How much money is still left, what is the burn ratio, what is the runway?

We sold $3.5M worth of $GUARD in the token sale which ended June, 2018.

We spent a total of ~$1.2M in 2018. A lot of that was legal and accounting. Much of it also went into the product, professional design work for the app, roadshow for the token sale, conferences, etc.

Token sales are expensive: $250-$500K is what the legal work alone cost on average. Then there is accounting. Taxes (since it is revenue, it is a taxable event).

Like many others, the offshore entity that conducted the token sale was domiciled outside the US (in Belize, in our case). Company formation, compliance, tax planning (and paying) always eats more money than you hope.

Our corporate law firm is Perkins Coie (one of the best in the world). They were so busy with other client companies doing token sales — many of them paying several million for crypto legal expenses — that they literally had no time for us: we were too small a token sale.

So we hired a second law firm — a crypto expert — to handle our token sale. This also meant we had two law firms, and two legal bills.

After we spent $1.2M, we had $2.3M, mostly still in crypto.

Now, we have done everything VERY carefully, in terms of legality and compliance, at every step of the way. We have left money on the table because of this (we turned away many US-based participants, for example). We have moved slowly at times because of this, until we gained absolute certainty on an issue.

The soonest I could convert most of the crypto was in July, when the token sale was over. This was a direct result of the legal hurdles. However, we could not get clarity from our accounting team on the tax implications of converting from crypto to fiat in a Belize corporation, and then sending that fiat to the GC, Inc. (US corp) entity. So we hired a second crypto-specialist accountant to analyze the issues. That took more time to find the right accountant, and then to get our situation properly analyzed.

By that time, the crypto market was collapsing, major coins losing 90% of their value.

The remaining $2.3M quickly became ~$350K before we could get the legal clarity we needed to move it safely.

[This should answer this question: Why is GC speculating (holding ETH) with our money? They’re not an investment firm — they’re a tech company?]

NEO went from a high of $187 to $6 in this period. So $800K in NEO became $25K (just to give you an idea of what that delta looked like.)

We then started converting our crypto very, very slowly, taking only what we needed for Amazon hosting bills, and to survive.

Chris and I had very meager salaries in 2018 — I have not taken anything at all in 2019 (in fact, I am underwater $250K+ personally in GC. Chris also has a bunch of expenses he is currently eating).

You guys sold all ETH. You sold the bottom. Care to clarify?

We looked at ETH, BTC and NEO to convert. We decided we believed in BTC the most, and the least in ETH.

So we converted ETH first. (Reason: ETH was (and is) still not scalable, EOS and TRON are already far more successful app coins — so we converted ETH first. It was a hard call — we debated it internally a lot.)

We have since started converting BTC. We have not touched any NEO at all: we knew that NEO corp was working on significant upgrades and this would help the price of NEO at some point. And now, dBFT 2.0 / Cli 2.10.2 launched 48 hours ago — HUGE upgrade to the Main Net — you can see it’s impact below — this should eventually be reflected in NEO’s price:

Why isn’t anyone hired when there’s 3–4m$ raised?

As you can see from all the above, the crypto winter hit us (and others) hard. Millions quickly became mere hundreds of thousands. (We are aware of another company that had $50M at its peak; it has laid most everyone off. We know of another that sold $10M worth in 30 seconds, and is likewise struggling — we are in better shape — because we have spent so leanly).

Our plan WAS to hire up several engineers working for Chris in an office in Manhattan Beach. But that did not materialize due to the crypto drops.

[Side Note: Most apps are done with a team of 3–6 people working over a six month period. We’re trying to produce the same quality app on two platforms with ONE person — Chris.]

We then decided to go much, much leaner. Survive longer on less. Get Guardian Circle 3.0 out the door. Build up the consumer adoption and the capitalization from that point forward.

The companies that live through the winter thrive. That happened with the dotcom boom, bust, and then web 2.0 resurgence. Amazon, Google, LinkedIn, and Facebook were all companies that lived through a winter. We’ll do the same.

What is the runway?

We currently have 12 months of runway.

If I put in more of my personal money, which I’m planning on doing if necessary: 18–24 months.

I am also talking with venture capitalists and other funding entities about a corporate raise. Once the 3.0 app is released and user base is growing, these conversations will get more real.

I see Mark traveling everywhere in the world — What are the results of those expensive trips? Please be detailed and don’t say “we are having great convos with many big parties in the industry”

And this travel and conferences are WHERE I meet with some of these VC’s I am pitching.

You probably saw me at Consensus in New York two weeks ago. You see me on Twitter, smiling, with this or that person.

What you do NOT know is that I did not actually purchase a ticket to Consensus (I hung out in the lobby the whole time), and I found bargain basement hotel rooms and plane fares.

The whole trip — all in — cost $1.5K. Also, I paid for it myself.

I had three venture pitch meetings while I was in the lobby. I also met with NASH founders, found out where they were in their launch process, thanked them for their support of $GUARD on their exchange and assured them we were near GC 3.0 launch (they were very understanding, as they are exactly as late as we are with their own product).

