UNITED STATES

                       SECURITIES AND EXCHANGE COMMISSION

                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

[X]               QUARTERLY REPORT UNDER SECTION 13 OR 15(D)
                         OF THE SECURITIES EXCHANGE ACT

                  FOR THE QUARTERLY PERIOD ENDED JUNE 30, 2002

[ ]               TRANSITION REPORT UNDER SECTION 13 OR 15(D)
                               OF THE EXCHANGE ACT

                FOR THE TRANSITION PERIOD FROM ______ TO _______

                         COMMISSION FILE NUMBER 0-28490

                          GUARDIAN INTERNATIONAL, INC.
        (Exact name of small business issuer as specified in its charter)

                          FLORIDA                      58-1799634
      (State or other jurisdiction of       (I.R.S. Employer Identification No.)
      incorporation or  organization)

                3880 N. 28 TERRACE                   (954) 926-5200
             HOLLYWOOD, FLORIDA 33020           (Issuer's telephone number)
     (Address of principal executive offices)


         Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (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 ___

         As of August 13, 2002, Guardian International, Inc. had 8,096,441
shares of Class A Voting Common Stock, par value $.001 per share, and 634,035
shares of Class B Non-Voting Common Stock, par value $.001 per share, issued and
outstanding.

           TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (CHECK ONE):

                                YES ____ NO _X__

<PAGE>

                          GUARDIAN INTERNATIONAL, INC.

                                TABLE OF CONTENTS
<TABLE>
<CAPTION>

                                                                                                  Page No.
<S>             <C>                                                                               <C>

PART I          FINANCIAL INFORMATION

Item 1.         Financial  Statements

                Consolidated Balance Sheets as of June 30, 2002 and
                     December 31, 2001                                                                 1

                Consolidated Statements of Operations for the Three and Six
                     Months Ended June 30, 2002 and 2001                                               2

                Consolidated Statement of Changes in Shareholders' Deficit
                     for the Six Months Ended June 30, 2002                                            3

                Consolidated Statements of Cash Flows for the Six Months
                     Ended June 30, 2002 and 2001                                                      4

                Notes to Consolidated Financial Statements                                             5

Item 2.         Management's Discussion and Analysis                                                  10

PART II         OTHER INFORMATION

Item 4.         Submission of Matters to a Vote of the Security Holders                               19

Item 6.         Exhibits and Reports on Form 8-K                                                      20
</TABLE>

<PAGE>

PART I.  FINANCIAL INFORMATION
ITEM 1.  FINANCIAL STATEMENTS

                          GUARDIAN INTERNATIONAL, INC.
                          CONSOLIDATED BALANCE SHEETS

<TABLE>
<CAPTION>
                                                                            JUNE 30, 2002   DECEMBER 31, 2001
                                                                            -------------   -----------------
<S>                                                                          <C>              <C>
      ASSETS                                                                  (UNAUDITED)
Current assets:
      Cash and cash equivalents                                              $    668,131     $    713,204
      Accounts receivable, net of allowance for doubtful accounts
             Of  $222,873 and $250,186, respectively                            2,097,230        1,986,094
      Current portion of notes receivable                                          81,619           96,619
      Inventories                                                               1,218,621          931,501
      Prepaid expense and other                                                   486,447          219,758
                                                                             ------------     ------------
             Total current assets                                               4,552,048        3,947,176

Property and equipment, net                                                    10,249,826        9,769,146
Customer accounts, net                                                         17,144,233       18,485,550
Goodwill and other intangible assets, net                                       1,553,764        1,531,883
Notes receivable, less current portion                                             41,517           57,467
Deposits and other assets                                                       1,657,820        1,375,791
                                                                             ------------     ------------
             Total assets                                                    $ 35,199,208     $ 35,167,013
                                                                             ============     ============

LIABILITIES AND SHAREHOLDERS' DEFICIT
Current liabilities:
      Accounts payable and accrued expenses                                  $  3,926,792     $  3,902,562
      Current portion of unearned revenue                                       2,546,830        2,380,013
      Current portion of long term obligations                                    181,981          178,065
                                                                             ------------     ------------
             Total current liabilities                                          6,655,603        6,460,640
Unearned revenue, less current portion                                          9,015,382        8,073,978
Long-term obligations, less current portion                                    13,706,755       13,065,091
                                                                             ------------     ------------
             Total liabilities                                                 29,377,740       27,599,709
                                                                             ------------     ------------

Commitments and contingencies (Note 7)
Redeemable cumulative preferred stock, $.001 par value
      Series C 7% preferred stock, 8,397 shares issued and outstanding,
      $8.4 million liquidation preference, at June 30, 2002 and December
      31, 2001, respectively                                                    8,397,000        8,397,000
                                                                             ------------     ------------

Shareholders' deficit:
      Preferred stock, $.001 par value, 30 million shares authorized
             Series D 6% preferred stock, 12,051 and 11,369 shares issued
             and outstanding, $12.1 million and $11.4 million liquidation
             preference, at June 30, 2002 and December 31, 2001,
             respectively                                                              12               11
             Series E 7% preferred stock, 8,000 shares issued and
             outstanding, $8.0 million liquidation preference, at June 30,
             2002 and December 31, 2001, respectively                                   8                8
      Class A voting common stock, $.001 par value, 100,000,000 shares
             authorized, 8,096,441 issued and outstanding                           8,097            8,097
      Class B non-voting common stock, $.001 par value, 1,000,000 shares
             authorized, 634,035 shares issued and outstanding                        634              634
      Additional paid-in capital                                               27,110,301       26,748,771
      Accumulated deficit                                                     (29,694,584)     (27,587,217)
                                                                             ------------     ------------
             Total shareholders' deficit                                       (2,575,532)        (829,696)
                                                                             ------------     ------------
             Total liabilities and shareholders' deficit                     $ 35,199,208     $ 35,167,013
                                                                             ============     ============
</TABLE>

              The accompanying notes are an integral part of these
                        consolidated financial statements

                                       1
<PAGE>

                          GUARDIAN INTERNATIONAL, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                FOR THE THREE MONTHS ENDED        FOR THE SIX MONTHS ENDED
                                                        JUNE 30,                           JUNE 30,
                                              -----------------------------     -----------------------------
                                                  2002             2001              2002            2001
                                              ------------     ------------     ------------     ------------

<S>                                           <C>              <C>              <C>              <C>
Revenues:
     Monitoring                               $  3,495,964     $  3,268,168     $  6,950,323     $  6,572,987
     Installation and service                    2,069,909        1,853,580        3,949,278        3,627,432
     Other revenues                                 62,724           54,228          129,181          100,360
                                              ------------     ------------     ------------     ------------
        Total revenues                           5,628,597        5,175,976       11,028,782       10,300,779
                                              ------------     ------------     ------------     ------------

Operating expenses:
     Monitoring                                    536,257          526,441        1,051,897        1,026,710
     Installation and service                    1,575,850        1,655,565        2,885,344        3,091,167
     Selling, general and administrative         2,127,599        1,989,654        4,261,736        4,044,442
     Amortization of customer accounts           1,001,229        1,148,942        2,233,077        2,286,238
     Depreciation and amortization                 665,227          656,863        1,400,451        1,284,042
                                              ------------     ------------     ------------     ------------
        Total operating expenses                 5,906,162        5,977,465       11,832,505       11,732,599
                                              ------------     ------------     ------------     ------------

        Operating loss                            (277,565)        (801,489)        (803,723)      (1,431,820)

