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UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
 

 
FORM 10-K
 

 
(Mark One)
 
x  ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2011
or

o  TRANSITION REPORT PURSUANT TO 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, AZ
85260
(Address of principal executive offices)
 
(Zip Code)

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

Securities registered pursuant to Section 12(b) of the Exchange Act: None
 
Securities registered pursuant to Section 12(g) of the Exchange Act: None

Indicate by check mark if the registrant is a well-known seasoned issuer, as defined in Rule 405 of the Securities Act.  
oYes           xNo

Indicate by check mark if the registrant is not required to file reports pursuant to Section 13 or 15(d) of the Act.  
xYes           oNo
Indicate by checkmark 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. 
x Yes   oNo

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).    
       x Yes   oNo

Indicate by checkmark if disclosure of delinquent filers pursuant to Item 405 of Regulation S-K (§229.405 of this chapter) is not contained herein, and will not be contained, to the best of registrant’s knowledge, in definitive proxy or information statements incorporated by reference in Part III of this Form 10-K or any amendment to this Form 10-K.    x

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 o    
Accelerated filer o
Non-accelerated filer o  (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  o      No x

State the aggregate market value of the voting and non-voting common equity held by non-affiliates computed by reference to the price at which the common equity was last sold, or the average bid and asked price of such common equity, as of the last business day of the registrant’s most recently completed second fiscal quarter. $5,055,476.75 based on a share value of $0.25.

Indicate the number of shares outstanding of each of the registrant’s classes of common stock, as of the latest practicable date. 27,592,318, $0.001 par value, outstanding on March 23, 2012.

DOCUMENTS INCORPORATED BY REFERENCE

List hereunder the following documents if incorporated by reference and the Part of the Form 10-K (e.g., Part I, Part II, etc.) into which the document is incorporated: (1) Any annual report to security holders; (2) Any proxy or information statement; and (3) Any prospectus filed pursuant to Rule 424(b) or (c) under the Securities Act of 1933. The listed documents should be clearly described for identification purposes (e.g., annual report to security holders for fiscal year ended December 24, 1980).
 
None.
 
 
GUARDIAN 8 HOLDINGS
FORM 10-K
TABLE OF CONTENTS
 
 
Page
 
PART I
2
 
2
 
6
 
13
 
13
 
13
 
13
 
     
PART II
14
 
14
 
15
 
15
 
18
 
18
 
20
 
20
 
20
 
     
Part III
21
 
21
 
24
 
27
 
28
 
29
 
     
Part IV
30
 
30
 

 
 
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-K references to “Guardian 8”, “G8”, “the Company”, “we,” “us,” “our” and similar terms refer to Guardian 8 Corporation and its wholly owned operating subsidiary, Guardian 8 Corporation.
 
AVAILABLE INFORMATION

Although we have not registered any of our securities under Section 12 of the Exchange Act, we voluntarily file annual, quarterly and special reports and other information with the SEC.  You can read these SEC filings and reports over the Internet at the SEC’s website at www.sec.gov or on our website at www.guardian8.com.  You can also obtain copies of the documents at prescribed rates by writing to the Public Reference Section of the SEC at 100 F Street, NE, Washington, DC 20549 on official business days between the hours of 10:00 am and 3:00 pm.  Please call the SEC at (800) SEC-0330 for further information on the operations of the public reference facilities. We will provide a copy of our annual report to security holders, including audited financial statements, at no charge upon receipt to of a written request to us at Guardian 8 Holdings, 15230 N. 75th Street, Suite 1002, Scottsdale, Arizona  85260.
 

 
PART I
 
Item 1. Business.
 
Overview

In November 2010, following a reverse merger by and among us, G8 Acquisition Subsidiary, Inc. (our wholly-owned subsidiary) and Guardian 8 Corporation, a Nevada corporation, we changed the focus of our business plan.

Prior to the reverse merger with Guardian 8 Corporation in November of 2010, we operated under the name Global Risk and focused on the provision of investigative, technical IT, background, document verification, and data banks of security information and entered into the personal defense industry. This business plan was ultimately abandoned following its unsuccessful implementation. Following the merger, we assumed the business plan of Guardian 8 Corporation and entered into the personal defense industry. Concurrent with the effectiveness of the merger, we changed our name to “Guardian 8 Holdings” The result of the merger was that the former stockholders of Guardian 8 Corporation controlled approximately 95% of our outstanding shares of common stock. In addition, Guardian 8 Corporation was deemed to be the acquiring company for financial reporting purposes and the merger was accounted for as a reverse merger. All of our principal operations are conducted through Guardian 8 Corporation as our wholly owned subsidiary.

Guardian 8 Corporation was incorporated in Nevada on June 8, 2009 as Guardian 6 Corporation. In August 2009, we changed our name to Guardian 8 Corporation.

Business Development
 
In June of 2009, concurrent with our incorporation, Charles “Andy” Ross, Jr., a former officer and director, agreed to transfer all rights, title and interest in and to all intellectual property rights he held in our device to us in exchange for $300,000 in cash and 19,000,000 shares of our common stock. From August of 2009 through September of 2010, Mr. Ross returned 4,500,000 shares of common stock to us for cancellation to assist in our fund raising efforts.

The Guardian 8 Device

The product we are developing is a personal security device that incorporates countermeasures to help defend against personal attacks, including alarms to frighten and take images of the attacker and/or alert others, latest technology utilizing LED lights to momentarily visually impair a would be attacker at night, audio/visual communications and Bluetooth technology advising security or law enforcement of the incident. The device’s general objective is to provide an enhanced personal security device that has a plurality of security functions.

The desire for personal security is a burgeoning one resulting in personal security devices being available on the marketplace. Such devices range from weapons designed to inflict harm on an attacker to alarms designed to call attention to the situation at hand so as to dissuade an attacker from further aggression.

Although such devices are assumably effective in operation, we believe it is desirable to have a device which presents a plurality of security functions which allow the user to help defend against dangerous situations and communicate the impending situation in one device.

In response to this perceived need, we have developed a personal security device which presents a multitude of security features including pepper spray, visual, recording, and audio alarms and communication with 9-1-1 or other preselected numbers. Such functions may either be initiated by the user or automatically activated during physical confrontations. The device is in the form of a pistol configuration which enables the user to better manipulate the device and control the available functions.
 
 

Additional significant objectives of the device are:

·  
to provide countermeasures that can momentarily incapacitate attackers and provide pain compliance;

·  
to activate audio and/or visual alarms so as to call attention to the altercation and/or frighten the attacker;

·  
to provide a laser pointing device that enables the user to accurately direct pepper-spray upon the attacker with a tracer substance to assist in subsequent identifications;

·  
to provide a device that links with a cell phone using Bluetooth technology so as to automatically alert 9-1-1 and/or document audio messages, and audio and image recordings of the altercation;

·  
to provide a security device that transmits or documents the audio/or visual recordings; and

·  
to provide a security device that provides a direct voice communication link with 9-1-1 or other preselected numbers.

Recent Developments

During the quarter ended September 30, 2011, we terminated our relationship with our prior product engineers and have begun the process of engaging a new engineer(s) to complete the development and design of our product and begin the development process for Version 2 of the design. This change in staff is due to a series of delays we believe were avoidable and project management that was inconsistent with best practices. Our expectation is to complete the transition to new project management leadership, already identified, within Q4 2011 and with limited delays to our product launch.

On August 5, 2011, our common stock was cleared for trading on the Over-the-Counter Bulletin Board under the symbol “GRDH”.

We completed the initial design 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 have elected to incorporate a significant number of upgrades, enhancements and make modifications to the initial design to improve reliability, durability and efficiencies. We will be rolling out the new design in the first half of 2012, with projected product to market in the fourth quarter of 2012.

In March of 2012 we announced a new upgraded model call the Pro V2. This model was developed in response to professional security guards seeking a robust design as well as highly functional tool for their duty belt. The Pro V2 will also be available to security conscious industries where staff safety is an ongoing priority.

In addition, 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 hope to obtain a response from DTC within the second quarter of 2012 and intend to work diligently to have our shares approved for electronic clearing in 2012. Along these same lines, our board of directors has decided to file a registration statement on Form S-1 to register 100% of the shares held by stockholders of record on April 1, 2012. 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.

Warranty
     
We intend to offer a three to six month limited warranty on our device. After the warranty expires, if the device fails to operate properly for any reason during the warranty period, we intend to replace the device either at a discounted price depending on when the product was placed in service or for a flat fee. These fees are intended to cover the handling and repair costs and include a profit. We believe this policy will be attractive to our customers. In particular, it avoids disputes regarding the source or cause of any defect. Extended warranties which provide additional coverage beyond the limited warranty, ranging from one to four years are anticipated to be also offered for specified fees.

Sales and Marketing

Professional Market

Professionals in the private security industry struggle with the decision about how to arm their guards. If the security guards are lucky, they will be given pepper spray and handcuffs, but in most cases they carry just the handcuffs. Our industry checks indicate that only about 30% of U.S. security guards are licensed to carry pepper spray. The reason for this is liability—more specifically, vicarious liability in which employers are liable for the negligent acts of their employees that cause injuries to a third party. Those managing private security guards fear lawsuits generated by the use, or perceived use, of excessive force because it implies negligent hiring, training and/or supervision. Consequently, a key directive to security guards is first to de-escalate potentially violent situations.
 
 

The same directive holds true for law enforcement officers trained with a “Use of Force continuum”—a visual model that depicts progressive escalation and de-escalation of force based on a subject’s actions.

In all cases, communication, if possible, is the first option for de-escalation, and lethal force is a last resort. While the appropriate tactics in potentially dangerous situations can require complex decisions, attempting to defuse a situation is clearly the best choice if that is possible. We believe a device that would greatly enhance a security guard’s ability to de-escalate a potentially violent situation would be eagerly adopted by the private security industry. The private security market will be the initial target market, and primary initial revenue source, for our device.

Retail Market

Sadly, according to the Law Enforcement Alliance of America, three out of four women in the United States will fall victim to a violent crime at some point in their lives. According to the Federal Bureau of Investigation, aggravated assault accounted for 62.5% of the 1.3 million violent crimes committed in the U.S. in 2010. The reality of these statistics has created a sizable self-defense products and services market. Consumers have a bevy of options to protect themselves, including self-defense classes, alarms, lethal and nonlethal weapons, even cell phones. None of these options is perfect; most offer a singular means of defense that may or may not be appropriate, depending on the situation. A device that incorporates features to de-escalate a dangerous situation while also providing an effective means of defense would likely ease a clouded decision-making process.

One of the directives of the Law Enforcement Alliance of America (LEAA)—the nation’s largest nonprofit, nonpartisan coalition of law enforcement professionals—is to educate the public about the best ways to avoid violent crime. Rather than offer blanket advice to either resist or comply, LEAA advises those faced with a violent attack to analyze their options to the extent possible and then make a decision and act swiftly. The options include running away, calling for help (either other people nearby or 9-1-1 via cell phone), or fighting back. The LEAA adds this sobering reminder, “No matter what course of action you choose, if you are attacked by a violent criminal, there is always a chance you may be hurt or killed.” Unfortunately, whatever choice the victim makes—grabbing a cell phone, alarm or pepper spray—it could be the wrong choice. There are no easy answers when facing a potentially violent assault. A clear improvement, in our view, would be the ability to alarm others, notify 9-1-1, and discourage further aggression in a single device. Further, the ability to use a weapon at a distance significantly reduces risk to the victim.

We plan to approach the market on three fronts; (i) The Private Security Market, (ii) National Accounts, and (iii) the Retail Market. We are currently in discussion with several large private security firms about testing the product as well as support for training. We intend to begin discussions with potential National Accounts targets once the testing phase for our product has been completed. We have engaged a marketing and advertising firm to assist in evaluating and implementing marketing, branding and advertising strategies.  We have also engaged the services of a former executive of a personal defense device manufacturer to assist in our marketing to the private security market.

United States Distribution

Initially we intend to focus on the professional and consumer defense market as our primary target. We are evaluating a number of go to market strategies for the product; including, security firms, direct sales, distributors, etc.

We intend to implement a variety of marketing initiatives to support sales of our device. We may produce an infomercial, if we maintain sufficient funds, which will air in initially in selected markets and if successful will target a nationwide campaign.

International Distribution

We intend to market and distribute our device in foreign markets through a network of distributors. For geographical and cultural reasons, it is anticipated that our distributors, when established, will usually have a territory defined by their country’s borders. These distributors will market our device where allowed by law. For foreign sales we may utilize an established distributor.      
     
Manufacturing
     
We intend to outsource all of our component manufacturing and assembly at least for the foreseeable future. We currently are anticipating using Argosy Research Inc., subject to quote approval, to manufacture our initial device; however, we do not foresee any issues with locating additional manufacturers of our device if and when the time arises.

Competition

Our device is anticipated to compete with other non-lethal weapons such as electronic control devices, batons, clubs, and chemical sprays; such as those sold by companies as Taser® International, Armor Holdings, Inc., TigerLight, PepperBall Technologies, and FN Herstal. The primary competitive factors in the private citizen market include a device’s cost, optionality, effectiveness, safety and ease of use.
 
 

Regulation

United States Regulation
     
Our device will be subject to regulations; although it is anticipated that our device will not be considered to be a “firearm” by the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives. Therefore, no Federal firearms-related regulations will apply to the sale and distribution of our device within the United States.
     
We are also subject to environmental laws and regulations, including restrictions on the presence of certain substances in electronic products. Reference is made to Risk Factors, under the heading “Environmental laws and regulations subject us to a number of risks and could result in significant liabilities and costs”.

Pepper Spray Regulations

One important issue for us is the way our device will be categorized by various government agencies. How the U.S. government categorizes the device could limit where our device can be exported. Domestically, we will have to cope with regulations that pertain to the use of pepper spray devices at the state level.

While the laser-targeting functionality of our device may be restricted by government export laws for a limited number of countries, pepper spray is the only component of the device that can truly be considered a weapon. Pepper spray causes temporary blindness, pain, breathing problems and panic. When used excessively on someone with a preexisting medical condition, it can, in rare cases, even result in death. As such, the self-defense product is restricted in some states and countries. The size of the pepper spray canister and the percentage of capsaicin are regulated by some states.

