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


FORM 10-Q


 
x           QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

For the quarterly period ended September 30, 2012

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

Commission file number 333-150954

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

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

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

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

Indicate by check mark whether the registrant (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days.  Yes x   No ¨

Indicate by check mark whether the registrant has submitted electronically and posted on its corporate Web site, if any, every Interactive Data File required to be submitted and posted pursuant to Rule 405 of Regulation S-T (§232.405 of this chapter) during the preceding 12 months (or for such shorter period that the registrant was required to submit and post such files). Yes x    No ¨

Indicate by check mark whether the registrant is a large accelerated filer, an accelerated filer, a non-accelerated filer, or a smaller reporting company. See the definitions of “large accelerated filer,” “accelerated filer” and “smaller reporting company” in Rule 12b-2 of the Exchange Act.
 
Large accelerated filer ¨
Accelerated filer ¨
   
Non-accelerated filer ¨  (Do not check if a smaller reporting company) 
Smaller reporting company x
                                         
Indicate by check mark whether the registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act).          Yes  ¨      No x

The number of shares of Common Stock, $0.001 par value, outstanding on November 14, 2012, was 30,874,508, not including 300,000 shares authorized but unissued.
 
 
TABLE OF CONTENTS
 
 
Part I – Financial Information
Page
     
Item 1.
1
Item 2.
12
Item 3. 
15
Item 4.
15
     
 
Part II – Other Information
 
     
Item 1. 
16
Item 1A. 
16
Item 2. 
16
Item 3.  
17
Item 4. 
17
Item 5.
17
Item 6.
17
 
19
 
 
PART I – FINANCIAL INFORMATION
 
Item 1. Financial Statements
 
GUARDIAN 8 HOLDINGS
(A Development Stage Company)
Condensed Consolidated Balance Sheets
September 30, 2012 and December 31, 2011

   
September 30,
   
December 31,
 
   
2012
   
2011
 
Assets
           
             
Current assets:
           
Cash and cash equivalents
 
$
25,185
   
$
195,894
 
Prepaid expenses
   
104,053
     
64,141
 
     Total current assets
   
129,238
     
260,035
 
                 
Property and equipment, net of accumulated depreciation of $688 and $0
   as of September 30, 2012 and December 31, 2011
   
4,317
     
-
 
                 
Website, net of accumulated amortization of $8,463 and $2,604  
   as of September 30, 2012 and December 31, 2011
   
14,971
     
20,830
 
                 
Patent, net of accumulation amortization of $2,372 and $1,333
    as of September 30, 2012 and December 31, 2011
   
8,013
     
9,052
 
                 
          Total assets
 
$
156,539
   
$
289,917
 
                 
Liabilities and Stockholders’ Equity:
               
                 
Current liabilities:
               
Accounts payable and accrued expenses
 
$
78,610
   
$
34,840
 
Accrued interest
   
1,973
     
2,810
 
Notes payable, related party – net of discount of $0 and $31,325
    As of September 30, 2012 and December 31, 2011
   
25,000
     
275,675
 
     Total current liabilities
   
105,583
     
313,325
 
                 
Commitments and contingencies:
               
Stockholders’ equity (deficit):
               
Preferred stock, $0.001 par value, 10,000,000 shares
   authorized, no shares issued and outstanding
   
-
     
-
 
Common stock, $0.001 par value, 100,000,000 shares
   Authorized; issued and outstanding of 30,382,008 and 27,412,318
   at September 30, 2012 and December 31, 2011
   
30,381
     
27,412
 
Common stock owed but not issued: 782,500 and 0
   at September 30, 2012 and December 31, 2011
   
783
     
-
 
Stock subscription receivable
   
(50,000
)
   
-
 
Paid in Capital
   
2,966,742
     
1,560,123
 
Retained deficit
   
(2,896,950
)
   
(1,610,943
)
     Total stockholders’ equity
   
50,956
     
(23,408
)
                 
          Total liabilities and stockholders’ equity (deficit)
 
$
156,539
   
$
289,917
 
 
The accompanying notes are an integral part of the condensed financial statements.
 
