<PAGE>
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 10-QSB
[ X ] QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(D) OF THE
SECURITIES EXCHANGE ACT OF 1934
For the fiscal quarter ended March 31, 2000
[ ] TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934 [NO FEE REQUIRED]
For the transition period from ____________ to ____________
Commission file number 0-28238
GUARDIAN TECHNOLOGIES INTERNATIONAL, INC.
-----------------------------------------------------------
(Exact Name of Registrant as Specified in its Charter)
Delaware 54-1521616
- ---------------------------- ----------------------
(State or other jurisdiction I.R.S. Employer
of incorporation or organization) Identification number
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 Address if Changed Since Last Report)
Check whether the Issuer (1) filed all reports required to be filed by Section
13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter
period that the Issuer was required to file such reports), and (2) has been
subject to filing requirements for the past 90 days.
Yes [ X ] No [ ]
APPLICABLE ONLY TO ISSUERS INVOLVED IN BANKRUPTCY
PROCEEDINGS DURING THE PRECEDING FIVE YEARS
Check whether the Registrant has filed all documents and reports required
to be filed by Sections 12, 13, or 15(d) of the Exchange Act after the
distribution of securities under a plan confirmed by a court. Yes [ ] No [
] *** not applicable ***
APPLICABLE ONLY TO CORPORATE ISSUERS
As of May 22, 2000, the Company had 3,611,662 shares of its $0.001 par
value common stock outstanding.
Transitional Small Business Disclosure Format (Check one).
Yes [ ] No [ X ]
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PART I. FINANCIAL INFORMATION
INDEX TO FINANCIAL STATEMENTS
PAGE
Balance Sheet - March 31, 2000 2
Statements of Operations - For the Three Months Ended March 31,
2000 and 1999 3
Statement of Changes in Shareholders' Equity - For the Three
Months Ended March 31, 2000 4
Statements of Cash Flows - For the Three Months Ended March 31,
2000 and 1999 5
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<PAGE>
<TABLE>
<CAPTION>
GUARDIAN TECHNOLOGIES INTERNATIONAL, INC.
BALANCE SHEET
MARCH 31, 2000
ASSETS
-------
<S> <C>
Current Assets:
Cash and cash equivalents $ 766,270
Accounts receivable, no allowance considered necessary 106,220
Inventories 145,029
Notes receivable:
Related party 85,000
Other 100,000
Prepaid expenses and other 92,636
------------
Total current assets 1,295,155
Equity Investment 994,590
Property and Equipment, net 48,007
Deposits and Other 18,105
------------
Total Assets $2,355,857
============
LIABILITIES AND SHAREHOLDERS' EQUITY
--------------------------------------
Current Liabilities:
Notes payable and current portion of long-term debt $ 55,825
Accounts payable 52,908
Accrued payroll and related benefits expenses 17,617
------------
Total current liabilities 126,350
Long-Term Debt, net of current portion -
Shareholders' Equity:
Preferred stock, $.20 par value, 1,000,000 shares
authorized; no shares issued and outstanding -
Common stock, $.001 par value; 15,000,000 shares
authorized, 3,167,168 shares issued and outstanding
3,168
Additional paid-in capital 5,496,600
Accumulated deficit (3,270,261)
-----------
Total shareholders' equity 2,229,507
-----------
Total Liabilities and Shareholders' Equity $2,355,857
============
</TABLE>
See accompanying notes to these financial statements.
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<TABLE>
<CAPTION>
GUARDIAN TECHNOLOGIES INTERNATIONAL, INC.
STATEMENTS OF OPERATIONS
For the Three
Months Ended
March 31,
--------------------
2000 1999
----- -----
<S> <C> <C>
Net Sales $ 226,438 $ 216,842
Cost of goods sold 173,302 190,749
---------- ----------
Gross Profit 53,136 26,093
Operating Expenses:
Selling expenses 12,516 12,952
General and administrative 188,015 178,150
---------- -----------
Total operating expenses 200,531 191,102
Operating Loss (147,395) (165,009)
Other Income (Expense):
Interest income (expense) 7,894 (24,932)
Rental income - 49,372
Gain on sale of assets (1,007) 109,759
Miscellaneous income (expense) 20,114 -
---------- -----------
Total other income (expense) 27,001 134,199
---------- -----------
Loss Before Earnings From Equity
Investment (120,394) (30,810)
Equity in net loss of
investment (47,786) -
----------- -----------
Net Loss $ (168,180) $ (30,810)
============ ============
Net Loss per Common Share,
Basic and Dilutive $ (.06) $ (.02)
============= ============
Average Common Shares Outstanding,
Basic and Dilutive 2,992,363 1,243,831
============== ============
</TABLE>
See accompanying notes to these financial statements.
