SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549

FORM 10-KSB

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

For the fiscal year ended December 31, 2002

Commission file number 028238

GUARDIAN TECHNOLOGIES INTERNATIONAL, INC.

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

Post Office Box 3618, Carefree, Arizona 853777439 East Ridgecrest Road, Cave Creek, Arizona 85331

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 $4,305,979.

The aggregate market value of the voting stock held by non-affiliates as of April 14, 2003 was approximately $602,760 based on the average bid and asked price of such stock.

The number of shares outstanding of issuer's Common Stock, $.001 par value, as of April 14, 2003 was 1,674,333.

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

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 August 1, 2001 as filed with the Commission on August 13, 2001; as amended under Form 8-K/A as filed with the Commission on August 24, 2001 and September 10, 2001.
| | 4. | 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, as amended under Form 8-K/A as filed with the Commission on April 11, 2001 and May 9, 2001.      
| | 5. | Incorporated by reference from the Company's Annual Report on Form 10-KSB for the fiscal year ended December 31, 2000, as filed with the Commission on April 17, 2001.                                                                           
| | 6. | 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.                                                                                              
| | 7. | 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.                                                                           
| | 8. | 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.                                                                           
| | 9. | 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 are primarily engaged in structural steel fabrication.

In 2002 and years prior, we also manufactured and distributed ballistic protective equipment.

We also own a commercial building and real estate in Wyoming.

Our executive offices are located at 7439 East Ridgecrest Road, Cave Creek, Arizona  85331.  Our mailing address is P.O. Box 3618, Carefree, Arizona  85377.  Our telephone and facsimile numbers are (480) 575-6972 and (480) 575-9307, respectively.  We use the calendar year for our fiscal year.

OPERATIONS

General

We have 100%-owned subsidiaries as follows:

| | Guardian Steel, Inc., which owns 50% of Structural Holdings, Inc.                               
| | ------------------------------------------------------------------------------------------------
| | -                                                                                               
| | Guardian Security and Safety Products, Inc., which owns a 33% member's interest in ForceOne, LLC
| | -                                                                                               
| | Palo Verde Group, Inc.                                                                          
| | -                                                                                               

Structural 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 an integrated package of steel construction services featuring engineering, detailing, shop fabrication and field erection.  Detailing and field erection are typically performed by subcontractors under our supervision and control.  By offering an integrated package of steel construction services from a single source, we believe that 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, but are not dependent on any of these firms in particular.

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, 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.                                                                                                                                                                                                                                   
| | * | 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 significantly to profitability and the 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 focus 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.

During the year ended December 31, 2002, we completed 12 contracts generating $4.3 million in total revenues.

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.  At December 31, 2002, we had a backlog of $1.7 million.

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 31, 2002, we had one full time corporate employee.  Guardian Steel, Inc., operating as Structural Holdings, Inc. dba H & M Steel, had 20 employees, four in management and administration and 16 in production.  We consider our relationship with our employees to be good.

Ballistic Protective Equipment Business

During 2002 and years prior, through ForceOne, LLC, we manufactured security and safety products, primarily ballistic protective equipment, including equipment commonly referred to as body armor.

During the fourth quarter of 2001, GSSP did not contribute to a ForceOne, LLC member capital call and therefore relinquished its 51% ownership.  Subsequent to December 31, 2001, GSSP converted a note receivable from ForceOne, LLC into a one-third interest in ForceOne, LLC.  As such, this investment was accounted for under the equity method of accounting beginning January 1, 2002.  Throughout 2002, GSSP reduced the value of its equity investment in ForceOne, LLC by its proportionate share of ForceOne, LLC losses.  In February 2003, GSSP sold its remaining one-third interest in ForceOne, LLC to another member.

Real Estate Interests

In September 2000, the Company acquired the Palo Verde Group, Inc. in consideration of the issuance of 361,800 shares of the Company's common stock.  The investment in Palo Verde Group represented an opportunity to enhance shareholder value by diversifying the Company's operations into a third industry.  The initial real estate assets of Palo Verde consisted of the following:

| | * | Five acres of undeveloped real property located in Carefree, Arizona.  The property was recorded on Palo Verde's books at that time at $275,000.  On September 3, 2002, Palo Verde sold this real property for $180,000 repaying a first mortgage of $94,000 and a second mortgage of $62,500.  A loss on the sale of $95,000 was recognized at the time of sale.                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | * | An 8,000 square foot building and associated real estate located in Thermopolis, Wyoming. The building has an estimated value, based on a recent appraisal, of $350,000 and is held subject to a first mortgage of $97,500 and a second mortgage of $125,000.  During 2002, the building was leased to a local restaurant group for a five year period.  Subsequent to year end, the tenant vacated the building for financial reasons.  The building has been listed for sale.

In August 2001, the Company, through Palo Verde, acquired a 4.88-acre parcel of undeveloped commercial real property located in Colorado Springs, Colorado.  The property was acquired in consideration of the issuance of 800,000 shares of the Company's common stock.  The property had an estimated value, based on an appraisal, of $659,000 and was held subject to a first mortgage of approximately $102,000 as to which the Company had an indemnity from a third party who was the principal debtor under the loan.  On July 31, 2002, Palo Verde sold this real property for $540,000 repaying the first mortgage of $102,000 and subsequently received an assignment of the underlying note receivable from the third party debtor.  In addition, Palo Verde used residual proceeds to retire $290,000 of long term debt and $75,000 of accounts payable.  Palo Verde is currently receiving monthly principal and interest payments of $4,750 from the third party debtor.

In August 2001, the Company, through Palo Verde, acquired a 100-acre parcel of undeveloped real property located near Thermopolis, Wyoming in consideration of the issuance of 100,000 shares of the Company's common stock.  The Company acquired the property at the then appraised value of $225,000 and subsequently completed $25,000 of improvements to the property.  The property was acquired subject to a first mortgage of approximately $150,000.  The Company's cost basis in the property was $100,000.  The real estate market in Wyoming declined substantially in late 2001 and several attempts by the Company to refinance the first mortgage during the fourth quarter were unsuccessful.  As a result the holder of the first mortgage initiated foreclosure proceedings subsequent to year end and the property was sold at auction for the amount of the first mortgage in 2002.

In light of the Wyoming land foreclosure and generally poor economic conditions, Palo Verde has implemented a plan of liquidating non-revenue producing real properties.  The only remaining property of Palo Verde is the Wyoming commercial building.  Now that the tenant has vacated, this property will be sold.

Termination of Acquisition of Vairex Corporation

On February 19, 2001, we entered into an Agreement and Plan of Merger pursuant to which we had agreed to acquire Vairex Corporation, of Boulder, Colorado.  Effective March 31, 2002, the merger agreement with Vairex terminated without consummation.  As part of the termination of the merger agreement, we entered into a termination agreement with Vairex under which Vairex has issued to us 1,000,000 shares of Vairex common stock , a warrant representing the right to purchase up to 500,000 shares of Vairex common stock at $2.00 per share and also agreed to reimburse us for our legal costs incurred in connection with the unsuccessful merger transaction, not to exceed $60,000.

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 covered 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 July 2000 we relocated our manufacturing operation to North Carolina and vacated the lower level space.  At December 31, 2000 we eliminated our administrative function and vacated the upper level space.

In January 2001 we subleased the upper level space to a third party sub-tenant for an amount slightly in excess of Guardian's Lease payment.

In March 2001 we subleased the lower level space to a third party sub-tenant for an amount that was less than our lease payment.  The sublease rental income increased quarterly until such time as it approximated our lease payment by March 2002.  The lease payment / sublease rental income differential of approximately $50,000 was accrued on our books at December 31, 2000.  In October 2001 the third party sub-tenant vacated the lower level space and terminated the lease.

During the fourth quarter of 2001 we contacted the owner of the building to begin negotiation of a buyout of the upper and lower level leases.  Effective January 31, 2002, we executed a settlement agreement which assigned the two subleases to the owner and released us from any further obligations under both leases.  The settlement amount of $104,050 was accrued on our books at December 31, 2001 and paid in 2002.

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

Item 3.       Legal Proceedings

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.

Other than as described in more detail below, we are not presently involved in any material legal proceedings:

The Company's consolidated subsidiary, H&M Steel, was involved in litigation pertaining to work performed on the fuel cell corrosion control project (the "Project").  H&M Steel was the fabricator on the Project and hired two subcontractors (the sub-fabricator and the erector) to perform work for H&M Steel and ultimately for the general contractor.  The two subcontractors and general contractor filed suit against H&M Steel for breach of contract and H&M Steel countersued both the general contractor and the subcontractors for breach of contract.  H&M accrued adequate loss reserves in 2001 for the resolution of this matter.  In 2002 this matter was satisfactorily resolved through mediation.  H&M, prior to mediation, had settled with one of its subcontractors and recovered the cost of this settlement in mediation.  H&M made no payment to either the second subcontractor or the general contractor as a result of mediation.

In January 2002, the Company executed a lease settlement pertaining to two subleases for $104,050.  The settlement released the Company from all of its obligations under the subleases.  The settlement amount of $104,050 was accrued on the books of the Company at December 31, 2001 and paid in 2002.

On April 10, 2002, a foreclosure action was filed in the District Court for the Fifth Judicial District, State of Wyoming, captioned Jonathan D. Edwards, Trustee v. Palo Verde Group, Inc., et al.  In the action, the holder of the first mortgage against the commercial property located in Thermopolis, Wyoming owned by our subsidiary, Palo Verde Group, Inc. began a foreclosure action for nonpayment.  The property was sold at auction in 2002 for the value of the first mortgage witih no residual liability to Palo Verde.

