10-Q 1 may10q7-11.txt MAY 31, 2011 10-Q UNITED STATES SECURITIES AND EXCHANGE COMMISSION Washington, D.C. 20549 FORM 10-Q (Mark One) [X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the quarterly period ended May 31, 2011 [ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934 For the transition period from _____ to _______ Commission File Number: None Security Devices International, Inc. -------------------------------------------------- (Exact Name of Registrant as Specified in its Charter) Delaware Applied For ------------------------------- ------------------- (State or other jurisdiction of (I.R.S. Employer incorporation or organization) Identification No.) 1101 Pennsylvania Ave., NW, 6th Floor Washington, DC 20004 ------------------------------------------------- (Address of Principal Executive Offices) (Zip Code) Registrant's telephone number including area code: (416) 787-1871 N/A ---------------------------------------------------- Former name, former address, and former fiscal year, if changed since last report Indicate by check mark whether the registrant (1) filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 90 days. Yes [X] No [ ] 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 [ ] 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 definition of "large accelerated filer", "accelerated filer" and "smaller reporting company" in Rule 12b-2 of the Exchange Act. Larger accelerated filer [ ] Accelerated filer [ ] Non-accelerated filer [ ] Smaller reporting company [X] Indicate by check mark whether registrant is a shell company (as defined in Rule 12b-2 of the Exchange Act). Yes [ ] No [X] Indicate the number of shares outstanding of each of the issuer's classes of common stock, as of the latest practicable date: 25,878,050 shares outstanding as of May 31, 2011. SECURITY DEVICES INTERNATIONAL, INC. (A Development Stage Enterprise) INTERIM FINANCIAL STATEMENTS MAY 31, 2011 (Amounts expressed in US Dollars) (Unaudited) SECURITY DEVICES INTERNATIONAL, INC. (A Development Stage Enterprise) INTERIM FINANCIAL STATEMENTS MAY 31, 2011 (Amounts expressed in US Dollars) (Unaudited) TABLE OF CONTENTS Page No Interim Balance Sheets as at May 31, 2011 and November 30, 2010 1 Interim Statement of Operations for the six months and three months ended May 31, 2011 and May 31, 2010 and the period from Inception (March 1, 2005) to May 31, 2011 2 Interim Statement of Cash Flows for the six months ended May 31, 2011 and May 31, 2010 and the period from Inception (March 1, 2005) to May 31, 2011 3 Interim Statements of changes in Stockholders' Deficit for the six months ended May 31, 2011 and for the period from inception (March 1, 2005) to November 30, 2010 4 Condensed Notes to Interim Financial Statements 5-19 SECURITY DEVICES INTERNATIONAL, INC. (A Development Stage Enterprise) Interim Balance Sheets As at May 31, 2011 and November 30, 2010 (Amounts expressed in US Dollars) May 31, November 30, 2011 2010 ---------- ------------ (unaudited) (audited) ASSETS $ $ CURRENT Cash 66,188 247,328 Deferred financing costs (note 10) 28,513 - Prepaid expenses and other 34,020 38,419 ------- ------- Total Current Assets 128,721 285,747 Plant and Equipment, net (Note 4) 23,807 29,200 ------- ------- TOTAL ASSETS 152,528 314,947 ------- ------- LIABILITIES CURRENT LIABILITIES Accounts payable and accrued liabilities 756,912 787,641 Current portion of Convertible debentures (note 10) 121,641 - ------- ------- Total Current Liabilities 878,553 787,641 Convertible Debentures (note 10) 50,000 - ------- ------- Total Liabilities 928,553 787,641 Going Concern (note 2) Related Party Transactions (note 8) Commitments (note 9) STOCKHOLDERS' DEFICIT Capital Stock (Note 5) Preferred stock, $0.001 par value, 5,000,000 shares authorized, Nil issued and outstanding (2010 - nil) Common stock, $0.001 par value 50,000,000 shares authorized, 25,878,050 issued and outstanding (2010 -25,878,050) 25,878 25,878 Additional Paid-In Capital 16,065,378 15,876,078 Deficit Accumulated During the Development Stage (16,867,281) (16,374,650) ---------- ----------- Total Stockholders' Deficit (776,025) (472,694) ---------- ----------- TOTAL LIABILITIES AND STOCKHOLDERS' DEFICIT 152,528 314,947 ---------- ----------- See condensed notes to the interim financial statements. 1 SECURITY DEVICES INTERNATIONAL, INC. (A Development Stage Enterprise) Statements of Operations For the Six Months and Three Months Ended May 31, 2011 and May 31, 2010 and the Period from inception (March 1, 2005) to May 31, 2011 (Amounts expressed in US Dollars) (Unaudited- Prepared by Management) For the For the For the For the six months six months three months three months Cumulative ended ended ended ended Since May 31, May 31, May 31, May 31, inception 2011 2010 2011 2010 $ $ $ $ ---------------------------------------------------------------- OPERATING EXPENSES: Research and product Development cost 7,652,784 159,809 431,221 - 160,008 Amortization 34,966 5,393 4,488 2,697 2,244 General and administration 9,438,380 313,684 432,403 146,812 159,320 ----------- ------- --------- ---------- ----------- TOTAL OPERATING EXPENSES 17,126,130 478,886 868,112 149,509 321,572 ----------- ------- --------- ---------- ----------- LOSS FROM OPERATIONS (17,126,130) (478,886) (868,112) (149,509) (321,572) Other expense- Interest (13,745) (13,745) (13,745) Other Income-Interest 272,594 - - - ----------- ------- --------- ---------- ----------- LOSS BEFORE INCOME TAXES (16,867,281) (492,631) (868,112) (163,254) (321,572) Income taxes - - - - - ----------- ------- --------- ---------- ----------- NET LOSS (16,867,281) (492,631) (868,112) (163,254) (321,572) ----------- ------- --------- ---------- ----------- Loss per share - basic and diluted (0.02) (0.05) (0.01) (0.02) ------- --------- ---------- ----------- Weighted average common shares outstanding 25,878,050 16,462,962 25,878,050 16,745,050 ---------- ----------- ----------- ------------
