SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A NO. 2
CURRENT REPORT
(DATED AUGUST 28, 1996,
ORIGINALLY FILED SEPTEMBER 12, 1996)
PURSUANT TO SECTION 13 OR 15(D) OF THE SECURITIES EXCHANGE ACT OF 1934
GUARDIAN INTERNATIONAL INC.
(FORMERLY EVEREST SECURITY SYSTEMS CORPORATION,
FORMERLY EVEREST FUNDING CORPORATION, FORMERLY BURNINGHAM ENTERPRISES, INC.)
----------------------------------------------------------------------------
(Exact name of the registrant as specified in charter)
NEVADA 58-1799634
- -------------------------- -------------------------------
(State of Incorporation) (I.R.S. Employer ID No.)
3880 NORTH 28TH TERRACE, HOLLYWOOD, FLORIDA 33020-1118
------------------------------------------------------
(Address of principal executive offices)
TELEPHONE NUMBER: (954) 926-1800
EVEREST SECURITY SYSTEMS CORPORATION,
823 NW 57TH STREET, FORT LAUDERDALE, FLORIDA 33309
--------------------------------------------------
(Former name or address, if changed since last report)
<PAGE>
Item 7 of the registrant's Form 8-K filed on September 12,1996 and of the
registrant's Form 8-K/A filed November 13,1996 is hereby amended in its entirety
by the following:
Item 7. Financial Statement and Exhibits
(a) Financial Statements
<PAGE>
GUARDIAN INTERNATIONAL, INC.
FINANCIAL STATEMENTS AS OF DECEMBER 31, 1994
TOGETHER WITH REPORT OF INDEPENDENT AUDITORS
2
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Stockholders of
GUARDIAN INTERNATIONAL, INC:
We have audited the accompanying balance sheet of GUARDIAN INTERNATIONAL, INC.
(a Florida S corporation) as of December 31, 1994, and the related statements of
operations, changes in shareholders' equity and cash flows for the year then
ended. These financial statements are the responsibility of the Company's
management. Our responsibility is to express an opinion on these financial
statements based on our audit.
We conducted our audit in accordance with generally accepted auditing standards.
Those standards require that we plan and perform the audit to obtain reasonable
assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audit provides a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of GUARDIAN INTERNATIONAL, INC. as
of December 31, 1994 and the results of its operations and cash flows for the
year then ended in conformity with generally accepted accounting principles.
McKEAN, PAUL, CHRYCY, FLETCHER & CO.
March 14, 1995
3
<PAGE>
<TABLE>
<CAPTION>
GUARDIAN INTERNATIONAL, INC.
BALANCE SHEET
DECEMBER 31, 1994
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash $ 14,011
Accounts receivable-net of $5,000
allowance for doubtful accounts 81,447
Other current assets 23,058 $118,516
---------
PROPERTY & EQUIPMENT:
Station equipment 259,002
Furniture and office equipment 29,854
Leasehold improvements 84,277
---------
373,133
Accumulated depreciation and amortization (122,784) 250,349
---------
OTHER ASSETS:
Customer accounts, net of $36,699 of amortization 513,120
Organization cost, net 58,809
Other 38,764 610,693
--------- --------
$979,558
========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expenses $ 105,584
Acquisition contracts payable 80,510
Unearned revenue 12,862
Current portion of debt 35,791 $234,747
----------
LONG-TERM DEBT:
Equipment installment note payable 87,672
Note payable shareholder 5,867
Note payable to financial institution 194,173 287,712
----------
SHAREHOLDERS' EQUITY:
Common stock, 1000 shares authorized $1 par value,
100 shares issued and outstanding 100
Additional paid-in-capital 1,064,030
Retained deficit (607,031) 457,099
---------- --------
$979,558
========
</TABLE>
The accompanying notes are an integral part of the financial statements.
4
<PAGE>
GUARDIAN INTERNATIONAL, INC.
