UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
Form 10QSB/A
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d)
OF THE SECURITIES EXCHANGE ACT
For the quarterly period ended September 30, 2000
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d)
OF THE EXCHANGE ACT
For the transition period from ______ to _______
Commission File Number 0-28490
GUARDIAN INTERNATIONAL, INC.
(Exact name of small business issuer as specified in its charter)
Florida 58-1799634
(State or other jurisdiction of (I.R.S. Employer Identification No.)
incorporation or organization)
3880 N. 28 Terrace (954) 926-5200
Hollywood, Florida 33020 (Issuer's telephone number)
(Address of principal executive offices)
Check whether the issuer (1) filed all reports required to be filed by
Section 13 or 15(d) of the Securities Exchange Act of 1934, as amended (the
"Exchange Act") during the past 12 months (or for such shorter period that the
registrant was required to file such reports), and (2) has been subject to such
filing requirements for the past 90 days. Yes X No ____
As of November 14, 2000, there were 8,096,441 shares of Class A Voting
Common Stock, par value $.001 per share ("Class A Common Stock"), and 634,035
shares of Class B Nonvoting Common Stock, par value $.001 per share, immediately
convertible into shares of Class A Common Stock on a one for one basis, of the
issuer outstanding.
Transitional Small Business Disclosure Format (Check one):
YES ____ NO X
<PAGE>
GUARDIAN INTERNATIONAL, INC.
Table of Contents
Page No.
--------
PART I FINANCIAL INFORMATION
Item 1. Financial Statements
Consolidated Balance Sheets as of September 30, 2000 and
December 31, 1999 1
Consolidated Statements of Operations for the Three and Nine
Months Ended September 30, 2000 and 1999 2
Consolidated Statement of Changes in Shareholders' Equity
for the Nine Months Ended September 30, 2000 3
Consolidated Statements of Cash Flows for the Nine Months
Ended September 30, 2000 and 1999 4
Notes to Consolidated Financial Statements 5
Item 2. Management's Discussion and Analysis 9
PART II OTHER INFORMATION
Item 6. Exhibits and Reports on Form 8-K 17
<PAGE>
PART I. FINANCIAL INFORMATION
Item 1. Financial Statements
GUARDIAN INTERNATIONAL, INC.
CONSOLIDATED BALANCE SHEETS
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
------------- ------------
(Unaudited)
<S> <C> <C>
ASSETS
Current assets
Cash $ 249,408 $ 578,034
Accounts receivable, net of allowance for doubtful accounts
of $526,199 and $549,356, respectively 2,238,012 2,896,317
Current portion of notes receivable 60,990 73,564
Inventory 803,236 458,385
Other 115,276 237,697
------------ ------------
Total current assets 3,466,922 4,243,997
Property and equipment, net 4,811,968 4,101,810
Customer accounts, net 27,021,834 30,230,816
Goodwill and other intangible assets, net 1,722,186 1,789,014
Notes receivable, less current portion 46,303 51,683
Deposits and other assets 108,860 90,273
------------ ------------
Total assets $ 37,178,073 $ 40,507,593
============ ============
LIABILITIES AND SHAREHOLDERS' EQUITY
Current liabilities
Accounts payable and accrued expenses $ 3,757,826 $ 3,632,094
Current portion of unearned revenue 2,669,927 3,230,957
Current portion of debt 453,056 807,421
------------ ------------
Total current liabilities 6,880,809 7,670,472
Unearned revenue, less current portion 1,605,612 1,656,852
Long term obligations, less current portion 11,106,991 10,608,280
------------ ------------
Total liabilities 19,593,412 19,935,604
Redeemable preferred stock, 16,397 shares issued and outstanding 16,397,000 16,397,000
Shareholders' equity:
Preferred stock, $.001 par value, 30,000,000 shares authorized 11 10
Series D preferred stock, 10,725 and 10,120 shares issued
and outstanding, at September 30, 2000 and December 31, 1999,
respectively
Class A voting common stock, $.001 par value, 100,000,000 shares 8,097 8,385
authorized, 8,096,441 and 8,384,441 shares issued and
and outstanding, at September 30, 2000 and December 31, 1999,
respectively
Class B non-voting common stock, $.001 par value, 1,000,000 shares 634 634
authorized, 634,035 shares issued and outstanding
Additional paid-in capital 20,087,115 19,516,784
Accumulated deficit (18,908,196) (15,350,824)
------------ ------------
Total shareholders' equity 1,187,661 4,174,986
------------ ------------
Total liabilities and shareholders' equity $ 37,178,073 $ 40,507,593
============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
1
<PAGE>
GUARDIAN INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF OPERATIONS
FOR THE THREE MONTHS AND NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(Unaudited)
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months Ended
September 30, September 30,
------------------------------ ------------------------------
2000 1999 2000 1999
------------ ------------ ------------ ------------
<S> <C> <C> <C> <C>
Revenue
Monitoring $ 3,227,456 $ 2,919,553 $ 9,518,266 $ 8,555,627
Installation and service 1,844,095 1,688,006 5,468,982 4,929,588
------------ ------------ ------------ ------------
Total revenues 5,071,551 4,607,559 14,987,248 13,485,215
------------ ------------ ------------ ------------
Operating costs
Monitoring 499,354 547,705 1,499,841 1,579,633
Installations and service 1,590,503 1,375,242 4,545,693 3,891,467
Selling, general and administrative 1,814,776 1,790,815 5,478,871 5,347,427
Amortization of customer accounts 1,266,229 1,269,733 3,729,550 3,685,038
Depreciation and amortization 278,501 208,978 820,934 580,722
------------ ------------ ------------ ------------
Total operating expenses 5,449,363 5,192,473 16,074,889 15,084,287
------------ ------------ ------------ ------------
Operating loss (377,812) (584,914) (1,087,641) (1,599,072)
Interest and other 344,384 224,595 942,686 740,811
------------ ------------ ------------ ------------
Net loss (722,196) (809,509) (2,030,327) (2,339,883)
Preferred stock dividends 449,546 444,118 1,349,769 1,320,527
------------ ------------ ------------ ------------
Net loss applicable to common stock $ (1,171,742) $ (1,253,627) $ (3,380,096) $ (3,660,410)
============ ============ ============ ============
Loss per common share $ (0.13) $ (0.14) $ (0.38) $ (0.40)
============ ============ ============ ============
Weighted average shares outstanding 8,730,476 9,136,588 8,876,578 9,189,421
============ ============ ============ ============
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
2
<PAGE>
GUARDIAN INTERNATIONAL, INC.