 
GUARDIAN 8 HOLDINGS
(a Development Stage Company)
Condensed Consolidated Statements of Operations
For the Three and Nine Months Ended September 30, 2012 and 2011
and for the Period from June 8, 2009 (Inception) to September 30, 2012
 
   
The Three Months Ended
   
The Nine Months Ended
   
For the period from June 8, 2009 (Inception) to
 
   
September 30,
   
September 30,
   
September 30,
 
   
2012
   
2011
   
2012
   
2011
   
2012
 
                               
Revenue
 
$
-
   
$
-
   
$
-
   
$
-
   
$
-
 
                                         
Cost of sales
   
-
     
-
     
-
     
-
     
-
 
                                         
Gross profit
   
-
     
-
     
-
     
-
     
-
 
                                         
Depreciation and amortization
   
2,875
     
129
     
7,585
     
387
     
11,522
 
General and administrative expenses
   
351,681
     
277,070
     
999,563
     
421,207
     
2,286,684
 
     
354,556
     
277,199
     
1,007,148
     
421,594
     
2,298,206
 
                                         
Loss from operations
   
(354,556
)
   
(277,199
)
   
(1,007,148
)
   
(421,594
)
   
(2,298,206
)
                                         
Other income (expense):
                                       
Interest expense
   
(630
)
   
-
     
(278,859
)
   
-
     
(294,129
)
     
(630
)
   
-
     
(278,859
)
   
-
     
(294,129
)
                                         
Loss before income tax
   
(355,186
)
   
(277,199
)
   
(1,286,007
)
   
(421,594
)
   
(2,592,335
)
                                         
Provision for income tax expense
   
-
     
-
     
-
     
-
     
-
 
                                         
Net (loss)
 
$
(355,186
)
 
$
(277,199
)
 
$
(1,286,007
)
 
$
(421,594
)
 
$
(2,592,335
)
                                         
                                         
Net loss per share – basic and diluted
 
$
(0.01
)
 
$
(0.01
)
 
$
(0.05
)
 
$
(0.02
)
       
                                         
Weighted average shares outstanding
   
28,661,817
     
27,086,540
     
27,755,124
     
26,896,709
         
 
The accompanying notes are an integral part of these condensed consolidated financial statements.
 
 
 GUARDIAN 8 HOLDINGS
(a Development Stage Company)
Condensed Consolidated Statements of Cash Flows
For the Nine Months Ended September 30, 2012 and 2011
and for the Period from June 8, 2009 (Inception) to September 30, 2012
 
   
Nine Months Ended
September 30,
   
For the period from
June 8, 2009
(Inception) to
September 30,
 
   
2012
   
2011
   
2012
 
Cash flows from operating activities:
                 
Net loss
 
$
(1,286,007
)
 
$
(421,594
)
 
$
(2,592,335
)
Adjustments to reconcile net (loss) to
    net cash (used) in operating activities:
                       
   Stock issued for services
   
64,750
     
62,500
     
258,500
 
   Stock issued for compensation
   
135,000
     
90,000
     
288,750
 
   Depreciation and amortization
   
7,585
     
387
     
11,522
 
  Amortization of discount on notes payable
   
257,746
     
-
     
270,205
 
Change in assets and liabilities -
                       
   Prepaid expenses
   
59,088
     
10,000
     
(5,053
)
   Accounts payable and accrued expenses
   
43,771
     
(21,018
)
   
78,611
 
  Accrued interest
   
21,113
     
-
     
23,923
 
   Due to related party
   
-
     
-
     
(184,250
)
Cash provided by operating activities
   
(696,954
)
   
(279,725
)
   
(1,850,127
)
                         
Cash flows from investing activities:
                       
  Purchase of fixed assets
   
(5,005
)
   
-
     
(5,005
)
  Purchase of website
   
-
     
-
     
(23,433
)
Cash used in investing activities
   
(5,005
)
   
-
     
(28,438
)
                         
Cash flows from financing activities:
                       
Proceeds from common stock sales
   
107,000
     
-
     
1,172,500
 
Proceeds from warrant exercises
   
61,750
     
-
     
61,750
 
Proceeds from notes payable, related party
   
362,500
     
-
     
679,500
 
Payments on notes payable, related party
   
-
     
-
     
(10,000
)
Net used in financing activities
   
531,250
     
-
     
1,903,750
 
                         
Increase in cash
   
(170,709
)
   
(279,725
)
   
25,185
 
Cash, beginning of period
   
195,894
     
290,829
     
-
 
Cash, ending of period
 
$
25,185
   
$
11,104
   
$
25,185
 
                         
Supplemental cash flow information:
                       
   Interest paid
 
$
-
   
$
-
   
$
12,460
 
   Income taxes paid
 
$
-
   
$
-
   
$
-
 
                         
   Stock issued for services
 
$
64,750
   
$
62,500
   
$
258,500
 
   Shares issued for services
 
$
135,000
   
$
250,000
   
$
2,845,000
 
                         
   Stock issued for compensation
 
$
135,000
   
$
90,000
   
$
288,750
 
   Shares issued for compensation
 
$
330,000
   
$
360,000
   
$
945,000
 
                         
   Stock issued for payment on due to related party
 
$
-
   
$
-
   
$
115,750
 
   Shares issued for payment on due to related party
 
$
-
   
$
-
   
$
463,000
 
                         
  Notes payable converted to common stock
 
$
666,450
     
-
   
$
666,450
 
  Shares issued for notes payable converted
   
3,107,690
     
-
     
3,107,690
 
 
The accompanying notes are an integral part of the condensed consolidated financial statements.  
 