STATEMENT OF OPERATIONS
FOR THE YEAR ENDED DECEMBER 31, 1994
REVENUES:
Monitoring $ 372,627
Installation 221,852
Other 1,939 $ 596,418
---------
OPERATING EXPENSES:
Monitoring - primarily salaries 155,872
Installation 200,683
Amortization of customer contracts 36,699
Depreciation and amortization 106,530
General and administrative 447,438 947,222
--------- -----------
Operating loss (350,804)
INTEREST EXPENSE 23,537
-----------
Net loss $ (374,341)
===========
The accompanying notes are an integral part of the financial statements.
5
<PAGE>
<TABLE>
<CAPTION>
GUARDIAN INTERNATIONAL, INC.
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEAR ENDED DECEMBER 31, 1994
ADDITIONAL
COMMON PAID-IN RETAINED
STOCK CAPITAL DEFICIT TOTAL
TOTAL ----------- ----------- ----------
---------
<S> <C> <C> <C> <C>
Balance, December 31, 1993 $ 100 $ -- $ (232,690) $ (232,590)
Net loss -- -- (374,341) (374,341)
Capital contributions -- 1,064,030 -- 1,064,030
---------- ----------- ----------- ---------
Balance, December 31, 1994 $ 100 $ 1,064,030 $ (607,031) $ 457,099
========= =========== =========== =========
</TABLE>
The accompanying notes are an integral part of the financial statements.
6
<PAGE>
GUARDIAN INTERNATIONAL, INC.
STATEMENT OF CASH FLOWS
FOR THE YEAR ENDED DECEMBER 31, 1994
CASH FLOWS FROM OPERATING ACTIVITIES:
Net loss ($ 374,341)
Adjustment to reconcile net loss to net
cash used in operating activities:
Depreciation and amortization of property 88,887
Amortization-customer accounts 36,699
Amortization-organization expense 17,642
Provision for doubtful accounts 5,000
Changes in assets and liabilities:
Accounts receivable (67,550)
Other current assets (23,058)
Accounts payable and accrued expenses 56,219
Acquisition contracts payable 80,510
Unearned revenue 11,662
-----------
Net cash used in operating activities (168,330)
-----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets (14,784)
Acquisition of customer accounts (540,211)
Other assets (25,447)
-----------
Net cash used in investing activities (580,442)
-----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of long-term debt (119,338)
Proceeds from line-of-credit 194,173
Decrease in shareholders' loans (376,082)
Cash contributions and conversion of
shareholders' loans to capital 1,064,030
Net cash provided by financing activities 762,783
-----------
Net change in cash 14,011
-----------
CASH, BEGINNING OF PERIOD --
-----------
CASH, END OF PERIOD $ 14,011
===========
The accompanying notes are an integral part of the financial statements.
7
<PAGE>
GUARDIAN INTERNATIONAL, INC.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1994
1. SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES
A. OPERATIONS
Guardian International, Inc. ("The Company") operates a central monitoring
alarm station which services customer accounts and those accounts owned by
security system dealers.
B. INCOME TAXES
The Company, with the consent of its stockholders, has elected to be
treated as an S Corporation under the provisions of the Internal Revenue Code.
Under these provisions, the income or loss of the corporation is included in the
income tax returns of the individual stockholders. Accordingly, no income tax
provision or benefit has been reflected in the accompanying financial
statements.
C. PROPERTY AND EQUIPMENT
Property and Equipment are stated at cost. Depreciation is computed using
accelerated methods over the estimated useful lives of the assets.
D. CUSTOMER ACCOUNTS
Customer Accounts purchased from alarm dealers are reflected at cost. The
purchase price of the contract is amortized on a straight line basis over the
shorter of the term of the contract (usually five years) or life of the customer
account.
E. REVENUES
Revenues from monitoring alarm services are recognized when service is
rendered. Amounts paid in advance are deferred and recognized as revenue in the
period service occurs. Revenues from installation of alarm systems are
recognized in the period installed.
