SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549FORM 10-KSB

ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT OF 1933

Commission file number 028238

|Delaware                          | 54-1521616           
|--------------------------------- | ---------------------
|(State or other jurisdiction      | I.R.S. Employer      
|of incorporation or organization) | Identification number

11 Sundial Circle, Suite 17, Carefree, Arizona 85377

Issuer's telephone number:(480) 575-6972

Securities registered under Section 12(b) of the Exchange
Act:     NONE
Securities registered under Section 12(g) of the Exchange Act:

Common Stock, $.001 par value

(Title of Class)

Check whether the Issuer (1) filed all reports required to be filed by SectiOn 13 or 15(s) of the Exchange Act during the past 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 [  ]

Check if there is no disclosure of delinquent filers in response to Item 405 of Regulation S-B contained in this form, and no disclosure will be contained to the best of registrant's knowledge, in definitive proxy or information
statements incorporated by reference in Part III of this Form 10-KSB or any amendment to this Form 10-KSB.  [   ]

Issuer's revenues for its most recent fiscal year were $606,453.

The aggregate market value of the voting stock held by non-affiliates as of April
12, 2001 was approximately $1,915,755 based on the average bid and asked price of such stock.

The number of shares outstanding of issuer's Common Stock, $.0005 par value, as of April 12, 2001 was
3,995,690.

Transitional Small Business Disclosure Format (Check one). Yes [  ]  No [X]

DOCUMENTS INCORPORATED BY REFERENCE

The Registrant hereby incorporates herein by reference the following documents:

Item 13.       Exhibits

| | 1. | Incorporated by reference from the Company's Registration Statement on Form SB-2, SEC File No. 333-2712, as filed with the Commission on March 22, 1996.              
| | -- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 2. | Incorporated by reference from the Company's Registration Statement on Form SB-2/A, SEC File No. 333-38044, as filed with the Commission on January 18, 2001.         
| | 3. | Incorporated by reference from the Company's Current Report on Form 8-K dated February 19, 2001, as filed with the Commission on March 2, 2001.                       
| | 4. | Incorporated by reference from the Company's Current Report on Form 8-K dated September 30, 2000, as filed with the Commission on October 13, 2000.                   
| | 5. | Incorporated by reference from the Company's Annual Report on Form 10-KSB for the fiscal year ended December 31, 1996, as filed with the Commission on April 15, 1997.
| | 6. | Incorporated by reference from the Company's Annual Report on Form 10-KSB for the fiscal year ended December 31, 1997, as filed with the Commission on March 31, 1998.
| | 7. | Incorporated by reference from the Company's Current Report on Form 8-K/A as filed with the Commission on August 16, 1999.                                            

PART I

DESCRIPTION OF BUSINESS

Item 1.       General

Guardian Technologies International, Inc., a Delaware corporation, was originally incorporated in 1989.  We manufacture and distribute ballistic protective equipment, including equipment
commonly referred to as body armor.  Our product lines include four basic types of ballistic protective vests, ballistic protective shields, a ballistic protective vests for police dogs, aircraft ballistic protective equipment, and assorted other
ballistic protective devices, such as ballistic protective blankets and seat cover liners.

We also are engaged in the specialty steel fabrication business through our 50%-owned subsidiary, Structural Holdings, Inc.

We also have a wholly-owned subsidiary, Palo Verde Group, Inc., which owns some undeveloped real estate in Arizona and a commercial building and real estate in Wyoming.

Our executive offices are located at 11 Sundial Circle, Suite 17, Carefree, Arizona 85377, telephone (480) 575-6972.  We use the calendar year for our fiscal year.OPERATIONS

General

We have 100%-owned subsidiaries
as follows:

Guardian Steel and Safety Products, Inc., which owns a 51% member's interest in ForceOne,        LLC

-       the manufacture and distribution of ballistic protective equipment,

Guardian Steel, Inc., which owns 50% of Structural Holdings, Inc.
       -       specialty steel fabrication, and

Palo Verde Group, Inc.

-       real estate interests.

Ballistic Protective Equipment Business

Through ForceOne, LLC, we manufacture ballistic protective equipment, including equipment commonly referred to as body armor.  Our product lines include four basic types of ballistic protective
vests, K-9 ballistic protective vests, and assorted other ballistic protective devices, such as aircraft ballistic protective equipment and ballistic protective shields, blankets, and seat cover liners.Overview of the Industry

We participate in the global security industry through the manufacture of security products marketed to law enforcement and correctional personnel.  Increasingly, governments,
businesses, and individuals have recognized the need for our products to protect them from the risks associated with physical attacks and threats of violence.

Certain industry studies estimate that worldwide expenditures for security products will grow at a compounded annual rate of 7.9% from approximately $14 billion in 1990 to approximately $60
billion in 2010.  Although these statistics do not correlate directly to our product lines, we believe that the increasing spending in the private security sector is indicative of a greater demand for our products in the law enforcement, correctional and
governmental sectors.

In response to an increased emphasis on safety and protection, the number of police officers has increased significantly over the past several years.  By 1996 there were approximately 738,000
full-time sworn law enforcement officers in the U.S.  In 1993, a U.S. Department of Justice survey of local police departments indicated that 65% of such organizations have purchased body armor for all of their officers, 60% supply their officers with
pepper spray, 35% supply their officers with tear gas and 10% maintain inventories of stun grenades and less-than-lethal projectiles.  In addition, the U.S. prison population has doubled since 1985 to approximately 1.8 million inmates in 1998.  We believe
this rise in the prison population has spurred demand from institutional correctional facilities for manufactured security products.

Our Products

We manufacture and sell body armor products that are designed to protect against bodily injury caused by bullets.  Our principal armor products are ballistic resistant vests and shields.  Our
line of ballistic protective vests provides varying levels of protection depending upon the configuration of ballistic materials and the standards (domestic or international) to which the armor is built.  We recently introduced a lighter, more comfortable
and flexible ballistic resistant vest under the brand name Thin Blue Line.

Based on studies and testing performed at an independent testing laboratory and our own test experience, we believe that protective vests and equipment manufactured with Honeywell's high
performance materials provide, pound for pound, greater ballistic protection and reduced blunt trauma to the wearer, at higher projectile velocities and with longer durability than similar equipment made with other forms of ballistic resistant materials.

Manufacturing

We manufacture substantially all of our products under our own label at the ForceOne facility in Spruce Pine, North Carolina.

Raw Materials

We manufacture our products primarily with high performance Spectra 1000 woven fabric and non-woven composite ballistic materials Spectra Shield, Spectra Flex, Gold Shield, and Gold Flex.
These materials are available only from Honeywell International, Inc., which holds the patent for the unidirectional fiber/resin process incorporating Spectra ultra high molecular weight polyethylene fibers.  Honeywell also controls the proprietary
thermoplastic process used to manufacture its Shield and Flex materials.

Our Customers

Sales to the US government represented 23% of our total sales in 1999.  Sales to municipal law enforcement agencies represented 20% of our total sales in 1999.  Approximately 20% of our total
sales were made to a distributor who purchased products on behalf of a foreign police and military organization.

Marketing and Distribution

We market our products directly and through selected dealers of police equipment to local, state, and federal agencies, private security companies, and private individuals with legitimate
security needs.  Our marketing methods include personal sales presentations, advertising in magazines and periodicals aimed at the law enforcement profession, direct mail campaigns, and participation in selected trade shows and conferences.  We also make
joint presentations with other companies to bring together technical expertise, sales and marketing efforts, and production capabilities; and we respond to agency and department solicitations for bids and proposals.

In June 1997, we entered into a four-year contract with the General Services Administration (GSA) - the federal government's principal procurement channel - that enables us to sell all of our
products directly through GSA.

We have our own home page (www.guardiantech.com) and E-Mail address (gti@interramp.com) that have become channels for marketing products in the United States and around the world.

We subscribe to two marketing services: BidNet and FACNet.  BidNet tracks bids and solicitations for proposals from local and state jurisdictions throughout the United States.  FACNet provides
information on federal procurements and is a required on-line service for GSA contract suppliers seeking to sell to the U.S. Department of Defense.  In order to respond to Defense Department solicitation opportunities, we seek manufacturers of compatible
products and/or materials with which we can match our technical expertise, sales and marketing efforts and production capabilities.

Our Competition

The ballistic protective equipment business is highly competitive.  We have at least five major competitors in the domestic law enforcement, federal government, and military markets,.  We
believe that the principal elements of competition in the sale of ballistic protective vests are (1) materials used in construction, (2) style and design of the vest, and (3) price.  In the law enforcement and military markets, we frequently bid for
orders in response to invitations for bidding which set forth product performance specifications.  Although our products are priced slightly higher than that of our competition, we believe that our prices are justified by our products' better
craftsmanship, the higher ballistic capability of the materials we use, the fact that our products generally provide more body area coverage, and the fact that we provide a longer warranty.  In international markets, our
competition consists of several American competitors and a few international companies.

Environmental Matters

We are subject to federal, state, and local laws and regulations governing the protection of the environment, including those regulating discharges to the air and water, the management of
wastes, and the control of noise and odors.  While we always strive to operate in compliance with these requirements, we cannot assure you that we are at all times in complete compliance with all such requirements.  Like all companies, we are subject to
potentially significant fines or penalties if we fail to comply with environmental requirements. Although we have made and will continue to make capital expenditures in order to comply with environmental requirements, we do not expect material capital
expenditures for environmental controls in 2000.  However, environmental requirements are complex, change frequently, and could become more stringent in the future.  Accordingly, we cannot assure you that these requirements will not change in a manner
that will require material capital or operating expenditures or will otherwise have a material adverse effect on us in the future.

Specialty Steel Fabrication Business

Through Structural Holdings, Inc., our 50%-owned subsidiary, we fabricate and erect structural steel for governmental, military, commercial and industrial construction projects such as
dormitories, aircraft hangers, special operations centers, high and low rise buildings and office complexes, hotels and casinos, convention centers, sports arenas, shopping malls, and hospitals, and a variety of customized projects.  We seek to
differentiate our operations by offering complete, turnkey steel construction services featuring engineering, detailing, shop fabrication and field erection.  Certain turnkey services are provided by subcontractors in the areas of detailing and erection.
By offering an integrated package of steel construction services from a single source, we are able to respond more efficiently to the design and construction challenges associated with large, complex, "fast track'' construction projects.

We provide our integrated steel services primarily to general contractors and engineering firms, including, among others, the US Army Corps of Engineers, Flintco, McMasters, and  Manhatten,
that focus on a wide variety of projects, including hotels, office complexes, hospitals, shopping malls and centers, sports stadiums, restaurants, convention facilities, entertainment complexes, aircraft facilities, schools, churches and warehouses.
Representative projects include: the Marriott Renaissance Hotel, Special Operations Aircraft Facility, Fine Airport Parking Facility, and Dobson Communications Corporate Office buildings.  We maintain relationships with a number of local or regional
general contracting and engineering firms.

Overview of Industry

Companies engaged in the steel fabrication and erection industry prepare detailed shop drawings, fabricate, and erect structural steel and steel plate weldments, and perform related engineering
services for the construction of various facilities.  The primary customers for these services are private developers, general contractors, engineering firms, and governmental agencies involved in a variety of large scale construction projects.
Historically, these customers have relied on multiple subcontractors to perform various services to complete a single project, primarily because few companies in this industry offer fully integrated engineering, detailing, fabrication and erection services.

We believe that the steel fabrication and erection industry is highly fragmented and that many of our competitors are businesses operating in local or regional markets.  Given the trend toward
the use of fully integrated contractors and the large number of smaller companies engaged in this industry, we believe the industry may experience consolidation.

