UNITED STATES
                       SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                   FORM 10-QSB

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

         FOR THE QUARTERLY PERIOD ENDED SEPTEMBER 30, 1997

                                       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.
        (Exact name of small business issuer as specified in its charter)

        NEVADA                                            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 Exchange Act during the past 12 months (or for such
shorter period that the issuer 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 November 14, 1997, there are 8,996,804 shares of Class A Voting
Common Stock and 484,035 shares of Class B Nonvoting Common Stock of the issuer
outstanding.

           TRANSITIONAL SMALL BUSINESS DISCLOSURE FORMAT (CHECK ONE):

                            YES ____    NO   X


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<TABLE>
<CAPTION>

                                TABLE OF CONTENTS

                                                                                                   PAGE NO.
<S>                        <C>                                                                       <C>
PART I            FINANCIAL INFORMATION

Item 1.                    Financial  Statements

                           Consolidated Balance Sheets
                             As of September 30, 1997 and December 31, 1996                          1

                           Consolidated Statements of Operations
                             For the Three and Nine Month Periods Ended
                             September 30, 1997 and 1996                                             2

                           Consolidated Statements of Cash Flows
                             For the Nine Month Periods Ended
                             September 30, 1997 and 1996                                             3

                           Notes to Consolidated Financial Statements                                4

Item 2.                    Management's Discussion and Analysis                                      8

PART II           OTHER INFORMATION

Item 1.                    Legal Proceedings                                                       16

Item 3.                    Defaults Upon Senior Securities                                         16

Item 6.                    Exhibits and Reports on Form 8-K                                        16

</TABLE>

<PAGE>


                                                                     FORM 10-QSB

ITEM 1.           FINANCIAL STATEMENTS

<TABLE>
<CAPTION>

                          GUARDIAN INTERNATIONAL, INC.
                           CONSOLIDATED BALANCE SHEETS
                    SEPTEMBER 30, 1997 AND DECEMBER 31, 1996

                                                                                        September 30,       December 31,
                                                                                            1997                1996
                                                                                        -------------       ------------
                                                                                         (Unaudited)              *
<S>                                                                                     <C>                 <C>         
Assets

Current assets:
     Cash and cash equivalents                                                          $     166,860       $  1,037,861
     Accounts receivable, net of allowance for doubtful accounts of
       $138,110 at September 30, 1997 and $166,315 at December 31, 1996                       732,073            569,180
     Other                                                                                     80,603             20,736
                                                                                        -------------       ------------
          Total current assets                                                                979,536          1,627,777
                                                                                        -------------       ------------
Property and equipment, net                                                                   691,314            484,859

Customer accounts, net                                                                      7,573,813          5,124,449

Intangible assets, net                                                                      1,706,524          1,718,377

Deposits and other assets                                                                      57,470             26,517
                                                                                        -------------       ------------
           Total Assets                                                                 $  11,008,657       $  8,981,979
                                                                                        =============       ============
Liabilities and Shareholders' Equity

Current liabilities:
    Accounts payable and accrued expenses                                               $     773,710       $    578,592
    Unearned revenue                                                                          247,616            123,961
    Current portion of long term obligations                                                   85,446             84,004
                                                                                        -------------       ------------
          Total current liabilities                                                         1,106,772            786,557
                                                                                        -------------       ------------

Long term obligations, less current portion                                                 7,601,765          5,079,832

Shareholders' equity:
Class A voting common stock, $.001 par value, 100,000,000 shares authorized,
   6,503,804 and 6,453,804 shares issued; and 6,496,804 and 6,453,804 shares
   outstanding at September 30, 1997 and December 31, 1996, respectively                        6,504              6,454
Class B non voting common stock, $.001 par value, 484,035 shares authorized, issued
   and outstanding at September 30, 1997 and December 31, 1996                                    484                484
Additional paid-in capital                                                                  4,745,714          4,777,772

Accumulated deficit                                                                        (2,446,144)        (1,467,762)

Treasury shares                                                                                (6,438)                 -

Notes receivable from sale of stock                                                                 -           (201,358)
                                                                                        -------------       ------------
                                                                                            2,300,120          3,115,590
                                                                                        -------------       ------------
           Total Liabilities and Shareholders' Equity                                   $  11,008,657       $  8,981,979
                                                                                        =============       ============

</TABLE>


*  Excerpted from audited Financial Statements filed with the issuer's
   Form 10-KSB for the period ended December 31, 1996.


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

                                        1

<PAGE>

<TABLE>
<CAPTION>

                                                                     FORM 10-QSB

                          GUARDIAN INTERNATIONAL, INC.
                      CONSOLIDATED STATEMENTS OF OPERATIONS
         FOR THE THREE AND NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
                                   (UNAUDITED)

                                                                  FOR THE THREE MONTHS          For the Nine Months
                                                                   ENDED SEPTEMBER 30,          Ended September 30,
                                                                 -----------------------       -----------------------
                                                                    1997        1996              1997         1996
                                                                 -----------  ----------       -----------  ----------
<S>                                                                <C>       <C>                <C>        <C>
Revenues:
     Monitoring                                                  $ 1,016,747  $  679,304       $ 2,836,102  $1,894,290
     Installation and service                                        447,607     228,557         1,182,920     405,151
                                                                 -----------  ----------       -----------  ----------
          Total revenue                                            1,464,354     907,861         4,019,022   2,299,441
                                                                 -----------  ----------       -----------  ----------
Operating expenses:
     Monitoring                                                      192,632      92,441           546,061     270,552
     Installation and service                                        408,909     200,637         1,293,882     373,867
     General and administrative                                      633,462     357,646         1,419,475     856,661
     Amortization of customer contracts                              350,385     184,889           768,212     438,998
     Depreciation and amortization                                    88,009      35,477           245,573     116,500
                                                                 -----------  ----------       -----------  ----------
          Total operating expenses                                 1,673,397     871,090         4,273,203   2,056,578
                                                                 -----------  ----------       -----------  ----------

