873198--5/16/2006--GUARDIAN_TECHNOLOGIES_INTERNATIONAL

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{regulation, government, change}

{product, candidate, development}

{stock, price, share}

{product, market, service}

{operation, international, foreign}

{property, intellectual, protect}

{stock, price, operating}

{personnel, key, retain}

{interest, director, officer}

{control, financial, internal}

{customer, product, revenue}

{acquisition, growth, future}

{provision, law, control}

{competitive, industry, competition}

Risks Related to Our Company and Our Operations Our business plan and technologies are unproven, we have generated minimal revenues from our operations, and incurred substantial operating losses since our inception. We may face competition from other developers or sellers of imaging and radiology technology and baggage screening technology. We may undertake acquisitions which pose risks to our business. Our independent registered public accounting firm has expressed uncertainty regarding our ability to continue as a going concern. Investor confidence in the price of our stock may be adversely affected if we are unable to comply with Section 404 of the Sarbanes-Oxley Act of 2002. Our stock price is volatile. There is a limited market for our common stock. Because we became public because of a reverse acquisition, we may not be able to attract the attention of major brokerage firms or institutional investors. Our common stock is subject to the SEC s Penny Stock Regulations. Certain provisions of our charter and bylaws may discourage mergers and other transactions. Our board of directors may issue additional shares of preferred stock without stockholder approval. We depend on key personnel. Our directors and named executive officers own a substantial percentage of our common stock. Our ability to attract and retain additional skilled personnel may impact our ability to develop our technology, and attract customers in growing our business. We have never paid a cash dividend Risks Related to Our Industries Changes may take place in funding for healthcare. Virtually all of our prospective customers in the healthcare industry are subject to governmental regulation, including Medicare and Medicaid regulation. Competition for healthcare information systems is intense. Product liability claims may occur. Product malfunction liability claims may occur. Specific government regulations relating to Medicare and Medicaid may impinge on us. Medical device regulation may require us to obtain approval for our products. System errors and warranties may subject us to liability. We may infringe the proprietary rights of others. Unforeseeable disruption in the economy may take place consequent to terrorism or other international events. A number of factors that affect our revenues make our future results difficult to predict, and therefore we may not meet expectations for a particular period. We expect to depend on a small number of customers for a substantial portion of our future revenues. Governmental agencies, the primary customers for our PinPoint products, are subject to budget processes which could limit the demand for these products. Legislative actions could lead to fluctuations in demand for transportation security scanning products and services. Governmental agencies have special contracting requirements, which create additional risks. Our growth depends on our introduction of new products and services, which may be costly to develop and may not achieve market acceptance. Our PinPoint product may fail to obtain certification by the TSA. Our existing PinPoint product may fail to obtain re-certification by the TSA for changes in the PinPoint system. Our major potential customer, the TSA, is a part of the Department Of Homeland Security, a newly created agency that has experienced, and may continue to experience, delays in its operations, which may cause delays in our receiving orders for our products from the TSA. Future sales of our PinPoint products will depend on the ability of airports to secure funding to build baggage handling systems and to integrate our PinPoint product into such systems, which they may not be able to do. If our PinPoint product fails to detect explosives, we could be exposed to product liability and related claims for which we may not have adequate insurance coverage, and we may lose current and potential customers. We expect to substantially depend on large orders from a limited number of customers. As a result, order cancellations from any of our customers or the failure of these customers to continue to purchase PinPoint products could have a material negative impact on our business and financial results. The sales cycle for our PinPoint products is lengthy, and we may expend a significant amount of effort in obtaining sales orders and not receive them. Our future international sales subject us to risks that could materially harm our business. Exchange rate fluctuations could cause a decline in our financial condition and results of operations. Our inability to adapt to rapid technological change could impair our ability to remain competitive. The transportation security scanning industry is highly competitive. Given the anticipated continuing demand for airport security products, competition may increase. Litigation may be necessary to enforce or defend against claims of intellectual property infringement, which could be expensive and, if we lose, could prevent us from selling our products.

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873198--5/16/2006--GUARDIAN_TECHNOLOGIES_INTERNATIONAL_INC