Form 10-Q/A
                       SECURITIES AND EXCHANGE COMMISSION
                             Washington, D.C. 20549

               [X] AMENDMENT TO THE QUARTERLY REPORT PURSUANT TO
                      SECTION 13 OR 15(d) OF THE SECURITIES
                              EXCHANGE ACT OF 1934

                For the quarterly period ended September 30, 1996

                                       OR

             [ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d)
                     OF THE SECURITIES EXCHANGE ACT OF 1934

               For the transition period from _______ to ________

                         Commission File Number 0-28490

                          GUARDIAN INTERNATIONAL, INC.
                 (Formerly Everest Security Systems Corporation,
                      formerly Everest Funding Corporation,
                     formerly Burningham Enterprises, Inc.)
             (Exact name of Registrant as specified in its charter)

         State of Nevada                                    58-2201633
(State or other jurisdiction of                           (I.R.S. Employer
 incorporation or organization)                            Identification No.)

                          Guardian International, Inc.
                               3880 N. 28 Terrace
                            Hollywood, Florida          33020
               (Address of principal executive offices) (Zip Code)

Registrant's telephone number, including area code: (954)926-1800
                                             ------------------------
Indicate by check mark whether the Registrant (1) has filed all reports required
to be filed by  Section  13 or 15(d) of the  Securities  Act of 1934  during the
preceding 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
The number of shares  outstanding of the  Registrant's  Common Stock,  par value
$.001 per share, at October 16, 1996, was 6,453,804 shares.

                                        1

<PAGE>



                                     PART I

Item 1.           Financial Statements


                          GUARDIAN INTERNATIONAL, INC.

                  FINANCIAL STATEMENTS AS OF SEPTEMBER 30, 1996


                                   [unaudited]


                   GUARDIAN INTERNATIONAL, INC. AND SUBSIDIARY
                           CONSOLIDATED BALANCE SHEETS
                    SEPTEMBER 30, 1996 AND DECEMBER 31, 1995


ASSETS

                                              September 30,      December 31,
                                                      1996             1995
                                                   (Unaudited)
CURRENT ASSETS:
   Cash                                            $  1,175,129    $    14,263
   Accounts receivable, less allowance
    for doubtful accounts of  $68,147                   553,052        146,285
      and $15,000 
 Other current assets                                   146,274          7,943
                                                 --------------      -----------
        Total current assets                          1,874,455        168,491
                                                  -------------     ------------

PROPERTY & EQUIPMENT:
     Station equipment                                  521,401        287,055
     Furniture and office equipment                      44,636         31,859
     Leasehold improvements                             112,429        103,217
                                                 --------------     -----------
                                                        678,466        422,131

    Accumulated depreciation and amortization          (278,977)      (212,184)
                                                 --------------     ------------

                                                        399,489        209,947
                                                 --------------    -------------

CUSTOMER ACCOUNTS, net                                4,835,415      2,075,671
INTANGIBLE ASSETS, net                                1,330,338         41,165
OTHER                                                    18,043        138,492
                                                  -------------      -----------

           Total Assets                             $ 8,457,740    $ 2,633,766
                                                    ===========


                      LIABILITIES AND SHAREHOLDERS' EQUITY


CURRENT LIABILITIES:
    Accounts payable and accrued expense       $    420,093     $    185,067
    Unearned revenue                                123,705           60,880
    Current portion of debt                          45,241           44,947
                                             --------------   --------------
          Total current liabilities                 589,039          290,894
                                              -------------    -------------


                                                         2

<PAGE>





DEFERRED INCOME TAX LIABILITY                        63,000                -

LONG TERM DEBT:
    Equipment installment notes payable             144,044           61,970
    Notes and loans payable to shareholders               -          198,887
    Note payable to financial institution         4,598,669        1,895,299
                                                -----------      -----------
          Total long term debt                    4,742,713        2,156,156
                                                -----------

SHAREHOLDERS' EQUITY:
     Common stock, 100,000,000 shares 
         authorized, $.001 par value,                 6,454             3,227
          6,453,804 shares issued and 
          6,443,726 outstanding
      Additional paid-in capital                  4,355,494         1,060,903

     Accumulated deficit                         (1,097,400)      (  877,414)

     Stock subscriptions receivable                (201,358)               -
     Treasury stock, at  cost                          (202)               -
                                               ------------     --------------

                                                  3,062,988          186,716
                                               ------------    -------------
Total Liabilities and Shareholders' Equity      $ 8,457,740      $ 2,633,766
                                              ==============     ===========

See notes to consolidated financial statements.

