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A 0.80mm thin flexible wristwatch with an E Ink display housed in a single piece of stainless steel.
A 0.80mm thin flexible wristwatch with an E Ink display housed in a single piece of stainless steel.
7,658 backers pledged $1,026,292 to help bring this project to life.

Finances Update & Where We Go From Here

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Hi again, we wanted to add this Financial Summary into last update, but it took about six hours to distill all the technical details into something that could be digestible, and it took the better part of today to get all these things we’re about to share organized in a way that’s easy to follow. 

This update will show where our money has been spent to date, over the last two years. As many of you are asking about refunds, we wanted to open the books so you can see where the money you’ve contributed has been applied. 

The money has mostly gone into development, tooling, and purchasing the parts that go into making the watch and charger. We have included detailed pie charts below showing money in and money out. 

We are also publishing this information to show where we have not spent money. We realized immediately after the Kickstarter campaign ended that we had to run a tight ship and put every penny toward parts, development, and tooling, so we went to extreme lengths to keep our other expenses as low as possible.

Finances | The Details 

Money raised: 

The chart below shows all the money we raised. There’s a large chunk of money from all the Kickstarter backers and some additional funding post-campaign via pre-orders. You’ll also see $100k of additional outside funding we raised.

Money Used:

The money spent was separated into into two groups. The first group, money from Kickstarter and pre-orders, was used exclusively for tooling, parts, and development costs of the CST-01. The second group is the additional investment, which we used for our operational expenses. We split our expenses up this way to ensure that your contribution was unequivocally used on the specific manufacturing costs of the CST-01. 

The first chunk of money went to Kickstarter and Amazon fees. This was for hosting the campaign and processing payments. This was roughly $100k. The money we received from the campaign was $923,634. 

The Validation, R&D, Shipping & Start Up Costs bucket covers things like creating programming and test fixtures, experimentation of adhesives and materials, test tools for proving out the encapsulation process, sample batteries for evaluation, sample metal bands, and evaluation circuit boards. 

The largest slice was spent on parts for the watch and the associated tooling. Big-ticket items are the E-Ink display, batteries, battery-management ICs, microcontrollers and clock crystals. Tooling includes injection mold tools for the plastics, dies to form metal bands, diecut tools for trimming circuits, ultrasonic weld tools, and a custom machine for applying adhesives and encapsulants. Here is a break-down of all parts, tooling, programming and certification paid for to-date:

Running Lean, Keeping Operating Expenses to a Minimum: 

Our operating expenses came out of the additional 100k investment. We’ve broken this out below. 

Certain numbers stand out, for instance, you’ll see that “Compensation” is roughly around $18,000 for two years. This number reflects the net salaries paid to both of us over the two years we’ve been working on CST. This number is low because we not only invested a lot of our own savings into the company, but we paid ourselves the minimum we needed to scrape by month-to-month once the remainder of our personal savings was exhausted. 

Some things to note are what we’re NOT spending money on. When we could do things ourselves, we did.  This includes all of the CAD & specification drawings for the watch, the electrical engineering, a large chunk of the programming, the electrical testing and calculations, making our own programming and testing fixtures, procurement of parts, and identification of outside vendors (for steps that our manufacturer didn't have the capability for). We do not have an office (we worked from home or on-site at our manufacturer). We did not buy computers or software. We did not hire a staff. That has certainly helped as paying for even a small office seems like an unnecessary expense.

We both live in Chicago. When we have to travel to San Jose for CST, we organize our schedules so that we can find the cheapest airfare and lodging possible. We found that hotels are too expensive to stay at when we have to be in San Jose for weeks at a time (even the cheapest hotels can be over $100 a night per room). So, AirBnB always comes out as the cheapest option. We sort options by price and select the cheapest possible accommodations. 

Most recently, Dave has been spending almost every other week on-site. Because money is tight, Dave took the cheapest possible option for accommodations to the extreme. He rented a van from AirBNB with a futon in the back that he parks in the manufacturer’s parking lot. It’s $35 a day, so he gets transportation and somewhere to sleep. Again, since we’re mostly working when we’re on-site, these sparse accommodations don’t really matter too much, and it has allowed us to be at the manufacturer’s site more often in recent months.