Interest and other expense, net                   (199,010)        (286,625)        (368,216)        (620,501)
                                              ------------     ------------     ------------     ------------

       Net loss                                   (476,575)      (1,088,114)      (1,171,939)      (2,052,321)

Preferred stock dividends                         (467,714)        (467,139)        (935,428)        (914,967)
Gain on exchange of preferred stock                     --        2,594,070               --        2,594,070
                                              ------------     ------------     ------------     ------------

       Net income (loss) applicable to
               common stock                   $   (944,289)    $  1,038,817     $ (2,107,367)    $   (373,218)
                                              ============     ============     ============     ============

Basic earnings (loss) per common share:

Net income (loss)                             $      (0.11)    $       0.12     $      (0.24)    $      (0.04)
                                              ============     ============     ============     ============

Weighted average common shares outstanding       8,730,476        8,730,476        8,730,476        8,730,476
                                              ============     ============     ============     ============

Diluted earnings (loss) per common share:

Net income (loss)                             $      (0.11)    $       0.10     $      (0.24)    $      (0.04)
                                              ============     ============     ============     ============

Weighted average common shares and common
equivalent shares outstanding                    8,730,476       12,571,682        8,730,476        8,730,476
                                              ============     ============     ============     ============
</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                       2
<PAGE>



                          GUARDIAN INTERNATIONAL, INC.
           CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' DEFICIT

<TABLE>
<CAPTION>

                                             Preferred Stock      Preferred Stock        Common Stock           Common Stock
                                                 Series D            Series E               Class A                Class B
                                             Shares    Amount    Shares    Amount      Shares     Amount     Shares      Amount
                                           --------------------------------------------------------------------------------------
<S>                                          <C>        <C>      <C>        <C>       <C>         <C>        <C>         <C>
Balance at December 31, 2001                 11,369     $11      8,000      $  8      8,096,441   $8,097     634,035     $634


   Series C preferred dividends                  --      --         --        --             --       --          --       --
   Issuance and accrual of additional
       Series D preferred shares as
       dividends                                682       1         --        --             --       --          --       --
   Series E preferred dividends                  --      --         --        --             --       --          --       --
   Net loss                                      --      --         --        --             --       --          --       --

                                           --------------------------------------------------------------------------------------
Balance at  June 30, 2002                    12,051     $12      8,000      $  8      8,096,441   $8,097     634,035     $634
                                           ======================================================================================
[RESTUB]
<CAPTION>
                                             Additional
                                               Paid-in        Accumulated
                                               Capital          Deficit           Total
                                           -------------------------------------------------
<S>                                         <C>              <C>                <C>
Balance at December 31, 2001                $26,748,771      $(27,587,217)      $  (829,696)


   Series C preferred dividends                      --           (293,898)        (293,898)
   Issuance and accrual of additional
       Series D preferred shares as
       dividends                                361,530           (361,530)               1
   Series E preferred dividends                      --           (280,000)        (280,000)
   Net loss                                          --         (1,171,939)      (1,171,939)

                                           -------------------------------------------------
Balance at  June 30, 2002                   $27,110,301      $(29,694,584)      $(2,575,532)
                                           =================================================
</TABLE>

               The accompanying notes are an integral part of this
                        consolidated financial statement.

                                       3
<PAGE>

                          GUARDIAN INTERNATIONAL, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
                                   (UNAUDITED)

<TABLE>
<CAPTION>
                                                                FOR THE SIX MONTHS ENDED JUNE 30,
                                                                ---------------------------------
                                                                       2002           2001
                                                                   -----------     -----------

<S>                                                                <C>             <C>
Cash Flows from Operating Activities:
     Net loss                                                      $(1,171,939)    $(2,052,321)
     Adjustments to reconcile net loss to net cash
     provided by operating activities:
            Gain on sale of property and equipment                      (3,961)             --
            Depreciation and amortization                            1,400,451       1,284,042
            Amortization of customer accounts                        2,233,077       2,286,238
            Amortization of deferred financing costs                   131,250          87,083
            Provision for doubtful accounts                            270,001         306,639
            Provision for (reversal of) inventory losses                    --          (6,000)
        Changes in assets and liabilities:
            Accounts receivable                                       (365,187)       (424,577)
            Inventory                                                 (287,120)       (115,097)
            Prepaid expenses and other                                (266,689)       (236,782)
            Notes receivable                                            15,000
            Deposits and other assets                                 (163,568)        (19,724)
            Accounts payable and accrued expenses                     (128,188)        646,355
            Unearned revenue                                         1,086,017         864,548
                                                                   -----------     -----------
            Net cash provided by operating activities                2,749,144       2,620,404
                                                                   -----------     -----------

Cash Flows from Investing Activities:
     Purchase of property and equipment                                (64,986)       (324,859)
     Purchase of customer accounts                                    (717,142)        (42,838)
     Sale of property and equipment                                     16,000              --
     Capitalized installation costs                                 (1,828,181)     (1,760,194)
     Other                                                            (271,592)       (391,548)
                                                                   -----------     -----------
            Net cash used in investing activities                   (2,865,901)     (2,519,439)
                                                                   -----------     -----------

Cash Flows from Financing Activities:
     Payments on debt obligations                                   (1,376,967)     (1,822,253)
     Borrowings under line of credit                                 2,022,547       1,846,580
     Equity issuance costs                                                             (69,930)
     Payment of cash dividends                                        (573,896)       (573,896)
                                                                   -----------     -----------
            Net cash provided by (used in) financing activities         71,684        (619,499)
                                                                   -----------     -----------

            Net decrease in cash and cash equivalents                  (45,073)       (518,534)

Cash and cash equivalents, beginning of period                         713,204         722,525

                                                                   -----------     -----------
Cash and cash equivalents, end of period                           $   668,131     $   204,041
                                                                   ===========     ===========

Supplemental disclosure:
     Interest paid                                                 $   411,412     $   569,291
                                                                   ===========     ===========
     Income taxes paid                                             $         0     $         0
                                                                   ===========     ===========

Non-cash investing and financing activities:
     Retirement of Series C Preferred Stock                        $        --     $ 8,000,000
                                                                   ===========     ===========
     Issuance of Series E Preferred Stock                          $        --     $ 5,336,000
                                                                   ===========     ===========
     Preferred stock dividends                                     $   361,530     $   341,070
                                                                   ===========     ===========
     Contract holdbacks for purchased accounts                     $   166,387     $       328
                                                                   ===========     ===========
     Contract holdbacks applied against accounts written off       $    13,943     $    13,942
                                                                   ===========     ===========
</TABLE>

              The accompanying notes are an integral part of these
                       consolidated financial statements.

                                       4
<PAGE>

                          GUARDIAN INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS

1.   ACCOUNTING POLICIES

     Basis of Presentation
     ---------------------
     The accompanying unaudited consolidated financial statements of Guardian
     International, Inc. (the "Company") have been prepared pursuant to the
     rules and regulations of the Securities and Exchange Commission (the
     "SEC"). In the opinion of management, the accompanying unaudited
     consolidated financial statements contain all adjustments (consisting only
     of normal and recurring adjustments) necessary to present fairly the
     Company's financial position and the results of its operations for the
     periods presented and the disclosures herein are adequate to make the
     information presented not misleading. Operating results for interim periods
     are not necessarily indicative of the results that can be expected for a
     full year. These interim consolidated financial statements should be read
     in conjunction with the Company's audited consolidated financial statements
     and notes thereto for the year ended December 31, 2001, included in the
     Company's Annual Report on Form 10-KSB.

