| Large      accelerated filer | [      ]        | Accelerated      filer         | [        ] |
|------------------------------|----------------------|--------------------------------|----------------------|
| Non-accelerated      filer   | [        ] | Smaller reporting      company | [X]                  |

----

----

----

|   | Consolidated      Balance Sheets                           |   | F-2 |
|--------|------------------------------------------------------------|--------|-----|
|   | Consolidated      Statements of Operations                 |   | F-3 |
|   | Consolidated      Statements of Stockholder’s Equity |   | F-4 |
|   | Consolidated      Statements of Cash Flows                 |   | F-5 |
|   | Notes      to Consolidated Financial Statements            |   | F-6 |

----

| As      at                                                                                                                | August      31, | May      31, |
|---------------------------------------------------------------------------------------------------------------------------|-----------------|--------------|
|                                                                                                                      | 2,008           | 2,008        |
|                                                                                                                      | $               | $            |
| ASSETS                                                                                                                    |            |         |
|                                                                                                                      |            |         |
| Current                                                                                                                   |            |         |
|     Cash      and cash equivalents                                                                    | 15,548          | 21,067       |
|     Goods      and services tax recoverable                                                           | 204             | 86           |
|                                                                                                                      | 15,752          | 21,153       |
|                                                                                                                      |            |         |
| Equipment      – net of  $763 depreciation                                                           | 1,323           | 1,420        |
| Total      Assets                                                                                                         | 17,075          | 22,573       |
|                                                                                                                      |            |         |
| LIABILITIES                                                                                                               |            |         |
|                                                                                                                      |            |         |
| Current                                                                                                                   |            |         |
|      Accounts      payable and accrued liabilities                                               | 9,873           | 436          |
|      Advances      from a related party (Note 4)                                                 | 36,432          | 35,020       |
| Total      Liabilities                                                                                                    | 46,305          | 35,456       |
|                                                                                                                      |            |         |
| STOCKHOLDERS’      DEFICIT                                                                                          |            |         |
|                                                                                                                      |            |         |
| Preferred      Stock: $0.00001 par value; authorized 100,000,000 preferred shares; none      issued                       |            |
|                                                                                                                      |            |         |
| Common      Stock: $0.00001 par value; authorized 100,000,000 common shares; 8,518,000      shares issued and outstanding |
| (Note      5)                                                                                                             | 85              | 85           |
|                                                                                                                      |            |         |
| Additional      Paid-In Capital                                                                                           | 78,615          | 78,615       |
|                                                                                                                      |            |         |
| Deficit      Accumulated During the Development Stage                                                                     | (107,930)       | (91,583)     |
|                                                                                                                      |            |         |
| Total      Stockholders’ Deficit                                                                                    | (29,230)        | (12,883)     |
|                                                                                                                      |            |         |
| Total      Liabilities and Stockholders’ Deficit                                                                    | 17,075          | 22,573       |
|                                                                                                                      |            |         |

----

|                                                         |   Three      MonthPeriod      EndedAugust      31,2008 |   Three      MonthPeriod      EndedAugust      31,2007 | Cumulative      From November 27, 2006 (Date of Inception) toAugust      31,2008 |
|--------------------------------------------------------------|------------------------------------------------------------------|------------------------------------------------------------------|----------------------------------------------------------------------------------|
|   Revenue                                          | $ -                                                         | $ -                                                         | $ -                                                                         |
|                                                         |                                                             |                                                             |                                                                             |
| General      and Administrative Expenses                |                                                             |                                                             |                                                                             |
|                                                         | Accounting      and administration                               | 1,509                                                            | 900                                                                              | 4,359 |
|                                                         | Audit      fees                                                  | 7,560                                                            | 6,580                                                                            | 19,635 |
|                                                         | Bank      charges                                                | 76                                                               | 89                                                                               | 780 |
|                                                         | Consulting      fees                                             | 2,431                                                            | 5,672                                                                            | 37,767 |
|                                                         | Depreciation                                                     | 97                                                               | 91                                                                               | 763 |
|                                                         | Legal      fees                                                  | 517                                                              | 202                                                                              | 22,178 |
|                                                         | Licenses                                                         | 2,190                                                            | -                                                                                | 2,190 |
|                                                         | Marketing      & Advertising                                 | -                                                                | -                                                                                | 156 |
|                                                         | Office      expenses                                             | -                                                                | 32                                                                               | 1,287 |
|                                                         | Office      rent                                                 | 1,459                                                            | 945                                                                              | 6,241 |
|                                                         | Security      supplies, uniforms, general                        | -                                                                | 600                                                                              | 2,724 |
|                                                         | Telephone      and internet fees                                 | -                                                                | 400                                                                              | 1,076 |
|                                                         | Transfer      agent and filing fees                              | 315                                                              | 955                                                                              | 3,341 |
|                                                         | Vehicle      Expense                                             | -                                                                | 1,863                                                                            | 5,108 |
|                                                         | Loss      (gain) on foreign exchange                             | 193                                                              | (42)                                                                             | 325 |
|                                                         |                                                             |                                                             |                                                                             |
|  Net      Loss for the Period                           |  (16,347)                                                   |  (18,371)                                                   |  (107,930)                                                                  |
|   Basic      and Diluted Loss Per Share            |   (0.002)                                              |   (0.002)                                              |                                                                             |
|  Weighted      Average Number ofShares      Outstanding |   8,518,000                                            |   8,518,000                                            |                                                                             |

