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, 2001

Commission file number 028238

GUARDIAN TECHNOLOGIES INTERNATIONAL, INC.

|Delaware(State or other jurisdiction
of incorporation or organization) | 54-1521616I.R.S. Employer
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 $1,651,781.

The aggregate market value of the voting stock held by non-affiliates as of April 30, 2002 was approximately $833,194 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 30, 2002 was 6,506,663.

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

DOCUMENTS INCORPORATED BY REFERENCE

The Registrant hereby incorporates herein by reference the following documents:

Item 13.       Exhibits

| | 1. | Incorporated by reference from the Company's Registration Statement on Form 
SB-2, SEC File No. 333-2712, as filed with the Commission on March 22, 1996.                                                                                        
| | -- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | 2. | Incorporated by reference from the Company's Registration Statement on Form 
SB-2/A, SEC File No. 333-38044, as filed with the Commission on January 18, 2001.                                                                                   
| | 3. | Incorporated by reference from the Company's Current Report on Form 8-K dated 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.

We also manufacture and distribute ballistic protective equipment.

We also own undeveloped real estate in Arizona and Colorado and 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 Steel 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 and through making strategic acquisition, thereby leveraging our long-term relationships with regional and national construction and engineering firms, national and regional accounts, and other customers.  We also intend to continue to grow our operations by developing new project capabilities and services and by targeting specific types of projects in which we have an existing reputation for expertise, such as military base projects.  We believe that continuing to diversify our revenue base will reduce the impact of periodic adverse market or economic conditions.                                                                                                                                                                                                                                                                                                                                                                                                       
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | * | Promote Internal Growth.  We intend to pursue continued internal growth by adding sales and marketing personnel to dedicated, fast growing markets in which we are actively pursuing new projects, by further developing our engineering and design capabilities and fabrication capacity, and by continually updating our fabrication and detailing equipment and technologies.  We believe that these efforts will enhance our market share, revenues, and operating income in our existing and targeted principal markets and improve our operating capacity.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
| | * | Acquire Synergistic Businesses.  We intend to pursue selective acquisitions of steel detailing, fabrication and erection companies that offer us increased plant facilities, opportunities to increase market share in selected geographic markets, penetration of new product market segments, and access to domestic and international markets targeted by us for geographic expansion.  Such acquisitions may also provide the continued and additional benefits of increased purchasing efficiencies with respect to steel and other raw materials, payment and performance bonding and insurance premiums, and more efficient allocation and utilization of labor resources among projects within our geographic markets.  We believe that many of our competitors operate primarily on a local or limited geographic basis and, while having established relationships in those markets, lack the resources to compete for large or more complex projects.  In addition, the industry is highly fragmented with many of our competitors being closely or family held entities.
| | * | Manage Capacity Through Outsourcing.  We increase our project capacity by outsourcing certain amounts of our detailing, fabrication and erection work to reputable subcontractors.  Outsourcing has enabled us to effectively increase the capacity of our fabrication facilities while usually maintaining margins comparable to in-house services.  We believe outsourcing will play a key role in our strategy to continue to expand our presence in selected international markets, where we typically provide design engineering and project management services and utilize local subcontractors for fabrication and erection.  The ability to expand or contract capacity through the use of outsourcing provides us flexibility to meet changing market demands in a cost-effective manner.                                                                                                                                                                                                                                                                                 
| | * | Maintain Entrepreneurial Environment.  We believe that our management and operating structure, which emphasizes quality, innovation, flexibility, performance and safety, has contributed 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, 2001, we completed 20 contracts generating $11,500,000 in total revenues.  However, this business segment was accounted for during the first nine months of 2001 under the equity method and therefore, revenues of Structural Holdings for only the three months ended December 31, 2001 contributed to our consolidated 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, 2001, we had a backlog of $2,500,000.

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 March 31, 2002, we had one full time corporate employee.  Guardian Security & Safety Products, Inc., operating as ForceOne, LLC, had 12 full time employees, three in management and administration, two in sales and seven in manufacturing.  Guardian Steel, Inc., operating as Structural Holdings, Inc. dba H & M Steel, had 25 employees, five in management and administration and 20 in production.  We consider our relationship with our employees to be good.

Ballistic Protective Equipment Business

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

Overview of the Industry

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

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

Our Products

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

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

Manufacturing

We manufacture all of our products under our own label at the ForceOne facility in Spruce Pine, North Carolina.  We do not depend on any third parties to manufacture any of our products.

Raw Materials

We manufacture our products from materials available from Honeywell International, Inc. (Spectra 1000 woven fabric and non-woven composite ballistic materials Spectra Shield, Spectra Flex, Gold Shield, and Gold Flex), and Dupont (Kevlar).  To date, we have not experienced problems with obtaining necessary materials from suppliers.  Our new product line has been designed to be produceable from a number of different sources or supply so as not to be dependent on any one supplier.

Our Customers

Sales to the US government represented 25% and 30% of our total sales in 2001 and 2000, respectively.  Sales to municipal law enforcement agencies represented 75% and 70% of our total sales in 2001 and 2000, respectively.

Marketing and Distribution

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

Our Competition

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

Regulatory Matters

We are subject to federal, state, and local laws and regulations governing the protection of the environment, including those regulating discharges to the air and water, the management of wastes, and the control of noise and odors.  While we always strive to operate in compliance with these requirements, we cannot assure you that we are at all times in complete compliance with all such requirements.  Like all companies, we are subject to potentially significant fines or penalties if we fail to comply with environmental requirements. Although we have made and will continue to make capital expenditures in order to comply with environmental requirements, we do not expect material capital expenditures for environmental controls in 2001 or 2002.  However, environmental requirements are complex, change frequently, and could become more stringent in the future.  Accordingly, we cannot assure you that these requirements will not change in a manner that will require material capital or operating expenditures or will otherwise have a material adverse effect on us in the future.

In addition to the EPA, our body armor products are certified by the National Institute of Justice and our manufacturing operation subject to Occupational Safety and Health Organization guidelines.  We believe that we are in compliance with all applicable regulatory requirements.

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 is zoned residential and is currently held for development.  The Company is also considering selling the parcel outright should recent trends toward "upzoning" similar property in the area to commercial classification prove successful.  The property has an estimated value, based on a recent real estate appraisal of $330,000 and is held subject to a first mortgage of approximately $100,000.                                                                                
| | - | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | * | An 8,000 square foot commercial building and associated real estate located in Thermopolis, Wyoming.  The building is leased to a local restaurant group for $2,500 per month for a five year period.  The building has an estimated value, based on a recent appraisal, of $350,000 and is held subject to a first mortgage of approximately $90,000.  In April 2002, the holder of the first mortgage on the property filed a foreclosure action for nonpayment .  We are currently assessing alternative courses of action with respect to our interest in this property.

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 has an estimated value, based on a recent appraisal, of $659,000 and is subject to a first mortgage of approximately $123,000 as to which the Company has an indemnity from a third party who is the principal debtor under the loan.  The property is zoned office commercial and is being held for sale.  The Company has entered into a contract to sell the parcel at a price of $540,000 subject to the completion of due diligence by the purchaser.

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.  Although the Company still possesses the right to redeem the property for the auction amount, the decline in the real estate market has led management to decide not to pursue this endeavor further.  As such the basis in this property $100,000 was written off as of December 31, 2001.

In light of the foreclosure on the Wyoming land and in conjunction with the Company's shift in strategy away from diversification, management has begun implementation of a strategy to liquidate its non-revenue producing real estate properties.  As previously stated, the Colorado property is in the process of being sold and the Arizona property is being considered for future sale.  The liquidation strategy, while generating cash, is actually being implemented to allow the Company's management team to focus on growing H&M's structural steel fabrication business.