     Revenue Recognition
     -------------------
     MONITORING REVENUE. Customers are billed for monitoring services primarily
     on a monthly or quarterly basis in advance of the period in which such
     services are provided. Unearned revenues result from billings in advance of
     performance of monitoring services. Contracts for monitoring services are
     generally for an initial non-cancelable term of three to 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.

     INSTALLATION REVENUE. On installations for which the Company retains title
     to the electronic security systems or provides monitoring services
     subsequent to the installation, the installation revenue is deferred,
     classified as unearned revenue on the Company's consolidated balance sheet,
     and then recognized over the longer of the term of the service agreement or
     the estimated eight-year life of the customer relationship. All other
     installation revenues are recognized in the period in which the
     installation is completed. When a customer to whom we are providing
     monitored services cancels the service, any unearned revenue balance is
     recognized in the period in which the cancellation occurs.

     SERVICE REVENUE. Customers are billed for maintenance service, often in
     conjunction with monitoring services, primarily on a monthly or quarterly
     basis in advance of the period in which such services are provided.
     Unearned revenues result from billings in advance of performance of
     maintenance services. Contracts for maintenance services are generally for
     an initial non-cancelable term of three to 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.
     Additional revenue is generated from services rendered by the Company to
     customers without such contracts who request maintenance and repair
     services. This service revenue is recognized when the service is provided.

     Cost Accounting
     ---------------
     All direct installation costs, which include materials, direct labor and
     commissions, related to installations that result in deferred installation
     revenue, are capitalized on an agreement-by-agreement basis to the extent
     such costs do not exceed the total of deferred installation revenue and
     expected margin from monitoring services during the initial service
     contract term. To the extent such costs exceed the total of deferred
     installation revenue and expected margin from monitoring services during
     the initial service contract term, the excess is expensed as installation
     and operating expense in the period in which the installation is completed.
     Capitalized installation costs, to the extent of

                                       5
<PAGE>

     deferred installation revenue, are expensed over the longer of the term of
     the service agreement or the estimated eight-year life of the customer
     relationship. Capitalized installation costs in excess of deferred
     installation revenues, but which are less than the expected margin from
     monitoring services during the initial service contract term, are expensed
     over the initial term of the service agreement. Capitalized materials and
     direct labor costs, which are included in property and equipment, net
     totaling approximately $8.9 million at June 30, 2002, are expensed as
     depreciation; capitalized commissions, which are included in deposits and
     other assets totaling approximately $1.3 million at June 30, 2002, are
     expensed as installation and service operating expense. When a customer to
     whom we are providing monitored services cancels the service, any
     capitalized cost balance is recognized in the period in which the
     cancellation occurs.

     Comprehensive Loss
     ------------------
     The Company has no comprehensive loss components for the three and six
     months ended June 30, 2002 and 2001, therefore, comprehensive loss is the
     same as net loss for all periods.

     Reclassifications
     -----------------
     Certain 2001 amounts in the consolidated financial statements have been
     reclassified to conform to the 2002 presentation.

2.   CUSTOMER ACCOUNTS, NET

     The following is an analysis of the changes in customer accounts, net:

<TABLE>
<CAPTION>
                                                                     Six Months                Six Months
                                                                        Ended                     Ended
                                                                    June 30, 2002             June 30, 2001
                                                                    ------------              -------------
<S>                                                                  <C>                       <C>
     Balance, beginning of period                                    $18,485,550               $22,381,795
           Purchase of customer accounts from dealers                    905,703                    49,706
           Charges against contract holdbacks                            (13,943)                  (13,942)
           Amortization of customer accounts                          (2,233,077)               (2,286,238)
                                                                     ------------              ------------
     Balance, end of period                                          $17,144,233               $20,131,321
                                                                     ============              ============
</TABLE>

     In conjunction with certain purchases of customer accounts, the Company
     withholds a portion of the price as a credit to offset qualifying attrition
     of these purchased customer accounts and for purchase price settlements of
     assets acquired and liabilities assumed. The Company had a total balance
     withheld of approximately $351,000 and $99,000 at June 30, 2002 and June
     30, 2001, respectively, as contract holdbacks in connection with the
     purchase of customer accounts which are included in accounts payable and
     accrued expenses in the accompanying consolidated balance sheets.

3.   GOODWILL AND OTHER INTANGIBLE ASSETS, NET

     Goodwill and other intangible assets, net, consist of the following:

                                   Amortization       June 30,      December 31,
                                 Period in years        2002            2001
                                 ---------------    ------------    ------------

     Goodwill                                       $ 2,278,902      $2,409,443
     Deferred financing costs           2               283,671         275,000
                                                    ------------     -----------
                                                      2,562,573       2,684,443
     Accumulated amortization                        (1,008,811)     (1,152,560)
                                                    ------------     -----------
                                                    $ 1,553,764      $1,531,883
                                                    ============     ===========

                                       6
<PAGE>

     In July 2001, the Financial Accounting Standards Board issued Statement of
     Financial Accounting Standards No. 142 "Goodwill and Other Intangible
     Assets" ("SFAS 142"). SFAS 142 addresses financial accounting and reporting
     for intangible assets acquired individually or with a group of other assets
     (but not those acquired in a business combination) at acquisition. SFAS 142
     also addresses financial accounting and reporting for goodwill and other
     intangible assets subsequent to their acquisition. With the adoption of
     SFAS 142, goodwill is no longer subject to amortization. Rather, goodwill
     will be subject to at least an annual assessment for impairment by applying
     a fair-value based test. The impairment loss is the amount, if any, by
     which the implied fair value of goodwill and other intangible assets is
     less than the carrying or book value. SFAS 142 is effective for fiscal
     years beginning after December 15, 2001. Impairment loss for goodwill and
     other intangible assets arising from the initial application of SFAS 142 is
     to be reported as resulting from a cumulative effect of a change in
     accounting principle. The Company adopted SFAS 142 as of January 1, 2002,
     and performed the required goodwill impairment review. Based on that
     impairment review, the Company has determined that no impairment loss from
     initial application is required.

     The following table reflects the Company's results for the three and six
     months ended June 30, 2001, calculated using the new accounting treatment
     discussed above, compared to the Company's results for the three and six
     months ended June 30, 2002.

<TABLE>
<CAPTION>
                                            Three months ended June 30,    Six months ended June 30,
                                            ---------------------------    -------------------------
                                              2002             2001           2002            2001
                                            ---------       ----------     -----------      ---------
<S>                                         <C>             <C>            <C>              <C>
     Reported net income (loss)             $(944,289)      $1,038,817     $(2,107,367)     $(373,218)
     Add back:  Goodwill amortization              --           46,850              --         93,699
                                            ---------       ----------     -----------      ---------
     Adjusted net income (loss)             $(944,289)      $1,085,667     $(2,107,367)     $(279,519)
                                            =========       ==========     ===========      =========

     Basic earnings (loss) per share:
     Reported net income (loss)             $   (0.11)      $     0.12     $     (0.24)     $   (0.04)
     Add back:  Goodwill amortization              --               --              --           0.01
                                            ---------       ----------     -----------      ---------
     Adjusted net income (loss)             $   (0.11)      $     0.12     $     (0.24)     $   (0.03)
                                            =========       ==========     ===========      =========

     Diluted earnings (loss) per share:
     Reported net income (loss)             $   (0.11)      $     0.10     $     (0.24)     $   (0.04)
     Add back:  Goodwill amortization              --               --              --           0.01
                                            ---------       ----------     -----------      ---------
     Adjusted net income (loss)             $   (0.11)      $     0.10     $     (0.24)     $   (0.03)
                                            =========       ==========     ===========      =========
</TABLE>