----

|   | Common      Stock |    AdditionalPaid-In | DeficitAccumulatedDuring      theDevelopment |    TotalStockholders’ |
|--------|-------------------|-------------------------------------|----------------------------------------------|--------------------------------------------|
|   | Shares            | Amount                              | Capital                                      | Stage                                      | Equity |
|   |              | $                                   | $                                            | $                                          | $ |

|                                                                                                                                                                                                                                                            |                                                                |                                            |                                                        |                                          |                                                        |
|-----------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|---------------------------------------------------------------------|-------------------------------------------------|-------------------------------------------------------------|-----------------------------------------------|-------------------------------------------------------------|
| Common      stock issued for cash, November 28, 2007, to an officer and director at      $0.001 per share Common      stock issued for cash, February 23, 2007, at $0.0075 pershare Common      stock issued for cash, May 8, 2007 at $0.15 per share | 2,500,000    5,800,000   218,000 | 25    58   2 | 2,475    43,442   32,698 | -    -   - | 2,500    43,500   32,700 |
|                                                                                                                                                                                                                                                            |                                                                |                                            |                                                        |                                          |                                                        |
| Net      loss for the year endedMay      31, 2007                                                                                                                                                                                                               |  -                                                             |  -                                         |  -                                                     |  (19,332)                                |  (19,332)                                              |
|                                                                                                                                                                                                                                                            |                                                                |                                            |                                                        |                                          |                                                        |
| Balance,      May 31, 2007                                                                                                                                                                                                                                      | 8,518,000                                                           | 85                                              | 78,615                                                      |     (19,332)              |       59,368                  |
|                                                                                                                                                                                                                                                            |                                                                |                                            |                                                        |                                          |                                                        |
| Net      loss for the year endedMay      31, 2008                                                                                                                                                                                                               |  -                                                             |  -                                         |  -                                                     |  (72,251)                                |  (72,251)                                              |
|                                                                                                                                                                                                                                                            |                                                                |                                            |                                                        |                                          |                                                        |
| Balance,      May 31, 2008                                                                                                                                                                                                                                      | 8,518,000                                                           | 85                                              | 78,615                                                      | (91,583)                                      | (12,883)                                                    |
|                                                                                                                                                                                                                                                            |                                                                |                                            |                                                        |                                          |                                                        |
| Net      loss for the period ended                                                                                                                                                                                                                              |                                                                |                                            |                                                        |                                          |                                                        |
| August      31, 2008                                                                                                                                                                                                                                            | -                                                                   | -                                               | -                                                           | (16,347)                                      | (16,347)                                                    |
|                                                                                                                                                                                                                                                            |                                                                |                                            |                                                        |                                          |                                                        |
| Balance,      August 31, 2008                                                                                                                                                                                                                                   | 8,518,000                                                           | 85                                              | 78,615                                                      | (107,930)                                     | (29,230)                                                    |