                                                         3

<PAGE>

<TABLE>
<CAPTION>


                   GUARDIAN INTERNATIONAL, INC. AND SUBSIDIARY
                CONSOLIDATED STATEMENTS OF OPERATIONS (UNAUDITED)
                FOR THE PERIODS ENDED SEPTEMBER 30, 1996 AND 1995

<S>   <C>                                   <C>            <C>             <C>                 <C>  

                                             Three Months Ended          Nine Months Ended

                                               September 30,                 September 30,

                                            1996            1995             1996           1995
                                            ----            ----             ----           ----

REVENUES:
  
    Monitoring                               $  679,304    $269,980       $1,894,290      $  659,307
    Installation                                203,391       7,858          382,246         121,589
    Other                                        42,208         687           68,083           6,809
                                             ----------                 ------------    ------------
                                                924,903     278,525        2,344,619         787,705
                                              ---------    --------       ----------     -----------

OPERATING EXPENSES:
    Monitoring - primarily salaries              92,441      50,214          270,552         154,058
    Installation                                125,362      14,604          182,185         127,667
    General and administrative                  449,963     158,808        1,093,319         459,921
                                              ---------                                  -----------
                                                667,766     223,626        1,546,056         741,646
                                               --------    --------        ---------     -----------

    Operating income before interest,
     amortization and depreciation and          257,137      54,899          798,563          46,059
     provision for income taxes

INTEREST EXPENSE, AMORTIZATION
  AND DEPRECIATION:
     Interest expense                           151,631      36,811          400,051          83,147
     Amortization of customer contracts         184,889      36,555          438,998          84,978
     Depreciation and amortization               35,477      23,693          116,500          71,079
                                              ---------                                 ------------
                                                371,997      97,059          955,549         239,204
                                               --------   ---------         --------     -----------


    Loss before provision for income taxes     (114,860)   (42,160)        (156,986)       (193,145)


PROVISION FOR  INCOME TAXES
   upon change in tax status                   (63.000)           -         (63,000)               -
                                            -----------                 ------------


         Net loss                             $(177,860)   $(42,160)        $(219,986)    $ (193,145)
                                              =========    ========         =========     ==========



   Loss per share                          $      (.03)   $   (.01)     $      (.03)           (.03)
                                           ===========    ========      ===========     ===========

  Weighted average number of common
     shares outstanding                       6,453,804   6,453,804        6,453,804       6,453,804
                                              =========   =========        =========       =========

</TABLE>

See notes to consolidated financial statements.

                                                         4

<PAGE>



                   GUARDIAN INTERNATIONAL, INC. AND SUBSIDIARY
      CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996

                       Common Stock                   Additional    Accumulated
                       Shares       Amount        Paid in Capital     Deficit

Balance,
December 31, 1995      3,226,902    3,227         1,060,903        $  (877,414)

Issuance of stock
in connection with
Everest acquisition    3,226,902    3,227         4,962,429                 -

Distribution to
Shareholder            -            -             (1,667,838)               -

Net loss for period    -            -                -                (219,986)


Balance, September     _________    _________     ___________      ____________
30, 1996               6,453,804    $6,454        $4,355,494       $(1,097,400)
                       ---------    ------        ----------       ------------


--------------------------------------------------------------------------------

--------------------------------------------------------------------------------



                   GUARDIAN INTERNATIONAL, INC. AND SUBSIDIARY
      CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY (UNAUDITED)
                  FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996,
                                    CONTINUED


                           Stock            Treasury
                           Subscription     Stock                   Total
                           Receivable
Balance,
December 31, 1995          $ -              $-                      $186,716

Issuance of stock
in connection with 
Everest acquisition        (201,358)          (202)                4,663,491

Distribution to
Shareholder                -                -                     (1,667,838)

Net loss for period        -                -                       (219,986)

Balance, September         _________        _________            ___________
30, 1996                   (201,358)         $(202)              $ 3,062,988

See Notes to consolidated financial statements.

                                                         5

<PAGE>



                   GUARDIAN INTERNATIONAL, INC. AND SUBSIDIARY
                CONSOLIDATED STATEMENTS OF CASH FLOWS (UNAUDITED)
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1996 AND 1995

CASH FLOW FROM OPERATING ACTIVITIES:             1996                    1995
Net loss                                          $(219,986)         $(193,145)
Adjustments to reconcile net loss to 
  net cash used in operating activities:
     Depreciation and amortization                  116,500             71,079
     Amortization of customer accounts              438,998             84,978
     Provision for doubtful accounts                 24,047              9,140
Changes in assets and liabilities:
      Accounts receivable                          (233,778)           (28,341)
      Other Assets                                  (16,637)            17,034
      Accounts payable and accrued liabilities       (6,319)           (36,630)
      Acquisition contracts payable                 (33,765)           (53,058)
      Unearned revenue                               62,825            107,414
      Deferred income tax liability                  63,000               ---
                                                     ------               ---
     Net cash provided by                           194,885            (21,529)
      (used in) operating activities                --------           --------

CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets                           (179,402)           (25,226)
Acquisition of customer accounts                 (2,846,742)          (896,109)
Advances from Everest                            3, 115,619             ----
Cash acquired in acquisition                         37,711             ----
                                                 -------------          ----
     Net cash provided by                           127,186           (921,335)
       (used in) investing activities             ----------          ---------

CASH FLOWS FROM FINANCING ACTIVITIES:
Net payments of long-term debt                   (1,274,129)          (936,124)
Net proceeds from line of credit                  3,979,649          1,958,652
Payment of shareholder loans                       (198,887)             ----
Distribution to shareholder                      (1,667,838)             ----
                                                 -----------             ----
    Net cash provided by                            838,795          1,022,528
     financing activities                        -----------          ---------
        