4.   ACCOUNTS PAYABLE AND ACCRUED EXPENSES

     Accounts payable and accrued expenses consist of the following:

                                           June 30, 2002      December 31, 2001
                                           -------------      -----------------

     Trade accounts payable                 $  995,718         $  908,579
     Contract holdbacks                        351,306            198,862
     Preferred dividends payable               286,946            286,944
     Customer deposits                         724,799            962,450
     Accrued expenses                        1,568,023          1,545,727
                                            ----------         ----------
                                            $3,926,792         $3,902,562
                                            ==========         ==========

                                       7
<PAGE>

5.   LONG-TERM OBLIGATIONS

     Long-term obligations consist of the following:

<TABLE>
<CAPTION>
                                                   June 30, 2002  December 31, 2001
                                                   -------------  -----------------
<S>                                                 <C>              <C>
     Credit facility with financial institution     $13,372,775      $12,672,515
     Capital lease obligations                          253,232          265,465
     Equipment notes payable and other                  262,729          305,176
                                                    -----------      -----------
                                                     13,888,736       13,243,156
     Less : current portion                            (181,981)        (178,065)
                                                    -----------      -----------
                                                    $13,706,755      $13,065,091
                                                    ===========      ===========
</TABLE>

     On June 28, 2002, the Company entered into a new $20.0 million senior
     credit facility ("Credit Facility") with GE Capital Funding, replacing its
     previously existing $20.0 million senior credit facility. The Credit
     Facility has an initial expiration date of July 2004, and the Company may
     extend the facility for up to two additional years, subject to the
     occurrence of certain events. Under the Credit Facility, borrowings bear
     interest at floating rates, either at a certain index rate plus 1 3/4%
     (6.50% at June 30, 2002) or, at the Company's election, LIBOR plus 3 1/4%.
     Under the terms of the Credit Facility, the Company is required to meet
     certain financial performance covenants. The Company is in compliance with
     all such covenants as of June 30, 2002. At June 30, 2002, $6.6 million was
     available under the Credit Facility.

6.   EQUITY TRANSACTIONS

     On April 16, 2001, Richard Ginsburg, then president and chief executive
     officer of the Company, was named chief executive officer and a member of
     the Board of Directors of Protection One, Inc. ("Protection One"), an
     87%-owned subsidiary of Westar Energy, Inc. ("Westar Energy").

     In connection with Richard Ginsburg's resignation, the Company exchanged $8
     million principal amount of Series C 7% Redeemable Preferred Stock of the
     Company held by Westar Investments, Inc. ("Westar"), a subsidiary of Westar
     Energy, for $8 million principal amount of a newly issued Series E 7%
     Cumulative Preferred Stock, which is redeemable after October 21, 2001 at
     the Company's option, and is classified as equity in the Company's
     consolidated balance sheet. This transaction has undergone a third party
     appraisal, and as a result of this appraisal, the Company recorded a gain
     during the three months ended June 30, 2001 of approximately $2.6 million
     which is reflected in shareholders' deficit and is allocated to common
     shareholders in the earnings (loss) per share calculation.

     Protection One also granted the Company a warrant to purchase 250,000
     shares of Protection One's common stock at an exercise price of $1.31 per
     share. The warrant vests one-third annually over three years and has a
     ten-year term. This warrant and the related gain are being recorded ratably
     over the vesting period as non-operating other income based on the variable
     valuation of the warrant using the Black Scholes model at each quarter-end.
     As a result of this transaction, other income of approximately $111,000 was
     recorded in the six months ended June 30, 2002.

     In October 1998, the Company issued its Series D 6% Convertible Cumulative
     Preferred Stock ("Series D Preferred Stock"). This series of preferred
     stock allows for the annual dividend obligation, payable on January 1st of
     each year, to be satisfied in either cash or additional Series D Preferred
     Stock, at the option of the Company. To date, the Company has elected to
     issue additional Series D Preferred Stock to satisfy the dividend.

                                       8
<PAGE>

7.   COMMITMENTS AND CONTINGENCIES

     The Company experiences routine litigation in the normal conduct of its
     business. The Company believes that any such pending litigation will not
     have, individually or in the aggregate, a material adverse effect on its
     business, financial condition or results of operations.

                                       9
<PAGE>


ITEM 2.  MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND
         RESULTS OF OPERATIONS

FORWARD-LOOKING STATEMENTS

         Certain statements contained in this Quarterly Report on Form 10-QSB
are forward-looking statements, which generally express, or involve discussions
as to, expectations, beliefs, plans, objectives, assumptions or future events or
performance (often, but not always, including words or phrases such as
"believes," "expects," "anticipates," "hopes," or other words of similar
import).

         These forward-looking statements are based largely on expectations and
are subject to a number of risks and uncertainties. Such risks and uncertainties
include, among others, the following: (i) the ability of the Company to add
additional customer accounts to its account base through acquisitions from third
parties, through internal sales efforts and through strategic alliances; (ii)
the level of customer attrition; (iii) the availability of capital to the
Company relative to certain larger companies in the security alarm industry
which have significantly greater capital and resources; (iv) increased false
alarm fines and/or the possibility of reduced public response to alarm signals;
(v) changes in local, state and federal regulations; (vi) availability of
qualified personnel; (vii) competitive factors in the industry, including
additional competition from existing competitors or future entrants to the
industry; (viii) social and economic conditions; (ix) natural disasters; and (x)
other risk factors described in the Company's reports filed with the Securities
and Exchange Commission from time to time. Many of these risks and uncertainties
are beyond the Company's control. Actual results could differ materially from
the forward-looking statements made. In light of these risks and uncertainties,
there can be no assurance that the results anticipated in the forward-looking
information contained in this report will, in fact, occur.

         Any forward-looking statement speaks only as of the date on which such
statement is made. New factors emerge from time to time and it is not possible
for management to predict all of such factors, nor can it assess the impact of
each such factor on the business or the extent to which any factor, or
combination of factors, may cause actual results to differ materially from those
contained in any forward-looking statements.

OVERVIEW AND DISCUSSION OF CRITICAL ACCOUNTING POLICIES

         Guardian is a provider of monitoring (retail and wholesale),
maintenance services, sales and installation for high-grade electronic security
and fire alarm systems to commercial and residential customers primarily in the
states of Florida and New York.

         The Company's objective is to provide commercial and residential
security services to an increasing number of customers. The Company's growth
strategy is to enhance its position in the security alarm monitoring industry in
Florida and in the Metropolitan New York City area by increasing the number and
density of customers for whom it provides services. The Company is pursuing this
strategy through a balanced growth plan to generate monitoring and maintenance
contracts with its own sales and installation efforts through referrals and
traditional local marketing as well as incorporating purchases of portfolios of
customer accounts in existing and contiguous markets. The Company believes that
increasing the number and density of its customers will help it to achieve
economies of scale and enhance its results of operations. The Company also
regularly reviews opportunities for expanding its operations into other large
metropolitan markets.

         In order to finance this strategy, the Company has chosen to issue
yield-bearing instruments (such as senior debt or preferred stock), which
results in related interest and dividend expense. The Company believes that this
strategy, which emphasize creating long-term value over short-term net income,
will result in the Company's recording of net losses until such time as: (i) the
Company's cash flow from its increased customer base allows it to reduce
significantly its indebtedness and related interest costs; and (ii) the
Company's amortization expense related to acquired alarm contracts, through

                                       10
<PAGE>

the passage of time and recognition of account cancellations, is reduced. The
Company has never had net income and has a history of consistent and sometimes
significant net losses.