          Income (loss) from operations                             (209,043)     36,771          (254,181)    242,863

Interest expense                                                     284,081     151,631           724,201     400,051
                                                                 -----------  ----------       -----------  ----------

          Net loss before taxes                                     (493,124)   (114,860)         (978,382)   (157,188)

Provision for taxes                                                        -     (63,000)                -     (63,000)
                                                                 -----------  ----------       -----------  ----------

          Net loss                                               $  (493,124) $ (177,860)      $  (978,382) $ (220,188)
                                                                 ===========  ==========       ===========  ==========

Loss per share                                                   $     (0.08) $    (0.04)      $     (0.15) $    (0.06)
                                                                 ===========  ==========       ===========  ==========


Average number of shares outstanding                               6,496,804   4,419,453         6,473,705   3,628,787
                                                                 ===========  ==========       ===========  ==========

</TABLE>

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

                                        2

<PAGE>

<TABLE>
<CAPTION>

                                                                     FORM 10-QSB

                          GUARDIAN INTERNATIONAL, INC.
                      CONSOLIDATED STATEMENTS OF CASH FLOWS
              FOR THE NINE MONTHS ENDED SEPTEMBER 30, 1997 AND 1996
                                   (UNAUDITED)

                                                                                               1997                1996
                                                                                          -------------        -----------
<S>                                                                                       <C>                  <C>         
Cash flows from operating activities:
     Net loss                                                                             $    (978,382)       $  (220,188)
       Adjustments to reconcile net loss to net cash provided by (used in) operating
         activities:
          Depreciation and amortization                                                         245,573            116,500
          Amortization of customer accounts                                                     743,726            438,998
          Amortization of deferred financing costs                                              148,877                  -
          Provision for doubtful accounts                                                       112,972             24,047
     Changes in assets and liabilities:
          Accounts receivable                                                                  (275,865)          (233,778)
          Intangible and other assets                                                          (131,182)           (16,435)
          Accounts payable and accrued liabilities                                               82,468             22,916
          Unearned revenue                                                                      123,655             62,825
                                                                                          -------------        -----------
               Net cash provided by operating activities                                         71,842            194,885
                                                                                          -------------        -----------
Cash flows from investing activities:
     Purchase of fixed assets                                                                  (139,522)          (179,402)
     Acquisition of customer accounts                                                        (3,154,090)        (2,846,742)
     Cash acquired in acquisition                                                                     -          3,153,330
                                                                                          -------------        -----------
               Net cash (used in) provided by investing activities                           (3,293,612)           127,186
                                                                                          -------------        -----------
Cash flows from financing activities:
     Payments of long term obligation                                                        (2,818,516)        (1,274,129)
     Proceeds from line of credit                                                             5,175,723          3,979,649
     Purchase of treasury stock                                                                  (6,438)                 -
     Payment of shareholder loans                                                                     -           (198,887)
     Distribution to shareholder                                                                      -         (1,667,838)
                                                                                          -------------        -----------
               Net cash provided by financing activities                                      2,350,769            838,795
                                                                                          -------------        -----------
               Net increase (decrease) in cash and cash equivalents                            (871,001)         1,160,866

Cash and cash equivalents, beginning of period                                                1,037,861             14,263
                                                                                          -------------        -----------
Cash and cash equivalents, end of period                                                  $     166,860        $ 1,175,129
                                                                                          =============        ===========
Noncash investing and financing activities:
     Financed acquisition of property and equipment                                       $     166,168        $    58,250
                                                                                          =============        ===========
     Recognition of Class B common stock to be issued                                     $     130,500        $         -
                                                                                          =============        ===========
     Accrual of commitment fee to senior lender                                           $     112,500        $         -
                                                                                          =============        ===========
     Issuance of common stock to purchase customer contracts                              $      39,000        $         -
                                                                                          =============        ===========
     Write-off of stock subscription receivable from sale of stock                        $     201,358        $         -
                                                                                          =============        ===========
     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                                                                         $    568,264        $   345,957
                                                                                           ============        ===========
     Income taxes paid                                                                     $          -        $         -
                                                                                           ============        ===========

</TABLE>


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

                                       3

<PAGE>


                          GUARDIAN INTERNATIONAL, INC.
                   NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
                                   (UNAUDITED)

1.       ACCOUNTING POLICIES

         The accounting policies followed by Guardian International, Inc. ("the
         Company") are described in the Company's Form 10-KSB for the fiscal
         year ended December 31, 1996. The accompanying unaudited consolidated
         financial statements have been prepared by the Company pursuant to the
         rules and regulations of the Securities and Exchange Commission.

         In the opinion of management, the accompanying unaudited consolidated
         financial statements contain adjustments (consisting only of normal and
         recurring adjustments) necessary to present fairly the Company's
         financial position and the results of 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 financial statements should be
         read in conjunction with the Company's audited consolidated financial
         statements and notes thereto.

2.       ACQUISITIONS

         On August 28, 1996, Everest Security Systems Corporation ("Everest")
         acquired all of the outstanding common stock of Guardian International,
         Inc. ("Guardian"), a non public company, by issuing to Guardian's
         shareholders 3,226,902 authorized but unissued shares of Everest,
         representing 50% of Everest at August 28, 1996. In addition, the merger
         agreement required that $1,750,000 be paid to the principal shareholder
         of Guardian as consideration for consummating the transaction as a
         return of capital (including repayment of remaining shareholder loans
         of $82,162 at the merger date). The transaction has been accounted for
         under the purchase method of accounting as a reverse acquisition with
         Guardian being deemed the acquirer. The name of the surviving entity
         was changed from Everest to Guardian. The consolidated balance sheets
         at September 30, 1997 and December 31, 1996, the consolidated
         statements of operations for the three and nine month periods ended
         September 30, 1997, and the consolidated statement of cash flows for
         the nine month periods ended September 30, 1997 include the accounts
         and activity of the surviving entity and its wholly-owned subsidiary
         (Specialty Device Installers, Inc.). The consolidated statements of
         operations for the three and nine month periods ended September 30,
         1996, and the consolidated statement of cash flows for the nine month
         period ended September 30, 1996 include the accounts and activity of
         Guardian for the three and nine month periods ended September 30, 1996
         and include the wholly owned subsidiary acquired by Guardian from the
         merger date (August 28, 1996) through September 30, 1996.