CONSOLIDATED STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000
(Unaudited)
<TABLE>
<CAPTION>
Series D Common Stock Common Stock
Preferred Stock Class A Class B
Shares Amount Shares Amount Shares Amount
----------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C>
Balance, December 31, 1999 10,120 $ 10 8,384,441 $ 8,385 634,035 $ 634
Equity issuance costs
Series C Preferred Dividends
Series D Preferred Dividends 605 1
Purchase and retirement of treasury shares (288,000) (288)
Net loss
----------------------------------------------------------------------
Balance, September 30, 2000 10,725 $ 11 8,096,441 $ 8,097 634,035 $ 634
======================================================================
<CAPTION>
Additional
Paid-in Accumulated
Capital Deficit Total
-------------------------------------------------
<S> <C> <C> <C>
Balance, December 31, 1999 $ 19,516,784 $ (15,350,824) $ 4,174,989
Equity issuance costs (6,590) (6,590)
Series C Preferred Dividends (860,844) (860,844)
Series D Preferred Dividends 605,433 (488,925) 116,509
Purchase and retirement of treasury shares (28,512) (177,276) (206,076)
Net loss (2,030,327) (2,030,327)
-------------------------------------------------
Balance, September 30, 2000 $ 20,087,115 $ (18,908,196) $ 1,187,661
=================================================
</TABLE>
The accompanying notes are an integral part of this consolidated
financial statement.
3
<PAGE>
GUARDIAN INTERNATIONAL, INC.
CONSOLIDATED STATEMENTS OF CASH FLOWS
FOR THE NINE MONTHS ENDED SEPTEMBER 30, 2000 AND 1999
(Unaudited)
<TABLE>
<CAPTION>
For the Nine Months For the Nine Months
Ended September 30, Ended September 30,
2000 1999
----------- -----------
<S> <C> <C>
Cash Flows from Operating Activities:
Net Loss $(2,030,327) $(2,339,883)
Adjustments to reconcile net loss to net cash
provided by / (used in) operating activities:
Depreciation and amortization 820,934 580,722
Amortization of customer accounts 3,729,550 3,685,038
Amortization of capitalized installation costs 945,103 730,207
Amortization of deferred financing costs 72,308 133,177
Provision for doubtful accounts 430,034 396,550
Changes in assets and liabilities:
Accounts receivable 259,271 (613,044)
Deposits and other assets (407,593) (220,416)
Accounts payable and accrued liabilities 242,241 237,942
Unearned revenue (612,270) 604,084
----------- -----------
Net cash provided by operating activities 3,449,251 3,194,377
----------- -----------
Cash Flows from Investing Activities:
Purchase of fixed assets (495,295) (316,856)
Purchase of customer premise equipment (887,747) (1,196,267)
Purchase and placement of customer accounts (1,465,671) (2,310,458)
----------- -----------
Net cash used in investing activities (2,848,713) (3,823,581)
----------- -----------
Cash Flows from Financing Activities:
Payments on debt obligations (2,517,434) (514,471)
Proceeds from line of credit 2,661,780 1,627,694
Equity issuance costs (6,590) (3,139)
Acquisition of treasury shares (206,076) (94,424)
Payment of cash dividends (860,844) (800,265)
----------- -----------
Net cash (used in) provided by financing activities (929,164) 215,395
----------- -----------
Net decrease in cash and cash equivalents (328,626) (413,809)
Cash and cash equivalents, beginning of period 578,034 865,857
----------- -----------
Cash and cash equivalents, end of period $ 249,408 $ 452,048
=========== ===========
Supplemental disclosure:
Interest Paid $ 1,021,181 $ 595,823
Non cash investing and financing activities:
Contract holdbacks applied against accounts written off 11,917 21,104
</TABLE>
The accompanying notes are an integral part of these consolidated
financial statements.
4
<PAGE>
GUARDIAN INTERNATIONAL, INC.
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
SEPTEMBER 30, 2000
1. ACCOUNTING POLICIES
Basis of Presentation
The accompanying unaudited consolidated financial statements of
Guardian International, Inc. ("the Company") have been prepared
pursuant to the rules and regulations of the Securities and Exchange
Commission. 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 for the year ended December 31, 1999,
included in the Company's Annual Report on Form 10-KSB.
Revenue Recognition
Installation Revenue. In 1998, as a result of the acquisition of Mutual
Central Alarm Services, Inc. ("Mutual"), the Company adopted a new
accounting policy related to installation activity due to the nature of
the high-end commercial installations performed by Mutual. The Company
defers the excess of installation revenue over estimated direct selling
costs and amortizes such difference over the initial term of the
non-cancelable customer monitoring/service contract (generally over
five years). Costs attributed to providing the installations, which
include direct labor, direct materials and direct overhead, are
capitalized and amortized over a five-year period. All other costs
associated with the installation are charged to income in the period
when the installation occurs.
Monitoring/Service Revenue. Customers are billed for monitoring and
maintenance services primarily on a monthly or quarterly basis in
advance of the period in which such services are provided. Unearned
revenues result from billings in advance of performance of services.
Contracts for monitoring services are generally for an initial
non-cancelable term of three to five years with automatic renewal on an
annual basis thereafter, unless terminated by either party. A
substantial number of contracts are on an automatic renewal basis.
Reclassification
Certain 1999 amounts in the consolidated financial statements have been
reclassified to conform to the 2000 presentation.
2. PROPERTY AND EQUIPMENT, NET
During the nine months ended September 30, 2000, the Company expended
approximately $1,383,000 for the purchase of fixed assets, including
subscriber premises equipment approximating $888,000.