See condensed notes to the interim financial statements. 2 SECURITY DEVICES INTERNATIONAL, INC. (A Development Stage Enterprise) Interim Statement of Cash Flows For the Six Months Ended May 31, 2011 and May 31, 2010 (Amounts expressed in US Dollars) (Unaudited-Prepared by Management) For the For the six months six months Cumulative ended ended since inception May 31, May 31, (March 1, 2005) 2011 2010 $ $ $ CASH FLOWS FROM OPERATING ACTIVITIES Net loss for the period (16,867,281) (492,631) (868,112) Items not requiring an outlay of cash: Issue of shares for professional services 584,500 - - Stock based compensation (included in general and administration expenses) 5,556,406 - 106,819 Loss on cancellation of common stock 34,400 - - Amortization 34,966 5,393 4,488 Amortization of debt discount 4,441 4,441 - Amortization of deferred financing cost 6,647 6,647 - Changes in non-cash working capital: Prepaid expenses and other (34,020) 4,399 16,210 Due to related parties - - 32,250 Accounts payable and accrued liabilities* 721,752 (65,889) 185,506 ----------- ----------- --------- NET CASH USED IN OPERATING ACTIVITIES (9,958,189) (537,640) (522,839) ----------- ----------- --------- CASH FLOWS FROM INVESTING ACTIVITIES Acquisition of plant and equipment (58,773) - - ----------- ----------- --------- NET CASH USED IN INVESTING ACTIVITIES (58,773) - - ----------- ----------- --------- CASH FLOWS FROM FINANCING ACTIVITIES Stock subscriptions received 190,000 160,000 50,000 Net proceeds from issuance of common shares 9,629,150 - 357,500 Proceeds from convertible debentures 196,500 196,500 - Cancellation of common stock (50,000) - - Advances from a non related party - - 50,000 Exercise of stock options 117,500 - 10,800 ----------- ----------- --------- NET CASH PROVIDED BY FINANCING ACTIVITIES 10,083,150 356,500 468,300 ----------- ----------- --------- NET INCREASE (DECREASE) IN CASH FOR THE PERIOD 66,188 (181,140) (54,539) Cash, beginning of period - 247,328 55,431 ----------- ----------- --------- CASH, END OF PERIOD 66,188 66,188 892 =========== =========== ========= INCOME TAXES PAID - - - =========== =========== ========= INTEREST PAID - - - =========== =========== ========= * Excludes the credit of $35,160 to accrued liability resulting from deferred financing (a non cash item) See condensed notes to the interim financial statements 3 SECURITY DEVICES INTERNATIONAL, INC. (A Development Stage Enterprise) Interim Statement of Changes in Stockholders' Equity Six months ended May 31, 2011 and for Period from Inception (March 1, 2005) to November 30, 2010. (Amounts expressed in US Dollars) (Unaudited-Prepared by Management ) Number of Common Additional Deficit Common Shares Paid-in Accumulated During Shares amount Capital Development Stage 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) ---------- ------ ---------- ------------------ ----------- Issuance of common shares for cash 8,143,000 8,143 1,665,157 1,673,300 Issuance of common shares For services 2,500,000 2,500 428,000 430,500 Stock subscriptions received 30,000 30,000 Stock based compensation 289,670 289,670 Net loss for the year (2,320,962) (2,320,962) ---------- ------ ---------- ------------------ ----------- Balance as of November 30, 2010 25,878,050 25,878 15,876,078 (16,374,650) (472,694) Stock subscriptions received 160,000 160,000 Beneficial conversion feature on Convertible debt 29,300 29,300 Net loss for the period (492,631) (492,631) ---------- ------ ---------- ------------------ ----------- Balance as of May 31, 2011 25,878,050 25,878 16,065,378 (16,867,281) (776,025)
See condensed notes to the interim financial statements 4 SECURITY DEVICES INTERNATIONAL, INC. (A Development Stage Enterprise) Condensed Notes to Interim Financial Statements May 31, 2011 (Amounts expressed in US Dollars) (Unaudited-Prepared by Management) 1. BASIS OF PRESENTATION The accompanying unaudited condensed financial statements have been prepared in accordance with the instructions to Form 10-Q and therefore do not include all information and footnotes necessary for a fair presentation of financial position, results of operations and cash flows in conformity with U.S. generally accepted accounting principles (GAAP); however, such information reflects all adjustments (consisting solely of normal recurring adjustments), which are, in the opinion of management, necessary for a fair statement of the results for the interim periods. The condensed financial statements should be read in conjunction with the financial statements and Notes thereto together with management's discussion and analysis of financial condition and results of operations contained in the Company's annual report on Form 10-K for the year ended November 30, 2010. In the opinion of management, the accompanying condensed financial statements reflect all adjustments of a normal recurring nature considered necessary to fairly state the financial position of the Company at May 31, 2011, the results of its operations for the six -and three-month periods ended May 31, 2011 and May 31, 2010, and its cash flows for the six -month periods ended May 31, 2011 and May 31, 2010. In addition, some of the Company's statements in this quarterly report on Form 10-Q may be considered forward-looking and involve risks and uncertainties that could significantly impact expected results. The results of operations for the six -month period ended May 31, 2011 are not necessarily indicative of results to be expected for the full year. The Company was incorporated under the laws of the state of Delaware on March 1, 2005. 