         In addition, pursuant to the merger, the Company issued 484,035 shares
         of Class B non voting common stock to the Company's senior lender,
         Heller Financial, Inc. ("Heller") or ("the Senior Lender") for
         cancellation of their existing Capital Appreciation Rights, as defined
         in the loan agreement. Also, in accordance with the terms of an
         agreement, Heller is entitled to receive an additional 150,000 shares
         of Class B non voting common stock. It was not determined until the
         quarter ended June 30, 1997 whether the additional 150,000 Class B
         shares would be transferred by the former Guardian shareholders from
         their personal shares, or whether such shares would be issued by the
         Company. Initial discussions indicated the former shareholders would
         transfer personal shares to fulfill this obligation. During the quarter
         ended June 30, 1997 it was decided the Company would

                                       4

<PAGE>


         issue the shares. The shares will be valued at $0.87 per share,
         capitalized as a cost of the acquisition of Everest and amortized over
         the remaining life of the debt expiring in May 1999 (see Note 4). The
         Company has accrued for the deferred cost of $130,500 (150,000 shares
         at $0.87 per share), recorded an increase in paid in capital of
         $130,350 to recognize the shares to be issued, and recorded $150 in
         accrued expense to recognize the par value of the shares to be issued
         which will be reclassified to Class B common stock upon issuance of the
         shares, which is expected to occur during the fourth quarter of fiscal
         1997.

         In May 1997 the Company completed the acquisition of the customer
         contracts as well as certain other assets of Alarm Control, Inc.
         ("Alarm Control" or "the Seller"). A total of approximately 2,200
         customer contracts were acquired, which has increased monthly revenue
         by approximately $60,000 per month. The purchase price consisted of
         $2.2 million in cash, 50,000 shares of Class A common stock, and an
         option to the Seller to purchase 100,000 additional shares of Class A
         common stock at $2.50 per share (the market price of the Company's
         stock on the date of the transaction was $0.78) (see Note 6).

3.       WRITE-OFF OF NOTES RECEIVABLE FROM SALE OF STOCK

         During the time period between December 31, 1995 and August 31, 1996,
         and prior to its merger with Guardian International, Inc., Everest
         Security Systems Corporation issued, among other issuances of common
         stock, 485,000 shares of Common Stock at $2.00 per share. The issuance
         was exempt from registration pursuant to Rule 504 of Regulation D
         promulgated under the Securities Act. These shares were issued in a
         private placement to accredited investors. As consideration for 285,000
         of the shares issued pursuant to such offering, Everest received notes
         with original balances totaling $570,000. As of the date of the merger
         of Guardian and Everest, the balances outstanding on the notes was
         $201,358, which was recorded by Guardian. After exhaustive collection
         efforts by the Company subsequent to the merger, no further monies have
         been received, nor are any additional collections anticipated. In light
         of the above factors, during the quarter ended June 30, 1997 the
         Company wrote off the $201,358 as a direct reduction to additional paid
         in capital.

4.       RENEWED CREDIT FACILITY

         In May 1997 the Company refinanced (the "Renewed Credit Facility") its
         existing credit facility with Heller. Under the Renewed Credit
         Facility, the maximum credit facility available to the Company was
         increased from $7 million, available under the existing agreement, to
         $15 million, and will be further increased to $20 million at such time
         as the Company achieves a Tangible Net Worth (as defined under the
         terms of the Renewed Credit Facility) of $5 million, provided that
         there have been no defaults under the Renewed Credit Facility. There
         can be no assurances that the Company will achieve a Tangible Net Worth
         (as defined) of $5 million. Interest under the Renewed Credit Facility
         is based on the 90 day LIBOR plus an additional percentage varying from
         4% to 5%, depending on the Company's outstanding borrowings and
         Tangible Net Worth (as defined). The Renewed Credit Facility expires in
         May 1999, and shall automatically renew from year to year thereafter
         unless terminated by either party. The credit facility is
         collateralized by substantially all of the Company's assets.
         Additionally, guarantees limited to potential losses, damages, costs
         and expenses incurred by Heller regarding certain Company
         representations have been provided by Harold and Sheilah Ginsburg, both
         of whom are directors, officers, and principal shareholders of the
         Company.


                                       5

<PAGE>


         Availability under the Renewed Credit Facility is subject to certain
         "Borrowing Base" limitations (as defined under the terms of the Renewed
         Credit Facility). The Renewed Credit Facility includes customary
         covenants, including, but not limited to, restrictions related to the
         incurring of other debt, the encumbrance or sale of the Company's
         assets, and the payment of dividends or making of other distributions
         to the Company's shareholders, and other financial performance
         covenants. During the three-month period ended September 30, 1997, the
         Company was not in compliance with certain of such covenants.
         Subsequent to September 30, 1997, the Renewed Credit Facility was
         amended and restated to include revisions which would bring the
         Company in compliance with all covenants. Also included in the
         amendment was a waiver for any previous instances of non compliance
         with the covenants.

5.       STOCK OPTIONS

         The Company has stock options outstanding to various employees to
         purchase 100,000 and 10,000 shares of common stock at $2 and $3 per
         share, respectively; to an investment banker to purchase 74,720 shares
         at $2 per share; and to the Seller (see Note 2) to purchase 100,000
         shares at $2.50 per share. All options expire on January 1, 2002. A
         summary of stock option transactions for the nine months ended
         September 30, 1997 is as follows:

<TABLE>

                                                                                 WEIGHTED
                                                               OPTION            AVERAGE
                                                               SHARES         EXERCISE PRICE
                                                            ------------      ---------------
<S>                                                              <C>                    <C>  
Outstanding at January 1, 1997                                   184,720                $2.05
     Granted                                                     100,000                 2.50
     Cancelled                                                         -                    -
     Exercised                                                         -                    -
                                                            ------------      ---------------
Outstanding at September 30, 1997                                284,720                $2.21
                                                            ============      ===============
Options exercisable at September 30, 1997                        184,720                $2.05
                                                            ============      ===============
</TABLE>


6.       LOSS PER SHARE

         Primary loss per share is computed for the three and nine month periods
         ended September 30, 1997 and 1996 by dividing net loss by the total of
         the weighted average number of shares outstanding. Common stock
         equivalents have not been considered in calculating loss per share
         because their effect would be anti-dilutive.