5
<PAGE>
3. CUSTOMER ACCOUNTS, NET
The following is an analysis of the changes in acquired customer
accounts:
<TABLE>
<CAPTION>
Nine Months Ended Year Ended
September 30, 2000 December 31, 1999
------------------ -----------------
<S> <C> <C>
Balance, beginning of period $ 30,230,816 $ 31,552,324
Purchase of customer accounts from dealers 291,368 2,819,205
Internally generated accounts 1,186,220 1,774,330
Charges against contract holdbacks (11,917) (25,076)
Amortization of capitalized installation costs (945,103) (1,016,836)
Amortization of customer accounts (3,729,550) (4,873,131)
------------- -------------
Balance, end of period $ 27,021,834 $ 30,230,816
============= =============
</TABLE>
In conjunction with certain purchases of customer contracts and
accounts, the Company withholds a portion of the price as a credit to
offset qualifying attrition of the acquired customer accounts and for
purchase price settlements of assets acquired and liabilities assumed.
The Company had a total balance withheld of $313,081 and $297,881 at
September 30, 2000 and December 31, 1999, respectively, as contract
holdbacks in connection with the acquisition of customer accounts which
are included in accounts payable and accrued expenses in the
accompanying consolidated balance sheets.
4. GOODWILL AND OTHER INTANGIBLE ASSETS
Goodwill and other intangible assets, net, consist of the following:
<TABLE>
<CAPTION>
Amortization September 30, December 31,
Period 2000 1999
------------- ------------- -------------
<S> <C> <C> <C>
At Cost
Goodwill 10 years $1,943,211 $1,943,211
Deferred financing costs 2 - 3 years 992,528 812,667
Covenant not to compete and other 5 - 10 years 416,233 442,569
---------- ----------
3,351,972 3,198,447
Accumulated amortization (1,629,786) (1,409,433)
---------- ----------
$1,722,186 $1,789,014
========== ==========
</TABLE>
5. ACCOUNTS PAYABLE AND ACCRUED EXPENSES
Accounts payable and accrued expenses consist of the following:
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
------------- ------------
<S> <C> <C>
Trade accounts payable $ 980,539 $ 578,660
Contracts holdbacks 313,081 297,881
Preferred dividends payable 775,872 892,380
Accrued expenses 1,688,334 1,863,173
------------- ------------
$3,757,826 $3,632,094
============= ============
</TABLE>
6
<PAGE>
6. LONG TERM OBLIGATIONS
Long term obligations consist of the following:
<TABLE>
<CAPTION>
September 30, December 31,
2000 1999
------------- ------------
<S> <C> <C>
Credit facility with financial institution $10,843,348 $10,338,757
Capital lease obligations 355,859 374,027
Equipment notes payable and other 360,840 702,917
------------- ------------
$11,560,047 $11,415,701
Less : current portion (453,056) (807,421)
------------- ------------
$11,106,991 $ 10,608,280
============= ============
</TABLE>
Under the Renewed Credit Facility, borrowings bear interest at floating
rates, either at Prime plus 1 3/4% or, at the Company's election, LIBOR
plus 3 1/2%. At September 30, 2000, the debt was bearing interest at
varying rates.
In June 2000, the Renewed Credit Facility was amended to extend the
expiration date to June 30, 2002 from May 31, 2001, for which the
Company paid a renewal fee of $150,000. Availability under the Renewed
Credit Facility is subject to certain "Borrowing Base" limitations (as
defined in the Renewed Credit Facility). In connection with the June
2000 amendment of the Renewed Credit Facility, the "Borrowing Base"
limitation relating to earnings before interest, taxes, depreciation,
and amortization ("EBITDA") was increased to 4.0 times EBITDA from 3.5
times EBITDA. The Renewed Credit Facility includes customary covenants,
including, but not limited to, restrictions related to the incurrence
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. The Company
believes it was in compliance with all such covenants as of September
30, 2000. At September 30, 2000, $7.6 million was available under the
Renewed Credit Facility.
7. RECENT PRONOUNCEMENTS
The SEC staff has recently issued Staff Accounting Bulletin No. 101
Revenue Recognition (SAB 101), which further clarifies existing
accounting literature on the timing and substance of recognizing an
organization's revenues. SAB 101 is required to be adopted by
registrants no later than the fourth quarter of 2000. Management
believes that, based on its understanding of the SEC staff's current
interpretation of SAB 101, the adoption of the pronouncement will
have an impact on its financial statements and is still assessing the
dollar amount of such impact.
8. SUBSEQUENT EVENTS
Basis of Presentation
During October 2000, the Company reached a settlement agreement related
to its August 13, 1998 acquisition of Stat-Land Burglar Alarm Systems &
Devices, Inc. ("Stat-Land"). The purchase agreement in that transaction
contains a provision for a working capital payment to be made
subsequent to the acquisition. Calculation of such provision had been
disputed by the parties, prior to the settlement agreement. Under the
settlement agreement, Guardian's payment of $100,000 to the former
owners of Stat-Land will be recorded as additional purchase price
consideration in the fourth quarter financial statements.
7
<PAGE>
Series D Preferred Stock
During November 2000, the Company has amended the terms of its Series D
Preferred Stock to eliminate redemption feature that occurred upon a
change of control, as defined. That feature was replaced with a
provision that allows for redemption by the holder of the Series D
Preferred Stock in the event that certain significant shareholders
dispose of their holdings. However, those significant shareholders must
seek the approval of the an Independent Board committee prior to
disposing of their shares. These changes were effected to more clearly
reflect the intentions of the parties at the time of the issuance of
the Series D Preferred Stock.
8
<PAGE>
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 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
made herein. 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 risks and uncertainties, and, accordingly,
actual results could differ materially from those expressed in the
forward-looking statements. 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, through internal sales efforts and through
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; (v) changes in local, state and federal
regulations; (vi) availability of qualified personnel; (vii) competitive factors
in the industry, including additional competition from existing competitors or
future entrants to the industry; (viii) social and economic conditions; (ix)
natural disasters; and (x) other risk factors described in the Company's reports
filed with the SEC from time to time.
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, nor can it assess the
impact of each such factor on the business or the extent to which any factor, or
combination of factors, may cause actual results to differ materially from those
contained in any forward-looking statements.
