<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K/A-2
CURRENT REPORT
Pursuant to Section 13 or 15(d) of
The Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 23, 1999
GUARDIAN TECHNOLOGIES INTERNATIONAL, INC.
------------------------------------------
(Exact name of registrant as specified in its charter)
Delaware 0-28238 54-1521616
- --------------------- ------------------------ ------------------
(State or other (Commission file number) (IRS Employer
jurisdiction of incor- Identification No.)
poration or organization)
22570 Markey Court, Dulles, Virginia 20166-6901
------------------------------------------------------
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: (703) 444-7931
--------------------------------------------------------------------
------------------------------------------------------------
-------------------------------------------------------------
(Former name or former address, if changed since last report)
<PAGE>
ITEM 7: FINANCIAL STATEMENTS AND EXHIBITS
- ------ ---------------------------------
(a) Financial Statements
--------------------
Pursuant to Item 7(a)(4), the Registrant files herewith the
following financial statements of the acquired business:
H & M Steel, Inc. Audited Financial Statements as of and for the
years ended February 28, 1999 and 1998:
Independent Auditor's Report
Balance Sheet as of February 28, 1999
Statements of Operations and Comprehensive Income (Loss)
for the years ended February 28, 1999 and 1998
Statements of Changes in Shareholders' Equity for the years
ended February 28, 1999 and 1998
Statements of Cash Flows for the years ended February 28,
1999 and 1998
Notes to Financial Statements
(b) Pro Forma Financial Information
-------------------------------
Pursuant to Item 7(b) and Item 7(a)(4), the Registrant files
herewith the following unaudited pro forma consolidated financial
information:
Pro Forma Combined Condensed Financial Information (Unaudited)
Pro Forma Combined Condensed Balance Sheet (Unaudited)
Pro Forma Combined Condensed Statement of Operations (Unaudited)
Notes to Pro Forma Combined Condensed Financial Information
<PAGE>
<PAGE>
INDEX TO FINANCIAL STATEMENTS
PAGE
----
Independent Auditor's Report 4
Balance Sheet - February 28, 1999 5
Statements of Operations and Comprehensive Income (Loss) - For the Years
Ended February 28, 1999 and 1998 6
Statements of Changes in Shareholder's Equity - For the Years Ended
February 28, 1999 and 1998 7
Statements of Cash Flows - For the Years Ended February 28, 1999 and 1998. 8
Notes to Financial Statements. . . . . . . . . . . . . . . . . . . . . . . 9
<PAGE>
<PAGE>
INDEPENDENT AUDITOR'S REPORT
Board of Directors
H&M Steel, Inc.
Luther, Oklahoma
We have audited the accompanying balance sheet of H&M Steel, Inc. as of
February 28, 1999, and the related statements of operations and
comprehensive loss, changes in shareholder's equity, and cash flows for the
years ended February 28, 1999 and 1998. 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 state-
ments. 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 H&M Steel, Inc. as of
February 28, 1999 and 1998, and the results of its operations and its cash
flows for the years then ended in conformity with generally accepted
accounting principles.
HEIN + ASSOCIATES LLP
Denver, Colorado
June 23, 1999
<PAGE>
<PAGE>
H&M STEEL, INC.
BALANCE SHEET
FEBRUARY 28, 1999
ASSETS
------
CURRENT ASSETS:
Cash and cash equivalents $1,268,674
Accounts receivable 3,689,322
Costs and estimated earnings in excess of
billings on uncompleted contracts 208,668
Inventories 47,109
Prepaid expenses and other 46,009
-----------
Total current assets 5,259,782
PROPERTY AND EQUIPMENT, at cost:
Land and building 274,524
Furniture and equipment 589,663
-----------
864,187
Less accumulated depreciation (520,074)
-----------
Net property and equipment 344,113
OTHER ASSETS 600
-----------
TOTAL ASSETS $5,604,495
============
LIABILITIES AND SHAREHOLDER'S EQUITY
------------------------------------
CURRENT LIABILITIES:
Accounts payable $881,808
Billings in excess of costs and estimated
earnings on uncompleted contracts 143,376
Accrued compensation and related costs 2,975,742
Accrued taxes and other 283,127
Deferred taxes 24,000
-----------
Total current liabilities 4,308,053
SHAREHOLDER'S EQUITY:
Common stock, par value $1.00 per share;
50 shares authorized, issued and outstanding 50
Additional paid-in capital 4,950
Retained earnings 1,291,442
-----------
Total shareholders' equity 1,296,442
-----------
TOTAL LIABILITIES AND SHAREHOLDERS' EQUITY $5,604,495
===========
See accompanying notes to these financial statements.