      Increase in cash                            1,160,866             79,664

CASH, BEGINNING OF PERIOD                            14,263             14,011
                                                 -----------        -----------
CASH, END OF PERIOD                              $1,175,129             93,675

NONCASH INVESTING AND FINANCING ACTIVITY:
Financed acquisition of property                  $  58,250             14,362
                                                 ----------         -----------
Fair value of Everest net assets acquired:
    Subscriber accounts acquired                 $  352,000              ----
    Goodwill                                   $  1,223,000              ----
    Other assets acquired                        $  332,743
    Purchase price of assumed liabilities       $(1,870,032)             ----

SUPPLEMENTAL DISCLOSURES:
Interest paid                                   $   345,957            356,776
                                                 -----------         ----------

See Notes to consolidated financial statements.


                                                         6

<PAGE>



                   GUARDIAN INTERNATIONAL, INC. AND SUBSIDIARY
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                               SEPTEMBER 30, 1996





1.    BUSINESS COMBINATION  AND SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

         Basis  of Presentation

                  In the  opinion  of  management,  the  accompanying  unaudited
     consolidated  financial  statements include all adjustments  (consisting of
     normal recurring  accruals or adjustments only) necessary to present fairly
     the financial position at September 30, 1996, and the results of operations
     and the cash flows for the periods presented. The results of operations for
     the interim  periods are not  necessarily  indicative  of the results to be
     obtained for the entire year.

         Business Combination

         On August 28, 1996, Everest Security Systems Corporation ("Everest", or
     "the predecessor  company") acquired all of the outstanding common stock of
     Guardian International, Inc. ("Guardian"), a non-public company, by issuing
     3,226,902  shares  of  Everest.  In  addition,  $1,750,000  was paid to the
     principal  shareholder of Guardian as  consideration  for  consummating the
     transaction   (including  repayments  of  shareholder  loans  of  $82,162).
     Guardian was merged into Everest,  and the name of the surviving entity was
     changed from Everest to Guardian (" the Company"). The transaction has been
     accounted  for under the  purchase  method  as a reverse  acquisition  with
     Guardian being deemed the acquirer.

         In  connection  with the  acquisition,  the Company will issue  484,035
     shares of  non-voting  class B common stock to a financial  institution  as
     consideration  for  their  consent  to  the  merger  and to  amend  certain
     covenants of the loan agreement. These shares will be valued at $217,358.

         The historical financial statements are those of Guardian.  The results
     of operations  reflect the operations of Guardian prior to the merger,  and
     thereafter  Guardian's  consolidated  results of operations  with Specialty
     Device Installers,  Inc. ("SDI"), a wholly-owned  subsidiary  acquired from
     the  predecessor  company.  The  balance  sheet  at  December  31,  1995 is
     Guardian's;  the consolidated  balance sheet at September 30, 1996 includes
     the accounts of the surviving entity and its wholly-owned  subsidiary.  All
     significant intercompany balances and transactions have been eliminated.

                                                         7

<PAGE>




         Unaudited  proforma  information giving effect to the acquisition as if
     it had  occurred  at the  beginning  of the periods  reflected  below is as
     follows:


                                   Three months ended        Nine months ended
                                       September 30,           September 30,

                                  1996         1995       1996       1995
                                  ----         ----     ------       ----

Revenues, net              $1,143,000   $  584,000   $3,212,000     $1,703,000
Net loss before income
   tax provision           $ (206,000)  $ (143,000)  $ (518,000)    $ (497,000)
Income tax credit, net     $    7,000   $   27,000   $  113,000     $  149,000
Net loss                   $ (199,000)  $ (116,000)  $ (405,000)    $ (348,000)
Net loss per share         $     (.03)        (.02)  $     (.06)    $     (.05)
Weighted average number
   of shares outstanding    6,453,804    6,453,804    6,453,804      6,453,804

         Description of Business

         The Company  operates a central  monitoring alarm station and sells and
     installs alarm systems for residential and commercial  customers in Florida
     .

         Cash and Cash Equivalents

         All highly liquid  investments  purchased with a remaining  maturity of
     three months or less at the date acquired are considered cash equivalents.

         Customer Accounts and Intangible Assets

         Customer  accounts  purchased from alarm dealers and intangible  assets
     are reflected at cost.  Substantially  all costs associated with purchasing
     an alarm account are capitalized and included in the "customer accounts" in
     the accompanying balance sheet. Costs related to marketing and installation
     of systems for  internally  generated  customer  accounts  are  expensed as
     incurred.  Customer accounts are amortized on a straight-line  basis over a
     10 year period.  It is the Company's policy to perform monthly  evaluations
     of  acquired  customer  account  attrition  and, if  necessary,  adjust the
     remaining  useful lives.  The Company  periodically  estimates  future cash
     flows from customer accounts. Because expected cash flows have exceeded the
     unamortized  cost of customer  accounts  the  Company  has not  recorded an
     impairment loss.

