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UNITED STATESSECURITIES AND EXCHANGE COMMISSIONWashington, D.C.
20549

Form 10-KSB

(Mark One)

[X] ANNUAL REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the fiscal year ended December 31, 2007

[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934

For the transition period from [ ] to [ ]

Commission file number 000-50011

LAMPERD LESS LETHAL
INC.(Name of small business issuer in its charter)

|Nevada                                                               | 98-0358040                          
|-------------------------------------------------------------------- | ------------------------------------
|(State or other jurisdiction of incorporation or
      organization) | (I.R.S. Employer Identification No.)

|1200 Michener Road,                      |           
|---------------------------------------- | ----------
|Sarnia, Ontario Canada                   | N7S 4B1   
|(Address of principal executive offices) | (Zip Code)

Issuer's telephone number 519-344-4445

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

|Title of each class | Name of each exchange on which registered
|------------------- | -----------------------------------------
|Nil                 | Nil                                      

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

Common Shares, par value $0.001USD(Title of
class)

Check whether the issuer (1) filed all reports required to be
filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or
for such shorter period that the 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 in response
to Item 405 of Regulation S-B is not contained in this form, 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. [ ]

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Indicate by check mark whether the registrant is a shell company
(as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X]

Issuer's revenues for its most recent fiscal year ended December
  31, 2007 is $295,862

Issuers aggregate market value of the voting common equity
  held by non-affiliates at March 31, 2008 was:

44,445,173 common shares @ $0.062(1)= USD$2,755,600(1) Average of
bid and ask closing prices on March 31, 2008.

(APPLICABLE ONLY TO CORPORATE REGISTRANTS)

State the number of shares outstanding of each of the issuer's
classes of equity stock, as of the latest practicable date.

59,871,043 common shares issued and outstanding as of March
31, 2008.

DOCUMENTS INCORPORATED BY REFERENCE

If the following documents are incorporated by reference,
briefly describe them and identify the part of the Form 10-KSB (e.g., Part I,
Part II, etc.) into which the document is incorporated: (1) any annual report to
security holders; (2) any proxy or information statement; and (3) any prospectus
filed pursuant to Rule 424(b) or (c) of the Securities Act of 1933 ("Securities
Act"). The listed documents should be clearly described for identification
purposes (e.g., annual report to security holders for fiscal year ended December
24, 1990).

Transitional Small Business Disclosure Format (Check one): Yes [
]; No [X].

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PART I

|Item 1. | Description of Business.
|------- | ------------------------

This annual report contains forward-looking statements within
the meaning of Section 27A of the Securities Act of 1933, as amended, and
Section 21E of the Securities Exchange Act of 1934, as amended. These statements
relate to future events or our future financial performance. In some cases, you
can identify forward-looking statements by terminology such as may, will,
should,  expects, plans, anticipates, believes, estimates,
predicts, potential or continue or the negative of these terms or other
comparable terminology. These statements are only predictions and involve known
and unknown risks, uncertainties and other factors, including the risks in the
section entitled Risk Factors, that may cause our or our industrys actual
results, levels of activity, performance or achievements to be materially
different from any future results, levels of activity, performance or
achievements expressed or implied by these forward-looking statements.

Although we believe that the expectations reflected in the
forward-looking statements are reasonable, we cannot guarantee future results,
levels of activity, performance or achievements. Except as required by
applicable law, including the securities laws of the United States, we do not
intend to update any of the forward-looking statements to conform these
statements to actual results.

Our financial statements are stated in Canadian Dollars (CND$)
unless other wise stated and are prepared in accordance with United States
Generally Accepted Accounting Principles.

In this annual report, unless otherwise specified, all
references to "common shares" refer to the common shares in our capital
stock.

As used in this annual report, the terms "we", "us", "our", and
"Lamperd" mean Lamperd Less Lethal Inc., unless otherwise indicated.

Corporate History

We were incorporated in the State of Nevada on October 4, 2001.
On March 21, 2005, we changed our name from "Sinewire Networks Inc." to "Lamperd
Less Lethal Inc". The name change was recorded by the Secretary of State of
Nevada on March 21, 2005, and took effect with the NASD Inc.s Over-the-Counter
Bulletin Board at the opening for trading on March 31, 2005 under our new stock
symbol "LLLI". Other than as set out herein, we have not been involved in any
bankruptcy, receivership or similar proceedings, nor have we been a party to any
material reclassification, merger, consolidation or purchase or sale of a
significant amount of assets not in the ordinary course of our business.

On April 21, 2005, we acquired all of the 100,000,000 issued
and outstanding common stock of 1476246 Ontario Limited, an Ontario corporation,
having effect from April 14, 2004, pursuant to the terms of a share exchange
agreement dated March 24, 2005 between us, the Ontario Company, Patrick Ward,
Hani Zabaneh and the shareholders of the Ontario company.

As consideration for the shares of the Ontario Company, we
issued 26,000,000 shares of our common stock to the shareholders of the Ontario
Company on the basis of one share of our company for every 3.8461538 common
shares of the Ontario Company. As a result of this transaction, the Ontario
Company became a wholly-owned subsidiary of our Company. For financial statement
purposes, the Ontario Company (the acquired entity) is regarded as the
predecessor entity as of April 14, 2005.

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Our original business plan was to become actively engaged as a
start-up wireless communications service provider. We planned to implement our
business strategy by supplying wireless high-speed Internet services, and other
complementary Internet and telecommunications services. We intended to provide a
telecommunications delivery service to businesses, Internet Service Providers
and telecommunication companies in underserved markets in North America.
Management investigated opportunities and challenges in the business of becoming
a wireless communications service provider and concluded that this business was
not in our best interest.

Our Current Business

Our company is now a developer and manufacturer of civil
defense products that are designed as a less lethal alternative to conventional
weapons. The products include weapon systems and munitions that are designed to
incapacitate as opposed to kill opponents, and at the same time, ensure the
safety of the personnel using the products. In addition, our company also
manufactures shields, service equipment, training gear and accessories. The
products are primarily designed for the use by military and law enforcement
organizations. Our company also offers less lethal training to police, military
and private sector security personnel. Training can be provided by experienced
military and police contractors in addition to trained civilian contractors
which are retained as required by our company with permission from their
respective agencies. The training programs offered by our company incorporate
the most current less lethal techniques and equipment, including our own
products.

The launchers consist of a hand held model called the Defender
I, a longer version called the Defender II, a revolving shotgun launcher
called the RSG-20, Homeland Defender 2 shot, and the Military Peace Keeper, or
MPK version, that combines lethal and less lethal technologies in one launcher.
The launchers fire 5 rounds except for our new product the Homeland Defender
which fires 2 rounds. The five types of munitions developed for use by the
launchers, as well as certain conventional weapons, consist of sock rounds, WASP
synthetic rounds, distractionary rounds, liquid incapacitant rounds, and
training rounds.

Our market is primarily comprised of military forces and law
enforcement organizations in Canada and the United States. In Canada, our
products are primarily sold to distributors who distribute its products to end
users on an exclusive basis. We have been granted a Canadian Business Firearms
License, which allows the company to manufacture, repair, store, import, export
and sell its proprietary products.

Our products are sold in the United States through a network of
distributors. Our munitions have been approved by the Joint Less-lethal Weapons
program in the United States. The program was established in order to provide
certain personnel with a variety of non-lethal weapons products. In furtherance
of the marketing and sales of our products, we have been assigned a NATO
Commercial and Government Entity Code which enables us to sell military supplies
to NATO member countries.

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Our Products

Launchers

We have developed five proprietary projectile launchers. Each
of the launchers is compatible with our line of proprietary less lethal
munitions including the WASP composite rounds, sock rounds, training rounds,
distractionary rounds and liquid incapacitant rounds. Four launchers fire 5
rounds and one launcher fires 2 rounds. The ability of an operator to fire more
than a single round provides greater security in hostile situations.

|1. | Defender I: The Defender I is our standard launcher
      product. The launcher fires munitions from a cylinder that holds five
      rounds. The launcher is a compact and lightweight product that fires 20
      gauge rounds.                                                               
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                 
|2. | Defender II: The Defender II is a longer version than the
      Defender I and also fires munitions from a cylinder that holds 5 rounds.
      The launcher fires 20 gauge rounds and has a longer barrel which provides
      for improved accuracy and greater effectiveness at longer
ranges.
|   |                                                                                                                                                                                                                                                                                                 
|3. | RSG-20: The RSG-20 is a revolving shotgun version
      developed for the United States market and designed to fire five 20 gauge
      cartridges.                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                 
|4. | Military Peace Keeper: The MPK version combines lethal
      and less lethal technologies in one launcher and fires five rounds. The
      launcher is lightweight and contains a laser system for increased
      accuracy.                                                                    
|   |                                                                                                                                                                                                                                                                                                 
|5. | Homeland Defender: The Homeland Defender is our 2 shot
      launcher. This launcher is light weight and small enough to be carried as
      second weapon.                                                                                                                                     

Munitions

We manufacture six types of proprietary munitions used by the
  launchers. Each of the munitions is made in 20 gauge, 12 gauge, 37mm and 40mm
  and 50 caliber sizes. In addition, our munitions are compatible with other 20
  gauge, 12 gauge, 37mm, 40mm and 50 caliber conventional weapons delivery systems.
  The munitions are designed to ensure the safety of the operator and incapacitate
  rather than kill an opponent.

WASP Composite Rounds

The WASP round is our most technologically advanced product.
The round consists of a projectile made from a rubber composite material that
does not harden in colder climates and possesses energy dissipation attributes,
resulting in a safer and more accurate projectile. The composite material allows
it to be used in temperatures ranging from minus 50 degrees Celsius to 100
degrees Celsius. The chemical composition of the projectile dissipates energy
upon impact, thus inflicting a level of force that is sufficient to temporarily
incapacitate but not kill the intended opponent. The projectile is patent
pending in Canada and the United States. The projectile was developed in
partnership with the University of Western Ontario. The University of Western
Ontario granted us an exclusive world-wide license to the technology pursuant to
a

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license agreement dated January 30, 2005. The license agreement
is effective for the term the patent rights are protected, subject to certain
conditions. In consideration for the grant of license, weve agreed to pay all
out-of-pocket expenses incurred by the University of Western Ontario, assume
responsibility for future patent prosecution and rights and pay the University a
royalty commencing on April 1, 2006 of three percent of revenue directly
attributable to the projectile. The royalty is subject to minimum royalty
obligations of $5,000 per year for each of the second and third years following
the entry into the license agreement, $10,000 per year for the fourth to sixth
years, and $20,000 thereafter.

Sock Rounds

The sock round fires a pouch or beanbag projectile filled
with lead pellets. Each sock round contains a proprietary tail attached to the
end of the round which stabilizes the round for increased accuracy. The
composition of the projectile allows for the dissipation of energy upon impact
which reduces the chances of injury of the intended target. The projectile is
intended to be aimed at the abdomen and hits the intended target with sufficient
force to knock the opponent down, but generally not enough to cause permanent
injury.

Distractionary Rounds

The distractionary round is an alternative to conventional stun
grenades and provides a bright flash combined with a 135 decibel noise, used to
disorient and temporarily blind opponents without causing permanent damage.

Liquid Incapacitant Rounds

Incapacitant rounds fire either a liquid or powder form of
pepper spray designed to temporarily blind and incapacitate opponents without
the need for officer contact. Firing the incapacitant rounds from a launcher
provides greater safety to the operator and provides more range than traditional
spray delivery methods.

Training Rounds

Training rounds are non-lethal munitions used by military and
law enforcement organizations to carry out training exercises amongst themselves
in preparation for hostile or combat situations.

Additional Products

We manufacture and distribute products in addition to launchers
and munitions, including the Specialized Mobil Armed Robot Technology System or
SMART System which combines the Defender launcher technology with an integrated
human-robot interface control platform. The SMART System is designed to deliver
less lethal, lethal and chemical weapon systems. Communication is facilitated by
a 360 degree camera and a proprietary sighting system mounted to the robotic
platform. The product can also be customized in accordance with the requirements
of the end-user.

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Our Firearm Training System, (FTS) is a simulation training
systems, to develop both fundamental basic and judgmental skills for lethal /
less lethal applications through computerized video hit projections. The FTS
product scenario can be customized to the customer needs.

Lumenyte Lamperd Undercarriage Camera Inspection System
(LLUCIS) is a powerful camera systems to assist security personal in carrying
out detailed vehicle inspections from a safe distance. This is a portable system
utilizes 5 digital video cameras along with a patent pending LED lighting array
which provides full non glare illumination. Images, are digitally recorded to a
computerized control system.

Employees

As at December 31, 2007, we have 5 full-time employees and 3
part-time employee.

Research and Development

For the fiscal years ended December 31, 2007 and 2006 we
expended approximately $29,142 and $4,369 on research and development activities
respectively.

Competition

The primary competitive factors in the demand for less lethal
products by military forces and law enforcement organizations include a weapons
cost, effectiveness and ease of use. There are several established competitors
offering less lethal products that directly complete with our companys
products, some of which are substantially more established than our company.

Regulation

In Canada, our launcher products are considered a firearm and
are regulated under federal law. The federal government has granted 1476246
Ontario Limited a Canadian Business Firearm License which permits our company to
manufacture, repair, store, import, export and sell our proprietary products. In
addition, in Canada we must also be registered under, and be in compliance with,
the Controlled Goods Program which sets requirement for possession/storage and
transport of our products. Our operating subsidiary is registered with the
Controlled Goods Program in accordance with the Defence Production Act.

In the US, the manufacture, sale and purchase of firearms are
subject to extensive federal governmental regulation. The basic federal laws are
the National Firearms Act and the Federal Firearms Act, which were originally
enacted in the 1930s and which have been amended from time to time, and the Gun
Control Act of 1968. Federal laws generally place certain restrictions on the
interstate sale of firearms unless certain licenses are obtained. The Defender
Series of products are considered to be a firearm by the United States Bureau
of Alcohol, Tobacco, Firearms and Explosives. Therefore, all firearms-related
regulations apply to the sale and distribution of our devices within the United
States.

In addition, we are subject to ITAR, the International Trade
and Arms Regulations.

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We believe that existing federal regulations regarding firearms
and ammunition will not have a material adverse effect on sales of our products.
However, there can be no assurance that federal, state, local or foreign
regulation of firearms and/or ammunition will not become more restrictive in the
future and that any such development would not have a material adverse effect on
our business whether directly or by placing additional burdens on those who
distribute and sell our products.

Foreign Regulation

Foreign regulations which may affect the sale of our products
are numerous and unclear. We prefer to work with foreign distributors who are
familiar with the applicable import regulations of their jurisdiction and who
are in a position to acquire the necessary approvals to sell our companys
products in the specified jurisdictions.

Raw Materials And Principal Suppliers

The principal components of our products are readily available
  from a variety of sources. The prices for these components are subject to market
  forces largely beyond our control. The prices for these components have varied
  in the past and may vary significantly in the future. The WASP synthetic round
  is made from a proprietary rubber compound. The aluminum for our launchers is
  readily available from a number of local sources.

Compliance With Environmental Laws

To our knowledge, neither the production nor the sale of our
products constitute activities or generate materials, in a material manner, that
requires compliance with federal, state or local environmental laws in any
jurisdiction of our operation.

Intellectual Property

We currently protect our intellectual property with a variety
of trademarks and trade secrets. In Canada and the United States, Lamperd has
applied for a patent of the underlying technology used in its WASP composite
round, which patent is currently pending. The patent application was filed by
the University of Western Ontario under United States Provisional Patent
Application No. 60/507,491.

The following names are trademarks of 1476246 Ontario Limited:
Lamperd Less Lethal, Defender I, Defender II, Enforcer Suit I, Enforcer Suit II
and Pinetree Law Enforcement.

Our company owns and operates the duly registered internet
domain name: www.lamperdlesslethal.com. The information contained in our
companys website is not part of this annual report.

RISK FACTORS

Much of the information included in this current report
includes or is based upon estimates, projections or other "forward looking
statements". Such forward looking statements include any projections or
estimates made by us and our management in connection with our business
operations. While these forward-looking statements, and any assumptions upon
which they are based, are made in good faith and reflect our current judgment
regarding the

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direction of our business, actual results will almost always
vary, sometimes materially, from any estimates, predictions, projections,
assumptions or other future performance suggested herein.

Such estimates, projections or other "forward looking
statements" involve various risks and uncertainties as outlined below. We
caution the reader that important factors in some cases have affected and, in
the future, could materially affect actual results and cause actual results to
differ materially from the results expressed in any such estimates, projections
or other "forward looking statements".

Risks Related To Our Business

We operate in a highly-competitive industry and our failure
to compete effectively may adversely affect our ability to generate
revenue.

Management is aware of similar products which compete directly
with our products and some of the companies developing these products have
significantly greater financial, technical and marketing resources, larger
distribution networks, and generate greater revenue and have greater name
recognition than us. These companies may develop products superior to those of
our company. Such competition will potentially affect our chances of achieving
profitability, and ultimately adversely affect our ability to continue as a
going concern. Some of our competitors conduct more extensive promotional
activities and offer lower prices to customers than we do, which could allow
them to gain greater market share or prevent us from increasing our market
share. In the future, we may need to decrease our prices if our competitors
continue to lower their prices. Our competitors may be able to respond more
quickly to new or changing opportunities, technologies and customer
requirements. To be successful, we must carry out our business plan, establish
and strengthen our brand awareness through marketing, effectively differentiate
our product line from those of our competitors and build our distribution
network. To achieve this we may have to substantially increase our marketing
research and development in order to compete effectively. Such competition will
potentially affect our chances of achieving profitability, and ultimately
adversely affect our ability to continue as a going concern. Due to minimal
revenue and lack of cash flow we have cancelled the product liability insurance
policy. The Company is researching other insurance agencies that are more
competitive with their price coverage. We plan to implement our product
liability insurance in 2008.

Rapid technological changes in our industry could render our
products non-competitive or obsolete and consequently affect our ability to
generate revenues.