Business Strategy

Our objective is to achieve and maintain a leading position in the geographic and project markets in which we compete by providing timely, high quality services to our customers, continuing to
grow internally, and making selected strategic and consolidating acquisitions. We believe that the steel fabrication industry will continue to be characterized by large, complex, fast track projects.  The complexity and size of these projects requires
companies with extended financial and operational capabilities.  We intend to take advantage of this trend with our integrated service capabilities.  Additionally, the fragmented nature of the industry provides us with opportunities for growth.  We seek
to achieve continued growth and diminish the impact of business and economic cycles by pursuing a growth strategy consisting of the following components:

We are pursuing this objective with a strategy comprised of the following components:

| | - | Expand Revenue Base.  We are seeking to expand our revenue base by internal growth and through making strategic acquisition, thereby leveraging our long-term relationships with regional and national construction and
engineering firms, national and regional accounts, and other customers.  We also intend to continue to grow our operations by developing new project capabilities and services and by targeting specific types of projects in which we have an existing
reputation for expertise, such as military base projects.  We believe that continuing to diversify our revenue base will reduce the impact of periodic adverse market or economic conditions.                                                                                                                                                                                                                                                                                                                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | - | Promote Internal Growth.  We intend to pursue continued internal growth by adding sales and marketing personnel to dedicated, fast growing markets in which we are actively pursuing new projects, by further
developing our engineering and design capabilities and fabrication capacity, and by continually updating our fabrication and detailing equipment and technologies.  We believe that these efforts will enhance our market share, revenues, and operating income
in our existing and targeted principal markets and improve our operating capacity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | - | Acquire Synergistic Businesses.  We intend to pursue selective acquisitions of steel detailing, fabrication and erection companies that offer us increased plant facilities, opportunities to increase market share in
selected geographic markets, penetration of new product market segments, and access to domestic and international markets targeted by us for geographic expansion.  Such acquisitions may also provide the continued and additional benefits of increased
purchasing efficiencies with respect to steel and other raw materials, payment and performance bonding and insurance premiums, and more efficient allocation and utilization of labor resources among projects within our geographic markets.  We believe that
many of our competitors operate primarily on a local or limited geographic basis and, while having established relationships in those markets, lack the resources to compete for large or more complex projects.  In addition, the industry is highly
fragmented with many of our competitors being closely or family held entities.
| | - | Manage Capacity Through Outsourcing.  We increase our project capacity by outsourcing certain amounts of our detailing, fabrication and erection work to reputable subcontractors.  Outsourcing has enabled us to
effectively increase the capacity of our fabrication facilities while usually maintaining margins comparable to in-house services.  We believe outsourcing will play a key role in our strategy to continue to expand our presence in selected international
markets, where we typically provide design engineering and project management services and utilize local subcontractors for fabrication and erection.  The ability to expand or contract capacity through the use of outsourcing provides us flexibility to
meet changing market demands in a cost-effective manner.                                                                                                                                                                                                                                                                                 
| | - | Maintain Entrepreneurial Environment.  We believe that our management and operating structure, which emphasizes quality, innovation, flexibility, performance and safety, has contributed to
our ability to develop new business in competitive or difficult economic environments. Our operating structure provides incentives to employees at all levels to focus on pursuing profitable growth opportunities, attaining financial objectives and
delivering superior customer service.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
| | - | Emphasize Innovative Services.  We focuses our engineering, detailing, fabrication and erection expertise on distinct product segments requiring unique or innovative techniques, where we typically experience less
competition and more advantageous negotiated contract opportunities.  We have extensive experience in providing services requiring complex fabrication and erection techniques and other unusual project needs, such as specialized transportation, steel
treatment or specialty coating applications. These service capabilities have enabled us to address such design sensitive projects as the Denver Courthouse.                                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - | Diversify Customer and Product Base.  Although we seek to garner a leading share of the geographic and product markets in which we compete, we also seek to diversify our projects across a wide range of commercial,
industrial, and specialty projects.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           

We believe that our combined diversification into new geographic, specific product and national markets will enable us to expand our revenue base and to reduce the impact of periodic market or
economic conditions adversely impacting one or more of our market segments.Primary Markets and Products

Our current principal geographic markets include the Southwest, principally Oklahoma, Texas, and Colorado.

Our projects are awarded through a competitive bid process or are obtained through negotiation, in either case generally using fixed price or cost-plus pricing.  While customers may consider a
number of factors, including availability, capability, reputation, and safety record, price and the ability to meet customer imposed project schedules are the principal factors on which we obtain contracts.  Generally, our contracts and projects vary in
length from one to twelve months depending on the size and complexity of the project, project owner demands, and other factors.

Our contract arrangements with customers sometimes require us to provide payment and performance bonds to partially secure our obligations under our contracts.  Bonding requirements typically
arise in connection with public works projects and sometimes with respect to certain private contracts.Backlog

We consider backlog an important indicator of our operating condition because our engineering, detailing, fabrication, and erection services are characterized by long lead times for projects
and orders.  We define our backlog of contract commitments as the potential future revenues to be recognized upon performance of contracts awarded to us.  Backlog increases as new contract commitments are obtained, decreases as work is performed and the
related revenues are recognized, and increases or decreases as modifications in work are performed under a contract. 
Based on the fact that the Company completed the redesign of its product line
through November 2000, little sales activity had resulted by December 31,
2000.  Therefore, no backlog existed at year end.

Competition

The principal geographic and product markets we serve are highly competitive.  We compete with other contractors on a local and regional basis, and in certain cases, on a national basis.  We
have different competitors for each of our services and product segments and within each geographic market we serve.  Among the principal competitive factors within the industry are price, timeliness of completion of projects, quality, reputation, and the
desire of customers to utilize specific contractors with whom they have favorable relationships and prior experience.  Certain of our competitors have financial and operating resources greater than ours.

Governmental Regulation

Our operations are governed by and subject to government regulations, including laws and regulations relating to workplace safety and worker health, principally the Occupational Safety and
Health Act and regulations thereunder.  Our operations are subject to the risk of changes in federal, state, and local laws and policies that may impose restrictions on us.  We believe that we are in material compliance with the laws and regulations under
which we operate, and we do not believe that future compliance with such laws and regulations will have a material and adverse effect on us.  We cannot determine, however, to what extent our future operations and earnings may be affected by new
legislation, new regulations, or changes in or new interpretations of existing regulations.

We are subject to licensure in each of the states in the United States in which we operate and in certain local jurisdictions within such states.  We believe that we are in material compliance
with all contractor licensing requirements in the various states in which we operate.  The loss or revocation of any license or the limitation on any of our services thereunder in any state in which we conduct substantial operations could prevent us from
conducting further operations in such jurisdiction and would have a material adverse effect on us.

Our Suppliers

We currently purchase a majority of our steel and steel components from several domestic and foreign steel producers, suppliers, and warehouses.  However, steel is readily available from
numerous foreign and domestic steel producers and we are not dependent on any one supplier.  We believe that our relationships with our suppliers are good.  We have no long-term commitments with any of our suppliers.  In recent periods, there has been an
increased demand for steel from domestic mills and we have purchased a greater portion of our steel requirements from warehouses.

Our Employees

As of December,
2000, we had one full time corporate employee.  Guardian Security &
Safety Products, Inc., operating as ForceOne, LLC, had 15 full time employees,
three in management and administration, 2 in sales and 10 in
manufacturing.  Guardian Steel, Inc., operating as Structural Holdings,
Inc. dba H & M Steel, had 75 employees, 15 in management and administration
and 60 in production.  We consider our relationship with our employees to be good.

Real Estate Interests

In September 2000, we acquired the Palo Verde Group, Inc. from Redwood MicroCap Fund, Inc., in consideration of the issuance of 361,800 shares of our common stock.

Palo Verde Group holds two separate real estate interests:

|- | Five acres of undeveloped real property located in Carefree Arizona.  The property is zoned residential and is held for development.  The property has an estimated value, based upon a recent real estate assessment, of
approximately $325,000, and is held subject to a first mortgage with a principal balance of approximately $100,000.                                                                                                                                                                                                                                                                               
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|- | An 8,000 square foot commercial building and associated real estate located in Thermopolis, Wyoming.

The building is held for lease, but has been vacant since
December 2000. 
The building has an estimated value, based upon a 1999 real estate appraisal,
that exceeds the Company's cost basis of $150,000 and the first mortgage on the
property of $75,000.  If sold, the Company, by the acquisition agreement,
is limited to a recovery of $150,000 after the payment of the first
mortgage.  This commercial building was acquired by Palo Verde Group
through foreclosure proceedings completed in December 2000.

Subsequent Events - Acquisition of Vairex Corporation



Vairex was founded in 1987 to develop, advanced proprietary oil-free compressor technology for automotive and industrial applications and has been engaged in the emerging fuel cell industry for
over six years.  Vairex has undertaken two major Department of Energy development contracts and to date has made prototype sales to industry leaders such as Ballard, G.M., Energy Partners and others.  It has also delivered evaluation units to McDermott
Technologies and Fiat Motors.

Under the Merger Agreement, we would acquire 100% of the issued and outstanding shares of Vairex Common Stock in exchange for a total of 28.3 million shares of Guardian Common Stock.  These
shares would represent, when issued, approximately 85% of our total issued and outstanding shares of Common Stock.  If consummated, the transaction would result in a change in control of Guardian, in which the Board of Directors and executive officers of
Guardian would be replaced by persons designated by Vairex.  If the acquisition is completed, our existing subsidiaries: Guardian Steel, Guardian Security and Palo Verde Group, would either be sold, liquidated or spun-off into separate public companies
under the leadership of Mr. Moorer, our present director and CEO.  A record date for the distribution of Guardian's existing assets and subsidiaries would be established as the effective date of the Vairex merger, thereby assuring that the economic
benefit of these existing operations is received by Guardian's pre-merger shareholders.

Consummation of the Vairex acquisition is subject to numerous conditions precedent, customary in transactions of this nature.  We cannot predict when
and if we may complete the acquisition of Vairex under the terms of the Merger Agreement.

Item 2.       Description of Property

Properties

On March 31, 1999, we sold our land and building for $2,825,000.  The building was constructed in 1997 for a total cost of $2,762,119 comprised of $237,339 for land and $2,524,780 in building
costs.  As a result of the sale we no longer incurred depreciation expense and other operating expenses associated with owning and managing a commercial building.  Following the sale we signed a five-year lease to occupy
15,520 square feet of space for approximately $15,000 per month.  The lease
covers 4,899 square feet of office space on the upper level of the building and
10,631 square feet of manufacturing space on the lower level of the
building.

In April 2000, the
Company subleased 1,032 square feet of upper level office space for
approximately $1,000 per month.  Also in April 2000, the Company subleased
10,631 of lower level manufacturing space for $3,000 per month from April -
August 2000 increasing to $4,000 per month from September - December 2000. 
The lower level manufacturing space was vacated January 1, 2001.

Subsequent to year end,
the Company subleased 3,507 square feet of upper level office space for
approximately $5,000 per month and was released from the remaining 360 square
feet of upper level office space by the landlord.  Also following year end,
the Company subleased the 10,631 square feet of lower level manufacturing space
vacated in January 2001 for approximately $9,000 per month.

Currently, the Company
has subleased 100% of the space of its previously owned building and has accrued
a liability at December 31, 2000 equal to any rental liability in excess of
rental income.

Structural Holdings,
through its wholly-owned subsidiary, H&M Steel, owns and operates structural
steel fabrication facilities which consist of five metal buildings containing approximately 40,000 square feet, located on 73.8 acres in Luther, Oklahoma.

ForceOne occupies a manufacturing facility located in Spruce Pine, North Carolina under a three-year lease expiring 2003.  The facility consists of approximately 4,500 square feet of
manufacturing area and 500 square feet of office space.  The monthly rent for the facility was $1,000 for the first six months beginning August 1, 2000 and $1,500 thereafter.

We also occupy an executive office in Carefree, Arizona, which we sublease on a month-to-month basis from Redwood Microcap Fund, Inc.  The monthly rent, including expense for secretarial and
clerical services, is $1,250.  The sublease is cancelable upon 30 days written notice.

In September 2000, we acquired the Palo Verde Group, Inc. from Redwood MicroCap Fund, Inc., in consideration of the issuance of 361,800 shares of our common stock.

Palo Verde Group holds two separate real estate interests:

|- | Five acres of undeveloped real property located in Carefree Arizona.  The property is zoned residential and is held for development.  The property has an estimated value, based upon a recent real estate assessment, of
approximately $325,000, and is held subject to a first mortgage with a principal balance of approximately $100,000.                                                                                                                                                                                                                                                                              
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|- | An 8,000 square foot commercial building and associated real estate located in Thermopolis, Wyoming.
The building is held for lease, but has been vacant since
December 2000. 
The building has an estimated value, based upon a 1999 real estate appraisal,
that exceeds the Company's cost basis of $150,000 and the first mortgage on the
property of $75,000.  If sold, the Company, by the acquisition agreement,
is limited to a recovery of $150,000 after the payment of the first
mortgage.  This commercial building was acquired by Palo Verde Group
through foreclosure proceedings completed in December 2000.

Item 3.       Legal Proceedings

We are not presently involved in any material legal proceedings.  However, construction in general and the fabrication and erection of structural steel and heavy steel plate in particular
involve a high degree of operational risk.  Adverse weather conditions, operator and other error, and other unforeseen factors can cause personal injury or loss of life, severe damage to or destruction of property and equipment, and suspension of
operations.  Litigation arising from such occurrences may result in the Company being named as a party to lawsuits asserting substantial claims or to administrative or criminal actions that may involve substantial monetary penalties or the restriction of
the Company's operations in one or more jurisdictions.  The Company may become a defendant in lawsuits from time to time, including lawsuits arising in the normal course of its business.

We maintain workers compensation insurance that provides full coverage of statutory workers compensation benefits.  We also maintain employer liability insurance in our principal geographic
markets and umbrella coverage.  We also maintain insurance against property damage caused by fire, flood, explosion, and similar catastrophic events that may result in physical damage or destruction of our facilities and property.  All policies are
subject to various deductibles and coverage limitations.  Although management believes that our insurance is adequate for its present needs, there can be no assurance that we will be able to maintain adequate insurance at premium rates that management
considers commercially reasonable, nor can there be any assurance that such coverage will be adequate to cover all claims that may arise.