         Intangible  assets  are  recorded  at cost  and  amortized  over  their
     estimated  useful  lives.  The  carrying  value  of  intangible  assets  is
     periodically   reviewed  and   impairments  are  recognized  when  expected
     operating  cash  flows  derived  from such  intangibles  is less than their
     carrying value.


                                                         8

<PAGE>




         Property and Equipment

         Property and  equipment  are stated at cost and are  depreciated  using
     accelerated methods over their estimated useful lives.

         Revenues

         Revenues are recognized when installation of security alarm systems has
     been  performed and when  monitoring  services are provided.  Customers are
     billed for monitoring  services on a monthly,  quarterly or annual basis in
     advance  of the  period  in which  such  services  are  provided.  Deferred
     revenues  result from  billings in advance of  performance  of  monitoring.
     Costs of  providing  installations,  including  inventory,  are  charged to
     income in the period when the installation occurs.  Losses on contracts for
     which future costs are anticipated to exceed revenues are recognized in the
     period such losses are  identified.  Contracts for monitoring  services are
     generally for an initial  non-cancelable  term of five years with automatic
     renewal on an annual basis thereafter  unless terminated by either party. A
     substantial number of contracts are on an automatic renewal basis.

         Income taxes

         Everest,  the predecessor company, is a C Corporation subject to income
     taxes at the  corporate  level.  Prior  to the  merger,  Guardian  was an S
     Corporation and subject to tax at the shareholder level. As a result of the
     merger on August 28, 1996,  Guardian's S Corporation  status was terminated
     and any future  earnings  will be subject to income taxes at the  corporate
     level.

         As result of the change in tax  status,  the  Company  has  established
     deferred  tax assets and  liabilities  for  temporary  differences  between
     financial  statement and tax bases of assets and liabilities  using enacted
     tax rates in effect in the years in which the  differences  are expected to
     reverse.

         Concentration of Credit Risk

         Financial   instruments  which  potentially   subject  the  Company  to
     concentrations of credit risk consist principally of trade receivables from
     large number of customers,  including both residential and commercial.  The
     Company  extends  credit to its customers in the normal course of business,
     performs periodic credit evaluations and maintains allowances for potential
     credit losses.

         Use of Estimates

         The preparation of financial statements in conformity with generally 
          accepted accounting

                                                         9

<PAGE>



     principles  requires  management  to make  estimates and  assumptions  that
     affect the reported  amounts of assets and  liabilities  and  disclosure of
     contingent  assets and liabilities at the date of the financial  statements
     and the  reported  amounts of revenues and  expenses  during the  reporting
     period. Actual results could differ from those estimates.

2.   PURCHASED CUSTOMER ACCOUNTS

     The following is an analysis of the changes in acquired  customer  accounts
for the nine months ended September 30, 1996:

         Balance, December 31, 1995                           $2,075,671
           Purchase of customer accounts                       2,846,742
           Customer accounts acquired in merger                  352,000
                                                              ----------
                                                               5,274,413
           Amortization and write-off of customer
              accounts                                          (438,998)
                                                             -----------
         Balance, September 30, 1996                          $4,835,415
                                                              ==========

     In conjunction  with certain  purchases of customer  accounts,  the Company
withholds a portion of the price as a credit to offset  qualifying  attrition of
the acquired  customer  accounts and for purchase  price  settlements  of assets
acquired and liabilities assumed. At September 30, 1996, the amounts withheld in
connection with the acquisition of customer accounts aggregated $68,719, and are
included in accounts payable in the accompanying consolidated balance sheet.


3.   INTANGIBLE ASSETS

     Intangible assets consist of the following at September 30, 1996:


                                                   Estimated
                                                     Lives               Amount
Excess of acquisition cost over
   the net assets acquired                          10 years        $ 1,223,000

Covenant not to compete, organization costs
    and other                                       Various             193,455
                                                                      1,416,455

     Less accumulated amortization                                     ( 86,117)
                                                                     -----------
                                                                     $1,330,338




                                                        10

<PAGE>



4.    NOTES  PAYABLE TO FINANCIAL INSTITUTION

     The  Company has a $7 million  line of credit with a financial  institution
for  the  purpose  of  borrowing  funds  to  acquire  customer  alarm  accounts.
Borrowings under the agreement  ($4,598,669 at September 30, 1996) bear interest
at 3% above  prime.  The loan is  collateralized  by the  Company's  assets  and
matures on November 30, 1999.  The  principal  shareholders  of the Company have
personally   guaranteed  $700,000  of  the  loan  and  pledged  their  stock  as
collateral. The agreement contains certain conditions including, but not limited
to, restrictions related to indebtedness, net worth and distribution payments to
shareholders other than $1,750,000 which was paid to a shareholder in connection
with the acquisition as described in Note 1.

5.   RELATED PARTY TRANSACTIONS

     Leased Facilities

     The Company leases its  monitoring  facilities  from an affiliate  which is
owned by the  principal  shareholders  of the  Company  at an  annual  rental of
approximately  $51,000 (plus annual increases not to exceed 3%) through December
31, 1999 with an option to renew for an additional 5 years under the same terms.