         In March 1997, the Financial Accounting Standards Board issued
         Statement of Financial Accounting Standards No. 128 "Earnings Per
         Share" ("SFAS No. 128") which establishes standards for computing and
         presenting earnings per share ("EPS"). This statement replaces primary
         and fully diluted EPS with basic and diluted EPS. Basic EPS excludes
         dilution and is computed by dividing net income by the weighted average
         common shares outstanding during the period. Diluted EPS is computed
         similarly to fully diluted EPS pursuant to Accounting Principles Board
         Opinion No. 15. SFAS No. 128 is effective for both interim and annual
         periods ending after December 15, 1997. Earlier application is not
         permitted. The effect of adopting this standard is not expected to be
         material.

                                       6

<PAGE>


7.       SUBSEQUENT EVENTS

         During October 1997, Westar Capital, Inc. acquired approximately 37% of
         the equity of the Company by purchasing 2,500,000 newly issued shares
         of Class A common stock and agreeing to purchase 1,875,000 shares of
         newly authorized and issued Series A 9 3/4% convertible cumulative
         preferred stock ("the Preferred Shares"). The Preferred Shares are
         convertible into shares of Class A common stock on a share for share
         basis. The proceeds of the $7.5 million investment will be used to pay
         down long term obligations, for acquisitions and other corporate
         purposes. The Company received $3.75 million in October 1997 relating
         to the purchase of the common shares. The remaining amount of $3.75
         million, relating to the purchase of the Preferred Shares, is expected
         be received in November, 1997.


                                       7

<PAGE>


                          GUARDIAN INTERNATIONAL, INC.

ITEM 2.           MANAGEMENT'S DISCUSSION AND ANALYSIS

INTRODUCTORY NOTE

FORWARD-LOOKING STATEMENTS. In connection with the safe harbor provisions of the
Private Securities Litigation Reform Act of 1995 (the "Reform Act"), the Company
is hereby providing cautionary statements identifying important factors that
could cause the Company's actual results to differ materially from those
projected in forward-looking statements (as such term is defined in the Reform
Act) made by or on behalf of the Company herein or orally, whether in
presentations, in response to questions or otherwise. Any statements that
express, or involve discussions as to, expectations, beliefs, plans, objectives,
assumptions or future events or performance (often, but not always, identified
through the use of words or phrases such as the Company or management
"believes," "expects," "anticipates," "hopes," words or phrases such as "will
result," "are expected to," "will continue," "is anticipated," "estimated,"
"projection" and "outlook," and words of similar import) are not historical
facts and may be forward-looking. Such forward-looking statements involve
estimates, assumptions, and uncertainties, and, accordingly, actual results
could differ materially from those expressed in the forward-looking statements.
Such 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, to generate new accounts internally, and to
form strategic alliances; (ii) the level of subscriber 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; and (v) other risk factors described in the
Company's reports filed with the Securities and Exchange Commission (the "SEC")
from time to time.

         The Company cautions that the factors described above could cause
actual results or outcomes to differ materially from those expressed in any
forward-looking statements made by or on behalf of the Company. Any
forward-looking statement speaks only as of the date on which such statement is
made, and the Company undertakes no obligation to update any forward-looking
statement or statements to reflect events or circumstances after the date on
which such statement is made or to reflect the occurrence of unanticipated
events. New factors emerge from time to time, and it is not possible for
management to predict all of such factors. Further, management cannot 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

         The majority of the Company's revenues is derived from recurring
payments for the monitoring of security systems, pursuant to contracts with
initial terms typically ranging from one to five years. The remainder of the
Company's revenues is derived from the sale and installation of security systems
and the servicing of such installed systems. Monitoring and service revenues are
recognized as the service is provided. Installation revenue is recognized when
the required work is completed. All direct installation costs, which include
equipment, labor and installation overhead, and selling and marketing costs, are
generally expensed in the period when incurred. In cases where the Company
maintains ownership of the equipment, however, the costs of such equipment is
capitalized to property and equipment and amortized over seven years.


                                       8

<PAGE>

         Alarm monitoring revenues generate significant gross margins, whereby
installation and service activity may result in direct costs exceeding revenues.
Management believes, however, that such installation and service activity is
necessary for the generation and retention of alarm monitoring subscribers.

         All direct external costs associated with purchases of subscriber
accounts (primarily through the Independent Alarm Acquisition Program and Dealer
Program described in the Company's Form 10-KSB for the fiscal year ended
December 31, 1996) are capitalized and amortized over ten years on a
straight-line basis. In contrast, the Company's costs related to the sales,
marketing and installation of new alarm monitoring systems generated by the
Company's internal sales force are generally expensed in the period in which
incurred. In cases where the Company maintains ownership of the equipment,
however, the costs of such equipment are capitalized to property and equipment
and amortized over seven years. To date, the Company has not had a large
internal sales force, and the number of subscriber accounts generated internally
during the three and nine month periods ended September 30, 1997 and 1996 was
not material. In the future, if the Company expands its internal sales
operations, as anticipated, the accounting treatment for such internally
generated revenues would result in higher operating expenses in the period such
revenues are generated, but lower amortization expenses as a percentage of
revenues.