         The majority of the Company's revenue is derived from recurring
payments for the monitoring and maintenance of security and fire alarm systems,
pursuant to contracts with initial terms typically ranging from three to five
years. Additional revenue is generated from services rendered by the Company to
customers without such contracts who request maintenance and repair services.
Historically, monitoring revenues have generated higher gross profit margins
than revenues derived from maintenance and service activities. Both monitoring,
maintenance and service revenues are recognized as the service is provided.
Unearned revenues result from billings in advance of performance of monitoring
and maintenance services. Contracts for monitoring services are generally for an
initial non-cancelable term of three to 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.

           Installation revenues produce lower gross profit margins than those
generated by monitoring revenues, but they are an integral component of the
Company's ability to retain and establish new monitoring customers. On
installations for which the Company retains title to the electronic security
systems or provides monitoring services subsequent to the installation, the
installation revenue is deferred, classified as unearned revenue on the
Company's consolidated balance sheet, and then recognized over the longer of the
term of the service agreement or the estimated eight-year life of the customer
relationship. All other installation revenues are recognized in the period in
which the installation is completed. All direct installation costs, which
include materials, direct labor and commissions, related to installations that
result in deferred installation revenue, are capitalized on an
agreement-by-agreement basis to the extent such costs do not exceed the total of
deferred installation revenue and expected margin from monitoring services
during the initial service contract term. To the extent such costs exceed the
total of deferred installation revenue and expected margin from monitoring
services during the initial service contract term, the excess is expensed as
installation and operating expense in the period the installation is completed.
Capitalized installation costs, to the extent of deferred installation revenues,
are expensed over the longer of the term of the service agreement or the
estimated eight-year life of the customer relationship. Capitalized costs in
excess of deferred revenues, but which are less than the expected margin from
monitoring services during the initial service contract term, are expensed over
the initial term of the service agreement. Capitalized materials and direct
labor costs, which are included in property and equipment, net totaling
approximately $8.9 million at June 30, 2002, are expensed as depreciation;
capitalized commissions, which are included in deposits and other assets
totaling approximately $1.3 million at June 30, 2002, are expensed as
installation and service operating expense. When a customer to whom we are
providing monitored services cancels the service, any unearned revenue balance
and the associated capitalized cost balance are recognized in the period in
which the cancellation occurs.

           Purchased contracts, which are identified as customer accounts, net
on the consolidated balance sheet, are reflected at cost. The cost of purchased
accounts is based on the estimated fair value at the date of purchase. The cost
of purchased customer accounts is capitalized and amortized on a straight-line
basis over an estimated useful life of ten years. For those accounts which
cancel during the amortization period, an estimate of the remaining carrying
value of the accounts is expensed in the period in which the accounts cancel. It
is the Company's policy to perform periodic evaluations of purchased customer
account attrition and, if necessary, to adjust the remaining useful lives. The
Company periodically estimates future cash flows from customer accounts to
determine whether any impairment has occurred. If the estimated future cash
flows are less than their unamortized cost, an impairment charge is recorded for
the amount that the unamortized cost of customer accounts exceeds their
estimated fair value. Based on the current balance in customer accounts, net,
and our historic rate of amortization expense, the majority of this asset will
be fully amortized within the next four years.

                                       11
<PAGE>

KEY OPERATING MEASURES

         The Company believes that EBITDA, RMR and RMR attrition are key
measurements of performance in the security monitoring industry.

         EBITDA. The Company manages its business based on earnings before
interest, taxes, depreciation and amortization ("EBITDA") which we derive by
adjusting net loss by adding: (i) amortization of customer accounts, (ii)
depreciation and amortization, and (iii) interest and other expense, net as set
forth in the table below.

         EBITDA does not represent cash flow from operations as defined by
accounting principles generally accepted in the United States, should not be
construed as an alternative to operating income and is indicative neither of
operating performance nor of cash flows available to fund the cash needs of the
Company. Items excluded from EBITDA are significant components in understanding
and assessing the financial performance of the Company. The Company believes
presentation of EBITDA enhances an understanding of financial condition, results
of operations and cash flows because EBITDA is used by the Company to satisfy
its debt service obligations and its capital expenditure and other operational
needs, as well as to provide funds for growth. In addition, EBITDA is used by
senior lenders and the investment community to determine the current borrowing
capacity and to estimate the long-term value of companies with recurring cash
flows from operations. The Company's computation of EBITDA may not be comparable
to other similarly titled measures of other companies.

         The following table provides a calculation of EBITDA for the three and
six months ended June 30, 2002 and 2001:

<TABLE>
<CAPTION>
                                                 Three Months Ended              Six Months Ended
                                                       June 30,                      June 30,
                                             --------------------------     ---------------------------
                                                 2002           2001            2002            2001
                                             ----------     -----------     -----------     -----------
<S>                                          <C>            <C>             <C>             <C>
Net loss                                     $ (476,575)    $(1,088,114)    $(1,171,939)    $(2,052,321)
Plus:
       Amortization of customer accounts      1,001,229       1,148,942       2,233,077       2,286,238
       Depreciation and amortization            665,227         656,863       1,400,451       1,284,042
       Interest and other expense, net          199,010         286,625         368,216         620,501

                                             ----------     -----------     -----------     -----------
              EBITDA                         $1,388,891     $ 1,004,316     $ 2,829,805     $ 2,138,460
                                             ==========     ===========     ===========     ===========
</TABLE>

         RECURRING MONTHLY REVENUE ("RMR"). RMR is revenue that the Company is
entitled to receive under monitoring and maintenance service contracts in effect
at the end of the period. Because the Company has grown rapidly, often by
acquiring security alarm companies and portfolios of customer accounts which are
included in revenues only from the date of purchase, the Company's revenues are
not proportional to the level of its investment of capital reported to the end
of the period upon which a return must be earned. Management believes RMR
enhances an investor's understanding of the Company's financial condition,
results of operations and cash flows because it provides a measure of the
Company's revenue that can be used to derive estimated annual revenues acquired
in purchases for a full year of operations. As a result, RMR can be compared to
the level of investment in the statement of financial condition at the end of
the period. By comparing RMR to cash, debt and equity balances at the end of a
period, an investor can assess the Company's investment track record. Further,
management believes an investor's consideration of RMR relative to the Company's
customer base helps identify trends in RMR per customer. RMR does not measure
profitability or performance, and does not include any allowance for future
losses of customers or allowance for doubtful accounts. The Company does not
have sufficient

                                       12
<PAGE>

information as to the losses of purchased customers accounts to
predict with absolute certainty the amount of acquired RMR that will be realized
in future periods or the impact of the loss of acquired accounts on our overall
rate of customer loss. Our computation of RMR may not be comparable to other
similarly titled measures of other companies and RMR should not be viewed by
investors as an alternative to actual monthly revenue as determined in
accordance with accounting principles generally accepted in the United States.
RMR at June 30, 2002 and 2001 was approximately $1,213,000 and $1,115,000,
respectively.

         RMR ATTRITION. The Company experiences customer cancellations, which
are commonly referred to as attrition, for monitoring and maintenance services
as a result of customer relocation, unfavorable economic conditions and other
reasons. This attrition is offset to a certain extent by revenues from the sale
of additional services to existing customers, periodic price increases, the
reconnection of premises previously occupied by customers, the conversion of
accounts previously monitored by other alarm companies and guarantees provided
by the sellers of such accounts. The Company defines RMR attrition numerically
for a particular period as a quotient. The numerator of this quotient is equal
to the difference between gross RMR lost as the result of canceled customer
accounts and RMR lost that was replaced pursuant to guarantees from sellers of
accounts purchased by the Company, replaced by periodic price increases, and
replaced by the reconnection of premises previously occupied by customers. The
denominator of this quotient is the average RMR for such period. RMR attrition
for the Company was under 10% for the twelve months ended June 30, 2002 and
2001.