What This Means for Delivery of Watches 

As you can see from the numbers here and in the last update, continuing production at this time is a challenge. We have the majority of the parts needed, but are struggling with the yield and the costs involved to assemble them into final units.  At the moment, we don’t have the reserve funds to make up for the yield and labor costs. We are currently investigating options that may allow us to get units out to the backers and continue to produce, but the details of these conversations are still in the early stages. We will be shipping as many watches as possible and are working with the manufacturer to see how many watches can be shipped.  

We hope that this update helps to communicate that we have been doing everything in our power to get through these issues and get these products out to you folks. We’re deeply sorry for what looks like may be a negative outcome and it pains us to write this post. We assure you that we will continue to look for ways we can get watches out to you and we will ship every last watch we are able to. 

-Dave & Jerry

Mark Gartner, Sally Scott, and 88 more people like this update.

Comments

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    1. Missing avatar

      Pat Devaney on

      Any update of criminal investigation on this project?
      Does Kickstarter have any liability in failed projects like this?

    2. Mark Wheadon on

      There are 89 likes on this post.

      Just how naive (or inattentive) do you have to be to "like" a post that's basically says "The money is gone, what few watches we made mostly didn't work or fell apart, some of you will, we hope, eventually get watches, but only some. We weren't up to it. Sorry".

    3. Missing avatar

      Luke H on

      Lack of information in the beginning and a flood of facts to justify failure demonstrate why so many backers are angry with CTS. That being said, I am not surprised that this project has failed. Similar experiences have occurred with other Kickstarter projects so I think I will stop backing Kickstarter campaigns all together. The most important thing I have learned is that there is a reason companies, not people with a dream, develop and release products. Hopefully the entire product line will be sold to a real company that has the resources to bring this watch to the market.
      I also want to thank Dave and Jerry for the idea of owning this watch. I am sure they are as popular as the guys that promised everyone hoverboards in the 80's. I was very excited to get a watch but looks like all I will have to show for my pledge is a CTS font.

    4. Machined Toys on

      @Gert - that is very kind of you to want to "pay it forward" for other backers! My hope is that someone comes along and continues the project.... segue into...

      @Robert - I totally agree, CST is in a difficult position. Anyone who comes along and has the funds to buy the parts pretty much has CST over a barrel. The displays are custom and not worth anything to anyone other than someone using them on this watch. Same with the bands. The batteries and battery IC's have some slightly broader appeal, but only to the right customer and the battery manufacturer would be the one to know best who that customer is. And I doubt they would offer more than pennies on the dollar. The best best for CST would be someone to come along who wants to pick up where CST left off and complete this project.

      There are problems with that though. CST has generated a *lot* of bad blood - and some of that anger would almost certainly transfer over to whomever bought the parts and brought this watch to market. Also, CST has said their process is broken and produces 50% yield. Either the process needs changed or the parts need changed - that is essentially a redesign of the watch. And who knows what the profitability could even conceivably be. These guys botched production so badly and I doubt they did any better with distribution. My gut feel is that this watch should retail for $199 to $249. After all, it is "just" a digital watch. My gut feel is also that it should be able to be made for $30-40 COGS, if not less. I really don't understand how they got the price to $170. I own a manufacturing business and we make electronics devices - I also make items for the watch industry so I know it relatively well. It's really just an E-ink display, an MCU, a flex PCB and laminating it together with a protective, flexible top portion. I just don't see where the money went, other than these guys trying to build the "Cadillac of watches" rather than just getting the job done.

      As Steve Jobs is claimed to have said... "REAL artists SHIP!".

    5. Missing avatar

      Robert Russell on

      @corporate3-6,
      I very much doubt that liquidating parts inventory will provide much in the way of refunds. Most are specialty parts with no real market value to other manufacturers. I'd estimate they'd be fortunate to get 15 cents on the dollar for batteries and the battery IC, and that's only if there's a real market demand. Everything else is probably scrap, as it was custom-made for CST and worthless to anyone else -- even the zinc weights for the base.

    6. Missing avatar

      Gert Menke on

      Yeah, I guess that makes sense.
      Sending good money after bad was never my intention; what I meant was: When I get my watch, and it works as it should, I'd be willing to give a few $ so that others might get theirs too.
      But I must admit, it does not look like that's going to happen.

    7. Machined Toys on

      @Gert,

      Yes, the total would need to be $300/watch, however that is just a parts cost.... it does not cover the R&D, shipping, returns nor the additional engineering and testing required to get the watch up to snuff.