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 traded on the Nasdaq Small Cap Market under the symbol "GRDN".  On April 29, 2002 we were notified by Nasdaq that our securities were delisted from the Nasdaq Stock Market for failure to meet Nasdaq's maintenance requirement for continued listing with respect to net tangible assets / shareholders equity.

Our common stock is now traded on the OTC Bulletin Board under the symbol
"GDTI."

The following table sets forth the high and low sales prices for each quarter during 1998, 1999, 2000, 2001 and 2002.

|                   | Common Stock
|------------------ | ------------
|Quarter Ended      | Low         
|March 31, 2001     | $0.06       
|June 30, 2001      | $0.26       
|September 30, 2001 | $0.27       
|December 31, 2001  | $0.07       
|March 31, 2002     | $0.05       
|June 30, 2002      | $0.04       
|September 30, 2002 | $0.12       
|December 31, 2002  | $0.36       

There were approximately 264 record holders of our common stock as of April 14, 2003.  This amount does not include beneficial owners of our common stock held in "street name."

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.

EQUITY COMPENSATION PLAN INFORMATION

|                                                                | Number of
securities to be
issued upon
exercise of
outstanding options, warrants and rights
             (a) | Weighted average exercise price of outstanding options, warrants and rights
        (b) | Number of securities remaining available for future issuances under equity compensation plans (excluding securities reflected in column (a))
     (c)
|--------------------------------------------------------------- | ------------------------------------------------------------------------------------------------------------ | --------------------------------------------------------------------------------------- | -----------------------------------------------------------------------------------------------------------------------------------------------------
|Equity compensation plans approved by
     security holders     | -0-                                                                                                          | -0-                                                                                     | -0-                                                                                                                                                  
|Equity compensation plans not approved by
     security holders | 17,300                                                                                                       | 5.00                                                                                    |                                                                                                                                                      
|Total                                                           | 17,300                                                                                                       | $5.00                                                                                   | -0-                                                                                                                                                  



|Item 6. | Management's Discussion and Analysis of Financial Condition and Results of Operations
|------- | -------------------------------------------------------------------------------------

General

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

Structural Steel Fabrication:

During 1999 the Company sold its land and building located in Dulles, Virginia.  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).  Prior to October 1, 2001, Structural was accounted for under the equity method of accounting due to a lack of control by the Company.  As a result of a change in management, the Company obtained sufficient control of Structural.  Effective October 1, 2001, the Company consolidated Structural.  H&M is engaged in the business of structural steel fabrication.  The investment in Structural represented an opportunity to enhance shareholder value by diversifying the Company's operations into a different industry.

Unfortunately in 2000 significant cost overruns on three contracts caused H&M to incur substantial losses.  In late 2000 it was determined that these three contracts were either incorrectly bid and/or under-bid during the acquisition due diligence phase and were subsequently inherited by Structural.  After it was discovered that the Company was going to incur losses associated with its equity investment in 2000, senior operating management was replaced in an effort to initiate a turn around of H&M.  To that end, in December 2000, the former owner of H&M steel was retained as General Manager in charge of all bidding, contracting, fabrication, job coordination and other technical issues.

In September 2001, the Company's President and CEO assumed the role of President of H&M responsible for strategic planning and senior executive management decision-making related to the structural steel fabrication business.

In December 2001, H&M completed a national search for a General Manager to fill the position previously assumed by the former owner.  In December 2001, H&M hired an experienced manager of structural steel fabrication facilities.  The new General Manager has worked in several locations in a turnaround capacity.  The new General Manager's strengths are in industry knowledge (both globally and operationally), organizational management, systems implementation, estimating, sales and marketing, and finance.

Since December 2000, the senior management team has implemented the following activities:

| | * | Established ongoing bidding procedures and controls to insure accurate bids are being submitted to contractors to maximize profit potential.                                                                                                                                                                                                                                                                                                                                                                                                  
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | * | Developed outplacement procedures for detailing services to afford the Company stable relationships with fewer detailers in an effort to captivate this critical resource.                                                                                                                                                                                                                                                                                                                                                                    
| | * | Developed program management policies and procedures to track costs incurred and profitability of jobs awarded providing timely management information so that problems, if they arise, can be rectified in a cost-efficient manner without sacrificing contract profit.                                                                                                                                                                                                                                                                      
| | * | Initiated personnel reductions that generated cost savings of approximately $130,000 per year.                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | * | Eliminated management fees in the amount of $360,000 per year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
| | * | Restructured seller financing arrangements associated with subordinated notes, non-compete and consulting agreements.  The total due under these arrangements was reduced from $951,000 to $650,000, a savings of $300,000.  The $650,000 balance was repaid in 2001 from proceeds from the additional equity referred to above and through the assignment of contract proceeds on one specific contract awarded to H&M.  The assignment retired the remaining $450,000 balance of the $650,000 in restructured seller financing arrangements.
| | * | Refinanced term debt deriving the cash flow benefit from more favorable payment terms with the new lender.  The existing level of debt service of approximately $80,000 per month was reduced to approximately $38,000 per month in April 2001 and to an interest only basis from October 2001 to March 2002.  Thereafter, the amount of the monthly payment is based on a percentage of average quarterly revenue.                                                                                                                           
| | * | Refinanced revolving debt deriving the cash flow benefit from more favorable payment terms with the new lender.  In effect, the revolving debt in existence at the time of the refinancing was converted into additional term debt with more favorable payment terms than that of the revolving facility.                                                                                                                                                                                                                                     

The aforementioned activities were developed to afford H&M the ability to achieve profitability on lower sales volume, reduce debt service and eliminate or reduce the impact of problems incurred while performing on a job.

Unfortunately, a significant slowdown in the economy and the impact of "9-11" on the release of government related projects caused a substantial decrease in work available for bid in 2002.  A decrease in jobs available to bid produced increased competition for bids once jobs were released by general contractors and in certain situations, were awarded to steel fabricators willing to perform at zero profit.  Since H&M had to bid jobs with enough profit to service its debt load, H&M often lost jobs to lower priced contractors.  These factors contributed significantly to an overall decline in revenues at H&M below a level where H&M was able to service its previously restructured promissory note obligations with its lender in the latter half of 2002.

In October 2002 H&M was notified that it was in default on its obligations to its lender under the promissory notes for non-payment of principal and interest payments since July 2002.  The combined total indebtedness of $2,128,224 is reflected in the Company's financial statements under current liabilities as notes payable.

H&M's management is currently in the process of attempting to restructure the payment terms of its promissory notes with its lender.  However, at this time, management cannot determine the impact of the satisfactory completion of these negotiations.  H&M's failure to restructure its debt position would have a negative impact on H&M's financial condition.

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.

In the latter part of 2001, the Company determined that the business plan developed for ForceOne, LLC was not effective and decided that no additional funding would be provided to the armor division.

During the fourth quarter of 2001, GSSP did not contribute to a ForceOne, LLC member capital call and therefore relinquished its previously held 51% ownership interest.  Subsequent to December 31, 2001 GSSP converted a note receivable from ForceOne, LLC into a one-third interest in ForceOne, LLC.  As such, this investment was accounted for under the equity method of accounting beginning January 2002.  Throughout 2002, GSSP reduced the value of its equity investment in ForceOne, LLC by its proportionate share of ForceOne, LLC losses.  In February 2003, GSSP sole its remaining one-third interest in ForceOne, LLC to another member.

Real Estate Interests:

In September 2000, the Company acquired the Palo Verde Group, Inc. in consideration of the issuance of 361,800 shares of the Company's common stock.  The investment in Palo Verde Group represented another opportunity to enhance shareholder value by diversifying the Company's operations into a third industry.  The initial real estate assets of Palo Verde consisted of the following:

| | * | Five acres of undeveloped real property located in Carefree, Arizona.  The property was recorded on Palo Verde's books at that time at $275,000.  On September 3, 2002, Palo Verde sold this real property for $180,000 repaying a first mortgage of $94,000 and a second mortgage of $62,500.  A loss on the sale of $95,000 was recognized at the time of sale.                                                                                                              
| | - | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | * | An 8,000 square foot building and associated real estate located in Thermopolis, Wyoming. The building has an estimated value, based on a recent appraisal, of $350,000 and is held subject to a first mortgage of $97,500 and a second mortgage of $125,000.  During 2002, the building was leased to a local restaurant group for a five year period.  Subsequent to year end, the tenant vacated the building for financial reasons.  The building has been listed for sale.

In August 2001, the Company, through Palo Verde, acquired a 4.88-acre parcel of undeveloped commercial real property located in Colorado Springs, Colorado.  The property was acquired in consideration of the issuance of 800,000 shares of the Company's common stock.  The property had an estimated value, based on an appraisal, of $659,000 and was held subject to a first mortgage of approximately $102,000 as to which the Company had an indemnity from a third party who was the principal debtor under the loan.  On July 31, 2002, Palo Verde sold this real property for $540,000 repaying the first mortgage of $102,000 and subsequently received an assignment of the underlying note receivable from the third party debtor.  In addition, Palo Verde used residual proceeds to retire $290,000 of long term debt and $75,000 of accounts payable.  Palo Verde is currently receiving monthly principal and interest payments of $4,750 from the third party debtor.

In August 2001, the Company, through Palo Verde, acquired a 100-acre parcel of undeveloped real property located near Thermopolis, Wyoming in consideration of the issuance of 100,000 shares of the Company's common stock.  The Company acquired the property at the then appraised value of $225,000 and subsequently completed $25,000 of improvements to the property.  The property was acquired subject to a first mortgage of approximately $150,000.  The Company's cost basis in the property was $100,000.  The real estate market in Wyoming declined substantially in late 2001 and several attempts by the Company to refinance the first mortgage during the fourth quarter were unsuccessful.  As a result the holder of the first mortgage initiated foreclosure proceedings subsequent to year end and the property was sold at auction for the amount of the first mortgage in 2002.