CONSOLIDATED STATEMENT OF OPERATIONS

                THREE AND SIX MONTHS ENDED JUNE 30, 2002 AND 2001

         The following table sets forth certain operating data as a percentage
of total revenues for the periods indicated:

<TABLE>
<CAPTION>
                                                     FOR THE THREE MONTHS ENDED           FOR THE SIX MONTHS
                                                              JUNE 30,                      ENDED JUNE 30,
                                                     --------------------------          --------------------
                                                        2002             2001            2002            2001
                                                        ----             ----            ----            ----
<S>                                                    <C>              <C>             <C>            <C>
Revenues:
        Monitoring                                      62.1%            63.1%           63.0%          63.8%
        Installation and service                        36.8             35.8            35.8           35.2
        Other revenues                                   1.1              1.1             1.2            1.0
                                                       -----            -----           -----          -----
                 Total revenues                        100.0            100.0           100.0          100.0

Operating expenses:
        Monitoring                                       9.5             10.2             9.5           10.0
        Installation and service                        28.0             32.0            26.2           30.0
        Selling, general and administrative             37.8             38.4            38.6           39.3
        Amortization of customer accounts               17.8             22.2            20.2           22.2
        Depreciation and amortization                   11.8             12.7            12.7           12.5
                                                       -----            -----           -----          -----
                 Total operating expenses              104.9            115.5           107.2          114.0

Interest and other expense, net                          3.5              5.5             3.3            6.0
                                                       -----            -----           -----          -----

Net loss                                                (8.4)%          (21.0)%         (10.5)%        (20.0)%
                                                       =====            =====           =====          =====
</TABLE>

                                       13
<PAGE>

RESULTS OF OPERATIONS FOR THE THREE MONTHS ENDED JUNE 30, 2002 COMPARED TO THE
THREE MONTHS ENDED JUNE 30, 2001

         REVENUE. Total revenues were approximately $5.6 million for the three
months ended June 30, 2002 and approximately $5.2 million for the three months
ended June 30, 2001, which represents an increase of 9%. Monitoring revenues
increased by 7% to approximately $3.5 million during the three months ended June
30, 2002, from approximately $3.3 million during the three months ended June 30,
2001. The increase in monitoring revenues compared to the prior year's period is
attributable to monitoring agreements that are continuously purchased from
independent alarm dealers as well as monitoring agreements that are signed in
conjunction with the Company's installation activities. Installation and service
revenues were approximately $2.1 million during the three months ended June 30,
2002, compared to approximately $1.9 million during the three months ended June
30, 2001, which represents an increase of 12%. The increase in our installation
and service revenues is a result of increased installation activity in the
Company's Florida and New York installation business units offset with larger
amounts of installation revenue deferred from current installation activities
during the three months ended June 30, 2002 compared to the prior period.

         MONITORING, INSTALLATION AND SERVICE. Monitoring, installation and
service expenses for the three months ended June 30, 2002 decreased 3% to
approximately $2.1 million, compared to approximately $2.2 million during the
corresponding period in the prior year. Monitoring expenses increased 2% to
approximately $536,000 compared to approximately $526,000 during the
corresponding period in the prior year. Monitoring expenses as a percentage of
monitoring revenues were 15% for the three months ended June 30, 2002 compared
to 16% for the three months ended June 30, 2001. Installation and service costs
during the three months ended June 30, 2002 decreased by 5% to approximately
$1.6 million, compared to approximately $1.7 million during the corresponding
period in the prior year. The decrease is due to the completion of projects with
higher levels of gross profit, the Company's overall efforts to reduce costs, as
well as larger amounts of installation costs deferred from current installation
activities during the three months ended June 30, 2002 compared to the prior
period.

         Gross profit, defined as total monitoring, installation, and service
revenues less monitoring, installation and service costs, increased by 17% to
approximately $3.5 million during the three months ended June 30, 2002, compared
to approximately $2.9 million during the corresponding period in the prior year.
Gross profit from monitoring revenues increased by 8% to approximately $3.0
million during the three months ended June 30, 2002, compared to approximately
$2.7 million during the corresponding period in the prior year. The increase in
gross profit from monitoring activities is attributable to the increase of
monitored accounts from internal installation activities and the purchase of
monitored accounts for which the incremental costs to monitor are minimal. Gross
profit from monitoring activities as a percentage of monitoring revenue was 85%
during the three months ended June 30, 2002 compared to 84% for the three months
ended June 30, 2001. Gross profit from installation and service activities
increased to approximately $494,000 during the three months ended June 30, 2002,
from approximately $198,000 during the corresponding period in the prior year,
which is primarily the result of better materials pricing, a lower volume of
projects requiring subcontracted labor, and fewer jobs with cost overruns.

         SELLING, GENERAL AND ADMINISTRATIVE ("SG&A"). SG&A increased by 7% to
approximately $2.1 million during the three months ended June 30, 2002, compared
to approximately $2.0 million during the corresponding period in the prior year.
The increase in SG&A costs in the three months ended June 30, 2002 from the
corresponding period in the prior year is related primarily to additional
personnel required to support our increased sales activities as well as
additional personnel allocated to care for our existing customers. The success
of the Company is dependent on its ability to attract and retain highly
qualified management, sales and service personnel. As the Company continues to
expand its operations, it expects to be faced with increasing personnel
requirements, and may be unable to generate sufficient revenues to offset the
increasing costs associated with fulfilling these requirements.

                                       14
<PAGE>

         AMORTIZATION OF CUSTOMER ACCOUNTS. Amortization of customer accounts
was approximately $1.0 million during the three months ended June 30, 2002
compared to approximately $1.1 million during the three months ended June 30,
2001, a decrease of 13%. This decrease is due primarily to a decrease in the
level of cancellations for the period offset by the additional amortization
expense of customer accounts purchased during 2001. Such costs are amortized
over ten years, unless accounts are cancelled and not replaced by the
independent alarm company from which the account was purchased, or otherwise, in
which case an estimate of the remaining unamortized balance is written off as a
charge to amortization expense.

         DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased
by 1% to approximately $665,000 during the three months ended June 30, 2002,
compared to approximately $657,000 during the corresponding period in the prior
year. The increase in depreciation and amortization is primarily due to growth
in the depreciation expense related to capitalized installation costs (the gross
balance of which increased to approximately $14.4 million at June 30, 2002 from
approximately $10.8 million at June 30, 2001). The Company expects that the
depreciation of capitalized installation costs will continue to increase in the
future as installation services which meet the capitalization criteria are
rendered to new customers. Based on our required goodwill impairment review, no
amortization expense was recorded in the three months ended June 30, 2002, in
accordance with the adoption of SFAS 142. Amortization expense related to
goodwill in the prior year was approximately $47,000.

         INTEREST AND OTHER EXPENSE, NET. Interest and other expense, net
decreased 31% to approximately $199,000 during the three months ended June 30,
2002, compared to approximately $287,000 during the corresponding period in the
prior year. Although the Company increased borrowings under its senior credit
facility, interest expense on our senior credit facility was lower from period
to period due to significantly lower average interest rates. The average
interest rate in the three months ended June 30, 2002 was 5.7% compared to 8.1%
in the three months ended June 30, 2001. Total borrowings under our senior
credit facility increased to approximately $13.4 million at June 30, 2002 from
approximately $11.5 million at June 30, 2001.