Termination of Acquisition of Vairex Corporation

On February 19, 2001, we entered into an Agreement and Plan of Merger pursuant to which we have agreed to acquire Vairex Corporation, of Boulder, Colorado.  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 agreed to issue 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 has 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 assigns the two subleases to the owner and releases us from any further obligations under both leases.  The settlement amount of $104,050.48 was accrued on our books at December 31, 2001.

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

ForceOne occupies a manufacturing facility located in Spruce Pine, North Carolina under a three-year lease expiring 2003.  The facility consists of approximately 4,500 square feet of manufacturing area and 500 square feet of office space.  The monthly rent for the facility was $1,000 for the first six months beginning August 1, 2001 and $1,500 thereafter.

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, is currently 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.

Subsequent to year end, H&M entered into settlement negotiations with one of the subcontractors and believes all three lawsuits will be resolved through arbitration within the next year.  The Company believes that their current loss reserves are adequate to cover any claims or settlements regarding all three suits against H&M Steel.

Subsequent to year end, the Company has executed a lease settlement with two subleases for $104,050.  The settlement releases the Company from all of its obligations under the leases and has been recorded in accrued expenses at December 31, 2001.

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.  We are currently assessing alternative courses of action which may be available to us with respect to our interest in this property.

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.

We were further notified that our securities are automatically eligible for trading on the OTC Bulletin Board.

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

|                   | Common Stock
|------------------ | ------------
|Quarter Ended      | Low         
|March 31, 1998     | $1.33       
|June 30, 1998      | $2.19       
|September 30, 1998 | $2.00       
|December 31, 1998  | $1.25       
|March 31, 1999     | $1.04       
|June 30, 1999      | $1.19       
|September 30, 1999 | $1.18       
|December 31, 1999  | $1.06       
|March 31, 2000     | $1.00       
|June 30, 2000      | $0.69       
|September 30, 2000 | $0.72       
|December 31, 2000  | $0.25       
|March 31, 2001     | $0.31       
|June 30, 2001      | $1.31       
|September 30, 2001 | $1.10       
|December 31, 2001  | $0.35       

There were approximately 264 record holders of our common stock as of April 12, 2002.  This amount does not include beneficial owner 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.

|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 tract 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 to include: one detailing manager, one job coordinator, a part-time shop manager, and several administrative personnel.  These reductions are expected to generate a cost savings of approximately $130,000 per year.                                                                                                                                                                                                                                                                                                                      
| | * | Eliminated management fees in the amount of $360,000 per year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
| | * | Received additional equity capital of $850,000 in early 2001.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
| | * | Restructured seller financing arrangements associated with subordinated notes, non-compete and consulting agreements.  The total due under these arrangements has been reduced from $951,000 to $650,000, a savings of $300,000.  In addition, the $650,000 remaining 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 will be based on a percentage of average 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.                                                                                                                                                                                                                                                                 

During 2001, H&M generated revenues of $11,400,000, achieved Earnings Before Interest, Taxes, Depreciation and Amortization of $1,300,000 and posted net income of $400,000.  While 2002 business levels are not expected to match that of 2001, the infrastructure of H&M has been changed to a point where the business can achieve profitability on lower sales volume.  In addition, the policies and procedures implemented in recent months as discussed above are designed to eliminate or at a minimum reduce the impact of problems incurred while performing on a job, a situation not previously managed well by H&M personnel and an area which caused substantial losses to be incurred in prior years.  Finally, once H&M's cost structure has been properly aligned with near term sales volume projections, management can focus on growing revenues in its current area of expertise and expanding revenue generating opportunities in other high margin fabrication areas.

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

Armor Products:

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

| | * | To retain experienced senior management and sales personnel able to capitalize on the newly developed, low-cost, lightweight armor products in order to increase sales volume.
| | - | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |   | -                                                                                                                                                                             
| | * | To reduce production costs associated with armor manufacturing by outsourcing or other means.                                                                                 
| |   | -                                                                                                                                                                             
| | * | To develop new products that will make the Company more competitive in the market.                                                                                            
| |   | -                                                                                                                                                                             
| | * | To develop and build an experienced sales staff and national dealer network.                                                                                                  
| |   | -                                                                                                                                                                             

Each of the items discussed above were completed and in place at the start of 2001, with the sales effort expected to be an ongoing process during the entire year.  While the new products were lower in cost than previous products, made of lighter, more comfortable material than previous products, and were able to be produced in a facility that was less costly to run, the Company was not able to increase sales levels over that of the previous year as expected.  Sales in 2001 were flat and the armor division again sustained loss.

During the latter part of 2001, the Company determined that the business plan developed for ForceOne was not effective and decided that no additional funding would be provided to the armor division.  Any new funds to complete the business plan would have to come from the Company's minority shareholders.  The minority interest shareholders accomplished this goal during the fourth quarter and the Company allowed its equity position to be diluted completely leaving only a $100,000 Note Receivable between the Company and ForceOne on the books.  This Note Receivable was written down from $223,500 to a net realizable value of $100,000 at December 31, 2001 because of future collection issues.  During 2001, the Company consolidated the operations for ForceOne from January 1, 2001 to November 30, 2001 and has accounted for the net remaining balance of its funding to ForceOne as Notes Receivable at year-end.  Effective January 1, 2002, the receivable was converted into a 33% equity interest in
ForceOne.

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 is zoned residential and is currently held for development.  The Company is also considering selling the parcel outright should recent trends toward "upzoning" similar property in the area to commercial classification prove successful.  The property has an estimated value, based on a recent real estate appraisal of $330,000 and is held subject to a first mortgage of approximately $100,000.                                                                               
| | - | ---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | * | An 8,000 square foot commercial building and associated real estate located in Thermopolis, Wyoming.  The building is leased to a local restaurant group for $2,500 per month for a five year period.  The building has an estimated value, based on a recent appraisal, of $350,000 and is held subject to a first mortgage of approximately $90,000.  In April 2002, the holder of the first mortgage on the property filed a foreclosure action for nonpayment.  We are currently assessing alternative courses of action with respect to our interest in this property.

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 has an estimated value, based on a recent appraisal, of $659,000 and is subject to a first mortgage of approximately $123,000 as to which the Company has an indemnity from a third party who is the principal debtor under the loan.  The property is zoned office commercial and is being held for sale.  The Company has entered into a contract to sell the parcel at a price of $540,000 subject to the completion of due diligence by the purchaser.

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.  Although the Company still possesses the right to redeem the property for the auction amount, the decline in the real estate market has led management to decide not to pursue this endeavor further.  As such, the basis in this property $100,000 was written off as of December 31, 2001.

In light of the foreclosure on the Wyoming land and in conjunction with the Company's shift in strategy away from diversification, management has begun implementation of a strategy to liquidate its non-revenue producing real estate properties.  As previously stated, the Colorado property is in the process of being sold and the Arizona property is being considered for future sale.  The liquidation strategy, while generating cash, is actually being implemented to allow the Company's management team to focus on growing H&M's structural steel fabrication
business.

Conclusion

The sections above outline the general activities of the three areas from which the Company generated or expects to generate revenue.  During 2001, the Company completed its transition from a body armor manufacturer to that of structural steel fabricator, an industry felt to have greater revenue and profit potential.

