SECURITIES AND EXCHANGE COMMISSION
                             WASHINGTON, D.C. 20549

                                    FORM 10-K
(Mark One)

(X)      ANNUAL   REPORT   PURSUANT   TO  SECTION  13  OR  15(d)  OF  THE
         SECURITIES EXCHANGE ACT OF 1934
                     For the Fiscal Year Ended November 30, 2009
    OR
( )      TRANSITION  REPORT  PURSUANT  TO  SECTION  13 OR  15(d)  OF  THE
         SECURITIES EXCHANGE ACT OF 1934

                           Commission File No. - None

                      SECURITY DEVICES INTERNATIONAL, INC.
              -------------- -------------------------------------
                 (Name of Small Business Issuer in its charter)

           Delaware                                   Applied For
-------------------------------           ------------------------------------
(State or other jurisdiction of           (I.R.S. Employer Identification No.)
incorporation or organization)

      2171 Avenue Rd., Suite 103
      Toronto, Ontario Canada                                  M5M 4B4
   ---------------------------------------                    --------
   (Address of Principal Executive Office)                    Zip Code

Registrant's telephone number, including Area Code: (416) 787-1871
Securities registered pursuant to Section 12(b) of the Act:  None
Securities registered pursuant to Section 12(g) of the Act:  None

Indicate by check mark if the registrant is a well-known seasoned issuer, as
defined in Rule 405 of the Securities Act. [ ]

Indicate by check mark if the registrant is not required to file reports
pursuant to Section 13 or Section 15(d) of the Act. [ ]

Indicate by check mark whether the registrant (1) has filed all reports to be
filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the
preceding 12 months (or for such shorter period that the registrant was required
to file such reports), and (2) has been subject to such filing requirements for
the past 90 days. Yes [X] No [ ]

Indicate by check mark whether the registrant has submitted electronically and
posted on its corporate Web site, if any, every Interactive Data File required
to be submitted and posted pursuant to Rule 405 of Regulation S-T (ss.232.405 of
this chapter) during the preceding 12 months (or for such shorter period that
the registrant was required to submit and post such files). Yes [ ] No [X]

Indicate by check mark if disclosure of  delinquent  filers  pursuant to
Item 405 of  Regulation  S-K is not  contained  herein,  and will not 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-K or any amendment to this Form 10-K.     [X]

Indicate by check mark whether the registrant is a large accelerated filer, an
accelerated filer, a non-accelerated filer, or a smaller reporting company. See
the definitions of "large accelerated filer," "accelerated filer" and "smaller
reporting company" in Rule 12b-2 of the Exchange Act.

Large accelerated filer  [  ]                   Accelerated filer  [ ]

Non-accelerated filer  [  ]                     Smaller reporting company  [X]
(Do not check if a smaller reporting company)

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

The aggregate market value of the voting stock held by non-affiliates of the
Company (9,901,050 shares) on May 31, 2009 was approximately $4,700,000.

As of February 20, 2010, the Company had 16,746,050 issued and outstanding
shares of common stock.

Documents incorporated by reference:         None



<PAGE>

ITEM 1.  BUSINESS
         --------

     Security  Devices  International,  Inc. is  currently in the final stage of
developing  LEKTROX,  a unique line of wireless  electric  ammunition for use in
military, homeland security, law enforcement, and professional and home security
situations.

      SDI's LEKTROX system was developed by Elad Engineering, a company located
in Israel with many years of experience in the weapons and medical device
industries.

      SDI's strategic collaboration with Elad resulted in the patent pending
LEKTROX system. Featuring the unique extended range Wireless Electro-Muscular
Disruption Technology, (or "W-EMDT"), SDI's first product, the LEKTROX 40mm
round ammunition is expected to be competed during 2010.

      LEKTROX has been specially designed for use with standards issue riot guns
and M203 grenade launchers. This will allow military, law enforcement agencies
etc. to quickly deploy LEKTROX without the need for lengthy, complex training
methods or significant functional adjustments to vehicles or personal equipment.
Simplicity of use is also a key benefit for the home security market where most
users have little or no specialized training.

      LEKTROX is a third generation electric solution. First generation
solutions were electric batons and hand-held stun guns which had a range of
arm's length. Second generation were the wired electric charge solutions. Third
generation are the wireless electric bullets. Currently, there is still no third
generation wireless electric bullet on the market.

      LEKTROX is being specifically developed to achieve the highest operational
success at the greatest distance of those known to be currently in development.
Causing instant target incapacitation up to distances of 50 meters, the LEKTOX
will give maximum field superiority to military personnel, law enforcement
officers and other security operatives in situations that do not call for the
use of lethal ammunition.

      The LEKTROX Electric Bullet is totally safe in storage, transportation,
handling and loading. Locked in safe mode until its internal electric and
mechanical systems are activated by contact with the target, LEKTROX eliminates
any possibility of the round's accidental charging.

      Exploiting proven technologies, the LEKTROX Electric Bullet maintains
excellent stability for the highest possible accuracy. In addition LEKTROX
achieves distances way beyond those reached by previous generation, wired
electric ammunition systems.

      In addition to achieving a greater range, the LEKTROX delivers new levels
of effectiveness and safety through the use of

     o    Unique mechanisms that reduce the projectile's kinetic energy

     o    W-EMDT that instantly incapacitates the target without causing serious
          injury or lethality.


                                       2
<PAGE>

      To reduce kinetic energy levels, the bullet's head is composed of a
collapsible material that enlarges the contact surface and absorbs part of the
impact. Additional energy is transferred to other absorption mechanisms that use
the energy to release the Multiple Mini-Harpoon mechanism and activate the
built-in electrical system.

      Upon colliding with the target, the mini-harpoons are released and the
bullet is attached irremovably to the target's clothing or body. At the same
time, the bullet's electrical system releases a W-EMDT charge that imitates the
electro-neural impulses used by the human body. Sending out a control signal to
the muscles, this high voltage low current pulse safely overrides the target's
nervous system inducing a harmless muscle spasm that causes them to fall to the
ground helpless.

      Operating at lower than critical cardio-fibrillation levels, the LEKTROX
W-EMDT electric output has been designed in line with stringent medical
equipment standards that protect patients from permanent injury. Enabling full
recovery with no clinical after effects, LEKTROX helps decreases liability for
wrongful injury or death.

      The LEKTROX 40MM round can be fired from a standard rifle with low recoil.
Simple to operate, this system will be point and fire with a standard trigger.

      As of February 20, 2010 SDI has completed the following steps in the
development of the LEKTROX:

     o    Design and testing of ballistic rounds.

     o    Production of various ballistic rounds.

     o    Design of `electrical arms' to adhere to clothing or skin.

     o    Design of safety/armed mechanism.

     o    Production of mechanical systems.

     o    Design of electrical system.

     o    Production of electrical system.

     o    Integration and assembly of mechanical and electrical  sub-systems for
          electrical rounds.

     o    Testing of different ballistic rounds

     o    Powder loading testing

     o    Testing of complete electrical rounds

     o    Adjustment of electrical rounds based on test results

     o    Two clinical studies in European clinics.

     o    Production of completed rounds.


                                       3
<PAGE>

     o    Developed a fully operational Long Range LEKTROX (40MM) and tested the
          rounds with military organizations.

     o    Designed moulds for the 40MM LEKTROX.

      During the year ending November 30, 2010 SDI plans to complete the tooling
and moulds for the 40MM LEXTROX.

     See Item 6 of this  report  for  information  regarding  the  timing of the
remaining steps in the development of the LEKTROX.

      The mechanical development of the LEKTROX is being completed by Elad
Engineering Ltd., an Israeli company which has designed weapons for the Israeli
Military.

Competition

      The primary competitive factors in the market for non-lethal weapons are a
weapon's cost, effectiveness, and ease of use.

      In the military market a wide variety of weapon systems are used.
Conducted energy devices, such as the LEKTROX, have gained increased acceptance
during the last years as a result of the increased role of military personnel in
Iraq and Afghanistan. Conducted energy weapons have gained limited acceptance in
the private citizen market for non-lethal weapons.

      SDI's primary competitors will be Taser International, Inc. and Stinger
Systems, Inc. The LEKTROX will also compete indirectly with a variety of other
non-lethal alternatives, including pepper spray and impact weapons sold by
companies such as Armor Holdings, Inc. and Jaycor, Inc.

      SDI believes that its competitive advantage will be the ability of the
LEKTROX to effectively incapacitate offenders from a distance as far as 50
meters without a trail of wires leading back to the launcher.

Patents

      Four patent applications, one for the electrical mechanism and other three
for the mechanical mechanism of the LEKTROX, have been filed by SDI with the
U.S. Patent Office and other patent offices worldwide.

      SDI has also filed several foreign patents applications.

      SDI's patents may not protect its proprietary technology. In addition,
other companies may develop products similar to the LEKTROX or avoid patents
held by SDI. Disputes may arise between SDI and others as to the scope and
validity of its patents. Any defense of its patents could prove costly and time
consuming and SDI may not be in a position, or may not consider it advisable, to
carry on such a defense. In addition, others may acquire or independently
develop the same or similar unpatented proprietary technology used by SDI.


                                       4
<PAGE>

Government Regulation

      Under current regulations the LEKTROX will be considered a crime control
product by the United States Department of Commerce and the export of the
LEKTROX will be regulated under export administration regulations. As a result,
export licenses from the Department of Commerce will be required for all
shipments to foreign countries other than Canada. In addition, the Department of
Commerce has regulations which may restrict the export of technology used in the
LEKTROX.

      The LEKTROX will be controlled, restricted or its use prohibited by
several state and local governments. In many cases, the law enforcement and
corrections market is subject to different regulations than the private citizen
market. Many states have regulations restricting the sale of stun guns and
hand-held shock devices, such as the LEKTROX, to private citizens or security
personnel.

      Foreign regulations pertaining to non-lethal weapons are numerous and
often unclear and a number of countries prohibit devices similar to the LEKTROX.
Employees

      The LEXTROX will be controlled, restricted or its use prohibited by
several state and local governments. In many cases, the law enforcement and
corrections market is subject to different regulations than the private citizen
market. Many states have regulations restricting the sale of stun guns and
hand-held shock devices, such as the LEXTROX, to private citizens or security
personnel.

General

      As of February 20, 2010 SDI did not have any full-time employees.

      SDI's offices are located at 2171 Avenue Rd., Suite 103, Toronto, Ontario,
Canada M5M 4B4. SDI's rental costs on this space for each of the two years
ending November 30, 2010, excluding SDI's share of operating and common area
expenses, will be $9,812. SDI's offices are expected to be adequate to meet
SDI's foreseeable future needs.

      SDI's website is www.lektrox.com.

ITEM 2.  DESCRIPTION OF PROPERTY
         -----------------------

      See Item 1 of this report.

ITEM 3.    LEGAL PROCEEDINGS.
           -----------------

      SDI is not involved in any legal proceedings and SDI does not know of any
legal proceedings which are threatened or contemplated.


                                       5
<PAGE>

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

      Not Applicable


ITEM 5.    MARKET  PRICE OF AND  DIVIDENDS ON THE  REGISTRANT'S  COMMON
           -------------------------------------------------------------
           EQUITY AND OTHER SHAREHOLDER MATTERS.
           ------------------------------------

      Since August 2006 SDI's common stock has been listed on the OTC Bulletin
Board under the symbol "SDEV". The following shows the high and low closing
prices for SDI's common stock for the periods indicated:

      Three Months Ended             High        Low
      ------------------             ----        ---

      February 2008                  $2.10      $1.09
      May 2008                       $2.50      $1.10
      August 2008                    $2.51      $1.15
      November 2008                  $1.25      $0.31

      February 2009                  $0.81      $0.31
      May 2009                       $0.60      $0.33
      August 2009                    $0.91      $0.15
      November 2009                  $0.42      $0.19


      As of February 20, 2010 SDI had approximately 200 shareholders and
16,745,050 outstanding shares of common stock.

      Holders of common stock are entitled to receive dividends as may be
declared by the Board of Directors. SDI's Board of Directors is not restricted
from paying any dividends but is not obligated to declare a dividend. No
dividends have ever been declared and it is not anticipated that dividends will
ever be paid.

    SDI's Articles of Incorporation authorize its Board of Directors to issue up
to 5,000,000 shares of preferred stock. The provisions in the Articles of
Incorporation relating to the preferred stock allow SDI's directors to issue
preferred stock with multiple votes per share and dividend rights which would
have priority over any dividends paid with respect to the holders of SDI's
common stock. The issuance of preferred stock with these rights may make the
removal of management difficult even if the removal would be considered
beneficial to shareholders generally, and will have the effect of limiting
shareholder participation in certain transactions such as mergers or tender
offers if these transactions are not favored by SDI's management.