         NET LOSS. The Company has never had net income and has a history of
consistent and sometimes significant net losses. Net loss applicable to common
stock for the three months ended June 30, 2002 was approximately $944,000 or
$(0.11) per share, basic and diluted, compared to net income of approximately
$1.0 million, or $0.10 per diluted share, during the corresponding period in the
prior year. The prior period net income applicable to common stock includes an
approximate $2.6 million in gain on exchange of preferred stock. Preferred stock
dividends of approximately $468,000 were recorded in both the three months ended
June 30, 2002 and 2001.

RESULTS OF OPERATIONS FOR THE SIX MONTHS ENDED JUNE 30, 2002 COMPARED TO THE SIX
MONTHS ENDED JUNE 30, 2001

         REVENUE. Total revenues were approximately $11.0 million for the six
months ended June 30, 2002 and approximately $10.3 million for the six months
ended June 30, 2001, which represents an increase of 7%. Monitoring revenues
increased by 6% to approximately $7.0 million during the six months ended June
30, 2002, from approximately $6.6 million during the six months ended June 30,
2001. The increase in monitoring revenues compared to the prior year's period is
attributable to monitoring agreements that are continuously purchased from
independent alarm dealers as well as monitoring agreements that are signed in
conjunction with the Company's installation activities. Installation and service
revenues were approximately $3.9 million during the six months ended June 30,
2002, compared to approximately $3.6 million during the six months ended June
30, 2001, which represents an increase of 9%. The increase in our installation
and service revenues is a result of increased installation activity in the
Company's Florida and New York installation business units offset

                                       15
<PAGE>

with larger amounts of installation revenue deferred from current installation
activities during the three months ended June 30, 2002 compared to the prior
period.

         MONITORING, INSTALLATION AND SERVICE. Monitoring, installation and
service expenses for the six months ended June 30, 2002 decreased 4% to
approximately $3.9 million, compared to approximately $4.1 million during the
corresponding period in the prior year. Monitoring expenses increased 2% to
approximately $1,051,000 compared to approximately $1,026,000 during the
corresponding period in the prior year. Monitoring expenses as a percentage of
monitoring revenues were 15% for the six months ended June 30, 2002 compared to
16% for the six months ended June 30, 2001. Installation and service costs
during the six months ended June 30, 2002 decreased by 7% to approximately $2.9
million, compared to approximately $3.1 million during the corresponding period
in the prior year. The decrease is due to the completion of projects with higher
levels of gross profit, the Company's overall efforts to reduce costs, as well
as larger amounts of installation costs deferred from current installation
activities during the six months ended June 30, 2002 compared to the prior
period.

         Gross profit, defined as total monitoring, installation and service
revenues less monitoring, installation and service costs, increased by 14% to
approximately $7.0 million during the six months ended June 30, 2002, compared
to approximately $6.1 million during the corresponding period in the prior year.
Gross profit from monitoring revenues increased by 6% to approximately $5.9
million during the six months ended June 30, 2002, compared to approximately
$5.5 million during the corresponding period in the prior year. The increase in
gross profit from monitoring activities is attributable to the increase of
monitored accounts from internal installation activities and the purchase of
monitored accounts for which the incremental costs to monitor are minimal. Gross
profit from monitoring activities as a percentage of monitoring revenue was 85%
during the six months ended June 30, 2002 compared to 84% during the six months
ended June 30, 2001, respectively. Gross profit from installation and service
activities increased to approximately $1.1 million during the six months ended
June 30, 2002, from approximately $536,000 during the corresponding period in
the prior year, which is primarily the result of better materials pricing, a
lower volume of projects requiring subcontracted labor, and fewer jobs with cost
overruns.

         SELLING, GENERAL AND ADMINISTRATIVE ("SG&A"). SG&A increased by 5% to
approximately $4.3 million during the six months ended June 30, 2002, compared
to approximately $4.0 million during the corresponding period in the prior year.
The increase in SG&A costs in the six months ended June 30, 2002 from the
corresponding period in the prior year is related primarily to additional
personnel required to support our increased sales activities as well as
additional personnel allocated to care for our existing customers. The success
of the Company is dependent on its ability to attract and retain highly
qualified management, sales and service personnel. As the Company continues to
expand its operations, it expects to be faced with increasing personnel
requirements, and may be unable to generate sufficient revenues to offset the
increasing costs associated with fulfilling these requirements.

         AMORTIZATION OF CUSTOMER ACCOUNTS. Amortization of customer accounts
was approximately $2.2 million during the six months ended June 30, 2002
compared to approximately $2.3 million during the six months ended June 30,
2001, a decrease of 2%. This decrease is due primarily to a decrease in the
level of cancellations for the period offset by the additional amortization
expense of customer accounts purchased during 2001. Such costs are amortized
over ten years, unless accounts are cancelled and not replaced by the
independent alarm company from which the account was purchased, or otherwise, in
which case an estimate of the remaining unamortized balance is written off as a
charge to amortization expense.

         DEPRECIATION AND AMORTIZATION. Depreciation and amortization increased
by 9% to approximately $1.4 million during the six months ended June 30, 2002,
compared to approximately $1.3 million during the corresponding period in the
prior year. The increase in depreciation and amortization

                                       16
<PAGE>

is primarily due to growth in the depreciation expense related to capitalized
installation costs (the gross balance of which increased to approximately $14.4
million at June 30, 2002 from approximately $10.8 million at June 30, 2001). The
Company expects that depreciation of capitalized installation costs will
continue to increase in the future as installation services which meet the
capitalization criteria are rendered to new customers. Based on our required
goodwill impairment review, no amortization expense was recorded in the three
months ended June 30, 2002, in accordance with the adoption of SFAS 142.
Amortization expense related to goodwill in the prior year was approximately
$94,000.

         INTEREST AND OTHER EXPENSE, NET. Interest and other expense, net
decreased 41% to approximately $368,000 during the six months ended June 30,
2002, compared to approximately $621,000 during the corresponding period in the
prior year. Approximately $111,000 of other income was recorded due to the
accretion of a warrant during the six months ended June 30, 2002 compared to
$19,000 during the corresponding period in the prior year. Interest expense on
our senior credit facility was lower from period to period due to significantly
lower average interest rates offset by increased borrowings. The average
interest rate in the six months ended June 30, 2002 was 5.6% compared to 8.8% in
the six months ended June 30, 2001. Total borrowings under our senior credit
facility increased to approximately $13.4 million at June 30, 2002 from
approximately $11.5 million at June 30, 2001.

         NET LOSS. The Company has never had net income and has a history of
consistent and sometimes significant net losses. Net loss applicable to common
stock for the six months ended June 30, 2002 was approximately $2.1 million, or
$(0.24) per share, basic and diluted, compared to a net loss of approximately
$0.4 million, or $(0.04) per share, basic and diluted, during the corresponding
period in the prior year. The prior period net loss applicable to common stock
includes an approximate $2.6 million in gain on exchange of preferred stock.
Preferred stock dividends of approximately $936,000 were recorded in the six
months ended June 30, 2002 compared to approximately $915,000 in the six months
ended June 30, 2001.