Item 4.       Submission of Matters to a Vote of Security Holders

None.

PART II

Item 5.       Market for Common Equity and Related Stockholder Matters

Our common stock trades on the Nasdaq Small Cap Market under the symbol "GRDN."

The following table sets forth the high and low sales prices for each quarter during 1998 and 1999 and for the first, second, and third quarters of 2000.

|                   | Common Stock
|------------------ | ------------
|Quarter Ended      | Low         
|March 31, 1998     | $1.33       
|June 30, 1998      | $2.19       
|September 30, 1998 | $2.00       
|December 31, 1998  | $1.25       
|March 31, 1999     | $1.04       
|June 30, 1999      | $1.19       
|September 30, 1999 | $1.18       
|December 31, 1999  | $1.06       
|March 31, 2000     | $1.00       
|June 30, 2000      | $0.69       
|September 30, 2000 | $0.72       
|December 31, 2000  | $0.25       
|March 31, 2001     | $0.31       

There were approximately 74 record holders and approximately 871 beneficial owners of our common stock as of April
12, 2001.

No dividends have been declared or paid by the Company, nor does the Company anticipate paying cash dividends on the shares of common stock in the foreseeable future.

Item 6.     Management's Discussion
and Analysis of Financial Condition and Results of OperationsGeneral

The following discussion of the financial condition and results of operations of the Company should be read in conjunction with the consolidated financial statements and related notes thereto.

Overview

Armor Products:

In late 1999, the Company determined it needed to restructure its armor business in order to achieve profitability.  Management began implementing the restructuring plan during the first
quarter of 2000 with implementation completed by December 31, 2000.  The successful implementation of the restructuring strategy is anticipated to produce positive cashflow in the armor business in 2001.  The basic elements involved in the strategy are
outlined below:

| | a) | To retain experienced senior management and sales personnel able to capitalize on the newly developed, light weight, lower priced armor products in order to increase sales volume.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | -- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |    | In early May 2000, the Company retained the services of Steven Young, an experienced industry professional.  Mr. Young assumed the role of President of the Company's armor division responsible for day to day operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
| | b) | To reduce production costs associated with armor manufacturing by outsourcing or other means.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
| |    | In conjunction with bringing Mr. Young on board, management relocated manufacturing to North Carolina, the heart of the textile belt and Mr. Young's base of operation.   The relocation process was started during the latter half of the
second quarter and completed by September 30.  The relocation significantly reduced the monthly expense base of armor manufacturing, particularly in the area of labor and overhead costs.  In addition, the relocation afforded the Company the ability to
establish a cost structure more in line with projected revenue levels.                                                                                                                      
| | c) | To develop new products that will make the Company more competitive in the market.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
| |    | During the third quarter, the Company developed an entire new line of low-cost, lightweight body armor designed to make the Company competitive in the market.  The new line will be manufactured and marketed through the
Company's majority-owned subsidiary ForceOne.  Manufacturing will take place at ForceOne's new facility located in North Carolina's textile belt.  The new line was certified by the National Institute of Justice's recently adopted "04" standard
requiring greater protection and reduced trauma.  The new line was introduced for the first time at the International Association of Cheifs of Police Convention held in San Diego, California during November 2000.

Structural Steel Fabrication:

During 1999 the Company sold its land and building.  Proceeds from the sale were used to purchase 50% of the outstanding shares of common stock of Structural Holdings, Inc., a Delaware holding company (Structural).  Structural has no operations and
was formed specifically to purchase 100% of the outstanding shares of common stock of H&M Steel, Inc., an Oklahoma corporation (H&M).  H&M is engaged in the business of structural steel fabrication.  The Company believed the investment in
Structural represented an opportunity to enhance shareholder value by diversifying the Company's operations by completing a consolidation strategy in this fragmented industry.  However, H&M operations since the acquisition by Structural have been
negatively impacted by significant contract overruns.  For a more detailed discussion of H&M operations see "Results of Operations" below.Results of Operations

Year Ended December 31, 2000 Compared to Year Ended December 31, 1999

Net sales for 2000 were $606,453 compared to $1,100,076 in 1999, a decrease of $493,623 or 45%.  The decrease in sales is attributable to a decline in demand for the Company's existing products
and to the suspension of sales efforts until the completion of the relocation of the Company's manufacturing facility to North Carolina.  The company spent most of the fourth quarter of 2000 bringing a new production facility online and designing and
certifying a new line of body armor products.

Lower sales volume and inefficient production during the relocation phase generated a gross profit of $22,451, or 4% for the year ended December 31, 2000 compared to gross margin of $163,424,
or 15% during the same period in 1999.

Total operating expenses for the twelve months ended December 31, 2000 were
$1,123,347 comprised of selling expenses of $70,709 and general and
adminstrative expenses of
$1,052,638.  Total operating expenses of $1,117,644 during 1999 were comprised of selling expenses of $83,955 and general and administrative expenses of $1,033,689.  Although the Company relocated its armor manufacturing operation to North Carolina and
subsequently achieved a lower overall operating cost base, the savings associated with the relocation were not realized in 2000 because the Company's staff reductions in one location were offset by new staff needed retained in its new location.  In
addition, during the fourth quarter, the Company actually incurred duplicated costs until certain functions could be eliminated in Virginia.  As of December 31, 2000, all operating costs related to the Company's former manufacturing facility in Virginia
were eliminated and the Company anticipates the overall operating cost base reduction to positively impact results of armor operations in 2001.

Other income (expense) was
$68,423 in 2000 compared to $95,668 in 1999. Other income in 1999 was primarily
attributable to a one time gain on the sale of the company's manufacturing facility in Virginia of $107,974.
In 2000, the company recognized interest income of $40,106 on notes receivable that was not generated in 1999. 
Also in 2000, the Company recorded $49,000 of income attributable to the
allocation of subsidiary losses to minority interest shareholders.
       The Company posted a net loss in 2000 of
($1,819,142), or ($.51) per share compared to a net loss of ($825,076) or ($.31) per share for 1999.  Lower sales volume and decreased gross margin (discussed above) produced an operating loss of
($1,100,896) for the period compared to an operating loss of ($954,220) a year ago.

Net results for the twelve months ended December 31, 2000 were negatively impacted by the recognition of a
$786,669 loss associated with the Company's equity investment in Structural Holdings.

The year 2000 loss sustained by Structural, through its operation of H&M, was caused principally by three contracts which were bid in the transitional period prior to the acquisition of
H&M in April 1999.  These three contracts were either mis-bid and/or under-bid.  In addition, the detailer on these jobs defaulted in the performance of their work and caused significant delays and cost overruns.  These contracts are currently
substantially complete and management does not anticipate additional losses beyond reserves established at December 31, 2000.
       The table below presents summarized financial information for Structural:

Summarized Financial Information for Structural Holdings(Amounts in 000's)

|                           | For the Year EndedDecember 31, 2000 | For the Year Ended
December 31, 1999
|-------------------------- | ----------------------------------- | ------------------------------------
|Current assets             | $ 2,986,000                         | $ 5,464,000                         
|Total assets               | $ 7,493,000                         | $10,241,000                         
|Current liabilities        | $ 6,885,000                         | $ 7,816,000                         
|Total liabilities          | $ 7,354,000                         | $8,450,000                          
|Total stockholders' equity | $    139,000                        | $ 1,790,000                         
|Sales revenue              | $14,901,000                         | $ 7,005,000                         
|Gross margin               | $   (468,000)                       | $ 1,675,000                         
|Net income                 | $(1,464,000)                        | $     
  90,000                     

After it was discovered in late 2000 that the Company was going to incur substantial losses associated with its equity investment, pressure was applied to change the senior operating management of Structural
in an effort to initiate a turn around of H&M.

To that end, in December 2000, the board of Structural authorized the retention of the former owner of H&M steel as general manager and chief operations officer in charge of all bidding, contracting,
fabrication, job coordination and other technical issues.

Since December 2000, the senior management team (which now includes the former owner of H&M) has implemented or is in the process of implementing the following activities which are anticipated to produce
positive cash flow at H&M in 2001:



|    | Implemented:                                                                                                                                                                                                                                        
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|a.) | Established ongoing bidding procedures and controls.                                                                                                                                                                                                
|b.) | Developed outplacement procedures for detailing services.                                                                                                                                                                                           
|c.) | Initiated personnel reductions to include: one detailing manager, one job coordinator, a part-time shop manager, and several administrative personnel.  These reductions are expected to generate a cost savings of approximately $130,000 per
year.
|d.) | Eliminated management fees in the amount of $360,000 per year.                                                                                                                                                                                      
|e.) | Received additional equity capital of $645,000 in early 2001.                                                                                                                                                                                       
|    | Implementing:                                                                                                                                                                                                                                       
|f.) | Restructured seller financing arrangement associated with subordinated notes, non-compete and consulting agreements.  The total due under these arrangements has been reduced from $951,000 to $650,000, a savings of $300,000.                     
|g.) | Refinancing of term debt to derive the cash flow benefit of a more favorable amortization.  The existing level of debt service of approximately $80,000 per month is expected to be reduced to approximately $38,000 per month.                     

Liquidity and Capital Resources

During the twelve months ended December 31, 2000, the Company used net cash in operating activities of
$724,886 compared with $391,893 last year.  The largest use of cash during 2000 was in support of losses incurred from armor manufacturing.

The Company had notes receivable of $235,000 at December 31, 1999.  In March 2000, the Company collected $50,000 of the total outstanding balance.  In May 2000, the Company issued
additional notes receivable in the amount of $150,000.  This amount increased a $100,000 note receivable that existed at December 31, 1999.  This particular note receivable balance at December 31, 2000 was $250,000. Subsequent to year end, the Company
collected notes receivable of $85,000 and $150,000.  The note receivable of $85,000 also existed at December 31, 1999.  The collection of the $150,000 after year end was in repayment of the note in the amount of $100,000 that existed at December 31, 1999
that was increased to $250,000 during 2000.  This particular note receivable has a current balance of $100,000.  Management believes the remaining balance of notes receivable is collectible.

During 2000, the Company
invested $130,000 to certify a new line of body armor products with the National
Institute of Justice.  This new product line was designed to make the
Company's armor products more competitive in the marketplace and provide
positive cashflow in 2001.

Also during 2000, the
Company issued advances to Structural of $250,000 to provide additional working
capital for operations.

The Company does not anticipate any significant capital expenditures for property and equipment in the coming year.

From January 2000 through March 2000, options for 424,000 shares of common stock were exercised generating net proceeds to the Company of $530,000.  These funds will be used for general working
capital purposes.

In January 2000, the Company sold 150,000 units (comprised of 2 common shares and warrants for the purchase of 4 shares of common stock) for $1.50 each receiving net proceeds of $225,000.  The
warrants have the following terms:

| | Warrant | Price  | Period* 
| | ------- | ------ | --------
| | Class A | $.7500 | 30 days 
| | Class B | $.8750 | 60 days 
| | Class C | $1.000 | 90 days 
| | Class D | $1.125 | 120 days
| | Class E | $1.250 | 150 days
| | Class F | $1.375 | 180 days

*      The exercise period begins upon the effective date of a registration statement registering the underlying shares of common stock issuable upon the exercise of these warrants.  Warrants
must be exercised in alphabetical order by warrant class.  If any warrant is not exercised during the term of the warrant by an individual warrant holder, all remaining classes of warrants will automatically expire.

Subsequent to December 31, 2000, the Company realized proceeds of $275,000 from the exercise of these warrants.  Should all warrants be exercised the
Company will receive additional proceeds from this offering of $3,825,000.  These funds will be used for acquisitions and general working capital purposes.

In October 2000, the Company received proceeds from the issuance of notes payable of $250,000.

The Company's
long-term indebtedness at December 31, 2000 relates primarily to a mortgage of
$106,772 on the Carefree, Arizona property held for development by Palo Verde Group, Inc.

In September 2000, we acquired the Palo Verde Group, Inc. from Redwood MicroCap Fund, Inc., in consideration of the issuance of 361,800 shares of our common stock.

Palo Verde Group holds two separate real estate interests:

|- | Five acres of undeveloped real property located in Carefree Arizona.  The property is zoned residential and is held for development.  The property has an estimated value, based upon a recent real estate assessment, of
approximately $325,000, and is held subject to a first mortgage with a principal balance of approximately $100,000.                                                                                                                                                                                                                                                                              
|- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|- | An 8,000 square foot commercial building and associated real estate located in Thermopolis, Wyoming.
The building is held for lease, but has been vacant since
December 2000. 
The building has an estimated value, based upon a 1999 real estate appraisal,
that exceeds the Company's cost basis of $150,000 and the first mortgage on the
property of $75,000.  If sold, the Company, by the acquisition agreement,
is limited to a recovery of $150,000 after the payment of the first
mortgage.  This commercial building was acquired by Palo Verde Group
through foreclosure proceedings completed in December 2000.