By comparison, most states ban electronic control devices (“ECDs”) from schools and courts, and some have additional restrictions such as limiting their use to homes and businesses or, as with handguns, requiring concealed weapons permits to carry them in public. At the time of this report, Hawaii, Michigan, Massachusetts, Rhode Island, New York, New Jersey and the District of Columbia prohibit the use of ECDs by the general public. Unlike ECDs, pepper spray is regulated in only five states and the District of Columbia. These limited regulations restrict retailers by requiring a firearms identification card, in some cases, and by limiting the size of the canister and strength of the spray. Given this backdrop, the pepper spray regulatory environment is not anticipated to limit our efforts to market our device to the security guard market and should be only a slight headwind in the consumer market in the six states that regulate the product. In addition, we plan to develop a version of our device that does not incorporate pepper spray.

United States Export Regulation
    
 Our product was recently classified EAR99, relatively unrestricted by the Department of Commerce (DOC). Accordingly, the export of our device will be regulated under export administration regulations and subject to export bans established by DOC to a limited set of restricted countries. We will be required to obtain export licenses from the DOC for all shipments to foreign countries other than Canada. The need to obtain these licenses may cause a delay in our shipments if we develop an international sales program.

Foreign Regulation
     
The U.S. Department of Defense, through its International Traffic in Arms regulation (ITAR), controls the exportation of defense products—the types of products exported and the countries to which they are exported. Pepper spray devices are exempt from this regulation, and our EAR99 classification affirms this view. Additionally, the Department of Commerce will require an export license for each country into which our device is sold and will most likely limit us from selling into the eight or so international markets for which our government has expressed human rights concerns. We expect, through distributors, to deal with specific regulatory issues on a country-by-country basis, which will likely lengthen the sales cycle for international sales.

Foreign regulations, which may affect our device, are numerous and often unclear. We intend to engage distributors who are familiar with the applicable import regulations in each foreign market we enter, if any. Restrictions may prohibit certain sales of our products in a number of countries. We intend to rely on the distributors to inform us of those countries where our device is prohibited or restricted.

Intellectual Property
     
We intend to protect our intellectual property with U.S. patents and trademarks. Our pending patent application relates to the PERSONAL SECURITY GUARDIAN device. We also intend to rely on international treaties, organizations and foreign laws to protect our intellectual property. We intend to continuously assess whether and where to seek formal protection for particular innovations and technologies based on such factors as: the commercial significance of our operations and our competitors’ operations in particular countries and regions; our strategic technology or product directions in different countries; and the degree to which intellectual property laws exist and are meaningfully enforced in different jurisdictions.
     
Confidentiality agreements are intended to be used with employees, consultants and key suppliers to help ensure the confidentiality of our trade secrets.
 
 

Research and Development
     
Since our inception, we expended approximately $260,000 on research and development through December 31, 2011. Our investment in research and development staff and equipment is anticipated to increase as our device gains market acceptance and we move into design and development of additional versions of our device or other products. Our return on this investment is intended to be realized over the long term, although new systems and technologies may have a more immediate impact on our business.

Employees

           We are a development stage company and currently have only one employee, Paul Hughes, Vice President of operations 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 and Paul Hughes with the assistance of our board of directors. We look to Mr. Cochennet 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 may hire marketing employees based on the projected size of the market and the compensation necessary to retain qualified sales employees. 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.
 
Item 1A. Risk Factors.
 
In the course of conducting our business operations, we are exposed to a variety of risks that are inherent to our industry. The following discusses some of the key inherent risk factors that could affect our business and operations, as well as other risk factors which are particularly relevant to us in the current period of significant economic and market disruption. Other factors besides those discussed below or elsewhere in this report also could adversely affect our business and operations, and these risk factors should not be considered a complete list of potential risks that may affect us.
 
Risks Related to Our Business

We are a development stage company, recently organized and have minimal operating history, which raises substantial doubt as to our ability to successfully develop profitable business operations.

We have a limited operating history.  Our prospects must be considered in light of the risks, expenses and difficulties frequently encountered in developing and marketing a new personal defense product. As a result of our recent formation we have yet to generate any revenues from operations and have been focused on organizational issues, start-up challenges, market analysis, product development, building relationships and initial fund raising activities. There is nothing at this time on which to base an assumption that our business operations will prove to be successful or that we will ever be able to operate profitably.  Our future operating results will depend on many factors, including:

·      our ability to raise adequate working capital;
·      success of our product development efforts;
·      the level of our competition;
·      demand for the product at a profitable price;
·      our ability to attract and maintain key management and employees; and
 
·
our ability to effectively demonstrate our ability to develop, produce and market a personal defense product.

To achieve profitable operations, we must, alone or with others, successfully execute on the factors stated above, along with continually developing ways to enhance our operations. Despite our best efforts we may not be successful in our development and marketing efforts or obtain required regulatory approvals. There is a possibility that our business plan may not be received favorably by investors or we may not be able to perfect our plan of operation to be commercially viable.

We may need additional capital in the future to finance our planned growth, which we may not be able to raise or it may only be available on terms unfavorable to us or our stockholders, which may result in our inability to fund our working capital requirements and harm our operational results.

We have and expect to continue to have working capital needs. We expect our cash on hand, together with cash generated from product sales, cash equivalents and short-term investments to meet our working capital and capital expenditure requirements for at least the next six months. After that time we may need to raise additional funds to fund our operations and implement our growth strategy, or to respond to competitive pressures and/or perceived opportunities, such as investment, acquisition, marketing and development activities.

If we experience operating difficulties or other factors, many of which may be beyond our control, cause our revenues or cash flows from operations, if any, to decrease, we may be limited in our ability to spend the capital necessary to complete our development, marketing and growth programs. If our cash flows do not commence within six months, we will require additional financing, in addition to anticipated cash generated from our operations, to fund our planned growth. Additional financing might not be available on terms favorable to us, or at all. If adequate funds were not available or were not available on acceptable terms, our ability to fund our operations, take advantage of unanticipated opportunities, develop or enhance our business or otherwise respond to competitive pressures would be significantly limited. In such a capital restricted situation, we may curtail our marketing, development, and operational activities or be forced to sell some of our assets on an untimely or unfavorable basis.
 
 
 
Declining economic conditions could negatively impact our business.

Our operations may be affected by local, national and worldwide economic conditions.  Markets in the United States and elsewhere have been experiencing extreme volatility and disruption for more than 24 months, due in part to the financial stresses affecting the liquidity of the banking system and the financial markets generally.  In recent months, this volatility and disruption has reached unprecedented levels.  The consequences of a potential or prolonged recession may include a lower level of economic activity. While the ultimate outcome and impact of the current economic conditions cannot be predicted, a lower level of economic activity might result in a decline in overall consumption.  Instability in the financial markets, as a result of recession or otherwise, also may affect the cost of capital and our ability to raise capital.

Our auditor’s report reflects the fact that without realization of additional capital, it would be unlikely for us to continue as a going concern.

As a result of our deficiency in working capital at December 31, 2011 and other factors, our auditors have included a paragraph in their audit report regarding substantial doubt about our ability to continue as a going concern. Our plans in this regard are to commence product sales, increase production, obtain inventory financing, seek strategic alternatives and to seek additional capital through future equity private placements or debt facilities.

We are highly dependent on our officers and directors. The loss of any of them, whose knowledge, leadership and technical expertise upon which we rely, could harm our ability to execute our business plan.
 
Our success depends heavily upon the continued contributions of our current officers and directors, whose knowledge, leadership and technical expertise may be difficult to replace at this stage in our business development, and on our ability to retain and attract experienced experts, and other technical and professional staff.  We have entered into an employment agreement with Paul Hughes, Vice President of Operations for Guardian 8 Corporation, but do not maintain key person insurance on him or Mr. Cochennet, the sole officer of the parent company. We may receive the resignation of Mr. Cochennet, the sole officer of the parent company, upon the first full order of our device and following his resignation anticipate that our board of directors will manage our operations until a suitable replacement is located. If we were to lose the services of our officers or directors, our ability to execute our business plan would be harmed and we may be forced to cease operations until such time as we could hire suitable replacements for them.

At this stage of our business operations, even with our good faith efforts, potential investors may lose their entire investment.
 
Because the nature of our business is expected to change as a result of shifts in the self-defense and personal protection industry, competition, and the development of new and improved technology, management forecasts are not necessarily indicative of future operations and should not be relied upon as an indication of future performance.
 
While Management believes its estimates of projected occurrences and events are within the timetable of its business plan, our actual results may differ substantially from those that are currently anticipated.

We may face personal injury and other liability claims that harm our reputation and adversely affect our sales and financial condition.
     
Our device is anticipated to be used in confrontations that may result in bodily injury to those involved. A person injured in a confrontation or otherwise in connection with the use of our device may bring legal action against us to recover damages on the basis of theories including personal injury, negligent design, defective product or inadequate warning. We may also be subject to lawsuits involving allegations of misuse of our products. If successful, personal injury, misuse and other claims could have a material adverse effect on our operating results and financial condition and could result in negative publicity about our device. Although we intend to carry product liability insurance, even if completely unfounded, we may still incur large legal expenses if we choose to self-insure and defend lawsuits and significant litigation this could also result in a diversion of management’s attention and resources, negative publicity and a potential award of monetary damages in excess of our insurance coverage. The outcome of any litigation is inherently uncertain and there can be no assurance that any future litigation will not have a material adverse effect on our revenues, our financial condition or financial results.

To the extent demand for our device increases, our future success will be dependent upon our ability to establish manufacturing production capacity which will be accomplished by the implementation of customized manufacturing automation equipment.

                To the extent demand for our device increases significantly in future periods, one of our key challenges will be to ramp our production capacity to meet sales demand, while maintaining product quality. Our primary strategies to accomplish this include locating larger outsourced assembly facilities. Our inability to meet any future increase in sales demand or effectively manage our expansion could have a material adverse effect on our revenues, financial results and financial condition.

If we are unable to design, introduce and sell new products or new product features successfully, our business and financial results could be adversely affected.
     
Our future success may depend on our ability to develop new products or new product features that achieve market acceptance in a timely and cost-effective manner. The development of new products and new product features is complex, time consuming and expensive, and we may experience delays in completing the development and introduction of new products. We cannot provide any assurance that products that we may develop in the future will achieve market acceptance. If we fail to develop new products or new product features on a timely basis that achieve market acceptance, our business, financial results and competitive position could be adversely affected.
 
 
 
Government regulation of our device and future products may adversely affect sales.

Federal regulation of sales in the United States: Our device is not considered a firearm regulated by the U.S. Bureau of Alcohol, Tobacco, Firearms and Explosives, but is a consumer product regulated by the U.S. Consumer Product Safety Commission. Although there are currently no federal laws restricting sales of our device in the United States, future federal regulation could adversely affect sales of our device and future products.
     
Federal regulation of international sales: It is anticipated that our device may be controlled as a “crime control” product by the U.S. Department of Commerce, or DOC, for export directly from the United States.  However, we have filed a request with DOC for a EAR99 classification, which is a less regulated category. Consequently, we will be required to obtain an export license from the DOC for the export of our device from the United States, other than to Canada, when and if we commence international sales. Our inability to obtain DOC export licenses on a timely basis for sales of our device to international customers could significantly and adversely affect our business.
     
State and local regulation: Our device may be controlled, restricted or its use prohibited by a number of state and local governments. Other jurisdictions may ban or restrict the sale of our device and our sales may be significantly affected by additional state, county and city governmental regulation.
     
Foreign regulation: Certain foreign jurisdictions prohibit the sale of conducted energy devices, which may include a product such as our device, limiting some of our international sales opportunities.

Environmental laws and regulations subject us to a number of risks and could result in significant liabilities and costs.
     
We may be subject to various state, federal and international laws and regulations governing the environment, including restricting the presence of certain substances in electronic products and making producers of those products financially responsible for the collection, treatment, recycling and disposal of those products. Environmental legislation within the European Union (EU) may increase our cost of doing business internationally and impact our revenues from EU countries as we comply with and implement these requirements.
     
The EU has published Directives on the restriction of certain hazardous substances in electronic and electrical equipment (the RoHS Directive) which became effective in July 2006, and on electronic and electrical waste management (the WEEE Directive). The RoHS Directive restricts the use of a number of substances, including lead. The WEEE Directive directs members of the European Union to enact laws, regulations, and administrative provisions to ensure that producers of electric and electronic equipment are financially responsible for the collection, recycling, treatment and environmentally responsible disposal of certain products sold into the market after August 15, 2005 and from products in use prior to that date that are being replaced. In addition, similar environmental legislation has been or may be enacted in other jurisdictions, including the U.S. (under federal and state laws) and other countries, the cumulative impact of which could be significant.
     
We intend to monitor the impact of specific registration and compliance activities required by the RoHS and WEEE Directives. We endeavor to comply with applicable environmental laws, yet compliance with such laws could increase our operations and product costs; increase the complexities of product design, procurement, and manufacturing; limit our ability to manage excess and obsolete non-compliant inventory; limit our sales activities; and impact our future financial results. Any violation of these laws can subject us to significant liability, including fines, penalties, and prohibiting sales of our products into one or more states or countries, and result in a material adverse effect on our financial condition.

If we are unable to protect our intellectual property, we may lose a competitive advantage or incur substantial litigation costs to protect our rights.
     
Our future success depends upon our proprietary technology. Our protective measures, including a patent and trade secret protection, may prove inadequate to protect our proprietary rights. The right to stop others from misusing our trademarks and service marks in commerce depends to some extent on our ability to show evidence of enforcement of our rights against such misuse in commerce. Our efforts to stop improper use, if insufficient, may lead to loss of trademark and service mark rights, brand loyalty and notoriety among our customers and prospective customers. The scope of any patent to which we have or may obtain rights may not prevent others from developing and selling competing products. The validity and breadth of claims covered in technology patents involve complex legal and factual questions, and the resolution of such claims may be highly uncertain, lengthy and expensive. In addition, our patents may be held invalid upon challenge, or others may claim rights in or ownership of our patent.      

We may be subject to intellectual property infringement claims, which could cause us to incur litigation costs and divert management attention from our business.

                Any intellectual property infringement claims against us, with or without merit, could be costly and time-consuming to defend and divert our management’s attention from our business. If our products were found to infringe a third party’s proprietary rights, we could be required to enter into costly royalty or licensing agreements in order to be able to sell our products. Royalty and licensing agreements, if required, may not be available on terms acceptable to us or at all.

 
 
Our efforts to avoid the patent, trademark, and copyright rights of others may not provide notice to us of potential infringements in time to avoid investing in product development and promotion that must later be abandoned if suitable license terms cannot be reached.
     
