UNITED STATES SECURITIES AND
                               EXCHANGE COMMISSION
                             Washington, D.C. 20549

                                   FORM 10-KSB/A

                   ANNUAL REPORT UNDER SECTION 13 OR 15(d) OF
                       THE SECURITIES EXCHANGE ACT OF 1934

                   For the Fiscal Year Ended December 31, 2005
                          Commission File No. 000-49907

                     Law Enforcement Associates Corporation
                 (Name of Small Business Issuer in Its Charter)

                  Nevada                                56-2267438
    (State of other jurisdiction of         (Employer Identification Number)
     Incorporation or Organization)


               100 Hunter Place, Youngsville, North Carolina 27596
               (Address of principal executive offices) (Zip Code)

                                 (919) 554-4700
                (Issuer's Telephone Number, Including Area Code)

      Securities registered pursuant to Section 12(b) of the Exchange Act:
                                      None.


                    Securities registered pursuant to Section
                           12(g) of the Exchange Act:

                     Common Stock, $.001 Par Value Per Share

Check  whether  the Issuer:  (1) has filed all  reports  required to be filed by
Section 13 or 15(d) of the Securities  Exchange Act of 1934 during the preceding
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 [ ]

Check if there is no  disclosure of  delinquent  filers  pursuant to Item 405 of
Regulation S-B contained  herein,  and no disclosure  will be contained,  to the
best of registrant's  knowledge,  in definitive proxy or information  statements
incorporated  by reference  in Part III of this Form 10-KSB or any  amendment to
this Form 10-KSB. [ ]

Indicate by check mark whether the  registrant is a shell company (as defined in
Rule 12b-2 of the Exchange Act)

                                 Yes [ ] No [X]

Our revenues for our most recent fiscal year were $ 8,157,390.

The aggregate  market value of the voting and  non-voting  common equity held by
non-affiliates of Law Enforcement  Associates  Corporation computed by reference
to the price at which the common  equity was sold,  or the average bid and asked
price of such common equity,  as of a specified date within the past 60 days was
$21,383,225  as of April 14,  2006,  based on the average bid and asked price of
$2.15 per share as of that date.

There were 25,152,433 shares of common stock, $.001 par value, outstanding as of
April 14, 2006.
<PAGE>
NOTE CONCERNING FORWARD-LOOKING STATEMENTS

     This Report  contains  certain  forward-looking  statements,  including the
plans and  objectives of management for the business,  operations,  and economic
performance  of  Law  Enforcement   Associates  Corp.  (the  "Company").   These
forward-looking  statements  generally  can be  identified by the context of the
statement or the use of words such as the Company or its management  "believes,"
"anticipates,"  "intends,"  "expects,"  "plans"  or  words of  similar  meaning.
Similarly,  statements that describe the Company's future operating performance,
financial results, plans, objectives,  strategies,  or goals are forward-looking
statements.  Although  management  believes that the assumptions  underlying the
forward-looking   statements  are   reasonable,   these   assumptions   and  the
forward-looking   statements   are  subject  to  various   factors,   risks  and
uncertainties, many of which are beyond the control of the Company. Accordingly,
actual  results  could  differ   materially  from  those   contemplated  by  the
forward-looking  statements.  In  addition  to the other  cautionary  statements
relating to certain forward-looking statements throughout this Report, attention
is directed to "Business --  Cautionary  Information  Regarding  Forward-Looking
Statements" below for discussion of some of the factors, risks and uncertainties
that could affect the outcome of future results  contemplated by forward-looking
statements.

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<PAGE>
                                     PART I

ITEM 1. DESCRIPTION OF BUSINESS.

     Law  Enforcement  Associates  Corporation  (f/k/a Academy  Resources  Inc.)
(hereinafter  referred to as the  "Company")  was  incorporated  on May 14, 1998
under the laws of the State of Nevada for the purpose of mining and exploration.
On  December  3, 2001,  the  Company  and Law  Enforcement  Associates  Inc.  (a
privately-owned  New Jersey  corporation doing business in North Carolina),  and
Sirchie Finger Print Laboratories,  Inc. ("Sirchie") the sole shareholder of Law
Enforcement  Associates,  Inc.  entered  into a Share  Exchange  Agreement  (the
"Agreement")  pursuant to which  Sirchie  tendered to the Company all issued and
outstanding  shares of  common  stock of Law  Enforcement  Associates,  Inc.  in
exchange for 8,333,333  shares of restricted  common stock of the Company.  As a
result  of  the  transaction,   Law  Enforcement  Associates,  Inc.  became  our
wholly-owned subsidiary. At the date of the acquisition,  Mr. John Carrington, a
59% shareholder of the Company,  was also the beneficial majority stockholder of
Law Enforcement Associates,  Inc. The acquisition was accounted for as a pooling
of interests due to the common control of both companies. Upon completion of the
Share  Exchange,   Academy  changed  its  name  to  Law  Enforcement  Associates
Corporation.

     On June 3, 2004,  we entered into two separate and distinct  agreements  to
acquire  assets.  The first  agreement  was  between  us and Audio  Intelligence
Devices ("AID"), Inc., a privately held manufacturer of electronic  surveillance
equipment  to  law  enforcement  and  government  agencies.   Pursuant  to  that
agreement,  we purchased  some of AID's  inventory  and equipment for a purchase
price of $540,000, payable $200,000 in cash, and $340,000 payable over 34 months
in increments of $10,000 per month.

     In a separate transaction,  we acquired surveillance equipment from a third
party. The surveillance  equipment will be integrated into our business. We paid
the third party 2,400,000  shares of our restricted  redeemable  common stock in
exchange for drawings and the trade name of "AID".

     On September 14, 2004, we closed on two separate and distinct agreements to
acquire  certain  patents  which  relate to Less  Lethal,  Electrical  Discharge
Weapons  ("EDW").  The first was  agreement was between us and James F. McNulty,
Jr. , whereby in exchange for 750,000 shares of our restricted  common stock, we
acquired  patents  which  relate  to EDW and  more  specifically  a  method  and
apparatus for increasing the effectiveness of the electrical  discharge for such
weapons.  The second  agreement  was with Yong S. Park  whereby in exchange  for
750,000 shares of our restricted  common stock, we will acquired certain patents
which relate to EDW, including a guard propulsion system for a remote electrical
discharge  weapon.  In addition,  we agreed to issue James F.  McNulty,  Jr., an
additional  20,000 shares of our  restricted  common stock in exchange for molds
which he had already  developed  which relate to EDW. To further the development
of the EDW, we also entered into consulting  agreements with James McNulty, Sr.,
and John  Chuddy,  II whereby  they agreed to assist us in the  development  and
manufacturing design of the EDW.

     We manufacture and distribute undercover  surveillance products including a
complete  line of audio  surveillance  equipment  that  allows  law  enforcement
agencies  to  monitor  conversations.  In  addition,  we have an  array of video
surveillance   products  ranging  from  disguised  miniature  cameras  to  video
transmission and recording  systems.  We offer our Bloodhound Global Positioning
Tracking System,  which is a global positioning  tracking system. The Bloodhound
Global  Positioning  Tracking  System is a global  positioning  system  receiver
combined with a cellular telephone that allows undercover surveillance agents to
monitor the movements of a vehicle.  The agent will call the Bloodhound Tracking
unit through a telephone and will be enabled to track the target vehicle in real

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<PAGE>
time or view the  target  vehicles  movements  over a period  of time.  The unit
records longitude and latitude data points that are transcribed via our computer
software onto a mapping program for viewing.  The Bloodhound Global  Positioning
Tracking System has been one of our leading products.  Finally, we also sell the
under  vehicle  inspection  system  ("UVIS"),  which also is one of our  leading
products.  The UVIS is used to view  the  underside  of  vehicles  entering  and
exiting secure areas or facilities for explosive  devices and other  contraband.
UVIS  provides  a  clear,  high  contrast  real-time  video  inspection  of  the
undercarriage of cars, vans and trucks.  Our products are used by military,  law
enforcement, security and corrections personnel throughout the world, as well as
governmental   agencies,   multinational   corporations   and   non-governmental
organizations.

     Our  products  are  marketed  under brand names such as Audio  Intelligence
Devices(AID) Bloodhound Global Positioning Tracking System and the Under Vehicle
Inspection   System.  We  sell  our  manufactured   products  primarily  to  law
enforcement agencies through sales representatives located throughout the United
States and at our home office in Youngsville,  North Carolina as well as through
our web site located at www.leacorp.com.

     We believe there are significant  opportunities  to grow our  manufacturing
business through the acquisition and development of new product lines, expansion
into new  territories  and  further  development  of sales  to  specialized  law
enforcement,  government  and military  agencies.  In addition,  we believe that
consistent  demand for our premium  products will continue  because our products
are critical to the safety and effectiveness of our customers.

Industry Overview/Market Opportunity

     We  participate  in  the  law  enforcement  and  global  security  products
industries  through the manufacture of surveillance and  intelligence  gathering
security   products  marketed  to  military,   law  enforcement,   security  and
corrections personnel.  The two types of products that we sell can be defined as
two separate business groups, which include the surveillance equipment group and
the under  vehicle  inspection  system  ("UVIS")  group.  The first group or the
surveillance  equipment  component  is  primarily  marketed  to law  enforcement
agencies for  undercover  police work.  The second group or the UVIS  component,
which can be marketed to a variety of military,  law  enforcement,  security and
corrections  personnel,  is  primarily  marketed  and sold to the  U.S.  federal
government to secure its facilities such as military bases, government complexes
and high visibility areas in order to prevent terrorist  attacks.  Increasingly,
law enforcement  agencies have recognized the need for our products and services
to assist them in surveillance  operations in order to protect their communities
from the risks associated with terrorism, physical attacks, threats of violence,
white-collar crime, fraud and other criminal operations or enterprises.

Growth Strategy

     We expect the demand for our surveillance  products to continue to grow. We
plan to address  this growth by offering a  comprehensive  array of security and
surveillance risk management products.

     We plan to  continue  to execute  this growth  strategy  primarily  through
internal expansion of our existing businesses.

     The following elements define our growth strategy:

     o    Capitalize on Exposure to Law  Enforcement  Agencies.  We believe that
          our current exposure to our current law enforcement agencies will lead
          to an increase in sales from these customers.

     o    Expand Distribution Network and Product Offerings. We will continue to
          leverage our  distribution  network by expanding  our range of branded
          law  enforcement  equipment by investing in the development of new and
          enhanced products which complement our existing  products.  We believe
          that as a result of our  acquisition of the AID name, logo and designs
          that it has  further  broadened  our  product  line and  enabled us to
          strengthen our  relationship  with law enforcement  agencies and other
          end users.  We are still in the  process of  developing  a less lethal
          weapon  (Stun  Pistol)  and have  completed  proto types of it. We are
          currently   negotiating   with   several   companies  to  license  the
          manufacture and sale of that weapon.


     Our distribution  network presently consists of 8 employees and seven sales
representatives that operate as independent contractors.  The four employees are
responsible for advertising,  direct mailing,  answering sales calls,  providing
technical  help,  attending  trade shows and forwarding  leads to the five sales
representatives.  Typically we will enter into  agreements with each of our sale
representatives,  which  allows the  representative  to sell our  products  in a
certain  geographical area. The agreements provide that the sales representative
will  receive  a  commission  within  the range of 10% to 20%  depending  on the
product sold.

                                       4
<PAGE>
Products

     We  manufacture  and  distribute  a  complete  line of  audio  surveillance
equipment including radio frequency transmitters,  receivers,  and repeaters for
use in surveillance  and  intelligence  gathering  operations by law enforcement
agencies.  In addition,  we have an array of video surveillance products ranging
from disguised miniature cameras to video transmission and recording systems. We
also  manufacture  and  distribute the Bloodhound  Global  Positioning  tracking
system and the Under  Vehicle  Inspection  System.  Each of our  products may be
manufactured to each of our clients' specifications.  The following is a summary
of the surveillance products that we manufacture and sell:


     UVIS - UVIS is an under vehicle inspection system, which we manufacture and
sell. UVIS is used to view the underside of vehicles entering and exiting secure
areas or facilities for explosives and contraband.  UVIS provides a clear,  high
contrast  real-time  video  inspection of the  undercarriage  of cars,  vans and
trucks  at  entry  points  in half the time of the  standard  inspection  mirror
search. In a government field test performed by the U.S. military,  the UVIS was
compared to standard  inspection mirror searches.  The results of the government
field test  indicated that the UVIS, as compared to standard  mirror  inspection
searches, had a higher percentage of target acquisitions,  which is the locating
and  preventing  of  explosives  and other types of  contraband  from entering a
protected facility.

     LEA BLOODHOUND  GLOBAL  POSITIONING  TRACKING  SYSTEM(TM)  utilizes  global
positioning  system technology in order to provide  surveillance  operatives the
ability  to  conduct  discrete  vehicle  tracking  and  monitoring.  The  global
positioning system is integrated with a cellular telephone and records longitude
and  latitude  data  points  anywhere  in  the  United  States.  A  surveillance
operative,  after  affixing  the  Bloodhound  to  a  vehicle,  can  contact  the
Bloodhound  Global  Positioning  System  through  any  telephone  and  track its
movements in real time or download the data points at  predetermined  intervals.
The Bloodhound Global  Positioning  readings are saved along with time and date,
which can then be superimposed onto mapping software, which may be utilized by a
standard  computer.  The  software  will  provide a "track"  of where and when a
target vehicle has been. The Bloodhound Global Positioning is limited in that an
agent will not be able to track a target  vehicle when the vehicle is outside of
cell phone  coverage.  However,  all data is saved and can be retrieved once the
target  vehicle  re-enters  cell  phone  coverage.  This  device  can be mounted
covertly on a target vehicle, and measures a compact size of 3"x4" x1.5".


     SYNTHESIZED AUDIO INTELLIGENCE  SYSTEM is a comprehensive  bodywire,  which
includes  microphone,  transmitter and receiver that is manufactured to military
standards.  It allows for the  transmitting  and  receiving  of voice data for a
distance depending on the watt level. Generally,  one watt of transmitting power
equates to a range of one mile.  This product  includes a FM receiver,  a rugged
under panel design,  a LCD battery  tester,  9-volt battery  tester,  audio line
output to a VCR and a voice scrambler. The Synthesized Audio Intelligence System
allows  law  enforcement  agencies  to engage  in  various  types of  undercover
operations  whereby all  conversations  engaged in by the  undercover  agent are
transmitted and recorded.


     SYNTHESIZED  TACTICAL  INTELLIGENCE  SYSTEM  is  a  combined  receiver  and
transmitter  that has a compact  design,  which enables it to be used for varied
surveillance situations. This products allows for the transmitting and receiving
of voice  data  within a one mile  range.  This  product  comes  with a built in
recorder as well as weather and water resistant case.

     GROUND HOG COVERT  UNATTENDED  VIDEO  SURVEILLANCE  SYSTEM is  specifically
designed for unattended  covert  outdoor  surveillance  of targets  ranging from
marijuana fields and drug labs to suspected larceny in a variety of fields.  The
Ground Hog utilizes a camouflaged  pinhole camera in a  weatherproof  housing to
view the targeted area. Images from the camera are recorded on the system's VCR.
The monitor station is also camouflaged and housed in a weather  resistant steel
case. The Ground Hog also utilizes a standby mode whereby its infrared, wireless
motion  detector  automatically  switches  the Ground Hog from standby to active
when  someone  walks  into the  target  area.  The  Ground Hog also comes with a
wireless option.