Subsequent Events - Acquisition of Vairex Corporation

On February 19, 2001, we entered into an Agreement and Plan of Merger pursuant to which we have agreed to acquire Vairex Corporation, of Boulder, Colorado.

Vairex was founded in 1987 to develop, advanced proprietary oil-free compressor technology for automotive and industrial applications and has been engaged in the emerging fuel cell industry for
over six years.  Vairex has undertaken two major Department of Energy development contracts and to date has made prototype sales to industry leaders such as Ballard, G.M., Energy Partners and others.  It has also delivered evaluation units to McDermott
Technologies and Fiat Motors.

Under the Merger Agreement, we would acquire 100% of the issued and outstanding shares of Vairex Common Stock in exchange for a total of 28.3 million shares of Guardian Common Stock.  These
shares would represent, when issued, approximately 85% of our total issued and outstanding shares of Common Stock.  If consummated, the transaction would result in a change in control of Guardian, in which the Board of Directors and executive officers of
Guardian would be replaced by persons designated by
Vairex.  If the acquisition is completed, our existing subsidiaries: Guardian Steel, Guardian Security and Palo Verde Group, would either be sold, liquidated or spun-off into separate public companies under the leadership of Mr. Moorer, our present
director and CEO.  A record date for the distribution of Guardian's existing assets and subsidiaries would be established as the effective date of the Vairex merger, thereby assuring that the economic benefit of these existing operations is received by
Guardian's pre-merger shareholders.

Consummation of the Vairex acquisition is subject to numerous conditions precedent, customary in transactions of this nature.  We cannot predict when we may complete the acquisition of Vairex
under the terms of the Merger Agreement.

FORWARD-LOOKING STATEMENTS

The Company believes that this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the
Securities Exchange Act of 1934, as amended, that are subject to certain risks and uncertainties. Forward-looking statements represent the Company's expectations or beliefs concerning future events, including the following: any statements regarding future
sales and gross profit percentages, any statements regarding the continuation of historical trends, any statements regarding the sufficiency of the Company's cash balance. and cash generated from operating and financing activities for the Company's future
liquidity and capital resource needs, any statements regarding the effect of regulatory changes, the success of development and enhancement of the Company's products, the adequacy of the Company's facilities, potential acquisitions, and any statements
regarding the future of the industry and the various parts of the markets in which the Company conducts its business. The Company cautions that any forward-looking statements made by the Company in this report or in other announcement made by the Company
are further qualified by important factors that could cause actual results to differ materially from those in the forward-looking statements.

Accounting Pronouncements

SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities", was issued in June 1998. This statement establishes accounting and reporting standards for derivative instruments and for hedging
activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. This statement is effective for the Company's financial statements for the
year ended December 31, 2001 and the adoption of this standard is not expected to have a material effect on the Company's financial statements.

Item 7.       Financial Statements

The following financial statements are filed as part of this report beginning on page F-1:







INDEX TO FINANCIAL STATEMENTS



|                                                                                                                                      | PAGE
|------------------------------------------------------------------------------------------------------------------------------------- | ----
|Independent Auditors' Reports                                                                                                         | F-2 
|Consolidated Balance Sheet - December 31, 2000                                                                                        | F-3 
|Consolidated Statements of Operations - For the Years Ended
      December 31, 2000 and
              1999                            | F-4 
|Consolidated Statement of Changes in Shareholders' Equity - For the
      Years Ended
               December 31, 2000
      and 1999 | F-5 
|Consolidated Statements of Cash Flows - For the Years Ended
      December 31, 2000 and
               1999                           | F-6 
|Notes to Consolidated Financial Statements                                                                                            | F-7 

INDEPENDENT AUDITOR'S REPORT

Board of Directors and Shareholders
Guardian Technologies International, Inc.
Carefree, Arizona

We have audited the accompanying consolidated balance sheet
of Guardian Technologies International, Inc. and Subsidiaries as of December 31,
2000 and the related consolidated statements of operations, changes in
shareholders' equity, and cash flows for the years ended December 31,
2000 and 1999. These consolidated financial statements are the responsibility of
the Company's management. Our responsibility is to express an opinion on these
consolidated financial statements based on our audits.

We conducted our audits in accordance with generally accepted
auditing standards. Those standards require that we plan and perform the audits
to obtain reasonable assurance about whether the consolidated financial
statements are free of material misstatement. An audit includes examining, on a
test basis, evidence supporting the amounts and disclosures in the consolidated
financial statements. An audit also includes assessing the accounting principles
used and significant estimates made by management, as well as evaluating the
overall consolidated financial statement presentation. We believe that our
audits provide a reasonable basis for our opinion.

In our opinion, the consolidated financial statements
referred to above present fairly, in all material respects, the financial
position of Guardian Technologies International, Inc. and Subsidiaries as of
December 31, 2000, and the results of their operations and their cash flows
for the years ended December 31, 2000 and 1999, in conformity with
generally accepted accounting principles.

Hein + Associates LLP

Denver, Colorado
April 11, 2001



GUARDIAN TECHNOLOGIES INTERNATIONAL, INC.CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2000

|ASSETS                                                                                                        
|--------------------------------------------------------------------------------------------------------------
|Current Assets:                                                                                               
|Cash and cash equivalents                                                                                     
|Accounts receivable, no allowance considered necessary                                                        
|Other accounts receivable                                                                                     
|Inventories                                                                                                   
|Notes receivable:                                                                                             
|Related party                                                                                                 
|Other                                                                                                         
|Prepaid expenses and other                                                                                    
|Total current assets                                                                                          
|                                                                                                              
|Note Receivable and Equity Investment                                                                         
|Property and Equipment, net                                                                                   
|Certification Costs,net of amortization of
      $4,000                                                       
|Deposits and Other                                                                                            
|Total Assets                                                                                                  
|                                                                                                              
|LIABILITIES AND SHAREHOLDERS' EQUITY                                                                          
|                                                                                                              
|Current Liabilities:                                                                                          
|Notes payable and current portion of long-term debt                                                           
|Accounts payable                                                                                              
|Accrued expenses                                                                                              
|Total current liabilities                                                                                     
|                                                                                                              
|Long-Term Debt, net of current portion                                                                        
|Commitments and Contingencies(Notes 2 and 8)                                                                  
|Shareholders' Equity:                                                                                         
|Preferred stock, $.20 par value, 1,000,000 shares authorized;
          no shares issued and outstanding      
|Common stock, $.001 par value; 15,000,000 shares authorized,
          3,995,690 shares issued and outstanding
|Additional paid-in capital                                                                                    
|Accumulated deficit                                                                                           
|Total shareholders' equity                                                                                    
|                                                                                                              
|Total Liabilities and Shareholders' Equity                                                                    

GUARDIAN TECHNOLOGIES INTERNATIONAL, INC.CONSOLIDATED STATEMENTS OF OPERATIONS

|                                                                 |  |  |  | For the
      Years EndedDecember 31,
|---------------------------------------------------------------- |  |  |  | -------------------------------------
|                                                                 |  |  |  |                                      
|                                                                 |  |  |  |                                      
|Net Sales                                                        |  |  |  |                                      
|Cost of goods sold                                               |  |  |  |                                      
|Gross Profit                                                     |  |  |  |                                      
|Operating Expenses:                                              |  |  |  |                                      
|Selling expenses                                                 |  |  |  |                                      
|General and administrative                                       |  |  |  |                                      
|Total operating expenses                                         |  |  |  |                                      
|Operating Loss                                                   |  |  |  |                                      
|Other Income (Expense):                                          |  |  |  |                                      
|Interest income, net                                             |  |  |  |                                      
|Minority interest in subsidiary loss                             |  |  |  |                                      
|Rental income                                                    |  |  |  |                                      
|Gain (loss) on sale of assets                                    |  |  |  |                                      
|Miscellaneous expense                                            |  |  |  |                                      
|Total other income                                               |  |  |  |                                      
|Loss Before Earnings (Loss) From Equity Investment               |  |  |  |                                      
|Equity in net earnings (loss) of investment                      |  |  |  |                                      
|                                                                 |  |  |  |                                      
|Net Loss                                                         |  |  |  |                                      
|                                                                 |  |  |  |                                      
|Net Loss per Common Share, Basic and Dilutive                    |  |  |  |                                      
|                                                                 |  |  |  |                                      
|Average Common Shares Outstanding,Basic and
            Dilutive |  |  |  |                                      



GUARDIAN TECHNOLOGIES INTERNATIONAL, INC.CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2000 AND 1999

|                                         |  | Common Stock |  | Additional
      Paid-In |  | Accumulated
      Deficit |  |             
|---------------------------------------- |  | ------------ |  | ------------------------ |  | ------------------------- |  | ------------
|                                         |  | Shares       |  | Amount                   |  | Capital                   |  | Deficit     
|Balances, January 1, 1999                |  | 2,487,662    |  | $2,488                   |  | $4,406,050                |  | $(2,277,005)
|Issuance of common stock:                |  |              |  |                          |  |                           |  |             
|Cash                                     |  | 133,334      |  | 133                      |  | 99,867                    |  | -           
|Services                                 |  | 141,672      |  | 142                      |  | 154,991                   |  | -           
|Net loss                                 |  | -            |  | -                        |  | -                         |  | (825,076)   
|Balances, December 31,
           1999   |  | 2,762,668    |  | $2,763                   |  | $4,660,908                |  | $(3,102,081)
|Issuance of common stock:                |  |              |  |                          |  |                           |  |             
|Cash                                     |  | 300,000      |  | 300                      |  | 224,700                   |  | -           
|Services                                 |  | 147,222      |  | 147                      |  | 155,950                   |  | -           
|Options exercised                        |  | 424,000      |  | 424                      |  | 529,576                   |  | -           
|Property Acquisition                     |  | 361,800      |  | 362                      |  | 361,438                   |  | -           
|Proceeds from short-swing sale           |  | -            |  | -                        |  | 19,626                    |  | -           
|Net loss                                 |  | -            |  | -                        |  | -                         |  | (1,819,142) 
|Balances, December 31,
             2000 |  | 3,995,690    |  | $3,996                   |  | $5,952,198                |  | $(4,921,223)

GUARDIAN TECHNOLOGIES INTERNATIONAL, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                                          |  | For the Years Ended  
|----------------------------------------------------------------------------------------- |  | ---------------------
|                                                                                          |  | December 31,         
|                                                                                          |  | 2000                 
|Cash Flows from Operating Activities:                                                     |  |                      
|Net loss                                                                                  |  | $ (1,819,142)        
|Adjustments to reconcile net loss to net cash used in
        operating activities:       |  |                      
|Depreciation and amortization of certification costs and property
          and equipment |  | 66,516               
|Minority interest in subsidiary loss                                                      |  | (49,000)             
|Common stock and options for services                                                     |  | 156,097              
|(Gain) loss on sale of property and equipment                                             |  | -                    
|Equity in (net earnings) loss of investment                                               |  | 786,669              
|Changes in operating assets and liabilities:                                              |  |                      
|(Increase) decrease in:                                                                   |  |                      
|Accounts receivable                                                                       |  | 104,358              
|Other A/R                                                                                 |  | (35,242)             
|Inventories                                                                               |  | 42,880               
|Prepaid expenses and other                                                                |  | 33,675               
|Increase (decrease) in:                                                                   |  |                      
|Accounts payable                                                                          |  | (43,321)             
|Accrued expenses                                                                          |  | 54,006               
|Other assets                                                                              |  | (22,382)             
|Net cash used in operating activities                                                     |  | (724,886)            
|Cash Flows from Investing Activities:                                                     |  |                      
|Certification costs                                                                       |  | (130,000)            
|Purchase of property and equipment                                                        |  | (2,821)              
|Sale of property and equipment                                                            |  | -                    
|Issuance of notes receivable                                                              |  | (150,000)            
|Payments on notes receivable                                                              |  | 50,000               
|Investment in and advances to Structural Holdings, Inc.                                   |  | (250,000)            
|Repayment of investment in Structural Holdings, Inc.                                      |  | 45,000               
|Net cash provided by (used in) investing activities                                       |  | (437,821)            
|Cash Flows from Financing Activities:                                                     |  |                      
|Deferred offering costs                                                                   |  | (70,040)             
|Contribution from minority interests                                                      |  | 49,000               
|Proceeds from issuance of notes payable                                                   |  | 272,396              
|Payment on notes payable                                                                  |  | (38,114)             
|Proceeds from short swing sale                                                            |  | 19,626               
|Exercise of options                                                                       |  | 530,000              
|Issuance of common stock                                                                  |  | 225,000              
|Net cash provided by (used in) financing activities                                       |  | 987,868              
|Decrease in Cash and Cash Equivalents                                                     |  | (174,839)            
|Cash and Cash Equivalents, beginning of
      period                                      |  | 191,690              
|Cash and Cash Equivalents, end of period                                                  |  | $       
      16,851
|Supplemental Schedule of Cash Flow Information:                                           |  |                      
|Cash paid for interest                                                                    |  | $       
      11,919

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.     Nature of Business and
Significant Accounting Policies:

Nature of Operations - Guardian Technologies
    International, Inc. ("Guardian Corp.") is incorporated in the
    State of Delaware. In September of 2000, Guardian Corp. completed a
    reorganization in which it formed Guardian Steel ("Steel") to
    manage Guardian Corp.'s steel division and Guardian Safety and Security
    Products ("GSSP") to manage Guardian Corp.'s armor products.
    Both Steel and GSSP are wholly-owned subsidiaries of Guardian Corp.
    Following the reorganization, Guardian Corp. formed Guardian Armor, LLC, a
    Delaware Limited Liability Company, which was later re-named ForceOne, LLC.
    In September of 2000, GSSP transferred the majority of its assets and
    liabilities associated with the armor division to ForceOne, LLC in exchange
    for a 51% membership interest. ForceOne, LLC manufactures and distributes
    soft armor products, primarily superior quality ballistic protective vests,
    for law enforcement officers, armed forces personnel, and other legitimate
    individuals or groups requiring protective equipment. During 1999, Guardian
    Corp. acquired a 50% interest in Structural Holdings, Inc. (Structural),
    which in September of 2000 was transferred to Steel. Structural is a holding
    company and its only investment at December 31, 2000 is 100% of the
    common stock of H&M Steel (H&M). H&M is engaged in the business
    of structural steel fabrication.