<PAGE>
<PAGE>
<TABLE>
<CAPTION>
GUARDIAN TECHNOLOGIES INTERNATIONAL, INC.
STATEMENT OF CHANGES IN SHAREHOLDERS' EQUITY
FOR THE THREE MONTHS ENDED MARCH 31, 2000
Additional
Common Stock Paid-In Accumulated
Shares Amount Capital Deficit Total
------ ----------------- ----------- -----
<S> <C> <C> <C> <C> <C>
Balances,
December 31,
1999 2,762,668 $ 2,763 $4,660,908 $(3,102,081)$1,561,590
Issuance of
common stock:
Cash 684,000 684 704,657 -
704,315
Services 124,994 125 130,973 -
131,098
Net loss - - - (168,180) (168,180)
----------- ----------- ---------- ----------- -----------
Balances,
March 31,
2000 3,571,662 $ 3,572 $5,496,196$(3,270,261) $2,229,507
=========== =========== ========== =========== ==========
</TABLE>
See accompanying notes to these financial statements.
<PAGE>
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<TABLE>
<CAPTION>
GUARDIAN TECHNOLOGIES INTERNATIONAL, INC.
STATEMENTS OF CASH FLOWS
For the Three
Months Ended
March 31,
----------------
2000 1999
--------- ----------
<S> <C> <C>
Cash Flows from Operating Activities:
Net loss $ (168,180) $ (30,810)
Adjustments to reconcile net loss
to net cash used in operating
activities:
Depreciation and amortization of
property and equipment 5,300 23,160
Gain on sale of property and
equipment 7 (109,759)
Equity in net loss of
investment 47,786 -
Changes in operating assets and
liabilities:
(Increase) decrease in:
Accounts receivable 55,047 98,226
Inventories 13,716 8,184
Prepaid expenses and other 14,120 (41,610)
Increase (decrease) in:
Accounts payable (262,990) (55,747)
Accrued expenses 135,716 5,491
Customer deposits 210 -
------------ ------------
Net cash used in operating
activities (159,268) (102,865)
------------ ------------
Cash Flows from Investing Activities:
Purchase of property and equipment (7,430) (648)
Sale of property and equipment 75 877,941
Payments on notes receivable 50,000 150,000
Deposit on acquisition - (286,900)
------------- ------------
Net cash provided by investing
activities 42,645 740,393
Cash Flows from Financing Activities:
Proceeds from issuance of notes
payable - 50,000
Payment on notes payable (13,797) (35,864)
Exercise of options 480,000 -
Proceeds of common stock issued 225,000 -
----------- -----------
Net cash provided by financing
activities 691,203 14,136
----------- -----------
Increase (Decrease) in Cash and
Cash Equivalents 574,580 651,664
Cash and Cash Equivalents,
beginning of period 191,690 585,937
------------ -----------
Cash and Cash Equivalents,
end of period $ 766,270 $1,237,601
============ ===========
Supplemental Schedule of Cash
Flow Information:
Cash paid for interest $ 1,519 $ 35,816
============ ===========
Common stock issued for
accrued liabilities $ 131,098 $ -
============ ============
</TABLE>
See accompanying notes to these financial statements.
<PAGE>
<PAGE>
GUARDIAN TECHNOLOGIES INTERNATIONAL, INC.
NOTES TO FINANCIAL STATEMENTS
1. UNAUDITED INTERIM FINANCIAL STATEMENTS:
--------------------------------------
The accompanying unaudited interim financial statements have been prepared
in accordance with the instructions to Form 10-QSB and do not include all
the information and footnotes required by generally accepted accounting
principles for complete financial statements. In the opinion of
management, all adjustments (consisting of normal recurring accruals)
considered necessary for a fair presentation have been included. The
results of operations for any interim period are not necessarily indicative
of results for the entire fiscal year. These statements should be read in
conjunction with the financial statements and related notes included in
Form 10-KSB for Guardian Technologies International, Inc. ("GRDN" or the
"Company") for the year ended December 31, 1999, as the notes to these
interim financial statements omit certain information required for complete
financial statements.