     LEA 6300 SERIES/AID  9400 SERIES - these include a variety of repeaters.  A
repeater is designed to work together with each of our  transmitters to increase
the distance that voice data may be monitored.  Our standard  transmitter allows
for monitoring within a one mile range.  However, a transmitter that is combined
with a repeater will be able to monitor  voice data with a two mile range.  With
the designs  which were  obtained  thru the purchase of some of AID's assets the
repeater systems will begin to be totally  synthesized.  This synthesized design
will enable LEA/AID to reduce manufacturing time for its repeater products.  Our
repeaters come in various designs including the following:

                                       5
<PAGE>
     o    Disguised Car Battery Repeater
     o    Weatherproof Tactical Repeater
     o    Briefcase Repeater
     o    Disguised Book Bag Repeater
     o    Gym Bag Repeater
     o    Disguised AM/FM Radio Repeater
     o    Miniature Portable Repeater
     o    Synthesized Repeater

     LEA 7000 SERIES /AID 9000 SERIES - these include a variety of  transmitters
and  accessories.  A  transmitter  is a device  that is hidden on an  undercover
agent,  which allows the law enforcement  agency to monitor the audio data. Each
of these transmitters come with various features including different designs and
transmit  power levels.  The  transmitters  are  available in various  disguised
formats  which  enable  these  items  to be  used  in  various  law  enforcement
operations.  With the designs  which were  obtained thru the purchase of some of
AID's  assets  the  transmitter  will  begin to be  totally  synthesized  . This
synthesized  design will  enable  LEA/AID to reduce  manufacturing  time for its
transmitter products. The designs that the transmitter are available in, include
the following:

     o    Denim Jacket Transmitter
     o    Flat Pack Transmitter
     o    Baseball Cap Transmitter
     o    Wristwatch Transmitter
     o    Garage Door Opener Transmitter
     o    Tape Measure Transmitter
     o    Radar Detector Transmitter
     o    Cigarette Transmitter
     o    Strip Outlet Transmitter
     o    1-Watt Transmitter
     o    Disguised Walkman Transmitter
     o    Miniature Transmitter
     o    Semi-Functional "Flex" Style Pager Transmitter
     o    Functional "Flex" Style Pager Transmitter
     o    Bravo Pager Transmitter
     o    Nokia or Motorola Cellular Telephone Battery Transmitter
     o    Nokia Digital Wireless Battery Transmitter
     o    Board Transmitter
     o    Nokia Digital Wireless Battery Transmitter
     o    Digital Scale transmitter
     o    Motorola /Nextel Battery transmitter

     VIDEO TRANSMISSION SYSTEMS - These transmissions systems provide both audio
and video surveillance capabilities. We have a variety of transmitters including
a disguised  sports cup video  transmission  system,  jean jacket video  system,
radar  detector,  video tape box, VCR, smoke  detector and clock radio.  Each of
these items includes a black and white and color camera, a video transmitter, an
audio transmitter and a directional antenna. The transmissions systems also come
in a transmitter/receiver combo.

     VIDEO SURVEILLANCE SYSTEMS - We offer video surveillance systems, which are
concealed in enclosures  resembling pole mounted  transformer and utility boxes.
These items come with a command control unit,  which includes a display monitor,
video  recorder/player  and digital  proportional "joy stick"  pan/tilt/control,
which is enclosed in a single portable carrying case.

     DISGUISED  ANTENNAS  which are  compatible  with all of our  receivers  and
repeaters.  The antennas are sold in various  disguises  including as a cellular
antenna, coat hanger, tissue box and cassette/CD box.

     DIGITLAL  PINHOLE  SURVEILLANCE  SYSTEM - includes a Digital video recorder
with pop-up monitor,  time/date generator and black and white mount cameras that
may be used for surveillance in automobiles and hotel rooms.

     DIGITAL  NOISE  FILTER  - This  item  can be  used to  cancel  up to 95% of
background noise for greater intelligibility of recordings.

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     DISGUISED  VIDEO/AUDIO RECORDING SYSTEM - incorporates a complete video and
audio  recording  system housed in a common  tote/gym  bag-style  carrying case.
Includes a Digital video cassette recorder, an integrated time/date generator, a
miniature  camera  with a wide angle lens and highly  sensitive  condenser  type
microphone.  Book Bag  Disguised  System - this is a  complete  video  and audio
recording  system  housed  and  disguised  in a common  book  bag.  This  system
incorporates a video cassette recorder, an integrated time and date generator, a
miniature  black and white  camera  with wide angle lens and a highly  sensitive
condenser type microphone.

Customers

     The  primary end users of our  products  are  federal,  state and local law
enforcement agencies,  local police departments,  state corrections  facilities,
U.S. and allied militaries,  highway patrols,  sheriffs'  departments and select
private security personnel.  Furthermore, the UVIS, one of our leading products,
may be sold both within the United States and abroad.

     We reach these  customers  through a  distribution  strategy  that utilizes
approximately seven sales representatives that are independent contractors and a
four person in-house sales team,  direct  mailings,  catalogs and trade shows as
well as our web site on the Internet located at www.lea-sales.com.

Marketing

     We market  and  distribute  our  products  directly  to the  military,  law
enforcement   agencies,   security  and  corrections   personnel  through  sales
representatives  and through our web site  located at  www.leacorp.com  , direct
mailings, catalogs and trade shows. Management believes that direct sales to end
users should allow us to more efficiently and effectively meet customer needs by
providing products which are tailored for the customer's individual requirements
at a more economical price. Typically we will enter into agreements with each of
our sale  representatives,  which allows the representative to sell our products
in  a  certain   geographical  area.  The  agreements  provide  that  the  sales
representative  will  receive  a  commission  within  the  range  of  10% to 20%
depending on the product  sold.  The standard  agreement  also provides that the
sales  representative  will not sell or handle  products  that  compete with our
products.

Product Manufacturing and Raw Materials

     All final assembly of our products is completed at our facility  located in
Youngsville,  North  Carolina.  The  manufacture  process  is a basic  procedure
whereby our manufacturing  employees assemble each of the products utilizing the
raw materials.  This process includes a sub assembly procedure for general items
and a final assembly for each specific product. We currently employ 12 employees
in the manufacturing sector.

     The raw materials used in manufacturing  our products include various items
ranging  from  screws,  adhesive,  circuit  boards  and  enclosures,  which  are
available  from a  multitude  of  suppliers  throughout  the United  States.  We
purchase these raw materials directly from the manufacturers. We believe that we
enjoy a good  relationship  with these  companies.  However,  if  necessary,  we
believe that we could readily find  replacement  manufacturers.  We are aware of
multiple  suppliers for these  materials and would not  anticipate a significant
impact if we were to lose any suppliers.

Competition

     The market for our  surveillance  products is not highly  competitive.  The
market for surveillance  products is basically  comprised of one competitor with
each  of  us  having  an  equal  market  share.  Our  prime  competitor  is  DTC
Communications,  Inc. No company in the surveillance products market is dominant
with  respect  to any one  specific  area nor does any  company  have more brand
recognition,  greater financial resources or any other advantage which may allow
them to compete more  effectively.  We believe we compete by providing  superior
design,  engineering  and  production  expertise  in our  line  of  surveillance
products.  The principal competitive factors for all of our products are quality
of engineering and design, reputation in the industry, production capability and
capacity,  price and ability to meet delivery  schedules.  We know of no company
that  manufactures and sells the Under Vehicle  Inspection System built with the
same  specifications.  However,  we do compete with companies that sell standard
inspection  search  mirrors,  which  are  used in  searching  the  underside  of
vehicles.  Although  the mirrors are less costly than the UVIS,  we believe that
the UVIS is more effective in detecting explosives and other contraband.

     As stated  above,  we are in the final  process of developing a EDW weapon,
and as a result,  we anticipate that we will come into direct  competition  with
Taser  International,  Inc.  ("Taser").  Taser is the leading  manufacturer  and
supplier  to law  enforcement  agencies  of less  lethal,  electrical  discharge
weapons.  While  Taser  is the  leader  in the  industry  and has  more  capital

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resources than we presently have, we believe that our new weapon will be able to
compete in the market with Taser as we believe our weapon is better designed and
has better features. There is no assurance,  however, that we will be successful
in  bringing  the EDW weapon to market or that if we do, that we will be able to
successfully compete with Taser.

Patents and Trademarks

     Other than the patents  described  above,  we do not hold any other patents
relating to any of our other products or related technologies. We have trademark
protection  for the name "LEA , AID, Audio  Intelligence  Devices and Bloodhound
Global Positioning Tracking System(TM)."

Governmental Regulation

     We are subject to federal  licensing  requirements with respect to the sale
in foreign  countries of certain of our  products.  However,  the under  vehicle
inspection  system is not restricted by the U.S.  Department of Commerce and may
be exported.  We have sold the UVIS  outside of the United  States and intend to
continue doing so.

     We are also obligated to comply with a variety of federal,  state and local
regulations,  both  domestically  and abroad,  governing  certain aspects of our
operations and the workplace including regulations relating to workplace safety,
fair labor standards, taxes, product safety and discrimination. Additionally, as
a  government  contractor,  we are subject to rules,  regulation  and  approvals
applicable to government contractors.

     We are also  regulated by the U.S.  Department of Justice under the Omnibus
Crime Control and Safe Streets Act of 1968, as amended (the "Omnibus Act"), as a
result of our sale of  listening  and  surveillance  devices.  The  Omnibus  Act
prohibits the manufacture,  possession,  sale and  advertisement of devices that
that would be useful for the purpose of the surreptitious  interception of wire,
oral or electronic  communications.  However, the Omnibus Act also provides that
it is not illegal for a party to manufacture,  sell or advertise a surreptitious
listening  device if that party is under contract to  manufacture  and sell such
device with the United States, a state or a political  subdivision thereof which
is authorized to use such device

Environmental Matters

     We are subject to federal,  state, and local laws and regulations governing
the protection of the environment,  including those regulating discharges to the
air and water,  the  management  of wastes,  and the control of noise and odors.
Like all companies, we are subject to potentially significant fines or penalties
if we fail to comply with environmental requirements.  We do not expect material
capital expenditures for environmental controls in 2002. However,  environmental
requirements are complex, change frequently,  and could become more stringent in
the future.

     Accordingly,  we cannot assure you that these  requirements will not change
in a manner that will require material capital or operating expenditures or will
otherwise have a material adverse effect on us in the future.

Employees

     As of April 12, 2005, we have a total of  approximately  25  employees,  of
which  approximately  7 were employed  within the sales and  marketing  area and
approximately 18 were employed in the manufacturing  area. None of our employees
are  represented  by a labor union.  We believe that our employee  relations are
good.

ITEM 2. DESCRIPTION OF PROPERTY.

     On February  1, 2002,  which lease was amended on August 1, 2005 we entered
into a lease with  Sirchie  Finger  Print  Laboratories,  Inc.  ("Sirchie").  We
currently lease  approximately  16,000 square feet of space for our Youngsville,
North Carolina,  headquarters at  approximately  $14,183 per month. The lease is
automatically  renewable  for periods of one-year  unless  either of the parties
provides a written notice of termination no later than 120 days prior to the end
of the term or renewal  term.  If our current lease is terminated or not renewed
we believe we will be able to lease similar premises at comparable prices.

                                       8
<PAGE>
     Sirchie owns  approximately  33.1% of our common stock. Mr.  Carrington,  a
majority  shareholder,  serves as the President,  Chief Executive  Officer and a
director  of  Sirchie  and also owns 69.1% of its  outstanding  shares of common
stock.

ITEM 3. LEGAL PROCEEDINGS

     From  time  to  time,  we may be a  party  to  litigation  or  other  legal
proceedings  that we would  consider to be a part of the ordinary  course of our
business.  We are  not  involved  currently  in  legal  proceedings  that  could
reasonably  be  expected  to have a  material  adverse  effect on our  business,
prospects,  financial condition or results of operations. We may become involved
in material legal proceedings in the future.

ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS.

     No matter was  submitted  to a vote of security  holders  during the fourth
quarter of the  current  fiscal  year  through  the  solicitation  of proxies or
otherwise.

                                     PART II

ITEM 5. MARKET FOR REGISTRANT'S COMMON EQUITY AND RELATED STOCKHOLDER MATTERS.

PRICE RANGE OF COMMON EQUITY

     Our common stock is currently  traded on the American  Stock  Exchange (the
"OTCBB"),  under the symbol "AID." Our stock  commenced  trading on the American
Stock Exchange on July 15, 2005.  Prior to that, the Company's  common stock was
traded  under  the  symbol  LENF  on  the  Over-The-Counter-Bulletin-Board.  The
following table sets forth, for the fiscal quarter  indicated,  the high and low
closing price per shares for the common stock as reported by either the American
Stock Exchange or the Over-The-Counter-Bulletin-Board.


------------------------------- ----------------------- ------------------------
                                 High                    Low
------------------------------- ----------------------- ------------------------
2004                              $                       $
 ------------------------------- ----------------------- -----------------------
First Quarter                    0.65                    0.26
------------------------------- ----------------------- ------------------------
Second Quarter                   1.19                    0.47
------------------------------- ----------------------- ------------------------
Third Quarter                    2.30                    0.61
------------------------------- ----------------------- ------------------------
Fourth Quarter                   6.78                    1.85
------------------------------- ----------------------- ------------------------
2005
------------------------------- ----------------------- ------------------------
First Quarter                   12.70                    3.60
------------------------------- ----------------------- ------------------------
Second Quarter                   4.55                    2.00
------------------------------- ----------------------- ------------------------
Third Quarter                    5.15                    1.68
------------------------------- ----------------------- ------------------------
Fourth Quarter                   3.25                    1.51
------------------------------- ----------------------- ------------------------

The per share  closing  sales price of the common stock as reported by the OTCBB
on April 13, 2006, (the date of the last reported sale) was $1.62.

Securities Authorized for Issuance under Equity Compensation Plans

As of April 13, 2005,  there were  approximately  3,000 holders of record of our
common stock. We had the following securities  authorized for issuance under the
equity   compensation   plans:

<TABLE>
<CAPTION>
                                                Number of Securities to be  Weighted-average   Number of securities
                                                 issued upon exercise of     exercise price     remaining available
                                                   outstanding options,      of outstanding     for future issuance
                                                    warrants and rights         options,            under equity
                                                                              warrants and       compensation plans
                                                                                rights         (excluding securities
Plan Category                                                                                  reflected in column (a)
<S>                                                          <C>                 <C>                    <C>
Equity compensation plans approved by security
holders                                                      N/A                 N/A                    N/A
Equity compensation plans not approved by
security holders                                          65,000               N/A(1)                935,000
Total                                                     65,000               N/A(1)                935,000
</TABLE>
                                       9
<PAGE>
(1) Pursuant to its 2002 Stock  Incentive  Plan,  the Company has issued  65,000
shares of common stock to employees and consultants of the Company. These shares
are not  options,  warrants  or rights and,  therefore,  do not have an exercise
price.

2002 Stock Incentive Plan
-------------------------

     The following is a summary of principal features of the 2002 Employee Stock
Option Plan. The summary, however, does not purport to be a complete description
of all the provisions of the 2002 Employee Stock Incentive Plan.