 
GUARDIAN 8 HOLDINGS
(A DEVELOPMENT STAGE COMPANY)
CONDENSED NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2012 AND 2011

NOTE 1 – SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES
 
Organization
 
Guardian 8 Corporation (“the Company”) was incorporated in Nevada on June 8, 2009 as Guardian 6 Corporation.  In August of 2009, the Company changed its name to Guardian 8 Corporation.  The Company’s principle offices are located in Scottsdale, Arizona.  The Company is in the process of developing a personal security device that incorporates countermeasures to help defend against personal attack.
 
Effective November 30, 2010, the Company 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 under Section 12g.  The Company merged into a newly formed wholly owned subsidiary of Global Risk, with the Company being the surviving corporation.  Post merger, Global Risk changed its name to Guardian 8 Holdings.
 
Principles of Consolidation
 
For the nine months ended September 30, 2012 and 2011, the Company was consolidated with its wholly-owned subsidiary, Guardian 8 Corporation.  All material intercompany transactions and accounts have been eliminated.

Development Stage Enterprise
 
The Company is a development stage enterprise, as defined in ASC 915, “Development Stage Entities.”  The Company’s planned principal operations have not commenced, and no revenue has been derived since the date of inception.
 
       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. 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.
 
Revenue recognition

It is the Company’s policy that revenues will be recognized in accordance with ASC 605-10, “Revenue Recognition”.  The company will therefore recognize revenue from sales of product upon delivery to its customers where the amount is fixed or determinable, and collectability is probable. Cash payments received in advance will be recorded as deferred revenue.   There were no revenues for the three-months and nine months ended September 30, 2012 and 2011 or from June 8, 2009 (inception) through September 30, 2012.
 
Warranty
 
The Company intends to offer a limited warranty on our device.  After the warranty expires, if the device fails to operate properly for any reason, the Company intends 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 $392,081 for the nine months ended September 30, 2012 and $35,793 for the year ended December 31, 2011.
 
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 September 30, 2012 and December 31, 2011. 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
 
ASC 360, “Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to be Disposed Of,” requires that long-lived assets be reviewed for impairment whenever events or changes in circumstances indicate that the historical cost-carrying value of an asset may no longer be appropriate. The Company assesses recoverability of the carrying value of an asset by estimating the future net cash flows expected to result from the asset, including eventual disposition. If the future net cash flows are less than the carrying value of the asset, an impairment loss is recorded equal to the difference between the asset’s carrying value and fair value.  The Company did not have any impaired assets for nine months ended September 30, 2012 and 2011 or from June 8, 2009 (inception) through September 30, 2012.
 
Net Loss Per Share
 
Loss per share is provided in accordance with ASC 260-10, “Earnings Per Share,” that requires the reporting of both basic and diluted earnings (loss) per share. Basic earnings (loss) per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. In accordance with ASC 260-10, any anti-dilutive effects on net income (loss) per share are excluded.

Income Taxes
 
The Company follows ASC subtopic 740-10, “Accounting for Income Taxes”) for recording the provision for income taxes.  ASC 740-10 requires the use of the asset and liability method of accounting for income taxes.  Under the asset and liability method, deferred tax assets and liabilities are computed based upon the difference between the financial statement and income tax basis of assets and liabilities using the enacted marginal tax rate applicable when the related asset or liability is expected to be realized or settled.  Deferred income tax expenses or benefits are based on the changes in the asset or liability each period.  If available evidence suggests that it is more likely than not that some portion or all of the deferred tax assets will not be realized, a valuation allowance is required to reduce the deferred tax assets to the amount that is more likely than not to be realized.  Future changes in such valuation allowance are included in the provision for deferred income taxes in the period of change.
 
Recent pronouncements
 
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 did not have a material effect on the Company's condensed consolidated 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 adoption of ASU 2011-08 did not have a material impact on the Company’s financial statements.
 
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 consolidated financial statements have been prepared assuming that the Company will continue as a going concern, which contemplates the recoverability of assets and the satisfaction of liabilities in the normal course of business.
 
The Company’s activities since inception have been financially sustained by issuance of common stock and related party loans. The Company may raise additional funding to continue its operations through contributions from the current stockholders and stock issuance to other investors.
 
The ability of the Company to continue as a going concern is dependent upon its ability to raise additional capital from the sale of common stock and, ultimately, the achievement of significant operating revenues. The accompanying financial statements do not include any adjustments that might be required should the Company be unable to recover the value of its assets or satisfy its liabilities.
 