There is no guarantee that our use of conventional technology searching and brand clearance searching will identify all potential rights holders. Rights holders may demand payment for past infringements and/or force us to accept costly license terms or discontinue use of protected technology and/or works of authorship that may include for example photos, videos, and software.

Defects in our products could reduce demand for our products and result in a loss of sales, delay in market acceptance and injury to our reputation.

Complex components and assemblies used in our products may contain undetected defects that are subsequently discovered at any point in the life of the product. Defects in our products may result in a loss of sales, delay in market acceptance and injury to our reputation and increased warranty costs.

To the extent demand for our products increase, our future success will be dependent upon our ability to ramp manufacturing production capacity.

We intend to begin marketing a new self-defense device. To the extent demand for that product, or other products we may develop, increases significantly in future periods, one of our key challenges will be to ramp up production capacity to meet sales demand, while maintaining product quality. We plan to use a contract manufacturer for all of our products. Our inability to meet any future increase in sales demand, access capital for inventory, may hinder growth or increase dilution.

Component shortages could result in our inability to produce volume to adequately meet customer demand. This could result in a loss of sales, delay in deliveries and injury to our reputation.
     
Single source components used in the manufacture of our products may become unavailable or discontinued. Delays caused by industry allocations, or obsolescence may take weeks or months to resolve. In some cases, parts obsolescence may require a product re-design to ensure quality replacement components. These delays could cause significant delays in manufacturing and loss of sales, leading to adverse effects significantly impacting our financial condition or results of operations.

Our dependence on foreign suppliers for key components of our products could delay shipment of our finished products and reduce our sales.
     
We anticipate depending on foreign suppliers for the delivery of certain components used in the assembly of our products. Due to changes imposed for imports of foreign products into the United States, as well as potential port closures and delays created by terrorist threats, public health issues or national disasters, we may be exposed to risk of delays caused by freight carriers or customs clearance issues for our imported parts. Delays caused by our inability to obtain components for assembly could have a material adverse effect on our revenues, profitability and financial condition.

We may experience a decline in gross margins due to rising raw material and transportation costs associated with a future increase in plastics prices.
     
A significant number of our raw materials are comprised of plastic based products, or incur some form of landed cost associated with transporting the raw materials or components to our facility. A significant rise in commodity prices could adversely impact our ability to sustain current gross margins, by increasing component pricing.
 
We face risks associated with rapid technological change and new competing products.
     
The technology associated with non-lethal devices is receiving significant attention and is rapidly evolving. While we anticipate having patent protection in key areas of our technology, it is possible that new non-lethal technology may result in competing products that operate outside our patent and could present significant competition for our products.

We may acquire assets or other businesses in the future.
 
We may consider acquisitions of assets or other business. Any acquisition involves a number of risks that could fail to meet our expectations and adversely affect our profitability. For example:
 
 
The acquired assets or business may not achieve expected results;

 
We may incur substantial, unanticipated costs, delays or other operational or financial problems when integrating the acquired assets;

 
We may not be able to retain key personnel of an acquired business;

 
Our management’s attention may be diverted; or

 
Our management may not be able to manage the acquired assets or combined entity effectively or to make acquisitions and grow our business internally at the same time.
 
If these problems arise we may not realize the expected benefits of an acquisition.
 
 
 
We have not implemented various voluntary corporate governance measures, in the absence of which, stockholders may have more limited protections against interested director transactions, conflicts of interest and similar matters.

Federal legislation, including the Sarbanes-Oxley Act of 2002, has resulted in the adoption of various corporate governance measures designed to promote the integrity of the corporate management and the securities markets. Some of these measures have been adopted in response to legal requirements. Others have been adopted by companies in response to the requirements of national securities exchanges, such as the NYSE, AMEX or the Nasdaq Stock Market, on which their securities are listed. Among the corporate governance measures that are required under the rules of national securities exchanges and Nasdaq are those that address board of directors’ independence, audit committee oversight, and the adoption of a code of ethics.

We have not yet adopted any of these other corporate governance measures and, since our securities are not yet listed on a national securities exchange or Nasdaq, we are not required to do so. We have not adopted corporate governance measures such as an audit or other independent committees of our board of directors as we presently have only four directors. If we expand our board membership in future periods to include independent directors, we may seek to establish an audit and other committees of our board of directors. It is possible that if we were to adopt some or all of these corporate governance measures, stockholders would benefit from somewhat greater assurances that internal corporate decisions were being made by disinterested directors and that policies had been implemented to define responsible conduct. For example, in the absence of audit, nominating and compensation committees comprised of at least a majority of independent directors, decisions concerning matters such as compensation packages to our senior officers and recommendations for director nominees are made by a majority of directors who have an interest in the outcome of the matters being decided. Prospective investors should consider our current lack of corporate governance measures in making their investment decisions.

Risks Relating to Our Common Stock

There is a limited trading market for our shares of common stock on the OTC:BB.  You may not be able to sell your shares of common stock if you need money.

Our common stock is traded on the OTC:BB, an inter-dealer automated quotation system for equity securities.  There has been limited trading activity in our common stock, and when it has traded, the price has fluctuated widely.  We consider our common stock to be “thinly traded” and any last reported sale prices might not be a true market-based valuation of the common stock.  Stockholders may experience difficulty selling their shares if they choose to do so because of the illiquid market and limited public float for our common stock.

Our Shares of common stock are currently not eligible for electronic transfer through the DTC system, which materially limits the ability for broker/dealers to transact in our securities and limits our trading volume on the OTC:BB.

In March of 2012 we filed an application, through a broker-dealer and its clearing firm, to become eligible with the Depository Trust Company (“DTC”) to permit our shares of common stock to trade electronically. However, as of the date of this report we have not been able to become “DTC-eligible” and the DTC has placed a “chill” on our shares of common stock. Because our shares of common stock are not “DTC-eligible”, our shares cannot be electronically transferred between brokerage accounts. This means that the shares of common stock can only be traded manually between accounts, which takes days and is not a realistic option for companies relying on broker dealers for stock transactions. While DTC-eligibility is not a requirement to trade on the OTC:BB, electronic trading is necessary to process trades on the OTC:BB if a company’s stock is going to trade with significant volume. There are no assurances that our shares will ever become DTC-eligible or, if they do, how long it will take.

In addition, our common stock is unlikely to be followed by any market analysts, and there may be few institutions acting as market makers for our common stock. Either of these factors could adversely affect the liquidity and trading price of our common stock. Until our common stock is fully distributed and an orderly market develops in our common stock, if ever, the price at which it trades is likely to fluctuate significantly. Prices for our common stock will be determined in the marketplace and may be influenced by many factors, including the depth and liquidity of the market for shares of our common stock, developments affecting our business, including the impact of the factors referred to elsewhere in these Risk Factors, investor perception of us and general economic and market conditions. No assurances can be given that an orderly or liquid market will ever develop for the shares of our common stock.

Because our common stock is deemed a low-priced “Penny” stock, an investment in our common stock should be considered high risk and subject to marketability restrictions.
 
Since our common stock is a penny stock, as defined in Rule 3a51-1 under the Securities Exchange Act of 1934, as amended, it will be more difficult for investors to liquidate their investment even if and when a market develops for the common stock. Until the trading price of the common stock rises above $5.00 per share, if ever, trading in the common stock is subject to the penny stock rules of the Securities Exchange Act specified in rules 15g-1 through 15g-10. Those rules require broker-dealers, before effecting transactions in any penny stock, to:

·  
Deliver to the customer, and obtain a written receipt for, a disclosure document;
·  
Disclose certain price information about the stock;
·  
Disclose the amount of compensation received by the broker-dealer or any associated person of the broker-dealer;
·  
Send monthly statements to customers with market and price information about the penny stock; and
·  
In some circumstances, approve the purchaser’s account under certain standards and deliver written statements to the customer with information specified in the rules.

Consequently, the penny stock rules may restrict the ability or willingness of broker-dealers to sell the common stock and may affect the ability of holders to sell their common stock in the secondary market and the price at which such holders can sell any such securities. These additional procedures could also limit our ability to raise additional capital in the future.
 
 

FINRA sales practice requirements may limit a stockholder's ability to buy and sell our stock.
 
In addition to the “penny stock” rules described above, FINRA has adopted rules that require that in recommending an investment to a customer, a broker-dealer must have reasonable grounds for believing that the investment is suitable for that customer. Prior to recommending speculative low priced securities to their non-institutional customers, broker-dealers must make reasonable efforts to obtain information about the customer's financial status, tax status, investment objectives and other information. Under interpretations of these rules, the FINRA believes that there is a high probability that speculative low priced securities will not be suitable for at least some customers. The FINRA requirements make it more difficult for broker-dealers to recommend that their customers buy our common stock, which may limit your ability to buy and sell our stock and have an adverse effect on the market for our shares.
 
If we fail to remain current on our reporting requirements, we could be removed from the OTC:BB, which would limit the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the secondary market.

Companies trading on the OTC:BB, such as us, must be reporting issuers under Section 12 of the Securities Exchange Act of 1934, as amended, and must be current in their reports under Section 13, in order to maintain price quotation privileges on the OTC:BB. More specifically, FINRA has enacted Rule 6530, which determines eligibility of issuers quoted on the OTC:BB by requiring an issuer to be current in its filings with the Commission. Pursuant to Rule 6530(e), if we file our reports late with the Commission three times in a two-year period our securities would be removed from the OTC:BB for failure to timely file twice in a two-year period and we would be ineligible for quotation on the OTC:BB. As a result, the market liquidity for our securities could be severely adversely affected by limiting the ability of broker-dealers to sell our securities and the ability of stockholders to sell their securities in the secondary market.  Through the quarter ended December 31, 2011, we have not been late in any of our reports to the Commission subject to Rule 6530 compliance.

Transfers of our securities may be restricted by virtue of state securities “blue sky” laws that prohibit trading absent compliance with individual state laws.  These restrictions may make it difficult or impossible to sell shares in those states.

Transfers of our common stock may be restricted under the securities or securities regulation laws promulgated by various states and foreign jurisdictions, commonly referred to as “blue sky” laws.  Absent compliance with such individual state laws, our common stock may not be traded in such jurisdictions.  Because the securities registered hereunder have not been registered for resale under the blue sky laws of any state, the holders of such shares and persons who desire to purchase them should be aware that there may be significant state blue sky law restrictions upon the ability of investors to sell the securities and of purchasers to purchase the securities.  These restrictions may prohibit the secondary trading of our common stock.  Investors should consider the secondary market for our securities to be a limited one.

Our officers and directors collectively own a substantial portion of our outstanding common stock, and as long as they do, they may be able to control the outcome of stockholder voting.

Our officers and directors are collectively the beneficial owners of approximately 25% of the outstanding shares of our common stock.  As long as our officers and directors collectively own a significant percentage of our common stock, our other stockholders may generally be unable to affect or change the management or the direction of our company without the support of our officers and directors.  As a result, some investors may be unwilling to purchase our common stock.  If the demand for our common stock is reduced because our officers and directors have significant influence over our company, the price of our common stock could be materially depressed.  The officers and directors will be able to exert significant influence over the outcome of all corporate actions requiring stockholder approval, including the election of directors, amendments to our articles of incorporation and approval of significant corporate transactions.
 
We have the ability to issue additional shares of our common stock and shares of preferred stock without obtaining stockholder approval, which could cause your investment to be diluted.

Our Articles of incorporation authorizes the Board of Directors to issue up to 100,000,000 shares of common stock and up to 10,000,000 shares of preferred stock.  The power of the Board of Directors to issue shares of common stock, preferred stock or warrants or options to purchase shares of common stock or preferred stock is generally not subject to stockholder approval.  Accordingly, any additional issuance of our common stock, or preferred stock that may be convertible into common stock, may have the effect of diluting your investment.

We do not expect to pay dividends for the foreseeable future.

For the foreseeable future, it is anticipated that earnings, if any, that may be generated from our operations will be used to finance our operations and that cash dividends will not be paid to holders of common stock.

Future sales of our common stock may result in a decrease in the market price of our common stock, even if our business is doing well.

The market price of our common stock, when and if established, could drop due to sales of a large number of shares of our common stock in the market after the offering or the perception that such sales could occur. This could make it more difficult to raise funds through future offerings of common stock.
 
 
 
We have derivative securities currently outstanding. Exercise of these derivatives will cause dilution to existing and new stockholders.

As of February 1, 2012, we had warrants to purchase approximately 382,000 shares of common stock outstanding in addition to $382,000 in convertible promissory notes. The exercise of the warrants, and the conversion of the notes, will cause additional shares of common stock to be issued, resulting in dilution to investors and our existing stockholders.

Our articles of incorporation and bylaws contain provisions that could discourage an acquisition or change of control of us.
 
Our articles of incorporation authorize our board of directors to issue preferred stock and common stock without stockholder approval. If our board of directors elects to issue preferred stock, it could be more difficult for a third party to acquire control of us. In addition, provisions of the articles of incorporation and bylaws could also make it more difficult for a third party to acquire control of us.
 
There are limitations in connection with the availability of quotes and order information on the OTC:BB.

Trades and quotations on the OTC:BB involve a manual process and the market information for such securities cannot be guaranteed. In addition, quote information, or even firm quotes, may not be available.  The manual execution process may delay order processing and intervening price fluctuations may result in the failure of a limit order to execute or the execution of a market order at a significantly different price.  Execution of trades, execution reporting and the delivery of legal trade confirmation may be delayed significantly.  Consequently, one may not be able to sell shares of our common stock at the optimum trading prices.
 
There are delays in order communication on the OTC:BB.

Electronic processing of orders is not available for securities traded on the OTC:BB and high order volume and communication risks may prevent or delay the execution of one’s OTC:BB trading orders. This lack of automated order processing may affect the timeliness of order execution reporting and the availability of firm quotes for shares of our common stock. Heavy market volume may lead to a delay in the processing of OTC:BB security orders for shares of our common stock, due to the manual nature of the market. Consequently, one may not able to sell shares of our common stock at the optimum trading prices.

There is a risk of market fraud on the OTC:BB.

OTC:BB securities are frequent targets of fraud or market manipulation. Not only because of their generally low price, but also because the OTC:BB reporting requirements for these securities are less stringent than for listed or NASDAQ traded securities, and no exchange requirements are imposed. Dealers may dominate the market and set prices that are not based on competitive forces. Individuals or groups may create fraudulent markets and control the sudden, sharp increase of price and trading volume and the equally sudden collapse of the market price for shares of our common stock.