2. EQUITY INVESTMENT (UNAUDITED):
-----------------------------
The Company has an investment in Structural Holdings, Inc. (Structural)
which is recorded under the equity method of accounting. The following is
a financial summary of the Company's investment in Structural. The table
reflects the financial position of Structural at March 31, 2000 and its
results of operations for the three months ended March 31, 2000:
<TABLE>
<CAPTION>
<S> <C> <C>
Net sales $3,605,716
Cost of sales $2,995,121
Depreciation $ 24,000
Net income $ 93,263
Guardian share of net income $ 46,632
Current assets $4,580,412
Noncurrent assets $4,900,740
Total assets $9,481,152
Current liabilities $6,986,091
Noncurrent liabilities $ 798,648
Total liabilities $7,784,739
Net assets $1,696,413
</TABLE>
The Company recorded its equity in estimated earnings of Structural totaling
$33,476 at December 31, 1999, based on Structural's management's best estimate
of profit on uncompleted contracts at the time the Company's Form 10-Ksb was
required to be filed with the SEC. However, Structural had not completed the
audit of its December 31, 1999 financial statements as of that date and the
audit still has not yet been issued. Based on a change of estimate in the
cost to complete certain jobs, Structural changed its percent of completion
calculation at December 31, 1999, thereby reducing its net income to a net
loss. As a result, the Company reduced its equity in earnings of Structural
for the three months ended March 31, 2000 by $94,418, which represents 50% of
the reduction in net income of Structural for the year ended December 31,
1999. This amount coupled with Structural's net income for the three months
ended March 31, 2000 presented above of $46,632, results in a net equity loss
of $47,786 for three months ended March 31, 2000 as recorded on the Company's
books.
<PAGE>
<PAGE>
Item 6. Management's Discussion and Analysis of Financial Condition and
Results of Operations
GENERAL
The following discussion of the financial condition and results of operations
of the Company should be read in conjunction with the consolidated financial
statements and related notes thereto.
OVERVIEW
ARMOR:
In late 1999, the Company decided to restructure its armor business in
order to achieve profitability. Management began implementing the
restructuring plan during the first quarter of 2000 with full implementation
expected by the end of the second quarter. The successful implementation of
the restructuring strategy is intended to produce positive cashflow in the
armor business by year-end. The basic elements involved in the strategy are
outlined below:
a) To develop new products that will make the Company more competitive
in the market.
- During the first quarter management worked with several
composite material vendors to develop new lightweight ballistic
material packages that will reduce the material cost component
of each vest.
- The first product developed, the CENTURIAN 2000, was certified
by the National Institute of Justice (NIJ) in two models. The
Undergarment model was certified at NIJ Threat Levels II and
III-A in male and female styles for use by law enforcement
personnel. The SWAT vest was certified at NIJ Threat Level
III-A.
- These vest models are constructed with Honeywell's latest
technological advancement-Spectra Shield Plus Flex (a non-woven
material) and Spectra woven fabric to produce a lightweight and
flexible vest.
- In addition, the Company is currently developing the POLARIS
2000, the lightest and lowest cost product the Company has
developed to date. The POLARIS 2000 will utilize an entirely
new ballistic material package. Development and NIJ testing
and certification is due to be completed by the end of the
second quarter.
b) To retain experienced senior management and sales personnel able to
capitalize on the newly developed, light weight, lower priced armor
products in order to increase sales volume.
- In early May 2000, the Company retained the services of Steven
Young, an experienced industry professional. Mr. Young will
assume the role of Chief Operating Officer of the Company
responsible for the day to day operations of the Company's
armor business.
c) To outsource the Company's manufacturing operation to reduce labor
and overhead costs.
- In conjunction with bringing Mr. Young on board, management
decided to relocate manufacturing to North Carolina, the heart
of the textile belt and Mr. Young's base of operation. The
relocation process is expected to be completed during the early
part of the third quarter.
In addition to the aforementioned restructuring of the armor business,
the Company continues to research private companies in the security and safety
products industry with profitable operations as potential acquisition
candidates that would compliment the body armor business. It is anticipated
that funds received from the Company's private placement and the exercise of
common stock options (see liquidity and capital resources), coupled with the
use of the Company's common stock, will be used to acquire a company in the
security and safety products business.