ITEM 6.  SELECTED FINANCIAL DATA
         -----------------------

      Not applicable.


                                       6
<PAGE>

ITEM 7.  MANAGEMENT'S  DISCUSSION  AND ANALYSIS OF FINANCIAL  CONDITION
         --------------------------------------------------------------
         AND PLAN OF OPERATION
         ---------------------

      SDI was incorporated on March 1, 2005 and for the period from inception to
November 30, 2009 has not generated any revenue.

      During the year ended November 30, 2009:

     o    Research  and  Product  Development  expenses  were  lower  since  the
          development of the Company's products was nearing completion.

     o    General  and  administrative  expenses  decreased  primarily  due to a
          decline  in  stock  based  compensation.  General  and  administrative
          expenses  included charges of $177,990,  which did not require the use
          of cash,  associated  with  lowering  the  exercise  price of  certain
          options granted to SDI's officers, directors and consultants.

      During the period from inception (March 1, 2005) through November 30, 2009
SDI's operations used $7,917,398 in cash. During this period SDI:

     o    purchased $50,521 of equipment;
     o    raised $7,966,650 from the sale of shares of its common stock; and
     o    raised  $106,700  from three of its  officers and  directors  upon the
          exercise of options to purchase 1,067,000 shares of common stock.

      In August 2009 SDI sold, in a private offering, 788,000 Units at a price
of $0.25 per Unit. Each Unit consisted of one share of SDI's common stock and
one warrant. Each warrant allows the Holder to purchase one additional share of
SDI's common stock at a price of $0.50 per share at any time on or before June
15, 2010.

      In January 2010 SDI sold, in a subsequent private offering, 1,510,000
shares of its common stock at a price of $0.25 per share.

      SDI relied upon the exemption provided by Section 4(2) of the Securities
Act of 1933 with respect to the sale of its securities in August 2009 and
January 2010. The investors in these offerings were provided with full
information regarding SDI. There was no general solicitation in connection with
these private offerings. The investors in these offerings acquired SDI's
securities for their own account. The certificates representing the shares of
common stock issued to the investors in these offerings bear restricted legends
providing that the shares cannot be sold except pursuant to an effective
registration statement or an exemption from registration.

      As of November 30, 2009 SDI had developed a fully operational Long Range
LEKTROX (40MM) and was planning a production line.


                                       7
<PAGE>

      SDI anticipates that its capital requirements for the twelve-month period
ending November 30, 2010 will be:

      Development and Preproduction costs         $ 1,500,000
      General and Administrative Expenses             375,000
                                                  ------------
           Total                                  $ 1,875,000
                                                  ============

      Other than the foregoing, SDI did not have any material future contractual
obligations or off balance sheet arrangements as of November 30, 2009.

     SDI does not have any  commitments  or  arrangements  from any  persons  to
provide SDI with any additional capital it may need. Without additional capital,
SDI will  not be able to fund  its  anticipated  capital  requirements  outlined
above.

ITEM 7A.   QUANTITATIVE AND QUALITATIVE DISCLOSURE ABOUT MARKET RISK
           ---------------------------------------------------------

      Not applicable.

ITEM 8     FINANCIAL STATEMENTS
           --------------------

      See the financial statements included with this report.

ITEM 9.    CHANGES IN AND DISAGREEMENTS WITH ACCOUNTANTS.
           ---------------------------------------------

      Not applicable.

ITEM 9A. and 9A(T).  CONTROLS AND PROCEDURES
                     -----------------------

      (a) SDI maintains a system of controls and procedures designed to ensure
that information required to be disclosed in reports filed or submitted under
the Securities Exchange Act of 1934, as amended ("1934 Act"), is recorded,
processed, summarized and reported, within time periods specified in the SEC's
rules and forms and to ensure that information required to be disclosed by SDI
in the reports that it files or submits under the 1934 Act, is accumulated and
communicated to SDI's management, including its Principal Executive Officer and
Principal Financial Officer, as appropriate to allow timely decisions regarding
required disclosure. As of November 30, 2009, SDI's Principal Executive Officer
and Principal Financial Officer evaluated the effectiveness of the design and
operation of SDI's disclosure controls and procedures. Based on that evaluation,
the Principal Executive Officer and Principal Financial Officer concluded that
SDI's disclosure controls and procedures were effective.

      (b) Changes in Internal Controls. There were no changes in SDI's internal
control over financial reporting during the year ended November 30, 2009, that
materially affected, or are reasonably likely to materially affect, its internal
control over financial reporting.

Management's Report on Internal Control Over Financial Reporting

      SDI's management is responsible for establishing and maintaining adequate
internal control over financial reporting and for the assessment of the


                                       8
<PAGE>

effectiveness of internal control over financial reporting. As defined by the
Securities and Exchange Commission, internal control over financial reporting is
a process designed by, or under the supervision of SDI's principal executive
officer and principal financial officer and implemented by SDI's Board of
Directors, management and other personnel, to provide reasonable assurance
regarding the reliability of financial reporting and the preparation of SDI's
financial statements in accordance with U.S. generally accepted accounting
principles.

      Because of its inherent limitations, internal control over financial
reporting may not prevent or detect misstatements. Also, projections of any
evaluation of effectiveness to future periods are subject to the risk that
controls may become inadequate because of changes in conditions, or that the
degree of compliance with the policies or procedures may deteriorate.

      SDI's management evaluated the effectiveness of its internal control over
financial reporting as of November 30, 2009 based on criteria established in
Internal Control - Integrated Framework issued by the Committee of Sponsoring
Organizations of the Treadway Commission, or the COSO Framework. Management's
assessment included an evaluation of the design of SDI's internal control over
financial reporting and testing of the operational effectiveness of those
controls.

      Inherent in any small business is the pervasive problem involving
segregation of duties. Since SDI has a small accounting department, segregation
of duties cannot be completely accomplished at this stage in its corporate
lifecycle. Accordingly, SDI's management has added compensating controls to
reduce and minimize the risk of a material misstatement in SDI's annual and
interim financial statements.

      Based on this evaluation, SDI's management concluded that SDI's internal
control over financial reporting was effective as of November 30, 2009.
      There was no change in SDI's internal control over financial reporting
that occurred during the year ended November 30, 2009 that has materially
affected, or is reasonably likely to materially affect, SDI's internal control
over financial reporting.

      This report does not include an attestation report of SDI's independent
registered public accounting firm regarding internal control over financial
reporting. Management's report was not subject to attestation by SDI's
independent registered public accounting firm pursuant to temporary rules of the
SEC that permit SDI to provide only management's report on internal control in
this report.

ITEM 9B.   OTHER INFORMATION
           -----------------

      Not applicable.



                                       9
<PAGE>

ITEM 10.   DIRECTORS, EXECUTIVE OFFICERS, PROMOTERS AND CONTROL  PERSONS
           -------------------------------------------------------------

    Name                     Age    Position
    ----                     ---    --------

    Sheldon Kales             54    Chief Executive Officer and a Director
    Boaz Dor                  55    Secretary and a Director
    Rakesh Malhotra           53    Chief Financial Officer
    Gregory Sullivan          43    Director

      The directors of SDI serve until the first annual meeting of its
shareholders and until their successors have been duly elected and qualified.
The officers serve at the discretion of SDI's directors.

Sheldon  Kales has been an officer and  director of SDI since March 2005.  Since
February  2004 Mr.  Kales has been  working on the  development  of the LEKTROX.
Between  January 2000 and February  2004 Mr. Kales was the  President of Yangtze
Telecom,  a company which provides messaging and related services for cell phone
users in China.  Mr. Kales  founded,  and between 1985 and 2001,  operated Argus
Investigation Services.

Boaz Dor has been a director  of SDI since  April 2005 and its  Secretary  since
March 15, 2006. Mr. Dor served in the Israeli  Defense Forces from 1972 to 1975.
Recruited  by  the  Israeli  Secret  Services,  Mr.  Dor  was  assigned  to  the
International   Security   Division  for  Aviation   Security  for  the  Israeli
Government, eventually assuming the position of Head of Security for the Embassy
of Israel and El Al Israel Airlines in Cairo,  Egypt,  and later, as Vice-Consul
and Head of Security for the Israeli Consulate in Toronto and Western Canada and
El Al Israel Airlines.  In 1989, Mr. Dor resigned from the public sector to open
a security  consulting  firm. In 1991, he was  appointed  executive  director of
security for the Seabeco Group of Companies where Mr. Dor oversaw  international
operations in Switzerland, Belgium, Russia, New York and Toronto. Since 2000 Mr.
Dor has owned and  operated  Ozone  Water  Systems  Inc.,  a water  purification
company.

Rakesh  Malhotra has been SDI's Chief  Financial  Officer since January 7, 2007.
Mr. Malhotra is a United States Certified Public Accountant (CPA) and a Canadian
Chartered  Accountant  (CA).  Mr.  Malhotra  graduated with Bachelor of Commerce
(Honors) degree from the University of Delhi (India) and worked for A.F Ferguson
& Co. (the Indian  correspondent  for KPMG) and obtained his CA  designation  in
India.  Having  practiced as an accountant for over ten years in New Delhi,  Mr.
Malhotra  moved  to  the  Middle  East  and  worked  for  five  years  with  the
International  Bahwan Group in a senior finance position.  During 2000 and 2001,
Mr. Malhotra worked as a chartered  accountant with a mid-sized  accounting firm
in Toronto  performing audits of public  companies.  Since 2005 Mr. Malhotra has
been a consultant to a number of public companies. Mr. Malhotra has more than 20
years experience in accounting and financing.

Gregory  Sullivan has been a director of SDI since April 2005. Mr.  Sullivan has
been a law enforcement officer for the past 20 years. During his law enforcement
career,  Mr. Sullivan has trained with federal,  state and municipal agencies in
the United States,  Canada and the Caribbean and has gained extensive experience


                                       10
<PAGE>

in the use of lethal and  non-lethal  weapons.  Mr.  Sullivan  has also  trained
personnel  employed by both public and private  agencies in the use of force and
firearms. Mr. Sullivan served four years with the military reserves in Canada.

      None of SDI's directors are independent as that term is defined in section
121(A) of the listing standards of the American Stock Exchange.

      SDI does not have a compensation committee or an audit committee. Rakesh
Malhotra is SDI's financial expert. However, since he is an officer of SDI Mr.
Malhotra is not independent as that term is defined in 803 of the NYSE Alternext
U.S. Company Guide.

      SDI has not adopted a Code of Ethics applicable to its principal
executive, financial, and accounting officers and persons performing similar
functions. SDI does not believe a Code of Ethics is needed at this time since
SDI has only four officers.

ITEM 11.  EXECUTIVE COMPENSATION
          ----------------------

      The following table shows the compensation for the three years ended
November 30, 2009 paid or accrued, to Sheldon Kales, the Principal Executive
Officer of SDI. None of the executive officers of SDI received compensation in
excess of $100,000 during this period.

                                                                All
                                                               Other
                                                               Annual
                                             Stock   Option    Compen-
Name and Principal  Fiscal  Salary   Bonus   Awards  Awards    sation
 Position            Year    (1)      (2)     (3)     (4)        (5)     Total
------------------  -----   ------   -----   ------  ------    -------   -----

Sheldon Kales,       2009                            $ 40,293 $126,500  $166,793
 President           2008      --      --        --  $155,948       --  $155,948
                     2007      --      --        --  $886,948       --  $886,948

(1)  The dollar value of base salary (cash and non-cash) received.
(2)  The dollar value of bonus (cash and non-cash) received.
(3)  The fair value of stock issued for services computed in accordance with FAS
     123R on the date of grant.
(4)  The fair value of options and warrants  granted computed in accordance with
     FAS 123R on the date of grant,  adjusted  for the fair  value  relating  to
     lowering  the  exercise  price of options  granted.
(5)  Amount represents consulting fees paid to Mr. Kales during the year.

      SDI does not have an employment agreement with any of its officers.

      On February 4, 2009 SDI's directors approved consulting agreements with
three of it's officers. The consulting agreements provide that the officers will
consult with SDI in the areas of corporate operations and product development.
The consulting agreements were amended effective January 1, 2010. The terms of
the amended consulting agreements are shown below.


                                       11
<PAGE>

                                         Monthly
                      Monthly       Consulting Fees for            Expiration of
                   Consulting fees   February through      Car      Consulting
Name              for January 2010    December 2010     Allowance    Agreement
----              ----------------  ------------------- ---------  -------------

Sheldon Kales           $5,000             $6,500            --      12-31-10
Boaz Dor                $5,000             $6,500            --      12-31-10
Gregory Sullivan        $5,000             $6,500            --      12-31-10

      The following shows the amounts which SDI expects to pay in cash as
consulting fees to its officers during the twelve month period ending December
31, 2010, and the time these persons plan to devote to SDI's business.

