compensation
    
582,400
      
582
      
254,000
      
254
      
322,508
      
-
      
323,344
  
Common stock issued for services
    
609,890
      
610
      
31,500
      
32
      
215,505
              
216,147
  
Common stock sold for cash
    
2,300,000
      
2,300
      
-
      
-
      
917,700
      
-
      
920,000
  
Conversion of warrant to common stock
    
150,000
      
150
      
-
      
-
      
37,350
      
  -
      
37,350
  
Conversion of notes payable into common stock
    
-
      
-
      
100,000
      
100
      
34,900
      
-
      
35,000
  
Discounts on notes payable
    
-
      
-
      
-
      
-
      
296,524
      
-
      
296,524
  
Private placement fees
    
-
      
-
      
-
      
-
      
(150,877
)
    
-
      
(150,877
)
Net loss for the nine months
    
-
      
-
      
-
      
-
      
-
      
(2,160,338
)
    
(2,160,338
)
Balance September 30, 2013
    
35,742,792
    
$
35,742
      
385,500
    
$
386
    
$
4,973,390
    
$
(5,539,731
)
  
$
(530,213
)
 
The accompanying notes are an integral part of these financial statements.
 
 
3
 
Guardian 8 Holdings
Condensed Consolidated Statement of Cash Flows
Unaudited
 
   
For the Nine
    
For the Nine
  
   
Months Ended
    
Months Ended
  
   
September 30,
    
September 30,
  
   
2013
    
2012
  
             
Cash flows from operating activities:
            
Net loss
  
$
(2,160,338
)
  
$
(1,286,007
)
Adjustments to reconcile net loss to net cash used by operating activities:
                
Stock issued for services
    
216,147
      
64,750
  
Stock issued for compensation
    
323,344
      
135,000
  
Depreciation and amortization
    
33,842
      
7,585
  
Amortization of discount on notes payable
    
26,636
      
257,747
  
Allowance for bad debts
    
952
      
-
  
Change in operating assets and liabilities:
                
Accounts receivable
    
(12,987
)
    
-
  
Prepaid expenses
    
(30,804
)
    
59,088
  
Deposits on inventory
    
(89,478
)
    
-
  
Inventory
    
(65,974
)
    
-
  
Accounts payable and accrued expenses
    
21,264
      
43,771
  
Deferred revenue
    
1,050
      
-
  
Accrued interest
    
8,162
      
21,113
  
Accrued payroll and payroll taxes
    
224,581
      
-
  
Insurance payable
    
64,374
      
-
  
Net cash used by operating activities
    
(1,439,229
)
    
(696,954
)
Cash flows from investing activities:
                
Purchase of property and equipment
    
(165,221
)
    
(5,005
)
Net cash used by investing activities
    
(165,221
)
    
(5,005
)
Cash flows from financing activities:
                
Proceeds from common stock sales
    
769,123
      
107,000
  
Proceeds from warrant exercises
    
37,500
      
61,750
  
Proceeds from notes payable, related party
    
858,933
      
362,500
  
Proceeds from notes payable, unrelated
    
100,000
      
-
  
Net cash provided by financing activities
    
1,765,556
      
531,250
  
                 
Net increase (decrease) in cash and cash equivalents
    
161,106
      
(170,709
)
Cash and cash equivalents, beginning of period
    
41,855
      
195,894
  
                 
Cash and cash equivalents, end of period
  
$
202,961
    
$
25,185
  
                 
Supplemental cash flow information:
                
Interest paid
  
$
-
    
$
-
  
Income taxes paid
  
$
-
    
$
-
  
Stock issued for services
  
$
216,147
    
$
64,750
  
Shares issued for services
    
641,390
      
135,000
  
Stock authorized for compensation
  
$
323,344
    
$
135,000
  
Shares authorized for compensation
    
836,400
      
330,000
  
Notes payable converted to common stock
  
$
35,000
    
$
666,450
  
Shares issued for notes payable converted
    
100,000
      
3,107,690
  
 
The accompanying notes are an integral part of these financial statements.
 
 
4
 
Guardian 8 Holdings
Notes to Condensed Consolidated Financial Statements

Note 1 - Company Organization and Summary of Significant Accounting Policies
 
Organization

Guardian 8 Corporation (“Guardian 8”) was incorporated in Nevada on June 8, 2009 as Guardian 6 Corporation.  In August of 2009, the Company changed its name to Guardian 8 Corporation.  The Company’s principle offices are located in Scottsdale, Arizona.
 
Effective November 30, 2010, we merged with Global Risk Management & Investigative Solutions (“Global Risk”), a public company with its common stock registered with the United States Securities and Exchange Commission.  The Company merged into a newly formed wholly owned subsidiary of Global Risk, with the Company being the surviving corporation.  Post merger, Global Risk changed its name to Guardian 8 Holdings.
 
Basis of presentation
 
The accompanying unaudited condensed consolidated financial statements contain all adjustments (consisting only of normal recurring adjustments) which, in the opinion of management, are necessary to present fairly the financial position of the Company as of September 30, 2013, and the results of its operations and cash flows for the three months and nine-months ended September 30, 2013 and 2012. Certain information and footnote disclosures normally included in financial statements have been condensed or omitted pursuant to rules and regulations of the U.S. Securities and Exchange Commission (the “Commission”). The Company believes that the disclosures in the unaudited condensed consolidated financial statements are adequate to make the information presented not misleading. However, the unaudited condensed consolidated financial statements included herein should be read in conjunction with the financial statements and notes thereto included in the Company’s Annual Report on Form 10-K for the year ended December 31, 2012 filed with the Commission on March 28, 2013.

Effective July 1, 2013 the Company transitioned from reporting as a development stage entity to an operating entity as revenues became sustainable with product sales.
 
Principles of consolidation
 
For the three and nine month periods ended September 30, 2013 and 2012, the Company was consolidated with its wholly-owned subsidiary, Guardian 8 Corporation.  All material intercompany transactions and accounts have been eliminated.
 
Cash and cash equivalents

Cash and cash equivalents include all cash balances in non-interest bearing accounts and money-market accounts. The Company places its temporary cash investments with quality financial institutions.  At times such investments may be in excess of Federal Deposit Insurance Corporation (FDIC) insurance limit. The Company does not believe it is exposed to any significant credit risk on cash and cash equivalents. For the purpose of the statements of cash flows, all highly liquid investments with an original maturity of three months or less are considered to be cash equivalents.  As of September 30, 2013 and December 31, 2012, there were cash equivalents of $202,961 and $41,855 respectively. 

Revenue recognition

It is the Company’s policy that revenues are recognized in accordance with ASC subtopic 605-10, “Revenue Recognition”.  The company therefore recognizes revenue from sales of product upon delivery to its customers where the fee is fixed or determinable, and collectability is probable. Cash payments received in advance are recorded as deferred revenue.  Extended warranties are recorded as deferred revenue and amortized according to the number of months in service.  Revenue for the three months ended September 30, 2013 was $22,527.  Revenue for the nine months ended September 30, 2013 was $25,651.  There were no revenues for the three or nine months ended September 30, 2012.

Warranty

The Company offers a 90-day limited warranty on its core product with an opportunity to upgrade to a one year limited warranty (for a fee) on the device.  These fees are intended to cover the handling and repair costs and include a profit.  Extended warranties that provide additional coverage beyond the limited warranty, ranging from one to four years, are anticipated to be offered for specified fees. Revenue derived from the sale of extended warranties are deferred and amortized over the duration of the warranty period.  During the three months ended September 30, 2013 the, Company recorded $1,050 to deferred revenue, and had related warranty expense of $319.  There was no deferred revenue or warranty expensed during the prior six months of 2013, or for the fiscal year ended December 31, 2012.
 
 
5

Research and development costs

The Company expenses all costs of research and development as incurred. There are R&D costs included in other general and administrative expenses of $294,250 and $126,474 for the three-months ended September 30, 2013 and 2012 respectively.  For the nine months ended September 30, 2013 and 2012, research and development expenditures were $543,779 and $392,081.
 
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 as of the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.  Actual results could differ from those estimates.

Property and equipment

Property and equipment are stated at cost.  Major improvements are charged to the asset accounts while replacements, maintenance and repairs which do not improve or extend the lives of respective assets are expensed.

The Company depreciates its property and equipment for the financial reporting purposes using the straight-line method based on the following useful lives of the assets: 
 
Tooling and equipment will be depreciated once the assets are approved for placement into service
3 - 5 years
Leasehold improvements
Life of lease
Furniture and fixtures
5 years
                                                      
Fair value of financial instruments

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of September 30, 2013 and the year ended December 31, 2012. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash, accounts payable and amounts due to related party.  Fair values were assumed to approximate carrying values because they are short term in nature and their carrying amounts approximate fair values or they are payable on demand.  See Note 10 for further details.

Impairment of long-lived assets

ASC 360, “Accounting for the Impairment of Long-Lived Assets to be Disposed Of”, requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the historical cost-carrying value of an asset may no longer be appropriate.  The Company assesses recoverability of the carrying value of an asset by estimating the future new cash flows expected to result from the asset, including eventual disposition.  If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset’s carrying value and fair value.  The Company did not have any impaired assets for the three or nine months ended September 30, 2013 and 2012. 
 
Net loss per share

Net Loss per share is provided in accordance with ASC 260-10, “Earnings Per Share” that requires the reporting of both basic and diluted earnings (loss) per share.  Basic earnings (loss) per share is computed by dividing the earnings (loss) available to common shareholders by the weighted average number of common shares outstanding during the period.  Diluted earnings (loss) per share reflect the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock.  In accordance with ASC 260-10, any anti-dilutive effects on net income (loss) per share are excluded.  For the three and nine months ended September 30, 2013 and 2012, the denominator in the diluted earnings per share computation is the same as the denominator for basic earnings per share due to the anti-dilutive effect of the warrants on the Company’s net loss.  Diluted earnings (loss) per share is not presented since the effect of the assumed conversion of warrants would have an anti-dilutive effect. Potential common shares as of September 30, 2013 that have been excluded from the computation of diluted net loss per share amounted to 7,270,560 from warrants.
 
 
6

Income taxes
 
The Company follows ASC subtopic 740-10, “Accounting for Income Taxes”, for recording the provision for income taxes.  ASC 740-10 requires the use of the asset and liability method of accounting for income taxes.  Under the asset and liability method, deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled.  Deferred income tax expenses or benefits are based on the changes in the asset or liability each period.  If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized.  Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change.  See Note 11 for further details.
 
Recent pronouncements

The Company has evaluated all new accounting pronouncements as of the issue date of these financial statements and has determined that none have or will have a material impact on the financial statements or disclosures.

Note 2 - Going Concern

The accompanying condensed consolidated financial statements have been prepared in conformity with generally accepted accounting principles and under the assumption that the Company will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business.  As of September 30, 2013, the Company has an accumulated deficit of $5,539,731, and the Company’s current liabilities exceed current assets by $772,791.
 
The Company’s activities since inception have been financially sustained by issuance of common stock and related party loans. The Company intends to raise additional funding to continue its operations through contributions from the current shareholders and stock issuance to other investors.
 