2. NATURE OF OPERATIONS AND GOING CONCERN The Company is a defense technology corporation specializing in the development of innovative next generation less-than-lethal solutions for security situations that do not require the use of deadly force, or ammunition. SDI is currently developing manufacturing partnerships to assist in the deployment of their patent pending family of products. These products consist of; the Blunt Impact Projectile 40mm (BIP40), and the Wireless Electric Projectile 40mm (WEP40). These financial statements have been prepared in accordance with generally accepted accounting principles applicable to a going concern, which assumes that the Company will be able to meet its obligations and continue its operations for its next fiscal year. 5 SECURITY DEVICES INTERNATIONAL, INC. (A Development Stage Enterprise) Condensed Notes to Interim Financial Statements May 31, 2011 (Amounts expressed in US Dollars) (Unaudited-Prepared by Management) 2. NATURE OF OPERATIONS AND GOING CONCERN -Cont'd At May 31, 2011, the Company has not yet achieved profitable operations, had a working capital deficiency of $749,832 and has accumulated losses of $16,867,281 since inception and expects to incur further losses in the development of its business, all of which limits the Company's ability to continue as a going concern. The Company has a need for additional working capital to launch its blunt impact and electric 40mm round products, meet its ongoing levels of corporate overhead and discharge its liabilities as they come due. In order to finance the continued development, the Company is working towards raising of appropriate capital in the near future. During the year ended November 30, 2009, the Company raised $197,000 through issue of common shares and warrants. The Company further raised an additional $1,673,300 net through the issue of 8,143,000 common shares and also received $30,000 subscription for shares pending allotment during the year ended November 30, 2010. The Company further received an additional $160,000 subscription for shares pending allotment during the six month period ended May 31, 2011 and also raised an additional $196,500 by issue of Convertible Debentures. While the Company has been successful in securing financings in the past, there is no assurance that it will be able to do so in the future. Accordingly, these financial statements do not give effect to adjustments, if any, that would be necessary should the Company be unable to continue as a going concern. The Company has incurred a loss of $ 492,631 during the six month period ended May 31, 2011 partly due to its research and development activities. At May 31, 2011, the Company had an accumulated deficit during the development stage of $16,867,281 which includes a non- cash stock based compensation expense of $5,556,406 for issue of options and warrants. 3. RESEARCH AND PRODUCT DEVELOPMENT Research and Product Development costs, including acquired research and product development costs, are charged against income in the period incurred. 6 SECURITY DEVICES INTERNATIONAL, INC. (A Development Stage Enterprise) Condensed Notes to Interim Financial Statements May 31, 2011 (Amounts expressed in US Dollars) (Unaudited-Prepared by Management) 4. 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 Leasehold Improvements straight line over period of lease May 31, 2011 November 30, 2010 -------------------- ------------------- Accumulated Accumulated Cost Amortization Cost Amortization $ $ $ $ Computer equipment 35,211 22,657 35,211 20,442 Furniture and fixtures 15,310 10,058 15,310 9,131 Leasehold improvements 8,252 2,251 8,252 - ------ ------ ------ ------ 58,773 34,966 58,773 29,573 ------ ------ ------ ------ Net carrying amount $23,807 $29,200 ------- ------- 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. 7 SECURITY DEVICES INTERNATIONAL, INC. (A Development Stage Enterprise) Condensed Notes to Interim Financial Statements May 31, 2011 (Amounts expressed in US Dollars) (Unaudited-Prepared by Management) b) Issued 25,878,050 Common shares c) Changes to Issued Share Capital Year ended November 30, 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 Company paid $20,000 as finder's fees. 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 in this connection. In May, 2010, the Company received $10,800 being the exercise of options to acquire 108,000 common shares at an exercise price of $0.10 per common share. The Company issued 108,000 common shares during the quarter ended August 31, 2010. On June 1, 2010 the Company sold 1,000,000 shares of common stock to a private investor at a price of $0.20 per share. 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 in connection with the sale of these securities. In June 9, 2010 the Company sold 650,000 shares of common stock to two private investors at a price of $0.20 per share. The Company relied upon the exemption provided by Section 4(2) of the Securities Act of 1933 in connection with the sale of these shares. The shares sold are restricted securities, as that term is defined in Rule 144 of the Securities and Exchange Commission. On August 31, 2010 the Company sold 700,000 shares of common stock to a private investor at a price of $0.20 per share. 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 in connection with the sale of these securities. 8 SECURITY DEVICES INTERNATIONAL, INC. (A Development Stage Enterprise) Condensed Notes to Interim Financial Statements May 31, 2011 (Amounts expressed in US Dollars) (Unaudited-Prepared by Management) 5. CAPITAL STOCK-Cont'd On September 22, 2010 the Company sold 2,250,000 shares of common stock to private investors at a price of $0.20 per share. 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 in connection with the sale of these securities. On October 18, 2010 the Company sold 1,925,000 shares of common stock to private investors at a price of $0.20 per share. 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 in connection with the sale of these securities. On October 18, 2010 the Company issued 2,500,000 shares of common stock for services which includes 550,000 common shares issued to directors for settlement of debt and cancellation of options and 1,800,000 common shares for services provided by an outside Company which is owned by an officer of this Company. Six months ended May 31, 2011 ----------------------------- The Company received subscriptions for 800,000 common shares at $0.20 per share. The Company has not issued any shares during this period. 6. STOCK BASED COMPENSATION Year ended November 30, 2010 ---------------------------- 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 expensed this additional non-cash stock based compensation expense relating to this modification for $6,534. 