LIQUIDITY AND CAPITAL RESOURCES

         CAPITAL RESOURCES. On June 28, 2002, the Company entered into a $20.0
million senior credit facility ("Credit Facility") with GE Capital Funding,
replacing its previously existing $20.0 million senior credit facility. The
Credit Facility has an initial expiration date of July 2004, and the Company may
extend the facility for up to two additional years, subject to the occurrence of
certain events. Under the Credit Facility, borrowings bear interest at floating
rates, either at a certain index rate plus 1 3/4% (6.50% at June 30, 2002) or,
at the Company's election, LIBOR plus 3 1/4%. Under the terms of the Credit
Facility, the Company is required to meet certain financial performance
covenants. The Company is in compliance with all such covenants as of June 30,
2002.

         As of June 30, 2002, the Company believes it will maintain the ability
to generate sufficient cash to fund future operations of the business over the
next twelve months. Generally, cash flow will be generated from a combination
of: (i) recurring revenue from its security monitoring customer base, and (ii)
the Company's $20.0 million Credit Facility. At June 30, 2002, there was $6.6
million of availability under the Credit Facility.

         LIQUIDITY. Net cash provided by operating activities during the six
months ended June 30, 2002 was approximately $2.7 million. The Company incurred
a net loss of approximately $1.2 million during such period. Included in such
loss, however, were depreciation and amortization expense, amortization of
customer accounts, and amortization of deferred financing costs totaling
approximately $3.8 million, and provisions for doubtful accounts approximately
$270,000. Other operating cash outflows include approximately $1.2 million
related to increases in accounts receivable, inventory, prepaid expenses and
other, deposits and other assets, and accounts payable and other expenses. Other
operating cash inflows include approximately $1.1 million related to net
increases in notes receivable and unearned revenue.

                                       17
<PAGE>

         Net cash used in investing activities was approximately $2.9 million
during the six months ended June 30, 2002 and was primarily comprised of the
purchase of property and equipment of approximately $65,000, the purchase of
customer accounts of approximately $717,000, capitalized installation costs of
approximately $1.8 million, and other of approximately $272,000 offset by the
sale of property and equipment of approximately $16,000.

         Net cash provided by financing activities was approximately $72,000,
during the six months ended June 30, 2002, primarily consisting of borrowings
under line of credit of approximately $2.0 million reduced by repayments on debt
obligations of approximately $1.4 million, and payment of cash dividends on
preferred stock of approximately $574,000. As of June 30, 2002, the Company's
cash balance was approximately $668,000.

         Total shareholders' deficit was approximately $2.6 million at June 30,
2002, changing by a net amount of approximately $1.7 million during the six
months ended June 30, 2002. The net decrease resulted from the accrual of
dividends on the Company's Series C and E Preferred Stock of approximately
$574,000 and the net loss of approximately $1.2 million. The accrual of
dividends on the Companies Series D Preferred Stock has no effect on the change
in shareholder's deficit of the consolidated balance sheet as the company has
chosen to pay this dividend in additional shares of Series D Preferred Stock
which is recorded as additional paid-in capital in the shareholders' deficit
section of the consolidated balance sheet.

                                       18
<PAGE>

ITEM 4.  SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS

         The Company's annual meeting was held on June 21, 2002. The following
number of votes were cast for the matters indicated:

1.       Election of Board of Directors

              Director                            For          Withheld
              --------                            ---          --------
              Harold Ginsburg                    6,387,743      306,694
              Richard Ginsburg                   6,418,243      276,194
              Sheilah Ginsburg                   6,680,137       14,300
              Darius G. Nevin                    6,418,243      276,194
              William Remington                  6,680,637       13,800
              Douglas T. Lake                    6,418,243      276,194
              Joel A. Cohen                      6,345,232      349,205
              David Heidecorn                    6,418,243      276,194

2.       Ratification of McKean, Paul, Chrycy, Fletcher & Co. as the independent
         accountants for the Company for the year ending December 31, 2002.

                    For           Against       Abstain        Non-vote
                    ---           -------       -------        --------
                 6,337,208        312,811        44,418           --

                                       19
<PAGE>

ITEM 6.  EXHIBITS AND REPORTS ON FORM 8-K

Exhibits

  3.1          Articles of Incorporation dated July 7, 1999 incorporated by
               reference to Exhibit 3(i) of the Company's Form 10-QSB filed
               August 13, 1999.
  3.2          Amended and Restated By-Laws of the Company dated March 2, 2000
               incorporated by reference to Exhibit 3(ii) of the Company's Form
               10-KSB filed March 30, 2000.
  3.3          Articles of Amendment to Articles of Incorporation of Guardian
               International, Inc. as filed with the Florida Secretary of State
               on March 9, 2000 incorporated by reference to Exhibit 3(iii) of
               the Company's Form 10-KSB filed March 30, 2000.
  3.4          Articles of Amendment to Articles of Incorporation of Guardian
               International, Inc. as filed 0with the Secretary of State on
               March 30, 2001 incorporated  by reference to Exhibit 3(iv) of
               the Company's Form 10-KSB filed April 2, 2001.
  3.5          Articles of Amendment to Articles of Incorporation of Guardian
               International, Inc. as filed with the Secretary of State on
               March 30, 2001 incorporated by reference to the Company's
               Form 8-K filed May 1, 2001.
  4.1          Specimen Stock Certificate incorporated by reference to Exhibit
               4(a) of the Company's Form 10-QSB filed August 13, 1999.
 10.1          Credit Agreement dated as of June 28, 2002 among Guardian
               International, Inc., as Borrower, the other credit parties
               signatory hereto, as Credit Parties, the lenders signatory hereto
               from time to time, as Lenders, and General Electric Capital
               Corporation, as Agent and Lender incorporated by reference to
               Exhibit 10.46 of the Company's Form 8-K filed on July 5, 2002.
 99.1*         Certification  by Harold Ginsburg, the Company's CEO, pursuant to
               18 U.S.C Section 1350, as adopted pursuant to section 906 of the
               Sarbanes-Oxley Act of 2002.
 99.2*         Certification by Kenneth Wiesenfeld, the Company's Vice
               President of Finance, pursuant to 18 U.S.C Section 1350, as
               adopted pursuant to section 906 of the Sarbanes-Oxley Act of
               2002.

*Incorporated Herewith

Reports on Form 8-K
-------------------

During the three months ended June 30, 2002, the Company disclosed the following
information on a current report on Form 8-K:

On April 15, 2002, the Company reported one event under Item 4, Changes in
Registrant's Certifying Accountant, relating to the appointment of McKean, Paul,
Chrycy, Fletcher & Co. as the independent accountants of the Company for the
fiscal year ending December 31, 2002, replacing Arthur Andersen LLP.

                                       20
<PAGE>

                                   SIGNATURES

     In accordance with the requirements of the Exchange Act, the registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                   GUARDIAN INTERNATIONAL, INC.

Date: August 13, 2002


                                   By: /s/ KENNETH WIESENFELD
                                       ----------------------
                                       Kenneth Wiesenfeld
                                       Vice President of Finance (Principal
                                       Finance Officer and Principal Accounting
                                       Officer)

                                       21
<PAGE>


                                  EXHIBIT INDEX

No.                        Exhibit
---                        --------

99.1                 Certification  by Harold Ginsburg, the Company's CEO,
                     pursuant to 18 U.S.C Section 1350, as adopted pursuant to
                     section 906 of the Sarbanes-Oxley Act of 2002.

99.2                 Certification by Kenneth Wiesenfeld, the Company's Vice
                     President of Finance, pursuant to 18 U.S.C Section 1350, as
                     adopted pursuant to section 906 of the Sarbanes-Oxley Act
                     of 2002.

                                       22