2. ACQUISITION OF CUSTOMER ACCOUNTS
During the year ended December 31, 1994, the Company purchased $540,211 of
customer accounts from various independent alarm dealers. At December 31, 1994,
the Company owed $80,510 in connection with of these acquisitions which is
included in the balance sheet as "Acquisition contracts payable".
8
<PAGE>
3. LINE OF CREDIT
In November 1994, the Company entered into a $7 million credit agreement
with a financial institution for the purpose of borrowing funds to purchase
customer accounts. Borrowings under the agreement bear interest at 4% above
prime plus a funding fee of 1% of any amounts borrowed. The loan is
collateralized by the Company's assets and matures on November 30, 1999. The
principal shareholders of the Company have personally guaranteed $700,000 of the
loan and pledged their stock as collateral. The agreement contains certain
conditions including, but not limited to, restrictions related to indebtedness,
net worth and distribution payments to shareholders.
In connection with the loan agreement, the Company has agreed to pay the
lender a "Capital Appreciation Payment", if a market event occurs (i.e. merger
or consolidation, sale or disposition of the Company or 20% of the number of
outstanding common shares, etc.). The payment is determined based on a
percentage (approximately 25%) of the fair value of the Company's common stock
and after deducting $1 million plus any capital contributions by the principal
shareholders for the purchase of additional shares of common stock.
4. RELATING PARTY TRANSACTIONS
A. LEASED FACILITIES
The Company rents on a month to month basis its monitoring facilities from
an affiliate which is owned by the principal shareholders of the Company. The
informal agreement required lease payments of approximately $50,000 during 1994.
Lease payments for the facilities in 1995 are estimated to be $35,000.
B. CONSULTING AGREEMENT
In May 1994, the Company entered into an agreement with a consultant to
provide advisory services at a fee of $400 per week (subject to increases by the
Board of Directors) through April 15, 1995 at which time agreement is to be
renegotiated. In addition, the Consultant shall be entitled to receive up to 10%
of the amount of common stock then outstanding for securing new customer
accounts (as defined) or in the event the Company has a public offering; sells
its assets or merges with other entity.
9
<PAGE>
GUARDIAN INTERNATIONAL, INC.
FINANCIAL STATEMENTS AS OF DECEMBER 31, 1995 AND 1994
TOGETHER WITH REPORT OF INDEPENDENT AUDITORS
10
<PAGE>
REPORT OF INDEPENDENT AUDITORS
To the Stockholders of
GUARDIAN INTERNATIONAL, INC.
We have audited the accompanying balance sheets of GUARDIAN INTERNATIONAL, INC.
( a Florida S corporation) as of December 31, 1995 and 1994, and the related
statements of operations, changes in shareholders' equity and cash flows for the
years then ended. These financial statements are the responsibility of the
Company's management. Our responsibility is to express an opinion on these
financial statements based on our audits.
We conducted our audits in accordance with generally accepted auditing
standards. Those standards require that we plan and perform the audit to obtain
reasonable assurance about whether the financial statements are free of material
misstatement. An audit includes examining, on a test basis, evidence supporting
the amounts and disclosures in the financial statements. An audit also includes
assessing the accounting principles used and significant estimates made by
management, as well as evaluating the overall financial statement presentation.
We believe that our audits provide a reasonable basis for our opinion.
In our opinion, the financial statements referred to above present fairly, in
all material respects, the financial position of GUARDIAN INTERNATIONAL, INC. as
of December 31, 1995 and 1994 and the results of its operations and cash flows
for the years then ended in conformity with generally accepted accounting
principles.
McKEAN, PAUL, CHRYCY, FLETCHER & CO.
February 26, 1996
11
<PAGE>
<TABLE>
<CAPTION>
GUARDIAN INTERNATIONAL, INC.