----

|                                                                                                                                                   |  Three      MonthPeriod      EndedAugust      31,2008 |  Three      MonthPeriod      EndedAugust      31,2007 | Cumulative      From November 27, 2006 (Date of Inception) to August 31,2008                                                                                                          |
|--------------------------------------------------------------------------------------------------------------------------------------------------------|------------------------------------------------------------|------------------------------------------------------------|---------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|                                                                                                                                                   | $                                                          | $                                                          |                               $ |
| Cash      provided by (used in):                                                                                                                       |                                                       |                                                       |                                                                                                                                                                                  |
| Operating      Activities                                                                                                                              |                                                       |                                                       |                                                                                                                                                                                  |
|                                                                                                                                                   |                                                       |                                                       |                                                                                                                                                                                  |
| Loss      from operations                                                                                                                              | (16,347)                                                   | (18,371)                                                   | (107,930)                                                                                                                                                                             |
|                                                                                                                                                   |                                                       |                                                       |                                                                                                                                                                                  |
| Items      not requiring cash outlay                                                                                                                   |                                                       |                                                       |                                                                                                                                                                                  |
|   Depreciation-                                                                                                                              | 97                                                         | 91                                                         | 763                                                                                                                                                                                   |
| Cash      provided by (used in) operating  assets      and liabilities:     Goods      and services tax recoverable |   (118)                                          |   (343)                                          |   (204)                                                                                                                                                                     |
|      Accounts      payable and accrued liabilities                                                                            | 9,437                                                      | 5,665                                                      | 9,873                                                                                                                                                                                 |
|  Net      cash used in operating activities                                                                                                       |  (5,516,9319)                                         |  (12,968)                                             |  (97,498)                                                                                                                                                                        |
|                                                                                                                                                   |                                                       |                                                       |                                                                                                                                                                                  |
| Investing      Activities                                                                                                                              |                                                       |                                                       |                                                                                                                                                                                  |
|                                                                                                                                                   |                                                       |                                                       |                                                                                                                                                                                  |
| Purchase      of computer equipment                                                                                                                    | -                                                          | -                                                          | (2,086)                                                                                                                                                                               |
|                                                                                                                                                   |                                                       |                                                       |                                                                                                                                                                                  |
| Net      cash used in investing activities                                                                                                             | -                                                          | -                                                          | (2,086)                                                                                                                                                                               |
|                                                                                                                                                   |                                                       |                                                       |                                                                                                                                                                                  |
| Financing      Activities                                                                                                                              |                                                       |                                                       |                                                                                                                                                                                  |
|                                                                                                                                                   |                                                       |                                                       |                                                                                                                                                                                  |
| Advances      from a related party                                                                                                                     | 1,412                                                      | -                                                          | 36,432                                                                                                                                                                                |
| Common      stock issued for cash                                                                                                                      | -                                                          | -                                                          | 78,700                                                                                                                                                                                |
|                                                                                                                                                   |                                                       |                                                       |                                                                                                                                                                                  |
| Net      cash provided by financing activities                                                                                                         | -1,412                                                     | -                                                          | 115,132                                                                                                                                                                               |
|                                                                                                                                                   |                                                       |                                                       |                                                                                                                                                                                  |
| Net      cash provided (used) during the period                                                                                                        | (5,519)                                                    | (12,968)                                                   | 15,548                                                                                                                                                                                |
|                                                                                                                                                   |                                                       |                                                       |                                                                                                                                                                                  |
| Cash      and cash equivalents at beginning of period                                                                                                  | 21,067                                                     | 59,309                                                     | -                                                                                                                                                                                     |
|                                                                                                                                                   |                                                       |                                                       |                                                                                                                                                                                  |
| Cash      and cash equivalents at end of period                                                                                                        | 15,548                                                     | 46,341                                                     | 15,548                                                                                                                                                                                |
|  Supplementary      Disclosure ofStatements of Cash Flows      Information                                                                        |                                                       |                                                       |                                                                                                                                                                                  |
|                                                                                                                                                   |                                                       |                                                       |                                                                                                                                                                                  |
| Interest      Paid                                                                                                                                     | -                                                          | -                                                          | -                                                                                                                                                                                     |
| Foreign      Exchange Gain/(Loss)                                                                                                                      | (193)                                                      | (42)                                                       | (325)                                                                                                                                                                                 |
| Income      Taxes (Note 6)                                                                                                                             | -                                                          | -                                                          | -                                                                                                                                                                                     |

----

| (b)   |  Year      End |
|-----------------|---------------------|

----

----

----

----

| (m)   | Recent      Accounting Pronouncements(continued) |
|-----------------|--------------------------------------------------|

|                                                          | August      31, 2008   | May      31, 2007 |
|---------------------------------------------------------------|------------------------|-------------------|
|                                                          | $                      | $            |
| Net      operating loss carry forwards(expiring      in 2027) |  107,931          | 72,251            |
|  Statutory      tax rate                                 |  15%      - 34.5% | 15%      - 34.5%  |
|  Deferred      tax assets                                |  28,175           | 24,435            |
|  Less:      Valuation allowance                          |  (28,175)         | (24,435)          |
|  Net      deferred tax assets                            |  -                | -                 |

----

| ITEM      2. | MANAGEMENT'S      DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF      OPERATIONS. |
|--------------|--------------------------------------------------------------------------------------------------|

----

```
None.
```

| ITEM      4. | CONTROLS      AND PROCEDURES. |
|--------------|-------------------------------|

| ITEM      6. | EXHIBITS. |
|--------------|-----------|

| Exhibit      No. | Document      Description                                                                                                                                                                                    |
|------------------|--------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------------|
|             |                                                                                                                                                                                                         |
| 31.1             | Certification      of Principal Executive Officer and Principal Financial Officer pursuant to      Rule 13a-15(e) and 15d-15(e), promulgated under the Securities and      Exchange Act of 1934, as amended. |
|             |
| 32.1             | Certification      pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of      the Sarbanes-Oxley Act of 2002 (Chief Executive Officer and Chief      Financial Officer).                 |

----

|   | PRINCIPLE      SECURITY INTERNATIONAL, INC. |
|--------|---------------------------------------------|
|   | (Registrant)                                |
|   |                                        |   |
|   | BY:                                         | CHARLES      PAYNE |
|   |                                        | Charles      Payne |
|   |                                        | President,      Principal Executive Officer, Principal Accounting Officer, Principal      Financial Officer, Secretary/Treasurer, and member of the Board of      Directors. |

----