The ability of the Company to continue as a going concern is dependent upon its ability to raise additional capital from the sale of common stock and, ultimately, the achievement of significant operating revenues.  The accompanying financial statements do not include any adjustments that might be required should the Company be unable to recover the value of its assets or satisfy its liabilities.
 
Note 3 - Property and equipment

Property and equipment consists of the following:
 
   
September 30,
2013
    
December 31,
2012
  
Equipment
  
$
96,379
    
$
-
  
Tooling
    
120,536
      
86,210
  
Leasehold Improvements
    
6,007
      
-
  
Furniture and fixtures
    
24,042
      
5,005
  
     
246,964
      
91,215
  
Less accumulated depreciation
    
28,117
      
918
  
   
$
218,847
    
$
90,297
  
 
As of September 30, 2013, all tooling was complete and placed into service.  
 
Note 4 - Deposit on Inventory

As of September 30, 2013, the Company has paid $89,478 for a deposit on inventory of its finished personal security devices.  As part of an agreement, the Company has a commitment to pay an additional $126,202 at various points of production of the product.
 
 
7

Note 5 - Notes payable

In October of 2011, the Company received $100,000 from a related party to issue a convertible note payable, bearing interest at a rate of 10% per annum, and maturing in April of 2012.  The note was not secured and was convertible into common stock at $0.35 per share that was the market value on the day the note was executed.  With the note, the Company issued 100,000 warrants to purchase common shares of the Company. The warrants have a term of three years and a strike price of $0.35 per share.  The warrants issued with the note were valued using the Black-Scholes Option Pricing Model and bifurcated out of the note proceeds and recorded as additional paid in capital in the amount of $25,172.  A discount on the note payable was recorded in the same amount and is being amortized into interest expense over the six-month life of the note using the interest method.  For the year ended December 31, 2011, $10,926 was amortized into interest expense and the remaining discount was $14,246 as of December 31, 2011.  For the year ended December 31, 2012, an additional $14,246 was amortized into interest expense and the remaining discount was $0 as of December 31, 2012.  In April of 2012, as noted below in Note 7, this note and the related accrued interest were converted into shares of common stock at a rate of $0.35 per share.

In December of 2011, the Company received $207,000 from various related parties to issue convertible note payables, bearing interest at a rate of 10% per annum, and maturing in June of 2012.  The notes were not secured and were convertible into common stock at $0.20 per share.  The market value on the day the notes were executed was $0.105.  With the notes, the Company issued 207,000 warrants to purchase common shares of the Company. The warrants have a term of three years and a strike price of $0.25 per share.  The warrants issued with the note were valued using the Black-Scholes option pricing model and bifurcated out of the note proceeds and recorded as additional paid in capital in the amount of $18,613.  A discount on the note payable was recorded in the same amount and is being amortized into interest expense over the six-month life of the note using the interest method.  For the year ended December 31, 2011, $1,534 was amortized into interest expense and the remaining discount was $17,079 as of December 31, 2011. For the year ended December 31, 2012, an additional $17,079 was amortized into interest expense and the remaining discount was $0 as of December 31, 2012.  In June of 2012, as noted below and in Note 7, all the notes except one ($25,000) and the related accrued interest were converted into shares of common stock at a rate of $0.20 per share.   The remaining note and related accrued interest were converted in August of 2012 at a rate of $0.20 per share.

During the year ended December 31, 2012, the Company received $362,500 from various related parties to issue convertible note payables, bearing interest at a rate of 10% per annum, and maturing at various times from July of 2012 to September of 2012.  The notes are not secured and are convertible into common stock at $0.20 per share.  The market value on the day the notes were executed ranged from $0.40 to $0.50.  With the notes, the Company issued 362,500 warrants to purchase common shares of the Company. The warrants have a term of three years and a strike price of $0.25 per share.  The warrants issued with the note were valued using the Black-Scholes option pricing model and bifurcated out of the note proceeds and recorded as additional paid in capital in the amount of $226,422.  A discount on the note payable was recorded in the same amount and is being amortized into interest expense over the six-month life of the note using the interest method.  As noted below and in Note 7, all of the notes were converted to common stock in June of 2012.  $226,422 of the discount was amortized into interest expense during the year ended December 31, 2012 and the remaining discount was $0 as of December 31, 2012.

As noted above, during the year ended December 31, 2012, a total of $669,500 of notes payable and $23,648 of related accrued interest was converted into 3,241,184 shares of common stock.  Of those shares, 133,494 shares were issued during the first quarter of 2013.

On November 13, 2012, the Company received a note payable from the CEO and president of the Company in the amount of $100,000.  The note is unsecured, bears interest at a rate of 12% and was due on September 1, 2013.

On December 10, 2012, the Company received a note payable from the CEO and president of the Company in the amount of $50,000.  The note is unsecured, bears interest at a rate of 12% and is due on September 1, 2013. 

On December 28, 2012, the Company received a note payable from the CEO and president of the Company in the amount of $50,000.  The note is unsecured, bears interest at a rate of 12% and is due on September 1, 2013.

On January 24, 2013, the Company received a note payable from the CEO and president of the Company in the amount of $50,000.  The note bears interest at 12% per annum and is payable on September 1, 2013.
 
On March 6, 2013, the Company received a note payable from the CEO and president of the Company in the amount of $100,000.  The note bears interest at 12% per annum and is payable on September 1, 2013.

On March 6, 2013, the Company received $50,000 from a director of the Company in the form of an unsecured 90-day promissory note.  The note bears interest at 12% per annum and is payable on September 1, 2013.
 
 
8

On March 26, 2013, the Company received $50,000 from a director of the Company in the form of an unsecured 90-day promissory note.  The note bears interest at 12% per annum and is payable on September 1, 2013.

On August 12, 2013, the Company received a note payable from the CEO and president of the Company in the amount of $50,000.  The note bears interest at 12% per annum and is payable on November 30, 2013.

On August 26, 2013, 2013, the Company received a note payable from the CEO and president of the Company in the amount of $150,000.  The note bears interest at 12% per annum and is payable on November 30, 2013.
 
On September 1, 2013, the Company had a total of $615,000 of the original $650,000 in notes payable outstanding to its CEO and directors, with an additional $33,933 owed in accrued interest.  This debt, previously due on September 1, 2013 through November 30, 2013, was exchanged for three new unsecured notes payable totaling $648,933 as detailed in the table below.  Each of these notes shall mature on April 30, 2014, bear interest at 12% per annum, and include a three-year warrant for every $1.00 of principal amount of each note.  The warrants are exercisable at $0.40 per share.
 
Issue Date
  
Interest Rate
    
Current Due Date
  
Amount
  
September 1, 2013
     12.0 %  
April 30, 2014
   $ 543,300  
September 1, 2013
     12.0 %  
April 30, 2014
     52,983  
September 1, 2013
     12.0 %  
April 30, 2014
     52,650  
Total
  
 
         $ 648,933  
 
On September 1, 2013 the Company received a note payable in the amount of $45,000 from a related party in exchange for outstanding invoices owed for engineering services provided in the first nine months of the year.  The note bears interest at 12% per annum, is payable on April 30, 2014, and includes a three-year warrant for each $1.00 of principal included in the note.  The warrants are exercisable at $0.40 per share.

On September 18, 2013, the Company received a note payable from the CEO and president of the Company in the amount of $50,000.  The note bears interest at 12%, is payable on April 30, 2014, and includes a three-year warrant for each $1.00 of principal included in the note.  The warrants are exercisable at $0.40 per share.

On September 19, 2013, the Company issued a note payable from a related party in the amount of $30,000.  The note bears interest at 12%, is payable on April 30, 2014, and includes a three-year warrant for each $1.00 of principal included in the note.  The warrants are exercisable at $0.40 per share.

On September 19, 2013, the Company issued a note payable from a related party in the amount of $250,000.  The note bears interest at 12%, is payable on April 30, 2014, and includes a three-year warrant for each $1.00 of principal included in the note.  The warrants are exercisable at $0.40 per share.

On September 30, 2013, the Company received a note payable in the amount of $100,000.  The note bears interest at 12%, is payable on April 30, 2014, and includes a three-year warrant for each of $1.00 of principal included in the note.   The warrants are exercisable at $0.40 per share.

As of September 30, 2013, the Company has notes payable of $1,123,933 and accrued interest of $8,162.   All amounts are due within the next year.  The Company also recognized $169,889 of expense associated with the convertible features of the notes payable issued during the three months ended September 30, 2013.

Total interest expense on notes payable was $40,058 and $278,859 for the nine months ended September 30, 2013 and September 30, 2012, respectively.

The following summarizes the outstanding notes payable as of September 30, 2013:

Issue Date
   Interest Rate    
Current Due Date
  
Amount
  
September 1, 2013
     12.0 %  
April 30, 2014
   $ 543,300  
September 1, 2013
     12.0 %  
April 30, 2014
     52,983  
September 1, 2013
     12.0 %  
April 30, 2014
     52,650  
September 1, 2013
     12.0 %  
April 30, 2014
     45,000  
September 18, 2013
     12.0 %  
April 30, 2014
     50,000  
September 19, 2013
     12.0 %  
April 30, 2014
     30,000  
September 19, 2013
     12.0 %  
April 30, 2014
     250,000  
September 30. 2013
     12.0 %  
April 30, 2014
     100,000  
Total
  
 
         $ 1,123,933  
 
 
9

Note 6 - Patents

In June of 2009, concurrent with the Company’s incorporation, one of its officers and directors, agreed to transfer all rights, title and interest in the patent he held for a personal security device in exchange for 15,000,000 shares of the Company’s common stock and $300,000.  $25,000 was to be paid in July of 2009 and the rest was to be paid as funds became available from common stock sales. The patent has been valued at $10,365, the historical cost.  The value of the cash, note payable, and stock given exceeded the historical cost of the patent by $304,615.  This amount was recorded as a reduction of retained earnings.  The total cost of the patent is being amortized over the 20-year life of the patent.

The Company hired a patent attorney specializing in products for the security industry to assist in filing additional utility and technology patents for its new enhanced non-lethal products.  As of September 30, 2013, the costs paid to this attorney for the filings, drawings, and research totaled $9,472.  These costs have been capitalized and will be amortized over the 20-year life of the patents once issued and placed into service.
 
Note 7 - Stockholder’s equity

During the year ended December 31, 2012, the Company authorized a total of 1,130,000 shares of common stock for compensation.  180,000 shares were issued to the board of directors, at the market price of $0.40, for a total expense of $72,000.  150,000 were issued to an employee, at the market price of $0.20, for a total expense of $30,000.  500,000 shares were authorized as a bonus to an officer/board member.  These shares were valued at the market price of $0.35 for a total expense of $175,000.  The final 300,000 shares are discussed in the next paragraph.  As of December 31, 2012, 500,000 shares had not been issued and were subsequently issued in the first quarter of 2013.

During the year ended December 31, 2012, the Company agreed to issue 300,000 shares of common stock in relation to compensation for a consulting agreement.  The shares were valued at $132,000, which was the fair market value on the date the agreement was signed and set up as a prepaid asset that will be amortized over the one-year life of the agreement.  As of June 30, 2013, the entire amount had been expensed.   These shares were issued in the first quarter of 2013.