<PAGE>
<PAGE>
<TABLE>
H&M STEEL, INC.
STATEMENTS OF OPERATIONS AND COMPREHENSIVE INCOME (LOSS)
FOR THE YEARS ENDED
FEBRUARY 28,
-------------------------------
1999 1998
-------------------------------
<S> <C> <C>
REVENUE $14,487,663 $11,956,214
Cost of sales 10,787,063 10,530,850
----------- -----------
GROSS PROFIT 3,700,600 1,425,364
OPERATING EXPENSES:
Officers' salaries 4,371,465 1,143,685
Other selling, general and
administrative expenses 277,325 327,671
----------- -----------
Total operating expenses 4,648,790 1,471,356
LOSS FROM OPERATIONS (948,190) (45,992)
INTEREST INCOME 98,132 75,576
----------- -----------
INCOME (LOSS) BEFORE TAXES (850,058) 29,584
INCOME TAX BENEFIT (PROVISION):
Current (63,720) (122,859)
Deferred 397,000 128,000
----------- -----------
Total income tax benefit (provision) 333,280 5,141
----------- -----------
Net Income (Loss) and Comprehensive
Income (Loss) $ (516,778) $34,725
============ ===========
</TABLE>
See accompanying notes to these financial statements.
<PAGE>
<PAGE>
<TABLE>
H&M STEEL, INC.
STATEMENTS OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE YEARS ENDED FEBRUARY 28, 1999 AND 1998
COMMON STOCKADDITIONAL
---------------- PAID-IN RETAINED
SHARES AMOUNT CAPITAL EARNINGS
TOTAL
------- ------- ---------- -------- ---
- -------
<S> <C> <C> <C> <C> <C>
BALANCES, March 1, 1997 50 $ 50 $ 4,950 $1,773,495
$1,778,495
Net income - - - 34,725
34,725
------- ------- ---------- ---------- ---
- -------
BALANCES, February 28,
1998 50 50 4,950 1,808,220
1,813,220
Net loss - - - (516,778)
(516,778)
------- ------- ---------- ---------- ---
- -------
BALANCES, February 28,
1999 50 $ 50 $ 4,950 $1,291,442
$1,296,442
======= ======= ========== ==========
==========
</TABLE>
See accompanying notes to these financial statements.
<PAGE>
<PAGE>
<TABLE>
H&M STEEL, INC.
STATEMENTS OF CASH FLOWS
FOR THE YEARS ENDED
FEBRUARY 28,
--------------------
1999 1998
-------- ---------
<S> <C> <C>
CASH FLOWS FROM OPERATING ACTIVITIES:
Net income (loss) $(516,778) $ 34,725
Adjustments to reconcile net loss to net
cash provided by (used in) operating
activities:
Depreciation 125,209 95,659
Bad debt expense (31,192) 42,698
Gain on sale of assets (3,000) -
Deferred income taxes (397,000) (128,000)
(Increase) decrease in:
Accounts receivable (3,632,629) (51,583)
Other receivables (32,083) (1,920)
Costs and estimated earnings in
excess of billings 1,033,630 229,667
Inventories (30,778) (461)
Increase (decrease) in:
Accounts payable 176,362 410,038
Billings in excess of costs and
estimated earnings 30,919 112,457
Accrued compensation and other
expenses 3,011,939 199,818
Accrued taxes and other (38,046) 4,598
----------- ---------
Net cash provided by (used in) operating
activities (303,447) 947,696
CASH FLOWS FROM INVESTING ACTIVITIES:
Purchase of property and equipment (75,464) (145,217)
Repayment of note receivable - 92,228
--------- ----------
Net cash used in investing activities (75,464) (52,989)
INCREASE (DECREASE) IN CASH (378,911) 894,707
CASH AND CASH EQUIVALENTS, at beginning of year 1,647,585 752,878
========= ==========
CASH AND CASH EQUIVALENTS, at end of year $1,268,674 $1,647,585
========== ==========
SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION -
Cash paid for income taxes $ 142,253 $ 126,466
========== ==========
</TABLE>
See accompanying notes to these financial statements.