6.   INCOME TAXES

     The conversion of Guardian from an S Corporation to C Corporation  resulted
in recognition  of a net deferred tax liability.  The components of deferred tax
assets and liabilities at September 30, 1996 are as follows:

           Deferred Tax Assets -
                Net operating loss carry forwards                      $ 48,500
                Allowance for doubtful accounts                          22,500
                      Total deferred tax assets                          71,000
           Deferred Tax Liabilities -
                Difference in amortization of customer
                  contracts                                             120,200
                Other                                                    13,800
                      Total deferred tax liabilities                    134,000
                       Net deferred tax liability                      $ 63,000

     At September 30, 1996,  the Company has net operating  loss carry  forwards
for federal income tax purposes of approximately  $143,000 which expire in 2010.
These net operating loss carry  forwards will be subject to  significant  annual
limitations on utilization in future years as a result of the merger and related
change in ownership control of the company.


                                                        11

<PAGE>




7.   PRO FORMA DATA

   Pro Forma Income Tax Provision (Credit)  -
         Pro forma net losses do not include a pro forma income tax provision or
benefit for periods prior to the acquisition,  as the Company has had net losses
since its inception.  The income tax provision in the pro forma data  represents
the estimated  deferred  income tax liability had the Company  terminated  its S
Corporation status at the end of the period presented.

   Pro Forma Net Loss Per Share -
         Pro forma net loss per share is computed by dividing  the pro forma net
loss by the pro forma  number of shares of common stock  outstanding  during the
periods.

   Pro Forma Shares Outstanding -
         Pro forma shares  outstanding  represent the number of shares of common
stock outstanding after giving retroactive effect to the 3,226,902 shares issued
in connection  with the merger.  Accordingly  the  calculation  of the pro forma
weighted average number of shares of common stock outstanding would be 6,453,804
shares for the nine months ended September 30, 1996 and 1995, respectively.

8.   STOCKHOLDERS' EQUITY

     (a) Common Stock

     The Company has  authorized  the  issuance of up to  100,000,000  shares of
common  stock  with a par value of $.001.  At  September  30,  1996,  there were
6,453,804 shares of common stock issued and outstanding. Treasury stock is shown
at cost, and as of September 30, 1996, consisted of 10,078 shares.

     (b)  Stock Subscription Notes Receivable

      In December  1995, the Company issued 285,000 shares of common stock at $2
per share ($570,000 in the aggregate).  The proceeds from the sale of the common
stock were evidenced by an 8% stock  subscription note receivable due in January
1996 and  collateralized  by the common stock.  As of September 30, 1996,  there
remains an outstanding balance of $201,358 ($179,760 of principal and $21,598 of
interest) under the notes receivable.  The $201,358 has been reflected as "stock
subscriptions  receivable"  and a  reduction  of  stockholder's  equity  in  the
accompanying  consolidated  balance  sheet.  Management  is in  the  process  of
attempting  to collect the  outstanding  amounts or have the  applicable  common
shares returned.

                                                        12

<PAGE>




9.   STOCK OPTION PLAN

     The Company has issued stock  options to various key  employees to purchase
100,000 and 10,000 shares of common stock at $2 and $3 per share,  respectively.
The Company also issued options to purchase  74,720 shares at $2 per share to an
investment  banker. All options expire on December 31, 2000. As of September 30,
1996, none of these options had been exercised.

     In October,  1995, the Financial Accounting Standards Board issued SFAS No.
123.  "Accounting for Stock Based  Compensation",  which  establishes  financial
accounting and reporting standards for stock-based  employee  compensation plans
and for the issuance of equity  instruments  to acquire  goods and services from
nonemployees.  The  Company  plans to  adopt  SFAS  No.  123 for its  stockbased
employee compensation plans in fiscal 1997 through pro forma disclosure only.

Item 2.           Management's Discussion and Analysis of Financial
                  Condition and Results of Operations.

Forward Looking Information

                  The  Private  Securities  Litigation  Reform  Act of 1995 (the
"Reform  Act")  provides  a "safe  harbor"  for  forward-looking  statements  to
encourage companies to provide prospective information about their companies, so
long as those statements are identified as  forward-looking  and are accompanied
by meaningful  cautionary  statements  identifying  important factors that would
cause actual results to differ materially from those discussed in the statement.
The Company  desires to take  advantage of the "safe  harbor"  provisions of the
Reform Act. Except for the historical  information contained herein, the matters
discussed in this Form 10QSB  quarterly  report are  forward-looking  statements
which involve risks and  uncertainties.  Although the Company  believes that the
expectations  reflected  in  such  forward-looking  statements  are  based  upon
reasonable  assumptions,  it can give no assurance that its expectations will be
achieved. Important factors that could cause actual results to differ materially
from the Company's  expectations  are disclosed in conjunction  with the forward
looking statements or elsewhere herein.