STRUCTURAL HOLDINGS:
During 1999, the Company sold its land and building. Proceeds from the
sale were used to purchase 50% of the outstanding shares of common stock of
Structural Holdings, Inc., a Delaware holding company (Structural).
Structural has no operations and was formed specifically to purchase 100% of
the outstanding shares of common stock of H&M Steel, Inc., an Oklahoma
corporation (H&M). H&M is engaged in the business of structural steel
fabrication. The Company, through its investment in Structural has embarked
on an aggressive acquisition campaign in the area of structural steel
fabrication. The Company believes this fragmented industry represents an
opportunity to complete a consolidation strategy. Since the acquisition of
H&M, Structural has executed letters of intent for three additional
fabricators. The Company expects Structural will close on one of the
acquisitions during the second quarter and anticipates closing the remaining
two opportunities during the third quarter of 2000. Funding from Guardian for
closing on these acquisitions by Structural will come from external equity
capital and debt financing.
RESULTS OF OPERATIONS (ARMOR)
THREE MONTHS ENDED MARCH 31, 2000 COMPARED TO THREE MONTHS ENDED MARCH 31,
1999
Net sales for the three months ended March 31, 2000 were $226,438
compared to $216,852 for the same period in 1998, an increase of $9,586 or
4.4%.
The Company's gross profit for the three months ended March 31, 2000 was
$53,136 or 23.5% compared to gross profit of $26,093 or 12.0%. Gross margin
as a percentage of sales nearly doubled during the current period because of
reductions in direct labor and overhead costs.
Total operating expenses for the three months ended March 31, 2000 were
$200,531 comprised of selling expenses of $12,516 and general and
administrative expenses of $188,015. Total operating expenses for the three
months ended March 31, 1999 were $191,102 comprised of selling expenses of
$12,952 and general and administrative expenses of $178,150. As selling
expenses remained stable period to period, the increase in total operating
expenses of $9,429 was attributable to the increase in general and
administrative expenses. These costs were negatively impacted by one-time
consulting costs of $25,000 ($20,000 in stock and $5,000 in cash) paid to a
director of the Company pertaining to a one-year agreement signed in February
1999. These consulting costs will not be duplicated in future quarters.
Other income for the three months ended March 31, 2000 was $27,001
compared to $134,199 during the same period a year ago. The decrease in other
income during the current period of $107,198 resulted from the gain recognized
during the first quarter of 1999 from the sale of the Company's land and
building. The gain recorded in 1999 was $109,759.
The Company posted a net loss for the three months ended March 31, 2000
of ($168,180) or ($.06) per share compared to a net loss of ($30,810) or
($.02) per share for the three months ended March 31, 1999. Without the gain
on sale of the Company's land and building of $109,759, the net loss sustained
for the three months ended March 31, 1999 would have been ($140,569). Net
results for the three months ended March 31, 2000 were negatively impacted by
the recognition of a ($47,786) loss associated with the Company's equity
investment in Structural (see discussion below). Without the impact of the
loss attributable to Structural, the Company's net loss would have been
($120,394).
RESULTS OF OPERATIONS (STRUCTURAL)
The following discussion pertains to the results of operations of H&M (a
wholly-owned subsidiary of Structural) for the three months ended March 31,
2000. Since the Company did not acquire its equity interest in Structural
until April 1999, it is not possible to compare results of operations for the
three months ended March 31, 2000 with results of operations for the same
period a year ago. Therefore, this discussion will focus on comparisons,
where relevant, of results of operations for the three months ended March 31,
2000 and results of operations for the nine months ended December 31, 1999
(pertaining to the Company's ownership since April 01, 1999).
H&M's revenues for the three months ended March 31, 2000 totaled
$3,605,716 compared to $6,049,236 for the nine months ended December 31, 1999.
First quarter 2000 revenues represent approximately 60% of the revenues
recognized during all of 1999. The increase in revenues is attributable to
increased production and shipping levels associated with increased backlog.
H&M initiated a second shift in the middle of the fourth quarter of 1999. The
positive effect of operating a second shift, coupled with increased production
on the day shift, was not fully recognized until the first quarter of 2000.
Additionally, design delays on two military base fabrication jobs caused
significant delays in production and resulted in decreased revenues of
approximately $3-$4 million for the nine months ended December 31, 1999. The
fabrication of these two projects was shifted to the first quarter of 2000.