During the year ended December 31, 2012, the Company authorized the issuance of 325,000 shares of common stock in exchange for services.  The shares were valued at the market price at the date of authorization for a total expense of $152,025.  145,000 shares were issued as of December 31, 2012, and 180,000 were issued in the first quarter of 2013.

During the year ended December 31, 2012, the Company agreed to sell 505,000 shares of common stock for total proceeds of $202,000.  The shares were sold for $0.40 each and came with two warrants.  The Class A warrants have an exercise price of $0.55 and a term of three years.  The Class B warrants have an exercise price of $0.75 and a term of five years.  392,500 of the shares sold were issued as of December 31, 2012 and 112,500 were shown in these financial statements as common stock owed but not issued.  These 112,500 shares were issued in the first quarter of 2013.

During the year ended December 31, 2012, the Company received $61,750 for the exercise of 247,000 warrants at $0.25 each.

During the year ended December 31, 2012, the Company converted $669,500 of notes payable and $23,648 of related accrued interest into 3,241,184 shares of common stock.  3,107,690 of these shares had been issued as of December 31, 2012, and 133,494 were issued in the first quarter of 2013.
 
During the year ended December 31, 2012, the Company reached a settlement with a former contractor, whereby the contractor surrendered 700,000 shares of common stock for cancellation.  The Contractor had received the shares in prior periods for services to be rendered.  The Company felt that the services had not been rendered and the settlement was reached.  The Company has cancelled the shares.  During the same period, the Company issued 60,000 shares to a consultant in error.  These shares were subsequently cancelled in 2012.
 
As of December 31, 2012, there were 30,874,508 common shares issued and outstanding, 1,225,994 common shares owed but not issued, and no preferred shares issued.  As of March 31, 2013, all of these shares were issued to their respective parties.

During the quarter ended March 31, 2013, three employees vested shares of common stock in accordance with their employment agreements (see Note 12).  The first was the CEO/Director, vesting 150,000 shares of common stock, which were valued at market price of $54,000.  The other two issuances were for the Company’s Chief Operating Officer and Vice President of Customer Service, both of which achieved milestones predicated by their employment agreements.  The total of number of shares vested for these two officers totaled 89,200 shares of common stock that were valued at market price of $37,464.
 
 
10

On January 23, 2013, the Company authorized the issuance of 330,000 shares of common stock in exchange for services, 180,000 of these shares were earned and expensed in the year ended December 31, 2012.  The remaining 150,000 shares were valued at the market price at the date of authorization for a total expense of $58,500.
 
On January 23, 2013, the Company conducted the third and final closing under a private placement offering, selling 225,000 units for $90,000 ($45,000 (112,500 shares) of which was received and accounted for in the year ended December 31, 2012).  The shares were sold for $0.40 each and came with two warrants.  The Class A warrants have an exercise price of $0.55 and a term of three years.  The Class B warrants have an exercise price of $0.75 and a term of five years.  All of the shares sold were issued as of March 31, 2013 and were shown in these financial statements as common stock issued.

On March 6, 2013, the Company issued 10,000 shares of restricted common stock for $4,000 to a consultant.

On March 19, 2013, the Company conducted the first closing under a private placement offering selling 750,000 units for $300,000 to three accredited investors. Each unit consists of one share of common stock, one three year warrant to purchase one share of common stock for $0.55 per share and one five year warrant to purchase one share of common stock for $0.75 per share. In connection with the sale of these units, the Company paid Finance 500, Inc., a registered broker/dealer and managing dealer for the offering, selling commissions in the amount of $39,000 and is obligated to issue 112,500 warrants to Finance 500. Each warrant will entitle Finance 500, or its assignees, to purchase one share of the Company’s common stock at $0.40 per share for ten years. The Company also incurred $46,121 of expenses associated with this offering, for a net amount of $253,879.

On April 30, 2013 the Company completed a closing under a private placement offering selling 187,500 units for $75,000 to three accredited investors.  Each unit consists of one share of common stock, one three year warrant to purchase one share of common stock for a $0.55 per share and one five year warrant to purchase one share of common stock for $0.75 per share.  In connection with the sale of these units, the Company paid selling commissions to a registered broker/dealer and managing dealer for the offering in the amount of $9,750.  The Company incurred $11,324 of total expenses associated with this offering, for a net amount of $63,675, and is obligated to issue 28,125 warrants to the registered broker in association with the sale.

On April 30, 2013 the Company issued 12,500 shares of common stock for cash in the amount of $5,000.

On May 6, 2013, the Company conducted a closing under a private placement offering selling 625,000 units for $250,000 to an accredited investor.  Each unit consists of one share of common stock, one three year warrant to purchase one share of common stock for $0.55 per share and one fie year warrant to purchase one share of common stock for $0.75 per share.  In connection with the sale of these units, the Company paid selling commissions to registered broker/dealer and managing dealer for the offering in the amount of $32,500.  The Company incurred $36,214 of total expenses associated with this offering, for a net amount of $213,786 and is obligated to issue 93,750 warrants to the registered broker in association with this sale.

On May 15, 2013, the Company entered into an amendment with its investment banking firm to reduce the warrants payable to the firm by 30,000.

On May 15, 2013, the Company issued a five-year warrant to purchase 22,000 shares of common stock at $0.40 per share for the first month of services under a Investor Relations Letter of Engagement.

On June 12, 2013, the Company conducted a closing under a private placement offering selling 437,500 units for $175,000 to four accredited investors.  Each unit consists of one share of common stock, one three year warrant to purchase one share of common stock for $0.55 and one five year warrant to purchase one share of common stock for $0.75 per share.  In connection with the sale of these units, the Company paid selling commissions to a registered broker/dealer and managing dealer for the offering in the amount of $22,750.  The Company incurred $31,558 of total expenses associated with this offering, for a net amount of $143,442 and is obligated to issue 65,625 warrants to the registered broker in association with this sale.

On June 30, 2013 employees vested 325,700 shares of common stock.  The value of the stock was $114,039 and the 325,700 shares were owed but not issued at June 30, 2013.  See Note 12 for further details.

On July 1, 2013, the Company issued a five-year warrant to purchase 22,000 shares of common stock at $0.40 per share for the second month of services under a Investor Relations Letter of Engagement.

On July 30, the Company entered into two agreements with independent contractors to deliver a training course for their product.  As part of the agreement, the Company will issue each contractor 19,445 shares of its common stock, with a value of $7,778 for each of their services, totaling 38,890 shares of its common stock, with a value of $15,556 which were expensed during the third quarter of 2013.
 
 
11

On July 30, 2013, the Company conducted a closing under a private placement offering selling 187,500 units for $75,000 to three accredited investors. Each unit consists of one share of common stock, one three year warrant to purchase one share of common stock for $0.55 per share and one five year warrant to purchase one share of common stock for $0.75 per share. In connection with the sale of these units, the Company paid a registered broker/dealer and managing dealer for the offering, selling commissions in the amount of $9,750 and is obligated to issue 28,125 warrants to registered broker. Each warrant will entitle registered broker, or its assignees, to purchase one share of the Company’s common stock at $0.40 per share for ten years. The Company also incurred $25,659 of expenses associated with this offering, for a net amount of $49,341.

On August 12, 2013, the CEO agreed to convert $35,000 of his notes payable into 100,000 shares of common stock, with a value of $35,000 per a prior warrant agreement.  These shares were owed but not issued as of September 30, 2013.

On August 29, 2013, the Company authorized and issued 225,000 shares with a value of $67,500 to a director and engineer for services performed for the Company.

On August 30, 2013 the Company issued 150,000 shares of its fully paid and non-assessable restricted common stock, valued at $0.25 per share, upon exercise of a warrant form and receipt of $37,500 from a current stockholder.

On August 30, 2013, the Company issued 142,000 shares, valued at $41,194, for public and investor relation services pursuant to an agreement dated August 26, 2013.

On August 30, 2013, the Company issued a five-year warrant to purchase 22,000 shares of common stock at $0.40 per share for the third and final month of services under a Investor Relations Letter of Engagement.  The warrant was valued at $6,300.

On September 23, 2013, the Company issued 31,500 shares of stock, valued at $11,009 to a consultant for services per a signed contract.  The shares were issued at $0.3495 per share.

On September 30, 2013, the Company authorized and recognized the expense for the issuance of 150,000 shares, valued at $66,000 to its CEO pursuant to the terms of his employment agreement.  These shares were owed but not issued as of September 30, 2013.

On September 30, 2013, the Company authorized and recognized the expense for the issuance of 104,000, valued at $45,760 shares to its Interim CFO pursuant to the terms of her consulting agreement.  These shares were owed but not issued as of September 30, 2013.

On September 30, 2013, the Company authorized and recognized the expense for the issuance of 31,500 shares of stock, valued at $13,388, to a consultant for services per a signed contract.  The shares were owed but not issued as of September 30, 2013.

During the three months ended September 30, 2013, in connection with the issuance of new promissory notes, the Company issued 1,023,935 three year warrants for the purchase of shares of its common stock for $0.40 per share.

As of September 30, 2013, there were 35,742,792 common shares issued and outstanding, 385,500 common shares owed but not issued, and no preferred shares issued.
 
 
12

Note 8 - Options and warrants

Options

As of September 30, 2013 and December 31, 2012 there are no outstanding options.
 
Warrants

During the year ended December 31, 2012, the Company issued 1,372,500 warrants to purchase common stock. The warrants were issued relating to notes payable proceeds and the sale of common stock as noted in Notes 5 and 7. All have a term between three and five years and a strike price of $0.25 to $0.75.

During the year ended December 31, 2012, 247,000 warrants were exercised at a strike price of $0.25 per warrant, with proceeds recorded to common stock and additional paid in capital.

During the nine months ended September 30, 2013, 150,000 warrants were exercised at a strike price of $0.40 per warrant, with proceeds recorded to common stock and additional paid in capital.  In addition, a warrant to purchase 100,000 shares of common stock, with a strike price of $0.35, was exercised and paid for by reducing a related party note payable in the amount of $35,000.

During the nine months ended September 30, 2013, the Company issued 4,600,000 warrants to purchase common stock relating to the sale of units as noted in Note 7.  All warrants have a term between three and ten years and a strike price ranging from $0.55 to $0.75.  Associated with the sale of its units under the current offering (“PPM”), the Company is obligated to issue an additional 298,125 warrants priced at $0.40 to the registered broker/dealer contracted
 
During the three months ended September 30, 2013, the Company also issued a total of 66,000 5-year warrants to purchase shares of common stock at $0.40 per share for services under an Investor Relations Letter of Engagement.
 
As of September 30, 2013, the Company issued 1,153,935 warrants associated with notes payable convertible into common stock.  See Note 5 for further details.
 