Management’s plan to eliminate the going concern situation includes, but is not limited to, obtaining investors to fund the working capital needs of the Company.

NOTE 3 – NOTES PAYABLE

In October of 2011, the Company received $100,000 from a related party to issue a convertible note payable, bearing interest at a rate of 10% per annum, and maturing in April of 2012.  The note 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.  For the nine months ended September 30, 2012, an additional $14,246 was amortized into interest expense and the remaining discount was $0 as of September 30, 2012.  In April of 2012, this note and the related accrued interest were converted into shares of common stock.

In December of 2011, the Company received $207,000 from various related parties to issue convertible note payables, bearing interest at a rate of 10% per annum, and maturing in June of 2012.  The notes are not secured and are convertible into common stock at $0.20 per share.  The market value on the day the notes were executed was $0.105.  With the notes, the Company issued 207,000 warrants to purchase common shares of the Company. The warrants have a term of three years and a strike price of $0.25 per share.  The warrants issued with the note were valued using the Black-Scholes option pricing model and bifurcated out of the note proceeds and recorded as additional paid in capital in the amount of $18,613.  A discount on the note payable was recorded in the same amount and 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. For the nine months ended September 30, 2012, an additional $17,079 was amortized into interest expense and the remaining discount was $0 as of September 30, 2012.  In June of 2012, all the notes except one ($25,000) and the related accrued interest were converted into shares of common stock.
 
 
During the nine months ended September 30, 2012, the Company received $362,500 from various related parties to issue convertible note payables, bearing interest at a rate of 10% per annum, and maturing at various times from July of 2012 to September of 2012.  The notes are not secured and are convertible into common stock at $0.20 per share.  The market value on the day the notes were executed ranged from $0.40 to $0.50.  With the notes, the Company issued 362,500 warrants to purchase common shares of the Company. The warrants have a term of three years and a strike price of $0.25 per share.  The warrants issued with the note were valued using the Black-Scholes option pricing model and bifurcated out of the note proceeds and recorded as additional paid in capital in the amount of $226,422.  A discount on the note payable was recorded in the same amount and will be amortized into interest expense over the six-month life of the note using the interest method.  All of the notes were converted to common stock in June of 2012 so $226,422 of the discount was amortized into interest expense during the nine months ended September 30, 2012 and the remaining discount was $0 as of September 30, 2012.

As noted above, during the nine months ended September 30, 2012, a total of $644,500 of notes payable and $21,950 of related accrued interest was converted into 3,107,690 shares of common stock.
 
As of September 30, 2012, the Company has a note payable of $25,000 and related accrued interest of $1,973.
 
Total interest expense and amortization of discount on notes payable was $278,859 for the nine months ended September 30, 2012 and $15,271 for the year ended December 31, 2011.

NOTE 4 – PATENT
In June of 2009, concurrent with our incorporation, one of the Company’s 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 the Company’s common stock and $300,000.  $25,000 was to be paid in July of 2009 and the rest was to be paid as funds became available from common stock sales.  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 $1,039 for of the nine months ended September 30, 2012 and $516 for the year ended December 31, 2011.

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– STOCKHOLDERS’ 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 the Company’s 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 the Company’s 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 under section 12g.  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.
 
During the three-months ended March 31, 2012, the Company authorized a total of 330,000 shares of common stock for compensation.  180,000 shares were issued to the board of directors, at the market price of $0.40, for a total expense of $72,000.  150,000 was authorized to an employee, at the market price of $0.20, for a total expense of $30,000.
 
During the three-months ended March 31, 2012, the Company authorized the issuance of 45,000 shares for $22,250 worth of services.  The stock was valued at the value of the services received.
 
During the three-months ended March 31, 2012, the Company reached a settlement with a former contractor, whereby the contractor surrendered 700,000 shares of common stock for cancellation.  The Contractor had received the shares in prior periods for services to be rendered.  The Company felt that the services had not been rendered and the settlement was reached.  The Company has cancelled the shares.
 
During the three months ended June 30, 2012, the Company converted $644,500 of notes payable and $21,950 of related accrued interest into 3,107,690 shares of common stock.  The stock was issued during the third quarter of 2012.
 
During the three months ended June 30, 2012, the Company received $61,750 for the exercise of 247,000 warrants at $0.25 each.  The stock was issued during the third quarter of 2012.
 
During the three months ended June 30, 2012, the Company agreed to issue 300,000 shares of common stock in relation to a consulting agreement.  The shares were valued at $132,000, which was the fair market value on the date the agreement was signed and set up as a prepaid asset that will be amortized over the one-year life of the agreement.  As of September 30, 2012, $55,000 had been expensed and $77,000 remained in prepaid assets.  As of September 30, 2012, these shares have not yet been issued.
 