GENERAL

     The  2002  Employee  Stock  Incentive  Plan  was  adopted  by the  Board of
Directors on November 7, 2002.  The Board of Directors  has  initially  reserved
1,000,000  shares of Common Stock for  issuance  under the 2002  Employee  Stock
Incentive  Plan.  Under the Plan,  options may be granted  which are intended to
qualify as Incentive  Stock Options  ("ISOs")  under Section 422 of the Internal
Revenue  Code of 1986 (the  "Code") or which are not  ("Non-ISOs")  intended  to
qualify as Incentive Stock Options thereunder. The 2002 Employee Stock Incentive
Plan and the right of participants to make purchases  thereunder are intended to
qualify as an "employee  stock  purchase plan" under Section 423 of the Internal
Revenue Code of 1986, as amended (the "Code"). The 2002 Employee Stock Incentive
Plan is not a qualified  deferred  compensation plan under Section 401(a) of the
Internal  Revenue  Code and is not  subject to the  provisions  of the  Employee
Retirement Income Security Act of 1974 ("ERISA").

PURPOSE

     The primary purpose of the 2002 Employee Stock Incentive Plan is to attract
and retain the best available  personnel for the Company in order to promote the
success  of the  Company's  business  and to  facilitate  the  ownership  of the
Company's  stock  by  employees.  In the  event  that the  2002  Employee  Stock
Incentive  Plan is not adopted the Company may have  considerable  difficulty in
attracting  and  retaining   qualified   personnel,   officers,   directors  and
consultants.

ADMINISTRATION

     The 2002 Employee Stock Incentive Plan, when approved, will be administered
by the Company's  Board of Directors,  as the Board of Directors may be composed
from time to time.  All questions of  interpretation  of the 2002 Employee Stock
Incentive  Plan are  determined  by the Board,  and its  decisions are final and
binding upon all participants. Any determination by a majority of the members of
the Board of  Directors  at any  meeting,  or by  written  consent  in lieu of a
meeting, shall be deemed to have been made by the whole Board of Directors.

     Notwithstanding  the foregoing,  the Board of Directors may at any time, or
from time to time, appoint a committee (the "Committee") of at least two members
of the Board of  Directors,  and delegate to the  Committee the authority of the
Board of Directors to administer the Plan. Upon such appointment and delegation,
the Committee  shall have all the powers,  privileges and duties of the Board of
Directors,  and  shall  be  substituted  for  the  Board  of  Directors,  in the
administration of the Plan, subject to certain limitations.

     Members of the Board of Directors who are eligible  employees are permitted
to participate in the 2002 Employee Stock Incentive Plan, provided that any such
eligible member may not vote on any matter affecting the  administration  of the
2002 Employee Stock Incentive Plan or the grant of any option pursuant to it, or
serve on a committee  appointed to administer the 2002 Employee Stock  Incentive
Plan.  In the event that any member of the Board of Directors is at any time not
a "disinterested person", as defined in Rule 16b-3(c)(3)(i) promulgated pursuant
to the Securities  Exchange Act of 1934, the Plan shall not be  administered  by
the Board of Directors,  and may only by  administered  by a Committee,  all the
members of which are disinterested persons, as so defined.

ELIGIBILITY

     Under the 2002 Employee Stock Incentive Plan, options may be granted to key
employees, officers, directors or consultants of the Company, as provided in the
2002 Employee Stock Incentive Plan.

                                       10
<PAGE>
TERMS OF OPTIONS

     The term of each  Option  granted  under the Plan shall be  contained  in a
stock option agreement between the Optionee and the Company and such terms shall
be determined by the Board of Directors  consistent  with the  provisions of the
Plan, including the following:

     (a) Purchase Price. The purchase price of the Common Shares subject to each
ISO  shall  not be less  than the fair  market  value  (as set forth in the 2002
Employee  Stock  Option  Plan),  or in  the  case  of the  grant  of an ISO to a
Principal  Stockholder,  not less than 110% of fair market  value of such Common
Shares at the time such  Option is  granted.  The  purchase  price of the Common
Shares  subject to each Non-ISO  shall be  determined at the time such Option is
granted,  but in no case less than 85% of the fair  market  value of such Common
Shares at the time such  Option is  granted.  The  purchase  price of the Common
Shares subject to each Non-ISO.

     (b) Vesting.  The dates on which each Option (or portion  thereof) shall be
exercisable  and the  conditions  precedent to such  exercise,  if any, shall be
fixed by the Board of Directors,  in its discretion,  at the time such Option is
granted.

     (c)  Expiration.  The expiration of each Option shall be fixed by the Board
of Directors,  in its discretion,  at the time such Option is granted;  however,
unless otherwise determined by the Board of Directors at the time such Option is
granted,  an Option  shall be  exercisable  for ten (10) years after the date on
which it was granted (the "Grant Date"). Each Option shall be subject to earlier
termination as expressly  provided in the 2002 Employee Stock  Incentive Plan or
as  determined by the Board of Directors,  in its  discretion,  at the time such
Option is granted.

     (d) Transferability. No Option shall be transferable, except by will or the
laws of descent and  distribution,  and any Option may be  exercised  during the
lifetime of the Optionee only by him. No Option  granted under the Plan shall be
subject to execution, attachment or other process.

     (e)  Option  Adjustments.  The  aggregate  number and class of shares as to
which Options may be granted under the Plan, the number and class shares covered
by each outstanding Option and the exercise price per share thereof (but not the
total price), and all such Options,  shall each be proportionately  adjusted for
any  increase  decrease in the number of issued  Common  Shares  resulting  from
split-up  spin-off or consolidation of shares or any like Capital  adjustment or
the payment of any stock dividend.

Except as otherwise  provided in the 2002 Employee  Stock  Incentive  Plan,  any
Option   granted   hereunder   shall   terminate  in  the  event  of  a  merger,
consolidation,  acquisition of property or stock, separation,  reorganization or
liquidation  of  the  Company.  However,  the  Optionee  shall  have  the  right
immediately  prior to any such transaction to exercise his Option in whole or in
part notwithstanding any otherwise applicable vesting requirements.

     (f)  Termination,  Modification  and  Amendment.  The 2002  Employee  Stock
Incentive  Plan (but not  Options  previously  granted  under  the  Plan)  shall
terminate  ten (10) years from the  earlier of the date of its  adoption  by the
Board of Directors or the date on which the Plan is approved by the  affirmative
vote of the holders of a majority of the outstanding  shares of capital stock of
the  Company  entitled to vote  thereon,  and no Option  shall be granted  after
termination of the Plan.  Subject to certain  restrictions,  the Plan may at any
time  be  terminated  and  from  time  to time be  modified  or  amended  by the
affirmative  vote of the holders of a majority of the outstanding  shares of the
capital stock of the Company present, or represented,  and entitled to vote at a
meeting  duly  held in  accordance  with  the  applicable  laws of the  State of
Delaware.

FEDERAL INCOME TAX ASPECTS OF THE 2002 EMPLOYEE STOCK INCENTIVE PLAN

THE FOLLOWING IS A BRIEF SUMMARY OF THE EFFECT OF FEDERAL  INCOME  TAXATION UPON
THE  PARTICIPANTS  AND THE COMPANY  WITH RESPECT TO THE PURCHASE OF SHARES UNDER
THE 2002  EMPLOYEE  STOCK  INCENTIVE  PLAN.  THIS SUMMARY DOES NOT PURPORT TO BE
COMPLETE AND DOES NOT ADDRESS THE FEDERAL INCOME TAX  CONSEQUENCES  TO TAXPAYERS
WITH  SPECIAL  TAX  STATUS.  IN  ADDITION,  THIS  SUMMARY  DOES NOT  DISCUSS THE
PROVISIONS OF THE INCOME TAX LAWS OF ANY MUNICIPALITY,  STATE OR FOREIGN COUNTRY
IN WHICH THE PARTICIPANT MAY RESIDE, AND DOES NOT DISCUSS ESTATE,  GIFT OR OTHER
TAX CONSEQUENCES  OTHER THAN INCOME TAX  CONSEQUENCES.  THE COMPANY ADVISES EACH
PARTICIPANT TO CONSULT HIS OR HER OWN TAX ADVISOR REGARDING THE TAX CONSEQUENCES
OF PARTICIPATION IN THE 2002 EMPLOYEE INCENTIVE OPTION PLAN AND FOR REFERENCE TO
APPLICABLE PROVISIONS OF THE CODE.

                                       11
<PAGE>
     The 2002 Employee  Stock  Incentive Plan and the right of  participants  to
make  purchases  thereunder  are  intended to qualify  under the  provisions  of
Sections 421, 422 and 423 of the Code. Under these provisions, no income will be
recognized by a participant  prior to disposition  of shares  acquired under the
2002 Employee Stock Incentive Plan.

     If the shares are sold or otherwise  disposed of (including by way of gift)
more than two years  after the first day of the  offering  period  during  which
shares were  purchased (the "Offering  Date"),  a participant  will recognize as
ordinary income at the time of such  disposition the lesser of (a) the excess of
the fair  market  value of the shares at the time of such  disposition  over the
purchase  price of the shares or (b) 15% of the fair market  value of the shares
on the first day of the  offering  period.  Any  further  gain or loss upon such
disposition will be treated as long-term capital gain or loss. If the shares are
sold for a sale price less than the purchase price,  there is no ordinary income
and the participant has a capital loss for the difference.

     If the shares are sold or otherwise  disposed of (including by way of gift)
before the expiration of the two-year holding period described above, the excess
of the fair market  value of the shares on the  purchase  date over the purchase
price will be treated as ordinary  income to the  participant.  This excess will
constitute  ordinary income in the year of sale or other  disposition even if no
gain is realized on the sale or a gift of the shares is made. The balance of any
gain or loss will be  treated  as  capital  gain or loss and will be  treated as
long-term capital gain or loss if the shares have been held more than one year.

     In the  case of a  participant  who is  subject  to  Section  16(b)  of the
Exchange Act, the purchase date for purposes of calculating  such  participant's
compensation  income and  beginning of the capital  gain  holding  period may be
deferred  for up to six months under  certain  circumstances.  Such  individuals
should  consult  with their  personal  tax  advisors  prior to buying or selling
shares under the 2002 Employee Stock Incentive Plan.

     The ordinary income reported under the rules described above,  added to the
actual purchase price of the shares,  determines the tax basis of the shares for
the  purpose of  determining  capital  gain or loss on a sale or exchange of the
shares.

     The Company is entitled to a deduction for amounts taxed as ordinary income
to a participant  only to the extent that ordinary  income must be reported upon
disposition of shares by the  participant  before the expiration of the two-year
holding period described above.

RESTRICTIONS ON RESALE

     Certain  officers  and  directors  of  the  Company  may  be  deemed  to be
"affiliates"  of the Company as that term is defined under the  Securities  Act.
The Common Stock  acquired  under the 2002 Employee  Stock  Incentive Plan by an
affiliate may be reoffered or resold only pursuant to an effective  registration
statement or pursuant to Rule 144 under the Securities Act or another  exemption
from the registration requirements of the Securities Act.

ITEM 6. MANAGEMENT'S  DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS
OF OPERATIONS

     The statements contained herein are not purely historical  statements,  but
rather  include what we believe are  forward-looking  statements.  These include
statements  about our  expectations,  beliefs,  intentions or strategies for the
future, which are indicated by words or phrases such as "anticipate,"  "expect,"
"intend,"  "plan,"  "will," "we believe,"  "the company  believes",  "management
believes" and similar words or phrases. The forward-looking statements are based
on our current expectations and are subject to certain risks,  uncertainties and
assumptions,  including factors set forth in the following discussion and in the
discussions  under  "Business." Our actual results could differ  materially from
results  anticipated in these  forward-looking  statements.  All forward-looking
statements included in this document are based on information available to us on
the date hereof, and we assume no obligation to update any such  forward-looking
statements.

     We begin  Management's  Discussion and Analysis of Financial  Condition and
Results of  Operations  (MD&A)  with a brief  overview  of the events  which has
created  the  delay in  reporting  our year end  results  as we have  previously
referred to in the Form 8-K and NT 10-K filed on March 31, 2006.  On December 1,
2005 we  received  notice of an  informal  inquiry  by the  Securities  Exchange
Commission  ("SEC")  regarding the accounting  treatment for the  acquisition of
Audio  Intelligence  Devices  ("AID"),  Inc.  on June 3, 2004.  We had  recorded
Goodwill in the amount of  $1,952,799 on our year end Balance Sheet for December
31, 2004 along with other values for inventory and  equipment.  The  transaction
also  involved  a  possible  contingency  for a "put  option"  to the  seller of
$1,080,000 which was dependent on the market price of our stock on a date in the
future. This transaction was complex because it had characteristics of both debt

                                       12
<PAGE>
and equity  given up in exchange  for hard  assets and  intangible  assets.  Our
primary  purpose  for  acquiring  AID was the  brand  name and the  intellectual
property in the form of drawings and designs.  The name recognition has paid off
in fiscal year 2005 as AID products and repair revenue  accounted for 38% of our
sales.  After over four months of discussion with three accounting firms,  legal
counsel, a well known valuation firm, our audit committee and the SEC we come to
the following conclusion on April 13, 2006:

     1.   Goodwill should not have been recorded because as previously  reported
          this was an asset purchase not a business purchase.

     2.   We had to determine a fair value for all assets purchased-  Inventory,
          Equipment,  Drawings/Designs and the Trade Name.  Specifically we have
          now determined that the fair values of the  drawings/designs and trade
          name are $411,000 and  $1,400,000  respectively.  The useful lives for
          amortization are 10 years and 25 years respectively.

     3.   A present value of the  contingent  "put option" of $1,080,000 and the
          fair value of the common stock at acquisition  date($1,920,000) needed
          to  be  included  in  the  purchase  price  of  assets  as  long  as a
          possibility   of  redemption   existed.   The  proper   Balance  Sheet
          classification is to record the present value amount at each reporting
          date in the  mezzanine  section  between  liabilities  and  equity  as
          Redeemable  Common Stock.  In August of 2005 when the "put option" was
          not exercised the value of the Redeemable Common Stock is reclassified
          to permanent equity.

     4.   Per EITF D-98 when we added the  amount  for the "put  option"  to the
          purchase price, the consideration  given by us exceeded the fair value
          of assets  received by $903,416.  This amount  increased our operating
          expenses  for the  quarter  ended  June 30,  2004 and the year to date
          amounts for September 30, 2004 and the year end amount for 2004.