         The Company loses customers from time to time for various reasons,
including, primarily, the following: (i) the customer moves; (ii) a business or
commercial account closes or goes out of business; (iii) a customer is
dissatisfied with the Company's level of service; (iv) a building or home is
destroyed; or (v) the customer can no longer afford to pay for service.
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 canceled subscriber accounts and the
resulting decreased monitoring revenue. Net attrition for a given period of time
is defined as the number of accounts disconnecting service during the period in
question, net of any replacement of such subscriber by means of Dealer or
independent company replacement during the guarantee period, or by other account
replacement methods employed by the Company. These methods might include, for
example, the solicitation of monitoring contracts from new occupants (where
attrition is attributable to customer relocation). Net subscriber attrition of
the Company's own customers during the three and nine month periods ended
September 30, 1997 and 1996 was less than 10%.

         The Company has developed an in-house system for identifying and
decreasing account attrition, which consists of the following: (1) the
identification of possible lost accounts via a daily test; (2) false alarm
tracking; (3) early account delinquent procedures; (4) quality customer service;
(5) control lockout; (6) early identification of new tenants/residences in homes
with alarms installed by the Company; and (7) aggressive problem solving by
management. The No-Tolerance Attrition Policy procedures identify possible
account attrition at various stages and attempt to prevent lost accounts or
replace lost accounts by quick and efficient intervention.

         Amounts paid to independent alarm companies and Dealers are capitalized
and amortized over ten years. If a customer signed on by an independent alarm
company or Dealer is lost and not replaced, the unamortized contract amount is
written off. Such write offs are included in amortization of customer contracts
in the accompanying Statements of Operations.


                                       9

<PAGE>

         MRR represents the monthly recurring revenue the Company is entitled to
receive under subscriber contracts in effect at the end of the period. Included
in MRR and the number of subscribers are amounts associated with subscribers
with past due balances. The Company maintains the policy and practice of taking
every economically feasible action to preserve the revenue stream associated
with these contractual obligations. To this end, the Company actively works both
towards the collection of amounts owed and the retention of subscribers. In
certain instances, this collection and evaluation period may exceed six months.
When, in the judgment of the Company's collection personnel, all reasonable
efforts have been made to collect balances due and certain legal steps are taken
to ensure proper cancellation of the relevant monitoring contract, nonpaying
subscribers are disconnected from the Company's monitoring center and are
included in the calculation of net subscriber and MRR attrition.

         Specialty Device Installers, Inc., a wholly-owned subsidiary of the
Company ("SDI"), provides installation services to third party security alarm
companies, many of which are competitors of the Company. During the first
quarter of fiscal year 1997, the Company significantly downsized SDI because of
SDI's poor operating performance and because the Company intends to focus on its
core business of alarm installation, monitoring, and related services for its
own customers.

RESULTS OF OPERATIONS

     As discussed in Note 2 of Notes to Consolidated Financial Statements, the
Company is the surviving corporation of a merger of Guardian with the Company's
predecessor, Everest, which was consummated on August 28, 1996. The transaction
was a reverse acquisition for accounting purposes, with Guardian deemed to be
the acquirer. The consolidated balance sheets at September 30, 1997 and December
31, 1996, the consolidated statements of operations for the three and nine month
periods ended September 30, 1997, and the consolidated statement of cash flows
for the nine month period ended September 30, 1997 include the accounts and
activity of the surviving entity and its wholly owned subsidiary, SDI. The
consolidated statements of operations for the three and nine month periods ended
September 30, 1996, and the consolidated statement of cash flows for the nine
month period ended September 30, 1996 include the accounts and activity of
Guardian for the three and nine month periods ended September 30, 1996 and
include the wholly owned subsidiary acquired by Guardian from the merger date
(August 28, 1996) through September 30, 1996.

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

CONSOLIDATED STATEMENTS OF OPERATIONS

<TABLE>
<CAPTION>

                                            PERCENTAGE OF TOTAL REVENUES
                                            ----------------------------
                                   FOR THE THREE MONTH           FOR THE NINE MONTH
                                     PERIODS ENDED                 PERIODS ENDED
                                     SEPTEMBER 30,                 SEPTEMBER 30,
                                 1997             1996        1997              1996
                                 ----             ----        ----              ----
                                      (Unaudited)                   (Unaudited)

<S>                                <C>              <C>        <C>              <C>
Revenues:

    Monitoring                     69%              75%         71%               82%
    Installation and service       31               25          29                18
                                 ----             ----        ----              ----
         Total revenues           100              100         100               100

                                                    (CONTINUED)

                                       10

<PAGE>


Operating expenses:
   Monitoring                      13               10          14                12
   Installation and service        28               22          32                16
   General and administrative      43               39          35                37
   Amortization of customer 
    contracts                      24               20          19                19
   Depreciation and amortization    6                4           6                 5
                                 ----             ----        ----              ----
Total operating expenses          114               95         106                89

Income (loss) from operations     (14)               5          (6)               11

Interest expense                  (19)             (17)        (18)              (17)

Provision for taxes                 -               (7)          -                (3)

Net income (loss)                 (33)%            (19)%       (24)%              (9)%
                                 ====             ====        ====              ====
</TABLE>

         Neither the Company nor the pre-merged Guardian International, Inc.
(see Note 2 of Notes to Consolidated Financial Statements) has ever had net
income, and the Company has a history of consistent and sometimes significant
net losses. Although no assurance can be given by the Company as to when or if
the Company will realize net earnings, the Company anticipates that, based on
its strategy of continued growth and customer account expansion, and barring any
unforeseen significant changes in the nature of its business or operations
(including its method of financing customer account acquisitions through its
existing and/or any new credit facility with its Senior Lender, and the
accounting for such acquisitions), it will continue to record net losses at
least until such time as the Company's retail customer contract base totals more
than approximately 20,000 and it has significantly reduced its indebtedness. At
September 30, 1997, the Company had approximately 11,800 retail customers,
compared to approximately 7,900 retail customer contracts at September 30, 1996,
a net increase of 49%. The Company recently increased its credit availability
with Heller from $7 million to $15 million (see Note 4 of Notes to Consolidated
Financial Statements) which, the Company believes, will provide sufficient
capital availability for achieving a customer contract base of 20,000 customers.
There can be no assurances, however, that the Company will achieve a customer
contract base of 20,000 customers or that the Company will become profitable if
it does.