Gross profit was $610,595, or 16.9% for the three months ended March 31,
2000 compared to $1,178,097, or 19.5% for the nine months ended December 31,
1999. Gross profit dollars during the first quarter increased on an average
run rate basis (average of $204,000) per month compared to the run rate
(average of $131,000) per month for the nine months ended December 31, 1999.
The dollar increase in average monthly gross profit during first quarter is
attributable to H&M's increased fabrication activities. The decrease in gross
profit percentage during the first quarter is due principally to not
recognizing any gross profit on one of the military base projects due to
anticipated labor cost overruns incurred on the job to make up for time lost
from the design delays.
Operating expenses were $334,213, or 9.3% of revenues for the three
months ended March 31, 2000 compared to $1,024,403, or 16.9% for the nine
months ended December 31, 1999. The percentage of revenue decrease in
operating expenses during the first quarter (9.3% versus 16.9%) is primarily
attributable to increased revenues during the first quarter compared to the
nine months ended December 31,1999. The increase in revenues is associated
with delays in the two military base fabrication projects. Operating expense
dollars for the three months ended March 31, 2000 have decreased on an average
run rate basis (average of $111,000) per month compared to the run rate
(average of $114,000) per month for the ten months ended December 31, 1999.
This reduction is due principally to greater fabrication levels in the plant,
which causes certain operating expenses to be included in cost of sales
(following percentage of completion accounting).
Earnings before interest, taxes, depreciation and amortization (EBITDA)
was $442,158 or 12.3% of revenues for the three months ended March 31, 2000
compared to $596,528 or 9.9% of revenues for the nine months ended December
31, 1999. EBITDA dollars for the current quarter have increased on an average
run rate basis (average of $147,000) per month compared to the run rate
(average of $66,000) per month for the nine months ended December 31, 1999.
The dollar increase in average monthly EBITDA is attributable to increased
fabrication activities in the plant. The increase was partially offset by not
recognizing any profit on one of the military base projects.
Net income for the three months ended March 31, 2000 was $93,263 compared
to a net loss of ($121,883) for the nine months ended December 31, 1999. The
net income posted during the first quarter of 2000 is attributable to greater
fabrication levels during the period, coupled with the revenue shift
associated with project delays in 1999 on the two military base projects,
which pushed fabrication on these jobs into the first quarter of 2000.
The Company recorded its equity in estimated earnings of Structural
totaling $33,476 at December 31, 1999, based on Structural's management's best
estimate of profit on uncompleted contracts at the time the Company's Form 10-
KSB was required to be filed with the SEC. However, Structural had not
completed the audit of its December 31, 1999 financial statements as of that
date and the audit still has not yet been issued. Based on a change of
estimate in the cost to complete certain jobs, Structural changed its percent
of completion calculation at December 31, 1999, thereby reducing its net
income to a net loss. As a result, the Company reduced its equity in earnings
of Structural for the three months ended March 31, 2000 by $94,418, which
represents 50% of the reduction in net income of Structural for the year ended
December 31, 1999. This amount coupled with Structural's net income for the
three months ended March 31, 2000 presented above of $46,632, results in a net
equity loss of $47,786 for three months ended March 31, 2000 as recorded on
the Company's books.
The table below reflects the results of operations of H&M for the three
months ended March 31, 2000 compared to the nine months ended December 31,
1999:
<TABLE>
<CAPTION>
3 Months Ended 9 Months Ended
3/31/2000 12/31/1999
--------------- ---------------
<S> <C> <C>
Net Revenues $3,605,716 $6,049,236
Cost of Goods Sold 2,995,121 4,871,139
Gross Profit Margin 610,595 1,178,097
EBITDA 42,158 596,528
Interest Expense 105,026 248,577
Income Taxes 87,000 27,000
Depreciation 24,000 69,737
Amortization 132,881 373,097
Net Income (Loss) 93,263 (121,883)
</TABLE>
LIQUIDITY AND CAPITAL RESOURCES (ARMOR)
During the three months ended March 31, 2000, the Company used net cash
in operating activities of $159,268 compared with $102,865 during the same
period last year. Cash used in operating activities was provided by $191,690
in available cash balances existing at the beginning of the year.
The Company does not anticipate any significant capital expenditure for
property and equipment in the coming year.