Overview
The majority of the Company's revenue is derived from recurring
payments for the monitoring and maintenance of security and fire systems,
pursuant to contracts with initial terms typically ranging from three to five
years. The remainder of the Company's revenue is derived from the sale and
installation of security and fire systems and the servicing and upgrades of such
installed systems. Monitoring and service revenues are recognized as the service
is provided. On installations for which the Company retains title to the
electronic security systems, the excess of installation revenue over estimated
selling costs is amortized over the initial term of the related
service/monitoring contract (generally five years). All other installation
revenues are recognized in the period in which installation occurs. All direct
installation costs, which include materials, labor and installation overhead are
capitalized and amortized over a five year period. When the Company maintains
ownership of the equipment, the costs of such equipment are capitalized to
property and equipment and amortized over seven years.
9
<PAGE>
The Company has never had any net income and has a history of
consistent and sometimes significant net losses. The Company has two core
strategies: (1) generating monitoring contracts through its own sales and
installation efforts and (2) acquiring alarm monitoring contracts. The Company
is exploring a third core strategy of direct investments in companies offering
related and unrelated technology and services. The first core strategy requires
a cost infrastructure that results in lower operating margins than are
achievable by companies that only acquire and service alarm monitoring
contracts. In order to pursue the second core strategy of acquiring alarm
monitoring contracts, the Company has chosen to issue yield-bearing instruments
(such as senior debt or preferred stock). The Company's present amortization
policy for those acquired contracts results in significant amortization costs.
The issuance of yield-bearing instruments results in related interest and
dividend expense. The Company believes that these strategies, which emphasize
creating long-term value over short-term net income, will result in the
Company's recording of net losses until such time as (i) the Company's cash flow
from its increased customer base allows it to reduce significantly its
indebtedness and related interest costs; and (ii) the Company's amortization
expense, through the passage of time and recognition of account losses, is
reduced.
Alarm monitoring revenues generate favorable gross margins.
Historically, installation and service activity generated unfavorable gross
margins because such activity was necessary for the generation and retention of
residential and mid-market commercial alarm monitoring customers. With the
February 1998 acquisition of Mutual Central Alarm Services, Inc. ("Mutual"), a
New York City-based provider to high-end commercial customers, however,
approximately 40% of the Company's installation activity now generates favorable
gross margins because competition in the high-end commercial market is based
less on price and more on the ability of competitors to design, deliver and
maintain sophisticated security systems.
The Company's objective is to provide residential and commercial
security services to an increasing number of subscribers. The Company's growth
strategy is to enhance its position in the security alarm monitoring industry in
Florida and in the Metropolitan New York City area by increasing the number and
density of subscribers for whom it provides services. The Company is pursuing
this strategy through a growth plan involving incorporating acquisitions of
portfolios of subscriber accounts in existing and contiguous markets and growth
in the Company's existing markets through referrals and traditional local
marketing. The Company believes that increasing the number and density of its
subscribers will help it to achieve economies of scale and enhance its results
of operations. The Company also regularly reviews opportunities for expanding
its operations into other large metropolitan markets.
Key Operating Measures
The Company believes that EBITDA, MRR, and MRR attrition are key
measurements of performance in the security monitoring industry.
EBITDA. Earnings before interest, taxes, depreciation and amortization
("EBITDA") does not represent cash flow from operations as defined by generally
accepted accounting principles, should not be construed as an alternative to
operating income and is indicative neither of operating performance nor of cash
flows available to fund the cash needs of the Company. Items excluded from
EBITDA are significant components in understanding and assessing the financial
performance of the Company. The Company believes presentation of EBITDA enhances
an understanding of financial condition, results of operations and cash flows
because EBITDA is used by the Company to satisfy its debt service obligations
and its capital expenditure and other operational needs, as well as to provide
funds for growth. In addition, EBITDA is used by senior lenders and the
investment community to determine the current borrowing capacity and to estimate
the long-term value of companies with recurring cash flows from operations. The
Company's computation of EBITDA may not be comparable to other similarly titled
measures of other companies.
10
<PAGE>
The following table provides a calculation of EBITDA for the three and nine
months ended September 30, 2000 and 1999:
<TABLE>
<CAPTION>
Three Months Ended Nine Months Ended
September 30 September 30
---------------------------------- ----------------------------------
2000 1999 2000 1999
---------------- --------------- ---------------- ----------------
<S> <C> <C> <C> <C>
Net loss $ (722,196) $ (809,509) $(2,030,327) $(2,339,883)
Plus :
Amortization of customer contracts 1,266,229 1,269,733 3,729,550 3,685,038
Depreciation and amortization 278,501 208,978 820,934 580,722
Interest expense and other 344,384 224,595 942,686 740,811
---------------- ---------------- ---------------- ----------------
EBITDA $ 1,166,918 $ 893,797 $ 3,462,843 $ 2,666,688
================ ================ ================ ================
</TABLE>
Monthly Recurring Revenue ("MRR"). MRR is revenue that the Company is
entitled to receive for a month of service under monitoring and service
contracts in effect at the end of the period. Because the Company has grown
rapidly, often by acquiring security alarm companies and portfolios of customer
accounts which are included in revenues only from the date of acquisition, the
Company's revenues are not proportional to the level of its investment of
capital reported to the end of the period upon which a return must be earned.
Management believes MRR enhances an investor's understanding of the Company's
financial condition, results of operations and cash flows because it provides a
measure of the Company's revenue that can be used to derive estimated annual
revenues acquired in acquisitions for a full year of operations. As a result,
MRR can be compared to the level of investment in the statement of financial
condition at the end of the period. By comparing MRR to cash, debt and equity
balances at the end of a period, an investor can assess the Company's investment
track record. Further, management believes an investor's consideration of MRR
relative to the Company's customer base helps identify trends in MRR per
customer. MRR does not measure profitability or performance, and does not
include any allowance for future losses of customers or allowance for doubtful
accounts. The Company does not have sufficient information as to the losses of
acquired customers' accounts to predict with absolute certainty the amount of
acquired MRR that will be realized in future periods or the impact of the loss
of acquired accounts on our overall rate of customer loss. Our computation of
MRR may not be comparable to other similarly titled measures of other companies
and MRR should not be viewed by investors as an alternative to actual monthly
revenue as determined in accordance with generally accepted accounting
principles. MRR at September 30, 2000 and 1999 was approximately $1,089,000 and
$978,000, respectively.