In light of the Wyoming land foreclosure and generally poor economic conditions, Palo Verde has implemented a plan of liquidating non-revenue producing real properties.  The only remaining property of Palo Verde is the Wyoming commercial building.  Now that the tenant has vacated, this property will be sold.

Results of Operations

Twelve Months Ended December 31, 2002 Compared To Twelve Months Ended December 31, 2001

It should be noted that the discussion of results of operations for 2002 reflects items of income and expense generated by the Company's structural steel operations while the discussion of results of operations for 2001 reflects items of income and expense generated by the Company's structural steel operations from October 1, 2001 through December 31, 2001 and items of income and expense generated by the Company's armor operations from January 1, 2001 through September 30, 2001.

The reason for this is a transition from the equity method of accounting for its investment in Structural to consolidation accounting for reporting results of operations of its structural steel operations due to a change in control of Structural and a change from consolidation accounting for reporting results of armor operations to the equity method of accounting for its investment in ForceOne, LLC due to a reduction of its ownership in ForceOne, LLC from 51% to 33%.

Net sales for the twelve months ended December 31, 2002 were $4,305,979 compared to net sales for the twelve months ended December 31, 2001 of $1,651,781 (comprised of sales from structural steel operations of $1,015,950 and armor operations of $635,831).  Although structural steel sales increased $2,654,198 year to year, structural steel sales in 2001 only reflect activity from October 1, 2001 through December 31, 2001 (the period in which the Company began consolidating structural steel operations).  Total structural steel sales of H&M in 2001 (from January 1, 2001 through December 31, 2001) were $11,400,000.

In general, a significant slowdown in the economy and the impact of "9-11" on the release of government related projects caused a substantial decrease in work available for bid in 2002.  A decrease in jobs available to bid produced increased competition for bids once jobs were released by general contractors.  Increased competition results in lower margins because companies are willing to take jobs at little or no margin to maintain a stable work force.  These factors contributed significantly to an overall decline in revenues at H&M.

Gross profit for the twelve months ended December 31, 2002 was $1,004,306 or 23% compared to gross profit for the twelve months ended December 31, 2001 of $328,447 (comprised of gross profit from structural steel operations of $148,704, 15% and armor operations of $179,743, 28%).  Although the gross profit percentage from structural steel operations improved from 15% in 2001 to 23% in 2002, an indication of increased efficiency on certain jobs completed in 2002, the most significant contribution to the increase in gross profit dollars is an overall increase in sales.

Total operating expenses for the twelve months ended December 31, 2002 were $2,486,062 and included a charge associated with impairment of goodwill attributable to the Company's investment in Structural Holdings of $1,143,534.  Total operating expenses for the twelve months ended December 31, 2001 were $1,716,582 and included selling expenses related to armor operations of $243,539, a charge associated with impairment of land and property held for investment and sale purposes of $219,000 and a charge related to the write-off of the Company's equity investment in ForceOne, LLC of $173,306.  No selling expenses were incurred in 2002 because the Company's structural steel operation does not maintain a standing sales force.  Sales are generated through a bid process administered by the General Manager and Vice President of H&M.

The Company posted a net loss for the twelve months ended December 31, 2002 of $1,723,223 or $1.22 per share compared to a net loss of $1,039,755 or $0.97 per share for the same period a year ago.  The one time charge of $1,143,534 attributable to impairment of goodwill contributed significantly to the overall loss sustained by the Company.

Liquidity and Capital Resources

Overview

The Company incurred losses of $1,723,223 and $1,039,755 for the years ended December 31, 2002 and 2001 respectively and has a working capital deficit of $2,402,650 as of December 31, 2002.

During 2002, the Company's main operating subsidiary, Structural, through its wholly owned subsidiary H&M, incurred a charge for good will impairment of $1,143,534 offsetting net income of this subsidiary of $161,142.

In October 2002 H&M, was notified that it was in default on its obligations to its lender under the promissory notes for non-payment of principal and interest payments since July 2002.  The combined total indebtedness of $2,182,224 is reflected in the Company's financial statements under current liabilities as notes payable.

H&M's management is currently in the process of attempting to restructure the payment terms of its promissory notes with its lender.  However, at this time, management cannot determine the impact of the satisfactory completion of these negotiations.  H&M's failure to restructure its debt position would have a negative impact on H&M's financial condition.

Operating Activities

During the twelve months ended December 31, 2002, the Company used net cash in operating activities of $851,197.

During the twelve months ended December 31, 2002, the Company issued common stock for services in the amount of $111,899 pertaining primarily to services of the Company's president in lieu of cash compensation for salary ($45,000), consulting services ($10,000) and board compensation in lieu of cash ($9,000).

During the twelve months ended December 31, 2002, The Company allocated $80,571 of income attributable to the operations of Structural.  The Company also recognized a charge for goodwill impairment associated with Structural of $1,143,534.

During the twelve months ended December 31, 2002, the Company recognized $95,000 in losses attributable to its equity investment in ForceOne, LLC.

For the twelve month period ended December 31, 2002, the Company increased accounts receivable by $197,727 and decreased accounts payable by $460,271.  Accounts payable decreased as cash flow from Structural facilitated a reduction of trade payables.

Investing Activities

In July 2002, the Company, through Palo Verde, sold a parcel of undeveloped commercial property located in Colorado Springs, Colorado for $540,000.  The Company acquired the property in August 2001 by issuing 800,000 shares of the Company's common stock.  The property was acquired subject to a first mortgage as to which the Company had an indemnity from a third party who was the principal debtor under the loan.  The value of the first mortgage at the time of the sale was approximately $102,000.  The Company repaid the third party first mortgage at closing and subsequently took an assignment of the underlying note receivable from the third party debtor.  The Company is currently receiving monthly principal and interest payments from the third party debtor.  A portion of the residual proceeds were used to retire debt.

In September 2002 the Company, through Palo Verde, sold a parcel of undeveloped property located in Carefree, Arizona for $180,000.  The property was acquired as part of the Company's acquisition of Palo Verde in September 2000 for $275,000.  The Company recorded a $95,000 loss on the sale and utilized a portion of the sale proceeds to retire debt.

Financing Activities

The Company had notes payable associated with Structural of $2,182,224.  In October 2002 H&M, was notified that it was in default on its obligations to its lender under the promissory notes for non-payment of principal and interest payments since July 2002.  The combined total indebtedness of $2,182,224 is reflected in the Company's financial statements under current liabilities as notes payable.

H&M's management is currently in the process of attempting to restructure the payment terms of its promissory notes with its lender.  However, at this time, management cannot determine the impact of the satisfactory completion of these negotiations.  H&M's failure to restructure its debt position would have a negative impact on H&M's financial condition.

During 2002 the Company's president exercised 2,700 common stock options generating proceeds to the Company of $13,500.

During 2002, the Company received proceeds of $35,000 in a private placement of its common stock.

Recent Developments

On February 19, 2001, we entered into an Agreement and Plan of Merger pursuant to which we had agreed to acquire Vairex Corporation, of Boulder, Colorado.  Effective March 31, 2002, the merger agreement with Vairex terminated without consummation.  As part of the termination of the merger agreement, we entered into a termination agreement with Vairex under which Vairex has issued to us 1,000,000 shares of Vairex common stock , a warrant representing the right to purchase up to 500,000 shares of Vairex common stock at $2.00 per share and also agreed to reimburse us for our legal costs incurred in connection with the unsuccessful merger transaction, not to exceed $60,000.

New Accounting Pronouncements

In June 2001, the Financial Accounting Standards Board ("FASB") issued Statements of Financial Accounting Standards No. 141 "Business Combinations" ("SFAS 141") and No. 142 "Goodwill and Other Intangible Assets" ("SFAS 142").  SFAS 141 requires all business combinations initiated after June 30, 2001 to be accou7nted for under the purchase method.  For all business combinations for which the date of acquisition is after June 30, 2001, SFAS 141 also establishes specific criteria for the recognition of intangible assets separately from goodwill and requires unallocated negative goodwill to be written off immediately as an extraordinary gain, rather than deferred and amortized.  SFAS 142 changes the accounting for goodwill and other intangible assets after an acquisition.  The most significant changes made by SFAS 142 are:  1) goodwill and intangible assets with indefinite lives will no longer be amortizes; 2) goodwill and intangible assets with indefinite lives must be tested for impairment at least annually; and 3) the amortization period for intangible assets with finite lives will no longer be limited to forty years.  The Company does not believe that the adoption of these statements will have a material effect on its financial position, results of operations, or cash flows.

In June 2001, the FASB also approved for issuance SFAS 143 "Asset Retirement Obligations."  SFAS 143 establishes accounting requirements for retirement obligations associated with tangible long-lived assets, including (1) the timing of the liability recognition, (2) initial measurement of the liability, (3) allocation of asset retirement cost to expense, (4) subsequent measurement of the liability and (5) financial statement disclosures.  SFAS 143 requires that an asset retirement cost should be capitalized as part of the cost of the related long-lived asset and subsequently allocated to expense using a systematic and rational method.  The Company will adopt the statement effective no later than January 1, 2003, as required.  The transition adjustment resulting from the adoption of SFAS 143 will be reported as a cumulative effect of a change in accounting principle.  At this time, the Company cannot reasonably estimate the effect of the adoption of this statement on its financial position, results of operations, or cash flows.