While the Company's real estate activities are passive in nature for the most part and its armor manufacturing activities eliminated, the primary focus of the Company since its President and CEO assumed the role of President of H&M in September 2001 has been to complete the turnaround of this business and grow its revenues and profits in future periods.

During 2001, H&M generated revenues of $11,400,000, achieved Earnings Before Interest, Taxes, Depreciation and Amortization of $1,300,000 and posted net income of $400,000.  While 2002 business levels are not expected to match that of 2001, the infrastructure of H&M has been changed to a point where the business can achieve profitability on lower sales volume.  In addition, the policies and procedures implemented in recent months as discussed above are designed to eliminate or at a minimum reduce the impact of problems incurred while performing on a job, a situation not previously managed well by H&M personnel and an area which caused substantial losses to be incurred in recent years.

The Company's management believes that by focusing in one area and performing well in that area, the Company will achieve greater shareholder return than its previously adopted strategy of diversification.  That is the reason why the Company decided in late 2001 to eliminate its majority control position of the armor business and to begin liquidating its real estate holdings.

The Company's management feels that the aforementioned strategy will return the Company to profitability in future periods and ultimately enhance shareholder value.

Results of Operations

Twelve Months Ended December 31, 2001 Compared To Twelve Months Ended December 31, 2000

It should be noted that the discussion of results of operations for 2001 reflects items of income and expense generated by the Company's armor operations from January 1, 2001 through September 30, 2001 and items of income and expense generated by the Company's structural steel operations from October 1, 2001 through December 31, 2001.  The reason for this is the Company's transition from consolidation accounting for reporting results of armor operations to a write-off of its investment effective November 30, 2001 and a transition from the equity method of accounting for its investment in Structural to consolidation accounting for reporting results of Structural's operations.  The transition occurred effective October 1, 2001.  The discussion of results of operations for the twelve months ended December31, 2000 reflect only results from armor operations.

Net sales for the twelve months ended December 31, 2001 were $1,651,781 comprised of sales from structural steel operations of $1,045,328 and armor operations of $635,832.  Sales from armor operations for the prior year were $606,453 representing a $29,379 increase in armor sales year to year.  Although the Company introduced a new line of lower cost, lightweight armor products, the Company was unable to increase sales levels over that of the previous year.

Gross profit for the twelve months ended December 31, 2001 was $328,447 or 20% and was comprised of gross profit from structural steel operations of $148,704 (15%) and gross profit from armor operations of $179,743 (28%).  This compares favorably to gross profit from armor operations last year of $22,451 or 4%.  The increase in gross profit from armor operations as a percentage of sales is attributable to sales of the higher margin ForceOne products over that of the "old style" Guardian products sold last year.  In addition, gross profit during 2001 was positively impacted by the sale of unusually high-margin "ballistic mats" during the second quarter of 2001.

Total operating expenses for the twelve months ended December 31, 2001 were $1,716,582 comprised of selling expenses of $243,539 (all related to armor operations) and general and administrative expenses of $1,473,043 (armor operations $1,176,460 and structural steel operations $296,583).  Total operating expenses for the twelve months ended December 31, 2000 were $1,123,347 comprised of selling expenses of $70,709 (all armor operations) and general and administrative expenses of $1,052,638 (all armor operations).  The increased selling expenses from armor operations during 2001 resulted from hiring additional sales people to market the ForceOne product line, travel associated with Trade Shows to promote the ForceOne product line and costs associated with establishing a nationwide dealership network to increase the sales exposure of the ForceOne product line.  General and administrative expenses associated with armor operations (including corporate related expenses) increased $123,822 over that of the previous year.  Included in these costs and contributing significantly to the overall increase in general and administrative expenses were substantial accounting, legal and consulting expenses incurred in connection with the Company's failed acquisition of Vairex.  Also included in general and administrative expenses for 2001 were $414,320 of services (some of which are related to consulting costs associated with the Vairex merger discussed above) for which common stock of the Company was issued.

The Company posted a net loss for the twelve months ended December 31, 2001 of $1,039,755 or $0.19 per share compared to a net loss of $1,819,142 or $0.51 per share for the same period a year ago.  Armor operations, Land and Property investments and Corporate activities contributed $1,247,935 to the overall loss
while structural steel operations offset the net loss sustained by generating income of $208,180 for the year.

Liquidity and Capital Resources

Overview

The Company incurred net losses of $1,039,755 and $1,819,412 for the years ended December 31, 2001 and 2000, respectively, and has a working capital deficit of $1,405,316 as of December 31, 2001.  During 2001, the Company incurred certain unusual expenses, including legal expenses totaling $50,000 related to a failed merger and corporate expenses totaling approximately $455,000 related to services provided in fiscal 2001 that were paid in common stock. The primary corporate expenses the Company expects to incur in fiscal 2002 relates to the officer's salary, legal expenses and accounting expenses.  The Company's main operating subsidiary, Structural, had net income in fiscal 2001 and is expected to generate net income in fiscal 2002.  The Company's remaining investment in ForceOne, LLC will be accounted for under the equity method of accounting beginning in fiscal 2002, and the Company does not expect to provide any additional capital to ForceOne, LLC.  The Company expects to incur insignificant expenses in fiscal 2002 related to its Palo Verde subsidiary.  The Company also expects to sell certain properties in Palo Verde in fiscal 2002 for estimated net proceeds of approximately $960,000, of which $575,000 will be utilized to pay down certain collateralized current debt totaling $385,000, with the remainder to be used as working capital.  Even with these positive developments, the Company will continue to have liquidity issues.  If the Company is unsuccessful in achieving positive results from operations at Structural or does not realize the proceeds expected from the sale of certain properties, the Company may be required to curtail operations, liquidate assets, or enter into capital or financing arrangements on terms which may have an adverse effect on future operations.

Operating Activities

During the 12 months ended December 31, 2001, the Company used net cash in operating activities of $344,790.

During the 12 months ended December 31, 2001, the Company issued common stock for services in the amount of $455,320 pertaining to legal services ($25,000), graphic design and advertising services associated with the launch of the Company's ForceOne product line ($20,000), general merger and acquisition services ($34,750), merger and acquisition services specifically associated with the Company's merger with Vairex Corporation ($174,000), other consulting services ($156,570) and services of the Company's president in lieu of cash compensation for salary ($45,000).

During the 12 months ended December 31, 2001, the Company realized the benefit of allocating $207,868 of losses attributable to the operations of ForceOne to
minority interest shareholders.

During the 12 months ended December 31, 2001, the Company realized the benefit of allocating $111,820 of losses attributable to the fourth quarter operations of Structural to
minority interest shareholders.

During the 12 months ended December 31, 2001, the Company recognized $320,000 of earnings attributable to its equity investment in Structural.

For the 12 month period ended December 31, 2001, the Company reduced Accounts Receivable by $760,837 and Accounts Payable
decreased by $298,296.  Accounts Receivable increased because of the consolidation of Structural at December 31, 2001.  Accounts Payable decreased as cash flow from Structural facilitated a reduction in trade payables.

Investing Activities

During 2001, the Company completed $33,500 of renovations on the commercial building located in Wyoming.  The building was acquired in September 30, 2000.  The building was leased in May 2001 to a restaurant group at the rate of $2,000 per month increasing to $2,500 in 2002.  The lease is for 5 years.

The Company had a Note Receivable from unrelated parties of $250,000 at December 31, 2000.  In January 2001, the Company collected $150,000 of the balance of the Note.  During 2001, the Company collected an additional $70,000 of this amount.  The remaining balance of the Note of $30,000 was collected in 2002.