                                Proposed         Time to be Devoted to the
      Name                    Compensation             Business of SDI
      ----                    ------------       -------------------------

      Sheldon Kales           $  76,500                     100%
      Boaz Dor                $  76,500                     100%
      Rakesh Malhotra         $  21,000                      10%
      Gregory Sullivan        $  76,500                      50%

      There are no sales, net income, or other thresholds which are required for
SDI's directors to increase the compensation which in the future may be paid to
SDI's officers. SDI may also issue shares of its common stock or options to
compensate its officers and directors for services provided to SDI.

Long-Term Incentive Plans. SDI does not provide its officers or employees with
pension, stock appreciation rights, long-term incentive or other plans and has
no intention of implementing any of these plans for the foreseeable future.

Employee Pension, Profit Sharing or other Retirement Plans. SDI does not have a
defined benefit, pension plan, profit sharing or other retirement plan, although
it may adopt one or more of such plans in the future.

Compensation of Directors During Year Ended November 30, 2009
-------------------------------------------------------------

                                                               Awards of Options
      Name               Paid in Cash (1)   Stock Awards (2)    or Warrants (3)
      ----               ----------------   ----------------   -----------------

      Boaz Dor                $79,750               --               $16,507
      Gregory Sullivan        $66,000               --               $10,243

(1)  Represents consulting fees paid during the year.

(2)  The fair value of stock issued for services computed in accordance with FAS
     123R on the date of grant.


                                       12
<PAGE>

(3)  The fair value of options or warrants  granted  computed in accordance with
     FAS 123R on the date of grant.

Stock Option and Bonus Plans
----------------------------

      SDI has adopted stock option and stock bonus plans. A summary description
of these plans follows. In some cases these Plans are collectively referred to
as the "Plans".

      Incentive Stock Option Plan. SDI's Incentive Stock Option Plan authorizes
the issuance of shares of SDI's Common Stock to persons that exercise options
granted pursuant to the Plan. Only SDI employees may be granted options pursuant
to the Incentive Stock Option Plan. The option exercise price is determined by
SDI's directors but cannot be less than the market price of SDI's common stock
on the date the option is granted.

      Non-Qualified Stock Option Plan. SDI's Non-Qualified Stock Option Plan
authorizes the issuance of shares of SDI's Common Stock to persons that exercise
options granted pursuant to the Plans. SDI's employees, directors, officers,
consultants and advisors are eligible to be granted options pursuant to the
Plans, provided however that bona fide services must be rendered by such
consultants or advisors and such services must not be in connection with the
offer or sale of securities in a capital-raising transaction.

      Stock Bonus Plan. SDI's Stock Bonus Plan allows for the issuance of shares
of common stock to it's employees, directors, officers, consultants and
advisors. However bona fide services must be rendered by the consultants or
advisors and such services must not be in connection with the offer or sale of
securities in a capital-raising transaction.

      Summary. The following lists, as of February 20, 2010, the options granted
pursuant to the Plans. Each option represents the right to purchase one share of
SDI's common stock.

                          Total        Shares
                          Shares     Reserved for    Shares        Remaining
                         Reserved    Outstanding    Issued as   Options/Shares
Name of Plan            Under Plans    Options     Stock Bonus     Under Plans
------------            -----------  ------------  -----------  --------------

Incentive Stock Option
 Plan                    1,000,000            --          N/A        1,000,000
Non-Qualified Stock
 Option Plan             5,000,000     3,598,000          N/A          335,000
Stock Bonus Plan           150,000           N/A           --          150,000

      The following tables show all options granted and exercised by SDI's
officers and directors since the inception of SDI and through February 20, 2010,
and the options held by the officers and directors named below. All of the
options listed below were granted pursuant to SDI's Non-Qualified Stock Option
Plan.


                                       13
<PAGE>

                            Options Granted/Exercised
                            -------------------------
<TABLE>
<S>                  <C>        <C>        <C>       <C>        <C>           <C>

                                                               Shares
                    Grant     Options   Exercise Expiration  Acquired on      Value
Name                 Date   Granted (#)   Price     Date     Exercise (1)  Realized (2)
----                ------  ----------- -------- ----------  ------------  ------------

Sheldon Kales      10/29/05    550,000    $0.10    10/29/11     550,000     $275,000
Sheldon Kales      10/29/05    100,000    $0.25    10/29/11
Boaz Dor           10/29/05    200,000    $0.10    10/29/11     200,000     $100,000
Boaz Dor           10/29/05    100,000    $0.25    10/29/11
Gregory Sullivan   10/29/05    200,000    $0.10    10/29/11     200,000     $100,000
Gregory Sullivan   10/29/05    100,000    $0.25    10/29/11
Rakesh Malhotra    01/07/07    125,000    $1.50    01/07/12
Sheldon Kales      10/12/07    675,000    $1.20    10/12/12
Boaz Dor           10/12/07    300,000    $1.20    10/12/12
Rakesh Malhotra    10/12/07    175,000    $1.20    10/12/12
Gregory Sullivan   10/12/07    175,000    $1.20    10/12/12
Sheldon Kales      01/24/08    108,000    $0.10    01/24/13
Boaz Dor           01/24/08    117,000    $0.10    01/24/13     117,000     $ 25,740
Gregory Sullivan   01/22/10    100,000    $0.25    01/22/15
</TABLE>

(1)  The number of shares received upon exercise of options.

(2)  With respect to options exercised, the dollar value of the difference
     between the option exercise price and the market value of the option shares
     purchased on the date of the exercise of the options.

                             Shares underlying
                        unexercised options which are:
                        -----------------------------     Exercise    Expiration
    Name                Exercisable      Unexercisable     Price         Date
    ----                -----------      -------------    --------    ----------

    Sheldon Kales          100,000 (1)           --         $0.25      10-29-11
    Boaz Dor               100,000 (1)           --         $0.25      10-29-11
    Gregory Sullivan       100,000 (1)           --         $0.25      10-29-11
    Rakesh Malhotra        125,000               --         $0.25 (2)
    6-30-14 (3)
    Sheldon Kales          675,000               --         $0.25 (2)
    6-30-14 (3)
    Boaz Dor               300,000               --         $0.25 (2)
    6-30-14 (3)
    Rakesh Malhotra        175,000               --         $0.25 (2)
    6-30-14 (3)
    Gregory Sullivan       175,000               --         $0.25 (2)
    6-30-14 (3)
    Sheldon Kales          108,000               --         $0.10       1-24-13
    Gregory Sullivan       100,000               --         $0.25       1-22-15

(1)  These options will expire on the first to occur of the following: (i) the
     expiration date of the option, (ii) the date the option holder is removed
     from office for cause, or (iii) the date the option holder resigns as an
     officer of the Company.

(2)  On June 17, 2009, SDI's directors approved the reduction of the exercise
     price of these options to $0.25 per share.


                                       14
<PAGE>

(3)  On December 4, 2009 SDI's directors extended the expiration date of these
     options to June 30, 2014.

      For the purpose of these options "Cause" means any action by the Option
Holder or any inaction by the Option Holder which constitutes:

      (i)  fraud, embezzlement, misappropriation, dishonesty or breach of trust;

      (ii) a willful or knowing failure or refusal by the Option Holder to
           perform any or all of his material duties and responsibilities as an
           officer of SDI, other than as the result of the Option Holder's death
           or Disability; or

     (iii) gross negligence by the Option Holder in the performance of any or
           all of his material duties and responsibilities as an officer of SDI,
           other than as a result of the Option Holder's death or Disability;

      For purposes of these options "Disability" means any mental or physical
illness, condition, disability or incapacity which prevents the Option Holder
from reasonably discharging his duties and responsibilities as an officer of SDI
for a minimum of twenty hours per week.

      The following table shows the weighted average exercise price of the
outstanding options granted pursuant to SDI's stock option plans as of November
30, 2009, SDI's most recent fiscal year end. SDI's stock option plans have not
been approved by its shareholders.

<TABLE>
<S>                                  <C>                <C>                   <C>

                                                                      Number of Securities
                                    Number                            Remaining Available
                                 of Securities                        For Future Issuance
                                 to be Issued    Weighted-Average         Under Equity
                                Upon Exercise    Exercise Price of    Compensation Plans,
                                of Outstanding    of Outstanding      Excluding Securities
Plan category                     Options (a)        Options         Reflected in Column (a)
-------------                   --------------   -----------------   -----------------------

Incentive Stock Option Plan               --               --                1,000,000
Non-Qualified Stock Option Plan    3,598,000            $0.33                  335,000
</TABLE>

Warrants
--------

      In addition to the options described above, SDI has granted warrants to
its officers and directors upon the terms shown below.

                                       Shares Issuable
                           Grant        Upon Exercise     Exercise    Expiration
    Name                   Date           of Options      Price (1)      Date
    ----                   ----        ---------------    ---------   ----------

    Boaz Dor              9-06-07          17,000         $0.25     5-31-17
    Sheldon Kales        10-05-07         250,000         $0.25    10-05-14
    Gregory Sullivan     10-05-07          50,000         $0.25    10-05-14


                                       15
<PAGE>

(1)  On June 17, 2009, SDI's directors approved the reduction of the exercise
     price of these warrants to $0.25 per share.

ITEM  12.  SECURITY OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND
           ------------------------------------------------------------------
           RELATED STOCKHOLDERS MATTERS
           ----------------------------

      The following table shows the ownership of SDI's common stock as of
February 20, 2010 by each shareholder known by SDI to be the beneficial owner of
more than 5% of SDI's outstanding shares, each director and executive officer
and all directors and executive officers as a group. Except as otherwise
indicated, each shareholder has sole voting and investment power with respect to
the shares they beneficially own.

                                    Number
     Name                         of Shares (1)       Percent of Class
     ----                         -------------       ----------------

     Sheldon Kales                 2,540,910               15.2%

     Boaz Dor                      1,020,000                6.1%

     Rakesh Malhotra                      --                  --

     Gregory Sullivan                400,000                2.4%

     Dror Shachar (2)              1,200,000                7.2%

     All Officers and Directors    3,960,910               23.7%
        as a group (four persons)

(1)  Does not reflect shares issuable upon the exercise of options.

(2)  Dror  Shachar  holds  these  shares  for the  benefit of his  father,  Mark
     Shachar.

ITEM 13.  CERTAIN RELATIONSHIPS AND RELATED TRANSACTIONS.
          -----------------------------------------------

      The following lists all shares of SDI's common stock which have been
issued since its incorporation:

                                                             Consideration
      Shareholder            Date of Sale   Shares Issued    Paid for Shares
      -----------            ------------   -------------    ---------------

      Sheldon Kales             3-03-05        2,300,000     Services rendered,
                                                              valued at $23,000
      Sheldon Kales             3-04-05          200,000     Services rendered,
                                                              valued at $2,000
      Boaz Dor                  3-03-05          900,000     Services rendered,
                                                              valued at $9,000
      Gregory Sullivan          3-03-05           40,000     Services rendered,
                                                              valued at $400


                                       16
<PAGE>

                                                             Consideration
      Shareholder            Date of Sale   Shares Issued    Paid for Shares
      -----------            ------------   -------------    ---------------

      Gregory Sullivan          3-04-05          200,000     Services rendered,
                                                              valued at $2,000
      Alexander Blaunshtein (1) 3-03-05        1,560,000     Services rendered,
                                                              valued at $15,600
      Consultant                3-03-05        1,200,000     Services rendered,
                                                              valued at $12,000
      Consultants               3-04-05          125,000     Services rendered,
                                                              valued at $1,250
      Private Investors         4-15-05          397,880     $  99,470
      Private Investors        12-31-05          486,000     $  48,600
      Private Investors         1-31-06          470,000     $  47,000
      Private Investors         3-08-06          286,000     $  50,050
      Consultant                3-08-06           50,000     Services rendered,
                                                              valued at $8,750
      Public Investors        5-06/7-06        2,000,000     $ 400,000
      Sheldon Kales               11-06          550,000     $  55,000 (2)
      Boaz Dor                    11-06          200,000     $  20,000 (2)
      Gregory Sullivan            11-06          200,000     $  20,000 (2)
      Private Investors           12-06        2,536,170     $  2,536,170

      Consultant                3-12-07           50,000     Services rendered,
                                                              valued at $155,000
      Private Investors       4-07/5-07        2,139,000     $4,812,750
      Boaz Dor                    11-08          117,000     $11,700 (2)
      Private Investors            8-09          778,000 (3) $197,000

(1)  Alexander  Blaunshtein  is the son of  Natan  Blaunstein,  who was a former
     director  of SDI.  In March 2007 these  shares  were  purchased  by SDI for
     $50,000,  cancelled,  and returned to the status of authorized but unissued
     shares.
(2)  Shares were issued upon the exercise of stock options.
(3)  Shares  were  sold as part of a Unit.  Each  Unit was sold  for  $0.25  and
     consisted of one share of SDI's common stock and one warrant.  Each warrant
     allows the Holder to purchase one share of SDI's common stock at a price of
     $0.50 per share at any time on or before June 15, 2010.