Also in September 2000, Guardian Corp. acquired 100% of
    Palo Verde Group, Inc. ("Palo Verde"), a Colorado Corporation. The
    assets of Palo Verde consist of certain real property in Carefree, Arizona
    and Thermopolis, Wyoming.Principles of Consolidation- The consolidated financial statements
    include the accounts of Guardian Corp., its wholly-owned subsidiaries, and
    GSSP's 51% ownership in ForceOne, LLC (collectively the
    "Company"). All significant intercompany minority interest
    accounts and transactions have been eliminated in consolidation. The
    unrelated owners portion of ForceOne, LLC has been recorded as minority
    interest in the accompanying consolidated financial statements.Investments- The Company's 50% ownership interest in Structural
    is accounted for under the equity method of accounting and is recorded at
    cost as adjusted for its proportionate share of earnings and distributions.

Revenue Recognition - Manufacturing revenue is
    recognized upon shipment of product.

Use of Estimates - The preparation of the Company's
    financial statements in conformity with generally accepted accounting
    principles requires management to make estimates and assumptions that affect
    the amounts reported in these financial statements and accompanying notes.
    Actual results could differ from those estimates. H&M enters into
    long-term contracts with its customers and recognizes revenue on a
    percentage of completion basis, which requires significant estimates.

Financial Instruments - The estimated fair value
    of cash and cash equivalents, accounts receivable, notes receivable,
    accounts payable and accrued expenses approximate their carrying amounts in
    the financial statements due to the short-term nature of these instruments.

Based on the borrowing rates currently available to the
    Company for loans with similar terms and average maturities, the fair value
    of long-term debt approximates its carrying value.Concentrations of Credit Risk- Financial instruments which
    potentially subject the Company to concentrations of credit risk consist of
    trade accounts receivable and cash. The Company grants credit terms in the
    normal course of business to its customers, who are primarily dealers or
    municipal, state and Federal law enforcement agencies, and who are located
    throughout the United States. As part of its ongoing procedures, the Company
    monitors the credit worthiness of its customers.

Cash Equivalents - For purposes of the statement
    of cash flows, the Company considers all highly liquid debt instruments with
    original maturities of three months or less to be cash equivalents.

Accounts Receivable - It is the practice of
    management to write-off receivables in the year amounts are determined to be
    uncollectible. No allowance for doubtful accounts is reflected in these
    financial statements since management believes all accounts at
    December 31, 2000 to be fully collectible.Inventories- Inventories consist of purchased materials and
    components, work-in-process, and finished goods. Inventories are stated at
    the lower of cost or market, with cost being determined on a first-in,
    first-out basis. Inventories consisted of the following at December 31,
    2000:

|Raw materials and components |  |  |  | $ 110,961
|---------------------------- |  |  |  | ---------
|Finished goods               |  |  |  | 4,904    
|                             |  |  |  | $ 115,865

Property and Equipment- Property and equipment are recorded at
cost and depreciated over 
            their
estimated useful lives. The Company uses the straight-line and accelerated
methods of
            depreciation,
respectively, for financial statement and income tax reporting purposes.

A summary of the estimated useful lives follows:

|Office furniture and equipment |  |  |  | 5 - 7 years
|------------------------------ |  |  |  | -----------
|Manufacturing equipment        |  |  |  | 7 - 8 years

Expenditures for maintenance and repairs which do not materially extend the
useful lives of
                   
property and equipment are charged to earnings. When property or equipment is
sold or
                   
otherwise disposed of, the cost and related accumulated depreciation are removed
from the
                   
respective accounts with the resulting gain or loss reflected in
earnings.

Certification Costs - During 2000, the Company capitalized $130,000
in certification costs
                   
associated with government certification of their soft armor products. The
certification costs will
                   
be amortized over the estimated useful life of seven years. Amortization expense
for the year
                   
ending December 31, 2000 was approximately $4,000.                   
Impairment of Long-Lived Assets - The Company performs an
assessment for impairment
                   
whenever events or changes in circumstances indicate that the carrying amount of
a long-lived
                   
asset may not be recoverable. If the net carrying value exceeds estimated
undiscounted future 
                   
net cash flows, then impairment is recognized to reduce the carrying value to
the estimated fair
                   
value.

Deferred Offering Costs Costs associated with registration of the
underlying common stock 
                   
of various warrants have been deferred and will be offset against the related
proceeds received 
                   
in 2001.                   
Income Taxes - The Company utilizes the liability method for
accounting for income taxes. The
                   
liability method accounts for deferred income taxes by applying enacted
statutory rates in effect 
                   
at the balance sheet date to differences between financial statement amounts and
tax bases of
                   
assets and liabilities. The resulting deferred income tax liabilities are
adjusted to reflect changes in
                   
tax laws and rates. Temporary differences consist of the difference in financial
statement and
                   
income tax bases for property and equipment. Deferred income taxes related to an
asset or
                   
liability are classified as current or noncurrent based on the classification of
the related asset or
                   
liability.                   
Net Loss Per Common Share - The Company has adopted SFAS No. 128
which establishes
                   
standards for computing and presenting earnings per share (EPS) for entities
with publicly held
                   
common stock. The standard requires presentation of two categories of EPS -
basic EPS and
                   
diluted EPS. Basic EPS excludes dilution and is computed by dividing income
available to
                   
common stockholders by the weighted-average number of common shares outstanding
for the
                   
year. Diluted EPS reflects the potential dilution that could occur if securities
or other contracts 
                   
to issue common stock were exercised or converted into common stock or resulted
in the 
                   
issuance of common stock that then shared in the earnings of the Company. At
December 31, 
                   
2000, the Company had warrants and options outstanding to purchase 5,228,712
and 
                   
200,000 shares of common stock, respectively. At December 31, 1999, the
Company had
                   
warrants and options outstanding to purchase 1,628,712 and 594,000 shares of
common 
                   
stock, respectively. All warrants and options outstanding had an anti-dilutive
effect and were 
                   
therefore excluded from the calculation of diluted EPS for fiscal 2000 and 1999.
Accordingly, 
                   
basic and diluted EPS are the same for each year.                   
Comprehensive Loss - SFAS No. 130 establishes standards for
reporting and display of
                   
comprehensive loss, its components and accumulated balances. Comprehensive loss
is defined 
                   
to include all changes in equity except those resulting from investments by
owners and 
                   
distributions to owners. Comprehensive loss was the same as net loss in 2000 and
1999.                   
Recently Issued Accounting Pronouncement - SFAS No. 133, Accounting
for Derivative
                   
Instruments and Hedging Activities, was issued in June 1998. This statement
establishes
                   
accounting and reporting standards for derivative instruments and for hedging
activities. It 
                   
requires that an entity recognize all derivatives as either assets or
liabilities in the statement of
                   
financial position and measure those instruments at fair value. This statement
is effective for the
                   
Company's financial statements for the year ended December 31, 2001 and
the adoption of this
                   
standard is not expected to have a material effect on the Company's financial
statements.2.     Liquidity:

The Company has incurred losses since inception,
    including $1,819,142in 2000 and $825,076 in 1999, respectively. If
    losses continue and/or the Company is unable to raise adequate capital to
    fund future operations, the Company may be required to curtail operations,
    liquidate assets, or enter into capital or financing arrangements on terms
    which may have an adverse effect on future operations. In an effort to
    improve operations and cash flow, the Company is currently pursuing the
    following activities:

During 2000, the Company restructured its armor
    operations, which is now a separate subsidiary named Force One, LLC. The
    Company moved its operations to North Carolina, retained experienced
    management and sales personnel, and anticipates a reduction in the costs
    associated with its armor operations. ForceOne has developed new
    lightweight, lower priced armor products in order to increase sales volume.
    The Company expects its restructuring efforts to positively impact armor
    profitability in fiscal 2001. Additionally, corporate overhead has also been
    reduced as a function of the overall Company restructuring.

Profitable and privately held strategic acquisition
    candidates. The Company intends to acquire the candidates through a
    combination of cash (raised through equity financings) and common stock of
    the Company.

Subsequent to December 31, 2000, the Company raised
    additional equity financing of approximately $275,000 through proceeds from
    the exercise of warrants. Assuming all warrants are exercised, the Company
    could receive proceeds of $3,825,000. However, there can be no assurances
    that any of these warrants will be exercised (see Note 9).

For these reasons, management believes that no
    adjustments or reclassifications of recorded assets and liabilities is
    necessary at this time.

3.     Investment in and Advances
to Structural Holdings and Subsidiary:

In 1999, the Company purchased a 50% interest in
    Structural for $850,000 cash and incurred $98,900 of costs directly
    associated with this investment. The investment is accounted for under the
    equity method of accounting. In 2000, the Company advanced $250,000 to
    Structural Holdings' Subsidiary. The interest on the unsecured demand note
    is at prime (9.5% at December 31, 2000) and is payable quarterly. As a
    result of Structural Holdings' financial position, this note has been
    recorded with the Company's equity investment. During 2000, the Company's
    net equity in the net loss of Structural Holdings was $786,669.

Summarized Financial Information for Structural Holdings(Amounts in 000's)



|                           |  | For the Year
      Ended
      December 31, 2000 |  | For the Year
      Ended
      December 31, 1999
|-------------------------- |  | ------------------------------------------------ |  | ------------------------------------------------
|                           |  |                                                  |  |                                                 
|Current assets             |  | $2,986,000                                       |  | $5,464,000                                      
|Total assets               |  | $7,493,000                                       |  | $10,241,000                                     
|Current liabilities        |  | $6,885,000                                       |  | $7,816,000                                      
|Total liabilities          |  | $7,354,000                                       |  | $8,450,000                                      
|Total stockholders' equity |  | $139,000                                         |  | $1,790,000                                      
|Sales revenue              |  | $14,901,000                                      |  | $7,005,000                                      
|Gross margin               |  | $(468,000)                                       |  | $1,675,000                                      
|Net income (loss)          |  | $(1,464,000)                                     |  | $90,000                                         

Structural purchased an entity (H&M) in 1999 for
    approximately $5,000,000. The purchase of H&M was accounted for under
    the purchase method of accounting, and as a result, approximately $3,025,000
    of goodwill was recorded which is being amortized over 15 years. The
    purchase was financed by Structural with approximately $1,700,000 in cash
    (of which $850,000 was paid by the Company), a $650,000 note payable to the
    seller and $2,650,000 of 3-year term loans to a financial institution to
    H&M. Additionally, H&M obtained a $2,350,000 3-year revolving
    line-of-credit from the same financial institution. H&M was not in
    compliance with certain financial covenants of the financial institution as
    of December 31, 2000 and as such, the notes have been classified as
    current. However, H&M is currently attempting to refinance the term debt
    with new creditors. The loan agreements have restrictions on payment of
    dividends, salaries and fees to the principals/shareholders of Structural.
    Consulting fees of $225,000, primarily related to obtaining the loan from
    the financial institution, were paid to an entity that has a common equity
    interest holder with a shareholder of Structural. This fee has been recorded
    as deferred financing fees and was expensed in 2000 in contemplation of the
    refinancing.

The Company received fees of $15,000 and $45,000 from
    Structural during fiscal 2000 and 1999, respectively. The original
    investment in Structural of approximately $949,000 differs from the Company's
    50% interest in the beginning net equity of Structural totaling $850,000.
    This difference is primarily the result of the Company capitalizing direct
    costs it incurred for the purchase of its 50% interest in Structural. This
    difference is being amortized over 15 years.