In October 2001, the FASB also approved SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets.  SFAS 144 replaces SFAS 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of.  The new accounting model for long-lived assets to be disposed of by sale applies to all long-lived assets, including discontinued operations, and replaces the provisions of APB Opinion No. 30, Reporting Results of Operations - Reporting the Effects of Disposal of a Segment of a Business, for the disposal of segments of a business.  Statement 144 requires that those long-lived assets be measured at the lower of carrying amount or fair value less cost to sell, whether reported in continuing operation or in discontinued operations.  Therefore, discontinued operations will no longer be measured at net realizable value or include amounts for operating losses that have not yet occurred.  Statement 144 also broadens the reporting of discontinued operations to include all components of an entity with operations that can be distinguished from the rest of the entity and that will be eliminated from the ongoing operations of the entity in a disposal transaction.  The provisions of Statement 144 are effective for financial statements issued for fiscal years beginning after December 15, 2001 and, generally, are to be applied prospectively.  At this time, the Company cannot estimate the effect of this statement on its financial position, results of operations, or cash flows.

In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities," which become effective January 2003.  SFAS No. 146 generally requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan.  This pronouncement is effective for exit or disposal activities initiated after December 31, 2002.  The Company does not believe that the adoption of the statement will have a material impact on its financial position or results of operations.

In December 2002, the FASB issued Statements of Financial Accounting Standards No. 148, "Accounting for Stock-Based compensation - Transition and Disclosure - an amendment of FASB Statement 123" (SFAS 123).  For entities that change their accounting for stock-based compensation from the intrinsic method to the fair value method under SFAS 123, the fair value method is to be applied prospectively to those awards granted after the beginning of the period of adoption (the prospective method).  The amendment permits two additional transition methods for adoption of the fair value method.  In addition to the prospective method, the entity can choose to either (i) restate all periods presented (retroactive restatement method) or (ii) recognize compensation cost from the beginning of the fiscal year o adoption as of the fair value method had been used to account for awards (modified prospective method).  For fiscal years beginning December 15, 2003, the prospective method will no longer be allowed.  The Company currently accounts for its stock-based compensation using the intrinsic value method as proscribed by Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," and plans on continuing using this method to account for stock options, therefore, it does not intend to adopt the transition requirements as specified in SFAS 148.  The Company has adopted the new SFAS 148 disclosure requirements of SFAS 148 in these financial statements.

Significant Accounting Policies

Principles of Consolidation - The consolidated financial statements include the accounts of Guardian Technologies International, Inc., its wholly-owned subsidiaries, and since October 1, 2001, Guardian Steel's 50% ownership in Structural (collectively the "Company").  All significant intercompany minority interest accounts and transactions have been eliminated in consolidation.  The unrelated owners portion of ForceOne, LLC and Structural has been recorded as minority interest in the accompanying consolidated financial statements.

Investments - The Company's 50% ownership interest in Structural was accounted for under the equity method of accounting through September 30, 2001 and was recorded at cost as adjusted for its proportionate share of earnings and distributions.  Subsequent to September 30, 2001, the Company accounted for Structural on a consolidation basis as a result of a change in control.

Income Recognition - The Company follows the percentage of completion method of accounting for all significant long-term contracts.  The percentage of completion method or reporting income from contracts takes into account total costs to date and total estimated costs to complete, estimated earnings, and revenue to date on contracts not yet completed.

The amount of revenue recognized is the portion of the total contract price that the costs incurred to date bears to the anticipated final total costs.  Contract costs includes all labor and benefits, materials unique to or installed in the project, subcontract costs, and allocations of indirect construction costs.  General and administrative costs are charged to expense as incurred.

As long-term contracts extend over one or more periods, revisions in estimates of costs and earnings during the course of the work are reflected in the accounting period in which the facts which require the revision become known.  At the time a loss on a contract becomes known, the entire amount of the estimated ultimate loss is recognized in the financial statements.  Costs and estimated earnings on contracts in progress in excess of billings is classified as a current asset.  Amounts billed in excess of costs and estimated earnings are classified as a current liability.

Income related to ForceOne is recognized upon shipment of product.  Income related to direct sales of equipment and parts is recognized upon shipment.

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.

In the current fiscal year, the Company purchased land in Colorado Springs valued at $659,000 and land in Wyoming for $100,000 (net of a related mortgage) in exchange for common stock.  These values were based upon third party appraisals.  During the fourth quarter of 2001, the Company wrote off its $100,000 Wyoming property as a result of bank foreclosure on the property and wrote down its Colorado Springs property by $119,000 to reflect its estimated the net realizable value as a result of a current pending sales contract.

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.

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                                                                                    |     
|Consolidated Balance Sheet -December 31, 2002                                                                    |     
|Consolidated Statements of Operations -For the Years Ended December 31, 2002 and 2001                            |     
|Consolidated Statement of Changes in Shareholders' Equity -For the Years Ended 
      December 31, 2002 and 2001 |     
|Consolidated Statements of Cash Flows -For the Years Ended December 31, 2002 and 2001                            |     
|Notes to Consolidated Financial Statements                                                                       |     

INDEPENDENT AUDITOR'S REPORT



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

We have audited the accompanying balance sheet of Guardian Technologies International, Inc. and Subsidiaries as of December 31, 2002 and the related statements of operations, shareholders' equity, and cash flows for the year ended December 31, 2002.  These financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of Guardian Technologies International, Inc. and Subsidiaries as of December 31, 2002, and the results of their operations and their cash flows for the year ended December 31, 2002, in conformity with accounting principles generally accepted in the United States of America.

The accompanying financial statements have been prepared assuming that the Company will continue as a going concern.  As described in Note 1, the Company has sustained losses from operations and has a net working capital deficiency which raise substantial doubts about its ability to continue as a going concern.  The financial statements do not include any adjustments that might result from the outcome of this uncertainty.

SCHUMACHER & ASSOCIATES, INC.

Denver, Colorado
April 9, 2003

INDEPENDENT AUDITOR'S REPORT



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

We have audited the statement of operations, shareholders' equity, and cash flows of Guardian Technologies International, Inc. and Subsidiaries for the year ended December 31, 2001.  These financial statements are the responsibility of the Company's management.  Our responsibility is to express an opinion on these financial statements based on our audit.

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

In our opinion, the financial statements referred to above present fairly, in all material respects, the results of operations, changes in shareholders' equity and cash flows of Guardian Technologies International, Inc. and Subsidiaries for the year ended December 31, 2001, in conformity with accounting principles generally accepted in the United States of America.

HEIN + ASSOCIATES LLP

Denver, Colorado
April 11, 2002

GUARDIAN TECHNOLOGIES INTERNATIONAL, INC.CONSOLIDATED BALANCE SHEET
DECEMBER 31, 2002

|ASSETS                                                                                                         
|---------------------------------------------------------------------------------------------------------------
|Current Assets:                                                                                                
|Cash and cash equivalents                                                                                      
|Accounts receivable, net of allowance for doubtful accounts of $77,000                                         
|Notes/advances receivable:                                                                                     
|Related party                                                                                                  
|Other                                                                                                          
|Prepaid expenses and other                                                                                     
|Total current assets                                                                                           
|Other Assets:                                                                                                  
|Property and equipment, net of accumulated depreciation                                                        
|Note receivable and equity investment, net                                                                     
|Land and property held for investment and sale purposes, net of accumulated depreciation of 
          $9,805  
|Goodwill                                                                                                       
|Total other assets                                                                                             
|Total Assets                                                                                                   
|                                                                                                               
|LIABILITIES AND SHAREHOLDERS' EQUITY                                                                           
|Current Liabilities:                                                                                           
|Accounts payable                                                                                               
|Accrued expenses                                                                                               
|Notes payable                                                                                                  
|Related                                                                                                        
|Other                                                                                                          
|Total current liabilities                                                                                      
|Total liabilities                                                                                              
|Minority Interest                                                                                              
|Commitments and Contingencies (Notes 1,3,7,8,9,12)                                                             
|Shareholders' Equity:                                                                                          
|Preferred stock, $.20 par value, 1,000,000 shares authorized; none issued and outstanding                      
|Common stock, $.001 par value; 15,000,000 shares authorized, 1,674,333 shares issued and 
          outstanding
|Additional paid-in capital                                                                                     
|Accumulated deficit                                                                                            
|Total shareholders' equity                                                                                     
|Total Liabilities and Shareholders' Equity                                                                     

See accompanying notes to these consolidated financial statements.

GUARDIAN TECHNOLOGIES INTERNATIONAL, INC.

|                                                                                |  | For the
Years Ended
December 31,
|------------------------------------------------------------------------------- |  | --------------------------------
|                                                                                |  | 2002                            
|                                                                                |  |                                 
|Revenues:                                                                       |  |                                 
|Steel                                                                           |  | $  4,305,979                    
|Armor                                                                           |  | -                               
|Total revenues                                                                  |  | 4,305,979                       
|                                                                                |  |                                 
|Cost of Sales:                                                                  |  |                                 
|Steel                                                                           |  | 3,301,673                       
|Armor                                                                           |  | -                               
|Total cost of sales                                                             |  | 3,301,673                       
|                                                                                |  |                                 
|Gross Profit                                                                    |  | 1,004,306                       
|                                                                                |  |                                 
|Operating Expenses:                                                             |  |                                 
|Selling expenses                                                                |  | -                               
|General and administrative                                                      |  | 1,342,528                       
|Impairment of land and property held for investment and sale purposes           |  | -                               
|Impairment of goodwill of investment in Structural Holdings                     |  | 1,143,534                       
|Write-off of equity interest and receivable of forfeited interest in subsidiary |  | -                               
|Total operating expenses                                                        |  | 2,486,062                       
|Operating (Loss)                                                                |  | (1,481,756)                     
|                                                                                |  |                                 
|Other Income (Expense):                                                         |  |                                 
|Interest income (expense), net                                                  |  | (268,831)                       
|Minority interest in ForceOne, LLC                                              |  | -                               
|Minority interest in Structural Holdings, Inc.                                  |  | (80,571)                        
|Rental income (expense), net                                                    |  | 12,000                          
|Loss on sale of assets                                                          |  | (11,250)                        
|Miscellaneous income(expense)                                                   |  | 202,185                         
|Total other income(expense)                                                     |  | (146,467)                       
|                                                                                |  |                                 
|Loss Before Earnings (Loss) From Equity Investments                             |  | (1,628,223)                     
|                                                                                |  |                                 
|Equity in net earnings of investment in Structural Holdings                     |  | -                               
|Equity in net (loss) of investment in
ForceOne, LLC                             |  | (95,000)                        
|Net Loss                                                                        |  | $ (1,723,223)                   
|                                                                                |  |                                 
|Net Loss per Common Share, Basic and Dilutive                                   |  | $(1.22)                         
|                                                                                |  |                                 
|Average Common Shares Outstanding, Basic and Dilutive                           |  | 1,411,053                       

See accompanying notes to these consolidated financial statements.