The Company had a Note Receivable from a related party of $85,000 at December 31, 2000.  This amount was collected in full in January 2001.

In February 2001, the Company, through its wholly-owned subsidiary, Guardian Steel, Inc., increased its investment in Structural by providing additional equity funding of $425,000.  Another $425,000 was contributed by the other 50% owner of Structural.  The proceeds from the funding were used for working capital purposes.  Guardian Steel, Inc. acquired the funds to make the additional investment in a loan transaction with a third party.  The loan bears interest at 12% per annum and is collateralized by a certain assets of the Company.

Financing Activities

The Company had term debt associated with Structural of $1,941,280 at December 31, 2001.

The Company issued a Note Payable to an unrelated party in February 2001 in the amount of $425,000.  Proceeds from the Note were used to provide an equity contribution to H&M Steel.  The equity contribution to H&M Steel was for working capital purposes.  The Company issued common stock to retire $50,000 of principal on the Note leaving a balance on the Note of $375,000 at December 31, 2001.

The balance of Notes Payable at December 31, 2001 consisted of Notes to minority interest shareholders of Structural of $100,000, a Mortgage Note Payable on the Company's residential real property located in Arizona of $98,311 and a related party Note Payable of $10,000.

During 2001, the Company's president exercised 200,000 common stock options generating proceeds to the Company of
$95,500.

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

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

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

Should all warrants be exercised, the Company will receive additional proceeds from this offering of $3,825,000.  These funds will be used for acquisitions and general working capital purposes.  In February 2001, the Company realized proceeds from the exercise of common stock purchase warrants attributed to the aforementioned private placement of approximately $273,000.

Recent Developments

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

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                                                                                    | F-1 
|Consolidated Balance Sheet - December 31, 2001                                                                   | F-2 
|Consolidated Statements of Operations - For the Years Ended December 31, 2001 and 2000                           | F-3 
|Consolidated Statement of Changes in Shareholders' Equity - For the Years Ended 
     December 31, 2001 and 2000 | F-4 
|Consolidated Statements of Cash Flows- For the Years Ended December 31, 2001
     and 2000                       | F-5 
|Notes to Consolidated Financial Statements                                                                       | F-6 



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, 2001 and the related statements of operations, stockholders' equity, and cash flows for the years ended December 31, 2001 and 2000.  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 audits.

We conducted our audits 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 audits provide 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, 2001, and the results of their operations and their cash flows for the years ended December 31, 2001 and 2000, 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, 2001

|ASSETS                                                                                                                    
|--------------------------------------------------------------------------------------------------------------------------
|Current Assets:                                                                                                           
|Cash and cash equivalents                                                                                                 
|Accounts receivable - trade, net of allowance of $491,889                                                                 
|Costs and estimated earnings in excess of billings on uncompleted contracts                                               
|Notes receivable/advance:                                                                                                 
|Related party                                                                                                             
|Other                                                                                                                     
|Prepaid expenses and other                                                                                                
|Total current assets                                                                                                      
|Property and Equipment, net                                                                                               
|Other Assets:                                                                                                             
|Note receivable and equity investment, net                                                                                
|Non-compete agreement, net of amortization of $260,673                                                                    
|Deferred financing costs                                                                                                  
|Land and property held for investment and sale purposes, net of impairment and accumulated 
      depreciation of $255,681
|Goodwill, less amortization of $626,641                                                                                   
|Other                                                                                                                     
|Total other assets                                                                                                        
|Total Assets                                                                                                              
|LIABILITIES AND SHAREHOLDERS' EQUITY                                                                                      
|Current Liabilities:                                                                                                      
|Notes payable and current portion of long-term debt                                                                       
|Current portion of capital leases                                                                                         
|Accounts payable                                                                                                          
|Accrued expenses                                                                                                          
|Billings in excess of costs and estimated earnings on uncompleted contracts                                               
|Accrued losses on contracts in progress                                                                                   
|Total current liabilities                                                                                                 
|Long-Term Liabilities:                                                                                                    
|Notes payable, net of current portion                                                                                     
|Capital lease obligations, net of current portion                                                                         
|Total long-term liabilities                                                                                               
|Minority Interest                                                                                                         
|Commitments and Contingencies (Notes 2 and 10)                                                                            
|Shareholders' Equity:                                                                                                     
|Preferred stock, $.20 par value, 1,000,000 shares authorized; no shares issued and outstanding                            
|Common stock, $.001 par value; 15,000,000 shares authorized, 6,506,663 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.

CONSOLIDATED STATEMENTS OF OPERATIONS

|                                                                                |  | For the
Years EndedDecember 31,
|------------------------------------------------------------------------------- |  | -------------------------------
|                                                                                |  | 2001                           
|Revenues:                                                                       |  |                                
|Steel                                                                           |  | $  1,015,950                   
|Armor                                                                           |  | 635,831                        
|Total revenues                                                                  |  | 1,651,781                      
|Cost of Sales:                                                                  |  |                                
|Steel                                                                           |  | 867,246                        
|Armor                                                                           |  | 456,088                        
|Total cost of sales                                                             |  | 1,323,334                      
|Gross Profit                                                                    |  | 328,447                        
|Operating Expenses:                                                             |  |                                
|Selling expenses                                                                |  | 243,539                        
|General and administrative                                                      |  | 1,080,737                      
|Impairment of land and property held for investment and sale purposes           |  | 219,000                        
|Write-off of equity interest and receivable of forfeited interest in subsidiary |  | 173,306                        
|Total operating expenses                                                        |  | 1,716,582                      
|Operating Loss                                                                  |  | (1,388,135)                    
|Other Income (Expense):                                                         |  |                                
|Interest income (expense), net                                                  |  | (128,420)                      
|Minority interest in ForceOne, LLC                                              |  | 207,868                        
|Minority interest in Structural Holdings, Inc.                                  |  | 111,820                        
|Rental income (expense), net                                                    |  | (69,682)                       
|Gain (loss) on sale of assets                                                   |  | -                              
|Miscellaneous expense                                                           |  | (93,206)                       
|Total other income                                                              |  | 28,380                         
|Loss Before Earnings (Loss) From Equity Investment                              |  | (1,359,755)                    
|Equity in net earnings (loss) of investment in Structural Holdings              |  | 320,000                        
|Net Loss                                                                        |  | $ (1,039,755)                  
|Net Loss per Common Share, Basic and Dilutive                                   |  | $          (0.19)              
|Average Common Shares Outstanding, Basic and Dilutive                           |  | 5,366,744                      

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, 2001 AND 2000

|                                                            |  | Common Stock |  | Additional
Paid-In |  | Accumulated Deficit |  | Total        
|----------------------------------------------------------- |  | ------------ |  | ------------------ |  | ------------------- |  | -------------
|                                                            |  | Shares       |  | Amount             |  | Capital             |  |              
|Balances, January 1, 2000                                   |  | 2,762,668    |  | $  2,763           |  | $4,660,908          |  | $(3,102,081) 
|Issuance of common stock:                                   |  |              |  |                    |  |                     |  |              
|Cash                                                        |  | 300,000      |  | 300                |  | 224,700             |  | -            
|Services                                                    |  | 147,222      |  | 147                |  | 155,950             |  | -            
|Options exercised                                           |  | 424,000      |  | 424                |  | 529,576             |  | -            
|Property Acquisition                                        |  | 361,800      |  | 362                |  | 361,438             |  | -            
|Proceeds from short-swing sale                              |  | -            |  | -                  |  | 19,626              |  | -            
|Net Loss                                                    |  | -            |  | -                  |  | -                   |  | (1,819,142)  
|Balances, December 31, 2000                                 |  | 3,995,690    |  | 3,996              |  | 5,952,198           |  | (4,921,223)  
|Issuance of common stock:                                   |  |              |  |                    |  |                     |  |              
|Warrants exercised, net of 
      offering costs of $76,890 |  | 348,680      |  | 348                |  | 196,190             |  | -            
|Services                                                    |  | 962,293      |  | 962                |  | 454,358             |  | -            
|Options exercised                                           |  | 200,000      |  | 200                |  | 95,300              |  | -            
|Property Acquisition                                        |  | 900,000      |  | 900                |  | 758,100             |  | -            
|Debt retirement                                             |  | 100,000      |  | 100                |  | 49,900              |  | -            
|Net loss                                                    |  | -            |  | -                  |  | -                   |  | (1,039,755)  
|Balances, December 31, 2001                                 |  | 6,506,663    |  | $
6,506            |  | $7,506,046          |  | $ (5,960,978)

See accompanying notes to these consolidated financial statements.