There is a limitation in connection with the editing and canceling of orders on the OTC:BB.

Orders for OTC:BB securities may be canceled or edited like orders for other securities. All requests to change or cancel an order must be submitted to, received and processed by the OTC:BB. Due to the manual order processing involved in handling OTC:BB trades, order processing and reporting may be delayed, and one may not be able to cancel or edit one’s order. Consequently, one may not able to sell their shares of our common stock at the optimum trading prices.

Increased dealer compensation could adversely affect our stock price.

The dealer’s spread (the difference between the bid and ask prices) may be large and may result in substantial losses to the seller  of shares of our common stock may incur an immediate “paper” loss due to the price spread.  Moreover, dealers trading on the OTC:BB may not have a bid price for shares of our common stock on the OTC:BB.  Due to the foregoing, demand for shares of our common stock on the OTC:BB may be decreased or eliminated.

Additional Risks and Uncertainties

If any of the risks that we face actually occur, irrespective of whether those risks are described in this section or elsewhere in this report, our business, financial condition and operating results could be materially adversely affected.
 
 
 
Item 1B. Unresolved Staff Comments.
 
Not applicable.
 
Item 2. Properties.
 
Effective February 1, 2012 we will relocate our principal executive office to 15230 N. 75th Street, Suite 1002, Scottsdale, AZ  85260. We have leased approximately 1,789 sq.ft. of general office space for a period of two years with rent of approximately $2,000 per month. Prior to the relocation, we maintained a 260 sq.ft. executive office at 11006 Parallel Parkway, Suite 200, Kansas City, Kansas  66109, with monthly rent of $250. Additionally, Mr. Cochennet, our CEO/President, occasionally will utilize his home to conduct business on our behalf.  Mr. Cochennet does not receive any remuneration for the use of his home. We do not believe that we will need to obtain additional office space at any time in the foreseeable future until our business plan is more fully implemented.

Item 3. 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 4. Mine Safety Disclosures.
 
None. 
 
 

PART II
 
Item 5. Market for Registrant’s Common Equity, Related Stockholder Matters and Issuer Purchases of Equity Securities.
 
(a) Market Information

Our common stock was approved for quotation on the Over-the-Counter Bulletin Board system under the symbol “GRDH” on August 8, 2011.

Since August of 2011 we have traded minimal volumes of common stock at prices ranging from $0.20 to $0.50 per share.

On March 27, 2012, the closing price of shares of common stock of the Company was $0.20.  However, the Company considers its common stock to be thinly traded and, as a result, any reported sales prices may not be a true market-based valuation of the common stock.

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 hope to obtain a response from DTC within the second quarter of 2012 and intend to work diligently to have our shares approved for electronic clearing in 2012. Along these same lines, our board of directors has decided to file a registration statement on Form S-1 to register 100% of the shares held by stockholders of record on April 1, 2012. 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.

(b) Holders of Common Stock

As of March 23, 2012, there were approximately 168 holders of record of our Common Stock and 27,592,318 shares outstanding.

(c) Dividends

In the future we intend to follow a policy of retaining earnings, if any, to finance the growth of the business and do not anticipate paying any cash dividends in the foreseeable future. The declaration and payment of future dividends on the Common Stock will be the sole discretion of board of directors and will depend on our profitability and financial condition, capital requirements, statutory and contractual restrictions, future prospects and other factors deemed relevant.
 
 
 
(d) Securities Authorized for Issuance under Equity Compensation Plans

None.

Recent Sales of Unregistered Securities

On October 13, 2011, we received $100,000 from our CEO, C. Stephen Cochennet, pursuant to a six-month convertible term note. The note is unsecured, bears interest at a rate of 10% per annum and is convertible into shares of our common stock at $0.35 per share. In addition, we issued Mr. Cochennet a three year warrant to purchase 100,000 shares of our common stock at $0.35 per share.

On January 12, 2012, we authorized the issuance of a total of 180,000 shares of common stock, valued at $24,000, to three of our newly appointed directors (60,000 shares each), Kathleen Hanrahan, Corey Lambrecht and Jim Nolton, for their services as directors until the next annual stockholders meeting.

On January 12, 2012, we accepted $282,000 in six-month convertible term notes from nine investors, including five of its current directors (Messrs. Cochennet, Miller, Edwards, Lambrecht and Nolton). The notes are unsecured, bear interest at a rate of 10% per annum and are convertible into shares of our common stock at $0.20 per share. In addition, we issued the investors a three year warrant to purchase an aggregate of 282,000 shares of our common stock at $0.25 per share.

Effective March 8, 2012, we entered into a settlement agreement with one of our prior project managers for the return and cancellation of 700,000 shares of common stock previously held by the project manager. These shares were not cancelled as of the date of this report.

On March 23, 2012, we authorized the issuance of 150,000 shares of common stock, valued at $30,000, to Paul Hughes for recruiting services performed under the terms of his employment agreement. These shares were not issued as of the date of this report.

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 year ended December 31, 2011.
 
Item 6. Selected Financial Data.
 
Not applicable.
 
Item 7. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
 
The following discussion should be read in conjunction with the financial statements section included elsewhere in this report.

During the quarter ended September 30, 2011, we terminated our relationship with our prior product engineers and have begun the process of engaging a new engineer(s) to complete the development and design of our product and begin the development process for Version 2 of the design. This change in staff is due to a series of delays we believe were avoidable and project management that was inconsistent with best practices. We completed the transition to new project management leadership, already identified, in late 2011.

On August 5, 2011, our common stock was cleared for trading on the Over-the-Counter Bulletin Board under the symbol “GRDH”.

We completed the initial design 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 have elected to incorporate a significant number of upgrades, enhancements and make modifications to the initial design to improve reliability, durability, and efficiencies. We will be rolling out the new design in the first half of 2012 with projected product to market in the fourth quarter of 2012.
 
 

In March of 2012 we announced a new upgraded model call the Pro V2. This model was developed in response to professional security guards seeking a robust design as well as highly functional tool for their duty belt. The Pro V2 will also be available to security conscious industries where staff safety is an ongoing priority.

In addition, 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 hope to obtain a response from DTC within the second quarter of 2012 and intend to work diligently to have our shares approved for electronic clearing in 2012. Along these same lines, our board of directors has decided to file a registration statement on Form S-1 to register 100% of the shares held by stockholders of record on April 1, 2012. 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.

 Results of Operations for Years Ended December 31, 2011 and 2010 

We generated net losses of $583,943 for the year ended December 31, 2010, with further losses of $492,680 for the year ended December 31, 2011. This equated to a total loss of $1,306,328 since our inception on June 8, 2009 through December 31, 2011. Our losses were generated primarily from general and administrative expenses; however, did include research and development costs related to our product of $35,793 and $38,832 for the year ended December 31, 2011 and year ended December 31, 2010, 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 our inception in June of 2009 through December 31, 2011, we raised approximately $1,065,500 through the sale of our common stock and an additional $317,000 through the issuance of six month convertible term notes.  As of December 31, 2011, our cash balance was $195,894. 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 and third party financings. We anticipate potential sales-generated income in the second half of 2012, but may not generate sufficient amounts of revenues to meet our working capital requirements. Consequently, we intend to make appropriate plans to insure sources of additional capital in the future to fund growth and expansion through additional equity or debt financing or credit facilities.
 
Since inception, we have financed cash flow requirements through the issuance of common stock for cash and services. 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 R&D costs included in other general and administrative expenses of $35,793 and $38,832 for the years ended December 31, 2011 and 2010, respectively. We anticipate performing up to $500,000 on additional significant product research and development under our plan of operation for the development of our second generation device.

Significant changes in the number of employees.

We are a development stage company and currently have only one full-time employee, Paul Hughes, Vice President of operations 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 and Paul Hughes with the assistance of our board of directors. We look to Mr. Cochennet 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 may hire marketing employees based on the projected size of the market and the compensation necessary to retain qualified sales employees. 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.

Expected purchase or sale of plant and significant equipment.

We do not anticipate the purchase or sale of any plant or significant equipment; as such items are not required by us at this time.
 
 
 
Liquidity and Capital Resources

Since inception, we have financed our cash flow requirements through issuance of common stock, receipt of funds from convertible term notes and through December 31, 2011 had raised approximately $1,065,500 from two private placement offerings and an additional $317,000 from convertible notes. Our cash balance as of December 31, 2011 was $195,894 and we anticipate this amount to satisfy our cash requirements only through March 31, 2011. Consequently, we will be 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 to the extent necessary to augment our working capital. We have also evaluated sources of inventory financing that will be implemented once we have orders for our product.

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.

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.

Going Concern
 
The financial statements included in this filing have been prepared in conformity with generally accepted accounting principles that contemplate the continuance of G8 as a going concern. We may not have a sufficient amount of cash required to pay all of the costs associated with operating and marketing of our product. Management intends to use borrowings and security sales to mitigate the effects of cash flow deficits, however no assurance can be given that debt or equity financing, if and when required, will be available. The financial statements do not include any adjustments relating to the recoverability and classification of recorded assets and classification of liabilities that might be necessary should we be unable to continue existence.

Recent Accounting Developments

In June 2009, the FASB issued ASC 105 Accounting Standards Codification TM and the Hierarchy of Generally Accepted Accounting Principles. The FASB Accounting Standards Codification TM (the “Codification”) has become the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in accordance with Generally Accepted Accounting Principles (“GAAP”). All existing accounting standard documents are superseded by the Codification and any accounting literature not included in the Codification will not be authoritative. Rules and interpretive releases of the SEC issued under the authority of federal securities laws, however, will continue to be the source of authoritative generally accepted accounting principles for SEC registrants. Effective September 30, 2009, all references made to GAAP in our consolidated financial statements will include references to the new Codification. The Codification does not change or alter existing GAAP and, therefore, will not have an impact on our financial position, results of operations or cash flows.
 
In May 2011, the Financial Accounting Standards Board (FASB), issued Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS under ASU 2011-04, or ASU 2011-04. ASU 2011-04 amends ASC 820, Fair Value Measurements (ASC 820), providing a consistent definition and measurement of fair value, as well as similar disclosure requirements between U.S. GAAP and International Financial Reporting Standards. ASU 2011-04 changes certain fair value measurement principles, clarifies the application of existing fair value measurement and expands the ASC 820 disclosure requirements, particularly for Level 3 fair value measurements. ASU 2011-04 will be effective for the Company's third quarter of fiscal year 2012. The amendments in ASU 2011-04 are to be applied prospectively. The adoption of ASU 2011-04 is not expected to have a material effect on the Company's condensed financial statements, but may require certain additional disclosures.
 
In June 2011, the FASB issued Presentation of Comprehensive Income under ASU 2011-05 or ASU 2011-05. ASU 2011-05 requires the presentation of comprehensive income in either (1) a continuous statement of comprehensive income or (2) two separate but consecutive statements. ASU 2011-05 will be effective for the Company's first quarter of fiscal year 2013. The adoption of ASU 2011-05 may require a change in the presentation of the Company's comprehensive income from the statement of capital shares and equities to the presentation of comprehensive income in either (1) a continuous statement of comprehensive income or (2) two separate but consecutive statements. The amendments in ASU 2011-05 are to be applied retrospectively. The adoption of ASU 2011-05 is not expected to have a material effect on the Company's condensed financial statements.
 
In September 2011, the FASB issued Testing Goodwill for Impairment under ASU 2011-08, which is intended to reduce the cost and complexity of the annual goodwill impairment test by providing entities with the option of performing a qualitative assessment to determine whether impairment testing is necessary. The revised standard will be effective for annual and interim goodwill impairment tests performed beginning in the first quarter of fiscal year 2012, with early adoption permitted under certain circumstances. The Company is currently evaluating options related to early adoption.
 
 
 
Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the SEC did not or are not believed by management to have a material impact on the Company's present or future financial statements
 
International Financial Reporting Standards:
 
In November 2008, the Securities and Exchange Commission (“SEC”) issued for comment a proposed roadmap regarding potential use of financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. Under the proposed roadmap, the Company would be required to prepare financial statements in accordance with IFRS in fiscal year 2014, including comparative information also prepared under IFRS for fiscal 2013 and 2012. The Company is currently assessing the potential impact of IFRS on its financial statements and will continue to follow the proposed roadmap for future developments.
 
Item 7A. Quantitative and Qualitative Disclosures about Market Risk.
 
Not applicable.
 
Item 8. Financial Statements and Supplementary Data.
 
Management Responsibility for Financial Information

We are responsible for the preparation, integrity and fair presentation of our financial statements and the other information that appears in this annual report on Form 10-K. The financial statements have been prepared in accordance with accounting principles generally accepted in the United States and include estimates based on our best judgment.

We maintain a system of internal controls and procedures designed to provide reasonable assurance, at an appropriate cost-benefit relationship, that our financial information is accurate and reliable, our assets are safeguarded and our transactions are executed in accordance with established procedures.

Weaver Martin & Samyn, LLC, an independent registered public accounting firm, is retained to audit our consolidated financial statements. Its accompanying report is based on audits conducted in accordance with the standards of the Public Company Accounting Oversight Board (United States).

Our entire board of directors meets with our management and the independent registered public accounting firm to ensure that each is properly fulfilling its responsibilities. The board of directors oversees our systems of internal control, accounting practices, financial reporting and audits to ensure their quality, integrity and objectivity are sufficient to protect shareholders’ investments.
 
 

Index to Financial Statements
 
 
 
 
To the Board of Directors and Stockholders
Guardian 8 Holdings
Scottsdale, Arizona

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

We have audited the balance sheet of Guardian 8 Holdings as of December 31, 2011 and 2010 and the related statements of operations, stockholders’ equity, and cash flows for the year ended December 31, 2011 and the period from June 8, 2009 (inception) to December 31, 2011.  Guardian 8 Holdings’ management is responsible for these financial statements.  Our responsibility is to express an opinion on these financial statements based on our audits.

We conducted our audit in accordance with the standards of the Public Company Accounting Oversight Board (United States).  Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free of material misstatement.  The Company is not required to have, nor were we engaged to perform, an audit of its internal control over financial reporting.  Our audit included consideration of internal control over financial reporting as a basis for designing audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the Company’s internal control over financial reporting.  Accordingly, we express no such opinion.  Our audit of the financial statements includes examining, on a test basis, evidence supporting the amounts and disclosures in the financial statements, assessing the accounting principles used and significant estimates made by management, and evaluating the overall financial statement presentation.  We believe that our audit provides a reasonable basis for our opinion.