GUARDIAN TECHNOLOGIES INTERNATIONAL, INC.CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 2002 AND 2001

|                                                          |  | Common Stock |  | Additional
Paid-In |  | Accumulated Deficit |  | Total        
|--------------------------------------------------------- |  | ------------ |  | ------------------ |  | ------------------- |  | -------------
|                                                          |  | Shares       |  | Amount             |  | Capital             |  |              
|Balances, January 1, 2001                                 |  | 799,138      |  | $  799             |  | $ 5,955,395         |  | $ (4,921,223)
|                                                          |  |              |  |                    |  |                     |  |              
|Issuance of common stock:                                 |  |              |  |                    |  |                     |  |              
|                                                          |  |              |  |                    |  |                     |  |              
|Warrants exercised, net of 
    offering costs of $76,890 |  | 69,736       |  | 70                 |  | 196,468             |  | -            
|                                                          |  |              |  |                    |  |                     |  |              
|Services                                                  |  | 192,459      |  | 192                |  | 455,128             |  | -            
|                                                          |  |              |  |                    |  |                     |  |              
|Options exercised                                         |  | 40,000       |  | 40                 |  | 95,460              |  | -            
|                                                          |  |              |  |                    |  |                     |  |              
|Property Acquisition                                      |  | 180,000      |  | 180                |  | 758,820             |  | -            
|                                                          |  |              |  |                    |  |                     |  |              
|Debt retirement                                           |  | 20,000       |  | 20                 |  | 49,980              |  | -            
|                                                          |  |              |  |                    |  |                     |  |              
|Net loss                                                  |  | -            |  | -                  |  | -                   |  | (1,039,755)  
|                                                          |  |              |  |                    |  |                     |  |              
|Balances, December 31, 2001                               |  | 1,301,333    |  | $1,301             |  | $ 7,511,251         |  | $ (5,960,978)
|                                                          |  |              |  |                    |  |                     |  |              
|Issuance of common stock:                                 |  |              |  |                    |  |                     |  |              
|                                                          |  |              |  |                    |  |                     |  |              
|Options exercised                                         |  | 2,700        |  | 3                  |  | 13,497              |  | -            
|                                                          |  |              |  |                    |  |                     |  |              
|Private placement                                         |  | 70,000       |  | 70                 |  | 34,930              |  | -            
|                                                          |  |              |  |                    |  |                     |  |              
|Services                                                  |  | 180,300      |  | 180                |  | 111,719             |  | -            
|                                                          |  |              |  |                    |  |                     |  |              
|Debt retirement                                           |  | 120,000      |  | 120                |  | 29,880              |  | -            
|                                                          |  |              |  |                    |  |                     |  |              
|Net loss                                                  |  | -            |  | -                  |  | -                   |  | (1,723,223)  
|                                                          |  |              |  |                    |  |                     |  |              
|Balances, December 31, 2002                               |  | 1,674,333    |  | $1,674             |  | $ 7,701,277         |  | $ (7,684,201)

See accompanying notes to these consolidated financial statements.

GUARDIAN TECHNOLOGIES INTERNATIONAL, INC.CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                                                                                  |  | For the Years Ended
|--------------------------------------------------------------------------------------------------------------------------------- |  | -------------------
|                                                                                                                                  |  | December 31,       
|                                                                                                                                  |  | 2002               
|Cash Flows from Operating Activities:                                                                                             |  |                    
|Net loss                                                                                                                          |  | (1,723,223)        
|Adjustments to reconcile net loss to net cash used in operating activities:                                                       |  |                    
|Depreciation                                                                                                                      |  | 131,805            
|Impairment of goodwill of investment in Structural Holdings                                                                       |  | 1,143,534          
|Amortization of deferred financing costs                                                                                          |  | -                  
|Write-off of equity interest and receivable of forfeited interest in subsidiary                                                   |  | -                  
|Impairment of land and property held for investment and sale purposes                                                             |  | -                  
|Minority interest in subsidiary income (loss)                                                                                     |  | 80,571             
|Common stock and options for services                                                                                             |  | 111,899            
|Equity in (net earnings) loss of investment                                                                                       |  | 95,000             
|Changes in operating assets and liabilities:                                                                                      |  |                    
|(Increase) decrease in:                                                                                                           |  |                    
|Accounts receivable                                                                                                               |  | (197,727)          
|Other A/R                                                                                                                         |  | -                  
|Prepaid expenses and other                                                                                                        |  | 30,394             
|Costs and estimated earnings in excess of billings (billings in excess of costs and 
                    estimated earnings), net |  | (49,076)           
|Increase (decrease) in:                                                                                                           |  |                    
|Accounts payable                                                                                                                  |  | (460,271)          
|Accrued expenses                                                                                                                  |  | (14,103)           
|Net cash used in operating activities                                                                                             |  | (851,197)          
|Cash Flows from Investing Activities:                                                                                             |  |                    
|Purchase of property and equipment                                                                                                |  | (120,548)          
|Purchase of land held for investment and sale purposes                                                                            |  | -                  
|Sale of property and equipment                                                                                                    |  | 815,000            
|Issuance of notes receivable/advances                                                                                             |  | -                  
|Collection on notes receivable                                                                                                    |  | 33,715             
|Investment in and advances to Structural Holdings, Inc. and other                                                                 |  | -                  
|Net cash used in investing activities                                                                                             |  | 728,167            
|                                                                                                                                  |  |                    
|Cash Flows from Financing Activities:                                                                                             |  |                    
|Payments on capital leases                                                                                                        |  | (32,237)           
|Contribution from minority interests                                                                                              |  | -                  
|Proceeds from issuance of notes payable                                                                                           |  | 137,500            
|Payment on notes payable                                                                                                          |  | (73,831)           
|Exercise of warrants                                                                                                              |  | -                  
|Exercise of options                                                                                                               |  | 13,500             
|Issuance of common stock                                                                                                          |  | 35,000             
|Net cash provided by financing activities                                                                                         |  | 79,932             
|Increase (Decrease) in Cash and Cash Equivalents                                                                                  |  | (43,098)           
|Cash and Cash Equivalents, beginning of period                                                                                    |  | 94,364             
|Cash and Cash Equivalents, end of period                                                                                          |  | $     51,266       
|Supplemental Schedule of Cash Flow Information:                                                                                   |  |                    
|Cash paid for interest                                                                                                            |  | $    280,342       
|Non-Cash Investing and Financing Activities:                                                                                      |  |                    
|Accounts payable converted to debt                                                                                                |  | $               
- 
|Stock issued for retirement of debt                                                                                               |  | $      30,000      
|Stock issued for the purchase of land                                                                                             |  | $                - 

See accompanying notes to these consolidated financial statements.

GUARDIAN TECHNOLOGIES INTERNATIONAL, INC.

NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.      Nature of Business and Significant Accounting Policies:

Nature of Operations

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.  During the fourth quarter of 2001, GSSP did not contribute to a ForceOne, LLC member capital call and therefore relinquished its 51% ownership.  For financial statement purposes, the consolidation and ownership interest in ForceOne, LLC ceased as of November 30, 2001. Subsequent to December 31, 2001, GSSP converted a note receivable into a one-third interest in ForceOne, LLC.  As such, this investment is accounted for under the equity method of accounting beginning on January 1, 2002. 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.  Prior to October 1, 2001, Steel accounted for Structural under the equity method of accounting due to a lack of control.  As a result of a change in management and control, Steel has consolidated Structural effective October 1, 2001.  Structural is a holding company and its only investment at December 31, 2002 is 100% of the common stock of H&M Steel (H&M).  H&M is engaged in the business of structural steel fabrication.

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 Thermopolis, Wyoming, held for investment and/or sale.

Basis of Presentation - The accompanying financial statements have been prepared in conformity with generally accepted accounted principles, which contemplates continuation of the Company as a going concern.  H&M is materially in default on payments to a debt holder that has all of H&M's assets and business as collateral.  Failure of H&M to cure the default could result in foreclosure on all the assets and business of H&M.  Contingencies exist with respect to this matter, the ultimate resolution of which cannot presently be determined.  Additionally, the Company has sustained losses from operations and has a net working capital deficiency.  The above factors raise substantial doubt about the Company's ability to continue as a going concern.

In view of these matters, realization of certain of the assets in the accompanying balance sheet is dependent upon continued operations of the Company which in turn is dependent upon the Company's ability to meet its financial requirements, raise additional capital, and the success of its future operations.

Management is in the process of attempting to sell certain assets and reduce operating expenses.  Management believes that its ability to sell certain assets and reduce operating expenses provide an opportunity for the Company to continue as a going concern.