A summary of warrants as of September 30, 2013 and December 31, 2012 is as follows:

   
Options
    
Weighted Average
Exercise Price
    
Warrants
    
Weighted Average
Exercise Price
  
Outstanding 12/31/2012
    
-
    
$
-
      
1,432,500
    
$
0.53
  
    Granted
    
-
      
-
      
6,118,060
      
0.51
  
    Cancelled
    
-
      
-
      
30,000
      
0.40
  
    Exercised
    
-
      
-
      
250,000
      
0.29
  
Outstanding 9/30/2013
    
-
    
$
-
      
7,270,560
    
$
0.51
  

Note 9 - Lease commitments and related party transactions
 
In December of 2011, the Company leased space in Scottsdale, Arizona for its main headquarters. The lease runs from January of 2012 to March of 2014 at a rate of $1,907 per month. Future minimum payments as of September 30, 2013 under this lease are $5,721 for 2013, and $5,721 for 2014.
 
Rent expense was $18,031 and $19,410 for the nine months ended September 30, 2013 and 2012, respectively.

During the year ended December 31, 2012, the Company issued 60,000 shares, valued at $29,400 to a former director for consulting services.

During the years ended December 31, 2012 and 2011, the Company issued notes payable to related parties in exchange for cash.  The maturity dates for these notes were extended during the quarter ended September 30, 2013.  See Note 5 for further details.

During the nine months ended September 30, 2013 the Company issued convertible notes payable and warrants to related parties in exchange for cash.  See Note 5 for further details.

See Note 12 for details on stock issued to employees and related party consultants per their employment or consulting contracts with the Company.
 
 
13

Note 10 - Fair Value Measurements

The Company adopted ASC Topic 820-10 to measure the fair value of certain of its financial assets that are required to be measured on a recurring basis.  The adoption of ASC Topic 820-10 did not impact the Company’s financial condition or results of operations.  ASC Topic 820-10 establishes a fair value hierarchy that prioritizes the inputs to valuation techniques used to measure fair value.  The hierarchy gives the highest priority to unadjusted quoted prices in active markets for identical assets or liabilities (Level 1 measurements) and the lowest priority to unobservable inputs (Level 3 measurements).  ASC Topic 820-10 defines fair value as the price that would be received to sell an asset or paid to transfer a liability in an orderly transaction between market participants on the measurement date.  A fair value measurement assumes that the transaction to sell the asset or transfer the liability occurs in the principal market for the asset or liability.  The three levels of the fair value hierarchy under ASC Topic 820-10 are described below:
 
Level 1 - Valuations based on quoted prices in active markets for identical assets or liabilities that an entity has the ability to access.
 
Level 2 - Valuations based on quoted prices for similar assets and liabilities in active markets, quoted prices for identical assets and liabilities in markets that are not active, or other inputs that are observable or can be corroborated by observable data for substantially the full term of the assets or liabilities.
 
Level 3 - Valuations based on inputs that are supportable by little or no market activity and that are significant to the fair value of the asset or liability.  The Company had no level three assets or liabilities as of September 30, 2013 or December 31, 2012; therefore, a reconciliation of the changes during the year is not shown. 

Note 11 - Income Taxes
 
The Company follows ASC subtopic 740-10 (formerly Statement of Financial Accounting Standard No. 109, “Accounting for Income Taxes”) for recording the provision for income taxes.  ASC 740-10 requires the use of the asset and liability method of accounting for income taxes.  Under the asset and liability method, deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled.  Deferred income tax expenses or benefits are based on the changes in the asset or liability each period.  If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized.  Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change.
 
Deferred income taxes may arise from temporary differences resulting from income and expense items reported for financial accounting and tax purposes in different periods.  Deferred taxes are classified as current or non-current, depending on the classification of assets and liabilities to which they relate.  Deferred taxes arising from temporary differences that are not related to an asset or liability are classified as current or non-current depending on the periods in which the temporary differences are expected to reverse.

The Company’s operations for the three and six months ended September 30, 2013 and 2012 resulted in losses, thus no income taxes have been reflected in the accompanying statements of operations.
 
As of December 31, 2012, the Company has net operating loss carry-forwards that may be used to reduce future income taxes payable.  A valuation allowance has been recorded to reduce the net benefit recorded in the financial statements related to this deferred asset. The valuation allowance is deemed necessary as a result of the uncertainty associated with the ultimate realization of these deferred tax assets.

For financial reporting purposes, the Company has incurred a loss since inception to September 30, 2013.  Based on the available objective evidence, including the Company’s history of its loss, management believes it is more likely than not that the net deferred tax assets will not be fully realizable. Accordingly, the Company provided for a full valuation allowance against its net deferred tax assets at December 31, 2012. Further, management does not believe it has taken the position in the deductibility of its expenses that creates a more likely than not potential for future liability under the guidance of FIN 48.
 
 
14
 
Note 12 - Employment Contracts

During the year ended December 31, 2012, the Company entered into an amended and restated three-year employment contract with its Chief Operating Officer.  If the Company meets various goals and criteria during those three years, which have been set forth in the agreement, they will issue a prescribed amount of shares of its common stock to the Chief Operating Officer.  The Company reserved 450,000 shares of its common stock as required by the agreement.  As of September 30, 2013, in accordance with the terms of the agreement, the employee vested 122,500 shares of restricted stock for achieving milestones as set forth in the employment agreement.   As of September 30, 2013, 122,500 of these shares were issued and 327,500 are reserved for future issuance.

During the year ended December 31, 2012, the Company entered into a three-year contact with its Vice President of Customer Support.  If the Company meets various goals and criteria during those three years they will issue a prescribed amount of its common shares to the Vice President of Customer Support, all of which are prescribed in the agreement.  The Company reserved 288,000 shares of its common stock as required by the agreement.  As of September 30, 2013, in accordance with the terms of the agreement, the employee vested 38,400 shares of restricted stock for achieving milestones as set forth in the employment agreement.  As of September 30, 2013, 38,400 shares were issued, and 249,600 are reserved for future issuance.

On March 4, 2013, the Company entered into an employment agreement with its CEO/president.  The CEO/president has the ability to earn shares of common stock over the term of the agreement, which runs through March 31, 2014.  The Company reserved 750,000 shares of its common stock as required by the agreement.  Per the agreement, the Company will issue 150,000 common shares on the last day of every fiscal quarter as compensation through that period.  As of September 30, 2013 450,000 common shares have vested.  300,000 shares were issued during the second quarter of 2013, and 150,000 shares were owed, but not issued as of September 30, 2013.    In addition, the Chief Executive Officer and President shall earn an initial base salary of $250,000, which began on January 1, 2013 and will accrue until the Company completes certain requirements per the agreement.   At which time the accrued wages shall be paid in full.

On March 4, 2013, the Company amended the agreement with its non-employee interim Chief Financial Officer (CFO).  The CFO has the ability to earn shares of common stock over the term of the agreement, which runs through March 31, 2014.  The Company reserved 416,250 shares of its common stock as required by the agreement.  Per the contract, the Company will issue a prescribed amount of common shares on the last day of every fiscal quarter, beginning with the second quarter of 2013 and ending on March 31, 2014.  As of September 30, 2013, 208,000 shares have vested.  As of September 30, 2013, 104,000 of the shares vested were issued, and 104,000 shares were owed but not issued.    In addition, the Non-Employee Interim Chief Financial Officer will earn a base monthly retainer of $3000, which began to accrue on January 1, 2013 and will continue to accrue until the Company completes certain requirements per the agreement.  At which time the outstanding related party accounts payable will be paid in full.
 
As of September 30, 2013, the Company has a total of 1,579,350 shares of its common stock reserved for the following employment contracts:

Employee or Position
  
Shares
  
Chief Operating Officer
    
327,500
  
Vice President of Customer Support
    
249,600
  
Chief Executive Officer
    
450,000
  
Non-Employee Interim Chief Financial Officer
    
312,250
  
Lead Engineer
    
240,000
  
Total
    
1,579,350
  
 
Note 13 - Public Relations Agreement

On March 1, 2013, the Company entered into a one-year agreement with Kraves PR to assist with public relations as the Company moves into scaled production and distribution.  The contract will be executed on a project-by-project basis, beginning with media assistance provided at an industry conference in April 2013.  All monies paid under this contract will be classified in sales, general and administrative expenses as a marketing expenditure.

On August 30, 2013, we authorized the issuance of 142,000 to a company providing investor relations services to us. The shares were issued in September of 2013.

On May 15, 2013 we authorized the issuance of a five-year warrant to purchase 66,000 shares of common stock for $0.40 per share.  These warrants vested at a rate of 22,000 per month over the three month period of the agreement.  As of September 30, 2013 all 66,000 were vested.
 
 
15

Note 14 - Subsequent events

In preparing these financial statements, the Company evaluated events and transactions for potential recognition or disclosure through the date these financial statements were issued.

On October 1, 2013, in connection with the issuance of a new promissory note, the Company issued a 100,000 three year warrant for the purchase of shares of its common stock for $0.40 per share.

On October 3, 2013, the Company issued 31,500 shares of its common stock, valued at $13,388 for engineering services contracted during the second quarter of 2013.

On October 11, 2013, the Company conducted a closing under a private placement offering selling 250,000 units for $100,000 to one accredited investor. Each unit consists of one share of common stock, one three year warrant to purchase one share of common stock for $0.55 per share and one five year warrant to purchase one share of common stock for $0.75 per share. As of the date of this report the shares have not been issued. In connection with the sale of these units, we paid a registered broker/dealer and managing dealer for the offering, selling commissions in the amount of $13,000 and are obligated to issue 15,000 warrants to the registered broker. Each warrant can be exercised to purchase one share of our common stock at $0.40 per share for ten years. The Company also incurred $3,655.02 of expenses associated with this offering, for a net amount of $83,344.98.

On October 25, 2013, the Company conducted a closing under a private placement offering selling 787,500 units for $315,000 to eleven accredited investors.  Each unit consists of one share of common stock, one three year warrant to purchase one share of common stock for $0.55 per share and one five year warrant to purchase one share of common stock for $0.75 per share.  In connection with the sale of these units, the Company paid a registered broker/dealer and managing dealer for the offering, selling commissions in the amount of $40,950, and is obligated to issue 118,125 warrants to the registered broker/dealer.  Each warrant can be exercised to purchase one share of the Company’s common stock at $0.40 per share for ten years.  The Company also incurred $8,773.79 of expenses associated with this offering, for a net amount of $265,276.21.

On October 29, 2013, the Company received $14,375 from two accredited investors and current stockholders for the exercise of warrants to purchase 62,500 shares of common stock.

On October 29, 2013, the Company received $40,000 from an accredited investor for the purchase of 100,000 units. Each unit consists of one share of common stock, one three year warrant to purchase one share of common stock for $0.55 per share and one five year warrant to purchase one share of common stock for $0.75 per share.
 
On November 12, 2013, the Company conducted a closing under a private placement offering selling 1,373,750 units for $549,500 to three accredited investors.  Each unit consists of one share of common stock, one three year warrant to purchase one share of common stock for $0.55 per share and one five year warrant to purchase one share of common stock for $0.75 per share.  In connection with the sale of these units, the Company paid a registered broker/dealer and managing dealer for the offering, selling commissions in the amount of $71,435, and is obligated to issue 82,425 warrants to the registered broker/dealer.  Each warrant can be exercised to purchase one share of the Company’s common stock at $0.40 per share for ten years.  The Company also incurred $2,314 of expenses associated with this offering, for a net amount of $475,751.