      So it's actually $175 just in parts costs, plus an additional amount to complete the other tasks listed.

      I don't understand the rationale of sending good money after bad. It's like buying more of a stock that has tanked.

      These guys have been lying all along (or at least hiding the truth). I think it's probably a cinch that they are also hiding the truth of their financial situation.

      The real question is... looking at their charts and graphs, roughly $1 million of the $1.5 million went to buy parts. What is happening to those parts? What should happen is they be liquidated and refunds given to backers, but they have so far refused to answer a single question for months or years.

    8. Gilbert Thomas on

      I am amazed at how some of the backers still believe this nonsense these guys are spewing. All these tweaks and mods they were doing to the watch were just a way to prolong this scam . Bottom line is they ask for 200k to deliver these watches in Sept 2013. And spent the next 2 years giving minimal updates, and then updates on how everything was progressing with shipping dates etc just to appease us. Then finally they give an update with some colourful pie charts and how they didn't spend any money and people just believe them. SERIOUSLY? If these guys were really sorry, they would have spoke to the New York Observer to set the story straight but they flat out refused. http://observer.com/2015/04/did-the-creators-of-a-1m-kickstarter-botch-production-or-blow-the-cash-on-mojitos/ Why ? My bet would be they know that if a reporter actually investigates their story it wouldn't hold up.

    9. Missing avatar

      Jamie O'Rourke on

      @Jan, Yeah, it's so thin, no one can even see it!

    10. Missing avatar

      Jan on

      This watch is so thin, it will keep the record for thinnest watch for ever !!!

    11. Missing avatar

      Kets on

      So who gets one of the few you are managing to put together successfully?
      Friends? Family?Backers? Or will you give them to the pre-order customers to avoid legal problems? What priority are you going to give to people who made the project possible. Maybe you should send out in order of pledges whichever colour you have. There is no satisfactory way for this to conclude by the looks of it yet according to you there are watches being completed, so where are they?

    12. Missing avatar

      Jamie O'Rourke on

      @Gert

      "Could you explain how you got to that number? In Update #30, they said one watch would, given the current problems, cost about $300. On average, people have already paid roughly $125 per watch, so they should be short by $175 per watch, right?"

      You'd think so, but they have run out of money, I believe corporates figures are based on the fact that they have zero money, that's $125, that's gone, so we're looking at the full production cost and as they seemingly haven't made more than a couple dozen, that means each watch to be made will now cost $300 from here on in

    13. Missing avatar

      sam marko on

      I also paid for a pre order so I had one in each colour (�) - I had that payment returned a few days ago via PayPal. But I think we can accept the kickstarter money has all been spent, time to move on

    14. Missing avatar

      Gert Menke on

      @corporate3-6
      > Did you read the update?
      What makes you think I didn't?

      > They are not $50 short of making your watch.
      I did not claim that they were.
      Also, I don't intend to cover all their additional costs (remember, they claim to be evaluating other options as well), but I'm still willing to help them get back on their feet, *if* they can prove to me that they actually have a product and are still committed to bringing it to market.

      > They are $300 short per watch. They are out of money and the cost of each watch right now
      > is $300 given the yield problems which they haven't been able to solve.
      Could you explain how you got to that number? In Update #30, they said one watch would, given the current problems, cost about $300. On average, people have already paid roughly $125 per watch, so they should be short by $175 per watch, right?

      > These guys have never been up front about where things really stand,
      > leaving it up to backers to guess.
      That is, sadly, true.

      However, as slim as hope may be, I would still love to see this thing in the stores (and on my wrist) someday.

    15. Burns! on

      It seems I was one of the lucky ones. I received my CST-01 in early February. Unfortunately, it is too small for my wrist. I emailed CST immediately, hoping to exchange for a larger size, but of course I never heard back from them.

      It is a black CST-01, size medium. New-in-box; in fact, never left the box except for the one time I tried it on. Anyone interested? Perhaps one of the backers willing give more money to CST to (hopefully) get a finished product? Here is your finished product. If interested, email Burns! at cst4sale (at) gmail (dot) com.

    16. Missing avatar

      SC on

      They squandered over a million dollars (after originally asking for 200K) and people want to pitch in more.

      Wow. Just wow.

    17. Machined Toys on

      @ Gert,

      Did you read the update? They are not $50 short of making your watch. They are $300 short per watch. They are out of money and the cost of each watch right now is $300 given the yield problems which they haven't been able to solve.