      With the exception of the shares issued upon the exercise of shares issued
upon the exercise of options, SDI relied upon the exemption provided by Section
4(2) of the Securities Act of 1933 in connection with the issuance of these
shares.

      Sheldon Kales, Natan Blaunstein, Boaz Dor and Gregory Sullivan are the
promoters and parents of SDI.


                                       17
<PAGE>

      The services relating to the shares issued in March 2005 were provided for
the development of the LEKTROX and were valued at $0.01 per share. The 50,000
shares issued in March 2006 to a consultant were issued as compensation for
introducing investors to SDI and were valued at $0.175 per share which is the
price, per share, received by SDI for the shares sold for cash in March 2006.

ITEM 14.   PRINCIPAL ACCOUNTANT FEES AND SERVICES
           --------------------------------------

      Schwartz Levitsky Feldman, LLP ("Schwartz Levitsky") audited SDI's
financial statements for the years ended November 30, 2009 and 2008.

      The following table shows the aggregate fees billed and billable to SDI
during the years ended November 30, 2009 and 2008 by Schwartz Levitsky.

                                           2009           2008
                                           ----           ----

Audit Fees                              $16,200        $15,000
Audit-Related Fees                       $8,320       $  8,600
Financial Information Systems                               --
Design and Implementation Fees                              --
Tax Fees                                                    --
All Other Fees                                              --

      Audit fees represent amounts billed for professional services rendered for
the audit of SDI's annual financial statements. Audit-Related fees represent
amounts billed for the services related to the reviews of SDI's 10-Q reports and
reviews of SDI's registration statements on Form SB-2 and Form S-8. Before
Schwartz Levitsky was engaged by Security Devices to render audit services, the
engagement was approved by Security Device's Directors.

ITEM 15.  EXHIBITS

Exhibit
Number   Description of Exhibit
-------  ----------------------

  3.1    Articles of Incorporation           (Incorporated by reference to the
                                             same exhibit filed with the
                                             Company's registration statement
                                             on Form SB-2 (File No. 333-12456).
  3.2    Bylaws                              (Incorporated by reference to the
                                             same exhibit filed with the
                                             Company's registration statement
                                             on Form SB-2 (File No. 333-132456).
   31    Rule 13a-14(a) Certifications       *
   32    Section 1350 Certifications         *

* Filed with this report.



                                       18
<PAGE>



                      SECURITY DEVICES INTERNATIONAL, INC.
                        (A Development Stage Enterprise)

                              FINANCIAL STATEMENTS

                     YEARS ENDED NOVEMBER 30, 2009 AND 2008

      Together with Report of Independent Registered Public Accounting Firm

                        (Amounts expressed in US Dollars)



<PAGE>

                      SECURITY DEVICES INTERNATIONAL, INC.
                        (A Development Stage Enterprise)

                              FINANCIAL STATEMENTS

                     YEARS ENDED NOVEMBER 30, 2009 AND 2008
                        (Amounts expressed in US Dollars)


                                TABLE OF CONTENTS

                                                                         Page No
                                                                         -------

     Report of Independent Registered Public Accounting Firm                  1

     Balance Sheets as at November 30, 2009 and November 30, 2008             2

     Statements of Operations and Comprehensive loss for the years
     ended November 30, 2009 and November 30, 2008 and the period
     from inception (March 1, 2005) to November 30, 2009                      3

     Statements of Cash Flows for the years ended November 30, 2009
     and November 30, 2008 and the period from inception (March 1, 2005)
     to November 30, 2009                                                     4

     Statements of Stockholders' Equity (Deficit) for the years
     ended November 30, 2009 and November 30, 2008 and the period
     from inception (March 1, 2005) to November 30, 2009                      5

     Notes to Financial Statements                                         6-25




<PAGE>

             REPORT OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM

     To the Board of Directors and Stockholders of
     Security Devices International, Inc.
     (A Development Stage Enterprise)


     We have audited the accompanying balance sheets of Security Devices
     International, Inc. (the "Company") as at November 30, 2009 and 2008 and
     the related statements of operations and comprehensive loss, cash flows and
     stockholders' equity (deficiency) for the years ended November 30, 2009 and
     2008 and the period from inception (March 1, 2005) to November 30, 2009.
     These financial statements are the responsibility of the Company's
     management. Our responsibility is to express an opinion on these financial
     statements based on our audits.

     We conducted our audits in accordance with the standards of the Public
     Company Accounting Oversight Board (United States). Those standards require
     that we plan and perform the audits to obtain reasonable assurance about
     whether the financial statements are free of material misstatement. An
     audit includes examining, on a test basis, evidence supporting the amounts
     and disclosures in the financial statements. An audit also includes
     assessing the accounting principles used and significant estimates made by
     management, as well as evaluating the overall financial statement
     presentation. We believe that our audits provide a reasonable basis for our
     opinion.

     In our opinion, the financial statements referred to above present fairly,
     in all material respects, the financial position of the Company as of
     November 30, 2009 and 2008, and the results of its operations and its cash
     flows for the years ended November 30, 2009 and 2008 and the period from
     inception (March 1, 2005) to November 30, 2009 in accordance with generally
     accepted accounting principles in the United States of America.

     The company is not required to have, nor were we engaged to perform, an
     audit of its internal control over financial reporting. Our audits 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 controls over financial reporting. Accordingly, we
     express no such opinion.

     The accompanying financial statements have been prepared assuming that the
     company will continue as a going concern. As discussed in note 2 to the
     financial statements, the company has not commenced operations and has no
     source of operating revenue and expects to incur significant expenses
     before establishing operating revenue. The Company's future success is
     dependent upon its ability to raise sufficient capital, not only to
     maintain its operating expenses, but also to continue to develop and be
     able to profitably market its product. That raises substantial doubt about
     its ability to continue as a going concern. The financial statements do not
     include any adjustments that might result from the outcome of this
     uncertainty.

                                              /s/ Schwartz Levitsky Feldman LLP
                                                "SCHWARTZ LEVITSKY FELDMAN LLP"

     Toronto, Ontario, Canada                      Chartered Accountants
     February 26, 2010                          Licensed Public Accountants

                                        1
<PAGE>

SECURITY DEVICES INTERNATIONAL, INC.
(A Development Stage Enterprise)
Balance Sheets
As at November 30, 2009 and 2008
(Amounts expressed in US Dollars)


                                                              2009       2008
                                ASSETS                          $           $

CURRENT
   Cash and cash equivalents                                55,431    2,167,699
   Prepaid expenses and other                               31,172       45,984
                                                        -----------  -----------
Total Current Assets                                        86,603    2,213,683
Plant and Equipment, net (Note 9)                           29,924       25,450
                                                        -----------  -----------
TOTAL ASSETS                                               116,527    2,239,133
                                                        -----------  -----------

                                   LIABILITIES

CURRENT LIABILITIES
Accounts payable and accrued liabilities (Note 4)          691,729      219,081
                                                        -----------  -----------
Total Current Liabilities                                  691,729      219,081
                                                        -----------  -----------

Going Concern (Note 2)

Related Party Transactions (Note 8)

Commitments (Note 11)

Subsequent Events (Note 13)

                         STOCKHOLDERS' EQUITY (DEFICIT)

Capital Stock (Note 5)
Preferred stock, $0.001 par value, 5,000,000 shares
 authorized, Nil issued and outstanding (2008 - nil)
Common stock, $0.001 par value 50,000,000 shares
 authorized, 15,235,050 issued and outstanding
 (2008 -14,447,050)                                         15,235       14,447
Additional Paid-In Capital                              13,463,251   13,084,826
Deficit Accumulated During the Development Stage       (14,053,688) (11,079,221)
                                                        -----------  -----------
Total Stockholders' Equity (Deficit)                      (575,202)   2,020,052
                                                        -----------  -----------
TOTAL LIABILITIES AND STOCKHOLDERS' EQUITY (DEFICIT)       116,527    2,239,133
                                                        -----------  -----------

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




                                       2
<PAGE>


SECURITY DEVICES INTERNATIONAL, INC.
(A Development Stage Enterprise)
Statements of Operations and Comprehensive loss
Years Ended November 30, 2009 and 2008 and the Period from Inception (March 1,
2005) to November 30, 2009
(Amounts expressed in US Dollars)

                                      Cumulative
                                    since inception       2009         2008
                                            $               $            $
EXPENSES:

  Research and Product Development      6,546,273      2,031,230    2,632,548
  Amortization                             20,597          9,348        8,652
  General and administration            7,759,412        941,702    1,834,237
                                      ------------   ------------ ------------

TOTAL OPERATING EXPENSES               14,326,282      2,982,280    4,475,437
                                      ------------   ------------ ------------

LOSS FROM OPERATIONS                  (14,326,282)    (2,982,280)  (4,475,437)

  Other Income                            272,594         7,813        73,651

 LOSS BEFORE INCOME TAXES             (14,053,688)    (2,974,467)  (4,401,786)

   Income taxes (Note 10)                       -              -            -
                                      ------------   ------------ ------------

NET LOSS AND COMPREHENSIVE LOSS       (14,053,688)    (2,974,467)  (4,401,786)
                                      ------------   ------------ ------------

  Loss per share - basic and diluted                       (0.20)       (0.31)
                                                     ------------ ------------
  Weighted average common shares outstanding          14,671,576   14,335,179
                                      ------------   ------------ ------------





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



                                       3
<PAGE>

SECURITY DEVICES INTERNATIONAL, INC.
(A Development Stage Enterprise)
Statements of Cash Flows
Years Ended November 30, 2009 and 2008 and the Period from Inception (March 1,
2005) to November 30, 2009
(Amounts expressed in US Dollars)

<TABLE>
          <S>                                        <C>             <C>           <C>

                                                 Cumulative
                                               since inception       2009          2008
                                               ---------------       ----          ----
                                                      $                $             $
CASH FLOWS FROM OPERATING ACTIVITIES
 Net loss for the period                        (14,053,688)     (2,974,467)   (4,401,786)
  Items not requiring an outlay of cash:
  Issue of shares for professional services         154,000               -             -
  Stock based compensation (included in
   general and administration expenses)           4,905,419         177,990     1,231,056
  Compensation expense for warrants issued
   (included in general and administration
   expenses)                                        361,317           4,223             -
  Loss on cancellation of common stock               34,400               -             -
  Amortization                                       20,597           9,348         8,652
  Changes in non-cash working capital:
  Prepaid expenses and other                        (31,172)         14,812        (9,196)
  Accounts payable and accrued liabilities          691,729         472,648        44,239
                                                ------------    ------------  ------------
NET CASH USED IN OPERATING ACTIVITIES            (7,917,398)     (2,295,446)   (3,127,035)
                                                ------------    ------------  ------------
CASH FLOWS FROM INVESTING ACTIVITIES
  Acquisition of Plant and Equipment                (50,521)        (13,822)      (10,142)
                                                ------------    ------------  ------------
NET CASH USED IN INVESTING ACTIVITIES               (50,521)        (13,822)      (10,142)
                                                ------------    ------------  ------------
CASH FLOWS FROM FINANCING ACTIVITIES
 Loans/ (Repayments) from directors/shareholders          -               -             -
 Net Proceeds from issuance of common shares      7,966,650         197,000             -
 Cancellation of common stock                       (50,000)              -             -
 Exercise of stock options                          106,700               -        11,700
                                                ------------    ------------  ------------
NET CASH PROVIDED BY FINANCING ACTIVITIES         8,023,350         197,000        11,700
                                                ------------    ------------  ------------
NET INCREASE (DECREASE) IN CASH AND CASH
EQUIVALENTS FOR THE YEAR                             55,431      (2,112,268)   (3,125,477)
  Cash and cash equivalents, beginning of Year            -       2,167,699     5,293,176
                                                ------------    ------------  ------------
CASH AND CASH EQUIVALENTS, END OF YEAR               55,431          55,431     2,167,699
                                                ============    ============  ============
   INCOME TAXES PAID                                      -               -             -
                                                ============    ============  ============
   INTEREST PAID                                      -                -              -
                                                ============    ============  ============

</TABLE>

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


                                       4
<PAGE>

SECURITY DEVICES INTERNATIONAL, INC.
(A Development Stage Enterprise)
Statement of Changes in Stockholders' Equity
For the years ended November 30, 2009 and 2008 and the period from inception
(March 1, 2005) to November 30, 2009.
(Amounts expressed in US Dollars)