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: Risk free rate 2.61% Expected dividends 0% Forfeiture rate 0% Volatility 173.24% Exercise price $0.25 Increase in fair value due to reduction in exercise price of options $0.02 9 SECURITY DEVICES INTERNATIONAL, INC. (A Development Stage Enterprise) Condensed Notes to Interim Financial Statements May 31, 2011 (Amounts expressed in US Dollars) (Unaudited-Prepared by Management) 6. STOCK BASED COMPENSATION- Cont'd Market price of Company's common stock on date of reduction in exercise price $ 0.25 Stock-based compensation cost expensed $6,534 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 expensed this additional non-cash stock based compensation expense relating to this modification for $63,282. 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: Risk free rate 2.61% Expected dividends 0% Forfeiture rate 0% Volatility 173.24% Stock-based compensation cost expensed $63,282 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. The Company expensed stock based compensation cost of $23,677. 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: Risk free rate 2.61% Expected dividends 0% Forfeiture rate 0% Volatility 170.69% Market price of Company's common stock on date of grant of options $0.25 Stock-based compensation cost expensed $23,677 On May 20, 2010, the Company approved the extension of the expiration of 50,000 outstanding options from their initial expiry date from May 21, 2010 to a new expiration date of June 30, 2014 and a reduction in the exercise price of the options from $0.50 to $0.25 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 $13,326. 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: 10 SECURITY DEVICES INTERNATIONAL, INC. (A Development Stage Enterprise) Condensed Notes to Interim Financial Statements May 31, 2011 (Amounts expressed in US Dollars) (Unaudited-Prepared by Management) 6. STOCK BASED COMPENSATION-Cont'd Risk free rate 2.61% Expected dividends 0% Forfeiture rate 0% Volatility 166.16% Stock-based compensation cost expensed $13,326 On June 15, 2010, the board of directors granted options to a director to acquire 350,000 common shares, two directors to acquire 50,000 common shares each and to a consultant to acquire 35,000 common shares. All these 485,000 options were issued at an exercise price of $0.20 per share and vest immediately with an expiry term of five years. The Company expensed stock based compensation cost of $119,368. 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: Risk free rate 2.61% Expected dividends 0% Forfeiture rate 0% Volatility 164.99% Market price of Company's common stock on date of grant of options $0.26 Stock-based compensation cost expensed $119,368 On September 30, 2010, the board of directors granted options to two directors to acquire 50,000 common shares each. All these 100,000 options were issued at an exercise price of $0.20 per share and vest immediately with an expiry term of five years. The Company expensed stock based compensation cost of $25,271. 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: Risk free rate 2.61% Expected dividends 0% Forfeiture rate 0% Volatility 189.45% Market price of Company's common stock on date of grant of options $0.26 Stock-based compensation cost expensed $25,271 On October 1, 2010, the Board cancelled 725,000 options issued to a director having an exercise price of $0.25 per share and expiring on various dates ranging from October 29, 2011 to January 4, 2015 and issued warrants to acquire 397,000 common shares exercisable at $0.20 per share with an expiry term of five years and 500,000 common shares in lieu thereof. All outstanding 11 SECURITY DEVICES INTERNATIONAL, INC. (A Development Stage Enterprise) Condensed Notes to Interim Financial Statements May 31, 2011 (Amounts expressed in US Dollars) (Unaudited-Prepared by Management) 6. STOCK BASED COMPENSATION-Cont'd payables to the said director for services provided were adjusted against the said issuance of common shares. The Company expensed this additional non-cash stock based compensation expense relating to this modification for $31,097. 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: Risk free rate 3.25% Expected dividends 0% Forfeiture rate 0% Volatility 189.42% Stock-based compensation cost expensed $31,097 On October 1, 2010, the Board cancelled 400,000 options issued to a director having an exercise price of $0.25 per share and expiring on various dates ranging from October 29, 2011 to June 30, 2014 and issued warrants to acquire 50,000 common shares exercisable at $0.20 per share with an expiry term of five years and 50,000 common shares in lieu thereof. All outstanding payables to the said director for services provided were adjusted against the said issuance of common shares. The Company concluded that there was no additional non-cash stock based compensation expense relating to this modification. 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: Risk free rate 3.25% Expected dividends 0% Forfeiture rate 0% Volatility 189.42% Stock-based compensation cost expensed $Nil On October 1, 2010, the Board cancelled 175,000 options issued to an officer having an exercise price of $0.25 per share and expiring on June 30, 2014 and issued warrants to acquire 175,000 common shares exercisable at $0.20 per share with an expiry term of five years. The Company expensed this additional non-cash stock based compensation expense relating to this modification for $1,607. 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: Risk free rate 3.25% Expected dividends 0% Forfeiture rate 0% Volatility 189.42% Stock-based compensation cost expensed $1,607 12 SECURITY DEVICES INTERNATIONAL, INC. (A Development Stage Enterprise) Condensed Notes to Interim Financial Statements May 31, 2011 (Amounts expressed in US Dollars) (Unaudited-Prepared by Management) 6. STOCK BASED COMPENSATION-Cont'd On October 1, 2010, the Board cancelled 300,000 options each for a total of 600,000 options issued to two consultants having an exercise price of $0.25 per share and expiring on June 30, 2014 and issued warrants to each to acquire 300,000 common shares exercisable at $0.20 per share for a total of 600,000 warrants with an expiry term of five years. The Company expensed this additional non-cash stock based compensation expense relating to this modification for $5,508. 