Overview

                  The  services  offered  by the  Guardian  Companies  (Guardian
Monitoring,  Gibraltar  Security,  and Specialty Device Installers)  include the
design, sales/lease,  installation and maintenance of security and fire systems,
and the ongoing  monitoring  and service of these  systems.  Over  seventy  five
percent  (75%) of all the  systems the company  services  generate  some sort of
Monthly Recurring Revenue ("MRR").

                  A  majority  of  the  Company's   revenues  are  derived  from
recurring  payments for the monitoring and maintenance of security systems.  The
Company also generates revenue from billable

                                                        13

<PAGE>



service charges and revenues from the sale and installation of security systems,
add on and upgrades.  The installation work is done mostly through the Company's
wholly owned subsidiary  Specialty Device Installers,  Inc. ("SDI").  Revenue is
provided from  monitoring  contracts with initial terms ranging from one to five
years.  Payment for monitoring  services is typically  required in advance,  and
monitoring revenue is recognized as the service is provided.  Installation,  add
on and upgrade  revenue is recognized  when the required work is completed.  All
direct  installation  costs,  which include  materials,  labor and  installation
overhead, and selling and marketing costs are expensed in the period incurred.

                  The  heart of  Guardian's  operation  is its  state of the art
Central Monitoring Station.  The monitoring facility is one of the most advanced
and well equipped  facilities of its kind in the United States.  The Company has
recently  upgraded the system  software  which has made the facility even faster
and more efficient.  The Guardian  monitoring  station currently monitors 24,500
subscribers,  and with a minimal capital  expenditure can be expanded to monitor
up to 200,000 subscribers.  This well designed and efficient monitoring facility
is the  foundation  for future growth of MRR. With the efficiency of the Central
Monitoring Station,  alarm monitoring  services generate a significantly  higher
gross margin than do the other services provided by the Company. While sales and
installation  services  contribute to the  Company's  gross  profits,  the total
expenses  associated  with alarm system  installations  (including  not only the
direct costs of providing  such services but also the expenses  associated  with
sales and marketing of alarm systems) also exceed the revenues generated by such
services.  The  Company's  strategy,  however,  is to invest in system sales and
installation  because the  Company  believes  that such  services  and  products
contribute to the generation and retention of alarm monitoring subscribers.


Plan of Operation

                  The  Company's  strategy  for  growth  has  been  through  the
acquisition of other security companies and security monitoring  contracts,  and
internal growth with aggressive  marketing and superior  customer  service.  The
security  industry is experiencing  dramatic growth and increased  consolidation
among smaller,  fragmented "mom and pop" type companies.  Guardian's strategy is
to identify these  consolidation  opportunities and creating efficient economies
of scale through  technical and  managerial  efficiency.  From 1994 to 1996, the
Company made twelve  security  alarm  business  account  portfolio  acquisitions
including All American  Security and Gibraltar  Alarm  Systems.  The Company has
successfully  incorporated  these  businesses and molded these accounts into its
operation  and  created  economies  of scale and  improved  margins.  Guardian's
strategy of growth has increased the Company's current and future MRR.

                  The Company  can  continue  to  purchase  additional  accounts
through  internally  generated  cash  flow.  However,  to  implement  its growth
strategy the Company is currently undertaking expansion of its credit facilities
as well as contemplating equity funding.

                  During the first quarter of 1996 Guardian completed hardware 
and software upgrades

                                                        14

<PAGE>



to its security monitoring system.  These improvements  included the addition of
increased memory on the Data General/Avion machines, enhancements to the Company
system in a more  client/server  aspect  (as  opposed  to text  terminals),  and
additional automation  enhancements that will increase efficiency while reducing
cost.  Guardian is  currently  operating  under the MAS 5.50.11  version for its
automation, service, and billing system.

Results of Operations

                  Subscriber Attrition. Subscriber attrition has a direct impact
on the  Company's  results of  operations,  since it affects both the  Company's
revenues and its  amortization  expense.  Attrition  can be measured in terms of
decreased  MRR  resulting  from  canceled  subscriber  accounts  net of sales of
certain services to existing  subscribers,  and can also be measured in terms of
canceled  subscriber  accounts.  Guardian has  developed an in-house  system for
identifying and decreasing  account  attrition.  The Program has been dubbed the
"No-Tolerance Attrition Policy."

Guardian has developed  specific  procedures for  identifying  possible  account
attrition at various  stages and  preventing  lost  accounts or  replacing  lost
accounts  in a fast  manner.  This  program  is a  critical  part of  Guardian's
business strategy to increase and maintain MRR.

The No-Tolerance Attrition Policy includes the following:

a)                Identification of possible lost accounts via daily test.
b)                False alarm fines tracking and cause identification
c)                Early, account delinquent procedures
d)                Superb Customer Service
e)                Control Lockout
f)                Early identification of new tenants/residences in Guardian 
                    alarmed homes



Year        Gross           Net Attrition            Non-Tolerance
            Attrition         (after saves)          Program Results*
1993        7.2%                 6.7%                        .05%
1994        7.9%                 7.2%                        .07%
1995       10.1%                 7.5%                        2.6%

* This is the difference as a result of Guardian's 
  NO-Tolerance Attrition Program


The following table sets forth, for the periods indicated, the percentage of net
sales of certain  items in the Company's  consolidated  statements of operations
and other data, and the percentage change in each item from the prior period.