Currently, we derive substantially all of our revenues from the
  sale of civil defense products and related products using less lethal alternatives
  to conventional weapons, including launchers and munitions. Such products are
  characterised and affected by rapid technological change, evolving industry
  standards and regulations and changing client preferences. Our success will
  depend, in significant part, upon our ability to make timely and cost-effective
  enhancements and additions to our technology and to introduce new products and
  services that meet customer demands. We expect new products and services to
  be developed and introduced by other companies that compete with our products
  and services. The proliferation of new and established companies offering less
  lethal alternative products may reduce demand for our particular products. There
  can be no assurance that we will be successful in responding to these or other
  technological changes, to evolving industry standards or regulations or to new
  products and services offered by

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our current and future competitors. In addition, we may not
have access to sufficient capital for our research and development needs in
order to develop new products and services.

We could lose our competitive advantages if we are not able
to protect our proprietary technology and intellectual property rights against
infringement, and any related litigation could be time-consuming and
costly.

Our success and ability to compete depends in part on our
proprietary technology incorporated in our products. If any of our competitors
copy or otherwise gain access to our proprietary technology or develop similar
technologies independently, we would not be able to compete as effectively. We
consider our technologies invaluable to our ability to continue to develop and
maintain the goodwill and recognition associated with our brand. The measures we
take to protect our technologies, and other intellectual property rights, which
presently are based upon registered trade marks in addition to trade secrets,
may not be adequate to prevent their unauthorized use. Although we rely, in
part, on contractual provisions to protect our trade secrets and proprietary
know-how, there is no assurance that these agreements will not be breached, that
we would have adequate remedies for any breach or that our trade secrets will
not otherwise become known or be independently developed by competitors.
Further, the laws of foreign countries may provide inadequate protection of
intellectual property rights. We may need to bring legal claims to enforce or
protect our intellectual property rights. Any litigation, whether successful or
unsuccessful, could result in substantial costs and a diversion of corporate
resources. In addition, notwithstanding any rights we have secured to our
intellectual property, other persons may bring claims against us claiming that
we have infringed on their intellectual property rights, including claims that
our intellectual property rights are not valid. Adverse determinations in
litigation in which we may become involved could subject us to significant
liabilities to third parties, require us to grant licenses to or seek licenses
from third parties and prevent us from manufacturing and selling our products.
Any claims against us, with or without merit, could be time-consuming and costly
to defend or litigate, divert our attention and resources, result in the loss of
goodwill associated with our trademarks or require us to make changes to our
technologies. Furthermore, we cannot assure you that any pending patent
application made by us will result in an issued patent, or that, if a patent is
issued, it will provide meaningful protection against competitors or competitor
technologies.

We may not be able to hire and retain qualified personnel to
support our growth and if we are unable to retain or hire such personnel in the
future, our ability to improve our products and implement our business
objectives could be adversely effected.

To continue our growth, we will need to recruit additional
senior management personnel, including persons with financial and sales
experience. In addition, we must hire, train and retain a significant number of
other skilled personnel, including persons with experience in less lethal
munitions engineering and manufacturing. We have encountered competition for
these personnel. We may not be able to find or retain qualified personnel, which
will have a material adverse impact on our business.

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Our growth could be impaired if we are not able to develop
and maintain the relationships we need to implement our international
strategy.

Our growth will depend, in large part, on the success of our
international distribution strategy. We have limited experience in marketing and
selling our products outside of Canada and the United States. We will depend on
partnerships and/or joint ventures in international markets to help us build our
international operations and distribution networks. We will depend upon
international partners to provide marketing and relationship building expertise,
and a base of existing customers. If we are unable to develop and maintain these
relationships, or to develop additional relationships in other countries, our
ability to penetrate, and successfully compete in foreign markets will be
adversely affected.

We intend to expand our business internationally, and
therefore, we are subject to additional financial and regulatory risks.

Our current and future international operations are and will be
subject to various risks, including: foreign import controls (which may be
arbitrarily imposed and enforced and which could interrupt our supplies or
prohibit customers from purchasing our products); exchange rate fluctuations;
the necessity of obtaining government approvals for both new and continuing
operations; and legal systems of decrees, laws, taxes, regulations,
interpretations and court decisions that we are not familiar with. One component
of our strategy is to expand our operations into selected international markets.
Foreign countries in which we are actively marketing include the United States
and Israel; we intend to commence marketing efforts in Nigeria in the near
future. We, however, may be unable to execute our business model in this market
or new markets. Further, foreign providers of competing products and services
may have a substantial advantage over us in attracting consumers and businesses
in their country due to earlier established businesses in that country, greater
knowledge with respect to the cultural differences of consumers and businesses
residing in that country and/or their focus on a single market. As a result, we
expect to experience higher costs as a percentage of any revenues that we may
generate in the future in connection with the development and maintenance of
international sales. In pursuing our international expansion strategy, we face
several additional risks, including:

- foreign laws and regulations, which may vary country by
country, that may impact how we conduct our business;

- higher costs of doing business in foreign countries;

- potential adverse tax consequences if taxing authorities in
different jurisdictions worldwide disagree with our interpretation of various
tax laws or our determinations as to the income and expenses attributable to
specific jurisdictions, which could result in our paying additional taxes,
interest and penalties;

- technological differences that vary by marketplace, which we
  may not be able to support;

- longer payment cycles and foreign currency fluctuations; and

- economic downturns.

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We propose to operate in areas where local government policies
regarding foreign entities and the regulation of less lethal products are often
uncertain. We therefore cannot, be certain that we are in compliance with, or
will be protected by, all relevant local laws and taxes at any given point in
time. A subsequent determination that we failed to comply with relevant local
laws and taxes could have a material adverse effect on our business, financial
condition, results of operations and liquidity. One or more of these factors
could adversely affect our future international operations and, consequently,
could have a material adverse effect on our business, financial condition,
results of operation and liquidity.

Many of our customers have fluctuating budgets, which may
cause substantial fluctuations in our results of operations.

The potential customers for our products may include federal,
  state, municipal, foreign and military, law enforcement and other governmental
  agencies. Government tax revenues and budgetary constraints, which fluctuate
  from time to time, can affect budgetary allocations from these customers. Many
  domestic and foreign government agencies have in the past experienced budget
  deficits that have led to decreased spending in defense, law enforcement and
  other military and security areas. Any future revenues that our company may
  generate may be subject to substantial periodic fluctuations because of these
  and other factors affecting military, law enforcement and other governmental
  spending. A reduction of funding for federal, state, municipal, foreign and
  other governmental agencies could have a material adverse effect on any future
  revenues that we may generate.

Our WASP synthetic round is costly to compound, and our
company may not be able to find other subcontractors who are willing to supply
our company with this service.

The WASP synthetic round is made from a proprietary rubber
compound and is costly to compound. It may be difficult to find other
contractors willing to compound our material. If we are unable to find
contractors willing to compound and deliver our material, our revenues will be
reduced.

Risks Related To Our Industry

The products we sell are inherently risky and could give
rise to product liability and other claims.

The products that we manufacture are typically used in
applications and situations that involve a high level of risk of personal
injury. Failure to use our products for their intended purposes, failure to use
or care for them properly, or their malfunction, or, in some limited
circumstances, even correct use of our products, could result in serious bodily
injury or death. Given this potential risk of injury, proper maintenance of our
products is critical. Our products consist of less lethal products such as
launchers, munitions, pepper sprays and distraction devices. The manufacture and
sale of less-lethal products may be the subject of product liability claims
arising from the design, manufacture or sale of such goods. If these claims are
decided against our company and we are founds liable, we may be required to pay
substantial damages and our insurance costs, if any, may increase significantly
as a result. Also, a significant or extended lawsuit could also divert
significant amounts of managements time and energy. We cannot

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assure you that our insurance coverage, if any, would be
sufficient to cover the payment of any potential claim. In addition, we cannot
assure you that this or any other insurance coverage will continue to be
available or, if available, that we will be able to obtain it at a reasonable
cost. Any material uninsured loss could have a material adverse effect on our
business, financial condition and results of operations.

We are subject to extensive government regulation, and our
failure or inability to comply with these regulations could materially restrict
our operations and subject us to substantial penalties.

We are subject to many requirements with respect to the sale in
foreign and/or domestic countries of certain of our products. In addition, we
are obligated to comply with a variety of federal, state and local regulations,
both domestically and abroad, governing certain aspects of our operations and
workplace. The inability of our company to comply with such regulations may
limit our operations and subject us to substantial penalties and fines.

Risks Related To Our Common Stock

A decline in the price of our common stock could affect our
ability to raise further working capital and adversely impact our
operations.

A prolonged decline in the price of our common stock could
result in a reduction in the liquidity of our common stock and a reduction in
our ability to raise capital. Because our operations have been financed through
the sale of equity securities, a decline in the price of our common stock could
be especially detrimental to our liquidity and our continued operations. Any
reduction in our ability to raise equity capital in the future would force us to
reallocate funds from other planned uses and would have a significant negative
effect on our business plans and operations, including our ability to develop
new products and continue our current operations. If the stock price declines,
there can be no assurance that we can raise additional capital or generate funds
from operations sufficient to meet our obligations. We believe the following
factors could cause the market price of our common stock to continue to
fluctuate widely and could cause our common stock to trade at a price below the
price at which you purchase your shares:

- actual or anticipated variations in our quarterly operating
results;

- announcements of new services, products, acquisitions or
strategic relationships by us or our competitors;

- trends or conditions in the less lethal products
industry;

- changes in accounting treatments or principles;

- changes in earnings estimates by securities analysts and in
  analyst recommendations;

- changes in market valuations of other less lethal product
  companies; and

- general political, economic, regulatory and market conditions.

---

- 14 -

The market price for our common stock may also be affected by
our ability to meet or exceed expectations of analysts or investors. Any failure
to meet these expectations, even if minor, could materially adversely affect the
market price of our common stock.

If we issue additional shares in the future, it will result
in the dilution of our existing shareholders.

Our certificate of incorporation authorizes the issuance of
1,000,000,000 shares of common stock. Our board of directors has the authority
to issue additional shares up to the authorized capital stated in the
certificate of incorporation. Our board of directors may choose to issue some or
all of such shares to acquire one or more businesses or to provide additional
financing in the future. The issuance of any such shares will result in a
reduction of the book value or market price of the outstanding shares of our
common stock. If we do issue any such additional shares, such issuance also will
cause a reduction in the proportionate ownership and voting power of all other
shareholders. Further, any such issuance may result in a change of control of
our corporation.

If a market for our common stock does not develop,
shareholders may be unable to sell their shares.

There is currently a limited market for our common stock, which
trades through the Over-the-Counter Bulletin Board quotation system. Trading of
stock through the Over-the-Counter Bulletin Board is frequently thin and highly
volatile. There is no assurance that a sufficient market will develop in the
stock, in which case it could be difficult for shareholders to sell their stock.

Trading of our stock may be restricted by the Securities and
Exchange Commissions penny stock regulations which may limit a stockholders
ability to buy and sell our stock.

The Securities and Exchange Commission has adopted regulations
which generally define penny stock to be any equity security that has a market
price (as defined) less than $5.00 per share or an exercise price of less than
$5.00 per share, subject to certain exceptions. Our securities are covered by
the penny stock rules, which impose additional sales practice requirements on
broker-dealers who sell to persons other than established customers and
accredited investors. The term accredited investor refers generally to
institutions with assets in excess of $5,000,000 or individuals with a net worth
in excess of $1,000,000 or annual income exceeding $200,000 or $300,000 jointly
with their spouse. The penny stock rules require a broker-dealer, prior to a
transaction in a penny stock not otherwise exempt from the rules, to deliver a
standardized risk disclosure document in a form prepared by the Securities and
Exchange Commission which provides information about penny stocks and the nature
and level of risks in the penny stock market. The broker-dealer also must
provide the customer with current bid and offer quotations for the penny stock,
the compensation of the broker-dealer and its salesperson in the transaction and
monthly account statements showing the market value of each penny stock held in
the customers account. The bid and offer quotations, and the broker-dealer and
salesperson compensation information, must be given to the customer orally or in
writing prior to effecting the transaction and must be given to the customer in
writing before or with the customers confirmation. In addition, the penny stock
rules require that prior to a

---

- 15 -

transaction in a penny stock not otherwise exempt from these
rules; the broker-dealer must make a special written determination that the
penny stock is a suitable investment for the purchaser and receive the
purchasers written agreement to the transaction. These disclosure requirements
may have the effect of reducing the level of trading activity in the secondary
market for the stock that is subject to these penny stock rules. Consequently,
these penny stock rules may affect the ability of broker-dealers to trade our
securities. We believe that the penny stock rules discourage investor interest
in and limit the marketability of, our common stock.

The National Association of Securities Dealers Inc., or
NASD, has adopted sales practice requirements, which may limit a stockholders
ability to buy and sell our shares.

In addition to the penny stock rules described above, the
NASD has adopted rules requiring that in recommending an investment to a
customer, a broker-dealer must have reasonable grounds for believing that the
investment is suitable for that customer. Prior to recommending speculative
low-priced securities to their non-institutional customers, broker-dealers must
make reasonable efforts to obtain information about the customers financial
status, tax status, investment objectives and other information. Under
interpretations of these rules, the NASD believes that there is a high
probability that speculative low-priced securities will not be suitable for at
least some customers. The NASD requirements make it more difficult for
broker-dealers to recommend that their customers buy our common stock, which may
limit our shareholders ability to buy and sell our stock and which may have an
adverse effect on the market for our shares.

Most of our assets and a majority of our directors and
officers are outside the United States, with the result that it may be difficult
for investors to enforce within the United States any judgments obtained against
us or any of our directors or officers.

Although we are organized under the laws of the State of
Nevada, our principal executive office is located in Sarnia, Ontario, Canada.
Outside the United States, it may be difficult for investors to enforce
judgments against us obtained in the United States in any such actions,
including actions predicated upon civil liability provisions of federal
securities laws. In addition, some of our officers and directors reside outside
the United States, and a majority of the assets of these persons and our assets
are located outside of the United States. As a result, it may not be possible
for investors to effect service of process within the United States upon such
persons or to enforce against us or such persons judgments predicated upon the
liability provisions of the United States securities laws. There is substantial
doubt as to the enforceability against us or any of our directors and officers
located outside the United States in original actions or in actions of
enforcement of judgments of United States courts or liabilities predicated on
the civil liability provisions of United States federal securities laws.

|Item 2. | Description of Property.
|------- | ------------------------

Our principal executive offices are located at 1200 Michener
Road, Sarnia, Ontario, Canada. The 10,000 square foot space is leased for $6,400
per month for an additional three year term that commenced on January 1, 2008.
The Company also leases another 3,000 square feet for $1,000 a month. There is
no signed agreement for the additional leased space. We believe that our
principal office will be adequate for our needs for the next 2-3 years. In
addition to our principal office, we periodically lease a 15 acre property which
our company utilizes as a training facility to hold our diverse training
programs. The property is leased as required for a fluctuating daily fee.

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- 16 -

|Item 3. | Legal Proceedings.
|------- | ------------------

A Statement of Claim on February 1, 2007 has been filed against
our company by Mintz & Partners LLP for the amount of $103,248. Our company
is disputing this amount and plans to defend itself and is counter claiming
against Mintz. Our company and Mintz are in a settlement discussion. Proceedings
have being requested to be held in the City of Toronto, in the Province of
Ontario at the Ontario Superior Court of Justice.

|Item 4. | Submissions of Matters to a Vote of Security
      Holders.
|------- | -----------------------------------------------------------

There were no matters submitted to a vote of our security
holders either through solicitation of proxies or otherwise in the fourth
quarter of the fiscal year ended December 31, 2008.

PART II

|Item 5. | Market for Common Equity and Related
      Stockholder Matters.
|------- | ---------------------------------------------------------------

On June 5, 2003, our common stock received approval for
quotation on the National Association of Securities Dealers Inc.'s
Over-the-Counter Bulletin Board under the name "Sinewire Networks Inc." and
under the symbol "SNTW". On March 21, 2005, we changed our name from "Sinewire
Networks Inc." to "Lamperd Less Lethal Inc". The name change took effect with
the NASD Inc.s Over-the-Counter Bulletin Board at the opening for trading on
March 31, 2005 under our new stock symbol "LLLI".The following table reflects
the high and low bid information for our common stock for each fiscal quarter
during the fiscal years ended 2006 and 2005. The bid information was obtained
from Stock-watch and reflects inter-dealer prices, without retail mark-up,
markdown or commission, and may not necessarily represent actual
transactions.

Quarter Ended(1)
    High ($)
    Low ($)March 31, 2005
    1.30
    0.985June 30, 2005
    4.56
    1.25September 29, 2005
    1.99
    0.47December 31, 2005
    1.07
    0.36March 31, 2006
    0.52
    0.20June 30, 2006
    0.42
    0.14September 29, 2006
    0.22
    0.08December 31, 2006
    0.16
    0.08March 31, 2007
    0.11
    .10June 29, 2007
    0.08
    0.07September 28, 2007
    0.08
    0.06December 31, 2007
    0.04
    0.03


(1)Our common stock
received approval for quotation on June 5, 2003. The first trade occurred March
31, 2005.

On March 31, 2008, the closing price for the common stock as
reported by the quotation service operated by the OTC Bulletin Board was
$0.062

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- 17 -

As of March 31, 2008, there were 33 holders of record of our
common stock. As of such date, 59,871,043 common shares were issued and
outstanding.

Our common shares are issued in registered form. The Nevada
Agency and Trust Company, 50 Liberty Street, Suite 880, Reno, Nevada 89501
(Telephone: 775.322.0626; Facsimile 775.322.5623) is the registrar and transfer
agent for our common shares. We have no other classes of securities.

Dividend Policy

We have not paid any cash dividends on our common stock and
have no present intention of paying any dividends on the shares of our common
stock. Our current policy is to retain earnings, if any, for use in our
operations and in the development of our business. Our future dividend policy
will be determined from time to time by our board of directors.

