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Letter to SEC

GUARDIAN TECHNOLOGIES INTERNATIONAL, INC.

October 14, 2005

Mr. Stephen G. Krikorian

Branch Chief - Accounting

Securities and Exchange Commission

Room 4561

100 F Street, N.E.

Washington, D.C. 20549

Re:

Guardian Technologies International, Inc.

Form 10-KSB for Fiscal Year Ended December 31, 2004

Form 10-KSB/A for Fiscal Year Ended December 31, 2004

Form 10-Q for Fiscal Quarters Ended March 31 and June 30, 2005

Form 8-K Filed March 31 and May 23, 2005

(File No. 000-28238)

Dear Mr. Krikorian:

This will acknowledge receipt of your letter of comment, dated September 16, 2005, regarding the above referenced filings (“letter of comment”) of Guardian Technologies International, Inc. (the “Company”).  Enclosed for filing is an amendment to the Company’s Form 10-Q for the period ended June 30, 2005, reflecting certain changes to the Form 10-Q that was filed with the Securities and Exchange Commission (the “Commission”) on August 12, 2005.  The enclosed amended Form 10-Q (“Amended Form 10-Q”) is being filed to reflect changes in response to comments raised in the letter of comment and to make certain other changes.  We have set forth below responses to the comments raised by the staff in the letter of comment.  The numbered responses set forth below correspond to the numbered paragraphs in your letter of comment:

1.

Comment is noted and will be complied with in future filings of the Company’s Annual Reports on Form 10-K.

2.

Comment is noted and will be complied with in future filings of the Company’s Annual Reports on Form 10-K.

3.

Comment is noted and will be complied with in future filings of the Company’s Annual Reports on Form 10-K.

4.

Comment is noted and will be complied with in future filings commencing with the Company’s Form 10-Q for the period ended September 30, 2005.

5.

Comment is noted and will be complied with in future filings commencing with the Company’s Form 10-Q for the period ended September 30, 2005.

6.

The consulting agreements were generally for a term of one year and in some cases two years.  On the date of execution, the amount of shares issued pursuant to the

consulting agreements and the fair market value of the shares so issued was known.  The Company recorded the following book entry:

Dr.

Deferred stock compensation

Cr.

Common stock

Cr.

APIC

At the end of each reporting period, the Company recorded two entries:  (1) amortization of the period costs, and (2) re-measurement of the remaining unamortized shares to the period end fair market value, as follows:

(1)

Dr.

Stock compensation expense

Cr.

Deferred stock compensation

(2)

Dr.

Deferred Stock Compensation

Cr.

APIC

We have attached hereto a schedule that sets forth the flow of entries from inception through expense amortization and re-measurement.  Balances shown on the schedule agree to the balances shown on the Trial Balance for each period end.  Further, at year end the Statement of Stockholders’ Equity reflected the roll-forward of the deferred compensation account including new stock-based agreements, amortization of existing agreements, and the re-measurement of unamortized portions of the existing agreements.

7.

SFAS 86, Accounting for the Costs of Computer Software to be Sold, Leased, or Otherwise Marketed, divides the life of a software product into three segments, as follows:

·

Costs incurred before technological feasibility for the product is established are expensed as incurred under SFAS 2. Technological feasibility is determined upon completion of a detailed program design or completion of a working model.

·

Then the product’s second life segment, software production, begins, and the company capitalizes all relevant costs.

·

Once a software product is available for general release to customers, amortization begins for capitalized costs, and subsequent outlays are again expensed as incurred. Amortization of capitalized costs is computed by using a ratio of current and future gross revenues for the product, or by using a straight-line charge-off over the remaining economic life, whichever is greater. Remaining capitalized costs are reported at the lower of unamortized balances or net realizable value of the product, with any write-offs reflected year by year.

SFAS 2, Accounting for Research and Development Costs, requires that R&D generally be expensed as incurred and that each year’s total R&D be disclosed in the financial statements. SFAS 2 views the research component of R&D as a “planned search or critical investigation aimed at discovery of new knowledge” that could result in a new or improved product, service, process, or technique. The development component of R&D is translating “research findings or other

knowledge into a plan or design” for a new or improved product, service, process, or technique. Development includes conceptual formulation, design, and testing of product alternatives; construction of prototypes and operation of pilot plants; but not routine alterations to existing products, processes, or operations.