<PAGE>
<PAGE>
H & M STEEL, INC.
NOTES TO FINANCIAL STATEMENTS
1. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES:
ORGANIZATION - H&M Steel, Inc. ("H&M" or the "Company") commenced
operations and was incorporated in February 1989 by acquiring certain
assets and hiring certain employees from another company.
The Company specializes in manufacturing steel structures mainly to be
used in commercial buildings. The Company obtains bids on contracts
and manufactures the steel structures as ordered by customers.
CASH AND CASH EQUIVALENTS - The Company considers all highly liquid
monetary instruments purchased with an original maturity of three
months or less to be cash equivalents. The Company maintains cash in
bank deposit accounts which, at times, may exceed Federally insured
limits. The Company has not experienced any losses in such accounts.
The Company believes it is not exposed to any significant credit risk
on cash and cash equivalents.
INVENTORIES - Inventories, which consist primarily of raw materials,
are stated at the lower of cost or market using the first-in, first-
out method.
PROPERTY AND EQUIPMENT - Property and equipment is recorded at
historical cost. Depreciation of property and equipment is provided
utilizing the straight-line method over the following estimated useful
lives:
<TABLE>
YEARS
---------
<S> <C>
Building 31.5
Furniture and equipment 5
</TABLE>
Major renewals and betterments are capitalized while expenditures for
maintenance and repairs are charged to expense as incurred.
Depreciation expense for the years ended February 28, 1999 and 1998
was $125,209 and $95,659, respectively.
INCOME RECOGNITION - The Company follows the percentage of completion
method of accounting for all significant long-term contracts. The
percentage of completion method of reporting income from contracts
takes into account direct labor hours, the costs, estimated earnings,
and revenue to date on contracts not yet completed.
The amount of revenue recognized is the portion of the total contract
price that the direct labor hours incurred to date bears to the
anticipated final total direct labor hours. Contract costs includes
all labor and benefits, materials unique to or installed in the
project, subcontract costs, and allocations of indirect construction
costs. General and administrative costs are charged to expense as
incurred.
As long-term contracts extend over one or more years, revisions in
estimates of direct labor hours and costs and earnings during the
course of the work are reflected in the accounting period in which the
facts which require the revision become known. At the time a loss on
a contract becomes known, the entire amount of the estimated ultimate
loss is recognized in the financial statements. Costs and estimated
earnings on contracts in progress in excess of billings is classified
as a current asset. Amounts billed in excess of costs and estimated
earnings are classified as a current liability.
Income related to direct sales of equipment and parts is recognized
upon shipment.
ACCOUNTS RECEIVABLE - It is the practice of management to write off
receivables in the year amounts are determined to be uncollectible.
No allowance for doubtful accounts is reflected in these financial
statements since management believes all accounts at February 28, 1999
to be fully collectible.
IMPAIRMENT OF LONG-LIVED ASSETS - The Company performs an assessment
for impairment whenever events or changes in circumstances indicate
that the carrying amount of a long-lived asset may not be recoverable.
If the net carrying value exceeds estimated undiscounted future net
cash flows, then impairment is recognized to reduce the carrying value
to the estimated fair value.