During the three months ended September 30, 2012, the Company agreed to sell 267,500 shares of common stock, with an aggregate value of $107,000.  The Company also agreed to issue 90,000 shares for consulting services, with an aggregate value of $42,500.  As of September 30, 2012 these shares had not yet been issued.
 
On September 30, 2012, the Company agreed to sell 125,000 shares of common stock, with an aggregate value of $50,000.  These shares had not been issued or paid for as of September 30, 2012, therefore the Company has a Stock Subscription Receivable of $50,000 as of September 30, 2012.

As of September 30, 2012, there were 30,382,008 common shares issued and outstanding, 782,500 common shares owed but not issued, and no preferred shares issued.
 

NOTE 6 – OPTIONS AND WARRANTS

Options

As of September 30, 2012 and December 31, 2011, 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.
 
During the nine months ended September 30, 2012, the Company issued 1,147,500 warrants to purchase common stock.  All have a term of three to five years and a strike price ranging from $0.25 to $0.75.

A summary of stock options and warrants as of December 31, 2011 and September 30, 2012 is as follows:
 
   
Options
   
Weighted Average Exercise Price
   
Warrants
   
Weighted Average Exercise Price
 
Outstanding as of  01/01/11:
   
-
   
$
-
     
-
   
$
-
 
    Granted
   
-
     
-
     
307,000
     
0.28
 
    Cancelled
   
-
     
-
     
-
     
-
 
    Exercised
   
-
     
-
     
-
     
-
 
Outstanding as of 12/31/11:
   
-
   
$
-
     
307,000
   
$
0.28
 
    Granted
   
-
     
-
     
1,147,500
     
0.25
 
    Cancelled
   
-
     
-
     
-
     
-
 
    Exercised
   
-
     
-
     
(247,000
)
   
0.25
 
Outstanding as of 9/30/12:
   
-
   
$
-
     
1,207,500
   
$
0.26
 
Vested as of 9/30/12:
   
-
   
$
-
     
1,207,500
   
$
0.26
 
 

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, the Company renegotiated its lease and maintained the same headquarters on a month-to-month basis for $500 per month.  During the three months ended December 31, 2010 the Company renegotiated its 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, the Company 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, the Company moved its main headquarters to Kansas City, Kansas and rented space on a month-to-month basis for $325 per month.

In December of 2011, the Company leased space in Scottsdale, Arizona for its main headquarters.  The lease runs from January of 2012 to March of 2014 at a rate of $2,013 per month.  Future minimum payments as of September 30, 2012 under this lease are $6,039 for 2012, $24,152 for 2013, and $6,047 for 2014.

Rent expense was $19,410 for the nine months ended September 30, 2012 and $2,250 for the year ended December 31, 2011.

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 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 and the nine months ended September 30, 2012, 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; 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
    -       34,840       -       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 September 30, 2012:

   
Level 1
   
Level 2
   
Level 3
   
Fair Value
 
Cash
  $ 25,185     $ -     $ -     $ 25,185  
Accounts payable and accrued expenses
     -       78,610       -       78,610  
Accrued interest
    -       1,973       -       1,973  
Note payable
    -       25,000       -       25,000  

NOTE 9 – SUBSEQUENT EVENTS
 
In preparing these financial statements, the Company evaluated events and transactions for potential recognition or disclosure through the date these financial statements were issued.
 
On October 1, 2012, the Company agreed to issue 40,000 shares of common stock, with an aggregate value of $16,000 for public and investor relation services.  These shares were issued in November of 2012.
 
In October of 2012, the Company issued 60,000 shares of common stock previously authorized.
 
In November of 2012, the Company issued 392,500 shares of common stock previously authorized.
 
On November 13, 2012, the Company received $100,000 from its CEO/president in the form of an unsecured 90-day promissory note. The note bears interest at 12% per annum and is payable on February 12, 2013.
 
 
FORWARD-LOOKING STATEMENTS

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

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

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

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

In this form 10-Q references to “Guardian 8”, “G8”, “the Company”, “we,” “us,” “our” and similar terms refer to Guardian 8 Holdings and its wholly owned operating subsidiary, Guardian 8 Corporation.
 
 
Item 2. Management’s Discussion and Analysis of Financial Condition and Results of Operations.
 
The following discussion should be read in conjunction with our financial statements, including the notes thereto, appearing elsewhere in this report.

Overview

We were incorporated in Nevada on June 8, 2009 as Guardian 6 Corporation.  In August of 2009, we changed our name to Guardian 8 Corporation.  Our principle offices are located in Scottsdale, Arizona.  We are 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 under section 12g.  We merged into a newly formed wholly owned subsidiary of Global Risk, with Guardian 8 Corporation being the surviving corporation.  Post merger, Global Risk changed its name to Guardian 8 Holdings.