Principles of Consolidation  - The consolidated financial statements include the accounts of Guardian Corp., its wholly-owned subsidiaries, and since October 1, 2001, Guardian Steel's 50% ownership in Structural (collectively the "Company").  All significant intercompany minority interest accounts and transactions have been eliminated in consolidation.  The unrelated owners portion of ForceOne, LLC and Structural has been recorded as minority interest in the accompanying consolidated financial statements.

Investments  - The Company's 50% ownership interest in Structural was accounted for under the equity method of accounting through September 30, 2001 and was recorded at cost as adjusted for its proportionate share of earnings and distributions.  Subsequent to September 30, 2001, the Company accounted for Structural on a consolidation basis as a result of a change in control.

Income Recognition - The Company follows the percentage of completion method of accounting for all significant long-term contracts.  The percentage of completion method of reporting income from contracts takes into account total costs to date and total estimated costs to complete, estimated earnings, and revenue to date on contracts not yet completed.

The amount of revenue recognized is the portion of the total contract price that the costs incurred to date bears to the anticipated final total costs.  Contract costs includes all labor and benefits, materials unique to or installed in the project, subcontract costs, and allocations of indirect construction costs.  General and administrative costs are charged to expense as incurred.

As long-term contracts extend over one or more periods, revisions in estimates of costs and earnings during the course of the work are reflected in the accounting period in which the facts which require the revision become known.  At the time a loss on a contract becomes known, the entire amount of the estimated ultimate loss is recognized in the financial statements.  Costs and estimated earnings on contracts in progress in excess of billings, net of amounts billed in excess of costs and estimated earnings, are classified as other current assets.  At December 31, 2002, the Company had an insignificant number of jobs in progress.

Income related to ForceOne was recognized upon shipment of product.  Income related to direct sales of equipment and parts was recognized upon shipment.

The Company had allowances for doubtful accounts of $77,000 at December 31, 2002,  which was provided based on the Company's collection experience.

Accounting Estimates  - The preparation of financial statements in conformity with generally accepted accounting principles requires management to make estimates and assumptions that affect the amounts reported in the financial statements and the accompanying notes.  The actual results could differ from those estimates.  The Company's financial statements are based upon a number of significant estimates, total costs to complete each contract and its corresponding percent complete, the allowance for doubtful accounts, obsolescence of inventories, the estimated useful lives selected for property and equipment, and sales returns. Due to the uncertainties inherent in the estimation process, it is at least reasonably possible that the estimates for these items could be further revised in the near term and such revisions could be material.

Financial 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.

Financial Instruments, Major Customers and Vendors, and Other Concentrations of Credit Risk  - Credit risk represents the accounting loss that would be recognized at the reporting date if counterparties failed completely to perform as contracted.  Concentrations of credit risk (whether on or off balance sheet) that arise from financial instruments exist for groups of customers or counterparties when they have similar economic characteristics that would cause their ability to meet contractual obligations to be similarly effected by changes in economic or other conditions.

The estimated fair values for financial instruments are determined at discrete points in time based on relevant market information.  These estimates involve uncertainties and cannot be determined with precision.  The carrying amounts of cash, receivables, notes receivables, accounts payable, and accrued liabilities approximate fair value as a result of the short-term maturities.  The fair value of notes payable approximates their carrying value as generally their interest rates reflect the Company's current effective borrowing rate.

A significant portion of the Company's revenues are generated on projects in Southwestern United States. Sales to unaffiliated customers which represent 10% or more of the Company's sales for the year ended December 31, 2002 and 2001 were as follows (as a percentage of sales):

|Customer |  |  | 2002 |  | 2001
|-------- |  |  | ---- |  | ----
|A        |  |  | 30%  |  | 23% 
|B        |  |  | 18%  |  | 16% 
|C        |  |  | 12%  |  | 16% 

Purchases from unaffiliated vendors which represent 10% or more of the Company's purchases for the year ended December 31, 2002 and 2001 were as follows (as a percentage of cost of sales):

|Vendor |  |  | 2002 |  | 2001
|------ |  |  | ---- |  | ----
|A      |  |  | 24%  |  | 15% 
|B      |  |  | -    |  | -   
|C      |  |  | -    |  | -   

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.

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:

|Buildings                      |  | 39 years   
|------------------------------ |  | -----------
|Office furniture and equipment |  | 5 - 7 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.

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.

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.  As Structural is less than an 80% owned subsidiary, it is required to file its own separate tax retrun.

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, 2002 and 2001, the Company had warrants and options outstanding to purchase 650,264 and 20,000 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 2002 and 2001.  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 2002 and 2001.

New Accounting Pronouncements - In June 2001, the Financial Accounting Standards Board ("FASB") issued Statements of Financial Accounting Standards No. 141 "Business Combinations" ("SFAS 141") and No. 142 "Goodwill and Other Intangible Assets" ("SFAS 142").  SFAS 141 requires all business combinations initiated after June 30, 2001 to be accounted for under the purchase method.  For all business combinations for which the date of acquisition is after June 30, 2001, SFAS 141 also establishes specific criteria for the recognition of intangible assets separately from goodwill and requires unallocated negative goodwill to be written off immediately as an extraordinary gain, rather than deferred and amortized.  SFAS 142 changes the accounting for goodwill and other intangible assets after an acquisition.  The most significant changes made by SFAS 142 are:  1) goodwill and intangible assets with indefinite lives will no longer be amortized; 2) goodwill and intangible assets with indefinite lives must be tested for impairment at least annually; and 3) the amortization period for intangible assets with finite lives will no longer be limited to forty years.  During 2002, the Company ceased amortization of goodwill and tested goodwill for impairment under these standards.  This resulted in a reduction in amortization of approximately $220,000 per year.  During 2002 all goodwill related to the Company's investment in Structural Holdings was written down by $1,143,534 as a result of determinations that impairments existed.  The net carrying value of goodwill, after the write-down , totaled $1,035,794.

In June 2001, the FASB also approved for issuance SFAS 143 "Asset Retirement Obligations."  SFAS 143 establishes accounting requirements for retirement obligations associated with tangible long-lived assets, including (1) the timing of the liability recognition, (2) initial measurement of the liability, (3) allocation of asset retirement cost to expense, (4) subsequent measurement of the liability and (5) financial statement disclosures.  SFAS 143 requires that an asset retirement cost should be capitalized as part of the cost of the related long-lived asset and subsequently allocated to expense using a systematic and rational method.  The Company will adopt the statement effective no later than January 1, 2003, as required.  The transition adjustment resulting from the adoption of SFAS 143 will be reported as a cumulative effect of a change in accounting principle.  During 2002, the Company adopted these statements which had no material effect on its financial position, results of operations, or cash flows.

In October 2001, the FASB also approved SFAS 144, Accounting for the Impairment or Disposal of Long-Lived Assets.  SFAS 144 replaces SFAS 121, Accounting for the Impairment of Long-Lived Assets and for Long-Lived Assets to Be Disposed Of.  The new accounting model for long-lived assets to be disposed of by sale applies to all long-lived assets, including discontinued operations, and replaces the provisions of APB Opinion No. 30, Reporting Results of Operations-Reporting the Effects of Disposal of a Segment of a Business, for the disposal of segments of a business.  Statement 144 requires that those long-lived assets be measured at the lower of carrying amount or fair value less cost to sell, whether reported in continuing operations or in discontinued operations.  Therefore, discontinued operations will no longer be measured at net realizable value or include amounts for operating losses that have not yet occurred.  Statement 144 also broadens the reporting of discontinued operations to include all components of an entity with operations that can be distinguished from the rest of the entity and that will be eliminated from the ongoing operations of the entity in a disposal transaction.  The provisions of Statement 144 are effective for financial statements issued for fiscal years beginning after December 15, 2001 and, generally, are to be applied prospectively.  During 2002, the Company recorded a provision for impairment of long-lived assets, including goodwill totaling $1,145,534.

In June 2002, the FASB issued SFAS No. 146, "Accounting for Costs Associated with Exit or Disposal Activities," which become effective January 2003.  SFAS No. 146 generally requires companies to recognize costs associated with exit or disposal activities when they are incurred rather than at the date of a commitment to an exit or disposal plan.  This pronouncement is effective for exit or disposal activities initiated after December 31, 2002.  The Company does not believe that the adoption of the statement will have a material impact on its financial position or results of operations.

In December 2002, the FASB issued Statements of Financial Accounting Standards No. 148, "Accounting for Stock-Based compensation - Transition and Disclosure - an amendment of FASB Statement 123" (SFAS 123).  For entities that change their accounting for stock-based compensation from the intrinsic method to the fair value method under SFAS 123, the fair value method is to be applied prospectively to those awards granted after the beginning of the period of adoption (the prospective method).  The amendment permits two additional transition methods for adoption of the fair value method.  In addition to the prospective method, the entity can choose to either (i) restate all periods presented (retroactive restatement method) or (ii) recognize compensation cost from the beginning of the fiscal year o adoption as of the fair value method had been used to account for awards (modified prospective method).  For fiscal years beginning December 15, 2003, the prospective method will no longer be allowed.  The Company currently accounts for its stock-based compensation using the intrinsic value method as proscribed by Accounting Principles Board Opinion No. 25, "Accounting for Stock Issued to Employees," and plans on continuing using this method to account for stock options, therefore, it does not intend to adopt the transition requirements as specified in SFAS 148.  The Company has adopted the new SFAS 148 disclosure requirements of SFAS 148 in these financial statements.

2.     Reverse Stock Split:

During 2002, the Company effected a one-for-five reverse stock split.  All references to common stock have been retroactively adjusted to give effect to this reverse split.

3.     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 72,360 shares of Guardian common stock.  The acquisition was accounted for by the purchase method.  The assets of Palo Verde Group, Inc. consists of certain real property located in Thermopolis, Wyoming.