GUARDIAN TECHNOLOGIES INTERNATIONAL, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

|                                                                                                                          |  | For the Years Ended
|------------------------------------------------------------------------------------------------------------------------- |  | -------------------
|                                                                                                                          |  | December 31,       
|                                                                                                                          |  | 2001               
|Cash Flows from Operating Activities:                                                                                     |  |                    
|Net loss                                                                                                                  |  | $ (1,039,755)      
|Adjustments to reconcile net loss to net cash used in operating activities:                                               |  |                    
|Depreciation and amortization of certification costs and property and equipment                                           |  | 101,580            
|Amortization of deferred financing costs                                                                                  |  | 122,681            
|Write-off of equity interest and receivable of forfeited interest in subsidiary                                           |  | 173,306            
|Impairment of land and property held for investment and sale purposes                                                     |  | 219,000            
|Minority interest in subsidiary loss                                                                                      |  | (319,688)          
|Common stock and options for services                                                                                     |  | 455,320            
|Equity in (net earnings) loss of investment                                                                               |  | (320,000)          
|Changes in operating assets and liabilities:                                                                              |  |                    
|(Increase) decrease in:                                                                                                   |  |                    
|Accounts receivable                                                                                                       |  | 760,837            
|Other A/R                                                                                                                 |  | 40,242             
|Prepaid expenses and other                                                                                                |  | (11,675)           
|Costs and estimated earnings in excess of billings (billings in excess of costs and 
            estimated earnings), net |  | (224,746)          
|Increase (decrease) in:                                                                                                   |  |                    
|Accounts payable                                                                                                          |  | (298,296)          
|Accrued expenses                                                                                                          |  | (3,596)            
|Net cash used in operating activities                                                                                     |  | (344,790)          
|Cash Flows from Investing Activities:                                                                                     |  |                    
|Certification costs                                                                                                       |  | -                  
|Purchase of property and equipment                                                                                        |  | (3,961)            
|Purchase of land held for investment and sale purposes                                                                    |  | (34,069)           
|Issuance of notes receivable/advances                                                                                     |  | (49,235)           
|Payments on notes receivable                                                                                              |  | 320,000            
|Investment in and advances to Structural Holdings, Inc.                                                                   |  | (425,000)          
|Cash assumed upon consolidation of Structural Holdings, Inc.                                                              |  | 19,895             
|Cash in ForceOne, LLC upon forfeiture of equity interest                                                                  |  | (7,122)            
|Net cash used in investing activities                                                                                     |  | (179,492)          
|Cash Flows from Financing Activities:                                                                                     |  |                    
|Payments on capital leases                                                                                                |  | (8,688)            
|Contribution from minority interests                                                                                      |  | 244,612            
|Proceeds from issuance of notes payable                                                                                   |  | 74,950             
|Payment on notes payable                                                                                                  |  | (71,157)           
|Exercise of warrants                                                                                                      |  | 196,538            
|Exercise of options                                                                                                       |  | 95,500             
|Issuance of common stock                                                                                                  |  | 70,040             
|Net cash provided by financing activities                                                                                 |  | 601,795            
|Increase (Decrease) in Cash and Cash Equivalents                                                                          |  | 77,513             
|Cash and Cash Equivalents, beginning of period                                                                            |  | 16,851             
|Cash and Cash Equivalents, end of period                                                                                  |  | $       94,364     
|Supplemental Schedule of Cash Flow Information:                                                                           |  |                    
|Cash paid for interest                                                                                                    |  | $     260,079      
|Non-Cash Investing and Financing Activities:                                                                              |  |                    
|Accounts payable converted to debt                                                                                        |  | $     110,000      
|Stock issued for retirement of debt                                                                                       |  | $       50,000     
|Stock issued for the purchase of land                                                                                     |  | $     759,000      

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  - Guardian Technologies International, Inc. ("Guardian Corp.") is incorporated in the State of Delaware.  In September of 2000, Guardian Corp. completed a reorganization in which it formed Guardian Steel ("Steel") to manage Guardian Corp.'s steel division and Guardian Safety and Security Products
("GSSP") to manage Guardian Corp.'s armor products.  Both Steel and GSSP are wholly-owned subsidiaries of Guardian Corp.  Following the reorganization, Guardian Corp. formed Guardian Armor, LLC, a Delaware Limited Liability Company, which was later re-named
ForceOne, LLC.  In September of 2000, GSSP transferred the majority of its assets and liabilities associated with the armor division to
ForceOne, LLC in exchange for a 51% membership interest.  During the fourth quarter of 2001, Guardian 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, the Company converted its note receivable to a one-third interest in
ForceOne, LLC.  As such, this investment will be 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, the Company 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, the Company has consolidated Structural effective October 1, 2001.  Structural is a holding company and its only investment at December 31, 2000 is 100% of the common stock of H&M Steel (H&M).  H&M is engaged in the business of structural steel fabrication.

Also in September 2000, Guardian Corp. acquired 100% of Palo Verde Group, Inc. ("Palo Verde"), a Colorado Corporation.  The assets of Palo Verde consist of certain real property in Carefree, Arizona and Thermopolis, Wyoming, held for investment and/or sale.

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 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.

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

Based on the borrowing rates currently available to the Company for loans with similar terms and average maturities, the fair value of long-term debt approximates its carrying value.

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, 2001 and 2000 were as follows (as a percentage of sales):

|Customer |  |  | 2001 |  | 2000
|-------- |  |  | ---- |  | ----
|A        |  |  | 23%  |  | 16% 
|B        |  |  | 16%  |  | 14% 
|C        |  |  | 16%  |  | 11% 

The Company frequently sells large quantities of inventory to its customers.  At December 31, 2001, the Company had gross trade receivables totaling approximately $1,119,355 due from 14 customers.  The Company generally has the ability to place liens on the buildings that the Company provides materials, if a receivable is not paid timely.

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

|Vendor |  |  | 2001 |  | 2000
|------ |  |  | ---- |  | ----
|A      |  |  | 15%  |  | 14% 
|B      |  |  | -    |  | 12% 
|C      |  |  | -    |  | 12% 

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:

|Building                       |  | 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.

Intangible Assets  - The excess of the aggregate purchase price over the fair value of net assets acquired is included in the accompanying balance sheet as goodwill and is being amortized over 15 years using the straight-line method. Goodwill is reported net of accumulated amortization of $627,000 at December 31, 2001.

Convenant not to compete is being amortized over the term of the respective agreement and is carried at cost, less accumulated amortization of $261,000 at December 31,2001.