For the nine months ended September 30, 2012 and 2011, the Company was consolidated with its wholly-owned subsidiary Guardian 8 Corporation.  All material intercompany transactions and accounts have been eliminated.

Critical Accounting Policies

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

Development Stage Enterprise

We are a development stage enterprise, as defined in ASC 915, “Development Stage Entities.”

Use of Estimates

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

Net Loss Per Share

We adopted ASC 260, “Earnings Per Share” that requires the reporting of both basic and diluted earnings (loss) per share. Basic earnings (loss) per share is computed by dividing net income (loss) available to common shareholders by the weighted average number of common shares outstanding for the period. Diluted earnings (loss) per share reflects the potential dilution that could occur if securities or other contracts to issue common stock were exercised or converted into common stock. In accordance with ASC 260, any anti-dilutive effects on net income (loss) per share are excluded.

Going Concern

Our financial statements are prepared using generally accepted accounting principles applicable to a going concern, which contemplates the realization of assets and liquidation of liabilities in the normal course of business. Our ability to continue as a going concern is dependent upon our ability to locate sources of capital, and attain future profitable operations. Our management is currently initiating their business plan. The accompanying financial statements do not include any adjustments that might be necessary should we be unable to continue as a going concern.

Recent Developments
 
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 introduced the new design in the second quarter of 2012 and project to have product to market in the first quarter of 2013.
 

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 received DTC approval for electronic clearing on May 7, 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 as of 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.

On April 20, 2012, we appointed Kathleen Hanrahan, a current member of our board of directors, to serve as our interim chief financial officer. In addition, in anticipation of structuring the company for an exchange listing, our board of directors designated two new board committees, (i) an audit committee, and (ii) a governance, compensation and nominating committee.

Further, in May of 2012, we executed a letter of intent with an investment banker to pursue a public offering of our common stock in late 2012 and concurrently seek a listing of our common stock on a national stock exchange.

On June 29, 2012, a total of $644,500 of notes payable and $21,950 of related accrued interest was converted into 3,107,690 shares of common stock.

During the three months ended September 30, 2012, we sold 267,500 shares of common stock, with a cash value of $107,000.  In addition, we agreed to issue 90,000 shares to a former director for consulting services, with an aggregate value of $42,500.
 
On September 30, 2012, we agreed to sell 125,000 shares of common stock, with an aggregate value of $50,000.  These shares were not yet issued or paid for at September 30, 2012, therefore we set up a Stock Subscription Receivable of $50,000 at September 30, 2012.
 
Additionally, we received $61,750 from the exercise of 247,000 warrants.

Results of Operations for Guardian 8 Corporation for the nine months ended September 30, 2012 and September 30, 2011.

   
Nine Months Ended
   
Nine Months Ended
   
Increase/
 
   
September 30, 2012
   
September 30, 2011
   
Decrease
 
                   
Revenues
  $ -     $ -     $ -  
Operating Expenses
    1,007,148       421,594       585,554  
                         
Net (loss) from operations
    (1,007,148 )     (421,594 )     ( 585,554 )
Interest expense
    278,859       -       278,859  
                         
Net (loss)
  $ ( 1,286,007 )   $ ( 421,594 )   $ ( 864,413 )
                         
Net (loss) per share
  $ ( 0.05 )   $ ( 0.02 )   $ ( 0.03 )
Weighted average shares outstanding
    27,755,124       26,896,709          

We generated net losses of $1,286,007 and $421,594 for the nine months ended September 30, 2012 and 2011, respectively. Our losses were generated from general and administrative expenses; however, did include research and development costs related to our ProV2 device of $392,081 for the nine months ended September 30, 2012.

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 September 30, 2012, we raised $1,172,500 through the sale of our common stock, $61,750 from the exercise of warrants and an additional $679,500 through the issuance of six month convertible term notes.  As of September 30, 2012, our cash balance was $25,185. 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 fourth quarter of 2012, but may not generate sufficient amounts of revenues to meet our working capital requirements. Consequently, we intend to make appropriate plans to ensure sources of additional capital in the future to fund growth and expansion through additional equity or debt financing or credit facilities.
 