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.  The Company subsequently contributed an additional $179,500 to ForceOne, LLC.  During the fourth quarter of 2001, ForceOne, LLC had a capital call from its members, which the Company did not fund.  As a result, the Company forfeited its equity interest in ForceOne, LLC, resulting in a write-off of $38,306.  Effective January 1, 2002, the Company converted a $223,500 note receivable (reduced to $100,000 based on the net book value of ForceOne, LLC), into a one-third interest in ForceOne, LLC.

4.     Notes Receivable/Advance:

The Company has a note receivable from an entity with a balance due of $45,520 at December 31, 2002.  The note receivable is not collateralized.

As of December 31, 2002, the Company had advances to an officer/director/shareholder, of $23,500, which are uncollateralized, bear no interest, and have no written repayment terms.

5.     Property and Equipment:

Property and equipment consists of the following at December 31, 2002:

|Land and buildings       |  | $ 822,584   
|------------------------ |  | ------------
|Furniture and equipment  |  | 737,373     
|                         |  | 1,559,957   
|Accumulated depreciation |  | (467,802)   
|                         |  | $  1,092,155

Depreciation expense for the years ended December 31, 2002 and 2001 was $131,805 and $117,964, respectively.

6.     Land and Property Held for Investment and Sale Purposes:

In the acquisition of Palo Verde in 2000, the Company obtained land and a commercial building in Thermopolis, Wyoming recorded at $150,000, net of a related mortgage.  In 1991, the Company purchased land in Colorado Springs valued at $659,000 and land in Wyoming for $100,000 (net of a related mortgage) in exchange for common stock.  These values were based upon third party appraisals.  During the fourth quarter of 2001, the Company wrote off its $100,000 Wyoming property as a result of bank foreclosure on the property and wrote down its Colorado Springs property by $119,000 to reflect its estimated the net realizable value as a result of a current pending sales contract.  During 2002 the Company refinanced the $97,500 balance of the mortgage payable on the Thermopolis, Wyoming property.  (See Note 7.)

Land and property held for investment and sale consists of the following at December 31, 2002:

|Land and property held for investment and sale |  | $ 298,256 
|---------------------------------------------- |  | ----------
|Accumulated depreciation                       |  | (9,805)   
|                                               |  | $  288,451

7.     Notes Payable:

The Company has two notes payable to a related party totaling $222,500.  The notes were due December 31, 2002, but were not paid.  An extension was received to December 31, 2003.  The notes are collateralized by the Thermopolis, Wyoming real estate.  The first note of $97,500 bears interest at the rate of 8% per annum.  The second note of $125,000 has an interest rate of 12% and is convertible into common stock at $2.50 per share.

H & M Steel has notes payable to an entity totaling approximately $2,182,224.  The notes are in default and have been classified as current liabilities.  The notes are collateralized by all of the assets and business of H & M Steel and bear interest at an average rate of approximately 10.5 %.

In October 2002 H&M was notified that it was in default on its obligations to its lender under the promissory notes for non-payment of principal and interest payments since July 2002.  The combined total indebtedness of $2,128,224 is reflected in the Company's financial statements under current liabilities as notes payable.

H&M's management is currently in the process of attempting to restructure the payment terms of its promissory notes with its lender.  However, at this time, management cannot determine the impact of the satisfactory completion of these negotiations.  H&M's failure to restructure its debt position would have a negative impact on H&M's financial condition.

8.     Shareholders' Equity:

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 at December 31, 2002.

In January 2000, the Company sold 150,000 units (comprised of 0.40 common shares and 4.8 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 |  | $3.750 |  | 30 days 
|Class B |  | 4.375  |  | 60 days 
|Class C |  | 5.00   |  | 90 days 
|Class D |  | 5.625  |  | 120 days
|Class E |  | 6.250  |  | 150 days
|Class F |  | 7.50   |  | 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.
|- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

During 2001, the Company issued 192,400 shares of common stock valued at $455,320 for services and 180,000 shares of common stock valued at $759,000 for property acquired.  In addition, 20,000 shares of common stock valued at $50,000 were issued as partial retirement of debt.

During 2001, 50,668 Class A warrants were exercised for proceeds of $190,005 and 19,068 Class B warrants were exercised for proceeds of $83,423.  Proceeds from both Class A and Class B warrants were net of offering costs totaling $76,890.

Stock Option Plans - In 1997, the shareholders approved a stock option plan authorizing options for 60,000 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, 2002 and 2001:



|                               |  | 2002            |  | 2001                          
|------------------------------ |  | --------------- |  | ------------------------------
|                               |  | Numberof Shares |  | Weighted
Average
ExercisePrice
|                               |  |                 |  |                               
|Outstanding, beginning of year |  | 20,000          |  | 5.00                          
|Granted                        |  | -               |  |                               
|Exercised                      |  | (2,700)         |  | 5.00                          
|Exercised                      |  | -               |  |                               
|Expirations                    |  | -               |  | -                             
|                               |  |                 |  |                               
|Outstanding, end of year       |  | 17,300          |  | $   5.00                      
|                               |  |                 |  |                               
|Vested Options                 |  | 17,300          |  | $    5.00                     

All options granted during 2002 and 2001 were to employees and directors.  The exercise price of all the options granted in 2001 approximately equaled the market price of the stock on grant date.

If not previously exercised or forfeited, vested options outstanding at December 31, 2002 will expire in the year ending December 31, 2007 at a weighted average exercise price of $5.00 per share.  At December 31, 2002, the weighted average remaining contractual life of options outstanding was approximately 60 months.

The fair value of each option granted in 2002 and 2001 was estimated on the date of grant, using the Black-Scholes option-pricing model with the following weighted average assumptions:

|                          |  | 2002 |  | 2001  
|------------------------- |  | ---- |  | ------
|Expected volatility       |  | -    |  | 213.9%
|Risk-free interest rate   |  | -    |  | 4.8%  
|Expected dividends        |  | -    |  | -     
|Expected terms (in years) |  | -    |  | 1.0   

Pro Forma Stock-Based Compensation Disclosures - The Company applies APB Opinion 25 and related interpretations in accounting for its stock options and warrants which are granted to employees.  Accordingly, no compensation cost has been recognized for grants of options and warrants to employees since the exercise prices were not less than the market value of the Company's common stock on the grant dates.  Had compensation cost been determined based on the fair value at the grant dates for awards under those plans consistent with the method of SFAS No. 123, the Company's net loss and EPS would have been increased to the pro forma amounts indicated below.

|                                            |  | Year Ended December 31,
|------------------------------------------- |  | -----------------------
|                                            |  | 2002                   
|Net loss applicable to common shareholders: |  |                        
|As reported                                 |  | (1,723,223)            
|Pro forma                                   |  | (1,723,223)            
|Net loss per common shareholders:           |  |                        
|As reported - basic and diluted             |  | $     (1.22)           
|Pro forma - basic and diluted               |  | $     (1.22)           

9.     Income Taxes:

There was no provision for income taxes for the years ended December 31, 2002 or 2001 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:

|                                           |  | 2002         |  | 2001       
|------------------------------------------ |  | ------------ |  | -----------
|Current Deferred Tax Assets (Liabilities)  |  |              |  |            
|Vacation liability                         |  | $     563    |  | $     2,642
|Allowance for doubtful accounts            |  | 28,875       |  | 184,458    
|                                           |  | 29,438       |  | 187,100    
|Valuation allowance                        |  | (29,438)     |  | (187,100)  
|Net current deferred tax asset (liability) |  | $        -   |  | $        - 
|                                           |  |              |  |            
|Non-compete agreement                      |  | $        -   |  | $  71,686  
|Property and equipment                     |  | (149,500)    |  | (162,981)  
|Equity investment and impairment           |  | 643,368      |  | 214,543    
|Write down of property/receivables         |  | 107,200      |  | 105,746    
|Net operating loss carry forward           |  | 2,251,069    |  | 1,903,660  
|                                           |  | 2,852,137    |  | 2,132,654  
|Valuation allowance                        |  | (2,852,137)  |  | (2,132,654)
|Net long-term deferred tax asset           |  | -            |  | -          
|Total net deferred tax assets              |  | $          - |  | $        - 

Total income tax expense for 2002 and 2001 differed from the amounts computed by applying the U.S. Federal statutory tax rates to pre-tax income as follows:

|                                                                                                                                                                              |  | 2002  |  | 2001 
|----------------------------------------------------------------------------------------------------------------------------------------------------------------------------- |  | ----- |  | -----
|                                                                                                                                                                              |  |       |  |      
|Statutory rate                                                                                                                                                                |  | (34%) |  | (34%)
|State income taxes, net of Federal income tax benefit                                                                                                                         |  | (5%)  |  | (5%) 
|Increase in valuation allowance related to net operating
                              
loss carryforwards and change in temporary
                              
differences |  | 39%   |  | 39%  
|                                                                                                                                                                              |  | -     |  | -    

In 2002 and 2001, the valuation allowance increased $1,694,343 and $517,019, respectively.  At December 31, 2002, the Company has net operating loss carryforwards of approximately $6,002,851 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, 2011 through December 31, 2022.  A change in control of the Company could result in limitations and restrictions on use of the loss carryforwards.

10.     Fourth Quarter Adjustments:

During the fourth quarter of 2001, the Company recognized a loss in Structural of approximately $225,000. This loss was primarily the result of Structural adjusting its calculation for profit on long-term contracts substantially completed prior to the Company's fourth quarter.

During the fourth quarter of 2002, the Company recognized an impairment loss of $1,143,534 related to its investment in Structural Holdings.

11.     Business Segments:

During 2001, the Company has three reportable segments and accounted for corporate general and administrative expenses separately from operational general and administrative expenses.