BALANCE SHEETS
DECEMBER 31, 1995 AND 1994
1995 1994
----------- -----------
ASSETS
<S> <C> <C>
CURRENT ASSETS:
Cash $ 14,263 $ 14,011
Accounts receivable, net of $15,000 and $5,000
allowance for doubtful accounts, respectively 146,285 81,447
Other current assets 7,943 23,058
----------- -----------
Total current assets 168,491 118,516
----------- -----------
PROPERTY & EQUIPMENT:
Station equipment 287,055 259,002
Furniture and office equipment 31,859 29,854
Leasehold improvements 103,217 84,277
----------- -----------
422,131 373,133
Accumulated depreciation and amortization (212,184) (122,784)
----------- -----------
209,947 250,349
----------- -----------
OTHER ASSETS:
Customer accounts, net of $124,482 and $36,699
of amortization, respectively 2,075,671 513,120
Organization cost, net 41,165 58,809
Other 138,492 38,764
----------- -----------
2,255,328 610,693
----------- -----------
Total Assets $ 2,633,766 $ 979,558
=========== ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
CURRENT LIABILITIES:
Accounts payable and accrued expense $ 82,583 $ 105,584
Acquisition contracts payable 102,484 80,510
Unearned revenue 60,880 12,862
Current portion of debt 44,947 35,791
----------- -----------
290,894 234,747
----------- -----------
LONG TERM DEBT:
Equipment installment notes payable 61,970 87,672
Notes and loans payable to shareholders 198,887 5,867
Note payable to financial institution 1,895,299 194,173
----------- -----------
2,156,156 287,712
----------- -----------
SHAREHOLDERS' EQUITY:
Common stock, 1,000 shares authorized, $1 par
value, 100 shares issued and outstanding 100 100
Additional paid-in capital 1,064,030 1,064,030
Retained deficit (877,414) (607,031)
----------- -----------
186,716 457,099
----------- -----------
Total Liabilities and Shareholders' Equity $ 2,633,766 $ 979,558
=========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
12
<PAGE>
<TABLE>
<CAPTION>
GUARDIAN INTERNATIONAL, INC.
STATEMENTS OF OPERATIONS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
1995 1994
----------- ---------
<S> <C> <C>
REVENUES:
Monitoring $ 953,034 $ 372,627
Installation 131,229 221,852
Other 10,285 1,939
----------- ---------
1,094,548 596,418
----------- ---------
OPERATING EXPENSES:
Monitoring - salaries 215,711 155,872
Installations 141,121 200,683
General and administrative 660,969 447,438
----------- ---------
1,017,801 803,993
----------- ---------
Operating income (loss) before interest expense,
amortization and depreciation 76,747 (207,575)
INTEREST EXPENSE, AMORTIZATION
AND DEPRECIATION:
Interest expense 146,331 23,537
Amortization of customer contracts 87,783 36,699
Depreciation and amortization 113,016 106,530
----------- ---------
347,130 166,766
----------- ---------
Net loss $ (270,383) $(374,341)
=========== =========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
13
<PAGE>
<TABLE>
<CAPTION>
GUARDIAN INTERNATIONAL, INC.