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Guardian 8 Holdings as of December 31, 2011 and 2010 and the results of its operations, stockholders’ equity, and cash flows for the year ended December 31, 2011 and the period from June 8, 2009 (inception) to December 31, 2011 in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern. As discussed in Note 2 to the financial statements, the Company has suffered losses from operations and has experienced no revenues to date.  These factors raise substantial doubt about the Company’s ability to continue as a going concern.  Management’s plans in regard to these matters are also described in Note 2.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.



 /s/Weaver Martin & Samyn, LLC                                                                
Weaver Martin & Samyn, LLC
Kansas City, Missouri
March 28, 2012
 
 
 
Guardian 8 Holdings
(A Development Stage Company)
Balance Sheet

   
December 31,
 
   
2011
   
2010
 
             
Assets:
           
Current assets:
           
Cash
 
$
195,894
   
$
290,829
 
Prepaid expenses
   
64,141
     
10,000
 
     Total current assets
   
260,035
     
300,829
 
                 
Website, net of accumulated amortization of $2,604 and $0 as of
December 31,2011 and 2010
   
20,830
     
-
 
                 
Patent, net of accumulation amortization of $1,333 and $817 as of
December 31, 2011 and 2010
   
9,052
     
9,568
 
                 
          Total assets
 
$
289,917
   
$
310,397
 
                 
Liabilities and Stockholders’ Equity:
               
Current liabilities:
               
Accounts payable
 
$
34,840
   
$
37,410
 
Accrued interest
   
2,810
     
-
 
Notes payable, related party – net of discount of $31,325 and $0 as of
December 31, 2011 and 2010
   
275,675
     
-
 
     Total current liabilities
   
313,325
     
37,410
 
                 
Commitments and contingencies:
               
Shareholders’ equity:
               
Preferred stock, $0.001 par value, 10,000,000 shares
  Authorized; none issued and outstanding
   
-
     
-
 
Common stock, $0.001 par value, 100,000,000 shares
  authorized; issued and outstanding of 27,412,318 at December
  31, 2011 and 26,802,318 at December 31, 2010
   
27,412
     
26,802
 
Paid in Capital
   
1,560,123
     
1,364,448
 
Retained earnings
   
(1,610,943
)
   
(1,118,263
)
     Total shareholder’s equity
   
(23,408
)
   
272,987
 
                 
          Total liabilities and shareholders’ equity
 
$
289,917
   
$
310,397
 
 
See notes to financial statements
 
 
 
Guardian 8 Holdings
(A Development Stage Company)
Statements of Operations
 
               
For the period
 
   
For the Years Ended
   
From June 8, 2009
 
       
(inception) to
 
   
December 31, 2011
   
December 31, 2010
   
December 31, 2011
 
                   
Revenue
 
$
-
   
$
-
   
$
-
 
                         
Cost of sales
   
-
     
-
     
-
 
                         
Gross profit
   
-
     
-
     
-
 
                         
Amortization
   
3,120
     
516
     
3,937
 
General and administrative expenses
   
474,290
     
583,427
     
1,287,121
 
     
477,410
     
583,943
     
1,291,058
 
                         
Loss from operations
   
(477,410
)
   
(583,943
)
   
(1,291,058
)
                         
Other income (expense):
                       
   Interest expense
   
(15,270
)
   
-
     
(15,270
)
   Interest income
   
-
     
-
     
-
 
                         
     
(15,270
)
   
-
     
(15,270
)
                         
Loss before income tax
   
(492,680
)
   
(583,943
)
   
(1,306,328
)
                         
Provision for income tax expense
   
-
     
-
     
-
 
                         
Net (loss)
 
$
(492,680
)
 
$
(583,943
)
 
$
(1,306,328
)
                         
Net loss per share – basic and diluted
   
(0.02
)
   
(0.02
)
       
                         
Weighted average shares outstanding
   
27,029,330
     
25,137,557
         

See notes to financial statements
 
 
 
Guardian 8 Holdings
(A Development Stage Company)
Statement of Shareholder’s Equity
For the period of June 8, 2009 (inception) to December 31, 2011

   
Common Stock
                   
   
Shares
   
Amount
   
Paid in Capital
   
Retained Earnings
   
Total Equity
 
                               
Balance, June 8, 2009 (inception)
   
-
   
$
-
   
$
-
   
$
-
   
$
-
 
                                         
Acquisition of patent
   
15,000,000
     
15,000
     
-
     
(304,615
)
   
(289,615
)
Stock sold @ $0.025
   
4,000,000
     
4,000
     
96,000
     
-
     
100,000
 
Stock issued for services @ $0.025
   
2,150,000
     
2,150
     
51,600
     
-
     
53,750
 
Stock issued for services @ $0.25
   
100,000
     
100
     
24,900
     
-
     
25,000
 
                                         
Net loss for the year
   
-
     
-
     
-
     
(229,705
)
   
(229,705
)
                                         
Balance, December 31, 2009
   
21,250,000
   
$
21,250
   
$
172,500
   
$
(534,320
)
 
$
(340,570
)
                                         
Stock issued for services @ $0.25
   
210,000
     
210
     
52,290
     
-
     
52,500
 
Stock issued for debt @ $0.25
   
463,000
     
463
     
115,287
     
-
     
115,750
 
Stock sold for @ $0.25
   
3,862,000
     
3,862
     
961,638
     
-
     
965,500
 
Stock issued to directors @ $0.25
   
255,000
     
255
     
63,495
     
-
     
63,750
 
Stock cancelled
   
(500,000
)
   
(500
)
   
500
     
-
     
-
 
Merger shares
   
1,262,318
     
1,262
     
(1,262
)
   
-
     
-
 
                                         
Net loss for the year
   
-
     
-
     
-
     
(583,943
)
   
(583,943
)
                                         
Balance, December 31, 2010
   
26,802,318
   
$
26,802
   
$
1,364,448
   
$
(1,118,263
)
 
$
272,987
 
                                         
Stock issued for board compensation @ $0.25
   
360,000
     
360
     
89,640
     
-
     
90,000
 
Stock issued for services @ $0.25
   
250,000
     
250
     
62,250
     
-
     
62,500
 
Discounts on notes payable
   
-
     
-
     
43,785
     
-
     
43,785
 
                                         
Net loss for the year
   
-
     
-
     
-
     
(492,680
)
   
(492,680
)
                                         
Balance, December 31, 2010
   
27,412,318
   
$
27,412
   
$
1,560,123
   
$
(1,610,943
)
 
$
(23,408
)

See notes to financial statements
 
 
 
Guardian 8 Holdings
(A Development Stage Company)
Statement of Cash Flows
 
               
For the period from
 
   
For the Years
ended
   
June 8, 2009 (inception) to
 
   
December 31, 2011
   
December 31, 2010
   
December 31, 2011
 
Operating activities:
                 
Net (loss)
 
$
(492,680
)
 
$
(583,943
)
 
$
(1,306,328
)
Adjustments to reconcile net loss to cash flows
from operating activities:
                       
   Stock issued for services
   
62,500
     
52,500
     
193,750
 
   Stock issued for compensation
   
90,000
     
63,750
     
153,750
 
   Amortization of patent and website
   
3,120
     
516
     
3,937
 
   Amortization of discounts on note payable
   
12,460
     
-
     
12,460
 
Change in assets and liabilities-
                       
   Prepaid expenses
   
(54,141
)
   
(10,000
   
(64,141
)
   Accounts payable
   
(2,570
)
   
(38,259
)
   
34,840
 
   Accrued interest
   
2,810
     
-
     
2,810
 
   Due to related party
   
-
     
(159,250
)
   
(184,250
)
   Cash provided by operating activities
   
(378,501
)
   
(674,686
)
   
(1,153,172
)
                         
Investing activities:
                       
     Purchase of website
   
(23,433
)
   
-
     
(23,433
)
Cash used in investing activities
   
(23,433
)
           
(23,433
)
                         
Financing activities:
                       
Proceeds from common stock sales
   
-
     
965,500
     
1,065,500
 
Proceeds from notes payable, related party
   
307,000
     
10,000
     
317,000
 
Payments on notes payable, related party
   
-
     
(10,000
)
   
(10,000
)
Cash used in financing activities
   
307,000
     
965,500
     
1,372,500
 
                         
Increase in cash
   
(94,935
)
   
290,814
     
195,894
 
Cash, beginning of year
   
290,829
     
15
     
-
 
Cash, end of year
 
$
195,894
   
$
290,829
   
$
195,894
 
                         
Supplemental cash flow information:
                       
   Interest paid
 
$
12,460
   
$
-
     
12,460
 
   Income taxes paid
 
$
-
   
$
-
     
-
 
                         
   Stock issued for services
 
$
62,500
   
$
52,500
   
$
193,750
 
   Shares issued for services
   
250,000
     
210,000
     
2,710,000
 
                         
   Stock issued for compensation
 
$
90,000
   
$
63,750
   
$
153,750
 
   Shares issued for compensation
   
360,000
     
255,000
     
615,000
 
                         
   Stock issued for payment on due to related party
 
$
-
   
$
115,750
   
$
115,750
 
   Shares issued for payment on due to related party
   
-
     
463,000
     
463,000
 
 
See notes to financial statements
 
 
 
Guardian 8 Holdings
(A Development Stage Company)
Notes to 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, we changed our name to Guardian 8 Corporation.  Our principle offices are located in Kansas City, Kansas.  We are a development stage company in the process of developing a personal security device that incorporates countermeasures to help defend against personal attack.
 
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 the Company being the surviving corporation.  Post-merger, Global Risk changed its name to Guardian 8 Holdings.
 
As of December 31, 2011, we have had no revenues and have had only limited operations; therefore, we are classified as a development stage company.
 
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. There were no cash equivalents as of December 31, 2011 and 2010.
 
Revenue recognition

It is the Company’s policy that revenues will be recognized in accordance with ASC subtopic 605-10, “Revenue Recognition”.  The company will therefore recognize 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 will be recorded as deferred revenue.   There were no revenues for the years ended December 31, 2011 or 2010.
 
Warranty
 
We intend to offer a one year limited warranty on our device.  After the warranty expires, if the device fails to operate properly for any reason, we intend to replace the device either at a discounted price depending on when the device was placed in service or for a flat fee.  These fees are intended to cover the handling and repair costs and include a profit.  Extended warranties which provide additional coverage beyond the limited warranty, ranging from one to four years, are anticipated to be offered for specified fees.
 
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 $35,793 and $38,832 for the years ended December 31, 2011 and 2010, respectively.
 
Use of estimates

The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenue and expenses during the reporting period.  Actual results could differ from those estimates.
 
Fair value of financial instruments
 
Fair value estimates discussed herein are based upon certain market assumptions and pertinent information available to management as of December 31, 2011 and 2010. 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 8 for further details.
 
 
 
Impairment of long-lived assets
 
The Company reviews its long-lived assets periodically to determine potential impairment by comparing the carrying value of the long-lived assets with the estimated future cash flows expected to result from the use of the assets, including cash flows from disposition. Should the sum of the expected future cash flows be less than the carrying value, the Company would recognize an impairment loss. An impairment loss would be measured by comparing the amount by which the carrying value exceeds the fair value of the long-lived assets and intangibles.  The Company recognized no impairment losses in the years ended December 31, 2011 and 2010.
 
Loss per share
 
Loss per share is provided in accordance with ASC subtopic 260-10 (formerly Statement of Financial Accounting Standards No. 128).  Basic loss per share is computed by dividing the earnings available to shareholders by the weighted average number of shares outstanding during the period.  There were no securities or stock equivalents considered to be dilutive in the computation of loss per share for the years ended December 31, 2011and 2010.
 
Dividends

We do not anticipate the payment of cash dividends on our common stock in the foreseeable future.

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.  See Note 9 for further details.
 
Year end

The Company has adopted December 31 as its year end.

Recent pronouncements

In June 2009, the FASB issued ASC 105 Accounting Standards Codification TM and the Hierarchy of Generally Accepted Accounting Principles. The FASB Accounting Standards Codification TM (the “Codification”) has become the source of authoritative accounting principles recognized by the FASB to be applied by nongovernmental entities in the preparation of financial statements in accordance with Generally Accepted Accounting Principles (“GAAP”). All existing accounting standard documents are superseded by the Codification and any accounting literature not included in the Codification will not be authoritative. Rules and interpretive releases of the SEC issued under the authority of federal securities laws, however, will continue to be the source of authoritative generally accepted accounting principles for SEC registrants. Effective September 30, 2009, all references made to GAAP in our consolidated financial statements will include references to the new Codification. The Codification does not change or alter existing GAAP and, therefore, will not have an impact on our financial position, results of operations or cash flows.
 
In May 2011, the Financial Accounting Standards Board (FASB), issued Amendments to Achieve Common Fair Value Measurement and Disclosure Requirements in U.S. GAAP and IFRS under ASU 2011-04, or ASU 2011-04. ASU 2011-04 amends ASC 820, Fair Value Measurements (ASC 820), providing a consistent definition and measurement of fair value, as well as similar disclosure requirements between U.S. GAAP and International Financial Reporting Standards. ASU 2011-04 changes certain fair value measurement principles, clarifies the application of existing fair value measurement and expands the ASC 820 disclosure requirements, particularly for Level 3 fair value measurements. ASU 2011-04 will be effective for the Company’s third quarter of fiscal year 2012. The amendments in ASU 2011-04 are to be applied prospectively. The adoption of ASU 2011-04 is not expected to have a material effect on the Company’s condensed financial statements, but may require certain additional disclosures.
 
In June 2011, the FASB issued Presentation of Comprehensive Income under ASU 2011-05 or ASU 2011-05. ASU 2011-05 requires the presentation of comprehensive income in either (1) a continuous statement of comprehensive income or (2) two separate but consecutive statements. ASU 2011-05 will be effective for the Company’s first quarter of fiscal year 2013. The adoption of ASU 2011-05 may require a change in the presentation of the Company’s comprehensive income from the statement of capital shares and equities to the presentation of comprehensive income in either (1) a continuous statement of comprehensive income or (2) two separate but consecutive statements. The amendments in ASU 2011-05 are to be applied retrospectively. The adoption of ASU 2011-05 is not expected to have a material effect on the Company’s condensed financial statements.
 