         Earnings before interest, taxes, depreciation, and amortization
("EBITDA") is another important factor in considering profitability. EBITDA does
not represent cash flow from operations as defined by generally accepted
accounting principles, should not be construed as an alternative to net earnings
and is indicative neither of the Company's operating performance nor of cash
flows available to fund all the Company's cash needs. Items excluded from EBITDA
are significant components in understanding and assessing the Company's
financial performance. Nevertheless, management believes presentation of EBITDA
enhances an understanding of the Company's 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 has been used by the
investment community to determine the current borrowing capacity and to estimate
the long-term value of companies with recurring cash flows from operations and
net losses. The following table provides a calculation of EBITDA for the three
and nine month periods ended September 30, 1997 and 1996:

                                       11

<PAGE>

<TABLE>
<CAPTION>

                                                          FOR THE THREE MONTH PERIODS              FOR THE NINE MONTH PERIODS
                                                              ENDED SEPTEMBER 30,                      ENDED SEPTEMBER 30,
                                                            1997                1996                1997                1996
                                                           ----                ----                 ----                ----
                                                                 (Unaudited)                               (Unaudited)
<S>                                                      <C>                 <C>                 <C>                 <C>       
Net income (loss)                                        $(493,124)          $(177,860)          $(978,382)          $(220,188)

Plus:

     Amortization of customer contracts                    350,385             184,889             768,212             438,998
     Depreciation and amortization                          88,009              35,477             245,573             116,500
     Interest expense                                     2841,081             151,631             724,201             400,051
     Provision for taxes                                         -              63,000                   -              63,000

          EBITDA                                          $229,351            $257,137            $759,604            $798,361

</TABLE>


         EBITDA for the three and nine month periods ended September 30, 1997
includes approximately $144,000 of one-time expenses related to a merger
transaction that was not consummated. Without these expenses, EBITDA for the
three and nine month periods ended September 30, 1997 would have been $373,351
and $903,604 and increased 45% and 13% over EBITDA in the corresponding prior
periods.

THREE AND NINE MONTH PERIODS ENDED SEPTEMBER 30, 1997 COMPARED TO THREE AND NINE
MONTH PERIODS ENDED SEPTEMBER 30, 1996

         Total revenues for the three and nine month periods ended September 30,
1997 increased 61% and 75% to $1.5 million and $4.0 million, respectively,
from $908,000 and $2.3 million during the corresponding periods in the prior
year. Monitoring revenues for the three and nine month periods ended September
30, 1997 increased by 50% and 50% to $1.0 million and $2.8 million,
respectively, from $679,000 and $1.9 million during the corresponding periods of
the prior fiscal year. Installation and service revenues for the three and nine
month periods ended September 30, 1997 increased by 96% and 192% to $448,000 and
$1.2 million, respectively, compared to $229,000 and $405,000 during the
corresponding period of the prior fiscal year. Total retail subscribers
approximated 11,800 at September 30, 1997, compared to approximately 7,900 at
September 30, 1996, a net increase of 49%. The increase in revenues and number
of subscribers in 1997 from 1996 is primarily attributable to the Company's
ongoing Independent Alarm Acquisition Program and Dealer Program as described in
the Company's Form 10-KSB for the fiscal year ended December 31, 1996.
Additionally, in May 1997, the Company purchased approximately 2,200 retail
customers from Alarm Control, Inc ("ACI").

         Total operating expenses for the three and nine month periods ended
September 30, 1997 increased 92% and 108% to $1.7 million and $4.3 million,
respectively, compared to $871,000 and $2.1 million during the corresponding
periods of the prior fiscal year. Monitoring expenses increased 108% and 102% to
$193,000 and $546,000, respectively, compared to $92,000 and $271,000 during the
corresponding periods in the prior fiscal year. The increase in monitoring costs
from 1996 to 1997 was a result of the significant increase in monitoring
revenues and number of subscriber accounts (see previous paragraph). As a
percentage of monitoring revenues during the three and nine month periods ended
September 30, 1997, monitoring expenses were 19% and 19%, respectively, compared
to 14% and 14% during the corresponding periods of the prior fiscal year.
Installation and service costs during the three and nine month periods ended
September 30, 1997 increased by 104% and 246% to $409,000 and $1.3 million,
respectively, compared to $201,000 and $374,000 during the corresponding periods
of the prior

                                        12

<PAGE>


fiscal year. The increase in total installation and service costs in 1997 from
1996 was partly the result of increases in related revenues in 1997 from 1996
(see previous paragraph). As a percentage of installation and service revenue,
installation and service costs were 91% and 109% during the three and nine month
periods ended September 30, 1997, respectively, compared to 88% and 92%,
respectively, during the corresponding periods in the prior fiscal year. The
Company does not now generate, nor does it anticipate generating in the future,
any appreciable margins or profits, and may incur future losses from such
installation and service activity, but such activity is considered necessary to
the generation and retention of alarm monitoring subscribers.

         Total gross profit, defined as total revenues less monitoring and
installation and service costs, increased by 40% and 32% to $863,000 and $2.2
million, during the three and nine month periods ended September 30, 1997,
respectively, compared to $615,000 and $1.7 million during the corresponding
periods of the prior fiscal year. Gross profit from monitoring revenues
increased by 40% and 41% to $824,000 and $2.3 million during the three and nine
month periods ended September 30, 1997, respectively, compared to $587,000 and
$1.6 million during the corresponding periods of the prior fiscal year. Gross
profit (loss) from installation and service activities increased/(decreased) by
39% and (455%) to $39,000 and $(111,000) during the three and nine month periods
ended September 30, 1997, respectively, compared to $28,000 and $31,000 during
the corresponding periods of the prior fiscal year. See the previous two
paragraphs for a discussion of revenues and expenses of such monitoring and
installation and service activity.