<TABLE>
<S>                                 <C>          <C>          <C>           <C>          <C>

                                  Number of     Common    Additional
                                   Common       Shares      Paid-in       Deficit
                                   Shares       amount      Capital     accumulated     Total
                                  ---------     ------    ----------    -----------     -----
                                                   $           $             $            $

Balance as of March 1, 2005              -           -            -             -            -
                                 ----------  ----------   ----------    ----------   ----------
Issuance of Common shares
for professional services        6,525,000       6,525       58,725             -       65,250
Issuance of common shares
  for cash                         397,880         398       99,072             -       99,470
  Net loss for the period                -           -            -      (188,699)    (188,699)
                                 ----------  ----------   ----------    ----------   ----------

Balance as of
  November 30, 2005              6,922,880       6,923      157,797      (188,699)     (23,979)

Issuance of common shares
 for cash                          956,000         956       94,644             -       95,600

Issuance of common shares
 for cash                          286,000         286       49,764             -       50,050
Issuance of common shares to
 consultant for services            50,000          50        8,700             -        8,750
Issuance of common shares
 for cash                        2,000,000       2,000      398,000             -      400,000
Exercise of stock options          950,000         950       94,050             -       95,000
Issuance of common shares
 for cash (net of agent
 commission)                       200,000         200      179,785             -      179,985
Stock subscriptions received                              1,165,500             -    1,165,500
Stock based compensation                 -           -    1,049,940             -    1,049,940
  Net loss for the year                  -           -            -    (1,660,799)  (1,660,799)
                                 ----------  ----------   ----------    ----------   ----------
Balance as of
   November 30, 2006            11,364,880      11,365    3,198,180    (1,849,498)   1,360,047

Issuance of common shares
 for stock

Subscriptions received in
 prior year                      1,165,500       1,165       (1,165)            -            -

Issuance of common shares
 for cash                        1,170,670       1,171    1,169,499                  1,170,670
Issuance of common shares
 for cash and services              50,000          50      154,950                    155,000
Issuance of common shares
 for cash (net of expenses)      2,139,000       2,139    4,531,236                  4,533,375
Cancellation of stock           (1,560,000)     (1,560)     (14,040)                   (15,600)
Stock based compensation                                  2,446,433                  2,446,433
Issue of warrants                                           357,094                    357,094
  Net loss for the year                  -           -            -    (4,827,937)  (4,827,937)
                                 ----------  ----------   ----------    ----------   ----------

Balance as of
 November 30, 2007              14,330,050      14,330   11,842,187    (6,677,435)   5,179,082
Exercise of stock options          117,000         117       11,583                     11,700
Stock based compensation                 -           -    1,231,056             -    1,231,056
Net loss for the year                    -           -            -    (4,401,786)  (4,401,786)
Balance as of
 November 30, 2008              14,447,050      14,447   13,084,826   (11,079,221)   2,020,052
Issuance of common shares
 for cash                          788,000         788      196,212                    197,000
Stock based compensation                 -           -      177,990             -      177,990
Compensation expense for warrants                             4,223                      4,223
Net loss for the year                    -           -            -    (2,974,467)  (2,974,467)
                                 ----------  ----------   ----------    ----------   ----------
Balance as of
 November 30, 2009              15,235,050      15,235    13,463,251  (14,053,688)    (575,202)
                                 ----------  ----------   ----------    ----------   ----------
</TABLE>

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



                                       5
<PAGE>


SECURITY DEVICES INTERNATIONAL, INC.
(A Development Stage Enterprise)
Notes to Financial Statements
November 30, 2009 and 2008
(Amounts expressed in US Dollars)

1. BASIS OF PRESENTATION

     The financial  statements  which  include the accounts of Security  Devices
     International  Inc. (the  "Company")  were  prepared in accordance  with US
     GAAP.  The  Company  was  incorporated  under  the  laws  of the  state  of
     placeStateDelaware on March 1, 2005.

2. NATURE OF OPERATIONS AND GOING CONCERN

     The Company has completed the development of a fully  operational 40MM long
     range  LEKTROX,  a unique line of wireless  electric  ammunition for use in
     military,  homeland  security,  law enforcement,  and professional and home
     security  scenarios and the Company is now planning for a production  line.
     LEKTROX has been  specially  designed for use with standard issue riot guns
     and M203  grenade  launchers.  This will allow  military,  law  enforcement
     agencies  etc. to quickly  deploy  LEKTROX  without  the need for  lengthy,
     complex training methods or significant  functional adjustments to vehicles
     or personal equipment. Simplicity of use is also a key benefit for the home
     security  market where most users have little or no  specialized  training.
     LEKTROX is a 3rd generation electric solution.  First generation  solutions
     were electric  batons and hand-held stun guns which had a range of an arm's
     length.  2nd  generations  were the wired electric  charge  solutions.  3rd
     generations are the wireless electric bullets.

     The Company's financial  statements are presented on a going concern basis,
     which   contemplates   the  realization  of  assets  and   satisfaction  of
     liabilities in the normal course of business. The Company has no source for
     operating  revenue  and  expects  to  incur  expenses  before  establishing
     operating revenue. The Company has a need for additional working capital to
     fund its  operating  expenses and for the economic  production  of LEKTROX,
     which is currently being evaluated by the US Military. The Company's future
     success is dependent upon its continued ability to raise sufficient capital
     to fund  operating  expenses and the economic  production of LEKTROX.  This
     raises substantial doubt about the Company's ability to continue as a going
     concern. The financial statements do not include any adjustments that might
     result  from  this   uncertainty.   In  order  to  finance  the   continued
     development,  the  Company  is working  towards  to raising of  appropriate
     capital in the near future.  During the year ended  November 30, 2009,  the
     Company  was able to raise  $197,000  through  issue of common  shares  and
     warrants.  The Company  further raised an additional  $377,500  through the
     issue of common  shares  subsequent  to the year  (see  note  13-subsequent
     events)

     The  Company  has  incurred  a loss of $  2,974,467  during  the year ended
     November 30, 2009 primarily due to its research and development activities.
     At November 30, 2009,  the Company had an  accumulated  deficit  during the
     development  stage of  $14,053,688  which  includes a non- cash stock based
     compensation  expense of $4,905,419 and  compensation  expense for warrants
     for $361,317.



                                       6
<PAGE>

SECURITY DEVICES INTERNATIONAL, INC.
(A Development Stage Enterprise)
Notes to Financial Statements
November 30, 2009 and 2008
(Amounts expressed in US Dollars)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES

        a) Use of Estimates

          These  financial  statements  have been  prepared in  accordance  with
          generally  accepted  accounting  principles  in the  United  States of
          America. As the precise  determination of assets and liabilities,  and
          correspondingly  revenues and expenses,  depends on future events, the
          preparation  of  financial   statements  for  any  period  necessarily
          involves the use of  estimates.  Actual  amounts may differ from these
          estimates. Significant estimates include accruals, valuation allowance
          for  deferred tax assets,  estimates  for  calculation  of stock based
          compensation   and  estimating  the  useful  life  of  its  plant  and
          equipment.

        b) Income Taxes

            Deferred tax assets and liabilities are recorded for differences
            between the financial statement and tax basis of the assets and
            liabilities that will result in taxable or deductible amounts in the
            future based on enacted tax laws and rates. Valuation allowances are
            established when necessary to reduce deferred tax assets to the
            amount expected to be realized. Income tax expense is recorded for
            the amount of income tax payable or refundable for the period
            increased or decreased by the change in deferred tax assets and
            liabilities during the period.

        c) Revenue Recognition

            The Company's revenue recognition policies are expected to follow
            common practice in the manufacturing industry, where in the Company
            will recognize revenue when delivery of its products manufactured
            has occurred, persuasive evidence of an agreement exists, the price
            is fixed or determinable, collect ability is reasonably assured and
            product cannot be returned for refund.

        d) Earnings (Loss) Per Share

           Basic loss per share is computed by dividing net loss by the weighted
           average number of common shares outstanding for the year. Diluted
           loss per share is computed by dividing net loss by the weighted
           average number of common shares outstanding plus common stock
           equivalents (if dilutive) related to stock options and warrants for
           each year. There were no common equivalent shares outstanding at
           November 30, 2009 and 2008 that have been included in dilutive loss
           per share calculation as the effects would have been anti-dilutive.
           At November 30, 2009, there were 3,768,000 options and 1,105,000
           warrants outstanding, which were convertible into equal number of
           common shares of the Company. At November 30, 2008, there were
           3,768,000 options and 423,950 warrants outstanding, which were
           convertible into equal number of common shares of the Company.



                                       7
<PAGE>

SECURITY DEVICES INTERNATIONAL, INC.
(A Development Stage Enterprise)
Notes to Financial Statements
November 30, 2009 and 2008
(Amounts expressed in US Dollars)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

        e) Fair Values

           The Company carries cash and cash equivalents and accounts payable
           and accrued liabilities at historical costs since their respective
           estimated fair values approximate carrying values due to their
           current nature.

        f) Research and Product Development

           Research and Product Development costs, other than capital
           expenditures but including acquired research and product development
           costs, are charged against income in the period incurred.

        g) Stock-Based Compensation

           All awards granted to employees and non-employees after November 30,
           2005 are valued at fair value by using the Black-Scholes option
           pricing model and recognized on a straight line basis over the
           service periods of each award. The Company accounts for equity
           instruments issued in exchange for the receipt of goods or services
           from other than employees using the estimated fair market value of
           the consideration received or the estimated fair value of the equity
           instruments issued, whichever is more reliably measurable. The value
           of equity instruments issued for consideration other than employee
           services is determined on the earlier of a performance commitment or
           completion of performance by the provider of goods or services. As of
           November 30, 2009 there was $nil of unrecognized expense related to
           non-vested stock-based compensation arrangements granted. The total
           stock-based compensation expense relating to all employees and non
           employees for the years ended November 30, 2009 and 2008 was $177,990
           and $1,231,056 respectively

        h) Foreign Currency

           The Company maintains its books,  records and banking  transactions
           in U.S. dollars which is its functional and reporting currency.

        i) Comprehensive loss

           Comprehensive loss includes all changes in equity (net assets) during
           a period from non-owner sources. Examples of items to be included in
           comprehensive loss, which are excluded from net loss, include foreign
           currency translation adjustments and unrealized gains and losses on
           available-for-sale securities.


                                       8
<PAGE>


SECURITY DEVICES INTERNATIONAL, INC.
(A Development Stage Enterprise)
Notes to Financial Statements
November 30, 2009 and 2008
(Amounts expressed in US Dollars)


3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

        j) Impairment of Long-lived Assets

           Long-lived assets to be held and used are analyzed for impairment
           whenever events or changes in circumstances indicate that the related
           carrying amounts may not be recoverable. The Company evaluates at
           each balance sheet date whether events and circumstances have
           occurred that indicate possible impairment. If there are indications
           of impairment, the Company uses future undiscounted cash flows of the
           related asset or asset grouping over the remaining life in measuring
           whether the assets are recoverable. In the event such cash flows are
           not expected to be sufficient to recover the recorded asset values,
           the assets are written down to their estimated fair value. Long-lived
           assets to be disposed of are reported at the lower of carrying amount
           or fair value of asset less cost to sell.

        k) Asset Retirement Obligation

           Asset retirement obligations are recorded as a liability in the
           period in which the company incurs the obligation.

        l) Concentration of Credit Risk

           The Company does not have significant off-balance sheet risk or
           credit concentration.

       m)  Cash and Cash Equivalents

           Cash consists of cash and cash equivalents, which are short-term,
           highly liquid investments with original terms to maturity of 90 days
           or less.

       n)  Intellectual Property with Respect to Pending Patent Applications

           Four patent applications, one for the electrical mechanism and the
           other three for the mechanical mechanism of the LEKTROX, have been
           filed by the Company with the U.S. Patent Office. Expenditures for
           patent applications as a result of research activity are not
           capitalized due to the uncertain value of the benefits that may
           accrue.

       o)  Plant and Equipment

           Plant and equipment are recorded at cost less accumulated
           depreciation. Depreciation is provided commencing in the month
           following acquisition using the following annual rate and method:


           Computer equipment          30%         declining balance method
           Furniture and fixtures      30%         declining balance method


                                       9
<PAGE>

SECURITY DEVICES INTERNATIONAL, INC.
(A Development Stage Enterprise)
Notes to Financial Statements
November 30, 2009 and 2008
(Amounts expressed in US Dollars)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

    p)  Recent Accounting Pronouncements

        FASB ASC TOPIC 805 - "Business Combinations." The objective of this
        topic is to enhance the information that an entity provides in its
        financial reports about a business combination and its effects. The
        Topic mandates: (i) how the acquirer recognizes and measures the assets
        acquired, liabilities assumed and any non-controlling interest in the
        acquiree; (ii) what information to disclose in its financial reports
        and; (iii) recognition and measurement criteria for goodwill acquired.
        This Topic is effective for any acquisitions made on or after December
        15, 2008. The adoption of this Topic did not have a material impact on
        the Company's financial statements and disclosures.