Equity Compensation Plan Information

On December 4, 2006, our directors adopted a stock option plan
(the 2006 Option Plan) for our directors and employees, reserving a total of
2,000,000 shares of our common stock for issuance pursuant to grants made under
the 2006 Option Plan. The 2006 Option Plan was effective October 1, 2006

The following table provides a summary of the securities
authorized for issuance under Equity Compensation Plans, the weighted average
price and number of securities remaining available for issuance, all as at
December 31, 2007.

|                          |  |                   |  |   |                   |  |  | Number of            | 
|------------------------- |  | ----------------- |  | - | ----------------- |  |  | -------------------- | 
|                          |  |                   |  |   |                   |  |  | securities           | 
|                          |  | Number of         |  |   |                   |  |  | remaining available  | 
|                          |  | securities to be  |  |   |                   |  |  | for future issuance  | 
|                          |  | issued upon       |  |   | Weighted average  |  |  | under equity         | 
|                          |  | exercise of       |  |   | exercise price of |  |  | compensation plans   | 
|                          |  | outstanding       |  |   | outstanding       |  |  | (excluding           | 
|                          |  | options, warrants |  |   | options, warrants |  |  | securities reflected | 
|                          |  | and rights        |  |   | and rights        |  |  | in column (a))       | 
|                          |  | (a)               |  |   | (b)               |  |  | (c)                  | 
|Equity compensation plans |  |                   |  |   |                   |  |  |                      | 
|approved by security      |  |                   |  |   |                   |  |  |                      | 
|holders                   |  | N/A               |  |   | N/A               |  |  | N/A                  | 
|Equity compensation plans |  |                   |  |   |                   |  |  |                      | 
|not approved by security  |  |                   |  |   |                   |  |  |                      | 
|holders                   |  | 200,000           |  | $ | 0.10              |  |  | 1,800,000            | 
|                          |  | 650,000           |  | $ | 0.08              |  |  | 1,150,000            | 
|                          |  | 250,000           |  | $ | 0.10              |  |  | 900,000              | 
|                          |  | 500,000           |  | $ | 0.04              |  |  | 400,000              | 
|Total                     |  | 1,600,000         |  | $ | 117,000           |  |  |                      | 

Purchase of Equity Securities by the Issuer and Affiliated
Purchasers

We did not purchase any of our shares of common stock or other
securities during the year ended December 31, 2007.

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- 18 -

Recent Sales of Unregistered Securities

On March 18, 2005, the Company (formerly known as Sinewire
Networks Inc.) entered into a reverse acquisition transaction (transaction)
with privately held 1476246 Ontario Limited (1476246), an Ontario corporation.
The transaction was effected pursuant to a Share Exchange Agreement dated March
18, 2005 (the Agreement). Prior to the reverse takeover transaction 1476246
issued 99,996,000 common shares for nominal consideration. In accordance with
the Agreement the Company acquired all 100,000,000 issued and outstanding common
stock of 1476246 in exchange for the issuance by the Company of 26,000,000
shares of common stock to the shareholders of 1476246. Under the agreement, one
share of the Company was issued for every 3.8461538 common stock of 1476246. As
a result, 1476246 legally became a wholly owned subsidiary of the Company and
the former shareholders of 1476246 hold greater than 50% of the Companys
outstanding shares. Under the Agreement and as a result of the forward stock
split, 44,516,000 outstanding common shares of the Company were exchanged for
222,580,000 common shares, 199,580,000 common shares of the Company were
surrendered immediately for cancellation without consideration.

On April 13, 2005, we sold 1,500,000 units at a price of US
$1.00 per unit for an aggregate purchase price of US$1,500,000 to one non-U.S.
investor relying on the promulgated there exemption from the registration
requirements of the Securities Act of 1933 provided by Regulation S under. Each
unit was exercisable into one common share and two common share purchase
warrants. Each common share purchase warrant was immediately exercisable and
entitles the holder to purchase one common share for a period of 24 months
commencing from April 14, 2005. The warrants are exercisable at a price per
share of US $1.25 for twelve months following April 14, 2005, and at US$1.40
thereafter. On March 2, 2006, we issued an aggregate of 500,000 shares to two
individuals in an offshore transaction for which we relied on the exemption from
the registration requirements of the Securities Act of 1933 provided by
Regulation S promulgated there under.

On July 14, 2006 we agreed to issue 1,000,000 common shares to
an investor at a price of US$0.06 per share. Total consideration received was
US$60,000 that was used to pay for operating expenses. The securities were
issued pursuant to the exemption from registration under the United States
Securities Act of 1933 provided by Section 4(2), Section 4(6) and/or Rule 506 of
Regulation D promulgated under the 1933 Act to the investor who is an
accredited investor  within the respective meanings ascribed to that term in
Rule 501(a) under the 1933 Act. No advertising or general solicitation was
employed in offering the securities.

Effective December 4, 2006, we granted stock options to two (2)
  employees to purchase an aggregate of 200,000 shares of our common stock at
  an exercise price of $0.10 per share, exercisable until December 4, 2013. We
  issued the stock options to two (2) non-U.S. persons (as that term is defined
  in Regulation S of the Securities Act of 1933), in an offshore transaction relying
  on Regulation S and/or Section 4(2) of the Securities Act of 1933.

On March 2, 2006, we issued an aggregate of 500,000 shares to
  two individuals in an offshore transaction for which we relied on the exemption
  from the registration requirements of the Securities Act of 1933 provided by
  Regulation S promulgated there under.

Effective May 1, 2007, we issued in a private placement
offering for 750,000 shares at US $.10 a unit which included a common stock
purchase warrant entitling the holder to acquire up to 1,000,000 common shares
in the company at US $0.08 per share, expiring April 30, 2010.

Effective June 30, 2007, we granted stock options to one (1)
director one (1) employee and one (1) Consultant to purchase an aggregate of
650,000 shares of our common stock at an exercise price of $0.08 per share,
exercisable until June 30, 2012. We issued the stock options to two (3) non-U.S.
persons (as that term is defined in Regulation S of the Securities Act of 1933),
in an offshore transaction relying on Regulation S and/or Section 4(2) of the
Securities Act of 1933.

Effective July 20, 2007, we granted stock options to one (1)
consultant to purchase an aggregate of 250,000 shares of our common stock at an
exercise price of $0.10 per share, exercisable until

---

- 19 -

July 20, 2012. Stock options were issued to one U.S. person (as
  that term is defined in Regulation S of the Securities Act of 1933) relying
  on the exemptions from registration provided by Section 4(2) of the Securities
  Act of 1933 and upon Rule 506 of Regulation D of the Securities Act of 1933

Effective December 31, 2007 we granted stock options to one (1)
employee to purchase an aggregate of 500,000 shares of our common stock at an
exercise price of $0.04 per share, exercisable until December 31, 2012. We
issued the stock options to two (1) non-U.S. persons (as that term is defined in
Regulation S of the Securities Act of 1933), in an offshore transaction relying
on Regulation S and/or Section 4(2) of the Securities Act of 1933.

On December 31, 2006, we issued 250,000 shares of common stock
to Edward Ferguson, a director of our company, for services rendered in lieu of
a cash payment. The common stock was issued to one U.S. person (as that term is
defined in Regulation S of the Securities Act of 1933) relying on the exemptions
from registration provided by Section 4(2) of the Securities Act of 1933 and
upon Rule 506 of Regulation D of the Securities Act of 1933.

On December 31, 2006, we issued an aggregate of 1,570,158
shares of common stock to two (2) directors and one (1) consultant as payment
for services or supplies provided to our company for the period ending December
31, 2006. The common stock was issued to three (3) non-U.S. persons (as that
term is defined in Regulation S of the Securities Act of 1933), in an offshore
transaction relying on Regulation S and/or Section 4(2) of the Securities Act of
1933.

On March 31, 2007, we issued an aggregate of 422,982 shares of
common stock to one (1) director for services or supplies provided to our
company for the period ending June 30, 2007. The common stock was issued to one
(1) non-U.S. person (as that term is defined in Regulation S of the Securities
Act of 1933), in an offshore transaction relying on Regulation S and/or Section
4(2) of the Securities Act of 1933.

On June 30, 2007, we issued an aggregate of 374,900 shares of
common stock to one (1) director for services or supplies provided to our
company for the period ending June 30, 2007. The common stock was issued to one
(1) non-U.S. person (as that term is defined in Regulation S of the Securities
Act of 1933), in an offshore transaction relying on Regulation S and/or Section
4(2) of the Securities Act of 1933.

On December 31, 2007, we issued an aggregate of 4,503,003
shares of common stock to two (2) directors one (1) employee and one (1)
consultant as payment for services or supplies provided to our company for the
period ending December 31, 2007. The common stock was issued to three (4)
non-U.S. persons (as that term is defined in Regulation S of the Securities Act
of 1933), in an offshore transaction relying on Regulation S and/or Section 4(2)
of the Securities Act of 1933.

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- 20 -

|Item 6. | Managements Discussion and Analysis or Plan
      of Operation.
|------- | ----------------------------------------------------------------

Overview

You should read the following discussion of our financial
condition and results of operations together with the consolidated audited
financial statements and the notes to the consolidated audited financial
statements included elsewhere in this filing prepared in accordance with
accounting principles generally accepted in the United States.

Our financial statements are stated in Canadian Dollars unless
otherwise stated and are prepared in accordance with United States Generally
Accepted Accounting Principles. All financial information contained herein is in
Canadian Dollars unless otherwise stated.

This discussion contains forward-looking statements that
reflect our plans, estimates and beliefs. Our actual results could differ
materially from those anticipated in these forward-looking statements.

General  Explanation of Comparative Periods

The acquisition of 1476246 Ontario Limited was accounted for
using the purchase method of accounting as applicable to reverse acquisitions
because the former stockholders of 1476246 Ontario Limited controlled a majority
of our shares of common stock immediately upon conclusion of the transaction and
the continuing business is that of 1476246 Ontario Limited. Under reverse
acquisition accounting, the post-acquisition entity is accounted for as a
recapitalization of 1476246 Ontario Limited. After completion of the
acquisition, we changed our name to Lamperd Less Lethal Inc. to affect our
newly acquired business.

The previous audited financial statements of Sinewire Networks
Inc. for the fiscal periods ended December 31, 2004 and 2003 were included in
our annual report on Form 10-KSB, filed with the Securities and Exchange
Commission on April 7, 2005. Prior to the share exchange with 1476246 Ontario
Limited, Sinewire Networks Inc. (the inactive public company) was not operating,
had minimal assets and liabilities and had minimal revenue from its inception
through the date of its reorganization on April 14, 2005.

Plan of Operation

Results of Operations

Year Ended December 31, 2007 compared with year ended
December 31, 2006

We posted losses of $792,863 for the year ended December 31,
2007 compared to losses of $842,016 for the year ended December 31, 2006, and
losses of $3,024,376 since inception to December 31, 2007. The principal
component of the loss was for general and administrative expenses.

Operating expenses for the year ended December 31, 2007 were
$876,392 compared to $895,413 for the year ended December 31, 2006.

Financial Condition, Liquidity and Capital Resources

Cash used in operating activities was $261,332 during the year
ended December 31, 2007. Cash of $35,918 was used in the purchase of equipment
and leaseholds. There was a net cash inflow of $295,088 from financing
activities during the year ended December 31, 2007, which was mostly derived
from proceeds from promissory notes and advances.

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- 21 -

From inception on October 4, 2001 to April 13, 2005, the Company
  was engaged as a start-up wireless internet service provider. Since April 14,
  2005, the Company has been engaged in the business of developing and manufacturing
  of civil defense products that are designed as a less lethal alternative to
  conventional weapons. Our principal capital resources have been acquired through
  the issuance of common stock.

Year Ended December 31, 2007 compared with year ended
December 31, 2006

At December 31, 2007, we had a working capital deficit of
$608,677 compared to working capital deficit of $288,189 at December 31, 2006.

At December 31, 2007, we had assets of $426,274 compared to our
assets at December 31, 2006 of $487,313.

At December 31, 2007, our total liabilities were $765,269
compared to our liabilities of $486,564 as at December 31, 2006.

At December 31, 2007, we have bank indebtedness of $7,410
compared to cash on hand of $1,443 as at December 31, 2006.

We have no long-term debt as at December 31, 2007.

While we expect to meet our financial obligations, the
continuation of our business is dependent upon obtaining further financing, a
successful program of acquisition and development, and, finally, achieving a
profitable level of operations. The issuance of additional equity securities by
us could result in a significant dilution in the equity interests of our current
stockholders. Obtaining commercial loans, assuming those loans would be
available, will increase our liabilities and future cash commitments.

There are no assurances that we will be able to obtain further
funds required for our continued operations. As noted herein, we are pursuing
various financing alternatives to meet our immediate and long-term financial
requirements. There can be no assurance that additional financing will be
available to us when needed or, if available, that it can be obtained on
commercially reasonable terms. If we are not able to obtain the additional
financing on a timely basis, we will be unable to conduct our operations as
planned, and we will not be able to meet our other obligations as they become
due. In such event, we will be forced to scale down or perhaps even cease our
operations.

Product Research and Development

We anticipate that we will expend $55,000 on research and
development over the twelve months ending December 31, 2008.

Purchase of Significant Equipment

No significant purchases are being planned for the next 12
months.

Going Concern

Not having generated significant revenues, in the consolidated
financial statements for the year ended December 31, 2007, our independent
auditor included in their Report to Shareholders dated May 13, 2008 an
explanatory

---

- 22 -

paragraph regarding concerns about our ability to continue as a
going concern. Our consolidated financial statements contain additional note
disclosures describing the circumstances that lead to this disclosure.

The continuation of our business is dependent upon us raising
additional financial support. The issuance of additional equity securities by us
could result in a significant dilution in the equity interests of our current
stockholders. Obtaining commercial loans, assuming those loans would be
available, will increase our liabilities and future cash commitments.

We incurred losses in our first three years of business totaling
  of $3,189,649. Because of these losses and potential future losses, we will
  require additional working capital to develop our business operations.

We intend to raise additional working capital through private
placements, public offerings and/or bank financing.

There are no assurances that we will be able to either (1)
achieve a level of revenues adequate to generate sufficient cash flow from
operations; or (2) obtain additional financing through either private
placements, public offerings and/or bank financing necessary to support our
working capital requirements. To the extent that funds generated from operations
and any private placements, public offerings and/or bank financing are
insufficient, we will have to raise additional working capital. No assurance can
be given that additional financing will be available, or if available, will be
on terms acceptable to us. If adequate working capital is not available we may
not increase our operations.

These conditions raise substantial doubt about our ability to
continue as a going concern. The financial statements do not include any
adjustments relating to the recoverability and classification of asset carrying
amounts or the amount and classification of liabilities that might be necessary
should we be unable to continue as a going concern.

Related Party Transactions

During the year ended December 31, 2007 the Company entered into
  various transactions with related parties. For a complete description, see the
  financial statements.

Recently Issued Accounting Standard

See Note 2 in the financial statements for a discussion of
recent accounting pronouncements affecting the Company.

Application of critical accounting policies

Our financial statements and accompanying notes are prepared in
accordance with generally accepted accounting principles in the United States.
Preparing financial statements requires management to make estimates and
assumptions that affect the reported amounts of assets, liabilities, revenue,
and expenses. These estimates and assumptions are affected by management's
application of accounting policies. We believe that understanding the basis and
nature of the estimates and assumptions involved with the following aspects of
our consolidated financial statements is critical to an understanding of our
financial position.

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- 23 -

|Item 7. | Financial Statements.
|------- | ---------------------

Our financial statements are stated in Canadian dollars unless
otherwise stated and are prepared in accordance with United States Generally
Accepted Accounting Principles.

The following consolidated financial statements are filed as
part of this annual report:

| | Independent Auditors' Report, May
      13, 2008                                                                                   
| | -----------------------------------------------------------------------------------------------------------------------------------
| |                                                                                                                                    
| | Consolidated Balance Sheets at
      December 31, 2007 and December 31, 2006                                                       
| |                                                                                                                                    
| | Consolidated Statements of
      Operations for the years ended December 31, 2007, and December 31, 2006                           
| |                                                                                                                                    
| | Consolidated Statements of
      Changes in Stockholders' Equity for the years ended December 31, 2007, and
      December 31, 2006
| |                                                                                                                                    
| | Consolidated Statements of Cash
      Flows for the years ended December 31, 2007, and December 31, 2006                           
| |                                                                                                                                    
| | Notes to the Consolidated
      Financial Statements                                                                               

---

REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

To the Board of Directors and Stockholders of 
  Lamperd Less Lethal Inc.

We have audited the accompanying consolidated balance sheet of
  Lamperd Less Lethal Inc. as of December 31, 2007, and the related consolidated
  statements of operations, changes in stockholders equity (deficiency)
  and cash flows for the year ended December 31, 2007. 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 consolidated financial statements are free of material misstatement. The
  Company is not required to have, nor were we engaged to perform, an audit of
  its internal control over financial reporting. Our audit included consideration
  of internal control over financial reporting as a basis for designing audit
  procedures that are appropriate in the circumstances, but not for the purpose
  of expressing an opinion on the effectiveness of the Companys internal
  control over financial reporting. Accordingly, we express no such opinion. An
  audit also includes examining, on a test basis, evidence supporting the amounts
  and disclosures in the consolidated financial statements, 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 consolidated financial statements referred
  to above present fairly, in all material respects, the financial position of
  Lamperd Less Lethal Inc. as of December 31, 2007, and the results of its operations
  and its cash flows for the year ended December 31, 2007, in conformity with
  accounting principles generally accepted in the United States of America.

The accompanying consolidated financial statements have been
  prepared assuming that the Company will continue as a going concern. As more
  fully described in Note 1 to the consolidated financial statements, the Company
  has incurred a working capital deficiency and has an accumulated deficit. These
  conditions raise substantial doubt about its ability to continue as a going
  concern. Managements plans in regard to these matters are also described
  in Note 1. These financial statements do not include any adjustments that might
  result from the outcome of this uncertainty.