On November 12, 2013, the Company received subscriptions for $145,000 of units under the private placement offering from five accredited investors. The Company anticipates funds to be delivered and a closing to occur before November 30, 2013.

 
16
 
FORWARD-LOOKING STATEMENTS

This document contains “forward-looking statements” within the meaning of the Private Securities Litigation Reform Act of 1995. All statements other than statements of historical fact are “forward-looking statements” for purposes of federal and state securities laws, including, but not limited to, any projections of earnings, revenue or other financial items; any statements of the plans, strategies and objections of management for future operations; any statements concerning proposed new services or developments; any statements regarding future economic conditions or performance; any statements or belief; and any statements of assumptions underlying any of the foregoing.

Forward-looking statements may include the words “may,” “could,” “estimate,” “intend,” “continue,” “believe,” “expect” or “anticipate” or other similar words. These forward-looking statements present our estimates and assumptions only as of the date of this report. Accordingly, readers are cautioned not to place undue reliance on forward-looking statements, which speak only as of the dates on which they are made. We do not undertake to update forward-looking statements to reflect the impact of circumstances or events that arise after the dates they are made. You should, however, consult further disclosures we make in this Annual Report on Form 10-K, Quarterly Reports on Form 10-Q and Current Reports on Form 8-K.

Although we believe that the expectations reflected in any of our forward-looking statements are reasonable, actual results could differ materially from those projected or assumed in any of our forward-looking statements. Our future financial condition and results of operations, as well as any forward-looking statements, are subject to change and inherent risks and uncertainties. The factors impacting these risks and uncertainties include, but are not limited to:

 
·  
deterioration in general or global economic, market and political conditions;
 
·  
our ability to diversify our operations;
 
·  
actions and initiatives taken by both current and potential competitors;
 
·  
supply chain disruptions for components used in our product;
 
·  
manufacturers inability to deliver components or products on time;
 
·  
inability to raise additional financing for working capital;
 
·  
the fact that our accounting policies and methods are fundamental to how we report our financial condition and results of operations, and they may require management to make estimates about matters that are inherently uncertain;
 
·  
adverse state or federal legislation or regulation that increases the costs of compliance, or adverse findings by a regulator with respect to existing operations;
 
·  
changes in U.S. GAAP or in the legal, regulatory and legislative environments in the markets in which we operate;
 
·  
inability to efficiently manage our operations;
 
·  
inability to achieve future operating results;
 
·  
the unavailability of funds for capital expenditures;
 
·  
our ability to recruit and hire key employees;
 
·  
the inability of management to effectively implement our strategies and business plans; and
 
·  
the other risks and uncertainties detailed in this report.

In this form 10-Q references to “Guardian 8”, “G8”, “the Company”, “we,” “us,” “our” and similar terms refer to Guardian 8 Holdings and its wholly owned operating subsidiary, Guardian 8 Corporation.
 
 
17
 
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.

The following discussion should be read in conjunction with our financial statements, including the notes thereto, appearing elsewhere in this report.
 
Overview
 
We were incorporated in Nevada on June 8, 2009 as Guardian 6 Corporation.  In August of 2009, we changed our name to Guardian 8 Corporation.  Our principle offices are located in Scottsdale, Arizona.  We are a development stage company in the process of designing and introducing a new category of personal security devices, Enhanced Non-Lethal Devices (ENL), that incorporate layered defensive measures to help security professionals and consumers protect themselves against personal attacks, while capturing critical images and audio recordings to defend against personal liability.
 
Effective November 30, 2010 we merged with Global Risk Management & Investigative Solutions (“Global Risk”), a public company, with its common stock registered with the United States Securities and Exchange Commission.  We merged into a newly formed wholly owned subsidiary of Global Risk, with Guardian 8 Corporation being the surviving corporation.  Post merger, Global Risk changed its name to Guardian 8 Holdings.
 
For the three and nine months ended September 30, 2013 and 2012, the Company was consolidated with its wholly-owned subsidiary, Guardian 8 Corporation.  All material intercompany transactions and accounts have been eliminated.  Beginning July 1,2013 as product revenues became sustainable, the Company transitioned from reporting as a development stage Entity to an operating entity.  As a result, the financial statements included in this filing have been presented accordingly.
 
Since inception, our team of engineers and executives has been focused on developing and patenting our first commercial product, (the Guardian 8 Pro V2) as well as the key functions that create market differentiation.  We have also been formalizing marketing and manufacturing strategies as well as building customer distribution channels in preparation for our first product launch into the Private Security Market.  

During the nine months ended September 30, 2013, the Company received its first production units assembled by its contract manufacturer and shipped initial revenue totaling $25,651.  Included with these orders was the purchase of $1,050 of revenue associated with the sale of its one-year extended warranty. The Company has deferred this revenue, and will recognize it over the twelve months covered by the warranty period.

 In 2013, key personnel were hired in the areas of Sales and Operations.  These hires include an experienced Vice President of Customer Service, a lead manufacturing engineer, and a Sales Manager.  We intend to expand our sales and marketing staff, as well as administrative support during the next few months enabling us to reach key customers and shorten the sales cycles.

Critical Accounting Policies

Our discussion and analysis of our financial condition and results of operations are based upon our financial statements, which have been prepared in accordance with accounting principles generally accepted in the United States of America. The preparation of these financial statements requires us to make estimates and judgments that affect the reported amounts of assets, liabilities, revenues and expenses. In consultation with our Board of Directors, we have identified several accounting principles that we believe are key to the understanding of our financial statements. These important accounting policies require management’s most difficult, subjective judgments.
  
Use of Estimates
 
The preparation of financial statements in conformity with accounting principles generally accepted in the United States of America 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 the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

Net Loss Per Share

We adopted ASC 260, “Earnings Per Share” that requires the reporting of both basic and diluted earnings (loss) per share. Basic earnings (loss) per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. In accordance with ASC 260, any anti-dilutive effects on net income (loss) per share are excluded.
 
 
18
 
Going Concern
 
Our financial statements are prepared using generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. Our ability to continue as a going concern is dependent upon our ability to locate sources of capital, and attain future profitable operations. Our management is currently initiating their business plan. The accompanying financial statements do not include any adjustments that might be necessary should we be unable to continue as a going concern.
 
Revenue Recognition
 
It is the Company’s policy that revenues are recognized in accordance with ASC 605-10, “Revenue Recognition”.  The company therefore recognizes revenue from sales of product upon delivery to its customers where the amount is fixed or determinable, and collectability is probable. Cash payments received in advance will be recorded as deferred revenue.   Extended warranties will be recorded as deferred revenue and amortized according to the number of months included in service.  There were $22,527 of revenues for the three months ended September 30, 2013, and $25,651 for the nine months ended September 30, 2013.  There were no revenues for the three or nine months ended September 30, 2012.

In addition to the $22,527 recognized in the third quarter of 2013, the Company deferred $1,050 of revenue associated with the purchase of its one year extended warranty.  There were no revenue deferrals in 2012.

Fair Value of Financial Instruments

Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of September 30, 2013 and 2012. The respective carrying value of certain on-balance-sheet financial instruments approximated their fair values. These financial instruments include cash, accounts payable and amounts due to related party.  Fair values were assumed to approximate carrying values because they are short term in nature and their carrying amounts approximate fair values or they are payable on demand.

Income Taxes

The Company follows ASC subtopic 740-10, “Accounting for Income Taxes” for recording the provision for income taxes.  ASC 740-10 requires the use of the asset and liability method of accounting for income taxes.  Under the asset and liability method, deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled.  Deferred income tax expenses or benefits are based on the changes in the asset or liability each period.  If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized.  Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change.
 
Recent Developments
 
We completed the initial design of the first product under development in 2011. We tested these prototypes through a number of different venues and collected feedback and input on suggested design changes. As a result we incorporated significant upgrades and modified the initial design to improve reliability, durability and efficiencies.   An initial run of 120 units of the new designed Pro V2 was produced in the second quarter enabling our Engineers to complete a comprehensive testing protocol to confirm tooling and the assembly processes performed by our contract manufacturer, and to enable our Sales Team to send initial units for customer review.   In late June of 2013 the product was released by our Engineers for production and customer sales.

In March of 2012 we filed with the Depository Trust Company (DTC) for electronic clearing of our common stock, with the assistance of C. K. Cooper & Company and Legent Clearing. We received DTC approval for electronic clearing on May 7, 2012. Along these same lines, our board of directors intends to file a registration statement on Form S-1 to register 100% of the shares held by stockholders of record upon completion of our 2013 common stock raise. This is intended to make it easier and more efficient for our stockholders to trade our shares and brokerage firms to accept the shares for deposit.
 
On April 20, 2012, we appointed Kathleen Hanrahan, a current member of our board of directors, to serve as our interim chief financial officer. Ms. Hanrahan has extended the term of her agreement until such time as the Company finds a suitable replacement or, by the end of March of 2014. 
  
On February 7, 2013, we filed a Form 8-A to register our common stock under Section 12(g) of the Exchange Act.  Before this filing we were a voluntarily reporter under the Act and before November of 2010 were considered a “shell” company.  Therefore, our stockholders have been unable to rely on Rule 144 of the Act for the public sale of our securities.  Our stockholders will be able to rely on Rule 144 of the Act following the 90th day from filing of the Form 8-A described above.
 
 
19

During the nine months ended September 30, 2013, our CEO/president, C. Stephen Cochennet, along with two directors exchanged existing term notes along with accrued interest totaling $648,933 to three new notes, bearing interest at a rate of 12% per annum, which include a three-year warrant for every $1.00 of principal amount of each note, exercisable at $0.40 per share.

We issued four additional notes payable to related parties, including our CEO, during the month of September, totaling $375,000.  These notes all bear interest at a rate of 12% per annum, and include a three-year warrant for every $1.00 of principal amount of each note, exercisable at $0.40 per share.

Also during the three months ended September 30, 2013, we issued a note payable to a non-related party in the amount of $100,000.  This note bears interest at a rate of 12% per annum, and includes a three-year warrant for 100,000 shares of common stock, exercisable at $0.40 per share.

During the nine months ended September 30, 2013, we agreed to sell 2,300,000 shares of common stock for $920,500, less private placement fees of $150,877.  We also issued 641,890 shares of common stock in exchange for services in the amount of $216,147, and had warrants to purchase 250,000 shares of common stock converted through the payment of $37,500 in cash, and a reduction of $35,000 in a related party note payable.
 
We entered into five employment and or consulting contracts during the past nine months, in which employees of the Company receive vested shares either at set times, or if the Company meets certain criteria in the respective time periods of their contract.  As of September 30, 2013, 836,400 common shares vested per these contracts, for a total expense of $323,344.  A total of 254,000 shares were owed but not issued as of September 30, 2013.

During the three months ended September 30, 2013, revenue increased over the prior period, as additional production units became available for sale.  We also attended the ASIS conference in September where we initiated our training program and accepted new test and evaluation commitments from industry leaders in the Security market.  These trial units have not been recognized as revenue, but will be recorded as payment is received, or a purchase order documenting collectability is obtained.