MRR Attrition. The Company experiences customer cancellations, i.e.,
attrition, of monitoring and related services as a result of subscriber
relocation, the cancellation of acquired accounts during the process of
integrating such accounts into the Company's operations, unfavorable economic
conditions and other reasons. This attrition is offset to a certain extent by
revenues from the sale of additional services to existing subscribers, the
reconnection of premises previously occupied by subscribers, the conversion of
accounts previously monitored by other alarm companies and guarantees provided
by the sellers of such accounts. The Company defines attrition numerically for a
particular period as a quotient, the numerator of which is equal to the
difference between gross MRR lost as the result of canceled subscriber accounts
and MRR lost that was replaced pursuant to guarantees from sellers of accounts
purchased by the Company, and the denominator of which is the expected month-end
MRR calculated at the end of such period. Net MRR attrition of the Company's
customers during the twelve months ended September 30, 2000 and 1999 was less
than 10%, on an annualized basis.
11
<PAGE>
Results of Operations
The following table sets forth certain operating data as a percentage
of total revenues for the periods indicated for consolidated operations.
<TABLE>
<CAPTION>
For the Three Months Ended For the Nine Months
September 30, Ended September 30,
------------------------------- ----------------------------
2000 1999 2000 1999
-------------- ------------- ----------- ------------
<S> <C> <C> <C> <C>
Revenue
Monitoring 63.6% 63.4% 63.5% 63.4%
Installation and service 36.4% 36.6% 36.5% 36.6%
-------------- ------------- ----------- ------------
Total revenues 100.0% 100.0% 100.0% 100.0%
Operating costs
Monitoring 9.8% 11.9% 10.0% 11.7%
Installation and service 31.4% 29.8% 30.3% 28.9%
Selling, general and administrative 35.8% 38.9% 36.6% 39.7%
-------------- ------------- ----------- ------------
77.0% 80.6% 76.9% 80.3%
-------------- ------------- ----------- ------------
Income before interest expense, amortization and
depreciation 23.0% 19.4% 23.1% 19.7%
-------------- ------------- ----------- ------------
Interest expense 6.8% 4.9% 6.3% 5.5%
Amortization of customer accounts 25.0% 27.6% 24.9% 27.3%
Depreciation and amortization 5.5% 4.5% 5.5% 4.3%
-------------- ------------- ----------- ------------
37.3% 37.0% 36.7% 37.1%
-------------- ------------- ----------- ------------
Net loss (14.3%) (17.6%) (13.6%) (17.4%)
============== ============= =========== ============
</TABLE>
Nine months Ended September 30, 2000 Compared to Nine months Ended September 30,
1999
Revenue. Total revenues for the nine months ended September 30, 2000
increased 11% to approximately $15.0 million from approximately $13.5 million
during the corresponding period in the prior year. Monitoring revenues for the
nine months ended September 30, 2000 increased to approximately $9.5 million, or
11%, from approximately $8.6 million during the corresponding period of the
prior year. Installation and service revenues for the nine months ended
September 30, 2000 increased by 11% to approximately $5.5 million, compared to
approximately $4.9 million during the corresponding period of the prior year.
Total retail subscribers approximated 26,600 at September 30, 2000, compared to
23,700 at September 30, 1999, a net increase of 12%. The increase in monitoring
revenues and number of subscribers in the first nine months of 2000 from the
first nine months of 1999 is attributable to the Company's installation activity
and to the purchase of accounts in the latter part of 1999. The increase in
installation and service revenues in the first nine months of 2000 compared to
the prior year's period is a result of the Company's increased efforts in
internal installation activity.
Operating Expenses. Total operating expenses, excluding depreciation
and amortization, for the nine months ended September 30, 2000 increased 10% to
approximately $6.0 million, compared to approximately $5.5 million during the
corresponding period in the prior year. Monitoring expenses decreased 5% to
approximately $1.5 million compared to the corresponding period in the prior
year. As a percentage of monitoring revenues during the nine months ended
September 30, 2000, monitoring expenses were 16%, compared to 18% during the
corresponding period in the prior year. The decrease in
12
<PAGE>
monitoring costs was a result of cost efficiencies which included the transfer
of outside monitored accounts to the Company's monitoring facilities.
Installation and service costs during the nine months ended September 30, 2000
increased by 17% to approximately $4.5 million, compared to approximately $3.9
million during the corresponding period in the prior year. Installation and
service costs were 83% of related revenues during the nine months ended
September 30, 2000, compared to 79% during the corresponding period in the prior
year, because the Company derived a larger percentage of sales from lower
revenue / higher cost sales to homeowners and builders in the nine months ended
September 30, 2000 compared to the nine months ended September 30, 1999.
Gross Profit. Total gross profit, defined as total revenues less
monitoring and installation and service costs, increased by 12% to approximately
$9.0 million during the nine months ended September 30, 2000, compared to
approximately $8.0 million during the corresponding period in the prior year.
Gross profit from monitoring revenues increased by 15% to approximately $8.0
million during the nine months ended September 30, 2000, compared to
approximately $7.0 million during the corresponding period in the prior year.
The increase in gross profit from monitoring revenues is primarily attributable
to the Company's 1999 acquisitions of monitored accounts for which the
incremental costs to monitor are lower than the Company's average cost in 1999,
as well as more efficient operations. Gross profit from installation and service
activities decreased to approximately $923,000 during the nine months ended
September 30, 2000, from approximately $1,038,000 during the corresponding
period in the prior year, partly due to the costs associated with the increased
efforts in the Company's internal installations operations.
Selling, General and Administrative. Selling, general and
administrative costs ("SG&A") increased by 2% to approximately $5.5 million
during the nine months ended September 30, 2000, compared to approximately $5.3
million during the corresponding period in the prior year.