        FASB ASC TOPIC 810 - "Noncontrolling Interests." The objective of this
        Topic is to improve the relevance, comparability, and transparency of
        the financial information that a reporting entity provides in its
        consolidated financial statements by establishing accounting and
        reporting standards that require: (i) the ownership interests in
        subsidiaries held by parties other than the parent be clearly
        identified, labeled, and presented in the consolidated statement of
        financial position within equity, but separate from the parent's equity;
        (ii) the amount of consolidated net income attributable to the parent
        and to the noncontrolling interest be clearly identified and presented
        on the face of the consolidated statement of income; (iii) changes in a
        parent's ownership interest while the parent retains its controlling
        financial interest in its subsidiary be accounted for consistently; (iv)
        when a subsidiary is deconsolidated, any retained noncontrolling equity
        investment in the former subsidiary be initially measured at fair value.
        The gain or loss on the deconsolidation of the subsidiary is measured
        using the fair value of any noncontrolling equity investment rather than
        the carrying amount of that retained investment and; (v) entities
        provide sufficient disclosures that clearly identify and distinguish
        between the interests of the parent and the interests of the
        non-controlling owners. This Topic is effective for fiscal years, and
        interim periods within those fiscal years, beginning on or after
        December 15, 2008. Earlier adoption is prohibited. The adoption of this
        Topic is not expected to have a material impact on the Company's
        financial statements and disclosures.

        FASB ASC TOPIC 815 - "Derivatives and Hedging." The use and complexity
        of derivative instruments and hedging activities have increased
        significantly over the past several years. This Topic requires enhanced
        disclosures about an entity's derivative and hedging activities and
        thereby improves the transparency of financial reporting. This Topic is
        effective for financial statements issued for fiscal years and interim
        periods beginning after November 15, 2008, with early application
        encouraged. The adoption of this Topic is not expected to have a
        material impact on the Company's financial statements and disclosures.

        FASB ASC TOPIC 944 - "Financial Services - Insurance." Diversity exists
        in practice in accounting for financial guarantee insurance contracts by
        insurance enterprises. That diversity results in inconsistencies in the
        recognition and measurement of claim liabilities because of differing
        views about when a loss has been incurred. This Topic requires that an
        insurance enterprise recognize a claim liability prior to an event of
        default (insured event) when there is


                                       10
<PAGE>

SECURITY DEVICES INTERNATIONAL, INC.
(A Development Stage Enterprise)
Notes to Financial Statements
November 30, 2009 and 2008
(Amounts expressed in US Dollars)


3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

    p)  Recent Accounting Pronouncements Cont'd

        evidence that credit deterioration has occurred in an insured financial
        obligation. This Topic is effective for financial statements issued for
        fiscal years beginning after December 15, 2008 and all interim periods
        within those fiscal years, except for some disclosures about the
        insurance enterprise's risk-management activities. The adoption of this
        Topic is not expected to have a material impact on the Company's
        financial statements and disclosures.

        FASB ASC TOPIC 855 - "Subsequent Events." In May 2009, the FASB issued
        Topic 855, which establish general standards of accounting and
        disclosure of events that occur after the balance sheet date but before
        financial statements are issued or are available to be issued. In
        particular, this Topic sets forth : (i) the period after the balance
        sheet date during which management of a reporting entity should evaluate
        events or transactions that may occur for potential recognition or
        disclosure in the financial statements, (ii) the circumstances under
        which an entity should recognize events or transactions occurring after
        the balance sheet date in its financial statements, (iii) the
        disclosures that an entity should make about events or transactions that
        occurred after the balance sheet date. This Topic should be applied to
        the accounting and disclosure of subsequent events. This Topic does not
        apply to subsequent events or transactions that are within the scope of
        other applicable accounting standards that provide different guidance on
        the accounting treatment for subsequent events or transactions. This
        Topic was effective for interim and annual periods ending after June 15,
        2009, which was October 31, 2009 for the Company. The adoption of this
        Topic did not have a material impact on the Company's financial
        statements and disclosures.

        FASB ASC TOPIC 105 - "The FASB Accounting Standard Codification and the
        Hierarchy of Generally Accepted Accounting Principles." In June 2009,
        the FASB issued Topic 105, which became the source of authoritative GAAP
        recognized by the FASB to be applied by nongovernmental entities. Rules
        and interpretive releases of the SEC under authority of federal
        securities laws are also sources of authoritative GAAP for SEC
        registrants. On the effective date of this Topic, the Codification will
        supersede all then-existing non-SEC accounting and reporting standards.
        All other non-SEC accounting literature not included in the Codification
        will become non-authoritative. This Topic identifies the sources of
        accounting principles and the framework for selecting the principles
        used in preparing the financial statements of nongovernmental entities
        that are presented in conformity with GAAP and arranged these sources of
        GAAP in a hierarchy for users to apply accordingly. This Topic is
        effective for financial statements issued for interim and annual periods
        ending after September 15, 2009. The adoption of this topic did not have
        a material impact on the Company's disclosure of the financial
        statements.


                                       11
<PAGE>

SECURITY DEVICES INTERNATIONAL, INC.
(A Development Stage Enterprise)
Notes to Financial Statements
November 30, 2009 and 2008
(Amounts expressed in US Dollars)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

    p)  Recent Accounting Pronouncements Cont'd

        FASB ASC TOPIC 320 - "Recognition and Presentation of
        Other-Than-Temporary Impairments." In April 2009, the FASB issued Topic
        320 amends the other-than-temporary impairment guidance in GAAP for debt
        securities to make the guidance more operational and to improve the
        presentation and disclosure of other-than-temporary impairments on debt
        and equity securities in the financial statements. This Topic does not
        amend existing recognition and measurement guidance related to
        other-than-temporary impairments of equity securities. The Topic is
        effective for interim and annual reporting periods ending after June 15,
        2009, with early adoption permitted for periods ending after March 15,
        2009. Earlier adoption for periods ending before March 15, 2009, is not
        permitted. This Topic does not require disclosures for earlier periods
        presented for comparative purposes at initial adoption. In periods after
        initial adoption, this Topic requires comparative disclosures only for
        periods ending after initial adoption. The adoption of this Topic did
        not have a material impact on the Company's financial statements and
        disclosures.

        FASB ASC TOPIC 860 - "Accounting for Transfer of Financial Assets and
        Extinguishment of Liabilities." In June 2009, the FASB issued additional
        guidance under Topic 860 which improves the relevance, representational
        faithfulness, and comparability of the information that a reporting
        entity provides in its financial statements about a transfer of
        financial assets; the effects of a transfer on its financial position,
        financial performance, and cash flows; and a transferor's continuing
        involvement, if any, in transferred financial assets. This additional
        guidance requires that a transferor recognize and initially measure at
        fair value all assets obtained (including a transferor's beneficial
        interest) and liabilities incurred as a result of a transfer of
        financial assets accounted for as a sale. Enhanced disclosures are
        required to provide financial statement users with greater transparency
        about transfers of financial assets and a transferor's continuing
        involvement with transferred financial assets. This additional guidance
        must be applied as of the beginning of each reporting entity's first
        annual reporting period that begins after November 15, 2009, for interim
        periods within that first annual reporting period and for interim and
        annual reporting periods thereafter. Earlier application is prohibited.
        This additional guidance must be applied to transfers occurring on or
        after the effective date. The adoption of this Topic is not expected to
        have a material impact on the Company's financial statements and
        disclosures.

        FASB ASC TOPIC 810 - "Consolidation of Variables Interest and Special
        Purpose Entities." In June 2009, the FASB issued Topic 810, which
        requires an enterprise to perform an analysis to determine whether the
        enterprise's variable interest or interests give it a controlling
        financial interest in a variable interest entity. This analysis
        identifies the primary beneficiary of a variable interest entity as the
        enterprise that has both of the following characteristics: (i) The power
        to direct the activities of a variable interest entity that most
        significantly impact the entity's economic performance and (ii) The
        obligation to absorb losses of the entity that could potentially be
        significant to the variable interest entity or the right to receive
        benefits from the entity that could potentially be significant to the
        variable interest entity. Additionally, an enterprise is required to
        assess whether it has an implicit financial responsibility to ensure
        that


                                       12
<PAGE>

SECURITY DEVICES INTERNATIONAL, INC.
(A Development Stage Enterprise)
Notes to Financial Statements
November 30, 2009 and 2008
(Amounts expressed in US Dollars)

3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

    p)  Recent Accounting Pronouncements Cont'd

        a variable interest entity operates as designed when determining whether
        it has the power to direct the activities of the variable interest
        entity that most significantly impact the entity's economic performance.
        This Topic requires ongoing reassessments of whether an enterprise is
        the primary beneficiary of a variable interest entity and eliminate the
        quantitative approach previously required for determining the primary
        beneficiary of a variable interest entity, which was based on
        determining which enterprise absorbs the majority of the entity's
        expected losses, receives a majority of the entity's expected residual
        returns, or both. This Topic is effective as of the beginning of each
        reporting entity's first annual reporting period that begins after
        November 15, 2009, for interim periods within that first annual
        reporting period, and for interim and annual reporting periods
        thereafter. Earlier application is prohibited. The adoption of this
        Topic is not expected to have a material impact on the Company's
        financial statements and disclosures.

        FASB ASC TOPIC 820 - "Fair Value measurement and Disclosures", an
        Accounting Standard Update. In September 2009, the FASB issued this
        Update to amendments to Subtopic 82010, "Fair Value Measurements and
        Disclosures". Overall, for the fair value measurement of investments in
        certain entities that calculates net asset value per share (or its
        equivalent). The amendments in this Update permit, as a practical
        expedient, a reporting entity to measure the fair value of an investment
        that is within the scope of the amendments in this Update on the basis
        of the net asset value per share of the investment (or its equivalent)
        if the net asset value of the investment (or its equivalent) is
        calculated in a manner consistent with the measurement principles of
        Topic 946 as of the reporting entity's measurement date, including
        measurement of all or substantially all of the underlying investments of
        the investee in accordance with Topic 820. The amendments in this Update
        also require disclosures by major category of investment about the
        attributes of investments within the scope of the amendments in this
        Update, such as the nature of any restrictions on the investor's ability
        to redeem its investments at the measurement date, any unfunded
        commitment, and the investment strategies of the investees. The major
        category of investment is required to be determined on the basis of the
        nature and risks of the investment in a manner consistent with the
        guidance for major security types in GAAP on investments in debt and
        equity securities in paragraph 320-10-50-lB. The disclosures are
        required for all investments within the scope of the amendments in this
        Update regardless of whether the fair value of the investment is
        measured using the practical expedient. The amendments in this Update
        apply to all reporting entities that hold an investment that is required
        or permitted to be measured or disclosed at fair value on a recurring or
        non recurring basis and, as of the reporting entity's measurement date,
        if the investment meets certain criteria The amendments in this Update
        are effective for the interim and annual periods ending after December
        15, 2009. Early application is permitted in financial statements for
        earlier interim and annual periods that have not been issued. The
        adoption of this Update is not expected to have a material impact on the
        Company's financial statements and disclosures.


                                       13
<PAGE>

SECURITY DEVICES INTERNATIONAL, INC.
(A Development Stage Enterprise)
Notes to Financial Statements
November 30, 2009 and 2008
(Amounts expressed in US Dollars)


3. SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (cont'd)

    p)  Recent Accounting Pronouncements Cont'd

        FASB ASC TOPIC 740 - "Income Taxes", an Accounting Standard Update. In
        September 2009, the FASB issued this Update to address the need for
        additional implementation guidance on accounting for uncertainty in
        income taxes. For entities that are currently applying the standards for
        accounting for uncertainty in income taxes, the guidance and disclosure
        amendments are effective for financial statements issued for interim and
        annual periods ending after September 15, 2009. The adoption of this
        Update did not have a material impact on the Company's financial
        statements and disclosures.