COMPREHENSIVE INCOME (LOSS) - In June 1997, the Financial Accounting
Standards Board issued Statement of Financial Accounting Standards
(SFAS) No. 130, REPORTING COMPREHENSIVE INCOME (LOSS). SFAS No. 130,
which is effective for fiscal years beginning after December 15, 1997,
defines comprehensive income (loss) as all changes in shareholders'
equity exclusive of transactions with owners, such as capital
investments. Comprehensive income (loss) includes net income or loss,
changes in certain assets and liabilities that are reported directly
in equity such as translation adjustments in foreign subsidiaries, and
certain changes in minimum pension liabilities. The Company's
comprehensive income (loss) was equal to its net income (loss) for all
periods presented in these financial statements.
INCOME TAXES - The Company utilizes the liability method of accounting
for income taxes. The liability method accounts for deferred income
taxes by applying enacted statutory rates in effect at the balance
sheet date to differences between financial statements amounts and tax
bases of assets and liabilities. Deferred income taxes related to an
asset or liability are classified as current or noncurrent based on
the classification of the related asset or liability.
FINANCIAL INSTRUMENTS, MAJOR CUSTOMERS AND VENDORS, AND OTHER
CONCENTRATIONS OF CREDIT RISK - Credit risk represents the accounting
loss that would be recognized at the reporting date if counterparties
failed completely to perform as contracted. Concentrations of credit
risk (whether on or off balance sheet) that arise from financial
instruments exist for groups of customers or counterparties when they
have similar economic characteristics that would cause their ability
to meet contractual obligations to be similarly effected by changes in
economic or other conditions.
Financial instruments which potentially subject the Company to
concentration of credit risk consist principally of cash and cash
equivalents. At February 28, 1999, the Company maintained cash
balances with a commercial bank which were approximately $1,425,000 in
excess of FDIC limits.
The estimated fair values for financial instruments are determined at
discrete points in time based on relevant market information. These
estimates involve uncertainties and cannot be determined with
precision. The carrying amounts of cash, receivables, notes
receivables, accounts payable, and accrued liabilities approximate
fair value as a result of the short-term maturities.
Sales to unaffiliated customers which represent 10% or more of the
Company's sales for the years ended February 28, 1999 and 1998 were as
follows (as a percentage of sales):
<TABLE>
Customer 1999 1998
-------- ---- ----
<S> <C> <C>
A 26% *
B * 14%
C * 13%
D * 11%
E * 11%
------------------------
* Less than 10%.
</TABLE>
The Company frequently sells large quantities of inventory to its
customers. At February 28, 1999, the Company had gross trade
receivables totaling approximately $1,766,498 due from three
customers.
Purchases from unaffiliated vendors which represent 10% or more of the
Company's purchases for the years ended February 28, 1999 and 1998
were as follows (as a percentage of sales):
<TABLE>
Vendor 1999 1998
------ ---- ----
<S> <C> <C>
A 18% 27%
B 12% *
C 11% *
D * 12%
---------------------
* Less than 10%.
</TABLE>
ACCOUNTING ESTIMATES - The preparation of financial statements in
conformity with generally accepted accounting principles requires
management to make estimates and assumptions that affect the amounts
reported in the financial statements and the accompanying notes. The
actual results could differ from those estimates. The Company's
financial statements are based upon a number of estimates, including
total direct labor hours to complete each contract and its
corresponding percent complete, the allowance for doubtful accounts,
obsolescence of inventories, the estimated useful lives selected for
property and equipment, and sales returns. Due to the uncertainties
inherent in the estimation process, it is at least reasonably possible
that the estimates for these items could be further revised in the
near term and such revisions could be material.
2. TRADE RECEIVABLES:
The following information summarizes accounts receivable at February 28,
1999:
<TABLE>
<S> <C>
Accounts receivable:
Completed contracts $ 390,642
Uncompleted contracts 3,077,508
Retainage 160,281
----------
3,628,431
Other trade receivables 60,891
----------
$3,689,322
==========
</TABLE>
Some of the Company's contracts contain retainage provisions and
require that certain percentages of completion be achieved before
amounts under the contracts can be billed. Retainages are generally
collected within one year.
The Company provides ongoing credit evaluations of its customers but
collateral is generally not required. However, the Company typically
deals with general contractors who are bonded and the Company
generally has the right to file mechanics' liens to secure delinquent
accounts.