      These guys have never been up front about where things really stand, leaving it up to backers to guess. This update is no different.... except they admit that the money is gone, the watches aren't at a point they can be manufactured, they haven't made any, and they don't have any way to pay for the production even if they could fix the problems.

      So given that - anyone who is looking to kick in some more $$ to get a watch needs to put in an additional $300 + shipping, plus the cost of whatever additional R&D is needed to solve the problems - if they are even solvable. That cost could be another million or two.

    18. Missing avatar

      Gert Menke on

      @lincicy: You can't. This is Kickstarter, not Ebay.
      We all knew there were risks involved, and "being unexperienced in mass production of a complex device" is probably the one most common problem that tech projects on KS have to face. It was an ambitious project and mistakes have been made, but I don't think these people intentionally screwed us over.

      That being said, I would be willing to give another 50 bucks to help them build and ship more watches. But I'd want to get mine first (understandably, I think).

    19. Missing avatar

      lincicy on

      How can I get the refund? Waiting for soooo long. Not interested anymore.

    20. Jan Vercammen on

      http://cstbackers.freeforums.net/post/38/

      We'll keep relinking this until something actually happens.

    21. Paul Jewitt on

      Since you're struggling to meet the orders and you probably don't have the parts to make the watch I ordered can I just request that you send me any assembled watch in the size I requested, I'm not concerned with the colour.

    22. Missing avatar

      Neil Halin on

      I have to say that I am very disappointed with this news. Of great concern to me is the $100k to Kickstarter/Amazon. I think that Kickstarter should make it very CLEAR on their website what monies from the fundraiser are going to pay their bills. I think that they should post either a percentage or running "charges" so that funders know where their money is being spent.

      As for this project, the owners should post a listing of assets. How many complete watches are possible and what is the cost to finish the others? Where do the assets go if they fold and do not deliver watches?

    23. Missing avatar

      Dolores Willis on

      Totally disgusted with this project and its managers. Such a scam. I asked for a refund January 2014, and the response was to give them my Amazon order info. However, my pledge was made directly from my bank account. You would think that they would have a database that contains their donor information. Evidently, these are people with absolutely no business sense. SUCH A WASTE.

    24. Tibor Sekelj on

      I think people still don't get it. CST said they ran out of money to produce watches. They didn't say how many will be shipping as they don't have any money to produce and ship.

      They are sitting on a load of parts which can't be assembled into functioning watches by any reasonable yield.

      And for those asking for refund. Please read the comments and the attached links. There isn't any money left as CST now conveniently disclosed after two years.

      The only action we have is asking CST to open their books. If they did as they claim then it's not good but nothing can be done. If there were irregularities in spending then we have to check further options.

      So contact Kickstarter to get CST to answer questions as CST currently isn't saying anything

    25. Missing avatar

      Jamie O'Rourke on

      Of course, what the other 99% of idiots would do is a mystery ;) #grammar

    26. Missing avatar

      Jamie O'Rourke on

      """..please do a survey of who would be prepared to donate additional funding to help you achieve the goal." - I second this, if it would ensure delivery.""

      Survey done - 99% of people wouldn't, 1% of idiots would.

    27. Matthew Summers on

      How can I get my money back? I'm no longer interested in this product.

    28. MM on

      "..please do a survey of who would be prepared to donate additional funding to help you achieve the goal." - I second this, if it would ensure delivery.

    29. B.
      Superbacker
      on

      "We assure you that we will continue to look for ways we can get watches out to you and we will ship every last watch we are able to." Could we get more information ?

    30. Neil Mullett on

      I don't like watches generally, can't be doing with a lot of the designs out there with 10+ dials, and sized like a saucer. I want a watch that tells me the time, that doesn't weigh a tonne. This is why I backed this project.

      I'd donate a further £50. One lot of £50 will not make a difference, but I am already £120+ quid down and have almost wrote it off. BUT if a further £50 helped them get over the finish line, then my watch on my wrist would be all worth it, and, in my eyes at least, would only have cost me the £50 additional. If CST read these posts, please do a survey of who would be prepared to donate additional funding to help you achieve the goal.