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
ADDITIONAL
COMMON PAID-IN RETAINED
STOCK CAPITAL DEFICIT TOTAL
--------- ----------- ----------- -----------
<S> <C> <C> <C> <C>
Balance, December 31, 1993 $ 100 $ -- $ (232,690) $ (232,590)
Net loss -- -- (374,341) (374,341)
Capital contributions -- 1,064,030 -- 1,064,030
--------- ----------- ----------- -----------
Balance, December 31, 1994 100 1,064,030 (607,031) 457,099
Net loss -- -- (270,383) (270,383)
--------- ----------- ----------- -----------
Balance, December 31, 1995 $ 100 $ 1,064,030 $ (877,414) $ 186,716
========= =========== =========== ===========
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
14
<PAGE>
<TABLE>
<CAPTION>
GUARDIAN INTERNATIONAL, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED DECEMBER 31, 1995 AND 1994
1995 1994
----------- -----------
CASH FLOW FROM OPERATING ACTIVITIES:
<S> <C> <C>
Net loss $ (270,383) $ (374,341)
Adjustments to reconcile net loss to net cash
used in operating activities:
Depreciation and amortization 95,372 88,887
Amortization of customer accounts 87,783 36,699
Amortization of organization expenses 17,644 17,642
Provision for doubtful accounts 23,815 5,000
Changes in assets and liabilities:
Accounts receivable (88,653) (67,550)
Other assets (90,585) (23,058)
Accounts payable and accrued liabilities (23,001) 56,219
Acquisition contracts payable 21,974 80,510
Unearned revenue 48,018 11,662
----------- -----------
Net cash used in operating activities (178,016) (168,330)
----------- -----------
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of fixed assets (34,636) (14,784)
Acquisition of customer accounts (1,650,334) (540,211)
Other assets -- (25,447)
----------- -----------
Net cash used in investing activities (1,684,970) (580,442)
----------- -----------
CASH FLOWS FROM FINANCING ACTIVITIES:
Payments of debt (356,945) (119,338)
Proceeds from financial institutions 2,001,539 194,173
Increase (decrease) in shareholders' loan 218,644 (376,082)
Cash contributions and conversion of shareholders' loans to capital -- 1,064,030
----------- -----------
Net cash provided by financing activities 1,863,238 762,783
----------- -----------
Net change in cash 252 14,011
CASH, BEGINNING OF PERIOD 14,011 --
----------- -----------
CASH, END OF PERIOD $ 14,263 $ 14,011
=========== ===========
NON CASH INVESTING ACTIVITY:
Financed acquisition of property $ 14,362 --
----------- -----------
SUPPLEMENTAL DISCLOSURES:
Interest paid $ 128,281 $ 23,283
----------- -----------
</TABLE>
The accompanying notes to financial statements are an integral part of these
statements.
15
<PAGE>
GUARDIAN INTERNATIONAL, INC.
NOTES TO THE FINANCIAL STATEMENTS
DECEMBER 31, 1995 AND 1994
1. SUMMARY OF OPERATIONS AND SIGNIFICANT ACCOUNTING POLICIES
A. OPERATIONS
GUARDIAN INTERNATIONAL, INC. ("The Company") operates a central monitoring
alarm station and installs alarm systems for residential and commercial
customers in Florida .
B. INCOME TAXES
The Company, with the consent of its stockholders, has elected to be
treated as an S Corporation under the provisions of the Internal Revenue
Code. Under these provisions, the income or loss of the corporation is
included in the income tax returns of the individual stockholders.
Accordingly, no income tax provision or benefit has been reflected in the
accompanying financial statements.
C. PROPERTY AND EQUIPMENT
Property and equipment are carried at cost. Depreciation is computed using
accelerated methods over the estimated useful lives of the assets as follows:
LIFE
----
Equipment 5-7 years
Leasehold Improvements 31 1/2 years
D. CUSTOMER ACCOUNTS
Customer accounts purchased from alarm dealers are reflected at cost.
Effective January 1, 1995, the Company extended the estimated life of
purchased customer accounts and the applicable straight-line amortization
period from 5 to 10 years. The change in the estimated useful lives was made
to more accurately reflect current industry practice. The effect of the
change was to decrease the net loss by approximately $168,000 for the year
ended December 31, 1995. It is the Company's policy to periodically evaluate
acquired customer account attrition and, when necessary, adjust the remaining
useful lives.
E. REVENUES
Revenues from monitoring alarm services are recognized when service is
rendered. Amounts paid in advance are deferred and recognized as revenue in
the period service occurs. Revenues from installation of alarm systems are
recognized in the period installed.