3. CONTRACTS IN PROGRESS:
The following information is applicable to uncompleted contracts at
February 28, 1999:
<TABLE>
<S> <C>
Costs incurred on uncompleted contracts $6,769,658
Estimated earnings 1,212,445
----------
7,982,103
Less billings to date (7,916,811)
----------
$ 65,292
==========
These amounts are included in accompanying balance sheet at
February 28, 1999 under the following captions:
Costs and estimated earnings in excess of
billings on uncompleted contracts $ 208,668
Billings in excess of costs and estimated
earnings on uncompleted contracts (143,376)
----------
$ 65,292
==========
</TABLE>
4. INCOME TAXES:
Under SFAS No. 109, deferred taxes result from temporary differences
between the financial statements carrying amounts and the tax bases of
assets and liabilities. The deferred tax liability as of February 28,
1999 arises due to the use of different methods of accounting for
long-term contracts for financial reporting and income tax purposes.
Total income tax (expense) benefit differed from the amounts computed
by applying the U.S. federal statutory tax rates to pre-tax income as
follows:
<TABLE>
For the Years Ended
February 28,
-------------------
1999 1998
--------- --------
<S> <C> <C>
Total (expense) benefit computed by
applying the Federal statutory rate $ 289,200 $ (10,200)
State income taxes, net of Federal tax
benefit - (7,600)
Effect of graduated rates 6,400 5,700
Tax credits 10,200 14,600
Other 27,480 2,641
--------- --------
$ 333,280 $ 5,141
========= ========
</TABLE>
5. SHAREHOLDER'S EQUITY:
The Company has 50 common shares authorized and issued, all of which
are owned by the President of the Company and his spouse. These
shares were acquired by the President when the Company was
incorporated in 1989. There are no other forms of stocks, options,
warrants, or similar instruments authorized or outstanding.
6. BENEFIT PLANS:
The Company has a profit-sharing plan that covers all full-time
employees with 12 months of service who elect to enter the plan. At
the option of the Board of Directors, an amount, not to exceed that
allowable under the Internal Revenue Code of 1984, as amended, may be
contributed to the plan. During the years ended February 28, 1999 and
1998, the Company contributed $40,403 and $8,100, respectively, to the
plan.
7. SUBSEQUENT EVENTS:
PURCHASE BY STRUCTURAL HOLDINGS, INC. - On April 23, 1999, and
effective March 1, 1999, 100% of the Company's authorized, issued and
outstanding common stock was purchased by Structural Holdings, Inc.
(Structural) for $3,911,000. The purchase was paid by $3,261,000 cash
and a $650,000 note. The cash was funded primarily by two term loans
from a commercial institution. In conjunction with the purchase, a
management agreement, consulting services agreement, and non-compete
agreement were entered into, as described below. Structural plans to
maintain the operations of the Company consistent with prior
practices.
CONSULTING SERVICES AGREEMENT - Subsequent to February 28, 1999, and
as part of the purchase by Structural, the Company entered into a
consulting services agreement with the previous President and 100%
stock owners. The agreement expires February 28, 2003 and provides
for an annual salary of $93,750. The total value of the agreement is
$375,000.
NON-COMPETE AGREEMENT - Subsequent to February 28, 1999, and as part
of the purchase by Structural, the Company entered into a non-compete
agreement with the previous President and 100% stock owners. The
agreement expires February 28, 2003 and provides for quarterly
payments of $23,000. The total value of the agreement is $368,000.
MANAGEMENT AGREEMENT - Subsequent to February 28, 1999, and as part of
the purchase by Structural, the Company entered into a management
agreement with two officers and directors of the Company. The
agreement expires April 30, 2004 and provides for a monthly salary of
$25,000, plus a bonus not to exceed $100,000 annually based on
earnings of the Company. The agreement may be extended at the end of
the initial term by written notice of both parties.
<PAGE>
<PAGE>
GUARDIAN TECHNOLOGIES, INC.
PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
(UNAUDITED)
Effective March 1, 1999, Guardian Technologies International, Inc.
(Guardian) acquired 55% of the outstanding shares of Structural Holdings,
Inc. (Structural), a Delaware holding company. Also effective March 1,
1999, Structural acquired 100% of the outstanding shares of H & M Steel,
Inc. (H&M). Structural has no operations and was formed specifically to
purchase the shares of H&M.
For accounting purposes, the acquisition of Structural and H&M will be
accounted for as a purchase of Structural and H&M, and the shareholders of
Guardian will have effective control of the combined entities.
The accompanying pro forma balance sheet combines the December 31, 1998
balance sheet of Guardian and the February 28, 1999 balance sheet of H&M as
if the transaction had occurred on December 31, 1998.
The accompanying pro forma statements of operations combine the operations
of Guardian for the year ended December 31, 1998 and H&M for the year ended
February 28, 1999 as if the transaction had occurred as of the beginning of
the period.
These statements are not necessarily indicative of future operations or the
actual results that would have occurred had the transaction been
consummated at the beginning of the period indicated.
The pro forma combined financial statements should be real in conjunction
with the historical financial statements and notes of Guardian and H&M.
<PAGE>
<PAGE>
GUARDIAN TECHNOLOGIES INTERNATIONAL, INC.
PRO FORMA COMBINED CONDENSED BALANCE SHEET
(UNAUDITED)
<TABLE>
GUARDIAN H&M
------------- --------------
DECEMBER 31, FEBRUARY 28,
PRO FORMA PRO FORMA
1998 1999
ADJUSTMENTS COMBINED
------------- -------------- ----
- --------- ---------
<S> <C> <C> <C>
<C>
CURRENT ASSETS
Cash and cash equivalents $ 585,937 $1,268,674 $
(935,000)(a) $
- -
18,544 (a)
- -
(370,000)(b)
- -
883,000 (c) 1,451,155
Trade accounts receivable 193,718 3,689,322
- 3,883,040
Current notes receivable 400,000 -
- 400,000
Costs and estimated earnings
in excess of billings on
uncompleted contracts - 208,668
- 208,668
Inventories 180,786 47,109
- 227,895
Prepaid expenses or other 170,193 46,009
- 216,202
--------- ---------- ----
- ---------- ----------
Total current assets 1,530,634 5,259,782
(403,456) 6,386,960
PROPERTY, PLANT AND EQUIPMENT,
net 2,711,035 344,113
730,262 (a)
- -
(2,640,000)(c) 1,145,410
DEFERRED FINANCING COSTS - -
370,000 (b) 370,000
GOODWILL - -
2,954,752 (a) 2,954,752
NON-COMPETE AGREEMENT - -
368,000 (d) 368,000
OTHER ASSETS - 600
- 600
---------- ---------- ----
- --------- ----------
TOTAL ASSETS $4,241,669 $5,604,495
$1,379,558 $11,225,772
=========== ===========
============= ===========
LIABILITIES AND SHAREHOLDERS' EQUITY
------------------------------------
CURRENT LIABILITIES:
Billings in excess of costs
and estimated earnings
on uncompleted
contracts $ - $ 143,376 $ -
$ 143,376
Other current liabilities 286,880 4,164,677
(80,947)(c)
- -
92,000 (d) 4,462,610
---------- ----------- ----
- ------- ----------
Total current liabilities 286,880 4,308,053
11,053 4,605,986
LONG-TERM DEBT 1,823,256 -
3,300,000 (a)
- -
(1,823,256)(c)
- -
276,000 (d) 3,576,000
MINORITY INTEREST - -
765,000 (a) 765,000
SHAREHOLDERS' EQUITY 2,131,533 1,296,442
(1,296,442)(a) -
- -
147,203 (c) 2,278,736
---------- --------- -----
- ------ ----------
TOTAL LIABILITIES AND
SHAREHOLDERS' EQUITY $4,241,669 $5,604,495
$1,379,558 $11,225,722
=========== ==========
=========== ===========
</TABLE>
See accompanying notes.