4.     Merger, Acquisition and
Reorganization:

On September 27, 2000, the Company completed the
    acquisition of 100% of the issued and outstanding shares of common stock of
    Palo Verde Group, Inc., a Colorado corporation. In the transaction, Guardian
    issued 361,800 shares of its common stock to the sole shareholder (RMF) of
    Palo Verde Group, Inc. Palo Verde did not have any operations; only
    non-revenue generating assets and a note payable. The estimated fair market
    value of the assets acquired equaled the value of the Company's stock.
    Under the terms of the agreement, Guardian has agreed to use its best
    efforts to register the 361,800 shares of Guardian common stock. The
    acquisition will be accounted for by the purchase method.

The assets of Palo Verde Group, Inc. consists of certain
    real property located in Carefree, Arizona and a second mortgage held
    against property located in the State of Wyoming. In December of 2000, the
    Company foreclosed on the property (the "Property") in Wyoming and
    received the deed to the property. As a result of the agreement with the
    previous owners of the Property , the Company can only receive maximum
    proceeds of $150,000 upon the sale of the property. The Arizona property is
    held for development.

On September 30, 2000, the Company completed a
    reorganization and restructuring of its armor division.

The Company formed and organized a wholly-owned
    subsidiary, Guardian Security and Safety Products, Inc. ("GSSP").
    In forming that subsidiary, the Company transferred all of its assets and
    liabilities associated with its armor manufacturing division to GSSP in
    exchange for all the shares of GSSP common stock.

Following this restructuring, the Company formed and
    organized ForceOne, a Delaware limited liability company. GSSP transferred
    to ForceOne, LLC certain assets and liabilities associated with the armor
    division consisting of accounts receivable, accounts payable, inventory and
    fixed assets. The assets and liabilities transferred to ForceOne, LLC had a
    net book value of approximately $50,000, for which GSSP received a 51%
    membership interest in ForceOne, LLC.

Subsequent to year end, the Company entered into an
    agreement to merge with Vairex Corporation ("Vairex"). The Company
    will issue an aggregate of 28.3 million shares of common stock in exchange
    for all of the common stock of Vairex. The transaction will be treated as a
    purchase by Vairex of the Company, if consumated. For legal purposes,
    however, the Company will remain the surviving entity, therefore the capital
    structure of the Company will be restated. The merger is contingent upon the
    completion of certain events, including raising additional capital.

5.     Notes Receivable:

In conjunction with a failed acquisition of an entity in
    1998, the Company loaned $500,000 to this entity. The interest rate is 8%. A
    637-acre parcel of land and a building have been pledged as collateral on
    the note. At December 31, 2000, the note balance had been reduced to
    $250,000. The remaining balance is due June 30, 2001. Subsequent to
    December 31, 2000, the entity paid $150,000 on the note.

A related party note receivable of $85,000 is from an
    entity that is a stockholder in the Company and the other 50% stockholder in
    Structural. The interest rate is 9 %, with interest due monthly with the
    principal due June 30, 2001. This note is collateralized by 10% of the
    entity's common stock ownership of Structural and consulting fee payments
    of $25,000 per month made to the entity by Structural. Subsequent to
    December 31, 2000, this note was paid in full.

6.     Property and Equipment:

Property and equipment consists of the following at
    December 31, 2000:

|Land held for future development |  |  |  | $    275,000
|-------------------------------- |  |  |  | ------------
|Building                         |  |  |  | 150,000     
|Leasehold improvements           |  |  |  | 8,392       
|Manufacturing equipment          |  |  |  | 11,969      
|Furniture and fixtures           |  |  |  | 49,412      
|Computer equipment               |  |  |  | 56,155      
|                                 |  |  |  | 550,928     
|Accumulated depreciation         |  |  |  | (75,868)    
|                                 |  |  |  | $    475,060

Depreciation expense for the years ended
    December 31, 2000 and 1999 was $50,876 and $40,720, respectively.

In 1999, the Company sold its land and building for
    $2,825,000, which was greater than its net cost of approximately $2,640,000.
    In conjunction with the sale, the purchaser assumed the Company's note
    payable, which balance was approximately $1,857,000 on the date of the sale.
    The total proceeds to the Company was approximately $883,000. The Company
    also signed a 5-year lease totaling approximately $13,000 per month on the
    building after it was sold, which was subsequently leased to a third party.

Through the September 27, 2000 acquisition of Palo
    Verde, the Company obtained land in Carefree, Arizona valued at $275,000 and
    property and a building in Thermopolis, Wyoming recorded at $150,000.

7.     Notes Payable:

|Notes payable on two insurance premium finance
      agreements maturing in April 2001 with monthly payments of principle and
      interest of $4,965 with interest at 10.5% and 8.375%, respectively. | $  53,904
|------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | ---------
|Mortgage payable maturing in August 13, 2004 with
      monthly payments of principle and interest of $1,489 with interest at 9%,
      collateralized by certain real property.                        | 106,772  
|Note payable with interest at 12%. Principal and
      accrued interest due in March 2001, collateralized by a $250,000 note
      receivable.                                                          | 250,000  
|                                                                                                                                                                                                        | 410,676  
|Less current portion                                                                                                                                                                                    | (302,588)
|                                                                                                                                                                                                        | $ 108,088

The following is a schedule of future principal payments
    as of December 31, 2000:



|Year Ending December 31, |  |  |  |         
|------------------------ |  |  |  | --------
|2001                     |  |  |  | $302,588
|2002                     |  |  |  | 19,083  
|2003                     |  |  |  | 10,172  
|2004                     |  |  |  | 11,141  
|2005                     |  |  |  | 12,202  
|Thereafter               |  |  |  | 55,490  
|                         |  |  |  | $410,676



8.     Lease Commitments:

Office Lease - The Company leases office space,
    under a three-year and four-year operating leases. The Company subleases one
    of its leased locations that it no longer occupies. Total rental expense was
    $188,146 for the year ended December 31, 2000. The total minimum rental
    commitments at December 31, 2000 are as follows:



|     |  | Gross Minimum Rent |  | Sub Lease Income |  | Net
      Minimum Rent
|---- |  | ------------------ |  | ---------------- |  | ----------------------
|2001 |  | $ 182,702          |  | $(112,873)       |  | $69,829               
|2002 |  | 183,646            |  | (172,400)        |  | 11,246                
|2003 |  | 179,616            |  | (177,572)        |  | 2,044                 
|2004 |  | 42,967             |  | (44,269)         |  | (1,302)               
|     |  | $588,931           |  | $(507,114)       |  | $  81,817             

9.     Shareholders' Equity:

Stock Split - During fiscal 2000, the Company's
    Board of Directors approved a 2 for 1 stock split. Accordingly, all common
    stock reflected in the accompanying financial statements and notes reflect
    this split.

Preferred Stock - The Company has the authority
    to issue 1,000,000 shares of preferred stock. The Board of Directors has the
    authority to issue such preferred shares in series and determine the rights
    and preferences of the shares as may be determined by the Board of
    Directors. There were no outstanding shares of preferred stock in 2000 or
    1999.

Issuances of Common Stock and Warrants - During
    1999, the Company issued 66,666 shares of common stock valued at $50,000 to
    an entity which has a common officer with the Company for services provided
    in connection with the acquisition of Structural (see Note 3). In
    addition to $55,000 in cash for consulting services to a
    shareholder/director, the Company issued 75,006 shares of common stock to an
    entity owned by this shareholder/director for consulting services valued at
    $51,087. During 1999, the Company issued 133,334 shares of common stock
    for $100,000 to an entity that owns 50% of Structural.

During 2000, the Company issued 125,000 shares of common
    stock valued at $131,097 to the Board of Directors for services. In
    addition, the Company issued 22,227 shares of common stock valued at $25,000
    to a shareholder of ForceOne, LLC as an employment incentive.

On September 27, 2000, the Company completed the
    acquisition of 100% of the issued and outstanding shares of common stock of
    Palo Verde Group, Inc., a Colorado corporation. In the transaction, Guardian
    issued 361,800 shares of its common stock to the sole shareholder of Palo
    Verde Group, Inc.

In January 2000, the Company sold 150,000 units
    (comprised of 2 common shares and 24 common stock purchase warrants) for
    $1.50 each receiving net proceeds of $225,000. The warrants have the
    following terms:



|Warrant |  | Price   |  | Period* 
|------- |  | ------- |  | --------
|Class A |  | $ .7500 |  | 30 days 
|Class B |  | .8750   |  | 60 days 
|Class C |  | 1.000   |  | 90 days 
|Class D |  | 1.125   |  | 120 days
|Class E |  | 1.250   |  | 150 days
|Class F |  | 1.500   |  | 180 days

*     The exercise period
      begins upon the effective date of a registration statement  
             registering the underlying shares of
      common stock issuable upon the exercise of these
             warrants. Warrants must be exercised
      in alphabetical order by warrant class. If any
             warrant is not exercised during the
      term of the warrant by an individual warrant holder,
             all remaining classes of warrants
      will automatically expire.

Subsequent to year end, 253,340 Class A warrants
    were exercised for proceeds of $190,005 and 95,340 Class B warrants
    were exercised for proceeds of $83,423. In conjunction with the initial
    public offering in 1996, the Company issued 1,628,712 warrants. These
    warrants have an exercise price of $7.50 per share and expire in the year
    2001. None of these warrants have been exercised.

Stock Option Plans - In 1997, the shareholders
    approved a stock option plan authorizing options for 300,000 shares of
    the Company's common stock. Under the terms of the plan, the exercise
    price of non-qualified options will be the lesser of the book value per
    share of the common stock as of the end of the Company's fiscal year
    immediately preceding the date of such grant or 50% of the fair market value
    per share of the common stock on the date of such grant. For incentive stock
    options, the exercise price shall not be less than fair market value per
    share at the date of such grant. Options shall expire on the date specified
    by the

Board but not more than 10 years from the date of grant
    for non-qualified and incentive stock options and options granted to
    employees expire 90 days after termination.

Following is a summary of activity under the stock option
    plan for the years ended December 31, 2000 and 1999:

|                               |  | 2000            |  | 1999                                      
|------------------------------ |  | --------------- |  | ------------------------------------------
|                               |  | Numberof Shares |  | Weighted
      Average
      ExercisePrice
|Outstanding, beginning of year |  | 594,000         |  | $1.235                                    
|Granted                        |  | 100,000         |  | 1.000                                     
|Exercised                      |  | (424,000)       |  | 2.500                                     
|Expirations                    |  | (70,000)        |  | 2.500                                     
|Outstanding, end of year       |  | 200,000         |  | $1.205                                    
|Vested Options                 |  | 42,857          |  | $1.296                                    

All options granted during 2000 and 1999 were to
    employees and directors.

If not previously exercised or forfeited, vested options
    outstanding at December 31, 2000 will expire in the year ending
    December 31, 2007 at a weighted average exercise price of $1.296 per share.
    The remaining 157,143 options will vest ratably each quarter over seven
    years and will expire in January 2007 at a weighted average exercise price
    of $1.186 per share. At December 31, 2000, the weighted average
    remaining contractual life of options outstanding was approximately
    66 months.

Presented below is a comparison of the weighted average
    exercise price and fair values of the Company's common stock on the
    measurement date for all stock options granted to employees during 2000:



|                                         |   | Number ofShares |   | ExercisePrice |   | FairValue
|---------------------------------------- | - | --------------- | - | ------------- | - | ---------
|                                         |   |                 |   |               |   |          
|Market price equal to exercise price     |   | 100,000         |   | $2.00         |   | $2.00    
|Exercise price greater than market price | - |                 | - |               | -
|Exercise price greater than market price | - |                 | - |               | -
|                                         |   |                 |   |               |   |          
|                                         |   | 100,000         |   | $   2.00      |   | $   2.00 

Pro Forma Stock-Based Compensation Disclosures

|                                            |  | Year Ended December 31,
|------------------------------------------- |  | -----------------------
|                                            |  | 2000                   
|Net loss applicable to common shareholders: |  |                        
|As reported                                 |  | $(2,098,705)           
|Pro forma                                   |  | $(2,149,424)           
|Net loss per common shareholders:           |  |                        
|As reported - basic and diluted             |  | $(.59)                 
|Pro forma - basic and diluted               |  | $(.61)                 

The fair value of each option
    granted in 2000 was estimated on the date of grant, using the Black-Scholes
    option-pricing model with the following weighted average assumptions:



|Expected volatility       |  |  |  | 108.6%
|------------------------- |  |  |  | ------
|Risk-free interest rate   |  |  |  | 6.6%  
|Expected dividends        |  |  |  | -     
|Expected terms (in years) |  |  |  | 7.0   

10.     Income Taxes:

There was no provision for income taxes for the years
    ended December 31, 2000 or 1999 due to net operating losses, and
    deferred tax assets being offset by a valuation allowance.