4. ACCOUNTS PAYABLE AND ACCRUED LIABILITIES

                                                         2009            2008
                                                         -----           ----
           Accounts payable and accrued liabilities
           are comprised of the following:

               Trade payables                        $   658,932    $    2,950
               Accrued liabilities                        32,797       216,131
                                                      -----------    ----------
                                                     $   691,729    $  219,081
                                                      -----------    ----------

        Accrued liabilities relate primarily to audit, legal and accounting
        expenses (2008: research and development, audit, legal and accounting
        expenses)

     5. CAPITAL STOCK

        a) Authorized
            50,000,000 Common shares, $0.001 par value
           And
            5,000,000 Preferred shares, $0.001 par value

        The Company's Articles of Incorporation authorize its Board of Directors
        to issue up to 5,000,000 shares of preferred stock. The provisions in
        the Articles of Incorporation relating to the preferred stock allow the
        directors to issue preferred stock with multiple votes per share and
        dividend rights which would have priority over any dividends paid with
        respect to the holders of SDI's common stock.

        b) Issued

           15,235,050 Common shares (2008: 14,447,050 Common shares)

        c)  Changes to Issued Share Capital

        Year ended November 30, 2008
        ----------------------------

        The Company received $11,700 and issued 117,000 common shares on
        exercise of stock options by a director of the Company.


                                       14
<PAGE>

SECURITY DEVICES INTERNATIONAL, INC.
(A Development Stage Enterprise)
Notes to Financial Statements
November 30, 2009 and 2008
(Amounts expressed in US Dollars)

        Year ended November 30, 2009
        ----------------------------

        On August 19, 2009 the Company sold 788,000 units to a group of private
        investors. Each unit consisted of one share of common stock and one
        warrant. Each warrant allows the holder to purchase one share of the
        Company's common stock at a price of $0.50 per share at any time prior
        to June 15, 2010. The shares were sold at a price of $0.25 per unit. The
        shares of common stock are, and any shares issuable upon the exercise of
        warrants will be, restricted securities, as that term is defined in Rule
        144 of the Securities and Exchange Commission. The Company relied upon
        the exemption provided by Section 4(2) of the Securities Act of 1933 in
        connection

     6. STOCK BASED COMPENSATION

         Effective October 30, 2006 the Company adopted the following stock
         option and stock bonus plans.

         Incentive Stock Option Plan. The Company's Incentive Stock Option Plan
         authorizes the issuance of shares of its Common Stock to persons that
         exercise options granted pursuant to the Plan. Only employees may be
         granted options pursuant to the Incentive Stock Option Plan. The option
         exercise price is determined by its directors but cannot be less than
         the market price of its common stock on the date the option is granted.
         The Company has reserved 1,000,000 common shares under this plan. No
         options have been issued under this plan as at November 30, 2009.

         Non-Qualified Stock Option Plan. SDI's Non-Qualified Stock Option Plan
         authorizes the issuance of shares of its Common Stock to persons that
         exercise options granted pursuant to the Plans. SDI's employees,
         directors, officers, consultants and advisors are eligible to be
         granted options pursuant to the Plans, provided however that bona fide
         services must be rendered by such consultants or advisors and such
         services must not be in connection with the offer or sale of securities
         in a capital-raising transaction. By a resolution of the Board of
         Directors, the Company amended this plan to increase the number of
         common shares available under this plan from 2,250,000 to 4,500,000
         effective dateMonth10Day10Year2007October 10, 2007. The Company further
         amended its Non-Qualified Stock Option Plan to increase the number of
         Common Shares available under this plan to 5,000,000 and filed an S-8
         registration statement on April 10, 2008.

         Stock Bonus Plan. SDI's Stock Bonus Plan allows for the issuance of
         shares of common stock to its employees, directors, officers,
         consultants and advisors. However bona fide services must be rendered
         by the consultants or advisors and such services must not be in
         connection with the offer or sale of securities in a capital-raising
         transaction. The Company has reserved 150,000 common shares under this
         plan. No options have been issued under this plan as at November 30,
         2009.


                                       15
<PAGE>

SECURITY DEVICES INTERNATIONAL, INC.
(A Development Stage Enterprise)
Notes to Financial Statements
November 30, 2009 and 2008
(Amounts expressed in US Dollars)

     6. STOCK BASED COMPENSATION-Cont'd

        Year ended November 30, 2008
        ----------------------------

         Effective January 24, 2008 the board of directors granted the following
         options under its Non-Qualified Stock Option Plan:

          1.   Options to one director to acquire  108,000  common  shares.  The
               exercise price was set at $0.10 per share.

          2.   Options to one director to acquire  117,000  common  shares.  The
               exercise price was set at $0.10 per share.

        All of the above options vest immediately and have an expiry date of
        January 24, 2013. Stock based compensation cost of $324,891 has been
        expensed to general and administration expense.

        Effective April 11, 2008 the board of directors granted the following
        options under its Non-Qualified Stock Option Plan:

          1.   Options to two  consultants to each acquire 300,000 common shares
               for a total of 600,000 common shares.  The exercise price was set
               at $1.50 per share.

          2.   Options to one consultant to acquire  150,000 common shares.  The
               exercise price was set at $1.50 per share

        All of the above options vest immediately and have an expiry date of
        April 11, 2013. Stock based compensation cost of $850,067 has been
        expensed to general and administration expense.

        Effective May 21, 2008, the board of directors granted options to an
        Investor Relation consultant to acquire 50,000 common shares at an
        exercise price of $2.25 per share. All of these options vested
        immediately and have an expiry of May 21, 2010. Stock based compensation
        cost of $56,098 has been expensed to general and administration expense.

        Year ended November 30, 2009
        ----------------------------

        On December 17, 2008, the Company approved the reduction of the exercise
        price of 2,940,000 outstanding options which had earlier been issued at
        prices ranging from $1.00 to $3.60 to a new option price of $0.50 per
        share, with all other terms of the original grant remaining the same.
        The Company expensed this additional non-cash stock based compensation
        expense relating to this modification for $114,688. This reduction in
        exercise price relates to a total of 1,150,000 options in total issued
        to the Company's three directors; 300,000 options in total issued to the
        Company's officer and the balance total of 1,490,000 unexercised options
        issued in the past to various consultants.


                                       16
<PAGE>

SECURITY DEVICES INTERNATIONAL, INC.
(A Development Stage Enterprise)
Notes to Financial Statements
November 30, 2009 and 2008
(Amounts expressed in US Dollars)

  6. STOCK BASED COMPENSATION-Cont'd

        On June 17, 2009, the Company approved the reduction of the exercise
        price of 2,700,000 outstanding options which had on December 17, 2008
        been reduced to an option price of $0.50 per share, to a new option
        price of $0.25 per share, with all other terms of the original grant
        remaining the same. The Company expensed this additional non-cash stock
        based compensation expense relating to this modification for $63,302.
        This reduction in exercise price relates to a total of 1,150,000 options
        in total issued to the Company's three directors; 300,000 options in
        total issued to the Company's officer and the balance total of 1,250,000
        unexercised options issued in the past to various consultants.

        For the year ended November 30, 2009 the Company has recognized in its
        financial statements additional stock-based compensation costs as per
        the following details. The fair value of each option used for the
        purpose of estimating the stock compensation is calculated using the
        Black-Scholes option pricing model with the following weighted average
        assumptions:

        December 17, 2008:
        -----------------

        Risk free rate                                                    2.95%
        Expected dividends                                                   0%
        Forfeiture rate                                                      0%
        Exercise price                                                   $0.50
        Volatility                                                      137.12%
        Increase in fair value due to reduction in
         exercise price of options                                 $0.03-$0.09
        Market price of Company's common stock on date
         of reduction in exercise price                                  $0.32
        Stock-based compensation cost expensed                        $114,688
        Unexpended stock-based compensation deferred
         over to next period                                              $Nil

        June 17, 2009:
        -------------

        Risk free rate                                                    2.95%
        Expected dividends                                                   0%
        Forfeiture rate                                                      0%
        Exercise price                                                   $0.25
        Volatility                                                      125.79%
        Increase in fair value due to reduction in
         exercise price of options                                 $0.02-$0.03
        Market price of Company's common stock on date of
         reduction in exercise price                                     $0.25
        Stock-based compensation cost expensed                         $63,302
        Unexpended stock-based compensation deferred over to
         next period                                                      $Nil
        As of November 30, 2009 there was $Nil of unrecognized
        expense related to non-vested stock-based compensation
        arrangements granted.


                                       17
<PAGE>

SECURITY DEVICES INTERNATIONAL, INC.
(A Development Stage Enterprise)
Notes to Financial Statements
November 30, 2009 and 2008
(Amounts expressed in US Dollars)

 6. STOCK BASED COMPENSATION-Cont'd

     The  following  table   summarizes  the  options   outstanding   under  its
     Non-Qualified Stock Option Plan:

                                                        Number of shares
                                                   -------------------------
                                                   2009                 2008
                                                   ----                 ----

            Outstanding, beginning of year      3,768,000            2,890,000
            Granted                                     -            1,025,000
            Expired                                     -                    -
            Exercised                                   -             (117,000)
            Cancelled                                   -              (30,000)
                                             -------------        -------------
            Outstanding, end of year            3,768,000            3,768,000
                                             -------------        -------------
             Exercisable, end of year           3,768,000            3,768,000
                                             -------------        -------------

                                           Option price     Number of shares
                  Expiry date               per share      2009           2008
                  -----------               ---------      ----           ----
                  January 31, 2010            $1.20      120,000        120,000
                  May 21, 2010                $0.50       50,000              -
                  May 21, 2010                $2.25                      50,000
                  October 29, 2011            $0.25      300,000        300,000
                  October 29, 2011            $0.50      300,000        300,000
                  November 14, 2011           $0.25      100,000              -
                  November 14, 2011           $1.00            -        100,000
                  January 7, 2012             $0.25      125,000              -
                  January 7, 2012             $1.50            -        125,000
                  January 29, 2012            $0.50       40,000              -
                  January 29, 2012            $3.60                      40,000
                  April 23, 2012              $0.25      300,000              -
                  April 23, 2012              $2.75            -       300,000
                  October 12, 2012            $0.25    1,575,000              -
                  October 12, 2012            $1.20                   1,575,000
                  January 24, 2013            $0.10      108,000        108,000
                  April 11, 2013              $1.50            -        750,000
                  April 11, 2013              $0.50      150,000
                  April 11, 2013              $0.25      600,000              -
                                                       ---------      ---------
                  TOTAL                                3,768,000      3,768,000
                                                       ---------      ---------

          Weighted average exercise price:
          Options outstanding at end of year           $    0.29           1.27
          Options granted during the year              $       -           1.23
                                                       ---------      ---------
          Options exercised during the year            $       -           0.10
                                                       ---------      ---------
          Options cancelled during the year            $       -           1.20
                                                       ---------      ---------



                                       18
<PAGE>

SECURITY DEVICES INTERNATIONAL, INC.
(A Development Stage Enterprise)
Notes to Financial Statements
November 30, 2009 and 2008
(Amounts expressed in US Dollars)


  6. STOCK BASED COMPENSATION-Cont'd

        The weighted average remaining contractual term of the total
        outstanding, and the total exercisable options under the Non-Qualified
        Stock Option Plan were as follows:

                                                         2009          2008
                                                         ------------------
                                                         (Years)     (Years)
        Total outstanding options                         2.7          3.7
        Total exercisable options                         2.7          3.7

     7. STOCK PURCHASE WARRANTS

        Year ended November 30, 2008
        ----------------------------
        The Company did not issue any warrants during the year ended
        November 30, 2008

        Year ended November 30, 2009
        ----------------------------
        On August 19, 2009 the Company sold 788,000 units to a group of private
        investors. Each unit consisted of one share of common stock and one
        warrant. Each warrant allows the holder to purchase one share of the
        Company's common stock at a price of $0.50 per share at any time prior
        to June 15, 2010.
                                       Number of
                                        Warrants        Exercise       Expiry
                                        Granted          Prices         Date
                                                            $
                 Outstanding at                                               -
          November 30, 2006 and
         average exercise price               -             -
           Granted in year 2007          17,000           0.5         5/31/2017
           Granted in year 2007         250,000           0.5         10/5/2014
           Granted in year 2007          50,000           0.5         10/5/2014
           Granted in year 2007         106,950          2.81         4/25/2009
                      Exercised               -             -
                      Forfeited               -             -
                      Cancelled               -             -
                                ------------------------------
                 Outstanding at         423,950          1.08
          November 30, 2007 and
         average exercise price
           Granted in year 2008               -             -
                      Exercised               -             -
                      Forfeited               -             -
                      Cancelled               -             -
                                ------------------------------
                 Outstanding at         423,950          1.08
          November 30, 2008 and
         average exercise price
           Granted in year 2009         788,000           0.5         6/15/2010
                      Exercised               -             -

              Forfeited/Expired        (106,950)       (2.81)
                      Cancelled               -             -
                                ------------------------------
Exercisable at November 30, 2009      1,105,000          0.70
Exercisable at November 30, 2008        423,950          1.08


                                       19
<PAGE>

SECURITY DEVICES INTERNATIONAL, INC.
(A Development Stage Enterprise)
Notes to Financial Statements
November 30, 2009 and 2008
(Amounts expressed in US Dollars)

     7. STOCK PURCHASE WARRANTS-Cont'd

        The weighted average remaining contractual term of the total
        outstanding, and the total exercisable warrants were as follows:

                                                        2009         2008
                                                        -----------------
                                                        (Years)    (Years)

        Total outstanding options                         1.8        4.7
        Total exercisable options                         1.8        4.7

     8. RELATED PARTY TRANSACTIONS

        The following transactions are in the normal course of operations and
        are measured at the exchange amount, which is the amount of
        consideration established and agreed to by the related parties.