Amortization of Customer Contracts. Amortization of customer contracts
remained steady at approximately $3.7 million during the nine months ended
September 30, 2000, compared to the corresponding period in the prior year. This
steady amortization expense can be mostly attributed to the fact that account
portfolio purchases have been in proportion to account write-offs. Costs of
acquired contracts are amortized over 10 years, unless a contract is canceled
and not replaced by the corresponding independent alarm company, in which case
the remaining unamortized balance is written off as a charge to amortization
expense.
Depreciation and Amortization. Depreciation and amortization increased
by 41% to approximately $821,000 during the nine months ended September 30,
2000, compared to approximately $581,000 during the corresponding period in the
prior year. Such costs include depreciation of property and equipment (the gross
balance of which increased to approximately $6.8 million at September 30, 2000
from approximately $4.7 million at September 30, 1999) and the amortization of
certain other intangible assets.
Interest Expense and Other. Interest expense and other increased 27% to
approximately $943,000 during the nine months ended September 30, 2000, compared
to approximately $741,000 during the corresponding period in the prior year. The
increase in interest expense resulted from increased borrowings under the
Renewed Credit Facility. Total borrowings under the Renewed Credit Facility
increased to approximately $10.8 million at September 30, 2000 from
approximately $7.6 million at September 30, 1999.
Net Loss. Net loss applicable to common stock for the nine months ended
September 30, 2000 was approximately $(3.4) million, or $(0.38) per share,
compared to a net loss of approximately $(3.7) million, or $(0.40) per share,
during the corresponding period of the prior year.
13
<PAGE>
Three months Ended September 30, 2000 Compared to Three months Ended September
30, 1999
Revenue. Total revenues for the three months ended September 30, 2000
increased 10% to approximately $5.1 million from approximately $4.6 million
during the corresponding period in the prior year. Monitoring revenues for the
three months ended September 30, 2000 increased to approximately $3.2 million,
or 11%, from approximately $2.9 million during the corresponding period of the
prior year. Installation and service revenues for the three months ended
September 30, 2000 increased by 9% to approximately $1.8 million, compared to
approximately $1.7 million during the corresponding period of the prior year.
Total retail subscribers approximated 26,600 at September 30, 2000, compared to
23,700 at September 30, 1999, a net increase of 12%. The increase in monitoring
revenues and number of subscribers in the third quarter of 2000 from the third
quarter of 1999 is attributable to the Company's installation activity and to
the purchase of accounts in the latter part of 1999. The increase in
installation and service revenues in the third quarter of 2000 compared to the
prior year's period is a result of the Company's increased efforts in internal
installation activity.
Operating Expenses. Total operating expenses, excluding depreciation
and amortization, for the three months ended September 30, 2000 increased 9% to
approximately $2.1 million, compared to approximately $1.9 million during the
corresponding period in the prior year. Monitoring expenses decreased 9% to
approximately $499,000 compared to the corresponding period in the prior year.
As a percentage of monitoring revenues during the three months ended September
30, 2000, monitoring expenses were 15%, compared to 19% during the corresponding
period in the prior year. The decrease in monitoring costs was a result of cost
efficiencies which included the transfer of outside monitored accounts to the
Company's monitoring facilities. Installation and service costs during the three
months ended September 30, 2000 increased by 16% to approximately $1.6 million,
compared to approximately $1.4 million during the corresponding period in the
prior year. Installation and service costs were 86% of related revenues during
the three months ended September 30, 2000, compared to 81% during the
corresponding period in the prior year, because the Company derived a larger
percentage of sales from lower revenue / higher cost sales to homeowners and
builders in the three months ended September 30, 2000 compared to the three
months ended September 30, 1999.
Gross Profit. Total gross profit, defined as total revenues less
monitoring and installation and service costs, increased by 11% to approximately
$3.0 million during the three months ended September 30, 2000, compared to
approximately $2.7 million during the corresponding period in the prior year.
Gross profit from monitoring revenues increased by 15% to approximately $2.7
million during the three months ended September 30, 2000, compared to
approximately $2.4 million during the corresponding period in the prior year.
The increase in gross profit from monitoring revenues is primarily attributable
to the Company's 1999 acquisitions of monitored accounts for which the
incremental costs to monitor are lower than the Company's average cost in 1999,
as well as more efficient operations. Gross profit from installation and service
activities decreased to approximately $254,000 during the three months ended
September 30, 2000, from approximately $313,000 during the corresponding period
in the prior year, partly due to the costs associated with the increased efforts
in the Company's internal installations operations.
Selling, General and Administrative. Selling, general and
administrative costs ("SG&A") remained steady at approximately $1.8 million
during the three months ended September 30, 2000.
Amortization of Customer Contracts. Amortization of customer contracts
remained steady at approximately $1.3 million during the three months ended
September 30, 2000, compared to the corresponding period in the prior year. This
steady amortization expense can be mostly attributed to the fact that account
portfolio purchases have been in proportion to account write-offs. Costs of
acquired contracts are amortized over 10 years, unless a contract is canceled
and not replaced by the corresponding independent alarm company, in which case
the remaining unamortized balance is written off as a charge to amortization
expense.
14
<PAGE>
Depreciation and Amortization. Depreciation and amortization increased
by 33% to approximately $279,000 during the three months ended September 30,
2000, compared to approximately $209,000 during the corresponding period in the
prior year. Such costs include depreciation of property and equipment (the gross
balance of which increased to approximately $6.8 million at September 30, 2000
from approximately $4.7 million at September 30, 1999) and the amortization of
certain other intangible assets.
Interest Expense and Other. Interest expense and other increased 53% to
approximately $344,000 during the three months ended September 30, 2000,
compared to approximately $225,000 during the corresponding period in the prior
year. The increase in interest expense resulted from increased borrowings under
the Renewed Credit Facility. Total borrowings under the Renewed Credit Facility
increased to approximately $10.8 million at September 30, 2000 from
approximately $7.6 million at September 30, 1999.
Net Loss. Net loss applicable to common stock for the three months
ended September 30, 2000 was approximately $(1.2) million, or $(0.13) per share,
compared to a net loss of approximately $(1.3) million, or $(0.14) per share,
during the corresponding period of the prior year.