                                                        15

<PAGE>


<TABLE>
<CAPTION>

<S>          <C>            <C>          <C>             <C>            <C>            <C> 
         Percentage of   Percentage of  Nine Months  Percentage of  Percentage of   Three Months
         Total Revenues  Total Revenues Ended Sept.  Total Revenues Total Revenues  Ended Sept. 30,
         Nine Months     Nine Months    30, 1996 as  Three Months   Three Months    1996 Compared
         Ended Sept.     Ended Sept.    compared to  Ended Sept.    Ended Sept.     to Three Months
         30, 1996        30, 1995       Nine Months  30, 1996       30, 1995        Ended Sept. 30,
                                        Ended Sept.                                 1995
                                        30, 1995
Revenues:

   Monitoring    80.8%     82.7%        187%            73.4%          96.9%          152%
   Installation   16.3      15.4         214             22.0            2.8          2488
   Other           2.9       0.9         900              4.6            0.3          6035
Total Revenues     100       100         198              100            100           232
Operating
Expenses
   Monitoring     11.5      19.6          76              9.9            5.4            84
   Installation    7.8      16.2          43             13.6            5.2           758
   General and    46.6      58.4         138             48.6           57.0           183
Administrative
Total             65.9      94.2         108             72.1           80.3           199
Operating
Expenses
Operating         34.1       5.8        1634             27.9           19.7           368
Income (*1)
Interest          17.1      10.6         381             16.4           13.2           312
Expense
Amortization      18.7      10.8         417             20.0           13.1           406
of Customer
Contracts
Depreciation &     4.7       9.0          56              3.3            8.5            27
Amortization
Loss Before      (6.7)    (24.5)         160           (12.4)         (15.1)          21.5
provision for
Taxes
Provision for    (2.7)         -           -            (6.8)                            -
Income Taxes
 Net Profit      (9.4%)    (24.5%)       (11%)          (19.2%)        (15.1%)        (309%)
(loss)
-----------------------------------------------------------------------------------------------

<FN>

 *(1) Before Interest, Amortization and Depreciation and Provision for Income Taxes


Nine Months Ended September 30, 1996 Compared to
Nine Months Ended September 30, 1995
                 
</FN>
</TABLE>
                                                        16

<PAGE>


                  Revenues for the nine months ended September 30, 1996 
increased by $1,556,914, or  198%,  to  $2,344,619  from  $787,705  for the  
comparable  period  in 1995.  Monitoring  revenues  increased  by  $1,234,983,  
or 187%,  to  $1,894,290  from $659,307 for the comparable period in 1995,  
primarily because of a net increase in the number of  subscribers  to the 
Company's  alarm  services  resulting from acquisitions.  Installation  revenues
increase by $260,657 or 214%, to $382,246 from  $121,589  for  the  comparable 
period  in  1995,  mainly  because  of the acquisition of SDI.

                  Operating  expenses  for the nine months ended  September  30,
1996  increased  by  $804,410,  or 108%,  to  $1,546,056  from  $741,646 for the
comparable  period in 1995, and decreased as a percentage of revenues from 58.4%
to 46.6%.  Monitoring  expenses  increased by $116,494 or 76%, to $270,552  from
$154,058 for the comparable period in 1995, primarily because of addition of new
employees to handle the additional  monitoring  acquired  through  acquisitions.
Monitoring  expenses include  telephone,  labor, rent and depreciation  expenses
associated  with  monitoring  of  subscriber  accounts,  as well as billing  and
collection  expenses.  Installation  expenses  increased by $54,518,  or 43%, to
$182,185 from $127,667 in the comparable  period in 1995,  primarily as a result
of the  additional  installation  revenue  generated by the  acquisition of SDI.
Selling, general and administrative expenses for the nine months ended September
30, 1996 increased by $633,398,  or 138%, to 1,093,319 from $459,921  during the
comparable  period in 1995.  As a  percentage  of total  revenues,  general  and
administrative  expenses  decreased to 46.6% from 58.4%. The increase in general
and  administrative  expenses  resulted from the Company's  growth in revenue as
well  as the  merger  of  Everest  Security  Systems  Corporation  and  Guardian
International, Inc. The Company expects that the aggregate amount of general and
administrative  expenses will increase in the future as the Company's subscriber
base continues to grow but will decrease as a percentage of total revenue.

                   Interest  expense,  including  amortization  of debt issuance
costs,  for the nine months ended  September 30, 1996,  increased  approximately
$316,904,  or 381% to $400,051 from $83,147 during the  comparable  1995 period.
The  expense  increase  primarily  as a result of higher  outstanding  principal
balances during fiscal 1996 created by the increase in customer  accounts during
the year.

                  Amortization  of customer  contracts for the nine months ended
September 30, 1996 increased by $354,020,  or 417%, to $438,988 from $84,978 for
the  comparable  1995  period,  as a result  of the  acquisition  of  additional
subscriber accounts.