         General and administrative costs ("G&A") increased by 77% and 66% to
$633,000 and $1.4 million, respectively, during the three and nine month periods
ended September 30, 1997, compared to $358,000 and $857,000 during the
corresponding periods of the prior fiscal year. The increase in G&A costs in
1997 from 1996 is related primarily to the Company's growth in revenue,
resulting in an increase in the Company's overhead cost structure. As a
percentage of total revenues, G&A was 43% and 35% during the three and nine
month periods ended September 30, 1997, respectively, compared to 39% and 37%
during the corresponding periods of the prior fiscal year.

         Approximately 52% and 26% of the increase in G&A during the three and
nine month periods ended September 30, 1997 arose from one-time expenses of
approximately $144,000 related to a merger transaction that was not consummated.
Without those expenses, G&A for the three months and nine months ended September
30, 1997 would have increased by only $131,000 or 37%, and 419,000 or 49%, over
the corresponding prior periods.

         Amortization of customer contracts increased by 90% and 75% to $350,000
and $768,000 during the three and nine month periods ended September 30, 1997,
respectively, compared to $185,000 and $439,000 during the corresponding periods
in the prior fiscal year. The increase in such costs resulted from the increase
in the amount of capitalized customer contracts, which increased to a net
balance of $7.6 million at September 30, 1997 from $4.8 million at September 30,
1996.

         Depreciation and amortization increased by 148% and 111% to $88,000 and
$245,000, during the three and nine month periods ended September 30, 1997,
respectively, compared to $35,000 and $117,000 during the corresponding periods
of the prior fiscal year. Such costs include depreciation of property and
equipment (the gross balance of which increased to $691,000 at September 30,
1997 from $399,000 at September 30, 1996 as a result of (i) the Company's
continued expansion activities and (ii) the merger of Guardian and Everest,
which resulted in additional property and equipment being acquired), goodwill
amortization (a gross balance of $1.2 million in goodwill was recorded in
connection with the merger of Guardian and Everest, which is being amortized
over 10 years), and amortization of certain other intangible assets.

                                       13

<PAGE>


         Interest expense increased 87% and 81% to $284,000 and $724,000 during
the three and nine month periods ended September 30, 1997, compared to $152,000
and $400,000 during the corresponding periods of the prior fiscal year. The
increase in interest expense resulted from additional debt incurred primarily in
connection with the cost of acquiring subscriber accounts. The majority of such
subscriber acquisition costs were financed by Heller. Total long term
obligations (including the current portion) increased to $7.7 million at
September 30, 1997 from $4.8 million at September 30, 1996.

         Net income (loss) was $(493,000), or $(0.08) per share, and $(978,000),
or $(0.15) per share, for the three and nine month periods ended September 30,
1997, compared to $(178,000), or $(0.04) per share, and $(220,000), or $(0.06)
per share, during the corresponding periods of the prior fiscal year.

LIQUIDITY AND CAPITAL RESOURCES

         In May 1997 the Company entered into the Renewed Credit Facility with
Heller for $15 million, expiring in May 1999 with automatic yearly renewals
unless terminated by either party. On September 30, 1997, the Company was not in
compliance with certain covenants. Subsequent to September 30, 1997, the Renewed
Credit Facility was amended and restated, including revisions to the covenants
with which the Company was not in compliance. Also included in the amendment was
a waiver for any previous instances of non compliance with the covenants. See
Note 4 of Notes to Consolidated Financial Statements for further discussion of
the terms of the Renewed Credit Facility.

         The Renewed Credit Facility will be used primarily for acquisitions of
subscriber accounts. The Company's continued plan of growth through acquisitions
of subscriber accounts is contingent upon its ability to borrow under the
Renewed Credit Facility.

         At September 30, 1997, the Company had a working capital deficit of
$(127,000), and a current ratio of 0.89 to 1.0.

         Net cash provided by operating activities during the nine month period
ended September 30, 1997 was $72,000. The Company incurred a net loss of
$978,000 during such period; however, included in such loss was depreciation and
amortization expense, amortization of customer contracts expense and
amortization of deferred financing costs totaling $1.1 million, cash outflows of
$407,000 related to increases in assets and cash inflows of $206,000 related to
increases in liabilities. Also included in the net loss for the nine month
period ended September 30, 1997 are one-time expenses of approximately $144,000
related to a merger transaction that was not consummated.

         Net cash used in investing activities was $3.3 million during the nine
month period ended September 30, 1997 and was comprised of acquisition of
customer accounts of $3.2 million (including the purchase of contracts in the
amount of $2.2 million from Alarm Control in May 1997 (see Note 2 of Notes to
Consolidated Financial Statements), and purchases of fixed assets of $140,000.

         Net cash provided by financing activities was $2.4 million during the
nine month period ended September 30, 1997, consisting of proceeds under
borrowings from Heller of $5.2 million (including $2.2 million relating to the
Alarm Control transaction in May 1997) less repayments to Heller and other
long-term debt of $2.8 million, and purchases of treasury stock of $6,000. The
Company's cash balance was $167,000 at September 30, 1997.

                                       14

<PAGE>


         Total shareholders' equity was $2.3 million at September 30, 1997,
decreasing by a net amount of $815,000 during the nine month period ended
September 30, 1997. The net decrease consisted of the net loss incurred during
the period of $978,000, an increase of $39,000 resulting from the issuance of
50,000 shares of Class A common stock to Alarm Control in connection with the
purchase of Alarm Control's customer contracts as well as certain other assets,
an increase of $130,000 resulting from an accrual for the additional 150,000
shares of Class B common stock to be issued to Heller (see Note 2 of Notes to
Consolidated Financial Statements), and a decrease of $6,000 resulting from
purchases of treasury stock.