I met four exchanges that expressed new interest in listing $GUARD. CMC lists two of these in the top 10. (unfortunately, two also want 30 BTC listing fee). The other two are having a look at listing $GUARD for free.

And I reconnected with NEO corp dev folks, applying to their new $100M fund that they announced at Consensus.

Recently, you saw pictures of me in Austin, Texas and in Palo Alto, CA.

There is a very big announcement coming about three new people who are getting involved with GC. I would tell you or hint more about in what capacity, but I want to save it for a PR burst / press release. All three come from a company that has been in the news a lot lately. If I blow the news value here, then that doesn’t help $GUARD (especially when NASH launches) or Guardian Circle.

Anyway. I was meeting with two of the three people on these trips.

I was also meeting with the head of Perkins Coie in Silicon Valley: “Firmwide Co-Chair, Emerging Companies & Venture Capital Practice.” THE top guy — to discuss GC fundraising and go-to-market partnerships for the app.

All in all: if you’re “out there”, you will meet people and things will happen that wouldn’t have any other way. I do keep the costs down. But these have all been worth it.

At events, people see that your project is still alive (the bulk are dead). They tell you inside information in person that you’d never hear otherwise. They talk to others about your project. They introduce you to new people.

I don’t drink (so drunk-people parties are not fun for me). I don’t like to travel, actually. I don’t like to leave home. True, I find ways to enjoy it once I’m there, but I don’t actually like to do it. But I know I need to. I’ll need to do more once the app is released, hit the streets and preach the app like crazy.

Why isn’t the GUARD token registered with the SEC? According to the SEC, anything that is not registered with the SEC, is classified as a security token — are you aware? Can you please provide me the link to their SEC registration?

$GUARD is not a security. The Token Sale Agreement that all participants signed states this very clearly and repeatedly. We also have a lengthy Legal Opinion Letter from an expert lawyer that analysed our token and found that we were very clearly not a security. We have presented this letter to several compliant exchanges who agree with the analysis.

Furthermore, the relationship of the SEC with cryptocurrency is complex and ongoing. We know that BTC and ETH have been declared not securities. We also know one instance where courts found the SEC did not adequately prove that a certain token was a security that it claimed was one. The CFTC believes crypto is a commodity for example, and a Fed court recently backed them up as having jurisdiction, not the SEC.

We did our token sale EXTREMELY carefully. We hired a THIRD securities lawyer to analyze our token sale AFTER we did it, and to file all appropriate — even abundantly cautious — notices with the SEC.

However, $GUARD is not registered as a security — nor should it be.

Are the investors like Jason Calacanis still in dialogue or has he considered the investment in GC a loss?

Jason is a good friend and investor in Guardian Circle, Inc. However, Jason has also been a very loud anti-crypto voice — denouncing even Bitcoin. He is not a fan of any crypto, to put it mildly.

So he does not agree with our direction on $GUARD overall.

That said, he loves Guardian Circle and the mission of community safety. He put us on stage at the LAUNCH Festival in 2016. We owe a lot to Jason and we’re grateful for his corporate investment and friendship. He certainly hopes we become one more unicorn he can add to his stack of unicorn angel investments — he wins either way.

Last year there was a competition (xPrize) — Developers built applications using the GC api — any update on that?

There was a winner of the Women’s Safety XPRIZE: LEAF Wearables, out of New Delhi, India. We loved the winner; the winner loved us, we had 5+ meetings about working together and deploying their winning hardware in India with Guardian Circle 3.0.

However: LEAF ‘only’ won a million dollars with the XPRIZE. This simply wasn’t enough for them to mass-produce their panic button hardware device. They had believed that winning the XPRIZE would enable them to raise another $6M-$10M, which is what you need at a minimum to create a hardware product at scale.

So, they put the hardware on hold for the time being while they try to raise more money. We’re hopeful we’ll pick the conversation up when they do, but for right now, it’s on hold on their end.

We have similar hardware integration conversations underway right now, but nothing I can report closure yet on (many are waiting to see GC 3.0 before committing). One is for 100,000 seniors in 8 states; the other is a $3B / yr hardware company with a name you’d recognize)

How many total downloads/how many active users?

We have 10,000+ active users right now. Guardian Circle 3.0 is designed to be much more viral than 2.0 or 1.0, so we believe it will ramp much better than the earlier incarnations were able to. (Basically, the Contact Manager / Invite system never worked quite right in earlier versions — it does this time around).

Also the ‘news of the three people’ I alluded to earlier should help with consumer adoption quite a bit.

Conclusion

I know this has been a frustrating wait. Hopefully, this provides more detail as to what’s been going on on our end.

Please know: Chris and I work most nights and weekends. We have been this whole time, and we will continue to. Guardian Circle is our life.

The reason I haven’t done more of this kind of communication with the community is that I’ve prioritized other things. For example: I’m supposed to be putting together a customized version of our investor materials for our Perkins Coie contact right now — instead, I’ve stopped, and written this.

But I’ll take the time to do this sort of thing more often going forward.

Also, I will be in the Telegram room this coming Monday, June 10 at 1:00 PDT to answer any further questions you might have about all of this.