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: Risk free rate 3.25% Expected dividends 0% Forfeiture rate 0% Volatility 189.42% Stock-based compensation cost expensed $5,508 As of November 30, 2010 there was $Nil of unrecognized expense related to non-vested stock-based compensation arrangements granted. Six months ended May 31, 2011 ----------------------------- The Company did not issue any options during the six month period ended May 31, 2011. 7. STOCK PURCHASE WARRANTS Year ended November 30, 2010 ---------------------------- On October 1, 2010, the Board cancelled 725,000 options issued to a director having an exercise price of $0.25 per share and expiring on various dates ranging from October 29, 2011 to January 4, 2015 and issued warrants to acquire 397,000 common shares exercisable at $0.20 per share with an expiry term of five years and 500,000 common shares in lieu thereof. On October 1, 2010, the Board cancelled 400,000 options issued to a director having an exercise price of $0.25 per share and expiring on various dates ranging from October 29, 2011 to June 30, 2014 and issued warrants to acquire 50,000 common shares exercisable at $0.20 per share with an expiry term of five years and 50,000 common shares in lieu thereof. 13 SECURITY DEVICES INTERNATIONAL, INC. (A Development Stage Enterprise) Condensed Notes to Interim Financial Statements May 31, 2011 (Amounts expressed in US Dollars) (Unaudited-Prepared by Management) 7. STOCK PURCHASE WARRANTS-Cont'd On October 1, 2010, the Board cancelled 175,000 options issued to an officer having an exercise price of $0.25 per share and expiring on June 30, 2014 and issued warrants to acquire 175,000 common shares exercisable at $0.20 per share with an expiry term of five years. On October 1, 2010, the Board cancelled 300,000 options each for a total of 600,000 options issued to two consultants having an exercise price of $0.25 per share and expiring on June 30, 2014 and issued warrants to each to acquire 300,000 common shares exercisable at $0.20 per share for a total of 600,000 warrants with an expiry term of five years. Six months ended May 31, 2011 ----------------------------- The Company did not issue any stock purchase warrants during the six month period ended May 31, 2011. 8. RELATED PARTY TRANSACTIONS Six months ended May 31, 2011 ----------------------------- The Company expensed a total of $43,000 as Management fee for payment to its two directors for the six month period ended May 31, 2011. The Company expensed $7,000 for services provided by the CFO of the Company and $48,000 for services provided by COO of the Company. Six months ended May 31, 2010 ----------------------------- a) A Company Director has charged the Company a total amount of $1,500 for providing office space during the six month period ended May 31, 2010. b) The directors were compensated from January 1, 2010 as per their consulting agreements with the Company. During the quarter ended February 28, 2010, one director was paid $21,500 as consulting fee and $3,000 as automobile allowance; one director was paid $17,750 as consulting fee and $2,000 as automobile allowance; one director was paid $16,500 as consulting fee and $2,000 as automobile allowance. During the quarter ended May 31, 2010, the Company expensed $58,500 being remuneration for directors, including a director who resigned May 30, 2010. As of May 31, 2010, $32,250 was owed to the existing directors. 14 SECURITY DEVICES INTERNATIONAL, INC. (A Development Stage Enterprise) Condensed Notes to Interim Financial Statements May 31, 2011 (Amounts expressed in US Dollars) (Unaudited-Prepared by Management) c) On December 4, 2009 the board of directors approved extension of the expiration of outstanding options from their initial expiry date to a new expiration date of June 30, 2014 with all other terms of the original grant remaining the same. 1. Extension of the expiration of 1,150,000 outstanding options already issued to three directors from their initial expiry date to a new expiration date of June 30, 2014 2. Extension of the expiration of 300,000 outstanding options already issued to an officer from their initial expiry date to a new expiration date of June 30, 2014. Stock based compensation cost relating to the extension in the expiry date of the outstanding options issued to three directors and an officer, as above, amounting to $30,213 has been expensed to general and administration expense. 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. The Company expensed stock based compensation cost of $23,677. 9. COMMITMENTS a) Effective January 1, 2011, a director of the Company renewed consulting agreement with the Company on the following terms: Monthly Consulting Fees from Expiration of January through Consulting Name December 2011 Agreement ---- --------------------- ------------- Boaz Dor $3,000 12-31-2011 15 SECURITY DEVICES INTERNATIONAL, INC. (A Development Stage Enterprise) Condensed Notes to Interim Financial Statements May 31, 2011 (Amounts expressed in US Dollars) (Unaudited-Prepared by Management) 9. COMMITMENTS-Cont'd b) 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 (WEP40) and blunt impact (BIP40) technology. The Company will negotiate a royalty in the event of granting such rights to the contractor. The Company terminated their MOU with the contractor during the quarter ended February 28, 2011 and is currently negotiating with the contractor for future services. c) The Company has commitments for leasing office premises in Oakville, Ontario, Canada to September 30, 2012 at a monthly rent (excluding proportionate realty and maintenance costs and taxes) of Canadian $2,500 per month. d) The Company signed a consulting agreement with the COO of the Company for a period of six months commencing November 1, 2010. The officer will be paid $8,000 plus applicable taxes. e) The Company signed an agreement with a company to develop an Instructor and Operator Training course for its line of less-than-lethal rounds at a total commitment of $40,000. The Company has paid $40,000 during the six month period ended May 31, 2011. 