In September 2011, the FASB issued Testing Goodwill for Impairment under ASU 2011-08, which is intended to reduce the cost and complexity of the annual goodwill impairment test by providing entities with the option of performing a qualitative assessment to determine whether impairment testing is necessary. The revised standard will be effective for annual and interim goodwill impairment tests performed beginning in the first quarter of fiscal year 2012, with early adoption permitted under certain circumstances. The Company is currently evaluating options related to early adoption.
 
 
 
Other recent accounting pronouncements issued by the FASB (including its Emerging Issues Task Force), the AICPA, and the SEC did not or are not believed by management to have a material impact on the Company’s present or future financial statements
 
International Financial Reporting Standards:
 
In November 2008, the Securities and Exchange Commission (“SEC”) issued for comment a proposed roadmap regarding potential use of financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. Under the proposed roadmap, the Company would be required to prepare financial statements in accordance with IFRS in fiscal year 2014, including comparative information also prepared under IFRS for fiscal 2013 and 2012. The Company is currently assessing the potential impact of IFRS on its financial statements and will continue to follow the proposed roadmap for future developments.
 
Note 2 – Going Concern

The accompanying financial statements have been prepared in conformity with generally accepted accounting principles which contemplate continuation of the company as a going concern.  We have an accumulated deficit of $1,610,943 as of December 31, 2011. Our current liabilities exceeded our current assets by $53,290 as of December 31, 2011. In view of the matters described above, recoverability of a major portion of the recorded asset amounts shown in the accompanying balance sheet is dependent upon our continued operations, which in turn is dependent upon our ability to raise additional capital and obtain financing. The financial statements do not include any adjustments relating to the recoverability and classification of recorded asset amounts or amounts and classification of liabilities that might be necessary should we be unable to continue as a going concern.
 
Note 3 – Notes payable

In January and February of 2010, we received short-term, non-interest bearing loans from four of our shareholders.  These loans totaled $10,000.  The loans were repaid in full in April of 2010.  No interest expense has been imputed or paid relating to these loans.
 
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 is not secured and is convertible into common stock at $0.35 per share which 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 will be 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.
 
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 note is not secured and is convertible into common stock at $0.20 per share.  The market value on the day the note was executed was $0.105.  With the note, 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 will be 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.
 
Total interest expense and amortization of discount on notes payable was $15,271 for the year ended December 31, 2011.
 
Note 4 – Patent
 
In June of 2009, concurrent with our incorporation, one of our officers and directors, agreed to transfer all rights, title and interest in the patent he held for a personal security device in exchange for 19,000,000 shares of our 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.  Before the end of 2009, he returned 4,000,000 shares for cancellation in exchange for no consideration.  The patent has been valued at $10,365 which is 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.  Amortization costs were $516 for each of the years ended December 31, 2011 and 2010.
 
The $300,000 due to related party was paid (i) $25,000 in June of 2009, (ii) $131,500 in May of 2010, (iii) $115,750 was converted to 463,000 shares at $.25 per share in May of 2010, and (iiii) $27,750 in August of 2010 leaving no balance due as of December 31, 2010.  The issuance of stock for the debt was at the same price being offered in the private placement memo during May of 2010.
 
 
 
No interest expense has been imputed or paid relating to these amounts.
 
Note 5– Stockholder’s equity

The Company is authorized to issue up to 100,000,000 shares of common stock and 10,000,000 shares of preferred stock.  Both classes of stock have a par value of $0.001.

In June of 2009, concurrent with our incorporation, one of our officers and directors, agreed to transfer all rights, title and interest in the patent he held in the personal security device in exchange for 19,000,000 shares of our common stock and $300,000.  Before the end of 2009, he returned 4,000,000 shares for cancellation in exchange for no consideration.  During the year ended December 31, 2010, 500,000 more shares were returned for cancellation in exchange for no consideration.

In June of 2009, 4,000,000 shares were sold to four investors for a total purchase price of $100,000 or $0.025 per share.

In June of 2009, 2,000,000 shares were issued to an officer of the Company in exchange for his services as President and General Manager.  Those shares were valued at $0.025 per share and $50,000 was expensed as compensation.

In June of 2009, 150,000 shares were issued to an attorney in exchange for legal services.  Those shares were valued at $0.025 per share and $3,750 was expensed as legal expense.

In December of 2009, 100,000 shares were issued to a consultant in exchange for business development consulting services.  Those shares were valued at $0.25 per share and $25,000 was expensed as consulting expense.

As of December 31, 2009, there were 21,250,000 common shares outstanding and no preferred shares outstanding.

During the year ended December 31, 2010, 210,000 shares were issued for services.  Those shares were valued at $0.25 and $52,500 was expensed.

During the year ended December 31, 2010, $115,750 due to a related party was converted at $0.25 per share into 463,000 shares (See Note 4).

During the year ended December 31, 2010 we offered two Private Placement Memorandums for the sale of common stock at $0.25 per share.  In accordance with the first offering, we have sold 2,462,000 shares of common stock for $615,500.  In accordance with the second offering, we have sold 1,400,000 shares of common stock for $350,000.

During the year ended December 31, 2010, 255,000 shares were issued to the directors for compensation.  Those shares were valued at $0.25 and $63,750 was expensed.

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 the Company being the surviving corporation.  Post-merger, Global Risk changed its name to Guardian 8 Holdings.

As of December 31, 2010, there were 26,802,318 common shares outstanding and no preferred shares outstanding.

During the year ended December 31, 2011, the Company issued a total of 610,000 shares of common stock.  All were valued at $0.25.  360,000 shares were issued to the board of directors for compensation valued at $90,000; 140,000 shares were issued for legal services valued at $35,000; and 110,000 shares were issued for consulting services valued at $27,500.

As of December 31, 2011, there were 27,412,318 common shares outstanding and no preferred shares outstanding.
 
 
 
Note 6 – Options and Warrants

Options
 
As of December 31, 2011 and 2010, there are no outstanding options.
 
Warrants
 
During October and December of 2011, the Company issued 307,000 warrants to purchase common stock.  All have a term of three years.  100,000 warrants have a strike price of $0.35 and 207,000 have a strike price of $.25.  See Note 3 for further details.
 
A summary of stock options and warrants as of December 31, 2011 and 2010 is as follows:
 
   
Options
   
Weighted Average Exercise Price
   
Warrants
   
Weighted Average Exercise Price
 
Outstanding as of  01/01/10:
    -     $ -       -     $ -  
    Granted
    -       -       -       -  
    Cancelled
    -       -       -       -  
    Exercised
    -       -       -       -  
Outstanding as of 12/31/10:
    -     $ -       -     $ -  
    Granted
    -       -       307,000       0.28  
    Cancelled
    -       -       -       -  
    Expired
    -       -       -       -  
Outstanding as of 12/31/11:
    -     $ -       307,000     $ 0.28  
Vested as of 12/31/11:
    -     $ -       307,000     $ 0.28  

Note 7 – Lease Commitments and Related Party Transactions
 
During the period ended December 31, 2009 and the three months ended March 31, 2010, the Company leased its operating headquarters in Overland Park, Kansas on a month-to-month basis for $1,332 per month.  During the six months ended September 30, 2010, we renegotiated our lease and maintained the same headquarters on a month-to-month basis for $500 per month.  During the three months ended December 31, 2010 we renegotiated our lease again and maintained the same headquarters on a month-to-month basis for $250 per month.  From January of 2011 through October of 2011, we continued to maintain the same headquarters on a month-to-month basis for $250 per month.
 
During the period from November of 2011 to January of 2012, we moved our main headquarters to Kansas City, Kansas and leased space on a month-to-month basis for $325 per month.
 
In December of 2011, we leased space in Scottsdale, Arizona for our main headquarters.  The lease runs from January of 2012 to March of 2014 at a rate of $2,013 per month.  Future minimum payments under this lease are $24,195 for 2012, $24,152 for 2013, and $6,047 for 2014.
 
Rent expense was $3,536 and $7,745 for the years ended December 31, 2011 and 2010, respectively.
 
During the period ended December 31, 2009 and part of the year ended December 31, 2010, a former officer and director was paid $5,000 per month for his marketing services.  This agreement stopped in July of 2010.  The total paid for these services was $35,000 during the period ended December 31, 2009 and $33,500 during the year ended December 31, 2010.  During the year ended December 31, 2011, a former officer was paid $12,500 for consulting services.
 
During the years ended December 31, 2011 and 2010, a relative of a former officer and director was paid $24,000 and $27,650, respectively, for secretarial services.
 
During the year ended December 31, 2010, the Company paid $25,000 to an entity owned by a director for consulting services.
 
During the year ended December 31, 2010, the Company issued 80,000 shares, valued at $20,000, to a director for marketing and public relations services.
 
 
 
During the year ended December 31, 2011, the Company issued 140,000 shares, valued at $35,000, to a director for legal services.
 
During the year ended December 31, 2011, the Company issued convertible notes payable and warrants to related parties in exchange for cash.  See note 3 for further details.
 
Note 8 – Fair Value Measurements

The Company adopted ASC Topic 820-10 to measure the fair value of certain of its financial assets 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 December 31, 2011 and 2010; therefore, a reconciliation of the changes during the year is not shown.
 
The following table presents a reconciliation of all assets and liabilities measured at fair value on a recurring basis as of December 31, 2011:
 
   
Level 1
   
Level 2
   
Level 3
   
Fair Value
 
Cash
  $ 195,894     $ -     $ -     $ 195,894  
Accounts payable
    -       34,839       -       34,839  
Accrued interest
    -       2,810       -       2,810  
Note Payable
    -       275,675       -       275,675  

The following table presents a reconciliation of all assets and liabilities measured at fair value on a recurring basis as of December 31, 2010:
 
   
Level 1
   
Level 2
   
Level 3
   
Fair Value
 
Cash
  $ 290,829     $ -     $ -     $ 290,829  
Accounts payable
    -       37,410       -       37,410  
 
Note 9 – 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 years ended December 31, 2011 and 2010 resulted in losses, thus no income taxes have been reflected in the accompanying statements of operations.
 
The provision for income taxes for the years ended December 31, 2011 and 2010 consists of the following:
 
      12-31-2011       12-31-2010  
Current tax
  $ -     $ -  
Benefits of deferred tax assets
    115,074       198,500  
Change in valuation allowance
    (115,074 )     (198,500 )
Provision for income tax expense
  $ -     $ -  

As of December 31, 2011 and 2010, the Company has net operating loss carry-forwards which 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.

Below is a summary of deferred tax asset calculations as of December 31, 2010 based on a 34% income tax rate. Currently there is no reasonable assurance that the Company will be able to take advantage of a deferred tax asset. Thus, an offsetting allowance has been established for the deferred asset.
 
   
Deferred tax asset
   
34% tax rate
 
Net operating loss
  $ 699,380     $ 237,789  
Valuation allowance
            (237,789 )
Deferred tax asset
          $ -  

Below is a summary of deferred tax asset calculations as of December 31, 2011 based on a 34% income tax rate. Currently there is no reasonable assurance that the Company will be able to take advantage of a deferred tax asset. Thus, an offsetting allowance has been established for the deferred asset.
 
   
Deferred tax asset
   
34% tax rate
 
Net operating loss
  $ 1,037,832     $ 352,863  
Valuation allowance
            (352,863 )
Deferred tax asset
          $ -  

For financial reporting purposes, the Company has incurred a loss since inception to December 31, 2011.  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, 2010 and 2011. 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.
 
 
Note 10 – Subsequent events

The Company has evaluated all subsequent events through the date these financial statements were issued and determined that there are no subsequent events to record and the following subsequent events to disclose:

On January 12, 2012, the Company authorized the issuance of a total of 180,000 shares of common stock, valued at $24,000, to three of its newly appointed directors (60,000 shares each), Kathleen Hanrahan, Corey Lambrecht and Jim Nolton, for their services as directors until the next annual stockholders meeting.

On January 12, 2012, the Company accepted $282,000 in six-month convertible term notes from nine investors, including five of its current directors (Messrs. Cochennet, Miller, Edwards, Lambrecht and Nolton). The notes are unsecured, bear interest at a rate of 10% per annum and are convertible into shares of the Company’s common stock at $0.20 per share. In addition, the Company issued the investors a three year warrant to purchase an aggregate of 282,000 shares of its common stock at $0.25 per share.

Effective March 8, 2012, the Company entered into a settlement agreement with one of its prior project managers for the return and cancellation of 700,000 shares of common stock previously held by the project manager. These shares were not cancelled as of the date of this report.

On March 23, 2012, the Company authorized the issuance of 150,000 shares of common stock, valued at $30,000, to Paul Hughes for recruiting services performed under the terms of his employment agreement. These shares were not issued as of the date of this report.
 
 
 
F-13

 

Item 9. Changes in and Disagreements With Accountants On Accounting and Financial Disclosure.

None.
 
Item 9A. Controls and Procedures.
 
Our Chief Executive Officer and Principal Financial Officer, C. Stephen Cochennet, 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 concluded that our disclosure controls and procedures are effective in timely altering him to material information relating to us (including our consolidated subsidiaries) required to be included in our periodic SEC filings.

There were no changes in our internal control over financial reporting that occurred during our most recent fiscal quarter that have materially affected, or are reasonably likely to materially affect, our internal control over financial reporting.

Management’s Report on Internal Control over Financial Reporting

Our management is responsible for establishing and maintaining adequate internal control over financial reporting, as is defined in the Securities Exchange Act of 1934. These internal controls are designed to provide reasonable assurance that the reported financial information is presented fairly, that disclosures are adequate and that the judgments inherent in the preparation of financial statements are reasonable. There are inherent limitations in the effectiveness of any system of internal control, including the possibility of human error and overriding of controls. Consequently, an effective internal control system can only provide reasonable, not absolute, assurance, with respect to reporting financial information.

Management conducted an evaluation of the effectiveness of our internal control over financial reporting based on the framework and criteria established in Internal Control — Integrated Framework, issued by the Committee of Sponsoring Organizations of the Treadway Commission. Based on this evaluation, management concluded that our internal control over financial reporting was effective as of December 31, 2011.

This annual report does not include an attestation report of our registered public accounting firm regarding internal control over financial reporting. Management’s report was not subject to attestation by our registered public accounting firm pursuant to temporary rules of the Securities and Exchange Commission that permit us to provide only management’s report in this annual report.
 
Item 9B. Other Information.
 
None.
 
 
 
PART III
 
Item 10. Directors, Executive Officers and Corporate Governance.
 