Liquidity and Capital Resources
As of September 30, 2000, the Company believes it will maintain the
ability to generate sufficient cash to fund future operations of the business.
Generally, cash flow will be generated from a combination of (1) the Company's
existing $20.0 million Renewed Credit Facility with Heller, subject to
compliance with the provisions of the debt covenants in the Renewed Credit
Facility, and (2) recurring revenue from its security monitoring customer base,
which generated $3.5 million of EBITDA in the nine months ended September 30,
2000. At September 30, 2000, there was $7.6 million of availability under the
Renewed Credit Facility. Cash flow from operating activities was $3.4 million
for the nine months ended September 30, 2000.
Capital Resources. In June 2000, the expiration date of the Renewed
Credit Facility was extended to June 30, 2002 from May 2001. Availability under
the Renewed Credit Facility is subject to certain "Borrowing Base" limitations
(as defined in the Renewed Credit Facility). In connection with the June 2000
amendment of the Renewed Credit Facility, the "Borrowing Base" limitation
relating to EBITDA was increased to 4.0 times EBITDA from 3.5 times EBITDA. The
Renewed Credit Facility includes customary covenants, including, but not limited
to, restrictions related to the incurrence 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. The Company believes it was in compliance with all such covenants as
of September 30, 2000.
The Renewed Credit Facility is used primarily for acquisitions of
subscriber accounts and to finance the Company's internal account creation
efforts. The Company's continued plan of growth through acquisitions of
subscriber accounts is contingent upon its ability to borrow under the Renewed
Credit Facility.
Liquidity. Net cash provided by operating activities during the nine
months ended September 30, 2000 was approximately $3.4 million. The Company
incurred a net loss of approximately $2.0 million during such period; however,
included in such loss was non-cash depreciation and amortization expense,
amortization of customer contracts expense, amortization of capitalized
installation costs and amortization of deferred financing costs totaling
approximately $5.6 million and a bad debt provision of approximately $430,000.
Other operating cash flows included cash inflows of approximately $259,000
related to decreases in accounts receivable and cash outflows of approximately
$778,000 related to other assets and net decreases in liabilities.
15
<PAGE>
Net cash used in investing activities was approximately $2.9 million
during the nine months ended September 30, 2000 and was comprised of
approximately $1.5 million used in the purchase and placement of customer
accounts and the purchases of fixed assets of approximately $1,383,000 which
includes customer premise equipment of approximately $888,000.
Net cash used in financing activities was approximately $929,000 during
the nine months ended September 30, 2000, consisting primarily of repayments to
Heller and other debt obligations of approximately $2.5 million, payment of cash
dividends on preferred stock of approximately $861,000, payment for purchase and
retirement of treasury shares of approximately $206,000, and costs related to
the issuance of equity securities of approximately $7,000. These payments were
offset by proceeds under borrowings from Heller of approximately $2.7 million.
The Company's cash balance was $249,408 as of September 30, 2000.
Total shareholders' equity was $1,187,661 at September 30, 2000,
decreasing by a net amount of $2,987,328 during the nine months ended September
30, 2000. The net decrease resulted from the payment and accrual of dividends on
the Company's preferred stock and the net loss of approximately $2.0 million.
Affiliation with Western Resources, Inc. As discussed in the Company's
1999 Form 10-KSB, in Part I, Item I "1999 Developments", Western Resources, Inc.
indirectly holds a significant investment in the Company.
The Company does not currently have any significant commitments for
capital outlays.
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.
16
<PAGE>
Item 6. Exhibits And Reports On Form 8-K
(a) Exhibits
Exhibit No. Description
----------- -----------
3(i) Articles of Incorporation dated July 7, 1999 incorporated by
reference to Exhibit 3(i) of the Company's Form 10-QSB filed
August 13, 1999.
3(ii) Amended and Restated By-Laws of the Company dated March 2,
2000 incorporated by reference to Exhibit 3(ii) of the
Company's Form 10-KSB filed March 30, 2000.
3(iii) Articles of Amendment to Articles of Incorporation of
Guardian International, Inc. as filed with the Florida
Secretary of State on March 9, 2000 incorporated by reference
to Exhibit 3(iii) of the Company's Form 10-KSB filed March
30, 2000.
4(a) Specimen Stock Certificate incorporated by reference to
Exhibit 4(a) of the Company's Form 10-QSB filed August 13,
1999.
10(a) Second Amended and Restated Loan and Security Agreement with
Heller Financial, Inc. dated as of February 23, 1998,
incorporated by reference to Exhibit 10(j) of the Company's
Form 10-KSB filed March 31, 1998.
10(b) Stock Purchase Agreement dated as of February 23, 1998
incorporated by reference to Exhibit 10(a) of the Company's
Form 8-K filed as of March 10, 1998.
10(c) Registration Rights Agreement dated as of February 23, 1998
incorporated by reference to Exhibit 10(b) of the Company's
Form 8-K filed as of March 10, 1998.
10(d) Escrow and Pledge Agreement dated as of February 23, 1998
incorporated by reference to Exhibit 10(c) of the Company's
Form 8-K filed as of March 10, 1998.
10(e) Employment Agreement with Joel A. Cohen dated as of February
1, 1998 incorporated by reference to Exhibit 10(d) of the
Company's Form 8-K filed as of March 10, 1998.
10(f) Employment Agreement with Raymond L. Adams dated as of
February 1, 1998 incorporated by reference to Exhibit 10(e)
of the Company's Form 8-K filed as of March 10, 1998.
10(g) Asset Purchase Agreement effective as of March 9, 1998
incorporated by reference to Exhibit 10(a) to the Company's
Form 8-K filed as of March 24, 1998.
10(h) Warranty Bill of Sale dated as of March 5, 1998 incorporated
by reference to Exhibit 10(b) to the Company's Form 8-K filed
as of March 24, 1998.
10(i) Assignment and Assumption Agreement dated as of March 5, 1998
incorporated by reference to Exhibit 10(c) to the Company's
Form 8-K filed as of March 24, 1998.
10(j) Guaranty Agreement dated as of March 9, 1998 incorporated by
reference to Exhibit 10(d) to the Company's Form 8-K filed as
of March 24, 1998.