16 SECURITY DEVICES INTERNATIONAL, INC. (A Development Stage Enterprise) Condensed Notes to Interim Financial Statements May 31, 2011 (Amounts expressed in US Dollars) (Unaudited-Prepared by Management) 10. CONVERTIBLE DEBENTURES The carrying values of the Company's convertible debentures consist of the following as of May 31, 2011: Carrying Value ------------------------------------------------------------------------------- $100,000 face value convertible debenture due March 23, 2012 $ (83,032) $46,500 face value convertible debenture due April 14, 2012 (38,609) $50,000 face value convertible debenture due June 30, 2014 (50,000) ---------------- Total $ (171,641) ================ $100,000 Face Value Convertible Debenture ----------------------------------------- On March 23, 2011, the Company issued a $100,000 face value Convertible Debenture, due March 23, 2012 ("Convertible Debenture 1"), to an investor ("Investor") for net proceeds of $100,000. The debenture accrues interest at 10% per annum. Both principal and interest are payable at maturity. However, the principal amount, plus accrued interest, may be converted into common stock at the option of the Investor at any time during the term to maturity at a conversion price of $0.20 per share, subject to adjustment solely for capital reorganization events. The debenture also embodies certain traditional default provisions that are linked to credit or interest risks, such as bankruptcy proceedings, liquidation events and corporate existence. In the event the Company enters into a Subsequent Financing (an offering of no less than $3,000,000) that occurs prior to the Maturity Date, the debenture will automatically convert at a conversion price per share equal to $0.20 (subject to adjustment for stock splits, recapitalizations or similar events) immediately prior to the closing of the Financing. In addition to any principal payment made at maturity or any prepayment of principal, the Company is required to issue as an additional capital payment common stock equal to 20% of the principal amount paid or payable divided by the then applicable Conversion price. $46,500 Face Value Convertible Debenture ---------------------------------------- On April 14, 2011, the Company issued a $46,500 face value Convertible debenture, due April 14, 2012 ("Convertible Debenture 3"), to an investor ("Investor") for net proceeds of $100,000. The Debenture accrues interest at 10% per annum. Both principal and interest are payable at maturity. However, the principal amount, plus accrued interest, may be converted into common stock at the option of the Investor at any time during the term to maturity at a conversion price of $0.20 per share, subject to adjustment solely for capital reorganization events. The debenture also embodies certain traditional default provisions that are linked to credit or interest risks, such as bankruptcy proceedings, liquidation events and corporate existence. In the event the Company enters into a Subsequent Financing (an offering of no less than $3,000,000) that occurs prior to the Maturity Date, the debenture will automatically convert at a conversion price per share equal to $0.20 (subject to adjustment for stock splits, recapitalizations or similar events) immediately prior to the closing of the Financing. In addition to any principal payment made at maturity or any prepayment of principal, the Company is required to issue as an additional capital payment common stock equal to 20% of the principal amount paid or payable divided by the then applicable Conversion price. 17 SECURITY DEVICES INTERNATIONAL, INC. (A Development Stage Enterprise) Condensed Notes to Interim Financial Statements May 31, 2011 (Amounts expressed in US Dollars) (Unaudited-Prepared by Management) 10. CONVERTIBLE DEBENTURES-Cont'd $50,000 Face Value Convertible Debenture ---------------------------------------- On May 19, 2011, the Company issued a $50,000 face value Convertible debenture, due June 30 2014 ("Convertible Debenture 2"), to an investor ("Investor") for net proceeds of $50,000. The Debenture accrues interest at 8% per annum. The principal is payable at maturity whereas the interest is payable annually in arrears on each anniversary of the issuance date. The principal may be converted in multiples of $1,000 into common stock at the option of the Investor at any time during the term to maturity. The conversion prices are (i) $0.30 on or before the first anniversary of the debenture; (ii) $0.35 on or before the second anniversary of the debenture; and (iii) $0.40 after the second anniversary of the issuance of the debenture and maturity. The conversion prices are subject to adjustment solely for capital reorganization events. The debenture provides down-round protection to the Investor in the event the Company issues rights, options or warrants to all or substantially all the holders of the Common Shares pursuant to which those holders are entitled to subscribe for, purchase or otherwise acquire Common Shares or Convertible Securities within a period of 45 days from the date of issue (the "Rights Period") at a price, or at a conversion price, of less than 90% of the Current Market Price at the record date for such distribution (any such issuance being a "Rights Offering" and Common Shares that may be acquired in exercise of the Rights Offering, or upon conversion of the Convertible Securities offered by the Rights Offering, being the "Offered Shares"). The debenture also embodies certain traditional default provisions that are linked to credit or interest risks, such as bankruptcy proceedings, liquidation events and corporate existence. In the event of a reorganization, consolidation, merger, or a sale of all or substantially all of the assets, the Company has the option to redeem the debenture at (i) $1,250 per $1,000 of Principal Sum, if occurring on or before the first anniversary of issuance; (ii) $1,125 per $1,000 of Principal Sum if occurring after the first anniversary and prior to the second