Our executive officers and directors, the positions held by them, and their ages are as follows:

Name
Age
Title(s)
Board Committee(s)
Steve Cochennet
55
CEO/President, Secretary, Treasurer and Chairman of the Board
Executive
Paul Hughes
44
Vice President of Operations and Security Sales Manager for Guardian 8 Corporation
None
James G. Miller
63
Director
Executive
Loren Moll
55
Director
Executive (Chairman)
Kyle Edwards
59
Director
None
Kathleen Hanrahan
48
Director
None
Corey Lambrecht
42
Director
None
Jim Nolton
49
Director
None

Steve Cochennet has served as our CEO/President, Secretary, Treasurer and Chairman since our inception. From July of 2011 to present, Mr. Cochennet has also been the sole officer of Kansas Resource Development Company, a private oil and gas exploration company. Mr. Cochennet was the President, Chief Executive Officer and Chairman of EnerJex Resources, Inc., a publicly traded and SEC registered company, from August 2006 to December of 2010. Prior to joining EnerJex, Mr. Cochennet was President of CSC Group, LLC. Mr. Cochennet formed the CSC Group, LLC through which he supported a number of clients that included Fortune 500 corporations, international companies, natural gas/electric utilities, outsource service providers, as well as various start up organizations. The services provided included strategic planning, capital formation, corporate development, executive networking and transaction structuring. From 1985 to 2002, he held several executive positions with UtiliCorp United Inc. (Aquila) in Kansas City. His responsibilities included finance, administration, operations, human resources, corporate development, natural gas/energy marketing, and managing several new startup operations. Prior to his experience at UtiliCorp United Inc., Mr. Cochennet served 6 years with the Federal Reserve System. Mr. Cochennet graduated from the University of Nebraska with a B.A. in Finance and Economics. Mr. Cochennet has agreed to continue to serve as our sole officer until such time as we locate a new chief executive officer.
 
Paul Hughesserved as a consultant for Guardian 8 Corporation from October 2010 through December of 2011 when he was hired as an officer. Prior to consulting for Guardian 8 Corporation, Hughes was providing consulting services to several other privately held companies. From March of 2006 through November of 2009, Hughes served as the Director of New Markets Development for Taser® International, Inc., a publicly traded corporation. Before joining Taser®, Mr. Hughes spent two years (2005-2006) at Global Alerts LLC, a private company in the multinational alert industry. From 2003 through 2005, Paul served as a brand manager for Smith & Wesson Holding Corporation, a publicly traded firearms manufacturer. Mr. Hughes holds a MBA in Global Management & Leadership from Arizona State University and has over 60 hours of non-lethal weapons, policies and procedures coursework at Penn State University. He completed the Entrepreneurship Development Program at M.I.T. in January 2010. Further, Paul was honorably discharged from the Marine Corps following Operations Desert Shield/Desert Storm and was decorated for actions contributing to the liberation of Kuwait.
 
James G. Miller is a Director and founder of the Company. Mr. Miller retired in 2002 as Chief Executive of Utilicorp United’s business unit responsible for the Company’s electric generation, and electric and natural gas transmission and distribution assets serving 1.3 million customers in seven mid-continent states. He joined Utilicorp in 1989 and served as President of Michigan Gas Utilities until 1991, and then served as President of Utilicorp's WestPlains Energy division from 1991 to 1994.  Before joining Utilicorp as part of the acquisition of Michigan Gas Utilities, he served as that Company’s President from 1983 to 1989. Miller has served on Boards of Directors of Corporations listed on the NYSE, NASDAQ and the Australian Stock Exchange. Current business activities include ownership of retail, real estate and ranch businesses, and equity investments in several start-up companies.  Mr. Miller currently serves as Board Chair of The Nature Conservancy, Missouri Chapter, for which he has been a Board member for the past 11 years. He also serves as a director, trustee or member of several community and charitable organizations.  Miller holds a BS degree in electrical engineering and a MBA in management from the University of Wisconsin.
 
 

Loren Moll has been a partner of Caldwell & Moll, L.C., a law firm in Overland Park, Kansas, since November 1996.  Mr. Moll has 24 years of experience in the practice of law. His practice has focused on the representation of small businesses and entrepreneurs concerning a wide array of both every day and complex legal issues.   In addition to practicing law, since 2003 Mr. Moll has served as a director of Petrol Oil and Gas, Inc., a publicly traded energy development company, where he has also served as President and CEO.  Prior to starting his own law firm, Mr. Moll was an associate attorney at Bryan Cave LLP and partner of Lewis, Rice and Fingersh, L.C.  Mr. Moll graduated from the University of Kansas with a Bachelor of Arts degree and a Juris Doctorate.

Kyle Edwards. Mr. Edwards was the president and a director of Global Risk before the merger with Guardian 8 Corporation and is also President of Edwards Group International LLC, an investigative company specializing in employment backgrounds, gaming compliance, criminal and internal investigations, as well as providing due diligence and loss prevention expertise. Mr. Edwards has thirty four years of investigative experience. Mr. Edwards is a prior chief law enforcement officer with the Las Vegas Metropolitan Police Department, retiring after twenty six years as a Deputy Chief of Investigations. During his law enforcement career he led thousands of criminal investigations including several hundred homicides as well as other violent crimes and white collar crimes and gaming investigations. In addition he supervised undercover narcotic investigations receiving the departments Meritorious Service Award and the U.S. Attorney General’s Safety Award for an undercover operation culminating in Thailand.
 
After leaving the Las Vegas Metropolitan Police Department Mr. Edwards joined the MGM MIRAGE as Vice President of Corporate Security and Gaming Surveillance. In that role he developed and refined the companies background investigation process with a staff conducting over 35,000 backgrounds a year.

Kathleen Hanrahan has been a private management consultant for her own company, New Horizons Management Inc., which specializes in assisting small private companies as they prepare strategies, personnel and infrastructure for their next phase of growth since July of 2010. Prior to establishing New Horizons, from 2008 through 2010, Kathy served as the Co-Chairperson for the TASER® Foundation for Fallen Officers, as well as the organizations President and Chief Executive Officer. Prior to her involvement with the TASER® Foundation, Ms. Hanrahan served as the President and Chief Operating Officer of TASER® International headquartered in Scottsdale, Arizona. During her more than 12 year tenure with TASER® International, she filled a number of key executive roles as the business grew. She served first as Controller, from 1996 until November 2000, establishing the financial, human resource and administrative systems and controls to manage the business, while aiding the President with operating responsibilities. Then, in November of 2000, when the Company began preparations for its initial public offering, she was promoted to Chief Financial Officer to facilitate the transaction and establish the necessary infrastructure to meet both SEC and Wallstreet’s regulatory and reporting requirements. Mrs. Hanrahan also serves as a corporate director for Meridian Bank, N.A, an advisory board member for EmpowHER and a board member of the Maricopa County, Arizona YWCA.
 
Corey Lambrecht is a 14+ year public company executive with experience in strategic acquisitions, new business development, pioneering consumer products, corporate licensing and interactive technology services. Since 2009, Mr. Lambrecht has served as the President of Earth911, Inc and is a current director of Lifestyle Wireless. In addition, since 2007, Mr. Lambrecht has been a director of CUI Global, a publicly traded and SEC registered company. During 2004 and 2005, he served as Director of Sales for Leveraged Marketing Associates, a worldwide leader in licensed brand extension strategies. From 2001 through 2004, Corey was the Executive Vice President for Smith & Wesson Holding Corporation, where he was responsible for Smith & Wesson Licensing, Advanced Technologies and Interactive Marketing divisions. He was the former President of A For Effort (sold to Freesoftwareclub.com), an interactive database marketing company specializing in online content (advergaming) for clients such as the National Hockey League. Mr. Lambrecht’s prior experience also includes Pre-IPO founder for Premium Cigars International and VP Sales/Marketing for ProductExpress.com.

Jim Nolton has over 27 years of experience in engineering, new product development and business development in large complex corporations and small private start-up organizations. Since 2005, Mr. Nolton has been consulting on a private basis for Orbital Sciences Corp., a designer and manufacturer of rockets and satellites for commercial and U.S. Government applications. From 2003 through 2005, Mr. Nolton focused on completing his Masters Degree in Global Business Strategies, where he was ranked fourth in his graduating class. From 1995-2003, Mr. Nolton worked with Mobility Electronics, Inc., a publicly traded and SEC registered company, a company he co-founded and assisted in the engineering, design and manufacture of a number of electronic devices for the mobile and fixed PC computer systems. Mr. Nolton has also worked with Unitech Industries, Inc. and General Dynamics.

Limitation of Liability of Directors

Pursuant to the Nevada General Corporation Law, our Articles of Incorporation exclude personal liability for our Directors for monetary damages based upon any violation of their fiduciary duties as Directors, except as to liability for any breach of the duty of loyalty, acts or omissions not in good faith or which involve intentional misconduct or a knowing violation of law, or any transaction from which a Director receives an improper personal benefit. This exclusion of liability does not limit any right which a Director may have to be indemnified and does not affect any Director’s liability under federal or applicable state securities laws. We have agreed to indemnify our directors against expenses, judgments, and amounts paid in settlement in connection with any claim against a Director if he acted in good faith and in a manner he believed to be in our best interests.
 
 

Election of Directors and Officers

Directors are elected to serve until the next annual meeting of stockholders and until their successors have been elected and qualified. Officers are appointed to serve until the meeting of the board of directors following the next annual meeting of stockholders and until their successors have been elected and qualified.
 
Involvement in Certain Legal Proceedings

None of our executive officers or directors has been the subject of any Order, Judgment, or Decree of any Court of competent jurisdiction, or any regulatory agency permanently or temporarily enjoining, barring suspending or otherwise limiting him from acting as an investment advisor, underwriter, broker or dealer in the securities industry, or as an affiliated person, director or employee of an investment company, bank, savings and loan association, or insurance company or from engaging in or continuing any conduct or practice in connection with any such activity or in connection with the purchase or sale of any securities.

None of our executive officers or directors has been convicted in any criminal proceeding (excluding traffic violations) or is the subject of a criminal proceeding, which is currently pending.

Section 16(a) Beneficial Ownership Reporting Compliance

Section 16(a) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), requires our executive officers and directors, and persons who beneficially own more than ten percent of our common stock, to file initial reports of ownership and reports of changes in ownership with the SEC. Executive officers, directors and greater than ten percent beneficial owners are required by SEC regulations to furnish us with copies of all Section 16(a) forms they file. As a company with securities registered under Section 15(d) of the Exchange Act, our executive officers and directors, and persons who beneficially own more than ten percent of our common stock are not required to file Section 16(a) reports.

Audit Committee and Financial Expert

We do not have an Audit Committee; our Board of Directors during 2011 performed some of the same functions of an Audit Committee, such as: recommending a firm of independent registered public accountants to audit the annual financial statements; reviewing the independent auditors independence, the financial statements and their audit report; and reviewing management's administration of the system of internal accounting controls. The Company does not currently have a written audit committee charter or similar document.

We have no financial expert. We believe the cost related to retaining a financial expert at this time is prohibitive. Further, because of our start-up operations, we believe the services of a financial expert are not warranted.
 
Code of Business Conduct and Ethics

A code of ethics relates to written standards that are reasonably designed to deter wrongdoing and to promote:

 
(1)  
Honest and ethical conduct, including the ethical handling of actual or apparent conflicts of interest between personal and professional relationships;
 
(2)  
Full, fair, accurate, timely and understandable disclosure in reports and documents that are filed with, or submitted to, the Commission and in other public communications made by an issuer;
 
(3)  
Compliance with applicable governmental laws, rules and regulations;
 
(4)  
The prompt internal reporting of violations of the code to an appropriate person or persons identified in the code; and
 
(5)  
Accountability for adherence to the code.

As of December 31, 2011, we had not adopted a corporate code of ethics that applied to our principal executive officer, principal financial officer, principal accounting officer or controller, or persons performing similar functions. However, on March 23, 2012 our board of directors approved a Code of Business Conduct and Ethics, which is attached to this report as Exhibit 99.3.
 
 

Nominating Committee

We do not have a Nominating Committee or Nominating Committee Charter. Our Board of Directors in 2011 performed some of the functions associated with a Nominating Committee. In 2011, we appointed three new directors to serve until the next annual meeting of our stockholders. The three directors were nominated by Paul Hughes, Vice President of Operations and Security Sales Manager for Guardian 8 Corporation. We have elected not to have a Nominating Committee in that we have limited operations and resources.

Compensation Committee

We currently do not have a Compensation Committee of the Board of Directors. Until a formal committee is established our entire Board of Directors will review all forms of compensation provided to our executive officers, directors, consultants and employees, including stock compensation.

Executive Committee

The executive committee, which is currently comprised of Messrs. Cochennet, Moll and Miller, was formed for the purpose to function when the board of directors is not in session or to function in the capacity of the Company’s executive officer if such officer shall have resigned or be deemed unable to render service to the Company.
 
Item 11. Executive Compensation.

None of our current officers or directors receives any cash compensation for services rendered to the Company. We intend to recruit and retain additional management and employees once we are adequately capitalized and funds are available for the payment of salaries and other compensation. In addition, in the future we may issue shares of our common stock to compensate our officers and directors for services rendered on our behalf.

The following table sets forth summary compensation information for the years ended December 31, 2010 and 2011 for our chief executive officer and vice president of operations. We did not have any other executive officers as of the end of fiscal 2011 whose total compensation exceeded $100,000.

Summary Compensation Table

Name and Principal Position
Period
 
Salary
($)
   
Bonus
($)
   
Option Awards
($)
   
All Other Compensation
($)
   
Total
($)
 
                                 
C. Stephen Cochennet
2011
  $ 0       -       -       -     $ 0  
President, Chief Executive Officer
2010
  $ 0       -       -       -     $ 0  
                                           
Paul Hughes(1)
2011
  $ 27,000     $ 10,000 (2)     -     $ 51,000 (3)   $ 88,000  
Vice President of Operations of
Guardian 8 Corporation
 
2010
  $ 0       -       -     $ 5,000 (4)   $ 5,000  
                                           
(1)  
Mr. Hughes served as a consultant for Guardian 8 Corporation from October of 2010 to December of 2011. Effective December 1, 2011, Guardian 8 Corporation hired Mr. Hughes as its Vice President of Operations and Security Sales Manager.
(2)  
Represents bonus earned by Mr. Hughes when he was a consultant for his assistance with Guardian 8’s receipt of the ASIS Accolade. $5,000 of this bonus was paid in 2011.
(3)  
Represents consulting fees paid to Mr. Hughes for the period from January 1 through November 30, 2011.
(4)  
Represents consulting fees paid to Mr. Hughes for the period from October 1 through December 31, 2010.
 