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, 2001, the Company had warrants and options outstanding to purchase 3,251,320 and 100,000 shares of common stock, respectively.  At December 31, 2000, the Company had warrants and options outstanding to purchase 5,228,712 and 200,000 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 2001 and 2000.  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 2001 and 2000.

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.  Effective January 1, 2002, the Company will cease amortization of goodwill and test goodwill for impairment under these standards.  This is expected to result in a reduction in amortization of approximately $220,000 per year.  The Company has not yet commenced its evaluation of goodwill under the new standard and therefore does not know what effect the new standard will have on its financial statements in the future.

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.  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 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.  At this time, the Company cannot estimate the effect of this statement on its financial position, results of operations, or cash flows.

The Company incurred net losses of $1,039,755 and $1,819,412 for the years ended December 31, 2001 and 2000, respectively, and has a working capital deficit of $1,405,316 as of December 31, 2001.  During 2001, the Company incurred certain unusual expenses, including legal expenses totaling $50,000 related to a failed merger and corporate expenses totaling approximately $455,000 related to services provided in fiscal 2001 that were paid in common stock. The primary corporate expenses the Company expects to incur in fiscal 2002 relates to the officer's salary, legal expenses and accounting expenses.  The Company's main operating subsidiary, Structural, had net income in fiscal 2001 and is expected to generate net income in fiscal 2002.  The Company's remaining investment in ForceOne, LLC will be accounted for under the equity method of accounting beginning in fiscal 2002, and the Company does not expect to provide any additional capital to ForceOne, LLC.  The Company expects to incur insignificant expenses in fiscal 2002 related to its Palo Verde subsidiary.  The Company also expects to sell certain properties in Palo Verde in fiscal 2002 for estimated net proceeds of approximately $960,000, of which $575,000 will be utilized to pay down certain collateralized current debt totaling $385,000, with the remainder to be used as working capital.  Even with these positive developments, the Company will continue to have liquidity issues.  If the Company is unsuccessful in achieving positive results from operations at Structural or does not realize the proceeds expected from the sale of certain properties, the Company may be required to curtail operations, liquidate assets, or enter into capital or financing arrangements on terms which may have an adverse effect on future operations.

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 361,800 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 Carefree, Arizona and a restaurant located in 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.      Trade Receivables:

The following information summarizes accounts receivable at December 31, 2001:

| | Accounts receivable:            |  |            
| | ------------------------------- |  | -----------
| | Completed
contracts             |  | $   222,787
| | Uncompleted contracts           |  | 826,557    
| | Retainage                       |  | 70,011     
| |                                 |  | 1,119,355  
| | Less: allowance for backcharges |  | (491,889)  
| |                                 |  | $   627,466

Some of the Company's contracts contain retainage provisions and require that certain percentages of completion be achieved before amounts under the contracts can be billed.  Retainages are generally collected within one year.

The Company provides ongoing credit evaluations of its customers but collateral is generally not required.  However, the Company typically deals with general contractors who are bonded and the Company generally has the right to file mechanics' liens to secure delinquent accounts.

5.      Contracts in Progress:

The following information is applicable to uncompleted contracts at December 31, 2001:

| | Costs incurred on uncompleted contracts |  | $ 2,968,346 
| | --------------------------------------- |  | ------------
| | Estimated earnings                      |  | 713,612     
| |                                         |  | 3,681,958   
| | Less billings to date                   |  | (3,581,097) 
| |                                         |  | $    100,861

These amounts are included in accompanying balance sheet at December 31, 2001 under the following
captions

| | Costs and estimated earnings in excess of billings on uncompleted
      contracts |  | $   172,102
| | --------------------------------------------------------------------------------- |  | -----------
| | Billings in excess of costs and estimated earnings on uncompleted
      contracts |  | (71,241)   
| |                                                                                   |  | $   100,861

6.       Notes Receivable/Advance:

In conjunction with a failed acquisition of an entity in 1998, the Company loaned $500,000 to this entity. The interest rate is 8%.  A 637-acre parcel of land and a building have been pledged as collateral on the note. At December 31, 2001, the note balance had been reduced to $30,000.  The note was paid in fiscal 2002.

The Company has advanced an officer/director/shareholder $49,235.  Subsequent to December 31, 2001, approximately $20,000 has been repaid.

7.       Property and Equipment:

Property and equipment consists of the following at December 31,
2001:

| | Land                              |  | $   119,111
| | --------------------------------- |  | -----------
| | Buildings and improvements        |  | 703,553    
| | Furniture, fixtures and equipment |  | 721,738    
| |                                   |  | 1,544,402  
| | Accumulated depreciation          |  | (331,925)  
| |                                   |  | $1,212,477 

Depreciation expense for the years ended December 31, 2001 and 2000
was $117,964 and $50,876, respectively.

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

In the acquisition of Palo Verde in 2000, the Company obtained land in Carefree, Arizona valued at $275,000 and a restaurant in Thermopolis, Wyoming recorded at $150,000, net of a related mortgage.  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.

9.       Notes Payable:

Notes payable consists of the following at December 31, 2001:

| | Notes payable, Term A and B, with interest at 10.5%, due June 1, 2003.                                                                                                                    | $1,610,718 
| | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------- | -----------
| | Note payable, Term C, with interest at 10.5%, due November 1, 2002.                                                                                                                       | 330,562    
| | Note payable, with interest at 12%, principal and accrued interest
    due February 8, 2002.  Note collateralized by certain land and
    property held for investment and sale purposes. | 375,000    
| | Note payable with quarterly interest at prime (5% at December 31,
    2001).  Principal and interest due upon demand.  Note payable is
    unsecured.                                     | 100,000    
| | Note payable with interest at 9%.  Principal and accrued interest due
    August 13, 2004.                                                                                                | 98,311     
| | Other                                                                                                                                                                                     | 10,000     
| |                                                                                                                                                                                           | 2,524,591  
| | Less current portion                                                                                                                                                                      | (967,527)  
| | Long-term portion                                                                                                                                                                         | $ 1,557,064

The following is a schedule of future principal payments as of December 31, 2001:

|Year Ending December 31, |  |            
|------------------------ |  | -----------
|2002                     |  | $ 1,206,282
|2003                     |  | 1,239,477  
|2004                     |  | 78,832     
|                         |  | $ 2,524,591

The combined Term A and B notes payable are to be repaid as follows:

| | * | Monthly payment of $14,220, plus accrued interest in January 2002.                                                                                                                                                                                                                                                                                                                                                                                                                          
| | - | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| | * | Interest payments of $5,000 in February and March 2002.                                                                                                                                                                                                                                                                                                                                                                                                                                     
| | * | Beginning April 2002, payments will be made based upon average monthly revenues for the preceding quarter, ranging from $5,000 to $45,000 per month, with all unpaid principal and interest due June 1, 2003.  As a result of payment terms being contingent upon revenue beginning in April of 2002, only fixed payments of $142,680 through April of 2002 have been included in current notes payable.  The remainder of Term A and B notes have been included in long-term notes payable.

Note C is to be repaid in monthly principal and interest payments of $10,000, with all unpaid principal totaling $231,885 and interest due November 1, 2002.

H&M's Term A, Term B and Term C notes payable (the "Loans") with the financial institution are collateralized by all of H&M's assets and Structural Holdings, Inc.'s ownership in the common stock of H&M.  Additionally, Structural Holdings has guaranteed the Loans.