     The above items are explained in more detail in (Footnote 8 to our attached
Financial  Statements titled "ASSET PURCHASE  AGREEMENT.") The following results
of operations  include the above adjustments and we have also provided a summary
of the  restatements for the year ended 2004 and all quarters in 2005 at the end
of our footnotes.  The complexity of this  transaction  has caused a lot of time
and effort to be  expended,  but we now feel that our  balance  sheet  currently
represents  assets  that have been  evaluated  according  to current  acceptable
accounting standards and represent current fair values

     In our year end review we also became aware of an issue  related to revenue
recognition for the quarters ended March 31, 2005 and June 30, 2005.  Securities
and  Exchange   Commission  Staff  Accounting   Bulletin  ("SAB")  101,  Revenue
Recognition, as amended by SAB 104, outlines the basic criteria that must be met
to recognize  revenue and provides  guidance for presentation of revenue and for
disclosure related to revenue recognition policies in financial statements filed
with the Securities and Exchange Commission. We discovered upon review that on a
large government  contract that shipped in the quarters mentioned above that our
revenue  recognition policy did not conform to SAB 104 as we recorded revenue at
gross sales versus a fee for commissions.  We evaluated the criteria of the FASB
Emerging  Issues  Task  Force  ("EITF")  99-19,  Reporting  Revenue  Gross  as a
Principal  Versus Net as an Agent, in determining  whether it was appropriate to
record the gross amount of revenue and related costs or the net amount earned as
commissions. We did not act as the primary obligor and we did not pass title, we
were  not  subject  to  inventory  risk,  we did not  establish  prices,  select
suppliers,  establish product  specifications,  and we had no risk of loss as it
relates to the ultimate collection of accounts receivable. We mainly acted as an
agent  for a  commission.  The above  item is  explained  in more  detail in our
footnotes in the section of restatements for the first two quarters of 2005. The
following results of operations include the above adjustment also.

     Also  during our year end review we  discovered  two issues in the  quarter
ended March 31, 2005 related to the recording of training revenue and accrual of
inventory related  purchases.  The first issue involved the recording of $50,000
of training revenue that should have been recorded as deferred revenue until the
service was provided.  It was later determined in the quarter ended December 31,
2005 that training would not be provided and this revenue needed to be reversed.
We have made the  adjustment to reverse the revenue from the quarter ended March
31, 2005.  We have also  implemented  procedures  in our billing  department  to
properly  record training to be provided as deferred  revenue.  The second issue
related to $124,770 of raw material inventory  purchases that were booked in the
quarter ended June 30, 2005, instead of being accrued in the quarter ended March
31,  2005.  We were in the process of  converting  to a  purchasing  system that
integrated   with  our  accounts   payable  system  and  these   purchases  were
inadvertently  booked in the second quarter.  Our purchasing  system was totally
integrated  at the  quarter  ended June 30,  2005 and we are  properly  accruing
expenses to the proper time period.  These items have also been reflected in our
footnotes in the section of restatements for the first two quarters. These items
did not impact the year end results.

     All of the  above  have  been  discussed  with our  auditors  and our audit
committee  and we will be  restating  the  above  adjustments  by  amending  all
previous  filings for the  appropriate  time  periods as we reported in our Form
8-K.

                                       13
<PAGE>
     Some of the  above  steps  required  the  internal  review  of 4,000  sales
transactions  and  hundreds  of  purchasing  and  inventory  transactions.  That
analysis  has taken  place along with our year end audit  happening  at the same
time. The above  hopefully  tells the story of where we have been and the effort
we have made to do things  right.  In light of the  foregoing we certainly  feel
that our Balance Sheet included in the following financial statements represents
current fair values.


Results of  Operations  - Year Ended  December  31, 2005  Compared to Year Ended
December 30, 2004

Revenues

     Revenues for the year ended December 31, 2005,  were $8,157,390 as compared
to $6,235,936 for the year ended December 31, 2004, which represents an increase
of $1,921,454 (30.8%). The increase in revenues from the prior year is primarily
due to the increased sales of AID related products, the success of our marketing
programs  and the  expansion  of our sales areas to the west coast of the United
States.  We  expect  the  trend  in  increased  revenues  to  continue  for  the
foreseeable  future as a result of the increased  purchases of AID equipment and
our basic surveillance products.

Costs of Goods Sold

     Cost of Goods Sold  increased by  $1,537,440,  or (45.2%) to $4,938,120 for
2005 as compared to $3,400,680  for 2004. As a percentage of net sales,  cost of
goods sold  increased by 6.0% to 60.5% of net sales in 2005 compared to 54.5% of
net sales in 2004.  The  increase in cost of goods sold as a  percentage  of net
sales is mainly  attributable to change in product mix to lower margin products,
increased  indirect  salaries for  manufacturing  support  personnel,  increased
engineering  materials,  rising  freight in costs and rising  freight  out costs
which did not keep pace with freight revenue billed to customers.

Gross Margin

     Gross margins for the year ended December 31, 2005 increased  $384,014,  or
13.5%, as compared to 2004. As a percentage of net sales,  gross margin declined
to 39.5% in 2005 from 45.5% in 2004. The decline in margin  percentage is mainly
attributable to the increased costs of goods sold that were mentioned above.

Operating Expenses

     Operating  Expenses,  including  services  and  compensation  paid for with
stock($399,060) and research and development($182,224)  decreased by $618,117 as
compared to 2004. The decrease is mainly  attributable  to the $903,416  expense
recorded  in 2004  related  to the AID asset  purchase  (See  Footnote  8 to our
Financial Statements "ASSET PURCHASE AGREEMENT") and the decrease of $286,370 in
services  and  compensation  paid  with  stock.  All  other  operating  expenses
exclusive of the above stock compensation and R&D totaled $3,029,569 an increase
of $663,597 or 28.0% greater than the $2,365,972  incurred in 2004. Based on net
revenue  percentages  these other operating  expenses were 37.1% of net sales in
2005 compared to 37.9% of net sales in 2004. The increased  leveraging  achieved
by  spreading  fixed  costs over  higher  sales  levels was offset by the higher
expenses  associated  with fees related to moving to the American Stock Exchange
in July 2005,  greater  expenses  associated with  amortization and depreciation
related to the AID purchase,  increased  consulting  fees related to systems and
increased insurance costs.

Net Loss

     Our net loss for the year ended  December 31, 2005 was $281,608 as compared
to a net loss of $848,883  for the year ended  December 31, 2004, a reduction of
$567,275.  Our net loss per weighted  average  share was $.01 for the year ended
2005, as compared to a net loss of $.04 per weighted  average share for 2004. As
stated in the operating  expenses our net loss for 2004 was mainly  attributable
to the  non  cash  expenses  of the  AID  purchase($903,416)  and  services  and
compensation  paid with  stock($685,430).  The net loss for 2005 was  influenced
again  by  non  cash   expenses  for  services   and   compensation   paid  with
stock($399,060)  and  amortization and  depreciation($230,511).  We have already
taken steps to reduce selling expenses in 2006 and we do not expect services and
compensation  paid with stock to be nearly as great as in previous years. We are
also passing on increased  freight  costs to our  customers and we are analyzing
selling prices to enhance margins wherever possible. We will also be focusing on
any possible  reductions in fixed and variable  costs in both cost of goods sold
and operating expenses.

                                       14
<PAGE>
Liquidity and Capital Resources

     At December 31, 2005, we had working capital of $2,232,622 as compared with
$1,861,272 at December 31, 2004, an increase of $371,350.  We have  historically
sustained  our  operations  and funded our capital  requirements  with the funds
received  from the sale of our  products as well as from working  capital  loans
received from two related  parties  including Mr. John H. Carrington and Sirchie
Finger Print Laboratories, Inc.

     Mr.  Carrington is a majority  shareholder  of our company and Sirchie owns
approximately  33.1% of our outstanding stock. Mr. Carrington is also a majority
shareholder of Sirchie.  All the loans which Sirchie  previously made to us were
paid in full in Fiscal 2003.

     At the end of 2005 we had a cash  balance  of  $778,156.  We have a line of
credit with Wachovia Bank in the amount of $750,000.  We had no  encumbrance  on
that line.

     If we need to obtain  capital,  no  assurance  can be given that we will be
able to obtain this capital on  acceptable  terms,  if at all. In such an event,
this may have a materially adverse effect on our business, operating results and
financial  condition.  If the need  arises,  we may  attempt  to obtain  funding
through the use of various types of short term funding, loans or working capital
financing  arrangements  from banks or financial  institutions.  As we generally
obtain  all  of our  funding  from  operations,  a  decrease  in  revenue  could
negatively  impact our short and long term  liquidity.  A change in the  current
political situation or a decrease in military spending could result in decreased
sales of some of our products.

Research and Development

     In fiscal 2005, we spent $182,224 on research and development. The majority
of these funds were spent on the research and  development of our EDW. We expect
to continue to expend funds on the research  and  development  on our EDW. We do
not  have  any  other  current  plans  to  commence   research  and  development
activities. However, we will engage in any research and development project that
is feasible and can be accomplished on an economical basis.

Inflation

     We  believe  that the  impact  of  inflation  on our  operations  since our
inception has not been material.

ITEM 7. FINANCIAL STATEMENTS AND SUPPLEMENTARY DATA.

     The response to this item is set forth at the end of this report.

ITEM 8. CHANGES IN OR DISAGREEMENTS WITH ACCOUNTANTS

     None.

ITEM 8A. CONTROLS AND PROCEDURES

     Attached as exhibits to this Form 10-K are  certifications of the Company's
Chief  Executive  Officer (CEO) and Chief  Financial  Officer  (CFO),  which are
required in accordance with Rule 13a-14 of the Securities  Exchange Act of 1934,
as amended (the Exchange Act). This "Controls and Procedures"  section  includes
information  concerning the controls and controls  evaluation referred to in the
certifications.

Status of  Remediation  Efforts with Respect to  Previously  Disclosed  Material
Weaknesses

     In our filing on Form 8-K on March 31, 2006 we  reported  that on March 26,
2006, on Managements  recommendation,  the Company,  in consultation with Baum &
Company, the Company's independent auditors, and the Company's advisors, that it
had concluded that the Company's  financial  statements for the interim  periods
for the six and nine months of 2004,  the financial  statements for the year end
of 2004,  and the interim  periods for the first  three,  six and nine months of
2005 should no longer be relied upon and that they will require adjustments. The
restatement  adjustments were identified primarily through an extensive internal
review of the Company's accounting  procedures and policies.  In connection with
the Company's internal review of its revenue and cost recognition policies,  the
Company is continuing to conduct an analysis of its  historical  financial  data
for the foregoing periods.  The Company is currently  evaluating the application
of certain accounting principles and accounting estimates that have resulted in
errors in the Company's  previously issued financial  statements as addressed in
Accounting  Principles Board Opinion No. 20. Management's  conclusion  regarding
reliance upon these previously  issued  financial  statements was also discussed
with and  confirmed  by the Audit  Committee  of the Board of  Directors  of the
Company.

                                       15
<PAGE>

     We began our  Management's  Discussion and Analysis of Financial  Condition
and Results of  Operations  (MD&A) on the related  items with a reference to the
Form 8-K filed on March 31, 2006. The first item was related to a one time event
involving the purchase of AID. We have included those adjustments in this filing
and we have provided  restated  numbers for the  statements of operations in our
footnotes.  The Company will file with the Securities and Exchange Commission an
amended  Form 10-K for 2004 and amended  Forms 10-Q for the interim  periods for
the periods  referenced above, to the extent that the nature or magnitude of the
errors  in such  previously  issued  financial  statements  is  material,  which
amendments  will include  restated  financial  statements and related  auditor's
report.

     We believe that as a result of our internal investigation that we have made
other adjustments which more accurately reflect the proper way to record certain
financial transactions. Examples of these include:

     1.   Reporting  Revenue Gross as a Principal  Versus Net as an Agent.  This
          was also an unusual  event and we have taken  steps to  identify  this
          type of order based on the criteria referred to in EITF 99-19. We have
          adjusted this filing and we will amend the proper quarters in 2005.
     2.   Deferring  revenue for  services  not  provided.  We have  trained our
          billing  department on how to code  services for training,  so that it
          will be initially recorded as deferred revenue. We will reclassify the
          deferred  revenue  from the balance  sheet to training  revenue on the
          statement  of  operations  upon  completion  of the  actual  training.
          Training  revenue  is  usually  not a  material  portion  of our total
          revenues.  We have  adjusted  this filing and we will amend the proper
          quarters in 2005.
     3.   Accrual of expenses in proper time period.  As we  mentioned  above we
          now have an  integrated  purchasing  system that allows for receipt of
          goods in the proper  period and we will monitor the cutoff of accounts
          payable.  Any expenses  that need to be accrued will be processed  via
          journal  entry and then  reversed in the  following  periods.  We have
          adjusted this filing and we will amend the proper quarters in 2005.

     Under the supervision and with  participation of the Company's  management,
including its principal Executive Officer and principal  Financial Officer,  the
Company  recently   conducted  an  evaluation  that  the  effectiveness  of  its
disclosures in controls and procedures as defined in 13(a)-15(e) and 15(d)-15(e)
under the Securities Exchange Act of 1934 as Amended as of the end of the period
covered by this report. Based on this evaluation and implementing the procedures
and  controls  to avoid the items  identified  previously  in this  report,  the
Company's principal Executive Officer and principal Financial Officer, concluded
as of the evaluation date that the Company's  disclosure controls and procedures
were not effective for the entire period  covered by this annual  report.  After
the quarter ending December 31, 2005,  there were  improvements in the Company's
internal  control  of  financial  reporting  that had a  material  effect on the
Company's internal control over finance reporting.

Evaluation of disclosure controls and procedures
------------------------------------------------

     As noted above,  after the quarter ended  December 31, 2005, we carried out
an evaluation of the effectiveness of the design and operation of its disclosure
controls and procedures  pursuant to Exchange Act Rule 13a-14.  This  evaluation
was done  under the  supervision  and with the  participation  of our  Principal
Executive  Officer and Principal  Financial  Officer.  Based upon the evaluation
noted above,  we have now  concluded  that our current  disclosure  controls and
current  procedures  are  effective  in  gathering,   analyzing  and  disclosing
information needed to satisfy our disclosure obligations under the Exchange Act,
except as noted above

ITEM 8B. OTHER INFORMATION

None.

                                       16
<PAGE>
PART III

Item 9. DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL PERSONS; COMPLIANCE
WITH SECTION 16(a) OF THE EXCHANGE ACT.

     Our  executive  officers,  directors  and key  employees and their ages and
positions with us as of December 31, 2005, are as follows:

 Name                          Age             Position

 Paul Feldman                  49              Director, President, CEO

 Anthony Rand                  66              Director

 Martin Perry                  45              Director

 General James Lindsay         73              Director

 Joseph Jordan                 58              Director

 Michael Wagner                59              CFO, Principal Accounting and
                                               Financial Officer


The  following  is a brief  description  of each  officer,  director and control
person:

     Paul Feldman has served as our President  and Treasurer  since August 2001.
Mr.  Feldman was appointed as a director in May 2003.  Mr. Feldman has served as
the President of Law Enforcement  Associates,  Inc.  ("LEAI"),  our wholly owned
subsidiary,  since  1993.  Mr.  Feldman  initially  joined  LEAI as the  Eastern
Regional  Sales Manager in 1989.  From 1989 to 1993,  Mr.  Feldman served as the
Vice President of Sales for LEAI. Prior to joining our company,  Mr. Feldman was
employed with United Parcel  Service as a manager from 1980 to 1989. Mr. Feldman
received a Bachelor of Science from Duke University in 1978.