16
<PAGE>
F. CONCENTRATION OF CREDIT RISK
Financial instruments which potentially subject the Company to
concentrations of credit risk consist principally of trade receivables from
large number of residential and commercial customers.
2. ACQUISITION OF CUSTOMER ACCOUNTS
During the years ended December 31, 1995 and 1994, the Company purchased
$1,650,334 and $540,211 respectively of customer accounts from various
independent alarm dealers which are reflected as customer accounts in the
balance sheet. At December 31, 1995 and 1994, the Company owed $102,484 and
$80,510, respectively in connection with these acquisitions which is included in
the balance sheet as "Acquisition Contracts Payable".
On January 4, 1996 (subsequent to year end) the Company purchased certain
assets consisting primarily of customer accounts and equipment from an alarm
dealer for approximately $1.8 million. The purchase was financed with borrowings
under the existing line of credit with a financial institution (see Note 3). As
of December 31, 1995, the Company had made a $100,000 deposit which is included
in "Other Assets" in the balance sheet.
3. NOTES PAYABLE
(a) Financial Institution
In November 1994, the Company entered into a $7 million line of credit
with a financial institution for the purpose of borrowing funds to acquire
customer alarm accounts. Borrowings ($1,895,299 at December 31, 1995) under the
agreement bear interest at 3% above prime. The loan is collateralized by the
Company's assets and matures on November 30, 1999. The principal shareholders of
the Company have personally guaranteed $700,000 of the loan and pledged their
stock as collateral. The agreement contains certain conditions including, but
not limited to, restrictions related to indebtedness, net worth and distribution
payments to shareholders. At December 31, 1995, the Company did not comply with
certain conditions of the agreement for which a waiver was obtained from the
lender.
In connection with the loan, the Company has agreed to pay the lender a
"Capital Appreciation Payment" if a market event occurs (i.e. merger or
consolidation, sale or disposition of the Company or 20% or more of the number
of its outstanding common shares, etc.). The payment is based on a percentage
(approximately 25%) of the fair value of the Company's common stock after
deducting $1 million plus any capital contributions by the principal
shareholders for the purchase of additional shares of common stock.
17
<PAGE>
(b) Loans Payable to Principal Shareholders
As of December 31, 1995 the principal shareholders have loaned the Company
$194,644. The loans bear interest at 7% and have no fixed maturity date. The
shareholders have indicated that these loans will not be due within a year and
therefore are classified as long-term debt in the balance sheet.
4. RELATED PARTY TRANSACTIONS
LEASED FACILITIES
The Company rents on a month to month basis its monitoring facilities from
an affiliate which is owned by the principal shareholders of the Company. The
informal agreement required lease payments of approximately $32,000 and $50,000
during 1995 and 1994, respectively. Lease payments for the facilities in 1996
are estimated to be $35,000.
18
<PAGE>
GUARDIAN INTERNATIONAL, INC.
UNAUDITED PROFORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
The following unaudited proforma condensed consolidated financial statements
give effect to the acquisition by Guardian International, Inc. ("Guardian") of
Everest Security Systems Corporation ("Everest"), pursuant to the Acquisition
Agreement between the parties, and are based on the estimates and assumptions
set forth therein. This is proforma information has been prepared utilizing the
historical financial statements and notes thereto, which are included. The
proforma financial data does not purport to be indicative of the results which
actually would have been obtained had the purchase been effected on the dates
indicated or of the results which may be obtained in the future.
The proforma financial information is based on the purchase method of accounting
as a reverse acquisition with Guardian being deemed the acquired. The proforma
entries are described in the accompanying notes to the unaudited proforma
condensed consolidated financial statements. The proforma unaudited condensed
consolidated statements of operations assumes the acquisition took place on the
first day of the period presented.
19
<PAGE>
GUARDIAN INTERNATIONAL, INC.