/s/ Danziger Hochman Partners LLP

Toronto, Canada 
  May 13, 2008

---

- 24 -



Source: LAMPERD LESS LETHAL, 10KSB, April 17, 2007

---

|LAMPERD LESS LETHAL INC.   
|---------------------------
|CONSOLIDATED BALANCE SHEETS
|(Canadian Funds)           
|As at December 31          

|                                                             |   | 2007       |   |   | 2006       |  
|------------------------------------------------------------ | - | ---------- | - | - | ---------- | -
|ASSETS                                                       |   |            |   |   |            |  
|Current Assets                                               |   |            |   |   |            |  
|Cash and cash equivalents                                    | $ | -          |   | $ | 1,443      |  
|Accounts receivable                                          |   | 23,580     |   |   | 70,095     |  
|Inventories                                                  |   | 131,900    |   |   | 120,559    |  
|Sundry                                                       |   | 1,512      |   |   | 6,278      |  
|Total Current Assets                                         |   | 156,992    |   |   | 198,375    |  
|                                                             |   |            |   |   |            |  
|Property and equipment net                                  |   | 241,657    |   |   | 255,721    |  
|Intangible assets                                            |   | 27,625     |   |   | 33,217     |  
|                                                             |   |            |   |   |            |  
|TOTAL ASSETS                                                 | $ | 426,274    |   | $ | 487,313    |  
|                                                             |   |            |   |   |            |  
|LIABILITIES                                                  |   |            |   |   |            |  
|Current Liabilities                                          |   |            |   |   |            |  
|Bank indebtedness                                            | $ | 7,410      |   | $ | -          |  
|Accounts payable                                             |   | 216,203    |   |   | 228,373    |  
|Accrued liabilities                                          |   | 252,274    |   |   | 182,024    |  
|Due to shareholders, directors,
      officers and employees |   | 289,382    |   |   | 76,167     |  
|Total Current Liabilities                                    |   | 765,269    |   |   | 486,564    |  
|                                                             |   |            |   |   |            |  
|                                                             |   |            |   |   |            |  
|STOCKHOLDERS EQUITY (DEFICIENCY)                            |   |            |   |   |            |  
|Common Stock                                                 |   |            |   |   |            |  
|Authorized 1,000,000,000
      common stock, US dollar       |   |            |   |   |            |  
|$0.001 par value                                             |   |            |   |   |            |  
|Issued and outstanding
      59,871,043 common stock         |   |            |   |   |            |  
|(2006 - 53,820,158)                                          |   | 72,087     |   |   | 65,947     |  
|Additional paid-in capital                                   |   | 2,778,567  |   |   | 2,331,588  |  
|Accumulated Deficit and Comprehensive Loss                   |   | (3,189,649 | ) |   | (2,396,786 | )
|Total Stockholders Equity (Deficiency)                      |   | (338,995   | ) |   | 749        |  
|TOTAL LIABILITIES AND STOCKHOLDERS EQUITY                   |   |            |   |   |            |  
|(DEFICIENCY)                                                 | $ | 426,274    |   | $ | 487,313    |  

GOING CONCERNCONTINGENCIES AND COMMITMENTSSUBSEQUENT EVENTS

The accompanying notes are an integral part of these consolidated
  financial statements

---

|LAMPERD LESS LETHAL INC.                                                    
|----------------------------------------------------------------------------
|CONSOLIDATED STATEMENT OF CHANGES IN STOCKHOLDERS
      EQUITY (DEFICIENCY)
|(Canadian Funds)                                                            

|                                     |  | Number of  |  |   | Par value |  |   | Additional |  |   |             |   |   | Total         |  
|------------------------------------ |  | ---------- |  | - | --------- |  | - | ---------- |  | - | ----------- | - | - | ------------- | -
|                                     |  | Common     |  |   | Common    |  |   | Paid-in    |  |   | Accumulated |   |   | Stockholders |  
|                                     |  | Shares     |  |   | Shares    |  |   | Capital    |  |   | Deficit     |   |   | Equity        |  
|Balance December 31, 2005            |  | 50,750,000 |  | $ | 62,696    |  | $ | 1,937,738  |  | $ | (1,554,770  | ) | $ | 445,664       |  
|Issuance of common shares            |  | 3,070,158  |  |   | 3,251     |  |   | 393,850    |  |   | -           |   |   | 397,101       |  
|Net loss for the year                |  |            |  |   |           |  |   |            |  |   | (842,016    | ) |   | (842,016      | )
|Balance December 31, 2006            |  | 53,820,158 |  | $ | 65,947    |  | $ | 2,331,588  |  | $ | (2,396,786  | ) | $ | 749           |  
|Issuance of common shares            |  | 6,050,885  |  |   | 6,140     |  |   | 344,091    |  |   | -           |   |   | 350,231       |  
|Net loss for the year                |  | -          |  |   | -         |  |   | -          |  |   | (792,863    | ) |   | (792,863      | )
|Share-based compensation
      costs |  | -          |  |   | -         |  |   | 102,888    |  |   | -           |   |   | 102,888       |  
|Balance December 31, 2007            |  | 59,871,043 |  | $ | 72,087    |  | $ | 2,778,567  |  | $ | (3,189,649  | ) | $ | (338,995      | )

The accompanying notes are an integral part of these consolidated
  financial statements

---

|LAMPERD LESS LETHAL INC.             
|-------------------------------------
|CONSOLIDATED STATEMENTS OF OPERATIONS
|(Canadian Funds)                     
|Years ended December 31              

|                                          |   | 2007       |   |   | 2006       |  
|----------------------------------------- | - | ---------- | - | - | ---------- | -
|                                          |   |            |   |   |            |  
|REVENUE                                   | $ | 295,862    |   | $ | 368,747    |  
|COST OF GOODS SOLD                        |   | 212,333    |   |   | 315,350    |  
|GROSS MARGIN                              |   | 83,529     |   |   | 53,397     |  
|EXPENSES                                  |   |            |   |   |            |  
|Selling,
      general and administrative |   | 752,964    |   |   | 849,862    |  
|Research and development                  |   | 29,142     |   |   | 4,369      |  
|Interest
       loans and advances       |   | 29,222     |   |   | -          |  
|Interest  other                          |   | 9,489      |   |   | 689        |  
|Depreciation
      and amortization       |   | 55,575     |   |   | 40,493     |  
|TOTAL EXPENSES                            |   | 876,392    |   |   | 895,413    |  
|NET LOSS                                  | $ | (792,863   | ) | $ | (842,016   | )
|                                          |   |            |   |   |            |  
|LOSS PER SHARE                            | $ | (0.01      | ) | $ | (0.02      | )
|                                          |   |            |   |   |            |  
|WEIGHTED AVERAGE NUMBER OF COMMON         |   |            |   |   |            |  
|SHARES OUTSTANDING                        |   | 54,845,781 |   |   | 51,551,104 |  

The accompanying notes are an integral part of these consolidated
  financial statements

---

|LAMPERD LESS LETHAL INC.             
|-------------------------------------
|CONSOLIDATED STATEMENTS OF CASH FLOWS
|(Canadian Funds)                     
|Years ended December 31              

|                                                                |   | 2007     |   |   | 2006     |  
|--------------------------------------------------------------- | - | -------- | - | - | -------- | -
|CASH FLOWS PROVIDED BY (USED IN):                               |   |          |   |   |          |  
|OPERATING ACTIVITIES                                            |   |          |   |   |          |  
|Net loss                                                        | $ | (792,863 | ) | $ | (842,016 | )
|Depreciation and amortization                                   |   | 55,575   |   |   | 40,493   |  
|Stock-based compensation                                        |   | 102,888  |   |   | -        |  
|Net changes in non-cash operating assets
      and liabilities: |   |          |   |   |          |  
|Accounts
      receivable                                       |   | 46,515   |   |   | (52,167  | )
|Inventories                                                     |   | (11,341  | ) |   | 61,054   |  
|Sundry                                                          |   | 4,766    |   |   | 105,021  |  
|Accounts payable and
      accrued liabilities                  |   | 333,128  |   |   | 258,465  |  
|Net cash used in operating
      activities                     |   | (261,332 | ) |   | (429,150 | )
|INVESTING ACTIVITIES                                            |   |          |   |   |          |  
|Purchase
      of equipment and leaseholds                      |   | (35,919  | ) |   | (19,248  | )
|Purchase of intangibles                                         |   | -        |   |   | (4,868   | )
|Net cash used in investing
      activities                     |   | (35,919  | ) |   | (24,116  | )
|FINANCING ACTIVITIES                                            |   |          |   |   |          |  
|Borrowings
      under bank indebtedness - net                  |   | 7,410    |   |   | -        |  
|Proceeds from promissory
      notes and advances               |   | 227,000  |   |   | 76,167   |  
|Repayment
      of promissory note                              |   | (25,000  | ) |   | -        |  
|Proceeds of share
      issues                                  |   | 86,398   |   |   | 67,932   |  
|Net cash provided by financing
      activities                 |   | 295,808  |   |   | 144,099  |  
|DECREASE IN CASH AND CASH EQUIVALENTS                           |   | (1,443   | ) |   | (309,167 | )
|CASH AND CASH EQUIVALENTS, beginning of
      year              |   | 1,443    |   |   | 310,610  |  
|CASH AND CASH EQUIVALENTS, end of year                          | $ | -        |   | $ | 1,443    |  
|                                                                |   |          |   |   |          |  
|                                                                |   |          |   |   |          |  
|                                                                |   |          |   |   |          |  
|Supplemental financial information                              |   |          |   |   |          |  
|Shares issued on settlement of
      liabilities                | $ | 263,763  |   | $ | 329,169  |  
|Income taxes paid                                               | $ | -        |   | $ | -        |  
|Interest paid                                                   | $ | 12,588   |   | $ | 1,603    |  

The accompanying notes are an integral part of these consolidated
  financial statements

---

|LAMPERD LESS LETHAL INC.                    
|--------------------------------------------
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  
|(Canadian Funds)                            
|Years ended December
      31, 2007 and 2006

|1. | BASIS OF PRESENTATION, DESCRIPTION OF BUSINESS AND GOING
        CONCERN                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | History:Lamperd Less Lethal Incorporated
        (Lamperd or the Company) was incorporated under
        the laws of the State of Nevada under the name "Sinewire Networks Inc."
        on October 4, 2001. On March 21, 2005, the Company changed its name to
        "Lamperd Less Lethal Inc." The name change was recorded by the Secretary
        of State of the State of Nevada on March 21, 2005, and took effect with
        the National Association of Securities Dealers Inc. (NASD)
        Over-the-Counter Bulletin Board at the opening of trading on March 31,
        2005 under the new stock symbol "LLLI".                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | On April 14, 2005 the Company entered into a reverse
        acquisition with 1476246 Ontario Limited, a company incorporated pursuant
        to the laws of Ontario, Canada.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Products:The Company is a developer and
        manufacturer of civil defense products that are designed as less lethal
        alternatives to conventional weapons. The products include weapon systems
        and munitions that are designed to incapacitate (as opposed to kill) opponents,
        and at the same time, ensure the safety of the personnel using the products.
        In addition, the Company also manufactures shields, service equipment,
        training gear and accessories. The products are primarily designed for
        the use by military and law enforcement organizations. The Company also
        provides less lethal training to police, military and private sector security
        personnel.                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Going concern:The accompanying
        consolidated financial statements have been prepared in accordance with
        United States generally accepted accounting principles that are applicable
        to a going concern, meaning that the Company will be able to realize its
        assets and discharge its liabilities in the normal course of operations.
        The Company has sustained operating losses sustained in 2007, 2006 and
        2005, and has a working capital deficiency of $608,277 and an accumulated
        deficit of $3,189,649 at December 31, 2007. The Companys ability
        to realize its assets and discharge its liabilities depends on its continued
        ability to raise additional debt or equity and to reach a profitable level
        of operations, the outcomes of which cannot be determined at this time.
        The use of United States generally accepted accounting principles that
        are applicable to a going concern therefore may not be appropriate. These
        consolidated financial statements do not reflect adjustments that would
        be necessary if the going concern assumption were not appropriate.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|2. | SIGNIFICANT ACCOUNTING POLICIES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | These consolidated financial statements have been prepared
        by management in accordance with the significant accounting policies in
        accordance with United States general accepted accounting principles:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Consolidation:The accompanying
        consolidated financial statements of the Company include the financial
        position, results of operations and cash flows of the Company and its
        wholly-owned subsidiary, 1476246 Ontario Limited. All inter-company transactions
        have been eliminated.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Cash and cash equivalents:Cash
        and cash equivalents include cash and all highly liquid investments purchased
        with original maturities of three months or less at the date of purchase.
        At December 31, 2007 and 2006, the Company had no cash equivalents.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|   | Inventories:Inventories are valued
        at the lower of cost and net realizable value with cost being determined
        using the first-in, first-out method.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 

---

|LAMPERD LESS LETHAL INC.                    
|--------------------------------------------
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  
|(Canadian Funds)                            
|Years ended December
      31, 2007 and 2006

|2. | SIGNIFICANT ACCOUNTING POLICIES (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Revenue recognition:Revenue from product
        sales is recognized in accordance with Securities and Exchange Commission
        (SEC) Staff Accounting Bulletin No. 104 (SAB 104),
        Revenue Recognition.Under SAB 104, revenue is recognized when
        persuasive evidence of an arrangement exists, delivery has occurred or
        services have been rendered, the sales price is fixed or determinable
        and collectibility is reasonably assured. Generally, these criteria are
        met upon shipment to customers. Revenues are recorded net of discounts,
        rebates and estimated returns. Customer payments received in advance of
        product shipments are recorded as unearned revenue and are presented in
        the accompanying consolidated financial statements as a component of accrued
        liabilities. Shipping and handling costs incurred are included in the
        cost of revenue.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | The Company provides standard warranties for its product
        for a period of one year from the date of shipment. Estimated warranty
        obligations are recorded at the time of sale.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Allowance for doubtful accounts: The allowance
        for doubtful accounts is based on the Companys assessment of the
        collectibility of customer accounts. The Company regularly reviews the
        allowance by considering factors such as historical experience, credit
        quality, the age of the accounts receivable balances and current economic
        conditions that may affect a customers ability to pay. The allowance
        for doubtful accounts was $1,760 at December 31, 2007 (2006 - $4,154).                                                                                                                                                                                                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | Property and equipment:Property
        and equipment are carried at cost less accumulated depreciation. Expenditures
        for maintenance and repairs are charged to operations when incurred, while
        additions and betterments are capitalized. The Company depreciates the
        costs of these assets over their estimated useful lives. When assets are
        retired or disposed, the assets original cost and related accumulated
        depreciation are eliminated from accounts and any gain or loss is reflected
        in income. Depreciation and amortization are generally provided for by
        the straight-line method over the estimated useful lives of the assets
        as follows:                                                                                                                                                                                                                           

| | Office, protective and demonstration, and computer
      equipment | 4 years                   
| | ------------------------------------------------------------------ | --------------------------
| | Manufacturing equipment                                            | 10 years                  
| | Leasehold improvements                                             | over the term of the lease

Intangibles: The
  Companys intangible assets comprise a license, trademarks and patents
  which are accounted for at cost. The license is amortized straight-line over
  17 years which is the life of the agreement, and the trademarks and patents
  are amortized straight-line over 5 years. Should the Company determine that
  there is permanent impairment in the value of the unamortized portion of an
  intangible asset, an appropriate amount of the unamortized balance of the intangible
  asset would be charged to income at that time.

Impairment of long-lived assets
  and long-lived assets to be disposed of:In accordance with Statement
  of Financial Accounting Standard (SFAS) No. 144, Accounting for
  the Impairment or Disposal of Long-Lived Assets, the Company reviews its long-lived
  assets for impairment whenever events or changes in circumstances indicate that
  the carrying amount of an asset may not be recoverable. Recoverability of assets
  to be held and used is measured by a comparison of the carrying amount of an
  asset to future net cash flows expected to be generated by the asset. If such
  assets are considered to be impaired, the impairment to be recognized would
  be measured by the amount by which the carrying amount of the assets exceeds
  the fair value of the assets. Assets to be disposed of would be reported at
  the lower of the carrying amount or fair value less costs to sell.

---

|LAMPERD LESS LETHAL INC.                    
|--------------------------------------------
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  
|(Canadian Funds)                            
|Years ended December
      31, 2007 and 2006

|2. | SIGNIFICANT ACCOUNTING POLICIES (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Advertising expenses:These costs are
        charged to expense in the period in which they are incurred. Advertising
        expenses for 2007 amounted to $4,383 (2006 - $8,568).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Use of estimates:The preparation
        of financial statements in conformity with United States generally accepted
        accounting principles requires management to make estimates and assumptions
        that affect the reported amounts of assets and liabilities and 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. Financial statement items subject to significant management judgment
        include revenue recognition; the valuation of accounts receivable and
        inventories; the valuation of property and equipment and intangible assets;
        the completeness of accounts payable and accrued liabilities; the valuation
        of share compensation expense and warrants; and, deferred income taxes.
        Actual results may differ from these estimates.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Income taxes:The Company accounts for
        income taxes in accordance with SFAS No. 109, Accounting for Income Taxes.
        Under SFAS No. 109, deferred tax assets and liabilities are determined
        based on temporary differences between the financial statement and tax
        bases of assets and liabilities and net operating loss and credit carry
        forwards, using enacted tax rates in effect for the year in which the
        differences are expected to reverse. Valuation allowances are established
        when necessary to reduce deferred tax assets to the amounts expected to
        be realized. A provision for income tax expense is recognized for income
        taxes payable for the current period, plus the net changes in deferred
        tax amounts when applicable.                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Research and development:Research and
        development costs are expensed as incurred in accordance with SFAS No.
        2, Accounting for Research and Development Costs. Materials and equipment
        are capitalized and amortized over their estimated useful lives should
        management determine that such expenditures meet the criteria under SFAS
        No. 2 for the capitalization of development costs.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Any approved Canadian government tax credits are recorded
        as a reduction of the related expense or cost of the asset acquired. The
        benefits are recognized when the Company has complied with the terms and
        conditions of the approved grant program or applicable tax legislation.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Accounting for stock-based compensation:Beginning
        in fiscal 2006, the Company adopted Statement of Financial Accounting
        Standards No. 123 (Revised 2004), Share-based Payment (SFAS 123R),
        which revises SFAS No. 123, Accounting for Stock-based Compensation, and
        supersedes Accounting Principles Board Opinion No. 25 (APB 25),
        Accounting for Stock Issued to Employees. SFAS 123R requires all share-based
        payments, including grants of employee stock options, be measured at fair
        value and expensed in the statement of operations over the service period.
        Prior to fiscal 2006, the Company accounted for its stock-based compensation
        plans using the intrinsic value method initially prescribed by APB 25.
        In applying APB 25, no expense was recognized upon grant of stock options
        under the Companys stock option plan.           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|   | Financial instruments:The Companys
        financial instruments comprise cash and cash equivalents, accounts receivable,
        accounts payable and accrued liabilities, promissory notes and due to
        shareholders. The fair value of the Companys financial instruments
        approximates their carrying value due to the short maturity of these instruments.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