     John H.  Carrington  resigned  as a director of the Company as of April 14,
2005 but, still remains the Company's  majority  shareholder.  Mr. Carrington is
the  President,  Chief  Executive  Officer,  director and 69.1%  shareholder  of
Sirchie Finger Print  Laboratories,  Inc., which owns approximately 41.8% of our
company.  Senator  Carrington has served as a member of the North Carolina State
Senate from 1995 to 2005. Mr.  Carrington  earned a degree in forensic  sciences
from the American  Institute of Applied Sciences in 1960 as well as a mechanical
engineering degree from Pennsylvania Military College (Widener College) in 1962.
Mr. Carrington also served in the U.S. Army, 3rd Airborne  Training School,  1st
Special  Troops  Brigade from 1953 to 1955.  Mr.  Carrington  is a member of the
International  Association of Police Chiefs,  the  International  Association of
Identification and the International Narcotics Officers Association. In December
2005,  Mr.  Carrington  plead guilty to a violation of Title 50,  United  States
Code,  Sections  1702 and  1705(b).  He had been charged  with  exporting  crime
control   equipment  to  the  People's   Republic  of  China  without   required
authorization  from the Secretary of Commerce  between  September 2000 and March
2004. Mr.  Carrington was ordered to pay a $850,000 fine and he also gave up his
exporting privileges for five years. It must be noted,  however,  that the items
exported  are  now   permitted  to  be  exported  to  China  without  any  prior
authorization. Since his resignation from the Board of Directors, Mr. Carrington
had not been active in the management of the Company.

     Anthony  Rand has served as a director of our company  since May 2003.  Mr.
Rand is the Senate  majority  leader for the North  Carolina  Senate since 1995.
Senator Rand earned a B.A. in Political  Science  from the  University  of North
Carolina , Chapel Hill in 1961 and a J.D. from the  University of North Carolina
Law School  1964.  Senator  Rand also is a  consultant  to Sonorex  Inc. and the
President of Rand &Gregory, P.A- Senator Rand also serves on numerous Boards and
commissions  such as the  Board  of  Directors  and  treasurer,  General  Alumni
Association of the University of North Carolina

     Martin  Perry has served as a director of our company  since May 2003.  Mr.
Perry   graduated  from  Brigham  Young   University   1985  with  a  degree  in
Communications  and played  basketball for the Cougars.  From 1994 thru 2000 Mr.
Perry was involved in Equipment Distributors, Raleigh North Carolina which works
exclusively with the law enforcement community.

                                       17
<PAGE>
     General  James J.  Lindsay has served as a director  of the  Company  since
August 2004.  General  Lindsay  retired from the Armed Services on July 1, 1990.
Currently,  General Lindsay is president of the Airborne and Special  Operations
Museum Foundation, and a Senior Observer with the Army's Battle Command Training
Program.  Additionally,  General  Lindsey is a member of the United  States Army
Ranger Hall of Fame and Officer  Candidate  School Hall of Fame, US Army Science
Board and Special Operations  Advisory Group to the Secretary of Defense. He was
also the 1996 recipient of the Infantry's Doughboy Award, and the 1998 recipient
of the United States Special Operations Command Bull Simon Award.

     Joseph A. Jordan has served as director  since  December 2004. on our as an
additional member of the Board of Directors of the Company.  Mr. Jordan received
a B.S. in Accounting from Villanova  University 1969 and was the former managing
partner  Kopensky & Company  CPA's.  He is currently a partner in the accounting
firm of Jordan & Delaney LLP and is currently a member of the American Institute
of CPA's. In addition, the Company adopted a formal Audit Committee Charter.

     Michael Wagner became our Chief Financial  Officer and principal  Financial
and  Accounting  Officer on September  19,  2005.  He had  initially  joined the
company on August 1, 2005 as the  Controller.  Mr.  Wagner  received  a B.S.  in
Accounting from Tri State  University in Indiana,  in 1974 and initially  worked
for a large public accounting firm. From 1996-1997, he was the Vice President of
Finance of Rollie Williams Paint Spot in Elkhart, Indiana where he installed new
accounting  systems and was responsible for all internal controls and accounting
procedures.  From  1998-2001,  he was the  Controller  at Yoder Oil Company also
located in Elkhart,  Indiana.  While there,  he guided the  Company's  financial
decisions by  establishing,  monitoring  and enforcing  accounting  policies and
procedures.  From 2002-2004,  he was a consultant for DM2 Software in Vancouver,
Washington and served as project  manager and account manager for small to large
petroleum jobbers through out North America.  He primarily focused on installing
and training  personnel on accounting  systems,  but he also  consulted with top
management on advanced  reporting of key metrics,  internal  controls and proper
accounting procedures.

     Directors  serve until the next  annual  meeting of  stockholders  or until
their successors are elected and qualified.  Officers serve at the discretion of
the board of  directors.  The board of directors  does not have any  committees.
Non-employee  directors  are  also  entitled  to  reimbursement  for  reasonable
expenses incurred in attending any such meetings.


Audit Committee

     On  December  23,  2004,  the  Company   established  an  audit  committee.
Currently, Mr. Rand, Mr. Perry and Mr. Jordan are members of that committee.

Compensation Committee

     On January 24,  2006 the  Company  established  a  Compensation  committee.
Currently, Mr. Perry and General Lindsay are members of that committee.

Code of Ethics

     The  Company  has  adopted  its Code of Ethics  and  Business  Conduct  for
Officers, Directors and Employees that applies to all of the officers, directors
and employees of the Company.

Section 16(a) Beneficial Ownership Reporting Compliance

     Section 16(a) of the Exchange Act requires the Company's executive officers
and  directors  and persons who own more than 10% of a  registered  class of the
Company's  equity  securities  to file  reports of their  ownership  thereof and
changes in that ownership with the  Securities and Exchange  Commission  ("SEC")
and the National  Association of Securities  Dealers,  Inc. Executive  officers,
directors and greater than 10%  stockholders  are required by SEC regulations to
furnish the Company with copies of all such reports they file.

     Based  solely  upon a review of Forms 3, 4 and 5, and  amendments  thereto,
furnished to the Company  during  fiscal year 2004,  the Company is not aware of
any  director,  officer  or  beneficial  owner of more than ten  percent  of the
Company's Common Stock that, during fiscal year 2002, failed to file on a timely
basis reports required by Section 16(a) of the Securities Exchange Act of 1934.


                                       18
<PAGE>
Item 10. EXECUTIVE COMPENSATION.

     The following table summarizes all compensation  paid by us with respect to
the year ended  December  31,  2005 paid by us to our  President,  and all other
executive  officers whose total cash compensation  exceeded $100,000 in the year
ended December 31, 2005 (collectively, the "Named Executive Officers").
<TABLE>
<CAPTION>
                           SUMMARY COMPENSATION TABLE


                               Annual Compensation             Long-Term Compensation
 Name and Principal      Year   Salary      Bonus    Other    Restricted       Securities
                                                                Stock          Underlying        LTIP Pay   All Other
 Position                         $          $        $         Award $      Options/SAR's $      Outs $        $
<S>                     <C>        <C>      <C>      <C>        <C>               <C>             <C>         <C>
 Paul Feldman           2005   $ 134,940                   $   172,500
 President              2004   $ 127,794                   $   400,000
</TABLE>

Employment and Other Agreements

     We have not entered into any  employment  agreements  with any of our named
executive  officers  and  directors  nor  is  there  any  compensatory  plan  or
arrangement with any named executive officer.

Item 11. SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT.

     The following  table sets forth certain  information  as of April 12, 2006,
with respect to the number of shares of each class of voting stock  beneficially
owned by (i)  those  persons  known to us to be the  owners  of more  than  five
percent of any such class of our voting stock, (ii) each of our directors of and
(iii) all of our directors and executive  officers as a group.  Unless otherwise
indicated,  each of the listed persons has sole voting and investment power with
respect to the shares beneficially owned by such shareholder.

 Name and Address of                          Amount of           Percentage of
 Beneficial Owner                             Beneficial           Beneficial
                                              Ownership            Ownership

 John H. Carrington (2)*                     14,448,368             57.443%

 Paul Feldman (1) (3)*                          491,146              1.953%

 Anthony Rand (1)*                              125,334              0.498%

 Martin L. Perry (1)*                           111,000              0.441%

 James J. Lindsay (1)                            52,975              0.211%

 Joseph Jordan (1)                                1,000              0.004%

 All Directors & Executive Officers             781,455              3.107%
 as a Group (5 persons)


* c/o Law Enforcement  Associates  Corporation,  100 Hunter Place,  Youngsville,
North Carolina 27596

(1) Director of our company.

(2) Includes 8,333,333 shares owned by Sirchie Finger Print  Laboratories,  Inc.
("Sirchie") a company  controlled by Mr. Carrington who serves as the President,
Chief  Executive  Officer  and a  director  and  who  also  owns  69.1%  of  its
outstanding shares of common stock.

(3) Officer of our company.

     The  securities   "beneficially  owned"  by  a  person  are  determined  in
accordance with the definition of "beneficial  ownership" set forth in the rules
and  regulations   promulgated  under  the  Securities  Exchange  Act  of  1934.
Beneficially  owned  securities may include  securities  owned by and for, among
others, the spouse and/or minor children of an individual and any other relative
who has the same home as such individual. Beneficially owned securities may also
include  other  securities  as to which the  individual  has or shares voting or
investment  power or which such  person has the right to acquire  within 60 days
pursuant to the  conversion  of  convertible  equity,  exercise  of options,  or
otherwise.  Beneficial  ownership  may  be  disclaimed  as  to  certain  of  the
securities.

     The  foregoing  table is based  upon  25,152,433  shares  of  common  stock
outstanding  as of April 12, 2006,  assuming no other changes in the  beneficial
ownership of the our securities.


                                       19
<PAGE>
Item 12. CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.

We entered into no related transactions within the last two fiscal years.

Item 13. EXHIBITS, LIST, AND REPORTS ON FORM 8-K.

         (a) The Exhibits required by Item 601 of Regulation S-B are as follows:


2.1     Agreement  for the  Exchange  of  Common  Stock by and  between  Academy
        Resources,  Inc.,  Sirchie  Finger  Print  Laboratories,  Inc.  and  Law
        Enforcement Associates, Inc.(1)
2.2     Agreement by and among  Academy  Resources,  Inc.  and Myofis  Internet,
        Inc.(1)
3.1     Certificate of Incorporation(1)
3.2     Certificate of Amendment to the Certificate of Incorporation(1)
3.3     By-laws(1)
10.1    Real Estate Lease entered  between  Sirchie  Finger Print  Laboratories,
        Inc. and Law Enforcement Associates Corp. dated February 1, 2002.(2)
21.1    List of Subsidiaries of the Registrant(1)
31.1    Certification  of the  Principal  Executive  Officer of Law  Enforcement
        Associates Corporation Pursuant to Section 302 of the Sarbanes-Oxley Act
        of 2002.
31.2    Certification  of the Principal  Accounting  Officer of Law  Enforcement
        Associates Corporation Pursuant to Section 302 of the Sarbanes-Oxley Act
        of 2002.
32.1    Certification  of the  Principal  Executive  Officer of Law  Enforcement
        Associates Corporation Pursuant to Section 906 of the Sarbanes-Oxley Act
        of 2002.
32.2    Certification  of the Principal  Accounting  Officer of Law  Enforcement
        Associates Corporation Pursuant to Section 906 of the Sarbanes-Oxley Act
        of 2002.
99.1    Code of Ethics and Business Conduct of Officers, Directors and Employees
        of Law Enforcement Associates Corporation (3)



(1) Previously filed on the Company's Form 10-SB filed July 11, 2002.
(2) Previously filed on the Company's Form 10-SB/A filed September 23, 2002.
(3) Previously filed on the Company's Form 10-KSB filed March 31, 2003.

(b) Reports on Form 8-K:

None.

Item 14. Principal Accountant Fees and Services.

        Audit Fees. The aggregate fees billed by our auditors,  for professional
services rendered for the audit of the Company's annual financial statements for
the years ended December 31, 2005 and 2004, and for the reviews of the financial
statements included in the Company's Quarterly Reports on Form 10-QSB during the
fiscal years were $43,750 and $31,600 respectively.

        Audit Related Fees.  For the years ended December 31, 2005 and 2004, the
Company  incurred  fees  to  auditors  of $0  and  $0 for  audit  related  fees,
respectively.

        All Other Fees.  No other fees were billed by our  auditors for services
rendered to the Company.

        The Board of Directors has considered whether the provision of non-audit
services is compatible with maintaining the principal accountant's independence.


                                       20
<PAGE>
                                   SIGNATURES

In  accordance  with  Section 13 or 15(d) of the Exchange  Act,  the  registrant
caused this report to be signed on its behalf by the undersigned, thereunto duly
authorized.

                                       LAW ENFORCEMENT ASSOCIATES CORPORATION

                                       By: /s/ Paul Feldman
                                           -----------------
                                           Paul Feldman, President

Dated: April 19, 2006

In  accordance  with the Exchange  Act, this report has been signed below by the
following  persons on behalf of the  registrant and in the capacities and on the
dates indicated.

  Signature                  Title                                   Date

  /s/Paul Feldman            President, Director  and
  ---------------            Principal Executive Officer        April 14, 2006

  /s/Martin L. Perry         Director                           April 14, 2006
  -------------------

  /s/ James Lindsey          Director                           April 14, 2006
  -----------------
  James Lindsay

  /s/ Anthony Rand           Director                           April 14, 2006
  -----------------
  Anthony Rand

  /s/ Joseph Jordan          Director                           April 14, 2006
  -----------------
  Joseph Jordan

  Michael Wagner             Principal and Chief
  --------------
  Michael Wagner             Financial Officer                  April 14, 2006


                                       21
<PAGE>
                              BAUM & COMPANY, P.A.
                          Certified Public Accountants
                        1515 University Drive - Suite 226
                          Coral Springs, Florida 33071



             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM


To the Board of Directors and Stockholders of
Law Enforcement Associates Corporation


We have audited the accompanying  consolidated balance sheets of Law Enforcement
Associates  Corporation  as of  December  31,  2005  and  2004  and the  related
consolidated  statements of operations,  stockholders' equity and cash flows for
the  years  then  ended.  These  consolidated   financial   statements  are  the
responsibility of the Company's management.  Our responsibility is to express an
opinion on these consolidated financial statements based on our audit.

We conducted  our audit in accordance  with the standards of the Public  Company
Accounting Oversight Board (United States). 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
statements.  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  audit  provides  a
reasonable basis for our opinion.

In our  opinion,  the  financial  statements  present  fairly  in  all  material
respects, the financial position of Law Enforcement Associates Corporation as of
December  31,  2005  and  2004  and  the  related  consolidated   statements  of
operations,  stockholders'  equity  and cash  flows for the years  then ended in
conformity with United States generally accepted accounting principles.