On September 13, 2013, we received a Research Report (the “Report”) prepared by Steven Ralston, CFA (the “Analyst”) of Zacks Small-Cap Research. We assisted the Analyst in gathering information for the Report, however, the understanding between us and the Analyst calls for the Analyst to maintain full discretion to report his own opinion about our investment prospects and its desirability for both individual and institutional investors.

In May of 2013, we entered into a service agreement with Zacks Investment Research, Inc. for the distribution of the Zacks Small Cap Research Report and the use of Zacks Advanced Targeting Software, whereby Zacks has licensed us to use the web based software targeting programs owned by Zacks. We agreed to pay Zacks a fee of $18,000 over the twelve month term of the service agreement. Zacks Advanced Targeting Software is used for targeting Institutional Investors / Buy & Sell Side Contact Directories and accessing shareholder data and peer group holdings analysis. 

Results of Operations for Guardian 8 Corporation for the nine months ended September 30, 2013 and 2012.
 
   
Nine Months Ended
September 30, 2013
    
Nine Months Ended
September 30, 2012
    
Increase/
(Decrease)
  
                   
Revenues
  
$
25,651
    
$
-
    
$
25,651
  
Cost of sales
    
6,696
      
-
      
6,696
  
Gross Profit
    
18,955
      
-
      
18,955
  
Operating Expenses
    
2,139,235
      
1,007,148
      
1,132,087
  
                         
Net (loss) from operations
    
(2,120,280
)
    
(1,007,148
)
    
(1,113,132
)
Interest expense
    
(40,058
)
    
(278,859
)
    
 (238,801
)
                         
Net (loss)
  
$
(2,160,338
)
  
$
(1,286,007
)
  
$
(874,331
)
                         
Net (loss) per share
  
$
(0.07
)
  
$
(0.05
)
  
$
(.02)
  
Weighted average shares outstanding
    
  32,383,557
      
  27,755,124
          
 
 
20
 
During the second and third quarters of 2013, we shipped our first production units, generating revenue of $25,651, and cost of sales of $6,696.  We did not have revenue in the first quarter of 2013, or the first nine months of 2012.

We generated net losses of $2,160,338 and $1,286,007 for the nine months ended September 30, 2013 and 2012, respectively. Our losses were generated from general and administrative expenses; however, did include research and development costs related to our Pro V2 device of $543,779 and $392,081 for the nine months ended September 30, 2013 and 2012, respectively.
 
We anticipate continued losses from operations until such time as we generate revenues through the sale of our device.
 
Satisfaction of our cash obligations for the next 12 months.
 
Since inception, we have financed cash flow requirements through the issuance of common stock for cash and services, as well as both convertible and non-convertible term notes. From June of 2009 through September 30, 2013, we raised $2,074,123 through the sale of our common stock, $61,750 from the exercise of 247,000 warrants in conjunction with notes payable, and an additional $1,888,433 through the issuance of notes payable, net of $10,000 of principle payments, and exercise of warrants for 100,000 shares of common stock with the exercise price of $35,000 paid by the reduction of a note payable to the individual exercising the warrant.  As of September 30, 2013, our cash balance was $202,961. Our plan for satisfying our cash requirements for the next twelve months is through the funds from additional offerings of our common stock, sales of additional convertible notes, third party financings and revenue generated through the sales of our products and training services. We may not generate sufficient amounts of revenues to meet our working capital requirements. Consequently, we intend to make appropriate plans to ensure sources of additional capital in the future to fund growth and expansion through additional equity or debt financing or credit facilities.
 
As we continue to expand operational activities, we may continue to experience net negative cash flows from operations, pending receipt of revenues from our product sales, and will be required to obtain additional financing to fund operations through common stock offerings and debt borrowings, giving consideration to loans and working diligently to move sales ahead to the extent necessary to provide working capital.
 
We anticipate incurring operating losses over the majority of the next twelve months. Our lack of operating history makes predictions of future operating results difficult to ascertain. Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development. Such risks include, but are not limited to, an evolving and unpredictable business model and the management of growth. To address these risks we must, among other things, implement and successfully execute our business and marketing strategy, continue to develop and upgrade technology and products, respond to competitive developments, and continue to attract, retain and motivate qualified personnel. There can be no assurance that we will be successful in addressing such risks, and the failure to do so can have a material adverse effect on our business prospects, financial condition and results of operations.
 
As a result of our cash requirements and our lack of revenues, we anticipate continuing to issue stock in exchange for loans and/or equity financing, which may have a substantial dilutive impact on our existing stockholders.

Summary of any product research and development that we will perform for the term of our plan of operation.
 
We expense all costs of research and development as incurred. There are research and development costs included in other general and administrative expenses of $543,779 and $392,081 for the nine months ended September 30, 2013 and 2012, respectively. We anticipate expending up to $500,000 on additional significant product research and development for our consumer device, the next program pending on our product road map.
 
In addition to investments in research and development expenditures, we have also retained the services of a patent attorney to assist us with the filing and protection of key utility applications, as well as future technologies to be incorporated in next generation products for the commercial security and consumer markets.  Costs associated with the filing of intellectual property has been capitalized and will be amortized over the 20-year life of the patents when issued.
 
Changes in the number of employees.
 
We have six full-time employees, C. Stephen Cochennet, Chief Executive Officer, Paul Hughes, Chief Operations Officer, Jose Rojas, Vice President of Customer Support, our Lead Manufacturing Engineer, Douglas Cote, National Sales Manager, and one additional accounting support person for Guardian 8 Corporation. We utilize the services of several contract personnel, engineers and other professionals on an as needed basis. We are currently managed by C. Stephen Cochennet, Kathleen Hanrahan and Paul Hughes with the assistance of our board of directors. We look to Mr. Cochennet, Ms. Hanrahan and Mr. Hughes for entrepreneurial, organizational and management skills. We plan to continue to use consultants, legal and patent attorneys, design and mechanical engineers, engineers and accountants as necessary. We intend to continue hiring sales and operations employees in 2013 to facilitate go to market activities. A portion of any employee compensation likely would include direct stock grants, or the right to acquire stock in the company, which would dilute the ownership interest of holders of existing shares of our common stock.

 
21
 
Expected purchase or sale of plant and significant equipment.
 
We anticipate investing significant resources in the purchase of a plant and equipment in the near future; as we will begin to scale production operations throughout 2013.
 
 Liquidity and Capital Resources
 
Working capital is summarized and compared as follows:
 
   
September 30,
2013
    
September 30,
2012
  
             
         Current assets
  
$
484,760
    
$
129,238
  
         Current liabilities
    
 1,257,551
      
 105,583
  
  Surplus (Deficit)
  
$
(772,791
)
  
$
23,655
  
 
Changes in cash flows are summarized as follows:
 
We had a net loss of $2,160,338 for the nine months ended September 30, 2013.  This loss was offset by non-cash items such as stock issued for services of $216,147, stock issued for compensation of $323,344, depreciation and amortization of $33,842, the amortization of discount on notes payable of $26,636 and the allowance for bad debts of $952.  We had cash used by the increase in accounts receivable of $12,987, prepaid expenses of $30,804, deposits on inventory of $89,478, and the increase in inventory of $65,974.  We had cash provided due to the increase in accounts payable and accrued expenses of $21,264, deferred revenue of $1,050, increase in accrued interest of $8,162, the increase in accrued payroll and payroll taxes of $224,581, and the increase in insurance payable of $64,374.
 
We had cash used by investing activities of $165,221 for the nine months ended September 30, 2013 due to the purchase of property and equipment, as well as for patent development.
 
We had cash provided by financing activities of $1,765,556 for the nine months ended September 30, 2013.  This included proceeds from the sale of common stock of $769,123 proceeds from the conversion of warrants of $37,500, proceeds from notes payable to related parties of $858,933, and proceeds from notes payable to unrelated parties of $100,000.
 
We had a net loss of $1,286,007 for the nine months ended September 30, 2012.  This included non-cash items such as stock issued for services of $64,750, stock issued for compensation of $135,000, depreciation and amortization of $7,585 and the amortization of discounts on notes payable of $257,746.  We had cash provided by a decrease in prepaid expenses of $59,088, and the decrease in accounts payable and accrued expenses of $43,771, and by the decrease in accrued interest to related parties of $21,113.
 
We had cash used by investing activities of $5,005 for the nine months ended September 30, 2012, due to the purchase of property and equipment, and the Company’s website.
 
We had cash provided by financing activities of $531,250 for the nine months ended September 30, 2012.  This included proceeds from the sale of common stock of $107,000, proceeds from warrants exercised of $61,750 and proceeds from notes payable to related parties of $362,500.

As a result, we are in immediate need for additional working capital and are forced to seek additional equity or debt financing to meet our ongoing working capital needs. As we expand our activities, we may, and most likely will, continue to experience net negative cash flows from operations, pending receipt of revenues from product sales. Additionally we anticipate obtaining additional financing to fund operations through common stock offerings, to the extent available, or to obtain additional financing through either convertible or non-convertible notes payable, to the extent necessary to augment our working capital. We are also evaluating sources of inventory financing that may be available once orders for our product are received.

We anticipate that we will incur operating losses in the next twelve months.  Our lack of operating history makes predictions of future operating results difficult to ascertain.  Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered by companies in their early stage of development, particularly companies in new and rapidly evolving markets.  Such risks for us include, but are not limited to, an evolving and unpredictable business model and the management of growth.  To address these risks, we must, among other things, obtain a customer base, implement and successfully execute our business and marketing strategy, continually develop and upgrade our product, respond to competitive developments, and attract, retain and motivate qualified personnel.  There can be no assurance that we will be successful in addressing such risks, and the failure to do so can have a material adverse effect on our business prospects, financial condition and results of operations.
 
 
22
 
Off-Balance Sheet Arrangements
 
We do not have any off-balance sheet arrangements that have or are reasonably likely to have a current or future effect on our financial condition, changes in financial condition, revenues or expenses, results or operations, liquidity, capital expenditures or capital resources that is material to investors. 
 
Item 3. Quantitative and Qualitative Disclosures about Market Risk.

Not applicable.

Item 4. Controls and Procedures.
 
Evaluation of Disclosure Controls and Procedures

Our Chief Executive Officer and Chief Financial Officer, C. Stephen Cochennet and Kathleen Hanrahan, evaluated the effectiveness of our disclosure controls and procedures (as defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Report. Based on the evaluation, Mr. Cochennet and Ms. Hanrahan concluded that our disclosure controls and procedures are effective in timely alerting them to material information relating to us (including our consolidated subsidiaries) required to be included in our periodic SEC filings.

Changes in Internal Control Over Financial Reporting
 
There has been no change in the Company’s internal controls over financial reporting that occurred during our last fiscal quarter that has materially affected, or is reasonably likely to materially affect, our internal controls over financial reporting.
 
Internal control systems, no matter how well designed and operated, have inherent limitations.  Therefore, even a system which is determined to be effective cannot provide absolute assurance that all control issues have been detected or prevented.  Our systems of internal controls are designed to provide reasonable assurance with respect to financial statement preparation and presentation.
 