PinPoint – through the date of this letter, the Company continues with the development of a working model of PinPoint.  We continue to search for new ideas, methods, and knowledge to incorporate in our technology and have not established technological feasibility (currently in the testing and validation mode).  We have not capitalized any of the research and development costs to-date and we will be expensing the 3rd quarter 2005 research and development costs incurred.

FlowPoint – the product is commercialized and available for sale to clients.  The software has been installed in several locations.  We purchased FlowPoint as part of our Wise Systems acquisition and account for the software value as an intangible asset.  The value of the intangible asset is being amortized over a period of five years (the estimated useful remaining life of the asset).  At the same time that we are amortizing the intangible asset, we continue to develop new modules to be made commercially available.  These modules are not incorporated into the core product, but rather sold as additional functionality.  We capitalize the production of these modules until commercial release, at which time we begin amortization.

8-11.   (a)

Please be advised that the Company’s management, with the assistance of its certifying officers, evaluated the Company’s disclosure controls and procedures (as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934, as amended (“Exchange Act”)) as of the end of the periods covered by the Company’s Form 10-KSB for the year ended December 31, 2004, Form 10-Q for the quarter ended March 31, 2005, and Form 10-Q for the quarter ended June 30, 2005.  We confirm that the Company’s disclosure controls and procedures are designed to provide reasonable assurance of achieving their objectives and the certifying officers concluded that the Company’s disclosure controls and procedures are effective at the “reasonable assurance” level as of the end of the periods covered by the Company’s Form 10-KSB for the year ended December 31, 2005, and the Company’s Form 10-Q for the period ended March 31, 2005.  (See SEC Release No. 33-8238, Section II.F.4.)

(b)

See changes to Item 4, page 32, of the Amended Form 10-Q enclosed herewith in connection with management’s evaluation of the effectiveness of the Company’s disclosure controls and procedures as of the end of the period covered by the Company’s Form 10-Q for the period ended June 30, 2005.  See also response to paragraph 21, below.  Furthermore, the Company’s proposes to address the effectiveness of its disclosure controls and procedures in its Form 10-Q for the quarter ended September 30, 2005.

(c)

Except as noted above and in paragraph 21, below, please be advised that in future filings of its Forms 10-K and 10-Q, the Company will, if true, include the following disclosures under Item 8A of the Form 10-K and Item 4 of the Form 10-Q (consistent with the requirements of Rule 13a-15 and Rule 15d-15 under the Exchange Act and the disclosure requirements of such items):

As of the end of the period covered by this Report, the Chief Executive

Officer and Chief Financial Officer of the Company (the “Certifying Officers”) conducted evaluations of the Company’s disclosure controls and procedures.  As defined under Rule 13a-15(e) and 15d-15(e) of the Securities Exchange Act of 1934, as amended (the “Exchange Act”), the term “disclosure controls and procedures” means controls and other procedures of an issuer that are designed to ensure that information required to be disclosed by the issuer in the reports that it files or submits under the Exchange Act is recorded, processed, summarized and reported, within the time periods specified in the Commission’s rules and forms. Disclosure controls and procedures include, without limitation, controls and procedures designed to ensure that information required to be disclosed by an issuer in the reports that it files or submits under the Exchange Act is accumulated and communicated to the issuer’s management, including the Certifying Officers, to allow timely decisions regarding required disclosure.  Based on this evaluation, the Certifying Officers have concluded that the Company’s disclosure controls and procedures were effective to ensure that material information is recorded, processed, summarized and reported by management of the Company on a timely basis in order to comply with the Company’s disclosure obligations under the Exchange Act, and the rules and regulations promulgated thereunder.

Further, there were no changes in the Company’s internal controls over financial reporting during the period covered by the Report that have materially affected, or are reasonably likely to materially affect, the Company’s internal control over financial reporting.

12.