         During October 1997, Westar Capital, Inc. acquired approximately 37% of
the equity of the Company by purchasing 2,500,000 newly issued shares of Class A
common stock and agreeing to purchase 1,875,000 shares of newly authorized and
issued Series A 9 3/4% convertible cumulative preferred stock ("the Preferred
Shares"). The Preferred Shares are convertible into shares of Class A common
stock on a share for share basis. The proceeds of the $7.5 million investment
will be used to pay down long term obligations, for acquisitions and other
corporate purposes. The Company received $3.75 million in October 1997 relating
to the purchase of the common shares. The remaining amount of $3.75 million,
relating to the purchase of the Preferred Shares, is expected be received in
November (see Note 7 of Notes to Consolidated Financial Statements).

         With the use of the Heller facility, the Company believes it can make
acquisitions to reach the 20,000 customer contract goal discussed above. The
Company does not anticipate any other significant capital expenditures.

CONCENTRATION OF CREDIT RISK

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

ACCOUNTING CHANGES

         In March 1997, the Financial Accounting Standards Board issued
Statement of Financial Accounting Standards No. 128 "Earnings Per Share" ("SFAS
No. 128") which establishes standards for computing and presenting earnings per
share ("EPS"). This statement replaces primary and fully diluted EPS with basic
and diluted EPS. Basic EPS excludes dilution and is computed by dividing net
income by the weighted average common shares outstanding during the period.
Diluted EPS is computed similarly to fully diluted EPS pursuant to Accounting
Principles Board Opinion No. 15. SFAS No. 128 is effective for both interim and
annual periods ending after December 15, 1997. Earlier application is not
permitted. The effect of adopting this standard is not expected to be material.

         Statement of Financial Accounting Standards No. 130 "Reporting
Comprehensive Income" ("SFAS No. 130") was issued by the Financial Accounting
Standards Board. This Statement requires that all items that are required to be
recognized under accounting standards as components of comprehensive income be
reported in a financial statement that is displayed with the same prominence as
other financial statements. The Company will adopt SFAS No. 130 beginning
January 1, 1998. The effect of adopting this standard is not expected to be
material.

                                       15


<PAGE>


                          GUARDIAN INTERNATIONAL, INC.

PART II - OTHER INFORMATION

ITEM 1.           LEGAL PROCEEDINGS

         Each of the Company and SDI experiences routine litigation in the
normal conduct of its business, that is incidental to the business. Neither the
Company nor SDI believes that any such pending litigation will have,
individually or in the aggregate, a material adverse effect on its respective
business or financial condition.

ITEM 3.           DEFAULTS UPON SENIOR SECURITIES

         See disclosure under Note 4 of Notes to Consolidated Financial
Statements.

ITEM 6.           EXHIBITS AND REPORTS ON FORM 8-K

(a) Exhibits

EXHIBIT NO.         DESCRIPTION

         3(i)     Articles of Incorporation dated October 30, 1986 incorporated
                  by reference to Exhibit 3(i) of the Company's Form 10-SB filed
                  May 6, 1996

         3(i)(a)  Amendment to the Articles of Incorporation incorporated by
                  reference to Exhibit 3(i)(a) the Company's Form 10-SB filed
                  May 6, 1996

         3(i)(b)  Amendment to the Articles of Incorporation incorporated by
                  reference to Exhibit 3(i)(b) of the Company's Form 10-SB filed
                  May 6, 1996

         3(i)(c)  Amendment to the Articles of Incorporation incorporated by
                  reference to Exhibit 3(i)(c) of the Company's Form 10-SB/A
                  filed January 24, 1997

         3(ii)    Amended and Restated By-Laws of the Company

         4        Specimen Stock Certificate incorporated by reference to
                  Exhibit 4 of the Company's Form 10-SB filed May 6, 1996

         10(a)    Letter from Heller Financial, Inc. Regarding Increase in
                  Credit Facility incorporated by reference to Exhibit 10(a) of
                  the Company's Form 10-QSB filed May 15, 1997

         10(b)    Amended and Restated Loan and Security Agreement dated as of
                  May 22, 1997 among Guardian International, Inc., the Borrowing
                  Subsidiaries From Time to Time Party Hereto, as Borrowers, and
                  Heller Financial, Inc., as Lender incorporated by reference to
                  Exhibit 10(b) of the Company's Form 10-QSB filed August 14,
                  1997

         10(c)    Third Amendment to Loan Agreement dated as of October 21, 1997
                  by and between the Company and Heller Financial, Inc.

         10(d)    Stock Subscription Agreement dated as of October 14, 1997
                  incorporated by reference to Item 7(c) of the Company's Form
                  8-K dated October 22, 1997

         10(e)    Registration Rights Agreement dated as of October 21, 1997
                  incorporated by reference to Item 7(c) of the Company's Form
                  8-K dated October 21, 1997

         10(f)    Stockholders Agreement dated as of October 21, 1997
                  incorporated by reference to Item 7(c) of the Company's Form
                  8-K dated October 22, 1997

         27       Financial Data Schedule (for SEC use only)



                                       16

<PAGE>


(b)      Reports on Form 8-K

1.       Form 8-K filed July 17, 1997 announcing the merger with a privately
         held Florida based security company; also submitting the agreement and
         plan of merger.

2.       Form 8-K filed September 3, 1997 announcing the termination of
         previously announced merger discussions with a privately held Florida
         based security company.



                                       17

<PAGE>


                                   SIGNATURES

     In accordance with Section 12 of the Securities Exchange Act of 1934, the
registrant has caused this report to be signed on its behalf by the undersigned,
thereunto duly authorized, as of the 14th day of November, 1997.

                                             GUARDIAN INTERNATIONAL, INC.

                                              By:   /S/ DARIUS G. NEVIN
                                                  ---------------------
                                                        Darius G. Nevin
                                                        Chief Financial Officer




                                       18

<PAGE>


                                  EXHIBIT INDEX

EXHIBIT           DESCRIPTION

    3(ii)      Amended and Restated By-Laws of the Company

   10(c)       Third Amendment to Loan Agreement dated as of October 21, 1997
               by and between the Company and Heller Financial, Inc.

   27          Financial Data Schedule (for SEC use only)