The Loans have various financial and operational covenants, including certain working capital and debt-to-equity ratios, operating cash flow to annual debt service ratios, net worth requirements, a limitation on capital expenditures and a minimum cash flow requirement.  Additionally, the Loan restricts H&M's ability to pay dividends, salaries and fees to the principals/shareholders of Structural Holdings.  H&M was not in compliance with certain covenants as of year-end on the Loans.  H&M obtained a waiver through December 31, 2002, from the financial institution.

In connection with the Loans, the Company incurred financing costs, which have been deferred and are being amortized over the live of the loans.

10.     Lease Commitments:

Equipment Leases- The Company leases certain equipment under capital leases.  As of December 31, 2001, the cost of the equipment leased under the capital lease obligations were $159,200, net of accumulated amortization of $10,273.  The liabilities under capital leases are recorded at the present value of the minimum lease payments and consist of the following:

| |                                                                                                                                                                                                                                                                    | December 31, 2001
| | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ | -----------------
| | Capitalized lease obligation, dated April 27, 2000, 60 monthly 
      installments of $1,619 including interest at a rate of 10.4%,
      with final payment due May 1, 2005.  This lease obligation
      relates to a forklift.                                  | $  54,250        
| | Capitalized lease obligation, dated July 11, 2000, payable in 48
      monthly installments of $846 including interest at a rate of
      14.15%, with final payment due August 1, 2004.  This lease
      obligation relates to a copier.                         | 22,269           
| | Capitalized lease obligation, dated December 20, 2000, 
      payable in 60 monthly installments of $1,019 including
      interest at a rate of 8.9%, with final payment due October
      20, 2005.  This lease obligation relates to a cambering
      machine. | 39,122           
| |                                                                                                                                                                                                                                                                    | 115,641          
| | Less current portion                                                                                                                                                                                                                                               | (32,237)         
| | Long-term portion                                                                                                                                                                                                                                                  | $     83,404     

Future minimum payments due as of December 31, 2001 are as follows:

| | 2002                                           | $   41,807
| | ---------------------------------------------- | ----------
| | 2003                                           | 41,807    
| | 2004                                           | 36,731    
| | 2005                                           | 14,574    
| |                                                | 134,919   
| | Less amount representing interest              | (19,278)  
| | Present value of future minimum lease payments | $ 115,641 

11.     Shareholders' Equity:

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

Preferred Stock  - The Company has the authority to issue 1,000,000 shares of preferred stock.  The Board of Directors has the authority to issue such preferred shares in series and determine the rights and preferences of the shares as may be determined by the Board of Directors.  There were no outstanding shares of preferred stock in
2001 or 2000.

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

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

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

|Warrant |  | Price   |  | Period* 
|------- |  | ------- |  | --------
|Class A |  | $  .750 |  | 30 days 
|Class B |  | .875    |  | 60 days 
|Class C |  | 1.000   |  | 90 days 
|Class D |  | 1.125   |  | 120 days
|Class E |  | 1.250   |  | 150 days
|Class F |  | 1.500   |  | 180 days

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

During 2001, the Company issued 962,000 shares of common stock valued at $455,320 for services and 900,000 shares of common stock valued at $759,000 for property acquired.  In addition, 100,000 shares of common stock valued at $50,000 were issued as partial retirement of debt.

During 2001, 253,340 Class A warrants were exercised for proceeds of $190,005 and 95,340 Class B warrants were exercised for proceeds of $83,423.  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 300,000 shares of the Company's common stock.  Under the terms of the plan, the exercise price of non-qualified options will be the lesser of the book value per share of the common stock as of the end of the Company's fiscal year immediately preceding the date of such grant or 50% of the fair market value per share of the common stock on the date of such grant.  For incentive stock options, the exercise price shall not be less than fair market value per share at the date of such grant.  Options shall expire on the date specified by the Board but not more than 10 years from the date of grant for non-qualified and incentive stock options and options granted to employees expire 90 days after termination.

Following is a summary of activity under the stock option plan for the years ended December 31,
2001 and 2000:

| |                                | 2001            | 2000                          
| | ------------------------------ | --------------- | ------------------------------
| |                                | Numberof Shares | Weighted
Average
ExercisePrice
| | Outstanding, beginning of year | 200,000         | $1.205                        
| | Granted                        | 100,000         | 0.25                          
| | Exercised                      | (100,000)       | 0.25                          
| | Exercised                      | (100,000)       | 0.705                         
| | Expirations                    | -               | -                             
| | Outstanding, end of year       | 100,000         | $   1.00                      
| | Vested Options                 | 100,000         | $   1.00                      

All options granted during 2001 and 2000 were to employees and directors.  The weighted average fair value of options granted during the year ended December 31, 2001 was $.23.  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, 2001 will expire in the year ending December 31, 2006 at a weighted average exercise price of $1.00 per share.  At December 31,
2001, the weighted average remaining contractual life of options outstanding was approximately 60 months.

The fair value of each option granted in 2001 and 2000 was estimated on the date of grant, using the Black-Scholes option-pricing model with the following weighted average assumptions:

| |                           |  | 2001   |  | 2000  
| | ------------------------- |  | ------ |  | ------
| | Expected volatility       |  | 213.9% |  | 108.6%
| | Risk-free interest rate   |  | 4.8%   |  | 6.6%  
| | Expected dividends        |  | -      |  | -     
| | Expected terms (in years) |  | 1.0    |  | 7.0   

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,
| | ------------------------------------------- |  | -----------------------
| |                                             |  | 2001                   
| | Net loss applicable to common shareholders: |  |                        
| | As reported                                 |  | $(1,039,755)           
| | Pro forma                                   |  | $(1,051,755)           
| | Net loss per common shareholders:           |  |                        
| | As reported - basic and diluted             |  | $           (.19)      
| | Pro forma - basic and diluted               |  | $           (.20)      

12.     Income Taxes:

There was no provision for income taxes for the years ended December 31,
2001 or 2000 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:

| |                                            | 2001            | 2000            
| | ------------------------------------------ | --------------- | ----------------
| | Current Deferred Tax Assets (Liabilities)  |                 |                 
| | Vacation liability                         | $     2,642     | $             - 
| | Inventory allowance                        | -               | 16,392          
| | Accrued closing costs                      | -               | 18,650          
| | Allowance for doubtful accounts            | 184,458         | -               
| |                                            | 187,100         | 35,042          
| | Valuation allowance                        | (187,100)       | (35,042)        
| | Net current deferred tax asset (liability) | $            -  | $             - 
| | Non-compete agreement                      | $  71,686       | $        -      
| | Property and equipment                     | (162,981)       | -               
| | Equity investment                          | 214,543         | 292,194         
| | Write down of property/receivables         | 105,746         | -               
| | Net operating loss carry forward           | 1,903,660       | 1,475,500       
| |                                            | 2,132,654       | 1,767,694       
| | Valuation allowance                        | (2,132,654)     | (1,767,694)     
| | Net long-term deferred tax asset           | -               | -               
| | Total net deferred tax assets              | $             - | $              -

Total income tax expense for 2001 and 2000 differed from the amounts computed by applying the U.S. Federal statutory tax rates to pre-tax income as follows:

| |                                                                                                                                             |  | 2001  |  | 2000 
| | ------------------------------------------------------------------------------------------------------------------------------------------- |  | ----- |  | -----
| | Statutory rate                                                                                                                              |  | (34%) |  | (34%)
| | State income taxes, net of Federal income tax benefit                                                                                       |  | (5%)  |  | (5%) 
| | Increase (reduction) in valuation allowance related to
        net operating loss carryforwards and change in
        temporary differences |  | 39%   |  | 39%  
| |                                                                                                                                             |  | -     |  | -    

In 2001 and 2000, the valuation allowance increased $517,019 and $648,299, respectively.  At December 31, 2001, the Company has net operating loss carryforwards of approximately $5,101,000 available under provisions of the Internal Revenue Code to be applied against future taxable income of which $504,000 was attributable to Structural Holdings and $4,597,000 attributable to Guardian Technologies International, Inc.  These carryforwards are subject to annual limitations on utilization and expire from December 31, 2010 through December 31, 2021.