The net deferred tax asset for the years ended
    December 31, are comprised of the following:

|                                            |                        | 2000                   |                        | 1999         
|------------------------------------------- | ---------------------- | ---------------------- | ---------------------- | -------------
|Current Deferred Tax Assets (Liabilities)   |                        |                        |                       
|Inventory allowance                         | $     16,392           |                        | $    33,458           
|Accrued closing costs                       |                        | 18,650                 |                        | -            
|Other                                       | -                      |                        | 2,986                 
|                                            | 35,042                 |                        | 36,444                
|Valuation allowance                         | (35,042)               |                        | (36,444)              
|Net current deferred tax asset (liability)  | $             
      - |                        | $             
      -
|Long-term Deferred Tax Assets (Liabilities) |                        |                        |                       
|Property and equipment                      |                        | $             
      - |                        | $       1,203
|Certification costs                         |                        | -                      |                        | (3,300)      
|Equity Investment                           |                        | 292,194                |                        | (12,487)     
|Options-FAS 123                             |                        | -                      |                        | 20,159       
|Net operating loss carry forward            | 1,475,500              |                        | 1,112,418             
|                                            |                        | 1,767,694              |                        | 1,117,993    
|Valuation allowance                         |                        | (1,767,694)            |                        | (1,117,993)  
|Net long-term deferred tax asset            | -                      |                        | -                     
|Total net deferred tax assets               | $             
      - |                        | $             
      -

Total income tax expense for 2000 and 1999 differed from
    the amounts computed by applying the U.S. Federal statutory tax rates
    to pre-tax income as follows:



|                                                                                                                                     |  | 2000  |  | 1999 
|------------------------------------------------------------------------------------------------------------------------------------ |  | ----- |  | -----
|Statutory rate                                                                                                                       |  | (34%) |  | (34)%
|State income taxes, net of Federal income tax benefit                                                                                |  | (5%)  |  | (4)% 
|Increase (reduction) in valuation allowance related to of net operating
      loss carryforwards and change in temporary differences |  | 39 %  |  | 38 % 
|                                                                                                                                     |  | -     |  | -    

In 2000 and 1999, the valuation allowance increased
    $648,299 and $403,000, respectively. At December 31, 2000, the Company
    has net operating loss carryforwards of approximately $3,955,763 available
    under provisions of the Internal Revenue Code to be applied against future
    taxable income. These carryforwards are subject to annual limitations on
    utilization and expire from December 31, 2010 through December 31,
    2020.

11.     Major Customers:

The Company sells its products primarily to authorized
    dealers for resale to municipal, county and state law enforcement agencies
    throughout the United States. Approximately 2% of sales in 2000 and 1999
    were to foreign governments and agencies.

Percentage of sales to major domestic customers at
    December 31, are as follows:



|                                                                       |  | 2000 |  | 1999
|---------------------------------------------------------------------- |  | ---- |  | ----
|Government Customer:                                                   |  |      |  |     
|U.S. Government Agency and
                         
      subcontract |  | 20%  |  | 23% 
|Municipal law enforcement agency                                       |  | 59%  |  | 20% 
|                                                                       |  |      |  |     
|Non-Governmental Customer                                              |  | 21%  |  | 20% 

12.     Major Supplier Concentration:

The ballistic resistant products of the Company are
    primarily manufactured with the raw materials Spectra 1000 woven fabric and
    Spectra Shield. These two products are manufactured and distributed by only
    one manufacturer. As of December 31, 2000 and 1999, Guardian
    Technologies International, Inc., owed $62,700 and $72,700, respectively, to
    this Company.

13.     Fourth Quarter Adjustment:

During the fourth quarter of 2000, the Company recognized
    a loss of approximately $575,000 on its equity in net earnings of
    Structural. This loss was primarily the result of Structural revising its
    calculation for profit on long-term contracts prior to the Company's
    fourth quarter.

The Company believes that this report contains forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange
Act of 1934, as amended, that are subject to certain risks and uncertainties. Forward-looking statements represent the Company's expectations or beliefs concerning future events, including the following: any statements regarding future sales and gross
profit percentages, any statements regarding the continuation of historical trends, any statements regarding the sufficiency of the Company's cash balance. and cash generated from operating and financing activities for the Company's future liquidity and
capital resource needs, any statements regarding the effect of regulatory changes, the success of development and enhancement of the Company's products, the adequacy of the Company's facilities, potential acquisitions, and any statements regarding the
future of the industry and the various parts of the markets in which the Company conducts its business. The Company cautions that any forward-looking statements made by the Company in this report or in other announcement made by the Company are further
qualified by important factors that could cause actual results to differ materially from those in the forward-looking statements.

Accounting Pronouncements

SFAS No. 133, "Accounting for Derivative Instruments and Hedging Activities", was issued in June 1998. This statement establishes accounting and reporting standards for derivative instruments and for hedging
activities. It requires that an entity recognize all derivatives as either assets or liabilities in the statement of financial position and measure those instruments at fair value. This statement is effective for the Company's financial statements for the
year ended December 31, 2001 and the adoption of this standard is not expected to have a material effect on the Company's financial statements.

Item 7.       Financial Statements

The following financial statements are filed as part of this report beginning on page F-1:



|1. | Independent Auditor's Report                                                    
|-- | --------------------------------------------------------------------------------
|2. | Balance Sheet as of December 31, 2000                                           
|3. | Statements of Operations for the years ended December 31, 2000 and 1999         
|4. | Statement of Stockholders' Equity for the years ended December 31, 2000 and 1999
|5. | Statements of Cash Flows for the years ended December 31, 2000 and 1999         
|6. | Notes to Financial Statements                                                   

INSERT FINANCIALS HERE

Item 8.     Changes and Disagreements with Accountants on Accounting and Financial

None.



PART III

Item 9.       Directors and Executive Officers

Our executive officers and directors are listed in the table below and brief summaries of their business experience and certain other information with respect to them are set forth thereafter.

| | Name              | Age | Position                      
| | ----------------- | --- | ------------------------------
| | J. Andrew Moorer  | 39  | President and CEO             
| | Kevin L. Houtz*   | 38  | Director and Secretary        
| | David W. Stevens* | 64  | Director                      
| | David R. Payne    | 42  | President, Structural Holdings
| | Steve Young       | 57  | President of ForceOne, LLC    

*Members of the Audit CommitteeJ. Andrew Moorer has been our President and Chief Executive Officer since February 1999.  Mr. Moorer was named Chief Operating Officer of the Company in l998.  He was Chief Financial Officer of Redwood
MicroCap Fund from 1994 until 1998.  Mr. Moorer began his career as a Certified Public Accountant in the Audit and Emerging Business Services Group of the international accounting firm of PriceWaterhouseCoopers.  Since leaving public accounting in l987,
Mr. Moorer has held various positions in finance with increasing levels of responsibility, including the position of Chief Financial Officer for several firms.  Mr. Moorer received his formal education at Loyola College of Maryland.Kevin L. Houtz is the founder of Elements of Design, a full service graphic design firm located in Baltimore, Maryland.  The firm, which specializes in the development of corporate identity and collateral and
packaging design, has served a variety of regional and national clients since its inception in 1989.  Mr. Houtz graduated from the University of Maryland in 1984 receiving a Bachelor of Arts degree in Visual Arts/Design.

David W. Stevens has been the Chief Operations Officer of Hargrove, Inc., a company specializing in exhibits and special events, for more than the past five years.  He has been the CEO
of several public and private companies for the past twenty-four years.  His assignments have focused on restructuring and turnaround situations in the manufacturing, defense electronics, and engineering services industries.  Mr. Stevens is also a
consultant to the International Finance Corporation of the World Bank Group in organizational development.

David R. Paynehas been President of Structural Holdings, our 50% - owned subsidiary, since its formation in April 1999.  Prior to serving as President, Mr. Payne was employed as
President of D.R. Payne & Associates, Inc., a financial management and consulting firm based in Oklahoma.  Mr. Payne received a Bachelor of Science Degree in accounting from Oklahoma Christian University.

Steve Young has been President of ForceOne LLC, our wholly-owned armour subsidiary, since July 2000.  From 1995 to the present, he has been Vice President, Armor Systems, of Safariland
Ltd., Inc., a manufacturer of law enforcement business products.  From 1969 to 1995, he served as Manager of Business Development for Allied Signal, Inc. in its Spectra High Performance Fibers Division.  He is a member of the National Association for the
Advancement of Law Enforcement Technology as well as the National Association of Police Equipment Distributors.  He earned a Bachelor of Science degree in Chemistry and Mathematics from Mars Hill College in 1965.

Board of Directors

Our certificate of incorporation authorizes our board to consist of either five or seven directors.  There are presently six directors.  The certificate provides that
the board will be divided into three (3) classes of directors, which classes serve for varying terms.  The certificate also grants to the sitting directors the authority to fill any vacancies on the Board and/or to appoint members to the Board to fill
any vacancies resulting from an increase in the authorized number of directors.  Beginning in 1998 all directors were elected for one-year terms.  At the next annual meeting, the Board intends to nominate candidates to fill staggered terms as provided in
the articles.  This classification of the board of directors may have the effect of delaying or preventing changes in control or of our management.Board Committees

The board appoints committees to help carry out its duties.  In particular, board committees work on key issues in greater detail than would be possible at full board meetings.  Each
committee reviews the results of its meetings with the full board.  The board has established the following committees.

Audit Committee

The audit committee is currently composed of the following directors:

Kevin L. Houtz
David W. Stevens

The Board of Directors has determined that the members of the audit committee are "independent" within the meaning of the National Association of Securities Dealers, Inc.'s listing standards.  For this
purpose, an audit committee member is deemed to be independent if he does not possess any vested interests related to those of management and does not have any financial, family or other material personal ties to management.

The audit committee met on one occasion during fiscal 2000. The committee is responsible for accounting and internal control matters. The audit committee:

|- | reviews with management, the internal auditors and the independent auditors policies and procedures with respect to internal controls;
|- | --------------------------------------------------------------------------------------------------------------------------------------
|- | reviews significant accounting matters;                                                                                               
|- | approves the audited financial statements prior to public distribution;                                                               
|- | approves any significant changes in accounting principles or financial reporting practices;                                           
|- | reviews independent auditor services; and                                                                                             
|- | recommends to the board of directors the firm of independent auditors to audit our consolidated financial statements.                 

In addition to its regular activities, the committee is available to meet on all of the independent accountants, controller or internal auditor whenever a special situation arises.Report of Audit Committee       In connection with the preparation of the annual report on Form 10-KSB of Guardian Technologies International, Inc., the audit committee certifies that it has:

|- | reviewed and discussed the audited financial statements with management;                                                                                                                                                                   
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|- | discussed with the Company's independent auditors the matters required to be discussed by the Statements of Auditing Standards 61;                                                                                                         
|- | received the written disclosures and the letter from the independent accountants required by the Independent Standards Board Standard No.  1, and has discussed with the independent accountant the independent account's
independence; and
|- | based on the review and discussions referred to above, the audit committee has recommended to the Board of Directors that the audited financial statements be included in the Company's annual report on Form 10KSB.                       

The Audit Committee
Kevin L. Houtz
David W. Stevens

Compensation Advisory Committee

The compensation advisory committee is currently composed of the following directors:

J. Andrew Moorer
Kevin L. Houtz

The compensation advisory committee (including for purposes of administering our stock compensation program) met on one occasion during fiscal 2000. The compensation advisory committee:

|- | recommends to the board of directors the compensation and cash bonus opportunities based on the achievement of objectives set by the compensation advisory committee with respect to our chairman of the board and president,
our chief executive officer and the other executive officers;
|- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|- | administers our compensation plans for the same executives;                                                                                                                                                                                                                                
|- | determines equity compensation for all employees;                                                                                                                                                                                                                                          
|- | reviews and approves the cash compensation and bonus objectives for the executive officers; and                                                                                                                                                                                            
|- | reviews various matters relating to employee compensation and benefits.                                                                                                                                                                                                                    

Board Compensation Advisory Committee Report on Executive Compensation

The compensation advisory committee of the board of directors consist of two directors, Mr. J. Andrew Moorer and Mr. Kevin L. Houtz. The committee has the responsibility to recommend to the board guidelines
for administrating our stock compensation program, and the compensation for our executive officers. The primary function of the committee is to ensure our compensation program is consistent with our values and aligned with the business strategy and goals.

The committee believes the compensation levels of our executives, who provide leadership and strategic direction, should consist of (1) base salaries that are, at a minimum, commensurate with executives of
other comparable public companies and (2) periodic cash bonuses based on the achievement of specific objectives.  These objectives are usually tied to a percentage of our profitability.

The committee also believes it should provide executive officers with significant stock-based incentive compensation, which increases in value in direct correlation with improvement in our common stock price.
Incentive or non-qualified stock options are granted upon appointment of the executive as an inducement for employment. Additional incentive or non-qualified stock options are granted to the executive if specific goals are achieved.