The Company had Notes Receivable from unrelated parties of $150,000 at
year-end. Following year-end, the Company collected $50,000 of this amount.
The remaining balance of Notes Receivable is due June 30, 2000. Management is
confident the Note will be paid in full on or before the due date which will
provide an additional $100,000 of cashflow to the Company for working capital
purposes.
During the three months ended March 31, 2000, the Company raised
additional equity capital of $225,000 and $480,000 through proceeds from a
private placement of common stock and the exercise of common stock options,
respectively. Included in the private placement were warrants to purchase
common stock over a 6 month period that when exercised will provide additional
proceeds of $3,825,000. Funds raised from these sources will be used for
acquisitions and general working capital requirements.
From January 2000 through March 2000, options for 384,000 shares of
common stock were exercised generating net proceeds to the Company of
$480,000. These funds will be used for general working capital purposes.
In January 2000 the Company sold 150,000 units (comprised of 2 common
shares and 24 common stock purchase warrants) for $1.50 each receiving net
proceeds of $225,000. The warrants have the following terms:
<TABLE>
<CAPTION>
WARRANT PRICE PERIOD*
<S> <C> <C> <C>
Class A $.7500 30 days
Class B $.8750 60 days
Class C $1.000 90 days
Class D $1.125 120 days
Class E $1.250 150 days
Class F $1.375 180 days
</TABLE>
*The exercise period begins upon the effective date of a registration
statement registering the underlying shares of common stock issuable upon the
exercise of these warrants. Warrants must be exercised in alphabetical order
by warrant class. If any warrant is not exercised during the term of the
warrant by an individual warrant holder, all remaining classes of warrants
will automatically expire.
Should all warrants be exercised the Company will receive additional
proceeds from this offering of $3,825,000. These funds will be used for
acquisitions and general working capital purposes.
LIQUIDITY AND CAPITAL RESOURCES (STRUCTURAL)
The following discussion pertains to the working capital position of H&M
(a wholly-owned subsidiary of Structural) as of March 31, 2000. Since the
Company did not acquire its equity interest in Structural until April 1999, it
is not possible to compare changes in working capital for the three months
ended March 31, 2000 with changes in working capital for the same period a
year ago. Therefore, this discussion will focus on Structural's current
working capital position and changes thereto since December 31, 1999 (the
Company's year-end).
As of March 31, 2000 Structural had total current assets of $4,580,412
comprised of cash and equivalents of $5,260, net accounts receivable of
$2,480,821, raw material inventory of $74,100, costs and related earnings in
excess of billings of $1,974,164 and other current assets of $46,067.
As of March 31, 2000 Structural had total current liabilities of
$6,986,091 comprised of trade accounts payable of $2,076,173, the current
portion of long term debt of $4,102,022, billings in excess of costs and
related earnings on uncompleted contracts of $251,696 and other current
liabilities of $556,200.
Working capital deficit at March 31, 2000 was $2,405,679 compared to a
working capital deficit at December 31, 1999 of $349,378.
Structural increased property, plant and equipment from December 31, 1999
by $24,087 to $1,290,750. Structural believes that it's available funds, cash
generated by operating activities and funds available under its bank credit
facilities will be sufficient to fund ordinary capital expenditures. However,
Structural may expand property, plant and equipment through future
acquisitions which will require additional equity and/or debt financing.
Long-term debt at March 31, 2000 was $798,648 comprised of notes payable
associated with the acquisition of H&M of $413,548, non-compete liability with
the seller of H&M of $182,100 and deferred taxes of $203,000. Long term debt
at December 31, 1999 was $3,081,095 comprised of H&M acquisition indebtedness
of $2,245,557, line of credit liability of $410,964, non-compete liability
with the seller of H&M of $205,574 and deferred taxes of $219,000. Since
year-end, H&M acquisition indebtedness has been reduced $153,675.
Structural's line of credit balance has increased $1,237,113 since year-end.
This increase is attributable to the growth in revenues (and related cost of
goods sold) during the first quarter of 2000.
H&M has a $2,350,000 3-year operating line of credit with a financial
institution with two 1-year automatic renewal terms unless terminated earlier
under certain conditions. Interest is at prime plus 1.5%. Additionally, for
each quarter, the Company must pay an unused line of credit fee equal to 1/2% of
the difference between $2,350,000 and the average outstanding daily balance.