---

|LAMPERD LESS LETHAL INC.                    
|--------------------------------------------
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  
|(Canadian Funds)                            
|Years ended December
      31, 2007 and 2006

|2. | SIGNIFICANT ACCOUNTING POLICIES (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                 
|-- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Earnings (loss) per common share:The
        Company computes net income (loss) per share in accordance with SFAS No.
        128, Earnings per Share. The standard requires presentation of both basic
        and diluted earnings per share (EPS) on the face of the statement
        of operations. Basic EPS is computed by dividing net income (loss) available
        to common shareholders by the weighted average number of shares outstanding
        during the reporting period. Diluted EPS gives effect to all dilutive
        potential common shares outstanding during the reporting period using
        the treasury stock method and convertible preferred stock using the if-
        converted method. In computing diluted EPS, the average stock price for
        the period is used in determining the number of shares assumed to be purchased
        from the exercise of convertible debt, stock options or warrants. Diluted
        EPS excludes all dilutive potential shares if their effect is anti-dilutive.
        All potentially dilutive securities have been excluded from the computation
        of loss per share in the accompanying consolidated financial statements
        at December 31, 2007 and 2006 as the effect would have been antidilutive.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Foreign currency translation:The
        accompanying consolidated financial statements are expressed in Canadian
        dollars, which is the Companys functional currency. All transactions
        in foreign currencies have been converted to Canadian dollars as at the
        date of the transaction. Gains and losses arising upon settlement of foreign
        currency denominated transactions or balances are included in the determination
        of net and other comprehensive income. Transactions in foreign currency
        are translated into Canadian dollars in accordance with the SFAS No. 52,
        Foreign Currency Translation, as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | i.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | ii.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | iii.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Comprehensive income (loss):The Company has adopted SFAS No. 130, Reporting Comprehensive Income
        (FAS No. 130), which establishes standards for reporting and
        the display of comprehensive income, its components and accumulated balances.
        Comprehensive income (loss) is defined to include all changes in equity
        except those resulting from investments by owners or distributions to
        owners. Among other disclosures, FAS No. 130 requires that all items that
        are required to be recognized under the current accounting standards as
        a component of comprehensive income be reported in a financial statement
        that is displayed with the same prominence as other financial statements.
        Comprehensive income (loss) is displayed in the accompanying consolidated
        statements of stockholders' deficiency and balance sheet as a component
        of shareholders' deficiency. At December 31, 2007 and 2006, there had
        been no transactions affecting other comprehensive income (loss).                                                                                                                                                                                                                  
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Comparative figures:Certain
        comparative figures have been restated to conform to the basis of presentation
        adopted for the current year.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | Recent accounting pronouncements:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|   | In June 2006, the Financial Accounting Standards
        Board (FASB) issued FASB Interpretation No. 48, "Accounting for Uncertainty
        in Income Taxes - an interpretation of FASB Statement No. 109" (FIN 48),
        which clarifies the accounting for uncertainty in tax positions. This
        Interpretation requires issuers to recognize the benefit of a tax position
        if that position is more likely than not of being sustained on a tax audit,
        based on the technical merits of the position. The provisions of FIN 48
        become effective as of the beginning of the Companys 2008 fiscal
        year, with the cumulative effect of the change in accounting principle
        recorded as an adjustment to opening retained earnings. Management does
        not expect the adoption of this statement to have a material effect on
        the Company's future reported financial position or results of operations.                                                                                                                                                                                                                                                                                                                                       



---

|LAMPERD LESS LETHAL INC.                    
|--------------------------------------------
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  
|(Canadian Funds)                            
|Years ended December
      31, 2007 and 2006

|2. | SIGNIFICANT ACCOUNTING POLICIES (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
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|   | Recent accounting pronouncements (continued):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | In September 2006, the FASB issued Statement No. 157,
        Fair Value Measurements (FAS 157). The objective of FAS 157
        is to increase consistency and comparability in fair value measurements
        and to expand disclosures about fair value measurements. FAS 157 defines
        fair value, establishes a framework for measuring fair value in generally
        accepted accounting principles, and expands disclosures about fair value
        measurements. FAS 157 applies under other accounting pronouncements that
        require or permit fair value measurements and does not require any new
        fair value measurements. The provisions of FAS 157 are effective for fair
        value measurements made in fiscal years beginning after November 15, 2007.
        In November 2007, the FASB announced an option to defer implementation
        of some of the requirements of this standard for certain non-financial
        assets and liabilities. Management does not expect the adoption of this
        statement to have a material effect on the Company's future reported financial
        position or results of operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | In September 2006, the Securities and Exchange Commission
        issued Staff Accounting Bulletin No. 108 (Topic 1N), Considering the Effects
        of Prior Year Misstatements when Quantifying Misstatements in Current
        Year Financial Statements (SAB 108), which addresses how the
        effect of prior year uncorrected misstatements should be considered when
        quantifying misstatements in current year financial statements. The provisions
        of SAB 108 become effective as of the end of the 2007 fiscal year. SAB
        108 requires SEC registrants (i) to quantify misstatements using a combined
        approach which considers both the balance sheet and income statement approaches;
        (ii) to evaluate whether either approach results in quantifying an error
        that is material in light of relevant quantitative and qualitative factors;
        and (iii) to adjust their financial statements if the new combined approach
        results in a conclusion that an error is material. SAB No. 108 addresses
        the mechanics of correcting misstatements that include effects from prior
        years. It indicates that the current year correction of a material error
        that includes prior year effects may result in the need to correct prior
        year financial statements even if the misstatement in the prior year or
        years is considered immaterial. Any prior year financial statements found
        to be materially misstated in years subsequent to the issuance of SAB
        108 would be restated in accordance with FAS No. 154, Accounting Changes
        and Error Corrections. SAB 108 is effective for fiscal years ending after
        November 15, 2006. The adoption of SAB 108 did not have a material effect
        on the Company's reported financial position or results of operations.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   | In February 2007, the FASB issued Statement No. 159,
        The Fair Value Option for Financial Assets and Financial Liabilities -
        Including an Amendment of FASB Statement No. 115 (FAS 159).
        This statement permits entities to choose to measure many financial instruments
        and certain other items at fair value. Most of the provisions of FAS 159
        apply only to entities that elect the fair value option. However, the
        amendment to FAS 115, Accounting for Certain Investments in Debt and Equity
        Securities, applies to all entities with available-for-sale and trading
        securities. FAS 159 is effective as of the beginning of an entity's first
        fiscal year that begins after November 15, 2007. Early adoption is permitted
        as of the beginning of a fiscal year that begins on or before November
        15, 2007, provided the entity also elects to apply the provisions of FAS
        157, Fair Value Measurements. Management does not expect the adoption
        of this statement to have a material effect on the Company's future reported
        financial position or results of operations.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      

---

|LAMPERD LESS LETHAL INC.                    
|--------------------------------------------
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  
|(Canadian Funds)                            
|Years ended December
      31, 2007 and 2006

|2. | SIGNIFICANT ACCOUNTING POLICIES (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
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|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | Recent accounting pronouncements (continued):                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | In December 2007, the FASB issued Statement No. 141(R),
        Business Combinations (FAS 141R), replacing FAS 141, Business
        Combinations (FAS 141). This statement retains the fundamental
        requirements in FAS 141 that the acquisition method of accounting (which
        FAS 141 termed the purchase method) be used for all business combinations
        and for an acquirer to be identified for each business combination. This
        Statement also establishes principles and requirements for how the acquirer:
        a) recognizes and measures in its financial statements the identifiable
        assets acquired, the liabilities assumed, and any noncontrolling interest
        in the acquiree; b) recognizes and measures the goodwill acquired in the
        business combination or a gain from a bargain purchase; and c) determines
        what information to disclose to enable users of the financial statements
        to evaluate the nature and financial effects of the business combination.
        This Statement clarifies that acquirers are required to expense costs
        related to any acquisitions. FAS 141R will apply prospectively to business
        combinations for which the acquisition date is on or after fiscal years
        beginning December 15, 2008. Early adoption is prohibited. The Company
        has not yet evaluated the impact, if any, that FAS 141R will have on its
        financial statements. Determination of the ultimate effect of this statement
        will depend on the Companys structure at the date of adoption.                                                                                                                                                                                                                                                    
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                            
|   | In December 2007, the FASB issued SFAS No. 160, Noncontrolling
        Interests in Consolidated Financial Statements  An Amendment of
        ARB No. 51 (FAS 160). FAS 160 establishes new accounting and
        reporting standards for the noncontrolling interest in a subsidiary and
        for the deconsolidation of a subsidiary. Specifically, this statement
        requires the recognition of a noncontrolling interest (minority interest)
        as equity in the consolidated financial statements and separate from the
        parents equity. The amount of net income attributable to the noncontrolling
        interest will be included in consolidated net income on the face of the
        income statement. FAS 160 clarifies that changes in a parents ownership
        interest in a subsidiary that do not result in deconsolidation are equity
        transactions if the parent retains its controlling financial interest.
        In addition, this statement requires that a parent recognize a gain or
        loss in net income when a subsidiary is deconsolidated. Such gain or loss
        will be measured using the fair value of the noncontrolling equity investment
        on the deconsolidation date. FAS 160 also includes expanded disclosure
        requirements regarding the interests of the parent and its noncontrolling
        interest. FAS 160 is effective for fiscal years beginning on or after
        December 15, 2008, with retrospective presentation and disclosure for
        all periods presented. Early adoption is prohibited. The Company currently
        has no entities or arrangements that will be affected by the adoption
        of FAS 160. However, determination of the ultimate effect of this pronouncement
        will depend on the Companys structure at the date of adoption.

|3. | INVENTORIES
|-- | -----------

|                |   | 2007    |  |   | 2006    | 
|--------------- | - | ------- |  | - | ------- | 
|Raw materials   | $ | 82,849  |  | $ | 40,519  | 
|Work in process |   | 27,519  |  |   | 53,466  | 
|Finished goods  |   | 21,532  |  |   | 26,574  | 
|                | $ | 131,900 |  | $ | 120,559 | 

---

|LAMPERD LESS LETHAL INC.                    
|--------------------------------------------
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  
|(Canadian Funds)                            
|Years ended December
      31, 2007 and 2006

|4. | PROPERTY AND EQUIPMENT
|-- | ----------------------

|                                       |   | 2007    |  |   | 2006    | 
|-------------------------------------- | - | ------- |  | - | ------- | 
|Office equipment                       | $ | 23,547  |  | $ | 23,547  | 
|Manufacturing equipment                |   | 218,508 |  |   | 216,509 | 
|Protective and demonstration equipment |   | 78,046  |  |   | 43,362  | 
|Computer equipment                     |   | 9,565   |  |   | 9,565   | 
|Leasehold improvements                 |   | 24,577  |  |   | 24,577  | 
|                                       |   | 354,243 |  |   | 317,560 | 
|Accumulated depreciation               |   | 112,586 |  |   | 61,839  | 
|                                       | $ | 241,657 |  | $ | 255,721 | 

|5. | INTANGIBLE ASSETS
|-- | -----------------

|           |   |        |  |   | 2007         |  |   |        |  |   |        |  |   | 2006         |  |   |        | 
|---------- | - | ------ |  | - | ------------ |  | - | ------ |  | - | ------ |  | - | ------------ |  | - | ------ | 
|           |   |        |  |   | Accumulated  |  |   |        |  |   |        |  |   | Accumulated  |  |   |        | 
|           |   | Cost   |  |   | Amortization |  |   | Net    |  |   | Cost   |  |   | Amortization |  |   | Net    | 
|License    |   |        |  |   |              |  |   |        |  |   |        |  |   |              |  |   |        | 
|agreement  | $ | 22,122 |  | $ | 3,904        |  | $ | 18,218 |  | $ | 22,122 |  | $ | 2,603        |  | $ | 19,519 | 
|           |   |        |  |   |              |  |   |        |  |   |        |  |   |              |  |   |        | 
|Trademarks |   | 822    |  |   | 307          |  |   | 515    |  |   | 822    |  |   | 224          |  |   | 598    | 
|           |   |        |  |   |              |  |   |        |  |   |        |  |   |              |  |   |        | 
|Patents    |   | 16,607 |  |   | 7,715        |  |   | 8,892  |  |   | 17,373 |  |   | 4,273        |  |   | 13,100 | 
|           | $ | 39,551 |  | $ | 11,926       |  | $ | 27,625 |  | $ | 40,317 |  | $ | 7,100        |  | $ | 33,217 | 

|6. | ACCRUED LIABILITIES
|-- | -------------------

| |                                       |   | 2007    |  |   | 2006    | 
| | ------------------------------------- | - | ------- |  | - | ------- | 
| | Customer payments received in advance | $ | 23,123  |  | $ | 2,147   | 
| | Legal and accounting                  |   | 176,245 |  |   | 170,677 | 
| | Payroll                               |   | -       |  |   | 5,600   | 
| | Interest                              |   | 27,009  |  |   | -       | 
| | Royalties                             |   | 5,000   |  |   | -       | 
| | Other                                 |   | 20,897  |  |   | 3,600   | 
| |                                       | $ | 252,274 |  | $ | 182,024 | 

---

|LAMPERD LESS LETHAL INC.                    
|--------------------------------------------
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  
|(Canadian Funds)                            
|Years ended December
      31, 2007 and 2006

|7. | CONTINGENCIES AND COMMITMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                           
|-- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | (a) Litigation:An
        action has been commenced against the Company for costs relating to professional
        services of approximately $130,000. Included as a component of accrued
        liabilities in the accompanying consolidated financial statements is an
        amount of $113,937 at December 30, 2007 (2006 - $114,677). Management
        feels that the balance of the claim action is without merit. Subsequent
        to December 31, 2007, the Company paid $20,000 to the claimant.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | (b) Employment Contract:The Company has an employment contract with an executive, expiring
        December 31, 2009, which stipulates that in the event of termination other
        than for just cause, the Company would be obligated to pay to the executive
        the aggregate of any unpaid salary and an amount equal to the lesser of:
        (1) three times the annual salary of the executive, and (2) an amount
        equal to the annual salary multiplied by the number of days between the
        date of termination and the executives normal retirement date divided
        by 365.                                                                                                                                                                                                                                                                                                                                                                                         
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|   | (c) License Agreement:The Company entered into a license agreement with the University
        of Western Ontario (UWO), effective April 1, 2005, granting
        the Company the exclusive rights to make, use, lease, sell, etc. a UWO
        invention, known as the Less Lethal Ammunitions Projectile (the Projectile),
        as well as any associated trade secrets, for which the Company incurred
        an initial licence fee of $5,000 which has been accrued for and is included
        as a component of accrued liabilities in the accompanying consolidated
        financial statements. Lamperd has agreed to pay all approved out-of-pocket
        expenses incurred by UWO, assume responsibility for future patent prosecution
        and rights and pay UWO a quarterly royalty commencing April 1, 2006 of
        three percent of revenue directly attributable to the Projectile. The
        royalty is subject to minimum royalty obligations as detailed below.

|Year                |   | Minimum Annual License Fee per Year | 
|------------------- | - | ----------------------------------- | 
|                    |   |                                     | 
|2008 - 2010         | $ | 10,000                              | 
|2011 and thereafter | $ | 20,000                              | 

Included as a component of accrued liabilities
  in the accompanying consolidated financial statements is an amount of $5,000
  at December 30, 2007 (2006 - $Nil).

(d)Operating Leases:The
  Company is committed to minimum payments under an operating lease for the land
  and building that it occupies. The lease expired December 31, 2007 and required
  annual minimum lease payments of $76,800, exclusive of occupancy charges. The
  lessor was 1109630 Ontario Ltd., a company owned by a director and vice-president
  of the Company. On January 1, 2008 the Company renewed its lease with 1109630
  Ontario Ltd. for an additional three years, expiring, Dec 31, 2010, under the
  same terms and conditions. The Company leases additional space from the same
  company on a month-to-month basis for a monthly rental of $1,000.

In addition, the Company is committed
  to minimum payments for a vehicle lease, ending February 2009, requiring annual
  lease payments of $6,696.