 
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 $392,081 and $35,793 for the nine months ended September 30, 2012 and 2011, 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 two full-time employees, Paul Hughes, Vice President of operations, and Jose Rojas, Vice President of Customer Service, for Guardian 8 Corporation. We utilize the services of several contract personnel, engineers and other professionals on an as needed basis. We are currently managed by C. Stephen Cochennet, Kathleen Hanrahan and Paul Hughes with the assistance of our board of directors. We look to Mr. Cochennet, Ms. Hanrahan and Mr. Hughes for entrepreneurial, organizational and management skills. We plan to continue to use consultants, legal and patent attorneys, design and mechanical engineers, engineers and accountants as necessary. We 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

Working capital is summarized and compared as follows:

 
September 30, 2012
 
September 30, 2011
 
 
       
Current assets
  $ 129,238     $ 11,104  
Current liabilities
    105,583       16,392  
Surplus (Deficit)
  $ 23,655     $ (5,288 )

We were able to reduce our working capital deficit through the receipt of funds from private placement offerings and conversion of promissory notes into shares of common stock.

Changes in cash flows are summarized as follows:

Since inception, we have financed our cash flow requirements through issuance of common stock, receipt of funds from convertible term notes and through September 30, 2012 had raised approximately $1,172,500 from two private placement offerings, $61,750 from the exercise of warrants and an additional $679,500 from convertible notes. Our cash balance as of September 30, 2012 was $25,185.
 
We had a net loss of $1,286,007 for the nine months ended September 30, 2012.  This loss was offset by non-cash items such as stock issued for services of $64,750, stock issued for compensation of $135,000, depreciation and amortization of $7,585, and the amortization of a discount on notes payable of $257,746.  We had cash provided by the decrease in prepaid expenses of $59,088, and the decrease in accounts payable and accrued expenses of $43,771 and the decrease in accrued interest of $21,113.
 
 
We had cash used by investing activities of $5,005 for the nine months ended September 30, 2012 due to the purchase of property and equipment.
 
We had cash provided by financing activities of $531,250 for the nine months ended September 30, 2012.  This included proceeds from the sale of common stock of $107,000, proceeds from warrants exercised of $61,750, and proceeds from notes payable to related parties of $362,500.
 
We had a net operating loss of $421,594 for the nine months ended September 30, 2011.  This included non-cash items such as stock issued for services of $62,500, stock issued for compensation of $90,000, and depreciation and amortization of $387.  We had cash provided by a decrease in prepaid expenses of $10,000, and cash used by a decrease in accounts payable and accrued expenses of $21,018.
 
There were no financing or investing activities for the nine months ended September 30, 2011.
 
As a result, we are in immediate need for additional working capital and are forced to seek additional equity or debt financing to meet our ongoing working capital needs. As we expand our activities, we may, and most likely will, continue to experience net negative cash flows from operations, pending receipt of revenues from product sales. Additionally we anticipate obtaining additional financing to fund operations through common stock offerings, to the extent available, or to obtain additional financing 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.

Item 3. Quantitative and Qualitative Disclosures about Market Risk.

Not applicable.
 
Item 4. Controls and Procedures.
 
Evaluation of Disclosure Controls and Procedures

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

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

Item 1. Legal Proceedings.

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

Our significant business risks are described in Item 1A to Form 10-K for the year ended December 31, 2011 to which reference is made herein.

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

During the three months ended June 30, 2012, we agreed to issue 300,000 shares of common stock in relation to Ms. Hanrahan’s consulting agreement.  The shares were valued at $132,000, which was the fair market value on the date the agreement was signed and set up as a prepaid asset that will be amortized over the one-year life of the agreement.  As of September 30, 2012, $55,000 had been expensed and $77,000 remained in prepaid assets. Further, the agreement provides for the 300,000 shares of common stock be issued upon the earlier of (i) December 31, 2012, or (ii) when we hire a full time replacement chief financial officer.

On August 30, 2012, we conducted the first closing under a private placement offering, selling 162,500 units for $65,000 to two accredited investors. Each unit consists of one share of common stock, one three year warrant to purchase one share of common stock for $0.55 per share and one five year warrant to purchase one share of common stock for $0.75 per share. Mr. Cochennet, our CEO/President, purchased 62,500 of the units for $25,000. The 162,500 underlying shares of common stock were issued in November of 2012.

On September 20, 2012, we authorized the issuance of 60,000 shares of common stock to a former director for business development services. The shares of common stock were issued in October of 2012.

On September 30, 2012, we conducted the second closing under a private placement offering, selling 230,000 units for $92,000 to three accredited investors. Each unit consists of one share of common stock, one three year warrant to purchase one share of common stock for $0.55 per share and one five year warrant to purchase one share of common stock for $0.75 per share. 125,000 of the units had not been issued or paid for as of September 30, 2012, therefore we had a Stock Subscription Receivable of $50,000 as of September 30, 2012. The subscription receivable was paid in October of 2012 and the 230,000 underlying shares of common stock were issued in November of 2012.

On October 1, 2012, we authorized the issuance of 40,000 shares of restricted common stock to our investor relations firm. The shares were earned over a four month period commencing on July 1, 2012 through October 1, 2012. The shares of common stock were issued in November of 2012.