<PAGE>
<PAGE>
GUARDIAN TECHNOLOGIES INTERNATIONAL, INC.
PRO FORMA COMBINED CONDENSED STATEMENT OF OPERATIONS
(UNAUDITED)
<TABLE>
GUARDIAN H&M
------------- --------------
DECEMBER 31, FEBRUARY 28, PRO
FORMA PRO FORMA
1998 1999
ADJUSTMENTS COMBINED
------------- -------------- -----
- -------- ---------
<S> <C> <C> <C>
<C>
NET REVENUES $1,656,649 $14,487,663 $
- - $16,144,312
58,289 (i)
COST OF SALES 1,377,977 10,787,063
86,000 (k) 12,309,329
---------- ----------- -----
- ------ ----------
GROSS PROFIT 278,672 3,700,600
(144,289) 3,834,983
OPERATING EXPENSES 697,856 4,648,790
(3,977,715)(e)
295,459 (i)
7,000 (k)
100,000 (f) 1,771,390
---------- ---------- -----
- ------ ----------
OPERATING INCOME (LOSS) (419,184) (948,190)
3,430,967 2,063,593
OTHER INCOME (EXPENSE):
Interest income (expense), net (100,717) 98,132
115,000 (k)
(384,438)(j) (272,023)
Other 72,646 -
(191,000)(k) (118,354)
---------- ---------- -----
- ------ ----------
Total other income
(expense) (28,071) 98,132
(460,438) (390,377)
INCOME (LOSS) BEFORE TAXES
AND MINORITY INTEREST (447,255) (850,058)
2,970,529 1,673,216
INCOME TAX BENEFIT (PROVISION) - 333,280
(1,278,000)(g) (944,720)
NET INCOME (LOSS) BEFORE
MINORITY INTEREST (447,255) (516,778)
1,692,529 728,496
Minority interest - -
(327,823)(h) (327,823)
---------- ---------- -----
- ------ ----------
NET INCOME (LOSS) $ (447,255) $ (516,778)
$1,364,706 $ 400,673
========== ==========
=========== =========
PRO FORMA NET INCOME (LOSS)
PER SHARE, BASIC AND DILUTIVE $(.40)
$.36
==========
==========
PRO FORMA WEIGHTED AVERAGE
COMMON SHARES OUTSTANDING,
BASIC AND DILUTIVE 1,120,310
1,120,310
==========
==========
</TABLE>
See accompanying notes.
<PAGE>
<PAGE>
GUARDIAN TECHNOLOGIES INTERNATIONAL, INC.
NOTES TO PRO FORMA COMBINED CONDENSED FINANCIAL INFORMATION
(a) To record the purchase of H&M's common stock through the issuance of
$3,300,000 of debt and $935,000 and $765,000 equity contributed by
Guardian and the other Shareholders of Structural, respectively.
The excess of purchase price over the net assets of H&M has been
allocated to property, plant and equipment based on its fair market
value with the remainder allocated to Goodwill.
(b) To record deferred financing costs associated with the acquisition
debt.
(c) To record Guardian's sale of its land and building to finance the
purchase of its interest in Structural and pay down the existing
mortgage on its land and building.
(d) To record the non-compete agreement with the prior owner of H&M.
(e) To reflect reductions in executive compensation as a result of the
elimination of certain executive positions and the renegotiation of
executive compensation agreements resulting from the acquisition.
(f) To reflect additional corporate overhead expenses to be incurred
resulting from public reporting and bank requirements.
(g) To adjust the provision for income taxes.
(h) To record the minority interest in income.
(i) To record the increase in depreciation and amortization of fixed
assets, goodwill and covenant not to compete.
(j) To record interest expense related to the acquisition debt and
amortization of deferred financing costs.
(k) To record the reduction of interest expense, depreciation and rental
income and increase in rent expense resulting from the sale of
Guardian's land and building.
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SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934, the
Registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
GUARDIAN TECHNOLOGIES
INTERNATIONAL, INC.
Date: July 7, 1999 By: /s/ J. Andrew Moorer
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J. Andrew Moorer, President