 
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PART II--OTHER INFORMATION

Item 1. Legal Proceedings.

We may become involved in various routine legal proceedings incidental to our business. However, to our knowledge as of the date of this report, there are no material pending legal proceedings to which we are a party or to which any of our property is subject.
 
Item 1A. Risk Factors.

Our significant business risks are described in Item 1A to Form 10-K for the year ended December 31, 2012 to which reference is made herein.

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

On May 15, 2013, we authorized the issuance of a five year warrant to purchase 22,000 shares of our common stock at $0.40 per share to a consultant providing investor relations services to us.

On July 1, 2013, we authorized the issuance of a five year warrant to purchase 22,000 shares of our common stock at $0.40 per share to a consultant providing investor relations services to us.

On July 30, 2013, we conducted the fifth closing under a private placement offering selling 187,500 units for $75,000 to two accredited investors. Each unit consists of one share of common stock, one three year warrant to purchase one share of common stock for $0.55 per share and one five year warrant to purchase one share of common stock for $0.75 per share. These shares were issued in August of 2013. In connection with the sale of these units, we paid Finance 500, Inc., a registered broker/dealer and managing dealer for the offering, selling commissions in the amount of $9,750 and are obligated to issue 28,125 warrants to Finance 500. Each warrant will entitle Finance 500, or its assignees, to purchase one share of our common stock at $0.40 per share for ten years.

On July 30, 2013, we entered into agreements with two individuals to provide training services and agreed to issue the service providers 38,910 shares of common stock for their services. These shares were issued in August of 2013.

On August 8, 2013, we issued 150,000 shares of common stock to our CEO (C. Stephen Cochennet) pursuant to the terms of his employment agreement, which vested as of June 30, 2013.

On August 8, 2013, we issued 104,000 shares of common stock to our Interim CFO (Kathleen Hanrahan) pursuant to the terms of her agreement, which vested as of June 30, 2013.

On August 8, 2013, we issued 70,000 shares to our Chief Operating Officer (Paul Hughes) and 19,200 to our Vice President of Customer Support (Jose Rojas) pursuant to their respective employment agreements and achievements of milestones during the quarter ended June 30, 2013.

On August 8, 2013, we authorized and issued 225,000 shares to a director and engineer (Jim Nolton) for services performed for us.

On August 12, 2013, our CEO/president, C. Stephen Cochennet, exercised a warrant for the purchase of 100,000 shares of our common stock for $35,000, which was deducted from the $100,000 principal balance owed to Mr. Cochennet under the terms of a promissory note dated November 13, 2012, as amended. Thereby reducing the principal amount owed to Mr. Cochennet under the note to $65,000 plus accrued and unpaid interest. As of the date of this report the shares have not been issued.

On August 16, 2013, we authorized the issuance of a five year warrant to purchase 22,000 shares of our common stock at $0.40 per share to a consultant providing investor relations services to us.
 
On August 30, 2013, we authorized the issuance of 150,000 shares of common stock to an accredited investor upon the exercise of warrants for cash totaling $37,500. The shares were issued in September of 2013.

On August 30, 2013, we authorized the issuance of 142,000 to a company providing investor relations services to us. The shares were issued in September of 2013.
 
 
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On August 30, 2013, we authorized the issuance of a five year warrant to purchase 22,000 shares of our common stock at $0.40 per share to a consultant providing investor relations services to us.

On September 6, 2013, we authorized and issued 31,500 shares to a consultant assisting with the development of our Pro V2 device.

During September and October of 2013, in connection with the issuance of new promissory notes, we issued 1,123,935 three year warrants for the purchase of shares of our common stock for $0.40 per share.

On October 3, 2013, we authorized 31,500 shares to a consultant assisting with the development of our Pro V2 device. The shares were issued in November of 2013.

On October 11, 2013, we conducted the sixth closing under a private placement offering selling 250,000 units for $100,000 to one accredited investor. Each unit consists of one share of common stock, one three year warrant to purchase one share of common stock for $0.55 per share and one five year warrant to purchase one share of common stock for $0.75 per share. As of the date of this report the shares have not been issued. In connection with the sale of these units, we paid Finance 500, Inc., a registered broker/dealer and managing dealer for the offering, selling commissions in the amount of $13,000 and are obligated to issue 15,000 warrants to Finance 500. Each warrant will entitle Finance 500, or its assignees, to purchase one share of our common stock at $0.40 per share for ten years.

On October 25, 2013, we conducted the seventh closing under a private placement offering selling 787,500 units for $315,000 to eleven accredited investors. Each unit consists of one share of common stock, one three year warrant to purchase one share of common stock for $0.55 per share and one five year warrant to purchase one share of common stock for $0.75 per share. As of the date of this report the shares have not been issued. In connection with the sale of these units, we paid Finance 500, Inc., a registered broker/dealer and managing dealer for the offering, selling commissions in the amount of $40,950 and are obligated to issue 47,250 warrants to Finance 500. Each warrant will entitle Finance 500, or its assignees, to purchase one share of our common stock at $0.40 per share for ten years.

On October 29, 2013, we received $14,375 from two accredited investors and current stockholders for the exercise of warrants to purchase 62,500 shares of common stock. As of the date of this report the shares have not been issued.

On October 29, 2013, we received $40,000 from an accredited investor for the purchase of 100,000 units. Each unit consists of one share of common stock, one three year warrant to purchase one share of common stock for $0.55 per share and one five year warrant to purchase one share of common stock for $0.75 per share. As of the date of this report the shares have not been issued.

On November 12, 2013, we conducted the eighth closing under a private placement offering selling 1,373,750 units for $549,500 to three accredited investors. Each unit consists of one share of common stock, one three year warrant to purchase one share of common stock for $0.55 per share and one five year warrant to purchase one share of common stock for $0.75 per share. As of the date of this report the shares have not been issued. In connection with the sale of these units, we paid Finance 500, Inc., a registered broker/dealer and managing dealer for the offering, selling commissions in the amount of $71,435 and are obligated to issue 82,425 warrants to Finance 500. Each warrant will entitle Finance 500, or its assignees, to purchase one share of our common stock at $0.40 per share for ten years.

On November 12, 2013, we received subscriptions for $145,000 of units under the private placement offering from five accredited investors. We anticipate funds to be delivered and the final closing to occur before November 30, 2013.

All of the above-described issuances were exempt from registration pursuant to Section 4(2) and/or Regulation D of the Securities Act as transactions not involving a public offering. With respect to each transaction listed above, no general solicitation was made by either the Company or any person acting on its behalf. All such securities issued pursuant to such exemptions are restricted securities as defined in Rule 144(a)(3) promulgated under the Securities Act, appropriate legends have been placed on the documents evidencing the securities, and may not be offered or sold absent registration or pursuant to an exemption therefrom.

Issuer Purchases of Equity Securities

We did not repurchase any of our equity securities during the quarter ended September 30, 2013.
 
Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

None.
 
 
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Item 5. Other Information.

Promissory Notes

On August 12, 2013, we received $50,000 from our CEO/president, C. Stephen Cochennet, in the form of an unsecured promissory note. The note bears interest at 12% per annum and was payable on November 30, 2013.

On August 26, 2013, we executed a $150,000 unsecured promissory note payable to our CEO/president, C. Stephen Cochennet. We received $50,000 of the funds on August 26, 2013, with the remaining $100,000 received on August 30, 2013. The note bears interest at 12% per annum and was payable on November 30, 2013.
 
On September 1, 2013, we authorized a series of 12% term notes (the “New Notes”). Each New Note bears interest at 12% per annum and matures on April 30, 2014. Further, each New Note includes one warrant to purchase one share of the Registrant’s common stock for each dollar of principal amount of the New Note, which is exercisable for a period of three years at $0.40 per share (the “Warrants”).
 
On September 1, 2013, the Registrant exchanged $615,000 in principal amount of unsecured promissory notes, including $33,933.34 in accrued interest (total of $648,933.34), for New Notes as follows:
 
Noteholder
  
Position(s) with
Registrant
  
Original Note
Amount(s) with
Accrued Interest
  
Original Note
Due Date(s)
  
New Note
Amount
    
Number of
Warrants
    
New Note
Exhibit #
  
C. Stephen Cochennet
  
CEO/President/Chairman
   $ 74,500.00  
9/1/13
   $ 543,300.01       543,301       10.2  
        $ 54,416.67  
9/1/13
                        
        $ 54,116.67  
9/1/13
                        
        $ 53,666.67  
9/1/13
                        
        $ 105,966.67  
9/1/13
                        
        $ 50,333.33  
11/30/13
                        
        $ 150,300.00  
11/30/13
                        
                                       
James G. Miller
  
Director
   $ 52,983.33  
9/1/13
   $ 52,983.33       52,984       10.3  
                                       
Corey Lambrecht
  
Director
   $ 52,650.00  
9/1/13
   $ 52,650.00       52,650       10.4  
 
On September 1, 2013, we issued a New Note for the principal amount of $45,000 to a director, Jim Nolton, for engineering services performed on behalf of us. Mr. Nolton was also issued 45,000 Warrants.

On September 18, 2013, we received $50,000 from its CEO/president, C. Stephen Cochennet, in the form of a New Note. Mr. Cochennet was also issued 50,000 Warrants.

On September 19, 2013, we received $250,000 from Kansas Resource Development Company, a company owned and controlled by our CEO/president, C. Stephen Cochennet, in the form of a New Note. Kansas Resource Development Company was also issued 250,000 Warrants.

On September 19, 2013, we received $30,000 from a director, James G. Miller, in the form of a New Note. Mr. Miller was also issued 30,000 Warrants.

On September 30, 2013, we received $100,000 from an unaffiliated third party accredited investor in the form of a New Note. The new noteholder was also issued 100,000 Warrants.
 
Press Releases

On September 5, 2013, we issued a press release disclosing the debut of our training program for the Pro V2 device. A copy of the press release is attached hereto as Exhibit 99.14.

On September 19, 2013, we issued a press release disclosing our exhibiting at the ASIS 2013 industry trade show. A copy of the press release is attached hereto as Exhibit 99.15.

On October 7, 2013, we issued a press release disclosing increased production of our Pro V2 device to meet demand. A copy of the press release is attached hereto as Exhibit 99.16.

On October 14, 2013, we issued a press release disclosing the signing of a distributor agreement with Nova Security Group for school administrators and campus safety officials. A copy of the press release is attached hereto as Exhibit 99.17.

 
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Item 6. Exhibits.
 
Exhibit No.
  