---

|LAMPERD LESS LETHAL INC.                    
|--------------------------------------------
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  
|(Canadian Funds)                            
|Years ended December
      31, 2007 and 2006

|7. | CONTINGENCIES AND COMMITMENTS (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | (e) Industry Risk:Products manufactured by Lamperd are typically used in applications
        and situations that involve a high level of risk of personal injury. Failure
        to use the Companys products for their intended purposes could result
        in serious bodily harm or death. As a result, less-lethal products may
        be subject to product liability claims arising from their design, manufacture
        or sale. If any such claims are decided against the Company, substantial
        payments for damages and increases in the cost insurance coverage may
        result. Any substantial uninsured loss could have a materially adverse
        effect on the Companys business, financial condition, and results
        of operations. Management is not aware of any lawsuits ongoing or threatened
        in regards to products manufactured and sold by the Company other than
        those disclosed in the notes to the accompanying consolidated financial
        statements.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | The Company cancelled its product liability
        insurance coverage during 2006. This coverage has not been reinstated.
        The Company cannot provide assurances that resources will be available
        in the foreseeable future to reinstate product liability insurance coverage
        or, failing that, that adequate resources will be available to cover any
        potential product liability litigation or claims should any arise.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | (f)  Concentrations
        of Risk and Economic Dependence: The Company performs ongoing
        credit evaluations of its customers and, with the exception of certain
        financing transactions, does not require collateral from its customers.
        The Companys customers are primarily in the enterprise, service
        provider and commercial markets. The Company receives certain of its components
        from sole suppliers. Additionally, the Company relies on a limited number
        of contract manufacturers and suppliers to provide manufacturing services
        for its products. The inability of a contract manufacturer or supplier
        to fulfill supply requirements of the Company could materially impact
        future operating results.                                                                                                                                                                                                                                   
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | During 2007, three customers represented 85%
        of the Companys gross revenues (2006  three; 81%).                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                      
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|8. | FINANCIAL INSTRUMENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Credit risk:The Company is engaged
        in the sale of less lethal products, other protective gear,
        and accessories typically to a small number of major customers, although
        the composition of this group of customers changes from year to year.
        Concentration of credit risk may arise from exposures to a single debtor
        or to a group of debtors having similar characteristics such that their
        ability to meet their current obligations is expected to be affected similarly
        by changes in economic or other conditions. The Company performs ongoing
        credit evaluation of its customers' financial condition and, generally,
        requires no collateral. At December 31, 2007, 34% (2006 - 66%) of total
        accounts receivable was due from one customer.                                                                                                                                                                                        
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Currency risk:The Company is subject
        to currency risk through its activities in the United States. Unfavorable
        changes in the exchange rate may affect the operating results of the Company.
        At December 31, 2007 the Company had United States dollar accounts receivable
        of $6,462 (2006 - $20,777) and $20,707 of United States dollar accounts
        payable and accrued liabilities (2006 - $68,672). The Company does not
        actively use derivative instruments to reduce its exposure to foreign
        currency risk. However, depending upon the nature, amount and timing of
        foreign currency receipts and payments, the Company may enter into forward
        exchange contracts to mitigate the associated risks. There were no forward
        exchange contracts outstanding at December 31, 2007 or 2006.                                                                                                                                                     

---

|LAMPERD LESS LETHAL INC.                    
|--------------------------------------------
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  
|(Canadian Funds)                            
|Years ended December
      31, 2007 and 2006

|8. | FINANCIAL INSTRUMENTS (continued)                                                                                                                                                                                                                                                                                                                                                                                              
|-- | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Market risk:The Company is exposed
        to certain market risk that the value of a financial instrument will fluctuate
        due to changes in market prices whether those changes are caused by factors
        specific to an individual security or its issuer or factors affecting
        all securities traded in the market.                                                                                       
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | Interest rate risk:The Company is
        exposed to interest rate risk arising from fluctuations in interest rates
        on its short-term investments. The Companys notes receivable and
        bridge loans bear interest at fixed rates. Management is of the opinion
        that the Company is not exposed to significant interest rate risks in
        respect of these instruments due to their short maturities.
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                
|9. | RELATED PARTY TRANSACTIONS                                                                                                                                                                                                                                                                                                                                                                                                     
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | (i)                                                                                                                                                                                                                                                                                                                                                                                                                            
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | (ii)                                                                                                                                                                                                                                                                                                                                                                                                                           
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | (iii)                                                                                                                                                                                                                                                                                                                                                                                                                          
|   |                                                                                                                                                                                                                                                                                                                                                                                                                                
|   | (iv)                                                                                                                                                                                                                                                                                                                                                                                                                           

---

|LAMPERD LESS LETHAL INC.                    
|--------------------------------------------
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  
|(Canadian Funds)                            
|Years ended December
      31, 2007 and 2006

|10. | DUE TO SHAREHOLDERS, OFFICERS DIRECTORS AND EMPLOYEES
|--- | -----------------------------------------------------

|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |   | 2007     |  |  | 2006     | 
|------ |  | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------ |  | - | -------- |  |  | -------- | 
|(i)    |  | Promissory notes due to shareholders,
      unsecured, bearing interest at 15% per 
      annum, due December 2007. The notes contain a penalty provision on failure
      
      to pay at the maturity date of 2% on the unpaid balance. The penalty and
      interest 
      have been accrued for and are included as a component of accrued liabilities
      in 
      the accompanying consolidated financial statements.                                                                                                                                                                                                                            |  |   | $ 50,000 |  |  | $ 50,000 | 
|(ii)   |  | Promissory notes due to a shareholder, unsecured,
      bearing interest at 15% per 
      annum, and are repayable April 2008. The note contains a penalty provision
      on 
      failure to pay at the maturity date of 2% on the unpaid balance. The interest
      has 
      been accrued for and is included as a component of accrued liabilities in
      the 
      accompanying consolidated financial statements.                                                                                                                                                                                                                              |  |   | 30,000   |  |  | -        | 
|(iii)  |  | Demand promissory note with a
      principal of $50,000 due to a shareholder, 
      bearing interest at 8% per annum and secured by a General Security Agreement
      
      over all assets of the Company. This note bore a lenders fee of $6,000,
      which 
      was expensed during 2007, resulting in net proceeds to the Company of 
      $44,000. The interest rate increases to 12% on January 1, 2008, plus an
      
      additional $2,000 lenders fee, on any unpaid balance. The Company
      repaid 
      $25,000 of the loan during 2007.                                                                                        |  |   | 25,000   |  |  | -        | 
|(iv)   |  | Promissory notes due to a shareholder, unsecured,
      bearing interest at 15% per 
      annum, repayable as to principal and interest on April 11, 2008. The interest
      
      has been accrued for and is included as a component of accrued liabilities
      in the 
      accompanying consolidated financial statements.                                                                                                                                                                                                                                                                                                                         |  |   | 20,000   |  |  | -        | 
|(v)    |  | Demand promissory note with a
      principal of $80,000 due to a director, bearing 
      interest at 10% per annum. Principal payments are due in monthly installments
      
      commencing June 30, 2007 of not less than $750. This note bore a lenders
      fee 
      of $5,000, which was expensed during 2007, resulting in net proceeds to
      the 
      Company of $75,000. No principal payments were made on the loan to 
      December 31, 2007. Unpaid interest of $1,506 has been accrued for and is
      
      included as a component of accrued liabilities in the accompanying consolidated
      
      financial statements. |  |   | 80,000   |  |  | -        | 
|(vi)   |  | Promissory note to shareholder, bearing interest
      at 12% per annum and due 
      April 12, 2009.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       |  |   | 2,000    |  |  | -        | 
|(vii)  |  | At December 31, 2007, the Company
      owes certain employees, a director and a 
      shareholder a total of $15,456 for non-interest bearing loans, unpaid expenses
      
      and services and $9,500 for unpaid consulting fees. These amounts are 
      repayable on demand.                                                                                                                                                                                                                                                                                                                                                                        |  |   | 24,956   |  |  | 8,309    | 
|(viii) |  | Amount owing to the Companys president in
      respect of unpaid wages and 
      miscellaneous expenses.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  |  |   | 57,426   |  |  | 17,858   | 
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  |   |          |  |  |          | 
|       |  |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              |  | $ | 289,382  |  |  | 76,167   | 

---

|LAMPERD LESS LETHAL INC.                    
|--------------------------------------------
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  
|(Canadian Funds)                            
|Years ended December
      31, 2007 and 2006

|11. | STOCK INCENTIVE PLAN                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | Effective October 1, 2006, the Company adopted the 2006
        Stock Option Plan (SOP), amending the Companys 2005
        SOP under with no stock-based compensation had ever been awarded. The
        2006 SOP is designed to reward directors, employees and consultants for
        their long-term contributions to the Company and provide incentives for
        them to remain with the Company. The number and frequency of stock-based
        awards are determined by the Companys board of directors based on
        competitive practices, operating results of the Company, and government
        regulations.                                                                                                                                                 
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | The maximum number of common shares issuable over the
        term of the 2006 SOP is limited to 2 million shares. The SOP permits the
        granting of stock options to directors, employees and consultants of the
        Company and its subsidiaries and affiliates. Options granted under the
        SOP have an exercise price of at least 100% of the fair market value of
        the underlying stock on the grant date and expire no later than ten years
        from the grant date. The stock options under the SOP generally become
        exercisable for 25% of the option shares one year from the date of grant
        and then rateably over the following 36 months. However, the administrator
        of the SOP has the authority to modify these terms.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    | The following SOP table summarizes the changes in options
        outstanding and the related prices for the shares of the Companys
        common stock issued as of December 31, 2007:                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                             

|                        |  | Number of |  |   | Weighted Average                | 
|----------------------- |  | --------- |  | - | ------------------------------- | 
|                        |  | Options   |  |   | Exercise
      Price US dollars | 
|January 1, 2006         |  | -         |  |   | -                               | 
|Granted  December 2006 |  | 200,000   |  | $ | 0.10                            | 
|January 1, 2007         |  | 200,000   |  |   | 0.10                            | 
|Granted  June 2007     |  | 650,000   |  |   | 0.08                            | 
|July 2007               |  | 250,000   |  |   | 0.10                            | 
|December 2007           |  | 500,000   |  |   | 0.04                            | 
|December 31, 2007       |  | 1,600,000 |  | $ | 0.07                            | 

Options Outstanding and Exercisable at
  December 31, 2007:

| |   | Options Outstanding |  |  | Options Exercisable | 
| | - | ------------------- |  |  | ------------------- | 
| |   | Range of            |  |  |                     | 
| |   | Exercise            |  |  |                     | 
| |   | Prices  US         |  |  |                     | 
| |   | dollars             |  |  | Shares              | 
| |   |                     |  |  |                     | 
| | $ | 0.04                |  |  | 500,000             | 
| |   | 0.10                |  |  | 250,000             | 
| |   | 0.08                |  |  | 650,000             | 
| |   | 0.10                |  |  | 200,000             | 
| |   |                     |  |  | 1,600,000           | 

During 2007, the Company recognized $102,888
  as stock-based compensation expense, with a corresponding increase in additional
  paid-in capital. Management is of the opinion that stock-based compensation
  expense for the year ended December 31, 2006 was not material.

---

|LAMPERD LESS LETHAL INC.                    
|--------------------------------------------
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  
|(Canadian Funds)                            
|Years ended December
      31, 2007 and 2006

|11. | STOCK INCENTIVE PLAN (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                  
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | The fair value of the options has been estimated using
        the Black-Scholes pricing option model. The assumptions used for the valuation
        of the options were: dividend yield  0%; expected volatility 
        144%; risk-free interest rate 4.1%; and an expected life of 5 -7 years
        (2006  0%; 25%; 4.25%; 10 years, respectively). Total stock-based
        compensation costs for 2007 amounted to $102,888. Management is of the
        opinion that the 2006 fiscal year stock-based compensation costs were
        not material.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|12. | CAPITAL STOCK                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                     
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    | Transactions during the year in the Companys capital
        stock are as follows:                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

|                              |  | Number of shares |  |   | Par value     |  |   | Additional paid-in | 
|----------------------------- |  | ---------------- |  | - | ------------- |  | - | ------------------ | 
|Date                          |  | issued           |  |   | common shares |  |   | capital            | 
|Balance  January 1, 2006     |  | 50,750,000       |  | $ | 62,696        |  | $ | 1,937,738          | 
|March 2, 2006 (i)             |  | 500,000          |  |   | 584           |  |   | 203,212            | 
|September 14, 2006 (ii)       |  | 1,000,000        |  |   | 1,100         |  |   | 66,832             | 
|December 12, 2006 (iii)       |  | 1,570,158        |  |   | 1,567         |  |   | 123,806            | 
|Balance  January 1, 2007     |  | 53,820,158       |  | $ | 65,947        |  | $ | 2,331,588          | 
|March 31, 2007 (iv)           |  | 422,982          |  |   | 488           |  |   | 53,233             | 
|May 1, 2007 (v)               |  | 750,000          |  |   | 750           |  |   | 85,718             | 
|June 30, 2007 (vi)            |  | 374,900          |  |   | 399           |  |   | 29,523             | 
|December 31, 2007 (vii)       |  | 3,077,528        |  |   | 3,078         |  |   | 120,023            | 
|December 31, 2007 (viii)      |  | 250,000          |  |   | 250           |  |   | 9,750              | 
|December 31, 2007 (ix)        |  | 250,000          |  |   | 250           |  |   | 9,750              | 
|December 31, 2007 (x)         |  | 925,475          |  |   | 925           |  |   | 36,094             | 
|2007 stock-based compensation |  | 0                |  |   | 0             |  |   | 102,888            | 
|Balance  December 31, 2007   |  | 59,871,043       |  | $ | 72,087        |  | $ | 2,778,567          | 

| | (i)  | Shares issues for services received during 2005, based
        on the stock price at close of business on March 2, 2006.
| | ---- | ------------------------------------------------------------------------------------------------------------------------
| |      |                                                                                                                         
| | (ii) | Shares issued in a private placement offering at $0.06
        per share.                                               

---

|LAMPERD LESS LETHAL INC.                    
|--------------------------------------------
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  
|(Canadian Funds)                            
|Years ended December
      31, 2007 and 2006

|12. | CAPITAL STOCK (continued)
|--- | -------------------------

| | (iii)  | Shares issued to related parties (two suppliers
      to the Company and the Companys president) in lieu of $125,373 due
      to these parties at an issue price of $0.08 per share.                                                                 
| | ------ | -------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
| |        |                                                                                                                                                                                                                                                        
| | (iv)   | Shares issued to a corporation owned by a director
      of the Company in lieu of repayment of loans outstanding at March 31, 2007.                                                                                                                   
| |        |                                                                                                                                                                                                                                                        
| | (v)    | Issued in a private placement offering at US $0.10
      a unit which included a common stock purchase warrant entitling the holder
      to acquire up to 1,000,000 common shares in the company at US $0.08 per
      share, expiring April 30, 2010.
| |        |                                                                                                                                                                                                                                                        
| | (vi)   | Shares issued to a corporation owned by a director
      of the Company in lieu of repayment of loans outstanding at June 30, 2007.                                                                                                                    
| |        |                                                                                                                                                                                                                                                        
| | (vii)  | Shares issued to a corporation owned by a director
      of the Company in lieu of payment for services rendered to the Company during
      2007.                                                                                                     
| |        |                                                                                                                                                                                                                                                        
| | (viii) | Shares issued to an employee of the Company as
      an incentive bonus.                                                                                                                                                                               
| |        |                                                                                                                                                                                                                                                        
| | (ix)   | Shares issued to a consultant in lieu of payment
      for services rendered to the Company during 2007.                                                                                                                                               
| |        |                                                                                                                                                                                                                                                        
| | (x)    | Shares issued to the president of the Company
      in lieu of payment for services rendered during 2007.                                                                                                                                              

|13. | WARRANTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | At January 1 2006, the Company had issued and outstanding
        3,000,000 common stock purchase warrants for the purchase of stock in
        the Company at US $1.25 - $1.40. These warrants expired in 2007.                                                                                                                                                                                                                                                                                                                                                                        
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | As part of the unit issuance described in note 12 (v),
        the Company issued 1,000,000 common stock purchase warrants for the purchase
        of stock in the Company at US $0.08. These warrants expire in May of 2010.                                                                                                                                                                                                                                                                                                                                                          
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|14. | DEFERRED INCOME TAXES                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | The parent company, Lamperd Less Lethal Inc., is a US
        corporation and is responsible for the filing of United States Federal
        income tax returns. There have been no taxable transactions in this company
        in 2007 or in 2006. Separate income tax returns are filed for the Canadian
        subsidiary, 1476246 Ontario Limited, which contains all of the reported
        operations for the consolidated entity. There was no taxable income and,
        consequently no provision for income taxes, for the years ended December
        31, 2007 and 2006.

---

|LAMPERD LESS LETHAL INC.                    
|--------------------------------------------
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  
|(Canadian Funds)                            
|Years ended December
      31, 2007 and 2006

|14. | DEFERRED INCOME TAXES (continued)                                                                                                                                                                                                                     
|--- | ------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                       
|    | The total provision for income taxes may differ from
        that amount which would be computed by applying the income tax rate to
        income (loss) before provision for income taxes. The reasons for these
        differences are as follows:

|                             |   | 2007     |   |  | 2006 |  
|---------------------------- | - | -------- | - |  | ---- | -
|                             |   | Amount   |   |  | %    |  
|Income tax computed at       |   |          |   |  |      |  
|statutory income tax rate    |   |          |   |  |      |  
|(recovery)                   | $ | (278,000 | ) |  | (35  | )
|Non-deductible and temporary |   |          |   |  |      |  
|differences                  |   | 56,000   |   |  | 7    |  
|                             |   |          |   |  |      |  
|Valuation adjustment         |   | 222,000  |   |  | 28   |  
|Net taxes (recovery) and     |   |          |   |  |      |  
|effective rate               | $ | 0        |   |  | 0    |  

Temporary differences and carry-forwards,
  which gives rise to deferred tax assets and liabilities are as follows:

|                   |   | 2007       |   |   | 2006             |  
|------------------ | - | ---------- | - | - | ---------------- | -
|                   |   | Amount     |   |   | Tax Effect (33%) |  
|                   |   |            |   |   |                  |  
|Net cumulative     |   |            |   |   |                  |  
|operating losses   |   |            |   |   |                  |  
|for Canadian       |   |            |   |   |                  |  
|subsidiary         | $ | 2,760,000  |   | $ | 911,000          |  
|                   |   |            |   |   |                  |  
|Temporary          |   |            |   |   |                  |  
|differences        |   | (202,000   | ) |   | (67,000          | )
|                   |   |            |   |   |                  |  
|Share issue costs  |   | 204,000    |   |   | 67,000           |  
|                   |   |            |   |   |                  |  
|Less valuation     |   |            |   |   |                  |  
|allowance          |   | (2,762,000 | ) |   | (911,000         | )
|                   |   |            |   |   |                  |  
|Net deferred tax   |   |            |   |   |                  |  
|asset              | $ | 0          |   | $ | 0                |  
|                   |   |            |   |   |                  |  
|Net cumulative     |   |            |   |   |                  |  
|operating losses  |   |            |   |   |                  |  
|US parent          | $ | 104,000    |   | $ | 37,000           |  
|                   |   |            |   |   |                  |  
|Less valuation     |   |            |   |   |                  |  
|allowance          |   | (104,000   | ) |   | (37,000          | )
|                   |   |            |   |   |                  |  
|Net deferred tax   |   |            |   |   |                  |  
|asset              | $ | 0          |   | $ | 0                |  

---

|LAMPERD LESS LETHAL INC.                    
|--------------------------------------------
|NOTES TO CONSOLIDATED FINANCIAL STATEMENTS  
|(Canadian Funds)                            
|Years ended December
      31, 2007 and 2006

|14. | DEFERRED INCOME TAXES (continued)                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | In assessing the realizability of future tax assets,
        management considers whether it is more likely than not that some portion
        or all of the future tax assets will not be realized. The ultimate realization
        of future tax assets is dependent upon the generation of future taxable
        income during the periods in which those temporary differences become
        deductible. Management considers the scheduled reversal of future tax
        liabilities, projected future taxable income and tax planning strategies
        in making this assessment. Management has provided for a valuation allowance
        on all of its losses as there is no assurance that future tax benefits
        will be realized.
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | At December 31, 2007 the Company had cumulative net
        operating loss carry-forwards of approximately $2,762,000 (2006 - $2,129,000)
        with respect to its Canadian subsidiary and $104,000 (2006 - $104,000)
        in the United States for the parent.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | With respect to the Canadian amount, $634,000 will expire
        in 2027, $800,000 will expire in 2026 and $1,328,000 in 2015.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | The U.S. net operating loss expires in 2021 through
        2024. The provisions of Internal Revenue Code Section 382 will apply to
        the use of the US net operating losses originated before 2005.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                              
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|15. | SUBSEQUENT EVENTS                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                       
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | (i) On March 19, 2008 a shareholder advanced $20,000
        to the Company under a promissory note bearing interest at 15% per annum,
        with principal due in March 2009. The notes are secured by certain purchase
        orders that the Company has received from its customers.                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | (ii) On April 9, 2008 a shareholder advanced $40,000
        to the Company under a promissory note bearing interest at 12% per annum,
        with principal due in April 2009. The notes are secured by certain purchase
        orders that the Company has received from its customers.                                                                                                                                                                                                                                                                                                                                                                                                                                                             
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                         
|    | (iii) In January and March 2008, shareholders advanced
        approximately $10,000 to the Company. These advances are non-interest
        bearing, unsecured, and repayable on demand.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               

---

- 25 -

LAMPERD LESS LETHAL INC.

|Item 8. | Changes In and Disagreements With
      Accountants on Accounting and Financial **Disclosure.**
|------- | -----------------------------------------------------------------------------------------------

On April 3, 2008, we engaged Danziger Hochman Partners LLP
Licensed Public Accountants, as our independent accountants to audit our
financial statements to replace Gregory J. Barber CPA.P.C. Danziger Hochman
Partners LLP were not consulted on any matter relating to accounting principles
to a specific transaction, either completed or proposed, or the type of audit
opinion that might be rendered on our financial statements. Gregory J. Barber
CPA.P.C. performed the 2006 audit and Mintz and Partners LLP performed the 2005
and 2004 audit.