UNAUDITED PROFORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE EIGHT MONTHS ENDED AUGUST 31, 1996
Unaudited Proforma Condensed Consolidated Financial Statements
The following represents the unaudited proforma condensed consolidated
statements of operations for the eight months ended August 31, 1996, assuming
the transaction was consummated as of January 1, 1996.
<TABLE>
<CAPTION>
HISTORICAL
GUARDIAN HISTORICAL
INTERNATIONAL, EVEREST SECURITY
INC. FOR THE SYSTEMS, INC.
EIGHT MONTHS FOR THE EIGHT
ENDED AUGUST MONTHS ENDED PROFORMA PROFORMA
31, 1996 AUGUST 31, 1996 ENTRIES COMBINED
-------------- --------------- ----------- ---------
<S> <C> <C> <C> <C>
Revenue $1,965,273 $ 870,717 (1)$( 2,986) $2,833,004
Operating $1,729,136 $ 1,218,729 (2) (17,536) $2,985,952
Expenses (3) (29,631)
(4) 55,394
(5) 14,491
Income (Loss) (152,948)
before Interest 236,137 (348,012)
Interest 351,767 -- 351,767
Net Loss $ 115,630 $ 348,012 $ (396,200)
Net Loss Per $ 0.7
Share
Weighted 5,383,693
Average
Number of
Shares
Outstanding
<FN>
- -----------
(1) To eliminate activity which would have been intercompany activity.
(2) To switch Everest amortization of customer contracts to Guardian's
amortization method.
(3) To eliminate amortization of goodwill on Everest's books.
(4) To recognize amortization of goodwill created in transaction.
(5) To recognize amortization of capitalized interest related to issuance of
shares to financial institution.
(6) To recognize income tax credit which would have resulted if the Company had
been a C corporation and able to utilize its operating losses.
</FN>
</TABLE>
20
<PAGE>
GUARDIAN INTERNATIONAL, INC.
UNAUDITED PROFORMA CONDENSED CONSOLIDATED FINANCIAL STATEMENTS
FOR THE EIGHT MONTHS ENDED AUGUST 31, 1995
Unaudited Proforma Condensed Consolidated Financial Statements
The following represents the unaudited proforma condensed consolidated
statements of operations for the eight months ended August 31, 1995, assuming
the transaction was consummated as of January 1, 1995.
<TABLE>
<CAPTION>
HISTORICAL
GUARDIAN HISTORICAL
INTERNATIONAL, EVEREST SECURITY
INC. FOR THE SYSTEMS, INC.
EIGHT MONTHS FOR THE EIGHT
ENDED AUGUST MONTHS ENDED PROFORMA PROFORMA
31, 1995 AUGUST 31, 1995 ENTRIES COMBINED
----------------- --------------- ----------- ----------
<S> <C> <C> <C> <C>
Revenue $ 694,016 $ 813,521 $1,507,537
Operating 801,857 1,024,769 (1) (29,631) 1,885,235
Expenses (2) 55,394
(3) 14,491
Loss Before (107,841) (211,248) (377,698)
Interest
Interest 68,781 -- 68,781
Loss before (176,622) (211,248) (446,479)
benefit of taxes
Benefit of taxes (4)137,199 137,199
Net Loss $ 176,622 $ 211,248 $ 309,280
Net Loss Per $ 0.08
Share
Weighted 3,884,740
Average
Number of
Shares
Outstanding
<FN>
- --------------
(1) To eliminate amortization of goodwill on Everest's books
(2) To recognize amortization of capitalized interest related to insurance of
shares of financial institution.
(3) To recognize amortization of capitalized interest related to insurance of
shares to financial institution.
(4) To recognize income tax credit which would have resulted if the Company had
been a C corporation and able to utilize its operating losses.
</FN>
</TABLE>
21
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities and Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GUARDIAN INTERNATIONAL, INC.
Date: April 22, 1997
By: /s/ ROBERT K. NORRIS
-----------------------------------
Robert K. Norris
Chief Financial Officer and Senior
Executive Vice President