/s/ Baum & Company, PA
Coral Springs, Florida
April 12 , 2006
                                      F-1

<PAGE>
                          Law Enforcement Associates Corporation
                                Consolidated Balance Sheets
                          December 31, 2005 and December 31, 2004
<TABLE>
<CAPTION>


                                                                                  December 31,      December 31,
                                                                                   2005               2004
                                                                               --------------     --------------
<S>                                                                            <C>                <C>
                                     ASSETS

 CURRENT ASSETS
       Cash                                                                    $      778,156     $      438,367
       Accounts receivable (net of allowance for doubtful accounts of $21,509)        628,825          1,053,719
       Inventory                                                                    1,092,457            842,764
       Deferred tax asset-current portion                                             213,546
       Income Tax Receivable and Other current assets                                 253,345            316,272
                                                                               --------------     --------------
           Total current assets                                                     2,966,329          2,651,122
                                                                               --------------     --------------

 PROPERTY AND EQUIPMENT - net                                                         257,539            340,398
                                                                               --------------     --------------

 OTHER NON-CURRENT ASSETS
       Intangibles-net                                                              2,675,860          2,770,608
       Deferred tax asset-net of current portion                                      195,552            354,504
       Deferred charges                                                                 5,528             16,234
                                                                               --------------     --------------
           Total non-current assets                                                 2,876,940          3,141,346
                                                                               --------------     --------------

 Total assets                                                                  $    6,100,809     $    6,132,866
                                                                               ==============     ==============
                      LIABILITIES AND STOCKHOLDERS' EQUITY

 CURRENT LIABILITIES
       Note payable-current portion                                            $      120,000     $      120,000
       Accounts payable and accruals                                                  609,867            571,951
       Capitalized leases payable - current                                                 -              2,251
       Prepaid sales deposits                                                           3,840             95,648
                                                                               --------------     --------------
           Total current liabilities                                                  733,707            789,850
                                                                               --------------     --------------

 LONG TERM LIABILITIES
       Note Payable-net of current portion                                             40,000            160,000
       Deferred tax liability                                                               -                  -
                                                                               --------------     --------------

           Total long term liabilities                                                 40,000            160,000
                                                                               --------------     --------------

           Total liabilities                                                          773,707            949,850
                                                                               --------------     --------------

 REDEEMABLE COMMON STOCK
       2,400,000 issued, redemption value $2,696,779, in 2004                               -          2,696,779

 STOCKHOLDERS' EQUITY
       Preferred stock $0.01 par value, 1,000,000 authorized, 0 issued                      -                  -
       Common stock, $0.001 par value, 50,000,000 authorized,
           25,152,433 and 22,625,433 issued and outstanding at
           December 31, 2005 and December 31, 2004, respectively                       25,152             22,625
       Paid in capital in excess of par                                             5,240,812          2,120,866
       Retained earnings                                                               61,138            342,746
                                                                               --------------     --------------
           Total stockholders' equity                                               5,327,102          2,486,237
                                                                               --------------     --------------

 Total liabilities and stockholders' equity                                    $    6,100,809     $    6,132,866
                                                                               ==============     ==============

</TABLE>
    The accompanying notes are an integral part of the financial statements.

                                      F-2
<PAGE>
                          Law Enforcement Associates Corporation
                           Consolidated Statement of Operations
                      For the Years Ended December 31, 2005 and 2004

<TABLE>
<CAPTION>
                                                                                           December 31,             December 31,
                                                                                              2005                     2004
                                                                                         ----------------         ----------------
<S>                                                                                      <C>                      <C>
 REVENUES                                                                                $      8,157,390         $      6,235,936

 COST OF GOODS SOLD                                                                             4,938,120                3,400,680
                                                                                         ----------------         ----------------

            Gross profit                                                                        3,219,270                2,835,256
                                                                                         ----------------         ----------------

 RESEARCH AND DEVELOPMENT                                                                         182,224                  274,152
 SERVICES AND COMPENSATION PAID WITH STOCK                                                        399,060                  685,430
 VALUE OF COMMON STOCK PUT OPTION IN EXCESS OF ASSETS ACQUIRED                                                             903,416
 OPERATING EXPENSES                                                                             3,029,569                2,365,972
                                                                                         ----------------         ----------------

            Total Operating Expenses                                                            3,610,853                4,228,970
                                                                                         ----------------         ----------------

 Net income(loss) before other income (expenses) and
 provision for income taxes                                                                      (391,583)              (1,393,714)
                                                                                         ----------------         ----------------

 OTHER INCOME (EXPENSE)
       Gain (loss) on retirement of fixed assets                                                   (4,257)                  30,673
       Interest (expense)                                                                         (15,014)                  (9,593)
       Other (expense)                                                                             (5,044)                       -
                                                                                         ----------------         ----------------

            Total other income (expense)                                                          (24,315)                  21,080
                                                                                         ----------------         ----------------

 Net income(loss) before provision for income taxes                                              (415,898)              (1,372,634)

 Provision for income taxes (benefit)                                                            (134,290)                (523,751)
                                                                                         ----------------         ----------------

 Net income(loss)                                                                        $       (281,608)        $       (848,883)
                                                                                         ================         ================
 Net income(loss) per weighted average share, basic                                      $          (0.01)        $          (0.04)
                                                                                         ================         ================
 Weighted average number of shares                                                             25,127,037               21,263,455
                                                                                         ================         ================
</TABLE>
    The accompanying notes are an integral part of the financial statements.



                                      F-3
<PAGE>
                     Law Enforcement Associates Corporation
                 Consolidated Statement of Stockholders' Equity

<TABLE>
<CAPTION>

                                                                         Paid in Capital      Stock                        Total
                                   Number of     Common     Preferred       in Excess      Subscription   Retained     Stockholders'
                                    Shares        Stock       Stock          of Par        Receivable     Earnings         Equity
                                 ------------ ----------- ------------ ----------------- ------------- -------------  --------------
<S>                                <C>           <C>      <C>          <C>               <C>           <C>            <C>
BALANCE, DECEMBER 31, 2003         19,885,433    $ 19,885 $          - $         407,526 $           - $   1,206,791  $    1,634,202


Common stock issued for services    1,070,000       1,070                        684,360                                    685,430

Common stock issued for patents     1,650,000       1,650                      1,014,600                                  1,016,250

Common stock issued for molds          20,000          20                         14,380                                     14,400

Change in redemption value of
Redeemable Common Stock                                                                                      (15,162)       (15,162)

Net loss for the Year ended
December 31, 2004                                                                                           (848,883)      (848,883)
                                 ------------ ----------- ------------ ----------------- ------------- -------------  --------------
BALANCE, December 31, 2004
                                   22,625,433    $ 22,625 $          - $       2,120,866 $           - $     342,746  $   2,486,237

Common stock issued for services      107,000         107                        371,954                                    372,061

Common stock issued for services       10,000          10                         26,990                                     27,000

Common stock issued for patents        10,000          10                         26,623                                     26,633

Common stock reclassified from
Redeemable Common Stock             2,400,000       2,400                      2,694,379                                  2,696,779

Net loss for the Year ended
December 31, 2005                                                                                           (281,608) $    (281,608)
                                 ------------ ----------- ------------ ----------------- ------------- -------------  --------------

BALANCE, December 31, 2005         25,152,433 $    25,152 $          - $       5,240,812 $           - $      61,138  $   5,327,102
                                 ============ =========== ============ ================= ============= =============  ==============

</TABLE>
    The accompanying notes are an integral part of the financial statements.

                                       F-4
<PAGE>

                          Law Enforcement Associates Corporation
                           Consolidated Statement of Cash Flows
                          Years Ended December 31, 2005 and 2004
<TABLE>
<CAPTION>

                                                                                        December 31,       December 31,
                                                                                            2005               2004
                                                                                       ---------------    ---------------
<S>                                                                                    <C>                <C>
 CASH FLOWS FROM OPERATING ACTIVITIES:
       Net income(loss)                                                                $      (281,608)   $      (848,883)

       Adjustments to reconcile net income(loss) to net cash provided by
       operations:
            Depreciation and amortization                                                      230,511             98,423
            Loss on disposal or reclassification of property and equipment                      23,284                  -
            Deferred taxes                                                                     (54,594)                 -
            Common stock issued for services                                                   399,060            684,360
            Redeemable common stock put option in excess of assets acquired                          -            903,416
       Changes in operating assets and liabilities:
            (Increase) decrease in accounts receivable                                         424,894             44,476
            (Increase) decrease in inventory                                                  (249,693)          (601,587)
            (Increase) decrease in other current assets                                         62,927           (154,644)
            Increase (decrease) in accounts payable and other accruals                          37,916            199,784
            Increase (decrease) in income taxes payable                                              -           (480,008)
            Increase (decrease) in customer sales deposits                                     (91,808)            60,192
                                                                                       ---------------    ---------------
 Net cash provided by operating activities                                                     500,889            (94,472)
                                                                                       ---------------    ---------------
 CASH FLOWS FROM INVESTING ACTIVITIES:
       Payments for deferred charges                                                            10,706            125,958
       Purchases of patents                                                                    (43,703)                 -
       Capital expenditures                                                                     (5,852)           (48,015)
                                                                                       ---------------    ---------------
 Net cash used in investing activities                                                         (38,849)            77,943
                                                                                       ---------------    ---------------
 CASH FLOWS FROM FINANCING ACTIVITIES:
       Payments on long-term debt                                                             (120,000)           (52,636)
       Payments on capital leases                                                               (2,251)            (7,092)
                                                                                       ---------------    ---------------
 Net cash (used in) financing activities                                                      (122,251)           (59,728)
                                                                                       ---------------    ---------------
 Net (decrease) in cash                                                                        339,789            (76,257)

 CASH - BEGINNING                                                                              438,367            514,624
                                                                                       ---------------    ---------------
 CASH - ENDING                                                                         $       778,156    $       438,367
                                                                                       ===============    ===============

 SUPPLEMENTAL DISCLOSURE OF CASH FLOW INFORMATION:
 Cash paid for interest expense                                                        $        15,014    $         9,593
                                                                                       ===============    ===============
 Cash paid for income taxes                                                            $             -    $        65,000
                                                                                       ===============    ===============
 Patents purchased with issuance of common stock                                       $        26,633    $     1,016,250
                                                                                       ===============    ===============
</TABLE>

    The accompanying notes are an integral part of the financial statements.


                                       F-5
<PAGE>

Law Enforcement Associates Corporation
Notes to Consolidated Financial Statements December 31, 2005 and 2004

1)   SIGNIFICANT ACCOUNTING POLICIES

Organization and operations
---------------------------

Law Enforcement Associates Corporation (originally Academy Resources,  Inc.) was
formed on December 3, 2001 when the company  acquired all the outstanding  stock
of Law  Enforcement  Associates,  Inc., a New Jersey  company doing  business in
North Carolina, which was incorporated in 1972.

The  operations  of  the  company  consist  of   manufacturing   and  providing,
surveillance  and  intelligence   gathering   products  and  vehicle  inspection
equipment. Products are used by law enforcement agencies, the military, security
and correctional organizations.

Principles of consolidation
---------------------------

The consolidated  financial  statements  include the accounts of Law Enforcement
Associates   Corporation  and  its   wholly-owned   subsidiary  Law  Enforcement
Associates,  Inc.  All  inter  company  transactions  have  been  eliminated  in
consolidation.  All  statements  have  been  prepared  on the  accrual  basis of
accounting  in  accordance  with  generally  accepted   accounting   principles.
Management  of the company has  determined  that the  Company's  operations  are
comprised  of one  reportable  segment  as that  term is  defined  SFAS  No.131.
Therefore,   no  separate   segment   disclosures  have  been  included  in  the
accompanying notes to the financial statements.

Revenue recognition
-------------------

We  recognize  revenues  when  persuasive  evidence  of an  arrangement  exists,
delivery has occurred or services have been rendered, title has transferred, the
price is fixed and  collectability is reasonably  assured.  All of our sales are
final and our  customers  do not have a right to return the  product.  We charge
most of our customers  shipping  fees,  which are recorded as a component of net
sales. We record training revenue as the service is provided.

Net income per share
--------------------

Basic  earnings  per  share  is  computed  by  dividing  the net  income  by the
weighted-average  number of shares of common stock and common stock  equivalents
(primarily outstanding options and warrants). Common stock equivalents represent
the dilutive effect of the assumed exercise of the outstanding stock options and
warrants,  using the treasury  stock method.  The  calculation  of fully diluted
earnings per share  assumes the dilutive  effect of the exercise of  outstanding
options and warrants at either the beginning of the respective  period presented
or the  date  of  issuance,  whichever  is  later.  There  are no  common  stock
equivalents for the company. No preferred stock had been issued.

Income taxes
------------

Deferred  income taxes are provided on a liability  method whereby  deferred tax
assets are recognized for deductible  temporary  differences  and operating loss
and tax credit carry  forwards and deferred tax  liabilities  are recognized for
taxable temporary differences. Temporary differences are the differences between
the reported amounts of assets and liabilities and their tax bases. Deferred tax
assets are reduced by a valuation  allowance when, in the opinion of management,
it is more likely than not that some  portion or all of the  deferred tax assets
will not be realized.  Deferred tax assets and  liabilities are adjusted for the
effects of changes in tax laws and rates on the date of enactment.

Fair value of financial instruments
-----------------------------------

The Company's  financial  instruments  include  cash,  accounts  receivable  and
accounts payable.  Due to the short-term nature of these  instruments,  the fair
value of these instruments approximates their recorded value.

Inventory
---------

Inventory is stated at the lower of cost or market on the FIFO basis. Provisions
are made to reduce potentially excess, obsolete or slow-moving inventories to
their net realizable value.

                                       F-6
<PAGE>
Law Enforcement Associates Corporation
Notes to Consolidated Financial Statements December 31, 2005 and 2004

1)   SIGNIFICANT ACCOUNTING POLICIES (Continued)

Use of estimates
----------------

The preparation of financial  statements in conformity  with generally  accepted
accounting principles requires management to make estimates and assumptions that
affect the  reported  amounts  of assets  and  liabilities,  the  disclosure  of
contingent assets and liabilities at the date of the financial  statements,  and
the  reported  amounts of revenues  and expenses  during the  reporting  period.
Actual results could differ from those estimates.

Accounts receivable
-------------------

Represents  amounts due from  customers for products sold or services  provided.
Substantially  all amounts  are  expected to be  collected  within 60 days.  The
$21,509  allowance  for bad debt  balance at December 31, 2005 and 2004 that had
been  established is a management  estimate due to the credit  worthiness of the
primary customer base, largely government entities and the military.

Shipping and Handling Costs
---------------------------

The  Company  records  the  amount of  shipping  and  handling  costs  billed to
customers as a component of revenue.  The associated shipping and handling costs
are included in cost of goods sold.  Costs for the year ended  December 31, 2005
and 2004 were $110,818 and $86,125 respectively.

Product Warranty
----------------

The company provides a provision for estimated  warranty repairs.  For the years
ended  December 31, 2005 and December 31, 2004, the accrued  warranty  provision
was $40,000 and $30,303 respectively.  Actual warranty expenses incurred in 2005
was $35,497.

Advertising
-----------

The Company expenses the production costs of advertising as incurred, except for
direct-response  advertising,  which  is  capitalized  and  amortized  over  its
expected  period of future  benefits  within the calendar year.  Direct-response
advertising  consists  of  product  catalogs  and all costs  related to the 2005
catalog were  expensed by the end of 2005.  During the years ended  December 31,
2005 and December  31,  2004,  advertising  costs were  $180,648  and  $138,554,
respectively.  This  increase was due to  additional  catalog  printings and the
associated bulk mailing costs.  All advertising  costs are included in operating
expenses in the accompanying statement of operations.

Research and Development
------------------------

The Company  expenses  research and development  costs as incurred.  The Company
incurred product  development expense of $182,224 and $274,152 in 2005 and 2004,
respectively.

Reclassification
----------------

Certain  reclassifications  were made to the 2004 amounts to conform to the 2005
presentation.