The amount of borrowing under the line of credit is limited to 80% of the net
amount of eligible receivables, less any allowance for doubtful accounts.
Structural's notes payable and line of credit with the financial
institution are collateralized by all of H&M's assets and Structural Holdings,
Inc.'s ownership in the common stock of H&M. Additionally, Structural
Holdings has guaranteed the notes payable and line of credit.
The notes payable and line of credit have various financial and
operational covenants, including certain working capital and debt to equity
ratios, operating cash flow to annual debt service ratios, net worth
requirements, a limitation on capital expenditures and a minimum cash flow
requirement. Additionally, the notes payable and line of credit restricts
H&M's ability to pay dividends, salaries and fees to the
principals/shareholders of Structural. H&M was not in compliance with certain
covenants as of December 31, 1999 and as of March 31, 2000. H&M is currently
seeking a waiver of said covenants. Management believes the waiver will be
granted, however, and has included the related indebtedness as a current
liability until such time that the waiver has been granted.
At March 31, 2000 Structural had executed Letters of Intent (LOI's) to
acquire three separate structural steel fabrication entities. Each of the
LOI's is subject to due diligence and adequate financing so as to not firmly
obligate Structural to close unless substantially all terms and conditions of
closing are acceptable to Structural. In order to close on certain of these
potential acquisitions, Structural will require additional equity and/or debt
financing.
<PAGE>
<PAGE>
PART II. OTHER INFORMATION
Item 1. Legal Proceedings
None
Item 2. Changes in Securities
See "Liquidity and Capital Resources (Armor)" in Management's Discussion
and Analysis of Financial Condition and Results of Operation, Part I,
Item 6.
Item 3. Default Upon Senior Securities
None.
Item 4. Submission of Matters to a Vote of Security Holders
None.
Item 5. Other Information
None.
Item 6. Exhibits and Reports on Form 8-K
Exhibits:
None.
<PAGE>
<PAGE>
SIGNATURE
In accordance with 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, thereunto duly authorized.
GUARDIAN TECHNOLOGIES INTERNATIONAL,
INC.
Date: May 22, 2000 By: /s/ J. Andrew Moorer
---------------- -----------------------------------
J. Andrew Moorer, President and CEO
<PAGE>
<PAGE>
GUARDIAN TECHNOLOGIES INTERNATIONAL, INC
INDEX TO EXHIBITS
Exhibit
Number Description
- -------- -----------
27 Financial Data Schedule
<TABLE> <S> <C>
<ARTICLE> 5
<LEGEND>
THIS SCHEDULE CONTAINS SUMMARY FINANCIAL INFORMATION EXTRACTED FROM THE
CONSOLIDATED BALANCE SHEET AND CONSOLIDATED STATEMENT OF OPERATIONS FOUND ON
PAGES 3 AND 4 OF THE COMPANY'S FORM 10-QSB FOR THE THREE MONTHS ENDED MARCH 31,
2000, AND IS QUALIFIED IN ITS ENTIRETY BY REFERENCE TO SUCH FINANCIAL
STATEMENTS.
</LEGEND>
<S> <C>
<PERIOD-TYPE> 3-MOS
<FISCAL-YEAR-END> DEC-31-1999
<PERIOD-END> MAR-31-2000
<CASH> 766,270
<SECURITIES> 0
<RECEIVABLES> 106,220
<ALLOWANCES> 0
<INVENTORY> 145,029
<CURRENT-ASSETS> 1,295,155
<PP&E> 193,849
<DEPRECIATION> 145,842
<TOTAL-ASSETS> 2,355,857
<CURRENT-LIABILITIES> 126,350
<BONDS> 0
0
0
<COMMON> 3,572
<OTHER-SE> 5,496,196
<TOTAL-LIABILITY-AND-EQUITY> 2,355,857
<SALES> 266,438
<TOTAL-REVENUES> 226,438
<CGS> 173,302
<TOTAL-COSTS> 200,531
<OTHER-EXPENSES> (27,001)
<LOSS-PROVISION> 0
<INTEREST-EXPENSE> 0
<INCOME-PRETAX> (168,180)
<INCOME-TAX> 0
<INCOME-CONTINUING> (168,180)
<DISCONTINUED> 0
<EXTRAORDINARY> 0
<CHANGES> 0
<NET-INCOME> (168,180)
<EPS-BASIC> (.06)
<EPS-DILUTED> (.06)
</TABLE>