During 2002, the Company had only two segments, Structural Steel Fabrication and Real Estate.

Although all segments are managed as part of an integrated enterprise, they are reported herein in a manner consistent with the internal reports prepared for management.

Transactions between reportable segments are recorded at cost.  Substantially all operating expenses are identified per each segment.  Substantially all of the Company's assets are located in the United States of America.

The reportable segments are as follows:

1)    Structural Steel Fabrication:

The Company, through Structural Holdings, fabricates and erects structural steel for governmental, military, commercial and industrial construction projects.

2)    Body Armor Manufacturing:

The Company, through ForceOne, manufactured ballistic equipment, including equipment commonly referred to as body armor used by law enforcement and correctional personnel.

3)    Real Estate:

The Company, through Palo Verde Group, owns a commercial building and real estate in Wyoming.  This property is held for investment and with the intent to resell it in the future.

|Description                                                    |  | Year |  | Real
Estate   |  | Body Armor   |  | Steel Fabrication |  | Corporate    |  | Total      
|-------------------------------------------------------------- |  | ---- |  | ------------- |  | ------------ |  | ----------------- |  | ------------ |  | -----------
|                                                               |  |      |  |               |  |              |  |                   |  |              |  |            
|Net sales                                                      |  | 2002 |  | $          -  |  | $          - |  | $4,305,979        |  | $          - |  | $4,305,979 
|                                                               |  | 2001 |  | $           - |  | $  635,832   |  | $1,015,949        |  | $          - |  | $1,651,781 
|                                                               |  |      |  |               |  |              |  |                   |  |              |  |            
|Loss from operations                                           |  | 2002 |  | (162,987)     |  | -            |  | (975,131)         |  | (343,638)    |  | (1,481,756)
|                                                               |  | 2001 |  | (18,464)      |  | (286,597)    |  | (148,192)         |  | (934,882)    |  | (1,388,135)
|                                                               |  |      |  |               |  |              |  |                   |  |              |  |            
|Interest income                                                |  | 2002 |  | -             |  | -            |  | 6,387             |  | 5,124        |  | 11,511     
|                                                               |  | 2001 |  | -             |  | 6,012        |  | 27,090            |  | 19,540       |  | 52,642     
|                                                               |  |      |  |               |  |              |  |                   |  |              |  |            
|Interest expense                                               |  | 2002 |  | (12,422)      |  | -            |  | (267,806)         |  | (114)        |  | (280,342)  
|                                                               |  | 2001 |  | (16,794)      |  | (4,183)      |  | (154,072)         |  | (6,015)      |  | (181,064)  
|                                                               |  |      |  |               |  |              |  |                   |  |              |  |            
|Depreciation and amortization                                  |  | 2002 |  | 4,124         |  | -            |  | 127,681           |  | -            |  | 131,805    
|                                                               |  | 2001 |  | -             |  | -            |  | 117,964           |  | -            |  | 117,964    
|                                                               |  |      |  |               |  |              |  |                   |  |              |  |            
|Equity in net income (loss) accounted for by the equity method |  | 2002 |  | -             |  | 95,000       |  | -                 |  | -            |  | 95,000     
|                                                               |  | 2001 |  | -             |  | 208,180      |  | 111,820           |  | -            |  | 320,000    
|                                                               |  |      |  |               |  |              |  |                   |  |              |  |            
|Total Assets                                                   |  | 2002 |  | 194,123       |  | 5,000        |  | 3,321,318         |  | 77,245       |  | 3,597,686  
|                                                               |  | 2001 |  | 1,022,621     |  | -            |  | 4,981,332         |  | 363,530      |  | 6,367,483  
|                                                               |  |      |  |               |  |              |  |                   |  |              |  |            
|Investment in equity method investors                          |  | 2002 |  | -             |  | -            |  | -                 |  | -            |  | -          
|                                                               |  | 2001 |  | -             |  | 207,868      |  | 111,820           |  | -            |  | 319,688    
|                                                               |  |      |  |               |  |              |  |                   |  |              |  |            
|Noncash Items:                                                 |  |      |  |               |  |              |  |                   |  |              |  |            
|                                                               |  |      |  |               |  |              |  |                   |  |              |  |            
|Stock issued for the purchase of land                          |  | 2002 |  | -             |  | -            |  | -                 |  | -            |  | -          
|                                                               |  | 2001 |  | -             |  | -            |  | -                 |  | 759,000      |  | 759,000    

12.     Employment Agreement

The Company has entered into an employment agreement with its President that perpetually renews each December 31.  If the Company elects to terminate this agreement without cause or there is a change in control of the Company, the employment agreement shall be extended for an additional 24 months from the date of such event.  The agreement provides for annual base compensation of $120,000 with annual increases of not less than 10%.  The agreement also provides for certain other employment benefits.

|Item 8. | Changes and Disagreements with Accountants on Accounting and Financial Disclosures
|------- | ----------------------------------------------------------------------------------

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  | 41  | Director and President/CEO
| | Kevin L. Houtz*   | 40  | Director and Secretary    
| | David W. Stevens* | 66  | Director                  

*Members of the Audit Committee

J. 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.

Board of Directors

Our certificate of incorporation authorizes our board to consist of up to seven directors.  There are presently three 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 additional 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 two occasions during fiscal 2002. The committee is responsible for accounting and internal control matters. The audit committee has adopted a charter which has been previously filed with the Commission.  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 2002. 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 curently 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.

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, 2002, Mr. Moorer failed to file four reports covering five 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 Our President and Chief Executive Officer.

|Table 1                                 
|----------------------------------------
|Summary Compensation Table              
|                                        
|Name and PrincipalPosition              
|J. Andrew Moorer,
  President and 
  CEO

|(1) | The above table reflects salary expenses as recorded on the Company's financial statements in accordance with generally accepted accounting principles.  As such, the amounts may differ from the base salary rates discussed below.
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------

Table 2

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

Aggregated Option Exercises in Fiscal Year 2002 and Fiscal Year 200 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, 2002.  All of the listed options were exercisable at December 31, 2002.

|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 Nature
of Beneficial Ownership (1) | Percentof class (2)
|------------------------------------ | --------------------------------------------- | -------------------
|J. Andrew Moorer                     | 260,496                                       | 15.6%              
|P.O. Box 3618                        |                                               |                    
|Carefree, AZ  85377                  |                                               |                    
|                                     |                                               |                    
|Kevin L. Houtz                       | 161,500                                       | 9.6%               
|3000 Chestnut Ave.,                  |                                               |                    
|Ste. 343D                            |                                               |                    
|Baltimore, MD 21211                  |                                               |                    
|                                     |                                               |                    
|David W. Stevens                     | 12,200                                        | 0.7%               
|312 Greenwood Point Rd.              |                                               |                    
|Grasonville, MD 21638                |                                               |                    
|                                     |                                               |                    
|All Officers and Directors as        | 434,196                                       | 25.9%              
|a Group (3 Persons)(6)               |                                               |                    

|(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 1,674,333 shares outstanding.                           
|(3) | Includes 17,300 shares under option.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|(4) | Includes 24,000 shares purchasable upon exercise of warrants.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|(5) | Includes 4,800 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 100,000 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 $.25 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.

During 2001 Mr. Moorer exercised 100,000 options to purchase common stock at $0.71 per share and 100,000 options to purchase common stock at $0.25 per share.

During 2002, Mr. Moorer exercised 2,700 options to purchase common stock at $5.00 per share.

At December 31, 2002, Mr. Moorer had outstanding advances from the Company of approximately $23,500.

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

| | Exhibit |                                                                                                                                                                                | 
| | ------- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | 
| | Number  | 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, 2002.

Item 14.    Controls and Procedures

J. Andrew Moorer, President and Chief Executive and Financial Officer of Guardian Technologies International, Inc. has established and is currently maintaining disclosure controls and procedures for the Company.  The disclosure controls and procedures have been designed to ensure that material information relating to the Company is made known to him as soon as it is known by others within the Company.

Our President and Chief Executive and Financial Officer conducts an update and a review and evaluation of the effectiveness of the Company's disclosure controls and procedures and has concluded, based on his evaluation within 90 days of the filing of this Report, that our disclosure controls and procedures are effective for gathering, analyzing and disclosing the information we are required to disclose in our reports filed under the Securities Exchange Act of 1934.  There have been no significant changes in our internal controls or in other factors that could significantly affect these controls subsequent to the date of the previously mentioned evaluation.

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 15, 2003 | By:/s/ J. Andrew Moorer   J. Andrew Moorer, Director, President,
   CEO and CFO

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   J. Andrew Moorer
   Director, President and
   Chief Executive Officer | Date:  April 15, 2003
|------------------------------------------------------------------------------------------------ | ---------------------
|By:/s/ Kevin L. Houtz   Kevin L. Houtz
   Director                                               | Date:  April 15, 2003
|By:/s/ David W. Stevens   David W. Stevens
   Director                                           | Date:  April 15, 2003

CERTIFICATION PURSUANT TO
18 U.S.C. SECTION 1350,
AS ADOPTED PURSUANT TO
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002

In connection with the Annual Report of Guardian Technologies International, Inc. (the "Company") on Form 10-KSB for the period ending December 31, 2002, as filed with the Securities and Exchange Commission on the date hereof (the "Report"), I, J. Andrew Moorer, President and Chief Executive Officer of the Company, certify, pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002, that:

| | (1) | The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and                              
| | --- | ---------------------------------------------------------------------------------------------------------------------------------------------------
| | (2) | The information contained in the Report fairly presents, in all material respects, the financial condition and result of operations of the Company.

/s/ J. Andrew Moorer                J. Andrew Moorer, President, CEO and
CFO
April 15, 2003