anniversary of issuance; and (iii) $1,050 per $1,000 of Principal Sum if occurring after the second anniversary of issuance and prior to the end of the term. Accounting for the Financings: The Company has evaluated the terms and conditions of the convertible debentures under the guidance of ASC 815, Derivatives and Hedging. The conversion features meet the definition of conventional convertible for purposes of applying the conventional convertible exemption. The definition of conventional contemplates a limitation on the number of shares issuable under the arrangement. In the case of Convertible Debenture 1 and Convertible Debenture 3, the instrument is convertible into a fixed number of shares and there are no down round protection features contained in the contracts. In the case of Convertible Debenture 2, the instrument is convertible into a fixed number of shares. Although this instrument contains a down-round protection feature, it was determined to be insignificant and did not preclude characterization as conventional convertible. Since the Convertible Debentures achieved the conventional convertible exemption, the Company was required to consider whether the hybrid contracts embody a beneficial conversion feature. In the case of Convertible Debenture 1 and 3, the calculation of the effective conversion amount resulted in a beneficial conversion feature. However, in the case of Convertible Debenture 2, the calculation of the effective conversion amount did not result in a beneficial 18 SECURITY DEVICES INTERNATIONAL, INC. (A Development Stage Enterprise) Condensed Notes to Interim Financial Statements May 31, 2011 (Amounts expressed in US Dollars) (Unaudited-Prepared by Management) 10. CONVERTIBLE DEBENTURES-Cont'd conversion feature. At inception, the Company recorded a beneficial conversion feature for Convertible Debenture 1 and 3, as a component of stockholder's equity. The automatic conversion provision embedded in Convertible Debenture 1 and 3 and the optional redemption feature embedded in Convertible Debenture 2 were not considered clearly and closely related to the host debt instrument. However, these features do not require bifurcation and liability classification because exercisability is solely at the Company's option. The Company analyzed the down-round protection feature, which expires 45 days from the inception date of the financing. The Company determined that there were no contemplated financings during this time period that would trigger the down-round protection feature. Given the feature's short-term nature and the unlikelihood of a triggering event occurring, the down-round protection feature was deemed immaterial at inception and thus does not require bifurcation and liability classification. The purchase price allocation for Convertible Debenture 1 resulted in a debt discount of $20,000. The purchase price allocation for Convertible Debenture 3 resulted in a debt discount of $9,300. The discount on the debenture will be amortized through periodic charges to interest expense over the term of the debenture using the effective interest method. Amortization of debt discount amounted to $4,441 during the period from inception to May 31, 2011. Additionally, the Company recorded accrued interest of $2,657 on the debentures from inception through May 31, 2011. The Company is required to issue common stock as an additional capital payment to any principal payment made on the Convertible Debenture 1 and Convertible Debenture 3. The Company has recorded this commitment as a liability in the amount of $35,160. The offsetting charge is to deferred financing costs. The deferred financing costs will be amortized through periodic charges to interest expense over the term of the debenture using the straight-line method. Amortization of deferred financing costs amounted to $6,647 during the period from inception to May 31, 2011. 11. SUBSEQUENT EVENTS Subsequent to May 31, 2011, the Company raised an additional $210,000 by issue of convertible debentures. The Debentures accrue interest at 8% per annum. The principal is payable at maturity whereas the interest is payable annually in arrears on each anniversary of the issuance date. The principal may be converted in multiples of $1,000 into common stock at the option of the Investor at any time during the term to maturity. The conversion prices are (i) $0.30 on or before the first anniversary of the debenture; (ii) $0.35 on or before the second anniversary of the debenture; and (iii) $0.40 after the second anniversary of the issuance of the debenture and maturity. The conversion prices are subject to adjustment solely for capital reorganization events. 19 PART I ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND PLAN OF OPERATION SDI is a less-than-lethal defense technology company, specializing in the development of innovative next generation solutions for security situations that do not require the use of lethal force, or ammunition. SDI is currently in the advanced stages of deploying their patent pending family of products. These products consist of; the Blunt Impact Projectile 40mm (BIP40), and the Wireless Electric Projectile 40mm (WEP40). The market sectors for these products include; the military, army, navy, air force, peacekeeping, homeland security, and law enforcement professionals. SDI's products were designed for use in existing 40mm grenade launchers, and standard issue riot guns. The BIP40 is a direct impact less-than-lethal ammunition round. Developed to respond to the increasing demand for security solutions in circumstances that do not require lethal force to control. Patented technology allow for operational effectiveness at distances of up to 262 feet (80m), while still enhancing target safety if engaged from close range. The BIP40 operates with smokeless powder as a propellant, ensuring consistent velocity and accuracy at long distances. The head of the round has a collapsible nose that absorbs the kinetic energy upon impact. The Company holds a global patent for the collapsible nose. Designed to supersede previous blunt impact solutions such as foam, baton, sponge