    31. Missing avatar

      Carlos alberto martinez gil on

      I would like a refund if possible..if not i Will wait..thanks

    32. Missing avatar

      Carlos alberto martinez gil on

      I would live a refund please if possible...if not possible ok i Will wait
      Thanks

    33. Tibor Sekelj on

      Nice summary. Every backer should read the post on free forums

    34. Missing avatar

      SC on

      @Casey Paleous....read this. Educate yourself.

      http://cstbackers.freeforums.net/post/38/

    35. Ярослав Тимофеев on

      i will be add money, if CST will show plan how they wil be produce our watch.
      Who can do vote?

    36. Saji Thabolingam on

      Hi Dave & Jerry, thank you for the update. I know there is a lot of vitriol here but i wanted to say I do appreciate the efforts you guys put in. I do believe that CST had the best intentions. I know how difficult it can be to put together a project involving so many people, what unexpected hurdles can do to not only a timeline but a budget as well. Being a small business owner, I know what it is to sink years of your life and most if not all of your energy into a singular vision and I can't imagine the disappointment you must feel at the turn this has taken. I hope you guys can find your funding source and get the watches out on the market.

    37. Missing avatar

      Terry Hook on

      @Kevin
      @Casey
      how is asking Dave & Jerry to show they actually spent the money by posting photos of raw components rather than the back of some random van being a conspiracy theorist or a hater? you don't make any sense. im as hopeful as the rest, but they said in one of the recent updates that they're out of money. how can they keep going with no plan? again, sense making. you. not.

    38. Missing avatar

      Timothy Giles on

      Casey and the other apologists. You can write what you like but the facts are clear. Throughout this KS there has been a lack of updates, extreme lack. Clearly the problems have not been explained through the project. I would remind you to read carefully what they stated on the front of the CST kickstarter relating to risks and how close they were to manufacturing.

      This project is how late? with how much delivered? no promise or 'real' plan on moving it forwards. It is clear that they are telling us (but without formal financial documents, who knows?) they are out of money. But how if they are to be defended could this have happened? They have had more money then they ever thought they needed.

      They state they have the batteries, the band, the display..... then send me that. I want the bits, forget putting it together. What I dont want is to allow them to walk away with out money, having consistently not delivered.

    39. Missing avatar

      Jamie O'Rourke on

      lol that's hilarious :D

    40. Ярослав Тимофеев on

      I recived it! https://www.facebook.com/photo.php…
      :))
      I am very disappointed, but I WILL BE wait this watch.
      To Dave & Jerry: Hello from Russians! We need this watch.

    41. Missing avatar

      Kevin Chan on

      Thanks for the update. It sounds like the project has been tough. With all the haters below, I just wanted to say that your efforts are appreciated. Keep going.

    42. Casey Paleos on

      To all the haters / conspiracy theorists: please see the excellent comment left by backer & professional product developer Simon Jelley below to educate yourself on some relevant issues about which you have clearly have no current understanding.

      To Dave & Jerry: DON'T GIVE UP!!!! Like many other backers, I would be willing to kick in a few more dollars to ensure this project ultimately succeeds!

    43. Missing avatar

      Terry Hook on

      has anyone seen this? the dude spent too much time on this, but wow

      http://cstbackers.freeforums.net/post/38/

    44. MM on

      I wonder if I'm being naive or if you're dancing around the point but the update doesn't actually say that we're not getting our watches. In fact, "We assure you that we will continue to look for ways we can get watches out to you and we will ship every last watch we are able to", leaves me with hope that I will. If this doesn't work then Kickstarter have to take some responsibility too, they can't take $100k in commissions and avoid all responsibility.

      2013 seems like a long time ago.

      Can we see what the plan would have been to manufacture if you had only raised the minimum, would that have been more viable or would it still have folded?

    45. Missing avatar

      Bill Carroll on

      Hi, Like all of the others I am really sorry this happened. Like a lot of the others I would offer more money if that helped to keep you on course. I would certainly offer another $100 if enough of us chip in, could you continue????

    46. Missing avatar

      Javier Santos on

      Dave & Jerry,

      Long time waiting & following all your steps, this last update is simply too sad however when anyone decided to be a backer there is always a risk. We are giving founds to something new a new idea not done before.
      I must say thanks to push us to be with you into this project.
      Ask for refunds make no sense, however I would like you not give up and give us chances to get our watches. I want mine !! but I want to help you too, I just can add some more money that makes this project to success !!!, may be not as it was though at the beginning.
      Please squeeze your brain and give us some chance to see this on our wrist.

      Hope you can achieve it !!