10(k) Escrow Agreement date March 9, 1998 incorporated by reference
to Exhibit 10(e) to the Company's Form 8-K filed as of March
24, 1998.
10(l) Employment Agreement with Dan Lawrence dated March 9, 1998
incorporated by reference to Exhibit 10(f) to the Company's
Form 8-K filed as of March 24, 1998.
10(m) Amendment to Registration Rights Agreement dated as of
February 23, 1998, incorporated by reference to Exhibit
10(gg) to the Company's Form 10-KSB filed as of March 31,
1998.
10(n) Stock Subscription Agreement dated as of February 23, 1998,
incorporated by reference to Exhibit 10(hh) to the Company's
Form 10-KSB filed as of March 31, 1998.
17
<PAGE>
10(o) Stock Purchase Agreement dated as of April 27, 1998,
incorporated by reference to Exhibit 10(a) to the Company's
Form 10-QSB filed as of August 14, 1998.
10(p) Employment Agreement with David Weston between Precision and
the Company dated as of April 27, 1998, incorporated by
reference to Exhibit 10(b) to the Company's Form 10-QSB filed
as of August 14, 1998.
10(q) Indemnification Agreement between sellers of Precision and
the Company dated April 27, 1998, incorporated by reference
to Exhibit 10(c) to the Company's Form 10-QSB filed as of
August 14, 1998.
10(r) Confidentiality, Noncompetition and Nonsolicitation Agreement
with Alan Dubow dated April 27, 1998, incorporated by
reference to Exhibit 10(d) to the Company's Form 10-QSB filed
as of August 14, 1998.
10(s) Confidentiality, Noncompetition and Nonsolicitation Agreement
with Richard Clark dated April 27, 1998, incorporated by
reference to Exhibit 10(e) to the Company's Form 10-QSB filed
as of August 14, 1998.
10(t) Confidentiality, Noncompetition and Nonsolicitation Agreement
with Jeff Chivers dated April 27, 1998, incorporated by
reference to Exhibit 10(f) to the Company's Form 10-QSB filed
as of August 14, 1998.
10(u) Stock Purchase Agreement dated as of August 13, 1998,
incorporated by reference to Exhibit 10(a) to the Company's
Form 10-QSB filed as of November 16, 1998.
10(v) Escrow Agreement dated as of August 13, 1998, incorporated by
reference to Exhibit 10(b) to the Company's Form 10-QSB filed
as of November 16, 1998.
10(w) Employment Agreement between Vincent Monardo and the Company
dated August 13, 1998, incorporated by reference to Exhibit
10(c) to the Company's Form 10-QSB filed as of November 16,
1998.
10(x) Employment Agreement between Kevin Killea and the Company
dated August 13, 1998, incorporated by reference to Exhibit
10(d) to the Company's Form 10-QSB filed as of November 16,
1998.
10(y) Employment Agreement between Michael Assenza and the Company
dated August 13, 1998, incorporated by reference to Exhibit
10(e) to the Company's Form 10-QSB filed as of November 16,
1998.
10(z) Employment Agreement between Paul Ferrara and the Company
dated August 13, 1998, incorporated by reference to Exhibit
10(f) to the Company's Form 10-QSB filed as of November 16,
1998.
10(aa) 1999 Stock Option Plan incorporated by reference to Exhibit A
to the Company's Schedule 14-A filed as of May 27, 1999.
10(bb) Severance Agreement between Darius G. Nevin and the Company
dated January 19, 2000 , incorporated by reference to Exhibit
10(bb) of the Company's Form 10-KSB filed March 30, 2000.
10(cc) Severance Agreement between Richard Ginsburg and the Company
dated January 19, 2000, incorporated by reference to Exhibit
10(cc) of the Company's Form 10-KSB filed March 30, 2000.
10(dd) Non-Qualified Stock Option Agreement between Douglas T. Lake
and the Company, effective April 28, 1998, incorporated by
reference to Exhibit 10(dd) of the Company's Form 10-KSB
filed March 30, 2000.
10(ee) Non-Qualified Stock Option Agreement between David Heidecorn
and the Company, effective May 12, 1999, incorporated by
reference to Exhibit 10(ee) of the Company's Form 10-KSB
filed March 30, 2000.
10(ff) Non-Qualified Stock Option Agreement between William
Remington and the Company, effective September 13, 1999,
incorporated by reference to Exhibit 10(ff) of the Company's
Form 10-KSB filed March 30, 2000.
10(gg) Stock Option Agreement between Richard Ginsburg and the
Company, effective October 15, 1997, incorporated by
reference to Exhibit 10(gg) of the Company's Form 10-KSB
filed March 30, 2000.
18
<PAGE>
10(hh) Stock Option Agreement between Darius G. Nevin and the
Company, effective October 15, 1997, incorporated by
reference to Exhibit 10(hh) of the Company's Form 10-KSB
filed March 30, 2000.
10(ii) Stock Option Agreement between Joel Cohen and the Company,
effective February 23, 1998, incorporated by reference to
Exhibit 10(ii) of the Company's Form 10-KSB filed March 30,
2000.
10(jj) Stock Option Agreement between Raymond Adams and the Company,
effective February 23, 1998, incorporated by reference to
Exhibit 10(jj) of the Company's Form 10-KSB filed March 30,
2000.
10(kk) First Amendment To Second Amended And Restated Loan And
Security Agreement from Heller Financial, Inc. dated as of
June 30, 2000, incorporated by reference to Exhibit 10(kk) to
the Company's Form 10-QSB filed as of August 14, 2000.
27 Financial Data Schedule (for SEC use only)
(b) Reports on Form 8-K
1. No reports were filed on Form 8-K during the three months ended
September 30, 2000.
19
<PAGE>
SIGNATURES
In accordance with Section 12 of the Exchange Act, the registrant has
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.
GUARDIAN INTERNATIONAL, INC.
By: /s/ DARIUS G. NEVIN
-----------------------
Darius G. Nevin
Chief Financial Officer and Vice President
Date: November 14, 2000
20
<PAGE>
EXHIBIT INDEX
EXHIBIT DESCRIPTION
------- -----------
27 Financial Data Schedule (for SEC use only)