13.     Fourth Quarter Adjustment:

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.

Contingencies  - The Company's consolidated subsidiary, H&M Steel, is currently 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 counter-sued both the general contractor and the subcontractors for breach of contract.

Subsequent to year end, H&M entered into settlement negotiations with one of the subcontractors and believes all three lawsuits will be resolved through arbitration within the next year.  The Company believes that their current loss reserves are adequate to cover any claims or settlements regarding all three suits against H&M Steel.

Subsequent to year end, the Company has executed a lease settlement with two subleases for $104,050. The settlement releases the Company from all of its obligations under the leases and has been recorded in accrued expenses at December 31, 2001.

15.     Business Segments:

The Company has three reportable segments and accounted for corporate general and administrative expenses separately from operational general and administrative expenses.

The three reportable segments 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, manufactures 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 undeveloped real estate in Arizona and Colorado and a commercial building and real estate in Wyoming.  These properties are held for investment and with the intent to resell them in the future.

Although all three 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.

| | Description                                                          | Year | RealEstate   | Body Armor | SteelFabrication | Corporate   | Total      
| | -------------------------------------------------------------------- | ---- | ------------ | ---------- | ---------------- | ----------- | -----------
| | Net sales                                                            | 2001 | $          - | $ 635,832  | $ 1,015,949      | $         - | $ 1,651,781
| |                                                                      | 2000 | -            | 606,453    | -                | -           | 606,453    
| | Loss from operations                                                 | 2001 | (18,464)     | (286,597)  | (148,192)        | (934,882)   | (1,388,135)
| |                                                                      | 2000 | (9,222)      | (517,442)  | (92)             | (574,140)   | (1,100,896)
| | Interest income                                                      | 2001 | -            | 6,012      | 27,090           | 19,540      | 52,642     
| |                                                                      | 2000 | 7,500        | 14,941     | 5,000            | 24,584      | 52,025     
| | Interest expense                                                     | 2001 | (16,794)     | (4,183)    | (154,072)        | (6,015)     | (181,064)  
| |                                                                      | 2000 | (2,459)      | 3,968      | -                | (13,428)    | (11,919)   
| | Depreciation and 
  amortization                                     | 2001 | -            | -          | 117,964          | -           | 117,964    
| |                                                                      | 2000 | -            | 66,516     | -                | -           | 66,516     
| | Equity in net income 
  (loss) accounted for 
  by the equity method | 2001 | -            | 208,180    | 111,820          | -           | 320,000    
| |                                                                      | 2000 | -            | -          | (786,669)        | -           | (786,669)  
| | Total Assets                                                         | 2001 | 1,022,621    | -          | 4,981,332        | 363,530     | 6,367,483  
| |                                                                      | 2000 | 446,692      | 390,228    | -                | 942,258     | 1,779,178  
| | Investment in equity 
  method investors                             | 2001 | -            | -          | -                | -           | -          
| |                                                                      | 2000 |              | -          | 420,537          | -           | 420,537    
| | Noncash Items:                                                       |      |              |            |                  |             |            
| | Stock issued for the 
  purchase of land                             | 2001 |              |            |                  | 759,000     | 759,000    
| |                                                                      | 2000 |              |            |                  | 361,800     | 361,800    

|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  | 40  | President and CEO     
| | Kevin L. Houtz*   | 39  | Director and Secretary
| | David W. Stevens* | 65  | 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 either five or seven directors.  There are presently six directors.  The certificate provides that the board will be divided into three (3) classes of directors, which classes serve for varying terms.  The certificate also grants to the sitting directors the authority to fill any vacancies on the Board and/or to appoint members to the Board to fill any vacancies resulting from an increase in the authorized number of directors.  Beginning in 1998 all directors were elected for one-year terms.  At the next annual meeting, the Board intends to nominate candidates to fill staggered terms as provided in the articles.  This classification of the board of directors may have the effect of delaying or preventing changes in control or of our management.

Board Committees

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

Audit Committee

The audit committee is currently composed of the following directors:

Kevin L. Houtz
David W. Stevens

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

The audit committee met on one occasion during fiscal 2001. 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 2001. The compensation advisory
committee:

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

Board Compensation Advisory Committee Report on Executive Compensation

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

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

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

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

The Compensation Advisory Committee

J. Andrew Moorer
Kevin L. Houtz

Board Compensation

We do not currently provide our directors with cash compensation for their services as members of the board of directors.  However, each member of the board of directors is reimbursed his actual expenses in attending meetings.  No compensation was awarded in 2001.

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

Section 16 (a) of the Securities Exchange Act of 1934, as amended, requires the Company's executive officers, directors and persons who own more than ten percent of the Common Stock (collectively, "Reporting Persons") to file initial reports of ownership and changes of ownership of the Common Stock with the SEC and the NASDAQ Stock Market. Reporting Persons are required to furnish the Company with copies of all forms that they file under Section 16(a).  Based upon information provided to the Company from Reporting Persons, during the two years ended December 31, 2000, Mr. Moorer failed to file four reports covering five transactions in a timely fashion, Mr. 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 Chief
  Executive
  Officer
|                                                               
|2000                                                           
|                                                               

|(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 2001 and Fiscal Year 2001 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, 2001.  All of the listed options were exercisable at December 31,
2001.

|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
P.O. Box 3618
Carefree, AZ  85377              | 340,779 (3)                                   | 5.2%               
|                                                                |                                               |                    
|Kevin L. Houtz
3000 Chestnut Ave.
Ste. 343D
Baltimore, MD 21211 | 412,500(4)                                    | 6.2%               
|                                                                |                                               |                    
|David W. Stevens
312 Greenwood Point Rd.
Grasonville, MD 21638  | 46,000(5)                                     | 0.7%               
|                                                                |                                               |                    
|All Officers and Directors as
a Group (3 Persons)(6)            | 779,279                                       | 11.8%              

|(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 6,506,663 shares outstanding.                           
|(3) | Includes 100,000 shares under option.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|(4) | Includes 120,000 shares purchasable upon exercise of warrants.                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(5) | Includes 24,000 shares purchasable upon exercise of warrants.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|(6) | Includes Messrs. Moorer, Houtz and Stevens.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  

Item 12. Certain Relationships and Related Transactions

In February 1999, Mr. North granted Mr. Moorer an option to acquire from Mr. North 100,000 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.

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.

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.

At December 31, 2001, Mr. Moorer had outstanding advances from the Company of approximately
$49,000, of which $20,000 has been repaid in 2002.

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, 2001.

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: May 20, 2002 | By:/s/ J. Andrew Moorer   J. Andrew Moorer, Director, President
   and Chief Executive Officer

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

|By:/s/ J. Andrew Moorer   J. Andrew Moorer
   Director, President and
   Chief Executive Officer | Date:  May 20, 2002
|------------------------------------------------------------------------------------------------ | -------------------
|By:/s/ Kevin L. Houtz   Kevin L. Houtz
   Director                                               | Date:  May 20, 2002
|By:/s/ David W. Stevens   David W. Stevens
   Director                                           | Date:  May 20, 2002