2)   PROPERTY AND EQUIPMENT

Property and Equipment are recorded at cost.  Expenditures  for major  additions
and  improvements  are  capitalized  and minor  replacements,  maintenance,  and
repairs are charged to expense as  incurred.  When  property and  equipment  are
retired or otherwise  disposed  of, the cost and  accumulated  depreciation  are
removed  from the  accounts  and any  resulting  gain or loss is included in the
results of operations for the respective periods.  Depreciation is computed over
the  estimated  useful  lives of the related  assets using the  accelerated  and
straight-line methods for financial statement purposes.

                                       F-7
<PAGE>
Law Enforcement Associates Corporation
Notes to Consolidated Financial Statements December 31, 2005 and 2004

2) PROPERTY AND EQUIPMENT (Continued)

The following is a summary of property and equipment, at December 30, 2005 and
2004:
<TABLE>
<CAPTION>
                                                        Useful Life       December 31, 2005     December 31, 2004
                                                        -----------       -----------------     -----------------
<S>                                                       <C>          <C>                   <C>
Office Furniture & Equipment                            5 to 7 years      $     55,087          $      43,408
Leasehold Improvements                                    7 years                5,138                 61,931
Vehicle                                                 3 to 5 years            16,000                 16,000
Machinery & Equipment                                   5 to 7 years           459,032                549,815
                                                                          ------------          -------------
                                                                               535,257                671,154
Accumulated Depreciation                                                      (277,718)              (330,756)
                                                                          ------------          -------------
                                                                          $    257,539          $     340,398
                                                                          ============          =============
</TABLE>
Included in property and  equipment at December 31, 2004 are  capitalized  lease
equipment  with a value of $187,578.  Depreciation  expense for the years ending
December 31, 2005 and 2004 were $ 65,427 and $ 42,981, respectively.

3)   INCOME TAXES

In accordance with FASB 109, deferred income taxes and benefits are provided for
the results of operations of the Company. The tax effects of temporary
differences, carry-backs and carry-forwards that give rise to significant
portions of deferred tax assets consist of the following:
<TABLE>
<CAPTION>
                                                                 December 31, 2005             December 31, 2004
                                                                ---------------------         ---------------------
<S>                                                             <C>                           <C>
Income tax receivable
Additional 2004 Taxable Loss carry back to 2002                 $              32,584         $              32,584
2004 Taxable Loss per Original Return-Received 3/13/06                        110,612
2005 Taxable Loss carry back to 2003                                           52,194
Other Taxable Loss Refund received 3/28/06                                     21,430
                                                                ---------------------         ---------------------
                                                                              216,820                        32,584

Deferred tax assets (Current)
2005 Federal Taxable Loss carry forward to 2006                               116,103
State Taxable Loss carry forward to 2006                                        7,637
Timing difference carry forward to 2006                                        89,806
                                                                ---------------------         ---------------------
                                                                              213,546

Deferred tax assets (Non-Current)
Write offs related to AID Acquisition                                         195,552                       354,504
                                                                ---------------------         ---------------------
Total Income tax receivable & Net Deferred Tax Assets           $             625,918         $             387,088
                                                                =====================         =====================


Current tax expense is the only  component  present in the  provision for income
taxes in the  accompanying  statements of operations.  A  reconciliation  of the
statutory federal income tax rate and effective rate is as follows:

                                                                                      December 31, 2005        December 31, 2004
                                                                                      -------------------      -------------------
Statutory federal income tax rate                                                            34%                      34%
State income tax - net of federal benefit                                                     5%                       5%
Previous estimated deferred tax differences ($27,910 in 2005, $11,576 in 2004)               -7%                      -1%
                                                                                             ---                      ---
  Effective tax rate                                                                         32%                      38%
                                                                                             ===                      ===
</TABLE>

                                       F-8
<PAGE>
Law Enforcement Associates Corporation
Notes to Consolidated Financial Statements December 31, 2005 and 2004


4)   CAPITAL TRANSACTIONS

On April 20, 2004 the Company issued  620,000 shares of restricted  common stock
to four individuals for services valued at $434,000.

On June 3, 2004,  2,400,000  shares of restricted  redeemable  common stock were
issued pursuant to the AID asset purchase agreement. These shares were initially
valued at $2,681,617 and classified as temporary equity. (See Note 8)

On June 16, 2004 the Company issued 400,000 shares of restricted common stock to
four individuals for services valued at $228,000.

On June 30,  2004 a present  value  adjustment  of $15,162  was  accreted to the
2,400,000 shares of redeemable stock that related to the AID asset purchase.  In
accordance with EITF Topic D-98,  "Classification  and Measurement of Redeemable
Securities"  this was  analogous  to a dividend  and a charge  was made  against
retained earnings. (See Note 8)

On July 20, 2004,  the Company issued 150,000 shares of common stock to an agent
for the acquisition of less lethal  electrical  discharge weapons patents valued
at $101,250.

On August 23, 2004, the Company issued 50,000 shares of restricted  common stock
to an individual for services valued at $23,430.

On September 8, 2004, the Company issued 1,500,000  shares of restricted  common
stock to two individuals for the acquisition of less lethal electrical discharge
weapons patents valued at $915,000.

On September 10, 2004,  the Company  issued  20,000 shares of restricted  common
stock  to an  individual  for the  acquisition  of the  less  lethal  electrical
discharge weapons injection molds valued at $14,400.

On January 5, 2005, the Company issued 105,000 shares of restricted common stock
to individuals for services valued at $361,726.

On  January 5, 2005,  the  Company  issued  2,000  shares of common  stock to an
individual for services valued at $10,335.

On April 5, 2005, the Company issued 10,000 shares of restricted common stock to
an individual for services valued at $27,000.

On April 6, 2005, the Company issued 10,000 shares of restricted common stock to
an individual for patents valued at $26,633.

On August 1, 2005 the  2,400,000  shares of  redeemable  common  stock issued in
conjunction with the AID asset purchase on June 3, 2004 were  reclassified  from
temporary equity to permanent equity at a value of $2,696,779. (See Note 8)

5)   LEASE COMMITMENTS

Facilities
----------

The  Company's   leases  its  office   facilities   from  Sirchie  Finger  Print
Laboratories,  Inc.  (Sirchie)  the majority  stockholder  of the  company.  The
original lease commenced in 2003.  Additional space was taken in August 2004 and
the lease was increased to $13,333 monthly.  Effective January 2005, a new lease
expiring  in  December  2005 was  entered  into at an annual  cost of  $160,000.
Effective  August 1, 2005 the lease was amended to add additional  office space,
which  increased the monthly  amount to $14,183.  Rent expense  incurred for the
years ended  December  31, 2005 and  December 31, 2004 was $164,250 and $134,347
respectively.

Equipment
---------

The company has capitalized  lease liabilities as of December 31, 2004 of $2,251
which expired August, 2005.

                                       F-9
<PAGE>
Law Enforcement Associates Corporation
Notes to Consolidated Financial Statements December 31, 2005 and 2004

6)   CONCENTRATION OF RISK

The  company  places its cash in high  credit  quality  financial  institutions.
During 2005 and 2004 the Company had on deposit  funds in excess of the $100,000
FDIC insured limits. Management does not believe that there is any concentration
risk.

At December 31, 2005 receivables  from three customers  represented 24% of total
receivables  and  at  December  31,  2004   receivables   from  three  customers
represented 25% of total receivables.

For the year ended December 31, 2005, sales to one customer accounted for 14% of
total sales and for the year ended  December  31,  2004,  sales to one  customer
accounted for 7% of total sales.

7)   CONTRACT COMMITMENT

On March 28, 2003, the Company  entered into a contract for technology  research
and product design  services in the amount of $373,000 plus  expenses.  Payments
are made as the services are provided.  Through December 31, 2004,  $336,495 had
been paid on the contract. Of these payments,  $210,537 was expensed as research
and  development and $125,958 was included in deferred  charges,  as new product
development.  At December  31, 2004 these  deferred  charges were written off to
research and development.  There are currently no outstanding obligations on the
contract.

8)   ASSET PURCHASE AGREEMENT

On June 3, 2004, the Company acquired from Audio Intelligence Devices, Inc. (AID
a Florida based corporation), machinery and equipment and furniture and fixtures
(utilized in the production of surveillance products). Pursuant to the agreement
the Company paid $200,000 in cash,  and will pay the seller  $10,000 a month for
34 months at a discounted  (deferred)  interest rate of 5.0% resulting in a note
payable for $540,000. In addition, the Company entered into a purchase agreement
with the sole stockholder of Audio Intelligence  Devices,  Inc. for intellectual
property,  trademarks,  inventory, drawings, designs, customer lists and related
production equipment and software in exchange for 2,400,000 shares of restricted
redeemable  common stock with a fair market  value of $.80 per share.  The asset
purchase agreement effectively guaranteed the seller $1.25 per share with a "put
option"  explained  below.  The present  value of this  redeemable  stock at the
future  put  dates  was  calculated  to be  $2,681,617.  The  fair  value of the
inventory and equipment acquired was $483,605 and  drawings/designs  were valued
at  $411,000.  The AID trade name was valued at  $1,400,000  using a relief from
royalty  method and it will be  amortized  over 25 years.  The total  value paid
using the guidance in EITF Topic D-98 exceeded the fair value of assets received
by $903,416.  This was recognized as an expense against operating income in 2004
and was primarily due to the "put option"  contingency  listed below.  When this
contingency  failed to  materialize  on August 1, 2005 the  Company  was able to
reclassify  $776,779 of the initial  $903,416 to additional paid in capital.  In
addition  the  Company  received  a deferred  tax  benefit  from the  additional
operating  expense  incurred  and  this  will  be  used  to  offset  future  tax
liabilities and net operating income.

The "put option" allowed the seller to sell 1,200,000 shares back to the Company
for $1.25 per share on August 1, 2005 and  1,200,000  shares back to the Company
for $1.25 per share on August 1,  2006.  On June 30,  2004 when the put price of
$1.25 was higher than market price the Company had to accrete a present value of
$15,162 to the previous fair value of $2,681,617  given at the purchase date. At
each quarter end from September 30, 2004 through the quarter ended June 30, 2005
the market price of common shares was as follows:

         September 30, 2004         $1.98
         December 31, 2004          $5.15
         March 31, 2005             $4.55
         June 30, 2005              $2.20

Since the put price  contingency of $1.25 was well under the above market prices
it was not probable at those above dates that the shares would be redeemed.  Per
the  guidance  in EITF  Topic  D-98  no  adjustment  was  then  required  to the
redemption  amount at the quarter ends  referenced  above. On August 1, 2005.the
seller did not  exercise  the "put  option" due to the market price of the stock
trading  well above the put price of $1.25 in the days  preceding  the  exercise
date.  The asset purchase  agreement  canceled the option for the August 1, 2006
"put option" if the first put was not  exercised.  On August 1, 2005 the Company
was able to reclassify  the  redeemable  common stock from  temporary  equity to
permanent equity at a fair value of $2,696,779 which was the adjusted redemption
amount at that  time.  The equity  components  were  $2,400 in common  stock and
$2,694,379 in additional paid in capital.

                                      F-10
<PAGE>
Law Enforcement Associates Corporation
Notes to Consolidated Financial Statements December 31, 2005 and 2004

9)   INTANGIBLE ASSETS

Patent costs include the acquired costs of obtaining patents.  Costs for patents
are  capitalized  and amortized  over the estimated  useful life of the patents,
usually 15 years, using the straight-line  method.  Those cost of the patents in
process are not amortized until  issuance.  In the event a patent is superseded,
the  unamortized  cost  will  be  written  off  immediately.   Trade  names  and
drawings/designs are tested at least annually for impairment under SFAS No. 144,
"Accounting  for the Impairment or Disposal of Long-Lived  Assets".  The company
has determined that no impairment exists on the trade name and  drawings/designs
based  on  the  undiscounted  future  cash  flows  generated  by  these  assets.
Intangible assets consist of the following at December 31, 2005 and 2004:
<TABLE>
<CAPTION>


                                     Estimated Life      December 31, 2005         December 31, 2004
                                                         -----------------         -----------------
<S>                                        <C>           <C>                       <C>
Patents                                    15            $       1,016,250         $       1,016,250
Patents-in process                         15                       70,336
Trade Name                                 25                    1,400,000                 1,400,000
Drawings/Designs                           10                      411,000                   411,000
                                                         -----------------         -----------------
                                                                 2,897,586                 2,827,250
Accumulated Amortization                                          (221,726)                  (56,642)
                                                         -----------------         -----------------
Total intangibles-net                                    $       2,675,860         $       2,770,608
                                                         =================         =================
</TABLE>
Estimated amortization for intangible assets is as follows:

Year                                    Amount
--------------------------------------------------
2006                                   $   169,539
2007                                       169,539
2008                                       169,539
2009                                       169,539
2010                                       169,539
Future Years                             1,828,165
                                       -----------
                                       $ 2,675,860
                                       ===========

10)  LINE OF CREDIT

The Company has a $750,000 line of credit with a bank,  which bears  interest at
LIBOR  plus 3%. At  December  31,  2005 and  December  31,  2004  there  were no
outstanding borrowings.

11)  NOTE PAYABLE

In June 2004,  the  Company  issued a $340,000  note  payable as part of the AID
asset purchase. The note requires 34 $10,000 monthly payments and had a deferred
interest rate of 5%. The note balance as of December 31, 2005 is:

                  Current Portion                   $    120,000

                  Balance-Net of Current                  40,000
                                                       ---------
                  Total Note Payable                $    160,000
                                                     ===========
       Maturities of long-term debt at September 30, 2005 are as follows:

                  Year Ending December 31:

                           2006                     $    120,000
                           2007                           40,000
                                                    ------------
                                                    $    160,000
                                                    ============

                                       F-11
<PAGE>
Law Enforcement Associates Corporation
Notes to Consolidated Financial Statements December 31, 2005 and 2004

12)  ACCOUNTS PAYABLE AND ACCRUALS

The  following is a breakdown  of accounts  payable and accruals at December 31,
2005 and December 31, 2004:
<TABLE>
<CAPTION>
                                              December 31, 2005              December 31, 2004
                                              -----------------              -----------------
<S>                                           <C>                            <C>
Accounts Payable                              $         381,486              $         331,887
Wages and related payroll taxes                          66,717                         35,620
Commissions                                              84,338                        144,862
401(k) contribution payable                              34,777                         25,388
Warranty Provision                                       40,000                         30,303
Sales tax payable                                         2,549                          3,891
                                              -----------------              -----------------
   Total accounts payable and accruals        $         609,867              $         571,951
                                              =================              =================
</TABLE>
The Company has a 401(k) Plan (the  "Plan") to provide  retirement  benefits for
its qualified  employees.  Qualified  employees may contribute up to the maximum
annual amount as set  periodically  by the Internal  Revenue  Service.  The Plan
provides for a discretionary employer match of up to 6% of the employees' wages.
Additionally, the Plan provides for a discretionary profit sharing contribution.
Such contributions to the Plan are allocated among eligible  participants in the
proportion of their  salaries to the total salaries of all  participants.  Total
contributions  by employees for the years ended  December 31, 2005 and 2004 were
$40,038 and $34,296, respectively.