The Company does not have any written agreement with Motion Computing, a manufacturer and distributor of tablet computers.  However, the Company has an unwritten vendor agreement with Motion Computing pursuant to which Motion Computing has furnished the Company demonstration products for use in connection with the Company’s FlowPoint products, sales and marketing support, and product pricing guidelines.  On July 25, 2005, the Company entered into a non-exclusive Co-marketing Agreement with NeuroStar Solutions, Inc. (“NeuroStar”), a national radiology software solutions provider, pursuant to which NeuroStar may integrate and resell components of the Company’s radiology information system and professional services program to NeuroStar’s customers in North and South America and Europe.  Also, the agreement authorizes Guardian to integrate and resell certain components of NeuroStar’s PACS software program to the Company’s customers in the same territories.  On November 11, 2004, the Company entered into a non-exclusive direct purchasing arrangement with Eizo Nanao Technologies, Inc., for the purchase and resale of certain computer monitors from Eizo for use by the Company’s customers in connection with its FlowPoint products.  On December 3, 2004, (and effective November 23, 2004) the Company entered into a non-exclusive Partner Solutions U.S. Partner Agreement with Avnet, Inc., a value added distributor of computer equipment, pursuant to which that the Company may purchase and resell certain IBM and other computer equipment to the Company’s customers in connection with its FlowPoint products.   On August 12, 2005, the Company entered into a nonexclusive OEM agreement with IBM for the licensing and resale of IBM’s Universe Database software product worldwide.  IBM’s Universe Database is an operating system that the Company utilizes in connection with its FlowPoint product.  The Company’s management does not believe that its agreements with Motion Computing, NeuroStar, Eizo Nanao,

Avnet, or IBM are material agreements.  The agreements were entered into in the ordinary course of the Company’s business.  Moreover, the Company’s management believes that its business is not dependent on any of such arrangements or agreements and that, in the absence of such arrangements or agreements, the Company would be able to readily purchase similar products from other manufacturers and distributors and at similar prices.  Moreover, the Company is not dependent on its non-exclusive agreement with NeuroStar in connection with the distribution of the Company’s FlowPoint products in the covered territories.

13.

      Comment complied with.  See Exhibit 10.20 to the Amended Form 10-Q enclosed herewith.

14.

      We assume for purposes of our response that the comment refers to 2004 and not 2005.

Amortization of intangible assets in 2004 included four components, as follows:  (1) capitalized patent expenses; (2) capitalized research and development expenses; (3) the intangible software asset acquired from DE Vision; and, (4) the intangible software asset acquired from Wise Systems.  The amortization expense in 2004 was higher than the projected expense in 2005 due to the inclusion of the amortization of the DE Vision software asset, which was written-off in its entirety in 2004, as impaired.

Not all of the amortization expense was classified as SG&A in 2004.  $197,278 was included in the Cost of Goods Sold.  The amortization of the DE Vision software was classified as SG&A along with the amortization of the capitalized patent expenses.  During the quarters ended March 31 and June 30, 2005, all amortization expense, except patent expenses, has been classified as Cost of Goods Sold.

With respect to Question 17 of the FASB Staff Implementation Guide, Statement 86, the answer given by the FASB is that the amortization expense related to software products marketed to others is to be expensed.  That is the treatment that we applied at year end and each of the succeeding quarters.  Software products (Wise Systems) held for sale to customers were amortized and the expense was recorded in the Cost of Goods Sold.  Software products (DE Vision) under development were amortized and the expense was recorded in the SG&A.

Similarly to the guidance provided in the FASB Staff Implementation Guide discussed above, we expensed the impairment write-off to SG&A because the impaired software was not being marketed for sale to others.

DEVision software was written off at 12/31/04 as impaired.  No amortization expense has been recorded on this software during 2005.  Patent amortization associated with the research and development of our PinPoint software (just made commercially available at the end of September) is expensed to SG&A.  Software acquired from Wise Systems was expensed to the Cost of Goods Sold in the first two quarters and will be hence forth.

15.

       We believe the stock compensation expense has been appropriately recorded.  The amortization expense has been recorded as a separate line item within the Selling,

General, and Administrative section.  The amortization expense was derived from stock issued to consultants for marketing, investor relations, and general business consulting, as well as, stock options issued to senior executives whose salary and compensation expenses are charged to SG&A and not to Cost of Goods Sold.

16.

      The following table sets forth the equity transactions described in the “Stockholders’ Equity” footnote, and through June 30, 2005, and shows the investment type, date of the transaction, fair market value, offer price, any additional value furnished, and the business purpose of each transaction:

Investment Type

 Investment Date

 FMV

 Offer Price

 Add’l. Value

 Business Purpose

Employee Direct Investment   (A)

 9/3/2003

 $2.80

 $1.50   (B)

 None

 Working capital.

Private Placement   (A)

 9/24/2003

 $2.70

 $1.50 (B)

 None

 Working capital.

Private Placement

 3/1/2004

 $3.50

 $1.60

 None

 Working capital