---

- 26 -

|Item 8A. | Disclosure Controls and Procedures
|-------- | ----------------------------------

(a)Evaluation of
Disclosure Controls and Procedures

The companys management with the participation of its Chief
  Executive Officer, has evaluated the effectiveness of the Company's disclosure
  controls and procedures (as defined in Rules 13a-15(e) and 15d-15(e) under the
  Securities Exchange Act of 1934) as of December 31, 2007. Based on that evaluation,
  the Companys Chief Executive Officer and other Senior Management have
  concluded that, as December 31 2007, the Companys disclosure controls
  and procedures were not totally effective as a result of the material weakness
  in internal control over financial reporting noted in (b) below. A material
  weakness is a deficiency, or a combination of deficiencies, in internal control
  over financial reporting, such that there is a reasonable possibility that a
  material misstatement of the companys annual or interim financial statements
  will not be prevented or detected on a timely basis

(b)Managements Report on
Internal Control Over Financial Reporting

The Companys significant personnel reduction resulting from
low sales volumes has affected the overall control environment.

*provide reasonable assurance that
transactions are recorded as necessary to permit preparation of financial
statements in accordance with generally accepted accounting principles.

*receipts and expenditures of the
Company are being made only in accordance with authorizations of management and
directors of the Company.

*effective controls over disclosures to
ensure that all disclosures required are addressed in financial statements.

All internal control system, no matter how will designed, have
inherent limitations. Therefore, even those systems determined to be effective
can provide only reasonable assurance with respect to financial statement
preparation and presentation. These inherent limitations include the realities
that judgement in decision making can be faulty, and that break down can occur
because of simple error. The design of any system of controls is based upon
certain assumptions about the likelihood of future events, and there can be no
assurance that any design will succeed in achieving its stated goals under all
potential future conditions.

( c)Changes in Internal
Control over Financial Reporting

During the quarter ending March 31, 2008, there were no changes
made to our Internal Control Procedures

|Item 8B. | Other Information
|-------- | -----------------

None.

---

- 27 -

PART III

|Item 9. | Directors, Executive Officers, Promoters and
      Control Persons; Compliance with Section **16(a) of the Exchange
      Act.**
|------- | --------------------------------------------------------------------------------------------------------------------------------

DIRECTORS AND EXECUTIVE OFFICERS, PROMOTERS AND CONTROL
PERSONS

As at April 30, 2008, our directors and executive officers,
their ages, positions held, and duration of such, are as follows:

Name
    Position Held with our
      Company
    Age
    Date First
      Elected or AppointedBarry Lamperd
    President, Chief Executive Officer and
      Director
    60
    April 14, 2005D'arcy David William Bell
    Director
    54
    April 14, 2005Dominic Dicarlo
    Director
    59
    April 14, 2005Edward Ferguson
    Director
    60
    April 14, 2005Terry Smith
    Director
    55
    April 14, 2005Sharon Scott
    Plant / Operation Manager
    54
    June 6, 2005


Business Experience

The following is a brief account of the education and business
experience during at least the past five years of each director, executive
officer and key employee, indicating the principal occupation during that
period, and the name and principal business of the organization in which such
occupation and employment were carried out.

Barry Lamperd

Mr. Lamperd became our President, Chief Executive Officer and
Director on April 14, 2005.

In 1989, Mr. Lamperd started Pine Tree Law Enforcement
Products, a company focussed on the design, production and manufacture of
products for a variety of uses by law enforcement, military and corrections
personnel. In January of 2005, Pine Tree Law Enforcement Products was acquired
by Lamperd. Upon the acquisition, Mr. Lamperd was appointed president of Lamperd
and currently supervises product research and development of the company. Mr.
Lamperd is a member of the Police and Military Advisory Board, an organization
that sets the training standards for police and military personnel in
Canada.

---

- 28 -

D'arcy David William Bell

Mr. Bell was appointed Vice President and Director on April 14,
2005.

Mr. Bell is a partner with the law firm George Murray Shipley
Bell LLP where he has a diverse practice including corporate commercial law. Mr.
Bell graduated with a Bachelor of Laws from the University of Windsor.

Dominic Dicarlo

Mr. Dicarlo was appointed Vice President and Director on April
14, 2005.

Mr. Dicarlo is the president of T.R.E.L. Of Sarnia Limited, a
machine shop. Mr. Dicarlo graduated from Fanshaw College of London, Ontario in
1969.

Terry Smith

Mr. Smith was appointed a director on April 14, 2005.

Terry E. Smith has been involve with the criminal justice
industry since patrolling the streets in Okinawa as a United State Marine
Military Policeman in 1972. In 1975, he ended his MP duties with the Marine
Corps at Quantico, Virginia to attend college in his hometown. His primary
studies there was in criminal justice and a minor in sociology. While attending
college he continued providing educational support to local law enforcement
agencies in the area of police baton certification, which he had certified as an
Instructor while in the Marine Corps. While in college, he also volunteered as
an auxiliary police officer and worked in private security.

Terry moved his family to Indianapolis, Indian to take on
duties as a Deputy Sheriff with the Marion County Sheriff's Department (MCSD) in
February 1978.

He eventually earned his B.S. in Criminal Justice at the
University of Indiana (IUPUI campus), Indiana in 1982. He worked many positions
within the department, but is most proud of his duty as a Senior Training
Officer at the MCSD Training Academy. In 1988, he accepted an offer to become
the Director of Training at a large criminal justice technology manufacturer in
New Hampshire. He continues in that position today. Terry is a Charter member of
several key trainer associations such as the International Law Enforcement
Educators and Trainers Association (ILEETA) and the former American Society of
Law Enforcement Trainers (ASLET). He is an associate member with the
International Association of Women Police (IAWP) and International Association
of Directors of Law Enforcement Standards and Training (IADLEST).

Edward Ferguson

Mr. Edward Ferguson was appointed a director on April 14,
2005

Mr. Edward Ferguson is a United States Navy Combat veteran.
Between 1990 and 1993, Mr Ferguson independently owned and operated E.L.F., and
advertising and marking company. Since 1993, Mr. Ferguson has been associated
with Fox Labs International

---

- 29-

Inc., and in 1997m Mr. Ferguson became the president and 50%
shareholder of Fox Labs International Inc. As of 1998 Mr. Ferguson held 100% of
shares for Fox Lab International Inc.

Sharon Scott

Mrs. Sharon Scott was appointed Plant / Operation Manager on
June 6, 2005.

Mrs. Scott has over 20 years experience in the injection molding
  manufacturing industries. Sharon has extensive knowledge in Production Controls,
  Expanded Bill of Material Costing (BOM), Customer Relations, SPC, FMEA, Control
  Plans, QS/ISO 9000. Mrs. Scott was the Operations Manager for a Plastic injection
  Molding Company in Michigan which supplied production and service parts for
  two major automotive companies. Previous to this position she was Production
  Manager / Customer Liaison for North American Plastics Inc. a chrome plating
  and plastics injection molding corporation in Canada. Mrs. Scott attended Westervelt
  Business College and Fanshaw College in London, Ontario.

Committees of the Board

Currently our company has the following committees:

- Audit Committee;
- Nominating and Corporate Governance Committee; and
- Compensation Committee.

The following people make up the Audit Committee: Barry
Lamperd, Dominic Dicarlo, and Darcy Bell. The Audit Committee is governed by the
Audit Committee Charter adopted by the board of directors on February 9,
2004.

Our Nominating and Corporate Governance Committee is currently
made up of all of our directors. The Nominating and Corporate Governance
Committee is governed by the Nominating and Corporate Governance Committee
Charter adopted by the board of directors on February 9, 2004.

Our Compensation Committee is currently made up of all of our
directors. The Compensation Committee is governed by the Compensation Committee
Charter adopted by the board of directors on February 9, 2004.

Family Relationships

There are no family relationships between any of our directors
or executive officers.

Involvement in Certain Legal Proceedings

Other than as discussed below, none of our directors, executive
officers, promoters or control persons have been involved in any of the
following events during the past five years:

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- 30 -

1. any bankruptcy petition filed by or
against any business of which such person was a general partner or executive
officer either at the time of the bankruptcy or within two years prior to that
time;

2. any conviction in a criminal
proceeding or being subject to a pending criminal proceeding (excluding traffic
violations and other minor offences);

3. being subject to any order,
judgment, or decree, not subsequently reversed, suspended or vacated, of any
court of competent jurisdiction, permanently or temporarily enjoining, barring,
suspending or otherwise limiting his involvement in any type of business,
securities or banking activities; or

4. being found by a court of competent
jurisdiction (in a civil action), the Commission or the Commodity Futures
Trading Commission to have violated a federal or state securities or commodities
law, and the judgment has not been reversed, suspended, or vacated.

Audit Committee Financial Expert

Our Board of Directors has determined that it does not have a
member of its audit committee that qualifies as an audit committee financial
expert as defined in Item 401(e) of Regulation S-B, and is independent as the
term is used in Item 7(d)(3)(iv) of Schedule 14A under the Securities Exchange
Act of 1934, as amended.

We believe that the members of our Board of Directors are
collectively capable of analyzing and evaluating our financial statements and
understanding internal controls and procedures for financial reporting. In
addition, we believe that retaining an independent director who would qualify as
an audit committee financial expert would be overly costly and burdensome and
is not warranted in our circumstances given the early stages of our development
and the fact that we have not generated adequate revenues to date.

Section 16(a) Beneficial Ownership Compliance

Section 16(a) of the Securities Exchange Act requires our
executive officers and directors, and persons who own more than 10% of our
common stock, to file reports regarding ownership of, and transactions in, our
securities with the Securities and Exchange Commission and to provide us with
copies of those filings. Based solely on our review of the copies of such forms
received by us, or written representations from certain reporting persons, we
believe that during fiscal year ended December 31, 2007, all filing requirements
applicable to its officers, directors and greater than ten percent beneficial
owners were complied with, with the exception of the following:

Name
    Number of Late
      Reports
    Number of Transactions Not
      Reported on a Timely Basis
    Failure to
      File Requested FormsBarry Lamperd
    1(1)
    21(1)(2)
    NilDarcy David William Bell
    1(2)
    9(1)(2)
    NilDominic Dicarlo
    1(2)
    17(1)(2)
    Nil


|(1) | The named officer, director or greater than 10%
      stockholder, as applicable, filed a late Form 4  Statement in Changes of
      Beneficial Ownership.                                 
|--- | --------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                             
|(2) | The named officer, director or greater than 10%
      stockholder, as applicable, is preparing to file a Form 5  Annual
      Statement of Changes in Beneficial Ownership of
  Securities.

---

- 31 -

Code of Ethics

Effective February 9, 2004, our company's board of directors
adopted a Code of Business Conduct and Ethics that applies to, among other
persons, our company's president (being our principal executive officer) and our
company's chief financial officer (being our principal financial and accounting
officer and controller), as well as persons performing similar functions. As
adopted, our Code of Business Conduct and Ethics sets forth written standards
that are designed to deter wrongdoing and to promote:

(1) honest and ethical conduct, including the ethical handling
of actual or apparent conflicts of interest between personal and professional
relationships;

(2) full, fair, accurate, timely, and understandable disclosure
in reports and documents that we file with, or submit to, the Securities and
Exchange Commission and in other public communications made by us;

(3) compliance with applicable governmental laws, rules and
regulations;

(4) the prompt internal reporting of violations of the Code of
Business Conduct and Ethics to an appropriate person or persons identified in
the Code of Business Conduct and Ethics; and

(5) accountability for adherence to the Code of Business
Conduct and Ethics.

Our Code of Business Conduct and Ethics requires, among other
things, that all of our company's personnel shall be accorded full access to our
president and corporate secretary, as well as persons performing similar
functions, with respect to any matter which may arise relating to the Code of
Business Conduct and Ethics. Further, all of our company's personnel are to be
accorded full access to our company's board of directors if any such matter
involves an alleged breach of the Code of Business Conduct and Ethics by our
president or chief financial officer.

In addition, our Code of Business Conduct and Ethics emphasizes
that all employees, and particularly managers and/or supervisors, have a
responsibility for maintaining financial integrity within our company,
consistent with generally accepted accounting principles, and federal,
provincial and state securities laws. Any employee who becomes aware of any
incidents involving financial or accounting manipulation or other
irregularities, whether by witnessing the incident or being told of it, must
report it to his or her immediate supervisor or to our company's audit
committee. Any failure to report such inappropriate or irregular conduct of
others is to be treated as a severe disciplinary matter. It is against our
company policy to retaliate against any individual who reports in good faith the
violation or potential violation of our company's Code of Business Conduct and
Ethics by another.

Our Code of Business Conduct and Ethics is incorporated by
reference from our Annual Report on Form 10-KSB filed on April 7, 2005. We will
provide a copy of the Code of Business Conduct and Ethics to any person without
charge, upon request. Requests can be sent to: Lamperd Less Lethal, Inc., 1200
Michener Road, Sarnia, Ontario N7T 7H8.

|Item 10. | Executive Compensation.
|-------- | -----------------------

The particulars of compensation paid to the following
persons:

- our principal executive officer;
- each of our two most highly compensated executive officers who were serving
  as executive officers at the end of the year ended December 31, 2006; and
- up to two additional individuals for whom disclosure would have been
  provided under (b) but for the fact that the individual was not serving as our
  executive officer at the end of the most recently

---

- 32 -

completed financial year, who we will collectively refer to as
the named executive officers, of our years ended December 31, 2006 and 2005 ,
are set out in the following summary compensation table:

[NTD  include footnotes for amounts in columns other
than salary, unless stock was given as part of salary]

SUMMARY COMPENSATION TABLEName and Principal
      Position
    Year
    Salary
      ($)
    Bonus
      ($)
    Stock
      Awards ($)
    Option
      Awards ($)
    Non-Equity
      Incentive Plan Compensa- tion
      ($)
    Change in Pension
      Value and Nonqualified Deferred
      Compensatio n Earnings ($)
    All Other
      Compensation ($)
    Total
      ($)Barry Lamperd President, Chief Executive Officer
      and Director(1)
    2007 2006 2005 2004
    87,981 125,000 125,000 Nil
    Nil Nil Nil Nil
    37,019 Nil Nil Nil
    Nil Nil Nil Nil
    Nil Nil Nil Nil
    Nil Nil Nil Nil
    Nil Nil Nil Nil
    125,000 125,000 125,000 NilDominic Dicarlo Vice President, Director(2)
    2007
    Nil
    Nil
    Nil
    16,000
    Nil
    Nil
    Nil
    16,000Sharon Scott Plant / Operation
      Manager(3)
    2007 2006 2005 2004
    60,000 60,000 33,462 N/A
    Nil Nil Nil N/A
    10,000 Nil Nil N/A
    40,000 10,000 Nil N/A
    Nil Nil N/A
    Nil Nil N/A
    Nil Nil N/A
    110,000 60,000 33,462 N/A


|(1) | Mr. Lamperd was appointed President and Chief Executive
      Officer on April 14, 2005.
|--- | ----------------------------------------------------------------------------------------
|(2) | Mr. Dominic Dicarlo was appointed Vice President /
      Director on April 14, 2005     
|(3) | Mrs. Scott was appointed Plant / Operation Manager on
      June 6, 2005.               

Employment/Consulting Agreements

There is one written employment/consulting agreement between
the company and Barry Lamperd, Director and President/CEO.

Long-Term Incentive Plans

There are no arrangements or plans in which we provide pension,
retirement or similar benefits for directors or executive officers, except that
our directors and executive officers may receive stock options at the discretion
of our board of directors. We do not have any material bonus or profit sharing
plans pursuant to which cash or non-cash compensation is or may be paid to our
directors or executive officers, except that stock options may be granted at the
discretion of our board of directors.

We have no plans or arrangements in respect of remuneration
received or that may be received by our executive officers to compensate such
officers in the event of termination of employment (as a result of resignation,
retirement, change of control) or a change of responsibilities following a
change of control, where the value of such compensation exceeds $60,000 per
executive officer.

---

- 33 -

Stock Option Plan

On December 4, 2006 our directors adopted a stock option plan
(the 2006 Option Plan) for our directors and employees, reserving a total of
2,000,000 shares of our common stock for issuance pursuant to grants made under
the 2006 Option Plan. The 2006 Option Plan was effective October 1, 2006.

The following table sets forth for each of the named executive
officers certain information concerning unexercised options, stock that has not
vested; and equity incentive plan awards outstanding as at the year ended
December 31, 2007.