 
 
Executive Employment Agreement

Effective December 1, 2011, Guardian 8 Corporation entered into an employment agreement with Paul Hughes to act as G8’s Vice President of Operations and Security Sales. Mr. Hughes’ employment agreement was approved by the board of directors of G8 and the Registrant.
 
In general, Mr. Hughes’ employment agreement contains provisions concerning terms of employment, voluntary and involuntary termination, indemnification, severance payments, and other termination benefits, in addition to a non-compete clause and certain other perquisites.

The original term of Mr. Hughes’ employment agreement runs from December 1, 2011 until November 30, 2014.

Mr. Hughes’ employment agreement provides for an initial annual base salary of $108,000, which may be adjusted by the G8 board of directors. In addition, Mr. Hughes is eligible to receive commissions based upon product sales and long-term common stock incentives (up to 750,000 shares) based upon unit sales, training revenues and officer/director recruitment as set forth in the employment agreement.

In the event of a termination of employment for “good reason”, by Hughes or “without cause” (as defined in the employment agreement) by G8, Mr. Hughes shall receive: (i) a lump sum payment equal to all earned but unpaid base salary through the date of termination of employment; (ii) all earned but unpaid commissions; (iii) a lump sum payment equal to 6-months Base Salary; and (iv) immediate vesting of all equity awards through the end of the then current calendar month (including but not limited to stock options and restricted shares).

Grants of Plan-Based Awards in Fiscal 2011

We did not grant any plan-based awards to our named executive officer during the fiscal year ended December 31, 2011.

Outstanding Equity Awards at 2011 Fiscal Year-End

We did not have any outstanding equity awards as of December 31, 2011.

Option Exercises for 2011

There were no options issued or exercised by our named executive officer in fiscal 2011.
 
 
 
Director Compensation
 
The following table sets forth summary compensation information for the year ended December 31, 2011 for each of our directors.
 
 
 
 
Name
 
Fees Earned or Paid in Cash
$
   
Stock Awards
$
   
Option Awards
$
 
All Other Compensation
$
 
Total
$
 
C. Stephen Cochennet(1)
  $ -     $ 30,000     $ -     $ -     $ 30,000  
                                         
Loren Moll(2)
  $ -     $ 15,000     $ -     $ 35,000 (3)   $ 50,000  
                                         
James G. Miller(4)
  $ -     $ 30,000     $ -     $ -     $ 30,000  
                                         
Kyle Edwards(5)
  $ -     $ 15,000     $ -     $ -     $ 15,000  
                                         
Kathleen Hanrahan(6)
  $ -     $ -     $ -     $ -     $ -  
                                         
Corey Lambrecht(6)
  $ -     $ -     $ -     $ -     $ -  
                                         
Jim Nolton(6)
  $ -     $ -     $ -     $ -     $ -  
                                         
(1)  
In August of 2011, Mr. Cochennet was issued 60,000 shares of our common stock valued at $0.25 per share for prior services as a director and an additional 60,000 shares of our common stock valued at $0.25 per share for 2011 director services.
(2)  
In August of 2011, Mr. Moll was issued 60,000 shares of our common stock valued at $0.25 per share for 2011 director services.
(3)  
In August of 2011, Mr. Moll was issued 140,000 shares of our common stock valued at $0.25 per share for his services to the Company in preparing the user manual and product warnings for the Company’s personal defense device.
(4)  
In August of 2011, Mr. Miller was issued 60,000 shares of our common stock valued at $0.25 per share for prior services as a director and an additional 60,000 shares of our common stock valued at $0.25 per share for 2011 director services.
(5)  
In August of 2011, Mr. Edwards was issued 60,000 shares of our common stock valued at $0.25 per share for 2011 director services.
(6)  
In January of 2012, Ms. Hanrahan and Messrs. Lambrecht and Nolton were each issued 60,000 shares of our common stock valued at $0.40 per share for 2012 director services.

Directors generally receive equity compensation of 60,000 restricted shares of common stock per year of service. Further, directors who are not employees are reimbursed for travel and other expenses if required.
 
 
 
Item 12. Security Ownership of Certain Beneficial Owners and Management and Related Stockholder Matters.

The following table presents information, to the best of the Company’s knowledge, about the beneficial ownership of its common stock as of March 23, 2012, held by those persons known to beneficially own more than 5% of its capital stock and by its directors and executive officers. The percentage of beneficial ownership for the following table is based on 27,592,318 shares of common stock outstanding.

Beneficial ownership is determined in accordance with the rules of the Securities and Exchange Commission and does not necessarily indicate beneficial ownership for any other purpose. Under these rules, beneficial ownership includes those shares of common stock over which the stockholder has sole or shared voting or investment power. It also includes (unless footnoted) shares of common stock that the shareholder has a right to acquire within 60 days after March 23, 2012 through the exercise of any option, warrant or other right. The percentage ownership of the outstanding common stock, however, is based on the assumption, expressly required by the rules of the Securities and Exchange Commission, that only the person or entity whose ownership is being reported has converted options or warrants into shares of our common stock.

 
 
Name of Beneficial Owner(1)
 
Number
of Shares
   
Percent of Outstanding Shares of
Common Stock(2)(3)
 
  C. Stephen Cochennet, CEO/President and Director
    4,529,500 (4)     16.3 %
  Paul Hughes, VP Operations Guardian 8 Corporation
    50,000       0.2 %
  James G. Miller, Director
    1,680,000 (5)     6.1 %
  Kyle Edwards, Director
    425,911 (6)     1.5 %
  Loren Moll, Director
    200,000       0.7 %
  Jim Nolton, Director
    80,000 (7)     0.3 %
  Corey Lambrecht, Director
    75,000 (8)     0.3 %
  Kathleen Hanrahan, Director
    60,000       0.2 %
                 
Directors, Officers and Beneficial Owners as a Group
    7,100,411       25.7 %
 
(1)  
As used in this table, “beneficial ownership” means the sole or shared power to vote, or to direct the voting of, security, or the sole or shared investment power with respect to a security (i.e., the power to dispose of, or to direct the disposition of, a security).  The address of each person is care of the Registrant, 15230 N. 75th Street, Suite 1002, Scottsdale, Arizona  85260.
(2)  
Figures are rounded to the nearest tenth of a percent.
(3)  
Based upon 27,592,318 shares of common stock outstanding.
(4)  
Includes 100,000 warrants to purchase shares of common stock exercisable at $0.35 per share through October 12, 2014 and 60,000 warrants to purchase shares of common stock exercisable at $0.25 per share through January 5, 2015.
(5)  
Includes 50,000 warrants to purchase shares of common stock exercisable at $0.25 per share through January 5, 2015.
(6)  
Includes 25,000 warrants to purchase shares of common stock exercisable at $0.25 per share through January 5, 2015.
(7)  
Includes 20,000 warrants to purchase shares of common stock exercisable at $0.25 per share through January 5, 2015.
(8)  
Includes 15,000 warrants to purchase shares of common stock exercisable at $0.25 per share through January 5, 2015.

 
 
Item 13. Certain Relationships and Related Transactions, and Director Independence.
 
Other than as set forth below, we were not a party to any transactions or series of similar transactions that have occurred during fiscal 2011 in which:
 
 
 •
 The amounts involved exceeds the lesser of $120,000 or one percent of the average of our total assets at year end for the last two completed fiscal years ($3,001); and
 
 •
 A director, executive officer, holder of more than 5% of our common stock or any member of their immediate family had or will have a direct or indirect material interest.

A relative of a former officer (Charles A. Ross, Jr.) and director was paid $27,650 for secretarial services.
 
We issued 140,000 shares, valued at $35,000, to Loren Moll, a director, for legal services.
 
In October of 2011, we received $100,000 from Steve Cochennet, our CEO, to issue a convertible note payable, bearing interest at a rate of 10% per annum, and maturing in April of 2012.  The note is not secured and is convertible into common stock at $0.35 per share which was the market value on the day the note was executed.  With the note, we issued 100,000 warrants to purchase common shares. 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 will be 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.
 
In December of 2011, we received $207,000 from various related parties (Messrs. Cochennet, Miller, Lambrecht, Edwards and Nolton) to issue convertible note payables, bearing interest at a rate of 10% per annum, and maturing in June 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 note was executed was $0.105.  With the note, we issued 207,000 warrants to purchase common shares. 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 will be 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.
 
Policies for Review and Approval of Related Party Transactions

In March of 2012, our board of directors adopted a Related Party Transaction Policy, which is designed to monitor and ensure the proper review, approval, ratification and disclosure of related party transactions. The policy applies to any transaction, arrangement or relationship (or any series of similar transactions, arrangements or relationships) in which we were, are or will be a participant and the amount involved exceeds $120,000 or one percent of the average of our total assets at year end for the last two completed fiscal years, and in which any related party had, has or will have a direct or indirect material interest. Our board of directors must review, approve and ratify a related party transaction if such transaction is consistent with the Related Party Transaction Policy and is on terms, taken as a whole, which the board believes are no less favorable to us than could be obtained in an arms-length transaction with an unrelated third party, unless the board otherwise determines that the transaction is not in our best interests. A copy of the Related Party Transaction Policy is attached hereto as Exhibit 99.4.

Director Independence

Our board of directors has affirmatively determined that Ms. Hanrahan and Messrs. Miller, Edwards, Moll, Lambrecht and Nolton are independent directors, as defined by Section 803 of the American Stock Exchange Company Guide.
 
 
 
Item 14. Principal Accounting Fees and Services.
 
Weaver Martin & Samyn, LLC served as our principal independent public accountants for fiscal 2011 and 2010, respectively. Aggregate fees billed to us for the fiscal years ended December 31, 2011 and 2010 by Weaver Martin & Samyn, LLC were as follows:

 
For the Fiscal Years Ended
December 31,
 
 
2011
 
2010
 
         
(1) Audit Fees(1)
 
$
28,500
   
$
15,000
 
(2) Audit-Related Fees(2)
   
-
     
-
 
(3) Tax Fees(3)
   
2,500
     
1,250
 
(4) All Other Fees
           
-
 
Total fees paid or accrued to our principal accountant
 
$
31,000
   
$
16,250
 

 
(1)  
Audit Fees include fees billed and expected to be billed for services performed to comply with Generally Accepted Auditing Standards (GAAS), including the reviews of the quarterly financial statements included in the Quarterly Reports on Form 10-Q filed with the Securities and Exchange Commission. This category also includes fees for audits provided in connection with statutory filings or procedures related to audit of income tax provisions and related reserves, consents and assistance with and review of documents filed with the SEC.
 
(2)  
Audit-Related Fees include fees for services associated with assurance and reasonably related to the performance of the audit or review of our financial statements. This category includes fees related to assistance in financial due diligence related to mergers and acquisitions, consultations regarding Generally Accepted Accounting Principles, reviews and evaluations of the impact of new regulatory pronouncements, general assistance with implementation of Sarbanes-Oxley Act of 2002 requirements and audit services not required by statute or regulation.
 
(3)  
Tax fees consist of fees related to the preparation and review of our federal and state income tax returns.

(5)      Audit Committee Policies and Procedures

Our Board of Directors pre-approves all services to be provided to us by our independent auditor. This process involves obtaining (i) a written description of the proposed services, (ii) the confirmation of our Principal Financial Officer that the services are compatible with maintaining specific principles relating to independence, and (iii) confirmation from our securities counsel that the services are not among those that our independent auditors have been prohibited from performing under SEC rules. The members of the Board of Directors then make a determination to approve or disapprove the engagement of Weaver Martin & Samyn, LLC for the proposed services. In fiscal 2011 and 2010, all fees paid to Weaver Martin & Samyn, LLC were unanimously pre-approved in accordance with this procedure.

(6)      Less than 50 percent of hours expended on the principal accountant’s engagement to audit the registrant’s financial statements for the most recent fiscal year were attributed to work performed by persons other than the principal accountant’s full-time, permanent employees.
 
 
 
PART IV
 
Item 15. Exhibits, Financial Statement Schedules.

The following information required under this item is filed as part of this report:

(99)  
1. Financial Statements

   
Page
Management’s Report on Internal Control Over Financial Reporting
 
20
Report of Independent Registered Public Accounting Firm
 
F-1
Balance Sheets
 
F-2
Statements of Operations
 
F-3
Statements of Stockholders’ (Deficit)
 
F-4
Statements of Cash Flows
 
F-5

(b) 2. Financial Statement Schedules

None.

© 3. Exhibit Index

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 the Form 10-K filed on March 23, 2011)
3.2
 
Bylaws, as currently in effect (incorporated by reference to Exhibit 3(ii)(a) to Form S-1 filed on May 16, 2008)
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)
21.1
 
31.1
 
32.1
 
99.1
 
Executive Committee Charter (incorporated by reference to Exhibit 99.1 to the Form 10-K filed on March 23, 2011)
99.2
 
L.A. Davis & Associates Research Report dated January 25, 2012 (incorporated by reference to Exhibit 3.1 to the Form 8-K filed on January 24, 2012)
99.3
 
99.4
 
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

 
 
SIGNATURES
 
In accordance with Section 13 or 15(d) of the Securities Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
GUARDIAN 8 HOLDINGS
 
       
Date: March 28, 2012
By:
/s/ C. Stephen Cochennet
 
   
C. Stephen Cochennet
 
   
Chief Executive Officer/President
 
       
 
Pursuant to the requirements of the Securities Exchange Act of 1934, the following persons on behalf of the Registrant and in the capacities and on the dates indicated have signed this report below.
 
Name
Title
Date
     
/s/ C. Stephen Cochennet                                                                   
C. Stephen Cochennet
Chief Executive Officer(Principal Executive Officer), President, Secretary & Treasurer (Principal Financial Officer), Director
March 28, 2012
     
/s/ James G. Miller                                                       
James G. Miller
Director
March 28, 2012
     
/s/ Kyle Edwards                                                                 
Kyle Edwards
Director
March 28, 2012
     
/s/ Jim Nolton                                                                  
Jim Nolton
Director
March 28, 2012
     
/s/ Kathleen Hanrahan                                           
Kathleen Hanrahan
Director
March 28, 2012
     
/s/ Corey Lambrecht                                           
Corey Lambrecht
Director
March 28, 2012
     
/s/ Loren Moll                                           
Loren Moll
Director
March 28, 2012