        Year ended November 30, 2009:

        a)  A Company Director has charged the Company a total amount of $6,000
            for providing office space during the year ended November 30, 2009.

        b)  The directors were compensated from January 1, 2009 as per their
            consulting agreements with the Company. One director was paid
            $110,000 as consulting fee and $16,500 as automobile allowance; one
            director was paid $68,750 as consulting fee and $11,000 as
            automobile allowance; one director was paid $40,000 as consulting
            fee and $11,000 as automobile allowance.

        c)  On December 17, 2008 the board of directors approved the reduction
            in the exercise price of the following options under its
            Non-Qualified Stock Option Plan:

          1.   Reduction in the exercise price of the options  already issued to
               three directors to acquire  1,150,000 common shares from exercise
               price of $1.20 to a new exercise price of $0.50 per share.

          2.   Reduction in the exercise price of the options  already issued to
               an officer to acquire  125,000  common shares from exercise price
               of $1.25 to a new exercise price of $0.50 per share and reduction
               in the exercise price to acquire 175,000 common shares from $1.20
               to a new exercise price of $0.50 per share.

           Stock based compensation cost relating to the reduction in the
           exercise price of the options issued to directors and officers, as
           above, amounting to $46,660 has been expensed to general and
           administration expense.


                                       20
<PAGE>

SECURITY DEVICES INTERNATIONAL, INC.
(A Development Stage Enterprise)
Notes to Financial Statements
November 30, 2009 and 2008
(Amounts expressed in US Dollars)

     8. RELATED PARTY TRANSACTIONS-Cont'd

     d)   On June 17, 2009 the board of directors  approved the reduction in the
          exercise price of the following options under its Non-Qualified  Stock
          Option Plan:

          1.   Reduction in the exercise price of the options  already issued to
               three directors to acquire  1,150,000  common shares from reduced
               exercise  price  of $0.50 to a new  exercise  price of $0.25  per
               share.

          2.   Reduction in the exercise price of the options  already issued to
               an officer to acquire 125,000 common shares from reduced exercise
               price of $0.50 to a new  exercise  price of $0.25  per  share and
               further reduction in the exercise price to acquire 175,000 common
               shares from $0.50 to a new exercise price of $0.25 per share.

        Stock based compensation cost relating to the reduction in the exercise
        price of the options issued to directors and officers, as above,
        amounting to $34,322 has been expensed to general and administration
        expense.

        e) On June 17, 2009, the Company further approved the reduction of the
           exercise price of 317,000 outstanding warrants which had earlier been
           issued to directors at $0.50 per share to a new exercise price of
           $0.25 per share, with all other terms of the original issue remaining
           the same. The Company expensed this additional non-cash compensation
           expense relating to this modification for $ 4,223.

        f) The Company expensed $ 21,300 being cost for services rendered by the
           CFO for the year ended November 30, 2009.

        Year ended November 30, 2008
        ----------------------------

        Effective January 24, 2008 the board of directors granted the following
        options under its Non-Qualified Stock Option Plan:

          3.   Options to one director to acquire  108,000  common  shares.  The
               exercise price was set at $0.10 per share.

          4.   Options to one director to acquire  117,000  common  shares.  The
               exercise price was set at $0.10 per share.

        All of the above options vest immediately and have an expiry date of
        January 24, 2013. Stock based compensation cost of $324,891 has been
        expensed to general and administration expense.

        A Director has charged the Company a total amount of $6,000 for
        providing office space during the year ended November 30, 2008.

        The Company expensed $ 20,850 being cost for services rendered by the
        CFO for the year ended November 30, 2008.


                                       21
<PAGE>

SECURITY DEVICES INTERNATIONAL, INC.
(A Development Stage Enterprise)
Notes to Financial Statements
November 30, 2009 and 2008
(Amounts expressed in US Dollars)


   9. PLANT AND EQUIPMENT, NET

        Plant and equipment are recorded at cost less accumulated depreciation.
        Depreciation is provided commencing in the month following acquisition
        using the following annual rate and method:


                Computer equipment          30%   declining balance method

                Furniture and Fixtures      30%   declining balance method


                                   Nov 30, 2009               Nov 30, 2008
                                           Accumulated              Accumulated
                                  Cost    Amortization     Cost    Amortization
                                    $           $            $           $

        Computer equipment       35,211       14,113       22,958       8,102
        Furniture and fixtures   15,310        6,484       13,741       3,147
                                -------      -------      -------     --------
                                 50,521       20,597       36,699      11,249
                                -------      -------      -------     --------

                Net carrying amount      $29,924               $25,450
                                         -------               -------

         Amortization expense            $ 9,348               $ 8,652
                                         -------               -------

     10. INCOME TAXES

        The Company has certain non-capital losses of approximately $8,501,446
        (2008: $5,704,969) available, which can be applied against future
        taxable income and which expire as follows:

        2025 $   188,494
        2026 $   609,991
        2027 $ 1,731,495
        2028 $ 3,174,989
        2029 $ 2,796,477

             $ 8,501,446

        Reconciliation of statutory tax rate to the effective income tax rate is
        as follows:

        Federal statutory income tax rate                                35.0 %
        Deferred tax asset valuation allowance                          (35.0)%
                                                                      --------
        Effective rate                                                   (0.0)%
                                                                      ========


                                       22
<PAGE>

SECURITY DEVICES INTERNATIONAL, INC.
(A Development Stage Enterprise)
Notes to Financial Statements
November 30, 2009 and 2008
(Amounts expressed in US Dollars)


     10. INCOME TAXES-Cont'd

     Deferred  tax asset  components  as of  November  30,  2009 and 2008 are as
     follows:

                                                         2009            2008
     Operating losses available to offset future
      income-taxes                                 $  8,501,446    $  5,704,969
                                                   -------------   -------------
     Expected Income tax recovery at statutory
      rate of 35% (2008: 34.0%)                     ($2,975,506)    ($1,939,689)
           Valuation Allowance                       $2,975,506      $1,939,689
                                                   -------------   -------------
           Net deferred tax assets                            -             -
                                                   -------------   -------------

        As the company is in the development stage and has not yet earned any
        revenue, it has provided a 100 per cent valuation allowance on the net
        deferred tax asset as of November 30, 2009 and 2008.

     11. COMMITMENTS

     (a)  The  company  has   commitments   for  leasing   office   premises  in
          Toronto,Ontario,Canada  to November 30, 2010. The annual  commitments,
          excluding  proportionate realty and maintenance costs and taxes are as
          follows:

                 Year ended November 30, 2010    $ 9,812
                                                 -------
                                                 $9,812

     (b)  On  February  4,  2009 the  Company's  directors  approved  consulting
          agreements  with  three  of the  Company's  officers.  The  consulting
          agreement  with Greg  Sullivan  was  modified to increase  the monthly
          consulting fees from $ 3,125 per month to $5,000 per month  commencing
          September  2009.  The  consulting  agreements,   which  are  effective
          retroactive to January 1, 2009, provide that the officers will consult
          with the  Company in the areas of  corporate  operations  and  product
          development.  The terms of the consulting  agreements  effective as of
          November 30, 2009 are shown below. The consulting agreements terminate
          on December 31, 2009.

                                                               Monthly
                                          Monthly             Automobile
        Name of Officer               Consulting Fee          Allowance
        ---------------               --------------          ---------

        Sheldon Kales                     $10,000               $1,500
        Boaz Dor                          $ 6,250               $1,000
        Greg Sullivan                     $ 5,000               $1,000


                                       23
<PAGE>

SECURITY DEVICES INTERNATIONAL, INC.
(A Development Stage Enterprise)
Notes to Financial Statements
November 30, 2009 and 2008
(Amounts expressed in US Dollars)

11. COMMITMENTS-Cont'd

     On January 1, 2010, the Company's directors renewed consulting agreements
     with three of the Company's officers on the following terms:

                                         Monthly
                      Monthly       Consulting Fees for            Expiration of
                  Consulting fees    February through       Car     Consulting
Name              for January 2009     December 2010     Allowance   Agreement
----              ----------------  -------------------  --------- -------------

Sheldon Kales         $5,000              $6,500               --    12-31-2010
Boaz Dor              $5,000              $6,500               --    12-31-2010
Gregory Sullivan      $5,000              $6,500               --    12-31-2010

     (c)  On  November  30,  2009,  the Company  entered  into a  Memorandum  of
          Understanding  ("MOU")  with  its  research  and  development  service
          contractor ("the contractor"). This MOU covers various alternatives to
          the Company to settle the liability to the contractor in the amount of
          $658,932 as at November 30, 2009. Should the Company become insolvent,
          or  is  unable  to  continue  operations,  or is  unable  to  pay  the
          contractor  pursuant to the MOU, then it will grant the  contractor an
          exclusive,   irrevocable,   worldwide,   assignable,  sub  licensable,
          perpetual  license to  further  develop  and to market  the  Company's
          electric  bullet  and  rubber  bullet  technology.  The  Company  will
          negotiate  a royalty  in the event  such  rights  are  granted  to the
          contractor.

     12. SEGMENT DISCLOSURES

        The Company, after reviewing its reporting systems, has determined that
        it has one reportable segment and geographic segment. The Company's
        operations are all related to the research and product development for
        its wireless electric ammunition. All assets of the business are located
        in Canada.

    13. SUBSEQUENT EVENTS

        The Company has reviewed subsequent events up to February 20, 2010.
        Subsequent events are as follows:

        On December 4, 2009, the Company approved the reduction of the exercise
        price of 300,000 outstanding options which had earlier been issued at a
        price of $0.50 to a new option price of $0.25 per share, with all other
        terms of the original grant remaining the same. The Company will expense
        this additional non-cash stock based compensation expense relating to
        this modification for $6,534 in the first quarter of 2010..

        On December 4, 2009, the Company approved the extension of the
        expiration of 2,900,000 outstanding options from their initial expiry
        date ranging from November 2011 to April 2013 to a new expiration date
        of June 30, 2014 with all other terms of the original grant remaining
        the same. The Company will expense this additional non-cash stock based
        compensation expense relating to this modification for $106,036 in the
        first quarter of 2010.


                                       24

<PAGE>

SECURITY DEVICES INTERNATIONAL, INC.
(A Development Stage Enterprise)
Notes to Financial Statements
November 30, 2009 and 2008
(Amounts expressed in US Dollars)

    13. SUBSEQUENT EVENTS-Cont'd

        On January 4, 2010, the board of directors granted options to a director
        to acquire 100,000 common shares at an exercise price of $0.25 per
        share. All of these options vested immediately and have an expiry of
        five years. Stock based compensation cost of $23,677 will be expensed in
        the first quarter of 2010.

        On January 4, 2010 the Company completed the placement for 1,510,000
        common shares to private investors. The shares were sold at a price of
        $0.25 per common share for a total consideration of $377,500. The shares
        of common stock are restricted securities, as that term is defined in
        Rule 144 of the Securities and Exchange Commission. The Company relied
        upon the exemption provided by Section 4(2) of the Securities Act of
        1933 in1933 in this connection.


                                       25
<PAGE>

                                   SIGNATURES

      In accordance with Section 13 or 15(a) of the Exchange Act, the Registrant
has caused this Report to be signed on its behalf by the undersigned, thereunto
duly authorized on the 28th day of February 2010.

                                  SECURITY DEVICES INTERNATIONAL INC.


February 28, 2010                     By   /s/ Sheldon Kales
                                           ------------------------------------
                                           Sheldon  Kales, President and
                                           Principal Executive Officer


February 28, 2010                     By   /s/ Rakesh Malhotra
                                           ------------------------------------
                                           Rakesh Malhotra, Principal Financial
                                           and Accounting Officer

      Pursuant to the requirements of the Securities Act of l934, this Report
has been signed below by the following persons on behalf of the Registrant and
in the capacities and on the dates indicated.

                                     Title                    Date
/s/ Sheldon Kales
--------------------------
Sheldon Kales                       Director             February 28, 2010

/s/ Boaz Dor
--------------------------
Boaz Dor                            Director             February 28, 2010

/s/ Gregory Sullivan
--------------------------
Gregory Sullivan                    Director             February 28,  2010




<PAGE>


                      SECURITY DEVICES INTERNATIONAL, INC.

                           ANNUAL REPORT ON FORM 10-K


                                    EXHIBITS


<PAGE>