13) RESTATEMENT OF 2004 RESULTS

The  acquisition  of AID on June 3, 2004 that was  referenced  above in 8) ASSET
PURCHASE  AGREEMENT  and in our MD&A in this 10K caused  several  changes to the
previously  reported financial  statements for the year ended December 31, 2004.
We also made some  adjustments  and  reclassifications  that were not associated
with the AID  acquisition.  Please refer to the key column in the balance  sheet
and  statement of  operations  on the page below which  relates to the following
numbered comments:

1.   Goodwill was removed because our agreement was an asset purchase.

2.   Designs/Drawings fair valued $411,000 (Useful Life 10 years).  Depreciation
     in 2004 = 7 months ($23,975).  Net book value end of 2004 = $387,025. Trade
     name fair valued $1,400,000 (Useful Life 25 years).  Depreciation in 2004 =
     7  months  ($32,667).  Net  book  value  end of  2004 =  $1,367,333.  Total
     amortization  added to  operating  expenses on  statement  of  operations =
     ($23,975+$32,667).

3.   The value of common stock  consideration  was 2,400,000 shares at par value
     of  $.001(3a).  The market value of the stock on the  acquisition  date was
     $.80.  APIC (3b) = 2,400,000  shares at $.799.  The value of the put option
     was $.45. The total  guaranteed  redeemable  stock was $1.25  ($.80+$.45) x
     2,400,000  shares = $3,000,000.  This amount  present valued out to the put
     exercise  dates using a discount  rate of 7%  =$2,681,617.  The increase in
     present  value to the end of June  2004 was  $15,162  and this  amount  was
     offset to retained  earnings  (3c).  The market price for the quarter ended
     September 30, 2004 and the year end of 2004 was greater than the guaranteed
     price  of  $1.25  so no  adjustment  in  redemption  amount  was  required.
     Therefore the value of redeemable  common stock in the mezzanine section of
     the balance  sheet at December  31,  2004(3d) =  ($2,681,617+$15,162).  The
     total  consideration  given  exceeded the fair value of assets  received by
     $903,416 (3e) and this was recorded in operating expenses.

4.   A note  payable  of  $340,000  was  also  given  as  consideration  in this
     transaction.  Deferred  interest at a rate of 5% was recorded and amortized
     to the end of 2004,  leaving a balance of $16,234 in deferred charges.  The
     short & long term  portions of the notes  payable  were  adjusted to proper
     balances at December 31, 2004. The interest  expenses  associated with this
     note had been previously recorded to operating expense.

5.   Previous  deferred charges for product  development not associated with the
     AID  purchase  in the  amount of  $125,958  were  written  off to R&D as of
     December 31, 2004.

6.   Associated  deferred  tax  assets  and the  provision  for  income tax were
     computed as a result of the above additional net operating loss. A previous
     deferred tax liability was netted against the deferred tax asset.

7.   For comparative  purposes  freight out expenses were moved to cost of goods
     sold.

8.   The  additional  net loss for 2004 of  $(671,717)  was  closed to  retained
     earnings.  The  decrease in retained  earnings = to $15,162  (3d) + the net
     loss.

                                      F-12
<PAGE>
Law Enforcement Associates Corporation
Notes to Consolidated Financial Statements December 31, 2005 and 2004

13) RESTATEMENT OF 2004 RESULTS (Continued)
<TABLE>
<CAPTION>
                                                                         For the Year Ended
         Balance Sheet:                                                  December 31, 2004
                                                       ------ ----------------- ----------------- ------------
                                                                 As Previously
                                                        Key         Reported         As Restated        +/(-)
                                                        ---         --------         -----------        -----
<S>                                                      <C>  <C>               <C>               <C>
Income Tax Receivable And Other Current Assets           6    $        283,688  $        316,272  $    32,584
TOTAL CURRENT ASSETS                                                 2,618,538         2,651,122       32,584
Property & Equipment - Net                               2             340,398           727,423      387,025
Goodwill                                                 1           1,952,799                     -1,952,799
Trade Name                                               2                             1,367,333    1,367,333
Deferred Tax Asset                                       6                               354,504      354,504
Deferred Charges                                        4/5            125,958            16,234     -109,724
TOTAL NON-CURRENT ASSETS                                             3,095,007         2,754,321     -340,686
TOTAL ASSETS                                                         6,053,943         6,132,866       78,923
                                                              ================= ================= ============
Note Payable-Current Portion                             4             109,293           120,000       10,707
TOTAL CURRENT LIABILITIES                                              779,143           789,850       10,707
Note Payable-Net Of Current Portion                      4             154,473           160,000        5,527
Deferred Tax Liability                                   6              27,211                        -27,211
TOTAL LONG TERM LIABILITIES                                            181,684           160,000      -21,684
                                                              ----------------- ----------------- ------------
TOTAL LIABILITIES                                                      960,827           949,850      -10,977
Redeemable Common Stock(2,400,000 Shares)               3d                             2,696,779    2,696,779
Common Stock(Prev-25,025,433 Restated-22,625,433)       3a              25,025            22,625       -2,400
Paid In Capital In Excess Of Par(APIC)                  3b           4,038,466         2,120,866   -1,917,600
Retained Earnings                                      3c/8          1,029,625           342,746     -686,879
                                                              ----------------- ----------------- ------------
TOTAL STOCKHOLDERS' EQUITY                                           5,093,116         2,486,237    2,606,879
TOTAL LIABILITIES AND S/H EQUITY                              $      6,053,943  $      6,132,866  $    78,923
                                                              ================= ================= ============


         Statement of Operations:                                        For the Year Ended
                                                                          December 31, 2004
                                                       ------ ------------------ ---------------- -------------
                                                                As Previously
                                                        Key         Reported         As Restated       +/(-)
                                                       ------ ------------------ ---------------- -------------
Cost Of Goods Sold                                       7    $      3,314,555   $    3,400,680   $     86,125
GROSS PROFIT                                                         2,921,381        2,835,256        -86,125
Research And Development                                 5             148,194          274,152        125,958
Aid Put Option In Excess Of Assets Acquired             3e                              903,416        903,416
Operating Expenses                                      2/7          2,395,456        2,365,972        -29,484
                                                              ------------------ ---------------- -------------
TOTAL OPERATING EXPENSES                                             3,229,080        4,228,970        999,890
OPERATING (LOSS)                                                      (307,699)      (1,393,714)    -1,086,015
NET (LOSS) BEFORE PROVISION FOR TAXES                                 (286,619)      (1,372,634)    -1,086,015
Provision For Income Taxes                               6            (109,453)        (523,751)      -414,298
                                                              ------------------ ---------------- -------------
NET INCOME (LOSS)                                        8    $       (177,166)  $     (848,883)  $   -671,717
                                                              ================== ================ =============
Net Income(Loss)Per Weighted Average Share, Basic             $          (0.01)  $        (0.04)  $      -0.03
                                                              ================== ================ =============
</TABLE>
                                      F-13
<PAGE>
Law  Enforcement   Associates   Corporation  Notes  to  Consolidated   Financial
Statements December 31, 2005 and 2004

14)  RESTATEMENT OF QUARTER ENDED MARCH 31, 2005

Below is a summary of the restatement  for the Statement of Operations.  We will
report the changes to all financial statements when we amend our filings.

1.   Revenues  were  reduced for sales that were  reported at gross  versus net.
     Deferred training sales of $50,000 were reversed out of revenue.

2.   Inventory Purchases of $124,770 were accrued into the quarter.

3.   For comparative purposes freight out expenses of $25,995 were moved to cost
     of goods sold.

4.   Total    amortization   of   AID   Trade   Name   &    Drawings/Designs   =
     ($14,000+$10,275).

5.   Provision  for income tax was adjusted  for the  additional  net  operating
     loss.
<TABLE>
<CAPTION>
                                                                            For the Quarter Ended
                                                                               March 31, 2005
                                                               ------------------------------------------------
                                                                 As Previously
                                                         Key       Reported        As Restated        +/(-)
                                                       ------  --------------- ----------------- --------------
<S>                                                       <C>  <C>              <C>              <C>   <C>
Revenues                                                  1    $    2,598,897   $    2,410,721   $    -188,176
Cost Of Goods Sold                                       2/3        1,297,463        1,448,228         150,765
GROSS PROFIT (As Reported 50.1%/Restated 39.9%)                     1,301,434          962,493        -338,941
Operating Expenses                                       3/4          733,944          732,224          -1,720
TOTAL OPERATING EXPENSES                                            1,164,119        1,162,399          -1,720
NET INCOME(LOSS) BEFORE PROVISION FOR TAX                             129,312         (207,909)       -337,221
Provision For Income Taxes                                5            54,000          (67,135)       -121,135
Net Income (Loss)                                              $       75,312   $     (140,774)  $    -216,086
                                                               =============== ================= ==============
Net Income (Loss) Per Weighted Average Share, Basic            $         0.00   $        (0.01)  $       -0.01
                                                               =============== ================= ==============
Weighted Average Number Of Shares                                  25,089,633        25,089,633     25,089,633
                                                               =============== ================= ==============
</TABLE>
15) RESTATEMENT OF QUARTER ENDED JUNE 30, 2005

Below is a summary of the restatement for the Statement of Operations. We will
report the changes to all financial statements when we amend our filings.

1.   Revenues were reduced for sales that were reported at gross versus net.

2.   Inventory Purchases of $124,770 were reversed out of the quarter. Incorrect
     costing entries applied against the gross sales were reversed.

3.   For comparative purposes freight out expenses of $25,662 were moved to cost
     of goods sold.

4.   R&D items were moved into the proper reporting period.

5.   Total    amortization   of   AID   Trade   Name   &    Drawings/Designs   =
     ($14,000+$10,275).

6.   Provision  for income tax was adjusted  for the  additional  net  operating
     loss.
<TABLE>
<CAPTION>
                                                                           For the Quarter Ended
                                                                               June 30, 2005
                                                               -----------------------------------------------
                                                                 As Previously
                                                         Key       Reported      As Restated         +/(-)
                                                       ------  --------------- --------------- ---------------
<S>                                                       <C>  <C>             <C>             <C>    <C>
Revenues                                                  1    $   1,918,283   $   1,545,470   $     -372,813
Cost Of Goods Sold                                        2        1,645,916       1,059,881         -586,035
GROSS PROFIT (As Reported 14.2%/Restated 31.4%)                      272,367         485,589          213,222
Research And Development                                  4          (49,850)         47,030           96,880
Operating Expenses                                       3/5         605,511         604,124           -1,387
TOTAL OPERATING EXPENSES                                             582,661         678,154           95,493
NET INCOME(LOSS) BEFORE PROVISION FOR TAX                           (313,544)       (195,816)         117,728
Provision For Income Taxes                                6         (126,000)        (63,230)          62,770
Net Income (Loss)                                              $    (187,544)  $    (132,586)  $       54,958
                                                               =============== =============== ===============
Net Income (Loss) Per Weighted Average Share, Basic            $       (0.01)  $       (0.01)  $         0.00
                                                               =============== =============== ===============
Weighted Average Number Of Shares                                  25,144,433      25,144,433      25,144,433
                                                               =============== =============== ===============
</TABLE>

                                      F-14
<PAGE>
Law  Enforcement   Associates   Corporation  Notes  to  Consolidated   Financial
Statements December 31, 2005 and 2004

16)  RESTATEMENT OF QUARTER ENDED SEPTEMBER 30, 2005

Below is a summary of the restatement  for the Statement of Operations.  We will
report the changes to all financial statements when we amend our filings.

1.   The  freight  out  expenses  ($51,655)  for the  first 2  quarters  was not
     reclassified and was inadvertently included in the 3rd quarter amount.

2.   Total    amortization   of   AID   Trade   Name   &    Drawings/Designs   =
     ($14,000+$10,275).

3.   Provision  for income tax was adjusted  for the  additional  net  operating
     loss.
<TABLE>
<CAPTION>
                                                                         For the Quarter Ended
                                                                           September 30, 2005
                                                              ---------------  -------------- ------------
                                                                 As Previously
                                                         Key       Reported     As Restated      +/(-)
                                                       ------  --------------- -------------- ------------
<S>                                                       <C>  <C>             <C>              <C>
Cost Of Goods Sold                                        1    $    1,551,413  $   1,499,758  $   -51,655
GROSS PROFIT (As Reported 41.7%/Restated 43.7%)                       110,229      1,161,884    1,051,655
Operating Expenses                                       1/2          771,215        847,145       75,930
NET INCOME(LOSS) BEFORE PROVISION FOR TAX                             302,621        278,346      -24,275
Provision For Income Taxes                                3           118,000         89,880      -28,120
Net Income (Loss)                                              $      184,621  $     188,466  $     3,845
                                                               =============== ============== ============
Net Income (Loss) Per Weighted Average Share, Basic            $         0.01  $        0.01  $      0.00
                                                               =============== ============== ============
Weighted Average Number Of Shares                                  25,152,433     25,152,433   25,152,433
                                                               =============== ============== ============
</TABLE>

                                     F-15
<PAGE>
17) NEW ACCOUNTING PRONOUNCEMENTS

In May 2003,  the FASB issued  Statement of Financial  Accounting  Standards No.
150, "Accounting for Certain Financial  Instruments with Characteristics of both
Liabilities  and Equity" (SFAS 150). SFAS 150 sets standards for an issuer as to
how to classify and measure financial  instruments with  characteristics of both
liabilities and equity. SFAS 150 is effective for financial  instruments entered
into after May 31, 2003, and is effective after June 15, 2003.  Adoption of SFAS
150 is not expected to have a material effect on the Company.

In December 2004, the FASB issued SFAS No. 123(R),  Share-Based  Payment,  which
establishes  standards for  transactions in which an entity exchanges its equity
instruments  for goods or services.  This  standard  requires a public entity to
measure the cost of  employee  services  received  in  exchange  for an award of
equity  instruments  based  on the  grant-date  fair  value of the  award.  This
eliminates  the exception to account for such awards using the intrinsic  method
previously allowable under APB Opinion No. 25. SFAS No. 123(R) will be effective
for interim or annual reporting  periods beginning on or after June 15, 2005. We
previously  adopted  the fair  value  recognition  provisions  of SFAS No.  123,
Accounting for Stock-Based Compensation,  on July 1, 2003 and have accounted for
all awards granted to employees in recent years using the fair value recognition
method.  Accordingly we believe SFAS No. 123(R) will not have a material  impact
on the financial statements.

In May 2005, the FASB issued SFAS 154, Accounting Changes and Error Corrections,
a replacement  of APB Opinion No. 20 and FASB Statement No. 3. SFAS 154 provides
guidance on the  accounting  for and reporting of  accounting  changes and error
corrections.  SFAS  154  requires  retrospective  application  to  prior  period
financial  statements  for  changes  in  accounting  principle,   unless  it  is
impracticable to determine either the period-specific  effects or the cumulative
effect of the change. SFAS 154 also requires that retrospective application of a
change in accounting  principle be limited to the direct  effects of the change.
Indirect effects of a change in accounting principle should be recognized in the
period  of the  accounting  change.  SFAS  154  further  requires  a  change  in
depreciation,  amortization,  or depletion method for long-lived,  non-financial
assets to be  accounted  for as a change in  accounting  estimate  affected by a
change in accounting principle. SFAS 154 is effective for accounting changes and
corrections  of errors made in fiscal years  beginning  after December 15, 2005.
The  Company  does not expect the  adoption of SFAS 154 to have an impact on its
financial condition or results of operations.


                                      F-16