OUTSTANDING EQUITY AWARDS AT FISCAL
      YEAR-ENDOption Awards
    Stock AwardsName
    Number of
      Securities Underlying Unexercised
      Options (#) Exercisable
    Number of
      Securities Underlying Unexercised
      Options (#) Unexercisable
    Equity
      Incentive Plan Awards: Number
      of Securities Underlying
      Unexercised Unearned Options
      (#)
    Option
      Exercise Price ($)
    Option
      Expirati on Date
    Number
      of Shares or Units
      of Stock That Have
      Not Vested (#)
    Market
      Value of Shares or
      Units of Stock That
      Have Not Vested ($)
    Equity
      Incentive Plan Awards: Number
      of Unearned Shares, Units or
      Other Rights That Have Not
      Vested (#)
    Equity Incentive Plan
      Awards: Market or Payout Value
      of Unearned Shares, Units or
      Other Rights That Have Not
      Vested ($)Dominic Dicarlo Vice President and
      Director
    200,000 (3)
    Nil
    Nil
    0.08
    June 30, 2012
    Nil
    Nil
    Nil
    NilSharon Scott Plant / Operation
      Manager
    66,666
      250,000 (3) 250,000 (4)
    Nil
      Nil
    33,334(2)Nil 250,000
    0.10 0.08
      0.04
    Dec. 4, 2013 June
      30, 2012 Dec 31, 2012
    Nil Nil
      Nil
    Nil Nil
      Nil
    Nil Nil
      Nil
    Nil Nil
      Nil


|(2) | Stock Options were granted effective December 4, 2006 and
      vest as to 33 1/3% on June 4, 2007, December 4, 2007 and June 4,
    2008
|--- | -----------------------------------------------------------------------------------------------------------------------------------------
|(3) | Stock Option were granted effective June 30, 2007 and
      vested as to 50% June 30, 2007, December 30, 2007                            
|(4) | Stock Options were granted effective December 31, 2007
      and vested as to 50% December 31, 2007 and 50% June 30, 2008
  .            

Directors Compensation

Other than disclosed above there was no other directors
compensations.

We reimburse our directors for expenses incurred in connection
with attending board meetings but did not pay director's fees or other cash
compensation for services rendered as a director in the year ended December 31,
2005.

We have no present formal plan for compensating our directors
for their service in their capacity as directors, although in the future, such
directors are expected to receive compensation and options to

---

- 34 -

purchase shares of common stock as awarded by our board of
directors or (as to future options) a compensation committee which may be
established in the future. Directors are entitled to reimbursement for
reasonable travel and other out-of-pocket expenses incurred in connection with
attendance at meetings of our board of directors. The board of directors may
award special remuneration to any director undertaking any special services on
behalf of our company other than services ordinarily required of a director.
Other than indicated in this annual report, no director received and/or accrued
any compensation for his or her services as a director, including committee
participation and/or special assignments.

Report on Executive Compensation

Our compensation program for our executive officers is
administered and reviewed by our board of directors. Historically, executive
compensation consists of a combination of base salary and bonuses. Individual
compensation levels are designed to reflect individual responsibilities,
performance and experience, as well as the performance of our company. The
determination of discretionary bonuses is based on various factors, including
implementation of our business plan, acquisition of assets, and development of
corporate opportunities and completion of financing.

|Item 11. | Security Ownership of Certain Beneficial
      Owners and Management and Related **Stockholder
      Matters.**
|-------- | ---------------------------------------------------------------------------------------------------------------

The following table sets forth, as at March 31, 2007, certain
information with respect to the beneficial ownership of our common stock by each
shareholder known by us to be the beneficial owner of more than five percent
(5%) of our common stock, and by each of our current directors and executive
officers. Each person has sole voting and investment power with respect to the
shares of common stock, except as otherwise indicated. Beneficial ownership
consists of a direct interest in the shares of common stock, except as otherwise
indicated.

Name and Address of Beneficial
      Owner
    Amount and Nature of Beneficial
      Ownership(1)
    Percentage of Class(1)Barry Lamperd 1041 Brimwood Crescent Sarnia,
      Ontario N7S 5E8
    6,741,795
    11.26.%Sharon Scott 2332 Kimball Rd.
      Courtright N0N 1H0
    Nil
    NilDArcy David William Bell 1280 Marcin
      Road Sarnia, Ontario N7V 3J9
    5,585,000
    9.32%Dominic Dicarlo 1981 Rainbow Trial
      Sarnia, Ontario N7T 7H6
    2,849,075
    4.75%Terry Smith 58 Kennedy Drive Keene,
      New Hampshire 03431
    Nil
    NilEdward Ferguson 20752 Miles St. S.
      Clinton Township, Michigan 48036- 1948
    250,000
    *


---

- 35 -

Name and Address of Beneficial
      Owner
    Amount and Nature of Beneficial
      Ownership(1)
    Percentage of Class(1)Mercer Investments Inc. (2)1610 Wesbrook
      Crescent Vancouver, British Columbia V6T 1W1
    2,990,000
    4.99%Bruce Strebinger 338 North Dollarton
      Highway North Vancouver, British Columbia V7G 1N1
    2,990,000
    4.99%Ernie Taglione 2155 Huron Shores Drive
      Sarnia, Ontario N7V 7H6
    2,849,075
    4.75%1109630 Ontario Limited (3)1165 Confederation St. Sarnia, Ontario N7S 3Y5
    4,993,748
    8.34%Directors and Executive Officers as a
      Group (5 individuals)
    15,425,870 common shares
    25.76%


* Less than 1%

|(1) | Based on 59,871,043 shares of common stock issued and
      outstanding as of March 31, 2008. Except as otherwise indicated, we
      believe that the beneficial owners of the common stock listed above, based
      on information furnished by such owners, have sole investment and voting
      power with respect to such shares, subject to community property laws
      where applicable. Beneficial ownership is determined in accordance with
      the rules of the SEC and generally includes voting or investment power
      with respect to securities. Shares of common stock subject to options or
      warrants currently exercisable, or exercisable within 60 days, are deemed
      outstanding for purposes of computing the percentage ownership of the
      person holding such option or warrants, but are not deemed outstanding for
      purposes of computing the percentage ownership of any other
  person.
|--- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(2) | The shares of common stock held by Bruce Strebinger and
      Mercer Investments Inc. are subject to a voting agreement dated March 18,
      2005 (the "Voting Agreement"). Pursuant to the provisions of the Voting
      Agreement, Bruce Strebinger and Mercer Investments Inc. vested all voting
      power of all shares beneficially owned in the capital of the Company in
      favour of Barry Lamperd, D'Arcy David William Bell and Dominic DiCarlo
      until April 1, 2008.                                                                                                                                                                                                                                                                                                                                                                                                                                                   
|    |                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                               
|(3) | Dominic Dicarlo and Ernie Taglione are 50% owners of
      1109630 Ontario Limited. This total has not been included in the Directors
      and Executive group percentage.                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                                   

Cancellation of Shares, Cancelled Debt

None.

Future Changes in Control

We are unaware of any contract or other arrangement, the
operation of which may, at a subsequent date, result in a change in control of
our company.

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- 36 -

|Item 12. | Certain Relationships and Related
      Transactions, and Director Independence.
|-------- | --------------------------------------------------------------------------------

Except as disclosed herein, there have been no transactions or
proposed transactions in which the amount involved exceeds the lesser of
$120,000 or one percent of the average of our total assets at year-end for the
last three completed fiscal years in which any of our directors, executive
officers or beneficial holders of more than 5% of the outstanding shares of our
common stock, or any of their respective relatives, spouses, associates or
affiliates, has had or will have any direct or material indirect interest.

The Company entered into an asset purchase agreement with
Pinetree Law Enforcement Products of Canada Limited (Pinetree) on January 1,
2005 to acquire certain assets of Pinetree in exchange for assumption of
liabilities and note payable. At the time of the agreement, a Director and Vice
President of the Company was owed $102,400 by Pinetree which was paid in full on
April 22, 2005 when the Company retired the note payable. No amounts are owed to
the related party at December 31, 2007.

The Company issued 250,000 shares of common stock to Edward
Ferguson, a director of our company, on December 2006, in lieu of a cash payment
in the amount of $277,500 for services rendered to our company.

A company controlled by a Director and Vice President of the
  Company is the primary subcontractor of parts for the Companys weapon
  launcher systems. The Company paid this corporation $2,807 in 2007, $6,431 for
  the year ended December 31, 2006, $149,413 for the year ended December 31, 2005
  and $Nil for the year ended December 31, 2004 for the manufacturing of various
  components, and purchases for the Company.

The company rents premises from a corporation controlled by a
  Director and Vice President of the Company. $88,800 for years ended 2007 and
  2006. $85,400 was paid for the year ended December 31, 2005 and was paid Nil
  for the year ended December 31, 2004.

The Company purchased consulting services from certain
directors and officers during 2007, in the amount of $NIL (2006-$12,000).

The Company received legal services from a shareholder in the
amount of $18,500, in 2007, (2006 -$9,000) 115,500 shares of common stock were
issued to satisfy the amount for 2006.

The Company issued 925,475 shares of common stock in 2007, and
  336,320 - 2006 to the President and Director in lieu of a cash payment for the
  amounts of $37,019  2007, and $26,906  2006 for services and loans
  rendered to our company.

The Company issued 3,875,410 shares of common stock in 2007,
  and 1,118,338 - 2006 to company controlled by a Vice President and Director
  in lieu of a cash payment for the amounts of $206,744– 2007, and $89,167–
  2006. for services and loans rendered to our company.

The Company issued 250,000 shares of common stock in 2007, and
NIL - 2006 to a Senior Manager for services provided over and above the salary
paid.

---

- 37 -

Corporate Governance

We currently act with six (6) directors, consisting of Barry
Lamperd, Darcy David William Bell, Dominic Dicarlo, Alexander Purvis Glenn, Ed
Ferguson and Terry Smith.

We have determined that Darcy David William Bell, Dominic
Dicarlo, Alexander Purvis Glenn, Ed Ferguson and Terry Smith are independent
directors, as that term is used in Rule 4200(a)(15) of the Rules of National
Association of Securities Dealers.

Currently our company has the following committees:

- Audit Committee;
- Nominating and Corporate Governance Committee; and
- Compensation Committee.

The following people make up the Audit Committee: Barry
Lamperd, Dominic Dicarlo, and Darcy Bell. The Audit Committee is governed by the
Audit Committee Charter adopted by the board of directors on February 9,
2004.

Our Nominating and Corporate Governance Committee is currently
made up of all of our directors. The Nominating and Corporate Governance
Committee is governed by the Nominating and Corporate Governance Committee
Charter adopted by the board of directors on February 9, 2004.

Our board of directors presently does not have a separate stock
plan committee.

|Item 13. | Exhibits.
|-------- | ---------

|Exhibit | Description                                                                                                                                                                                   
|------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|3.      | Articles of Incorporation
      and By-laws:                                                                                                                                                  
|3.1     | Articles of Incorporation (incorporated by reference from
      our Registration Statement on Form SB-2, filed on March 27, 2002).                                                            
|3.2     | Restated Articles of Incorporation (incorporated by
      reference from our Registration Statement on Form SB-2, filed on March 27,
      2002).                                             
|3.3     | Bylaws (incorporated by reference from our Registration
      Statement on Form SB-2, filed on March 27, 2002).                                                                               
|3.4     | Certificate of Amendment filed with the Nevada Secretary
      of State on January 31, 2005. (incorporated by reference from our Current
      Report on Form 8-K, filed on February 1, 2005).
|3.5     | Certificate of Amendment filed with the Nevada Secretary
      of State on March 21, 2005 (incorporated by reference from our Current
      Report on Form 8-K, filed on March 31, 2005).     

---

- 38 -

|Exhibit | Description                                                                                                                                                                                                                                                                                                                                                                                               
|------- | ----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------
|10.     | Material Contracts                                                                                                                                                                                                                                                                                                                                                                                        
|10.1    | Share Exchange Agreement dated March 18, 2005, among our
      company under our former name Sinewire Networks Inc., 1476246 Ontario
      Limited doing business as Lamperd Less Lethal, Patrick Ward, Hani Zabaneh
      and the principal shareholders as set out in the share exchange agreement
      (incorporated by reference from our Current Report on Form 8-K, filed on
      March 31, 2005).
|10.2    | Employment Agreement dated January 1, 2005 between
      1476246 Ontario Limited and Barry Lamperd (incorporated by reference from
      our Current Report on Form 8-K, filed on May 13, 2005).                                                                                                                                                                                                          
|10.3    | Addendum to Employment Agreement made January 1, 2005
      between 1476246 Ontario Limited and Barry Lamperd (incorporated by
      reference from our Current Report on Form 8-K, filed on May 13, 2005).                                                                                                                                                                                               
|10.4    | Asset Transfer Agreement dated January 1, 2005 between
      1476246 Ontario Limited and Pinetree Law Enforcement Products Ltd.
      (incorporated by reference from our Current Report on Form 8-K, filed on
      May 13, 2005).                                                                                                                                                                       
|10.5    | License Agreement dated January 20, 2005 between 1476246
      Ontario Limited and The University of Western Ontario (incorporated by
      reference from our Current Report on Form 8-K, filed on May 13, 2005).                                                                                                                                                                                        
|10.6    | Voting Agreement dated March 1, 2005 between Barry
      Lamperd, DArcy Bell, Dominic DiCarlo, Bruce Strebinger, Mercer
      Investments Inc. and 1476246 Ontario Limited (incorporated by reference
      from our Current Report on Form 8-K, filed on May 13, 2005).                                                                                                                                 
|10.7    | Consulting Agreement dated April 23, 2005 between 1476246
      Ontario Limited and Dominic DiCarlo (incorporated by reference from our
      Current Report on Form 8-K, filed on May 13, 2005).                                                                                                                                                                                                         
|10.8    | Consulting Agreement dated April 23, 2005 between 1476246
      Ontario Limited and 1476232 Ontario Limited (incorporated by reference
      from our Current Report on Form 8-K, filed on May 13, 2005).                                                                                                                                                                                                 
|10.9    | Letter of Intent dated Mary 18, 2005 between Lamperd Less
      Lethal Inc. and Taylors & Co. Inc. (incorporated by reference from
      our Current Report on Form 8-K filed on May 27, 2005).                                                                                                                                                                                                          
|10.10   | Geographic Exclusive Commissioned Sales Agent Agreement
      dated as of August 2, 2005 (incorporated by reference from our Current
      Report on Form 8-K filed on August 8, 2005).                                                                                                                                                                                                                   

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|Exhibit | Description                                                                                                                                 
|------- | --------------------------------------------------------------------------------------------------------------------------------------------
|14.     | Code of Ethics                                                                                                                              
|14.1    | Code of Business Conduct and Ethics (incorporated
      by reference from our Annual Report on Form 10- KSB, filed on March 30,
      2004).
|31.     | 302 Certification                                                                                                                           
|31.1*   | Section 302 Certification
      under Sarbanes-Oxley Act of 2002 of Barry Lamperd.                                                          
|32.     | 906 Certification                                                                                                                           
|32.1*   | Section 906 Certification
      under Sarbanes-Oxley Act of 2002 of Barry Lamperd.                                                          

* Filed herewith

|**Item 14.** | Principal Accountants Fees and Services
|------------ | ---------------------------------------

Audit Fees

The aggregate fees billed by Gregory J. Barber, CPA, P.C. for
professional services rendered for the audit of our annual financial statements
included in our Annual Report on Form 10-KSB for the fiscal year ended December
31, 2006 was $51,520 (US) and by Mintz & Partners LLP for the fiscal year
ended December 31, 2005 was $100,500.

Tax Fees

For the fiscal year ended December 31, 2006, the aggregate fees
billed by Gregory J. Barber, CPA, P.C. for other non-audit professional
services, other than those services listed above, totaled $Nil and by Mintz
& Partners LLP for the fiscal year ended December 31, 2005 was $Nil.

We do not use Gregory J. Barber, CPA, P.C. for financial
information system design and implementation. These services, which include
designing or implementing a system that aggregates source data underlying the
financial statements or generates information that is significant to our
financial statements, are provided internally or by other service providers. We
do not engage Gregory J. Barber, CPA, P.C. to provide compliance outsourcing
services.

Effective May 6, 2003, the Securities and Exchange Commission
adopted rules that require that before Gregory J. Barber, CPA, P.C. is engaged
by us to render any auditing or permitted non-audit related service, the
engagement be:

- approved by our audit committee (which consists of Barry Lamperd, Dominic
  Dicarlo, and Darcy Bell); or

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- 40 -

- entered into pursuant to pre-approval policies and procedures established
  by the audit committee, provided the policies and procedures are detailed as
  to the particular service, the audit committee is informed of each service,
  and such policies and procedures do not include delegation of the audit
  committee's responsibilities to management.

The audit committee pre-approves all services provided by our
independent auditors. The pre-approval process has just been implemented in
response to the new rules, and therefore, the audit committee does not have
records of what percentage of the above fees were pre-approved. However, all of
the above services and fees were reviewed and approved by the audit committee
either before or after the respective services were rendered.

The audit committee has considered the nature and amount of
fees billed by Gregory J. Barber, CPA, P.C. and believes that the provision of
services for activities unrelated to the audit is compatible with maintaining
Gregory J. Barber, CPA, P.C.s independence.

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- 41 -

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.

LAMPERD LESS LETHAL INC.

|By: | /s/ Barry Lamperd                                          | 
|--- | ---------------------------------------------------------- | 
|    | Barry Lamperd, President and
      Chief Executive Officer | 
|    | (Principal Executive Officer,
      Principal Financial    | 
|    | Officer and Principal Accounting
      Officer)            | 

Date: May 15, 2008

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/ Barry Lamperd             |                            |             
|Barry Lamperd                 | President, Chief Executive | May 15, 2008
|                              | Officer and Director       |             
|                              |                            |             
|/s/ Darcy David William Bell |                            |             
|Darcy David William Bell     | Director                   | May 15, 2008
|                              |                            |             
|/s/ Dominic Dicarlo           |                            |             
|Dominic Dicarlo               | Director                   | May 15, 2008
|                              |                            |             
|/s/ Terry Smith               |                            |             
|Terry Smith                   | Director                   | May 15, 2008

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