and rubber bullets, the BIP40's technology enables the projectile to engage the target with higher kinetic energy while meeting official, military standard requirements. The WEP40 is an electric ammunition round that was developed to answer the growing need for an effective, extended range incapacitation solution for situations that do not require the use of lethal force to control. Incorporating SDI's patented and patent-pending technologies allows for this ammunition round to deliver operational success at distances up to feet 160 feet (50m). The market sectors for these products include; the military, army, navy, air force, peacekeeping, homeland security, and law enforcement professionals. The WEP40 when deployed emits a Wireless Electro Neuro-Muscular Disruption Technology that incapacitates the targeted individual. The Company's products were designed for a standard 40mm ammunition casing, for use with standard issue weapons such as riot guns and M203 grenade launchers. SDI has received a Letter of Intent (LOI) from a distributor that represents an interested Country to obtain a large number of SDI's less-than-lethal ammunition. SDI and the end user Country will be testing the Company's ammunition in the summer of 2011 for assessment purposes. The Company has been in talks with several military and law enforcement 20 groups this quarter in regards to live demonstrations of SDI's less-than-lethal products. SDI will be demonstrating to these groups in the summer of 2011, looking to obtain sales orders of their products. During the three months ended May 31, 2011 the Company issued convertible notes for borrowings in the principal amount of $196,500. Subsequent to May 31, 2011, the Company raised an additional $210,000 by issuance of convertible debentures. The Debentures accrue interest at 8% per annum. The principal is payable at maturity whereas the interest is payable annually in arrears on each anniversary of the issuance date. The principal may be converted in multiples of $1,000 into common stock at the option of the Investor at any time during the term to maturity. The conversion prices are (i) $0.30 on or before the first anniversary of the debenture; (ii) $0.35 on or before the second anniversary of the debenture; and (iii) $0.40 after the second anniversary of the issuance of the debenture and maturity. The conversion prices are subject to adjustment solely for capital reorganization events. The Company has signed a Memorandum of Understanding (MOU) with a large, global defense technology company. The MOU maps out the intentions of both groups to move forward in having SDI's 40mm Blunt Impact ammunition round manufactured at the facility of the global defense technology company. A further definitive business agreement will need to be executed further defining the parties' roles. The proposed arrangement will enable SDI to produce and market its next generation less-than-lethal ammunition products through this production facility in the United States. The MOU represents SDI's first step in entering the marketplace both internationally and in North America. Subsequent to May 31, 2011, SDI was extended an invitation to a 2-day military workshop with top military leaders from an interested country. Both military and police agencies were present for this workshop. The purpose of the exhibition was to explore military products, including less-lethal products that will assist the country's armed forces in moving forward in a peace-keeping format. Representatives of SDI displayed the Company's Wireless Electric Projectile ("WEP40") ammunition, and the Blunt Impact Projectile ("BIP40") less-lethal ammunition. There was a large amount of interest from both the military and police groups to initiate a live demonstration in the coming weeks. SDI was incorporated on March 1, 2005 and for the period from inception to May 31, 2011 has not generated any revenue. During the three months ended May 31, 2011 compared to the three months ended May 31, 2010, there were no research and product development expenses since the development of the Company's products was nearing completion. During the period from inception (March 1, 2005) through May 31, 2011 SDI's operations used $9,958,189 in cash. During this period SDI purchased $58,773 of equipment and raised $10,083,150 from financing activities. SDI anticipates that its capital requirements for the twelve-month period ending May 31, 2012 will be: 21 Development and Production costs $120,000 General and Administrative Expenses $550,000 ---------- Total $670,000 ========== Other than the foregoing, SDI did not have any material future contractual obligations or off balance sheet arrangements as of May 31, 2011. 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. See Note 11 to the financial statements included as part of this report for information concerning events which occurred subsequent to May 31, 2011. Item 4. 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 May 31, 2011, 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, SDI's 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 quarter ended May 31, 2011, that materially affected, or are reasonably likely to materially affect, its internal control over financial reporting. 22 PART II Item 2. Unregistered Sales of Equity Securities and Use of Proceeds Not applicable. Item 6. Exhibits Exhibits 31.1 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Gregory Sullivan. 31.2 Certification pursuant to Section 302 of the Sarbanes-Oxley Act of 2002 for Rakesh Malhotra. 32 Certification pursuant to Section 906 of the Sarbanes-Oxley Act of 2002 for Gregory Sullivan and Rakesh Malhotra. 23 SIGNATURES Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused this report to be signed on its behalf by the undersigned thereunto duly authorized. SECURITY DEVICES INTERNATIONAL, INC. Date: July 15, 2011 By: /s/ Gregory Sullivan ----------------------------------- Gregory Sullivan, President and Principal Executive Officer Date: July 15, 2011 By: /s/ Rakesh Malhotra ----------------------------------- Rakesh Malhotra, Principal Financial and Accounting Officer 24