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

Issuer Purchases of Equity Securities

We did not repurchase any of our equity securities during the quarter ended September 30, 2012.
 
 
Item 3. Defaults Upon Senior Securities.

None.

Item 4. Mine Safety Disclosures.

None.

Item 5. Other Information.

Press Releases

On August 13, 2012, we issued a press release announcing the engagement of an Arizona consulting firm to provide guidance on international distribution. A copy of the press release is attached hereto as Exhibit 99.5.

On October 9, 2012, we issued a press release announcing the hiring of Jose Rojas to assist our subsidiary in running the customer support department. A copy of the press release is attached hereto as Exhibit 99.6.

On October 16, 2012, we issued a press release announcing the allowance of our first utility patent. A copy of the press release is attached hereto as Exhibit 99.7.

On October 24, 2012, we issued a press release announcing the allowance of our first design patent. A copy of the press release is attached hereto as Exhibit 99.8.

Promissory Note

On November 13, 2012, we received $100,000 from our CEO/president, C. Stephen Cochennet, in the form of an unsecured 90-day promissory note. The note bears interest at 12% per annum and is payable on February 12, 2013. A copy of the promissory note is attached hereto as Exhibit 10.4.

Item 6. Exhibits.
 
Exhibit No.
 
Description
2.1
 
Agreement and Plan of Merger among Global Risk Management & Investigative Solutions, G8 Acquisition Subsidiary, Inc. and Guardian 8 Corporation effective November 30, 2010 (incorporated by reference to Exhibit 2.1 to the Form 10-Q filed on August 6, 2010)
2.2
 
Articles of Merger (incorporated by reference to Exhibit 2.1 to the Form 8-K filed on December 21, 2010)
3.1
 
Amended and Restated Articles of Incorporation, as currently in effect (incorporated by reference to Exhibit 3.1 to Form 10-K filed on March 23, 2011)
3.2
 
Bylaws, as currently in effect (incorporated by reference to Exhibit 3.1(ii) to Form 8-K filed on April 30, 2012)
3.3
 
Certificate of Amendment to Articles of Incorporation (incorporated by reference to Exhibit 3.1 to the Form 8-K filed on December 21, 2010)
10.1
 
Convertible Term Note and Warrant issued to C. Stephen Cochennet dated October 13, 2012 (incorporated by reference to Exhibit 10.1 to Form 10-Q filed on May 10, 2012)
10.2†
 
Hughes Employment Agreement effective December 1, 2011 (incorporated by reference to Exhibit 10.1 to the Form 8-K filed on December 9, 2011)
10.3†
 
Hanrahan Engagement Agreement effective April 30, 2012 (incorporated by reference to Exhibit 10.1 to the Form 8-K filed on April 30, 2012)
10.4
 
31.1
 
31.2
 
32.1
 
32.2
 
99.1
 
Executive Committee Charter (incorporated by reference to Exhibit 99.1 to Form 10-K filed on March 23, 2011)
99.2
 
Audit Committee Charter (incorporated by reference to Exhibit 99.2 to Form 8-K filed on April 30, 2012)
99.3
 
Governance, Compensation and Nominating Committee Charter (incorporated by reference to Exhibit 99.3 to Form 8-K filed on April 30, 2012)
99.4
 
Reduction of Debt Press Release dated July 25, 2012 (incorporated by reference to Exhibit 99.4 to Form 10-Q filed on August 13, 2012)
99.5
 
99.6
 
 
 
99.7
 
99.8
 
99.9
 
Executive Summary as of November 2012 (incorporated by reference to Exhibit 99.1 to Form 8-K filed on November 5, 2012)
101.INS
 
XBRL Instance Document
101.SCH
 
XBRL Taxonomy Extension Schema
101.CAL
 
XBRL Taxonomy Extension Calculation Linkbase
101.DEF
 
XBRL Taxonomy Extension Definition Linkbase
101.LAB
 
XBRL Taxonomy Extension Label Linkbase
101.PRE
 
XBRL Taxonomy Extension Presentation Linkbase
 
† Indicates management contract or compensatory plan or arrangement.
 
 
SIGNATURES

In accordance with the requirements of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.
 
 
GUARDIAN 8 HOLDINGS
(Registrant)
 
       
Date: November 19, 2012
By:
/s/ C. Stephen Cochennet
 
   
C. Stephen Cochennet
 
   
Chief Executive Officer
 
       
Date: November 19, 2012
By:
/s/ Kathleen Hanrahan
 
   
Kathleen Hanrahan
 
   
Principal Financial Officer
 
   
(On behalf of the Registrant and as Principal Financial Officer)