Each of our executive officers are also eligible to participate in our benefit plans offered to all employees.

The Compensation Advisory Committee

J. Andrew Moorer
Kevin L. Houtz

Board Compensation

We do not currently provide our directors with cash compensation for their services as members of the board of directors.  However, each member of the board of directors is reimbursed his
actual expenses in attending meetings.  In addition, each director was issued 20,000 shares of common stock for his services as a director in 1999. 
No compensation was awarded in 2000.

Compliance with Section 16(a) of the Securities Exchange Act

Section 16 (a) of the Securities Exchange Act of 1934, as amended, requires the Company's executive officers, directors and persons who own more than ten percent of the Common Stock
(collectively, "Reporting Persons") to file initial reports of ownership and changes of ownership of the Common Stock with the SEC and the NASDAQ Stock Market. Reporting Persons are required to furnish the Company with copies of all forms that they file
under Section 16(a).  Based upon information provided to the Company from Reporting Persons, during the two years ended December 31, 2000, Mr. Moorer failed to file four reports covering five transactions in a timely fashion, Mr. North failed to file two
reports covering four transactions in a timely fashion, Mr. Houtz failed to file seven reports covering 24 transactions in a timely fashion, and Mr. Stevens failed to file three reports covering four transactions in a timely fashion.  Other than the
foregoing, the Company is not aware of any failure on the part of any Reporting Persons to timely file reports required pursuant to Section 16(a).

Item 10.  Executive Compensation

The following table sets forth the executive compensation paid to Mr. Moorer, who became President in February 1999.  No other executive officer of the Company was paid compensation in excess of $100,000 in
1999 or 2000.

|Table 1                                                
|-------------------------------------------------------
|Summary Compensation Table                             
|                                                       
|                                                       
|Name and PrincipalPosition                             
|Year Ended                                             
|J. Andrew Moorer, President
and Chief
Executive
Officer
|1999                                                   

Table 2

|Option/SAR Grants in Last Fiscal Year
|-------------------------------------
|Individual Grants                    
|Name                                 
|J. Andrew Moorer                     

Aggregated Option Exercises in Fiscal Year 2000 and Fiscal Year 2000 Year-end Option Values

The following table sets forth information concerning option exercises and option holdings for each of the names executive officers during the fiscal year ended December 31, 2000.  All of the
listed options were exercisable at December 31, 2000.

|Table 3
Aggregated Options/SAR Exercised in Last Fiscal Year
And FY-End Option/SAR Values
|-----------------------------------------------------------------------------------------
|Name                                                                                     
|J. Andrew Moorer,   
President and CEO                                                   
|                                                                                         

Item 11.   Security Ownership of Certain Beneficial Owners and Management

To our knowledge, the following table sets forth information regarding ownership of our common stock by:

-       beneficial owners of more than 5% of the outstanding shares of Common Stock;

-       each director and each executive officer; and

-       all directors and executive officers as a group.

Except as otherwise indicated below and subject to applicable community property laws, each owner has sole voting and sole investment powers with respect to the stock listed.

|Name and Address of Beneficial Owner                             | Amount and Natureof Beneficial Ownership(1) | Percentof class (2)
|---------------------------------------------------------------- | ------------------------------------------- | -------------------
|J. Andrew Moorer
P.O. Box 3618
Carefree, AZ  85377               | 520,000 (3)                                 | 12.1%              
|Oliver L. North
Rt. 1, Box 560
Bluemont, VA 20135                | 229,980                                     | 5.8%               
|                                                                 |                                            
|Kevin L. Houtz
3000 Chestnut Ave.,
Ste. 343D
Baltimore, MD 21211 | 412,500(4)                                  | 10.0%              
|David W. Stevens
312 Greenwood Point Rd.
Grasonville, MD 21638   | 46,000(5)                                   | 1.1%               
|All Officers and Directors as
a Group (3 Persons)(6)             | 978,500                                     | 22.0%              

|(1) | Under SEC Rules, we include in the number of shares owned by each person the number of shares issuable under outstanding options or warrants if those options or warrants are exercisable within 60 days of the date of this
report.  We calculate the ownership of each person who owns exercisable options by adding (i) the number of exercisable options for that person only to (ii) the number of total shares outstanding and dividing that result into (iii) the total number of
shares and exercisable options owned by that person.
|--- | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|(2) | In calculating percentage ownership, all shares of Common Stock that the named stockholder has the right to acquire within 60 days upon exercise of any option or warrant are deemed to be outstanding for the purpose of
calculating the percentage of Common Stock owned by such stockholder, but are not deemed outstanding for the purpose of computing the percentage of Common Stock owned by any other stockholder.  Shares and percentages beneficially owned are based upon
3,973,462 shares outstanding.                           
|(3) | Includes 300,000 shares purchasable upon exercise of options.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|(4) | Includes 120,000 shares purchasable upon exercise of warrants.                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(5) | Includes 24,000 shares purchasable upon exercise of warrants.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|6)  | Includes Messrs. Moorer, Houtz and Stevens.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

Item 12. Certain Relationships and Related Transactions

In February 1999, Mr. North granted Mr. Moorer an option to acquire from Mr. North 100,0000 shares of our common stock at an exercise price of $1.75 per share for a period of six months and
57,990 shares of common stock at an exercise price of $5.00 for a period of one year.  During 1999 Mr. Moorer exercised the option to purchase 100,000 shares of common stock from North for $175,000.  The remaining 57,990 options expired unexercised.

During 1999, we paid Mr. North $55,000 in cash and issued him 75,006 shares of common stock valued at $51,087 for consulting services.

In 1999 we sold TAIM Special Equities III 133,334 shares of common stock for $100,000.  TAIM owns 50% of Structural.

During 1999 we loaned TAIM $85,000.  The interest rate on the note is 9%, with interest due monthly and with principal due June 30, 2000.  The note is collateralized by 10% of TAIM's ownership
of Structural and consulting fee payments of $12,500 per month made to TAIM by Structural.

During 1999 we issued Redwood MicroCap Fund, Inc. 66,666 shares of common stock valued at $50,000 for services Redwood provided in connection with the acquisition of Structural.  Mr. Moorer was
an officer of Redwood at the time.  We also paid Redwood $50,000 for financial advisory services.

In January 2000 we issued 20,000 shares of common stock to each of our five directors as compensation to them for their services as directors in 1999.  The shares were valued at $.98 per share.

In January 2000, we sold in a private offering 150,000 units, each consisting of two shares of common stock and twenty-four warrants.  The units were priced at $1.50, so that the total proceeds
from the offering were $225,000.  The common stock component of the units and the common stock into which the warrants are exercisable are the shares being sold in this offering.  Two of our directors, Messrs. Houtz and Stevens, purchased 10,000 units and
2,000 units, respectively, in the offering.

We issued 194,000 options in 1999.  100,000 of those options were issued to Mr. Moorer.

The Options to Mr. Moorer have an exercise price of $.71 per share and expire in 2006.  We issued an additional 100,000 options to Mr. Moorer in January 2000 that are exercisable at $1.00 per
share and expire in 2007, and an additional 100,000 options in January 2001 that are exercisable at $.34 per share and expire in 2008.

On April 1, 2000, Mr. Moorer exercised 40,000 options to purchase common stock at $1.25 per share by issuing a note payable to us.  The note accrued interest at 8%.  The note has been repaid.

While we have not formally adopted any policy controlling transactions with our affiliates and principal shareholders, in each instance we believe that the terms of these arrangements are
commercially reasonable.  All transactions between the company, on the one hand, and one of our officers and directors, on the other, have been approved by a majority of our disinterested directors.Item 13.  Exhibits and Reports on Form 8-K

(a)        Exhibits

| | ExhibitNumber | Description                                                                                                                                                                    | 
| | ------------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | 
| |              
| | 3.1           | Certificate of Incorporation of the Company *                                                                                                                                  | 
| | 3.2           | Bylaws of the Company.*                                                                                                                                                        | 
| | 4.1           | Form of Common Stock Certificate.*                                                                                                                                             | 
| | 4.2           | Form of Warrant.*                                                                                                                                                              | 
| | 10.1          | Employment Agreement between the Company and Oliver L. North.**                                                                                                                | 
| | 10.2          | Employment Agreement between the Company and Joseph F. Fernandez.**                                                                                                            | 
| | 10.3          | Revolving Line of Credit Agreement dated December 7, 1995 among the Company, Creditanstalt Corporate Finance, Inc. and Oliver L. North, as Guarantor.**                        | 
| | 10.4          | Promissory Note dated December 7, 1995 from the Company to  Creditanstalt Corporate Finance, Inc.**                                                                            | 
| | 10.5          | Guaranty dated December 7, 1995 from Oliver L. North to Creditanstalt Corporate Finance, Inc.**                                                                                | 
| | 10.6          | Amendment dated November 26, 1996 relating to Revolving Loan of Credit Agreement among the Company, Creditanstalt Corporate Finance, Inc. and Oliver L. North, as Guarantor.** | 
| | 10.7          | Margin Agreement dated June 24, 1996 between the Company and Pershing, Division of Donaldson, Lufkin & Jenrette Securities Corporation.**                                      | 
| | 10.8          | Promissory Note dated February 7, 1997 from the Company to Dashco, Inc.**                                                                                                      | 
| | 10.9          | Deed of Trust between the Company and Marc A. Busman and Rosalyn R. Busman, Trustees.**                                                                                        | 
| | 10.10         | Deed of Lease dated January 23, 1997 between the Company, as Landlord, and Freedom Alliance, as Tenant.**                                                                      | 
| | 10.11         | Letter re: Line of Credit facility between the Company and Adler Financial Group.**                                                                                            | 
| | 10.12         | Letter re: Loan commitment between the Company and The Baltimore Life Insurance Company/Life of Maryland, Inc.***                                                              | 
| | 10.13         | Stock Purchase Agreement dated August 12, 1999 between the Company and Taim Investment Company regarding Structural Holdings, Inc.****                                         | 
| | 10.14         | Employment Agreement between the Company and J. Andrew Moorer dated February 1, 1999.*****                                                                                     | 
| | 10.15         | Option dated February 19, 1999 by and between J. Andrew Moorer and Oliver North.*****                                                                                          | 
| | 10.16         | Promissory Note dated May 1, 1999 from Taim Special Equities III to the Company.*****                                                                                          | 
| | 10.17         | Consulting Agreement between the Company and Structural Holdings, Inc. dated April 1, 1999.*****                                                                               | 
| | 10.18         | Consulting Agreement between the Company and Oliver L. North dated February 19, 1999.*****                                                                                     | 
| | 10.19         | Consulting Agreement between the Company and Redwood MicroCap Fund, Inc. dated December 31, 1998.*****                                                                         | 
| | 10.20         | Agreement and Plan of Reorganization dated September 30, 2000, incorporated by reference from the Company's Current Report on Form 8-K dated September 30, 2000.               | 
| | 10.21         | Agreement and Plan of Reorganization dated February 19, 2001, incorporated by reference from the Company's Current Report on Form 8-K dated February 19, 2001.                 | 

|*     | Filed as an Exhibit to the Company's Registration Statement on Form SB-2 dated March 22, 1996 (Reg. No. 333-2712-NY) and incorporated herein by reference.
|----- | ----------------------------------------------------------------------------------------------------------------------------------------------------------
|**    | Filed as an Exhibit to the Company's 1996 Form 10-KSB dated April 15, 1997 and incorporated herein by reference.                                          
|***   | Filed as an Exhibit to the Company's 1997 Form 10-KSB dated March 31, 1998 and incorporated herein by reference.                                          
|****  | Filed as an Exhibit to the Company's Current Report on Form 8-K/A-3 filed with the Commission on August 16, 1999                                          
|***** | Filed as an Exhibit to the Company's Current Report on Form 10-KSB dated April 14, 2000 and incorporated herein by reference                              

(b)      Reports on Form 8-K

The Registrant filed no Current Reports on Form 8-K during the fourth quarter ended December 31, 2000.



SIGNATURES

Pursuant to the requirements of Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

|                     |                                                                                          | GUARDIAN TECHNOLOGIES INTERNATIONAL, INC.
|-------------------- | ---------------------------------------------------------------------------------------- | -----------------------------------------
|                     |                                                                                          |                                          
|Date: April 16, 2001 | By:/s/ J. Andrew MoorerJ. Andrew Moorer, Director, President
and Chief Executive Officer

In accordance with the Exchange Act of 1934, this report has been signed below by the following persons on behalf of the registrant and in the capacities and on the dates indicated.

|By:/s/ J. Andrew Moorer                                          | Date:  April 16, 2001
|---------------------------------------------------------------- | ---------------------
|J. Andrew Moorer
Director, President and
Chief Executive Officer
|By:/s/ Kevin L. Houtz                                            | Date:  April 16, 2001
|Kevin L. Houtz
Director                                          |                      
|By:/s/ David W. Stevens                                          | Date:  April 16, 2001
|David W. Stevens
Director