Description
2.1
  
Agreement and Plan of Merger among Global Risk Management & Investigative Solutions, G8 Acquisition Subsidiary, Inc. and Guardian 8 Corporation effective November 30, 2010 (incorporated by reference to Exhibit 2.1 to the Form 10-Q filed on August 6, 2010)
2.2
  
Articles of Merger (incorporated by reference to Exhibit 2.1 to the Form 8-K filed on December 21, 2010)
3.1
  
Amended and Restated Articles of Incorporation, as currently in effect (incorporated by reference to Exhibit 3.1 to Form 10-K filed on March 23, 2011)
3.2
  
Bylaws, as currently in effect (incorporated by reference to Exhibit 3.1(ii) to Form 8-K filed on April 30, 2012)
3.3
  
Certificate of Amendment to Articles of Incorporation (incorporated by reference to Exhibit 3.1 to the Form 8-K filed on December 21, 2010)
4.1
  
Article VI of Amended and Restated Articles of Incorporation (included in Exhibit 3.1)
4.2
  
Article II and Article VIII of Bylaws (incorporated by reference to Exhibit 3(ii)(a) to Form S-1 filed on May 16, 2008)
10.1
  
Convertible Term Note and Warrant issued to C. Stephen Cochennet dated October 13, 2011 (incorporated by reference to Exhibit 10.1 to the Form 10-Q filed on November 14, 2011)
10.2†
  
Hughes Employment Agreement effective December 1, 2011 (incorporated by reference to Exhibit 10.1 to the Form 8-K filed on December 9, 2011)
10.3†
  
Hanrahan Engagement Agreement effective April 30, 2012 (incorporated by reference to Exhibit 10.1 to the Form 8-K filed on April 30, 2012)
10.4
  
$100,000 Term Note issued to C. Stephen Cochennet dated November 13, 2012 (incorporated by reference to Exhibit 10.4 to the Form 10-Q filed on November 19, 2012)
10.5
  
$50,000 Term Note issued to C. Stephen Cochennet dated December 10, 2012 (incorporated by reference to Exhibit 10.1 to the Form 8-K filed on January 8, 2013)
10.6
  
$50,000 Term Note issued to C. Stephen Cochennet dated December 28, 2012 (incorporated by reference to Exhibit 10.2 to the Form 8-K filed on January 8, 2013)
10.7
  
$50,000 Term Note issued to C. Stephen Cochennet dated January 24, 2013 (incorporated by reference to Exhibit 10.1 to the Form 8-K filed on January 31, 2013)
10.8
  
$100,000 Term Note issued to C. Stephen Cochennet dated March 6, 2013 (incorporated by reference to Exhibit 10.1 to the Form 8-K filed on March 18, 2013)
10.9
  
$50,000 Term Note issued to James G. Miller dated March 6, 2013 (incorporated by reference to Exhibit 10.2 to the Form 8-K filed on March 18, 2013)
10.10 †
  
Cochennet Employment Agreement dated March 4, 2013 (incorporated by reference to Exhibit 10.3 to the Form 8-K filed on March 18, 2013)
10.11 †
  
Hanrahan Amendment No. 1 to Interim CFO Agreement dated March 4, 2013 (incorporated by reference to Exhibit 10.4 to the Form 8-K filed on March 18, 2013)
10.12 †
  
Hughes Amended and Restated Employment Agreement with Guardian 8 Corporation effective October 1, 2012 (incorporated by reference to Exhibit 10.5 to the Form 8-K filed on March 18, 2013)
10.13 †
  
Rojas Employment Agreement with Guardian 8 Corporation effective October 1, 2012 (incorporated by reference to Exhibit 10.6 to the Form 8-K filed on March 18, 2013)
10.14 †
  
Silva Employment Agreement with Guardian 8 Corporation effective March 11, 2013 (incorporated by reference to Exhibit 10.7 to the Form 8-K filed on March 18, 2013)
10.15
  
$50,000 Term Note issued to Corey Lambrecht dated March 26, 2013 (incorporated by reference to Exhibit 10.15 to the Form 10-Q filed on May 15, 2013)
10.16
  
Extension No. 1 to $100,000 Term Note issued to C. Stephen Cochennet dated November 13, 2012 (incorporated by reference to Exhibit 10.16 to the Form 10-Q filed on May 15, 2013)
10.17
  
Extension No. 2 to $100,000 Term Note issued to C. Stephen Cochennet dated November 13, 2012 (incorporated by reference to Exhibit 10.17 to the Form 10-Q filed on May 15, 2013)
10.18
  
Extension No. 1 to $50,000 Term Note issued to C. Stephen Cochennet dated December 10, 2012 (incorporated by reference to Exhibit 10.18 to the Form 10-Q filed on May 15, 2013)
10.19
  
Extension No. 2 to $50,000 Term Note issued to C. Stephen Cochennet dated December 10, 2012(incorporated by reference to Exhibit 10.19 to the Form 10-Q filed on May 15, 2013)
10.20
  
Extension No. 1 to $50,000 Term Note issued to C. Stephen Cochennet dated December 28, 2012 (incorporated by reference to Exhibit 10.20 to the Form 10-Q filed on May 15, 2013)
10.21
  
Extension No. 1 to $50,000 Term Note issued to C. Stephen Cochennet dated January 24, 2013 (incorporated by reference to Exhibit 10.21 to the Form 10-Q filed on May 15, 2013)
10.22
  
Extension No. 2 to $50,000 Term Note issued to C. Stephen Cochennet dated May 27, 2013 (incorporated by reference to Exhibit 10.22 to the Form 10-Q filed on August 14, 2013)
 
 
10.23
  
Extension No. 1 to $50,000 Term Note issued to James Miller dated June 4, 2013 (incorporated by reference to Exhibit 10.23 to the Form 10-Q filed on August 14, 2013)
10.24
  
Extension No. 1 to $100,000 Term Note issued to C. Stephen Cochennet dated June 4, 2013 (incorporated by reference to Exhibit 10.24 to the Form 10-Q filed on August 14, 2013)
10.25
  
Extension No. 3 to $50,000 Term Note issued to C. Stephen Cochennet dated June 12, 2013 (incorporated by reference to Exhibit 10.25 to the Form 10-Q filed on August 14, 2013)
10.26
  
Extension No. 2 to $50,000 Term Note issued to C. Stephen Cochennet dated June 23, 2013 (incorporated by reference to Exhibit 10.26 to the Form 10-Q filed on August 14, 2013)
10.27
  
Extension No. 1 to $50,000 Term Note issued to Corey Lambrecht dated June 24, 2013 (incorporated by reference to Exhibit 10.27 to the Form 10-Q filed on August 14, 2013)
10.28
  
Extension No. 3 to $50,000 Term Note issued to C. Stephen Cochennet dated July 9, 2013 (incorporated by reference to Exhibit 10.28 to the Form 10-Q filed on August 14, 2013)
10.29
  
$50,000 Term Note issued to C. Stephen Cochennet dated August 12, 2013 (incorporated by reference to Exhibit 10.1 to the Form 8-K filed on August 21, 2013)
10.30
  
$100,000 Term Note issued to C. Stephen Cochennet dated August 26, 2013 (incorporated by reference to Exhibit 10.1 to the Form 8-K filed on September 5, 2013)
10.31
  
Form of 12% New Note and Warrant (incorporated by reference to Exhibit 10.1 to the Form 8-K filed on October 4, 2013)
10.32
  
New Note issued to C. Stephen Cochennet (incorporated by reference to Exhibit 10.2 to the Form 8-K filed on October 4, 2013)
10.33
  
New Note issued to James G. Miller (incorporated by reference to Exhibit 10.3 to the Form 8-K filed on October 4, 2013)
10.34
  
New Note issued to Corey Lambrecht (incorporated by reference to Exhibit 10.4 to the Form 8-K filed on October 4, 2013)
10.35
  
New Note issued to Jim Nolton (incorporated by reference to Exhibit 10.5 to the Form 8-K filed on October 4, 2013)
10.36
  
$50,000 New Note issued to C. Stephen Cochennet (incorporated by reference to Exhibit 10.6 to the Form 8-K filed on October 4, 2013)
10.37
  
$250,000 New Note issued to Kansas Resource Development Company (incorporated by reference to Exhibit 10.7 to the Form 8-K filed on October 4, 2013)
10.38
  
$30,000 New Note issued to James G. Miller (incorporated by reference to Exhibit 10.8 to the Form 8-K filed on October 4, 2013)
31.1
  
31.2
  
32.1
  
32.2
  
99.1
  
Code of Business Conduct and Ethics effective March 23, 2012 (incorporated by reference to Exhibit 99.1 to Form 10-K filed on March 29, 2012)
99.2
  
Related Party Transaction Policy effective March 23, 2012 (incorporated by reference to Exhibit 99.1 to Form 10-K filed on March 29, 2012)
99.3
  
Executive Committee Charter (incorporated by reference to Exhibit 99.1 to Form 10-K filed on March 23, 2011)
99.4
  
Audit Committee Charter (incorporated by reference to Exhibit 99.2 to Form 8-K filed on April 30, 2012)
99.5
  
Governance, Compensation and Nominating Committee Charter (incorporated by reference to Exhibit 99.3 to Form 8-K filed on April 30, 2012)
99.5
  
International Interest Press Release dated August 13, 2012 (incorporated by reference to Exhibit 99.5 to the Form 10-Q filed on November 19, 2012)
99.6
  
Hiring of Rojas Press Release dated October 9, 2012 (incorporated by reference to Exhibit 99.6 to the Form 10-Q filed on November 19, 2012)
99.7
  
Utility patent Press Release dated October 16, 2012 (incorporated by reference to Exhibit 99.7 to the Form 10-Q filed on November 19, 2012)
99.8
  
Design patent Press Release dated October 24, 2012 (incorporated by reference to Exhibit 99.8 to the Form 10-Q filed on November 19, 2012)
99.9
  
Executive Summary as of November 2012 (incorporated by reference to Exhibit 99.1 to Form 8-K filed on November 5, 2012)
99.10
  
Initial order press release dated December 20, 2012 (incorporated by reference to Exhibit 99.1 to the Form 8-K filed on January 8, 2013)
99.11
  
Corporate order press release dated July 30, 2013 (incorporated by reference to Exhibit 99.11 to the Form 10-Q filed on August 14, 2013)
99.12
  
Security Industry Sales press release dated August 6, 2013 (incorporated by reference to Exhibit 99.12 to the Form 10-Q filed on August 14, 2013)
 
 
99.13
  
Zacks Research Report dated September 13, 2013 (incorporated by reference to Exhibit 99.1 to the Form 8-K filed on September 13, 2013)
99.14
  
99.15
  
99.16
  
99.17
  
101.INS
  
XBRL Instance Document
101.SCH 
  
XBRL Taxonomy Extension Schema
101.CAL
  
XBRL Taxonomy Extension Calculation Linkbase
101.DEF
  
XBRL Taxonomy Extension Definition Linkbase
101.LAB
  
XBRL Taxonomy Extension Label Linkbase
101.PRE
  
XBRL Taxonomy Extension Presentation Linkbase
 
 † Indicates management contract or compensatory plan or arrangement.
 
 
 
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SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
GUARDIAN 8 HOLDINGS
(Registrant)
  
       
Date: November 14, 2013
By:
/s/ C. Stephen Cochennet
  
   
C. Stephen Cochennet
  
   
Chief Executive Officer
  
   
(On behalf of the Registrant and as Chief Executive Officer)
  
       
Date: November 14, 2013
By:
/s/ Kathleen Hanrahan
  
   
Kathleen Hanrahan
  
   
Chief Financial Officer
  
   
(On behalf of the Registrant and as Principal Financial Officer)
  

 
 
 
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