                  Depreciation  and  amortization  for  the  nine  months  ended
September  30, 1996  increased  by $45,421 or 63.9%,  to $116,500  from  $71,079
during the  comparable  period in 1995,  due to the  addition  of  property  and
equipment during the 1996 period.

                  Net loss for the nine  months  ended  September  30,  1996 was
$(219,986),  compared to a net loss of  $(193,145) in the  comparable  period in
1995.

Liquidity and Capital Resources

General.          The Company has financed its operations and acquisitions from 
a combination of

                                                        17

<PAGE>



borrowing,  sales  of  stock  and  internally  generated  funds.  The  Company's
principal uses of cash are  acquisitions  of subscriber  accounts,  interest and
principal   payments  on  long-term  debt  and  capital   expenditures.   Future
acquisitions of subscriber accounts will likely require additional financing.

For the nine months ended September 30, 1996, the Company's net cash provided by
operating  activities  was  $194,885,  compared  to  $(21,529)  net cash used in
operating activities for the comparable period in 1995.

For the nine months ended September 30, 1996, the Company's net cash provided by
investing  activities  was  $127,186,  compared to  $(921,335)  net cash used in
investing  activities  during the same period in 1995,  primarily as a result of
the funds advanced by Everest Security Systems Corporation in the form of equity
investment.

For the nine months ended September 30, 1996, the Company's net cash provided by
financing  activities  was $838,795,  compared to  $1,022,528 in the  comparable
period  in  1995.  Financing  activities  were  primarily  associated  with  the
retirement  of long-term  debt in fiscal 1996,  and  repayment of  shareholder's
loans.

     Heller  Financial.  Revolving Credit  Facility.  On November 16, 1994 , the
Company entered into an agreement with Heller  Financial,  Inc.  ("Heller') that
established the Revolving Credit Facility. The Revolving Credit Facility matures
in November 30, 1999, subject to earlier termination. The Company had $4,598,669
million and $1,028,634  million  outstanding at September 30, 1996 and September
30, 1995, respectively, under the credit facility.  Availability  under the 
Revolving  Credit  Facility is a function of a series of factors  including,  
the  amount  of  unbilled  revenue  of  Guardian's  account portfolio  and the 
multiple of Monthly  Recurring  Income for which  Guardian is borrowing.  At 
September 30, 1996, and September 30, 1995, the most  restrictive of  these  
availability  tests  resulted  in  total  remaining  availability  of 
approximately $2,401,331 million and $5,971,366 million, respectively.

Under the Revolving Credit Facility,  the applicable  interest rate is the prime
interest  rate plus 3%. The  Company  has paid  Heller a initial  funding fee of
$25,000 for the initial  $2,500,000 of borrowing,  and continues to pay Heller a
transaction fee of 1% of the amount it is borrowing at the time of funding. As a
result of exchanging the Capital  Appreciation rights of Heller for Common Class
B shares,  the  Company  is no longer  responsible  for any  additional  Capital
Appreciation Rights .

The Revolving Credit Facility  contains  customary  covenants  including,  among
others,  restrictions  on the  incurrence of debt,  encumbrances  on or sates of
assets,  mergers and  acquisitions,  dividends and transactions with affiliates.
Financial  covenants  include the  maintenance of (i) a minimum  EBITDA;  (ii) a
minimum ratio of EBITDA less capital  expenditures to senior  interest;  (iii) a
minimum  ratio of EBITDA less  capital  expenditures  to fixed  charges;  (iv) a
maximum  annual  rate  of  MRR   attrition;   and  (v)  maximum  annual  capital
expenditures. The Revolving Credit Facility provides that a "change of control"

                                                 18

<PAGE>



(as defined therein) constitutes an event of default.

The Revolving Credit Facility contain certain restrictions on transfers of funds
such as loans and advances to the Company from its subsidiaries, but not on cash
dividends to the Company by its  subsidiaries.  The Company  believes  that such
restrictions  have  not  had and  will  not  have a  significant  impact  on the
Company's ability to meet its cash obligations.

Capital   Expenditures.   The  Company  anticipates  making  additional  capital
expenditures in the remainder of fiscal 1996 of approximately $10,000 to upgrade
its telecommunications capabilities and for routine replacement and upgrading of
other capital items.  In addition,  the Company  anticipates  making  additional
capital  expenditures of approximately  $5,000 for facility  improvements in the
remainder  of fiscal 1996.  The Company has no other  material  commitments  for
capital expenditures.  the Company does not foresee the need for any significant
investment  in new  technology  in the  near  future  and  believes  that no new
technology expenditures are currently required in order to sustain market share.


                                     PART II


                                   SIGNATURES



        Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant  has duly  caused  this  report  to be  signed  on its  behalf by the
undersigned thereto duly authorized.

Dated this _____ day of December, 1996.

                                         GUARDIAN INTERNATIONAL, INC.
                                              (the "Registrant")




                                         By:_________________________________
                                               RICHARD GINSBURG, PRESIDENT


                                                        19

<PAGE>