- Amended Quarterly Report (10-Q/A)

Share Name	Share Symbol	Market	Type
Leeward Group Holdings Inc New (CE)	USOTC:PCPZ	OTCMarkets	Common Stock

UNITED STATES SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

FORM 10-Q/A

X QUARTERLY REPORT UNDER TO SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF 1934

FOR THE QUARTERLY PERIOD ENDED NOVEMBER 30, 2009

Commission file number 333-145730

PRINCIPLE SECURITY INTERNATIONAL, INC.

(Exact name of registrant as specified in its charter)

NEVADA

(State or other jurisdiction of incorporation or organization)

Unit B – 2015 Burrard Street

Vancouver, British Columbia

Canada V6J 3H4

(Address of principal executive offices, including zip code.)

(778) 233-3562

(telephone number, including area code)

Check whether the issuer (1) filed all reports required to be filed by Section 13 or 15(d) of the Exchange Act during the past 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the last 90 days. YES [ X ] 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 the definitions of “large accelerated filer, “accelerated filer,” “non-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]

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

At November 30, 2009, there were 21,295,006 shares of our common stock issued and outstanding.

EXPLANATORY NOTE

This quarterly report is being amended throughout to reflect a 2.5 for 1 forward split effected by the registrant on October 5, 2009, but inadvertently omitted in the original November 30, 2009 report filed.

TABLE OF CONTENTS


PART I - FINANCIAL INFORMATION		3

Item 1. Consolidated Financial Statements		3

Item 2. Management's Discussion and Analysis of Financial Condition and Results of Operations		20

Item 3. Quantitative and Qualitative Disclosures of Market Risk		22

Item 4. Controls and Procedures		23

PART II - OTHER INFORMATION		23

Item 1. Legal Proceedings		23

Item 2. Unregistered Sales of Equity Securities and Use of Proceeds		23

Item 3. Defaults Upon Senior Securities		23

Item 4. Submission of Matters to a Vote of Security Holders		23

Item 5. Other Information and Subsequent Events		24
.
Item 6. Exhibits		24

SIGNATURES		24

PART I – FINANCIAL INFORMATION

ITEM 1. CONSOLIDATED FINANCIAL STATEMENTS

The accompanying unaudited interim consolidated financial statements have been prepared in accordance with accounting principles generally accepted in the United States of America and the rules of the Securities and Exchange Commission ("SEC") and should be read in conjunction with the audited financial statements and notes thereto contained in our Annual Report filed with the SEC on Form 10-K on August 27, 2009. In the opinion of management, all adjustments, consisting of normal recurring adjustments, necessary for a fair presentation of financial position and the results of operations for the interim periods presented have been reflected herein. The results of operations for interim periods are not necessarily indicative of the results to be expected for the full year.

Forward-Looking Statements

The statements contained in this Form 10-Q that are not purely historical are forward-looking statements within the meaning of Section 27A of the Securities Act of 1933, as amended, and Section 21E of the Securities Exchange Act of 1934, as amended. These include statements about our expectations, beliefs, intentions or strategies for the future, which are indicated by words or phrases such as anticipate, expect, intend, plan, will, the Company believes, management believes and similar words or phrases. The forward-looking statements are based on our current expectations and are subject to certain risks, uncertainties and assumptions. Our actual results could differ materially from results anticipated in these forward-looking statements. All forward-looking statements included in this document are based on information available to us on the date hereof, and we assume no obligation to update any such forward-looking statements.

Principle Security International, Inc.

(A Development Stage Company)

Consolidated Financial Statements

(Expressed in U.S. Dollars)

(Unaudited)

30 November 2009

Principle Security International, Inc.

(A Development Stage Company)

Consolidated Balance Sheets

(Expressed in U.S. Dollars)

(Unaudited)

	As at 30 November 2009 (Restated )	As at 31 May 2009 (Audited)
	$	$

Assets

Current
Cash and cash equivalents (Note 2)	14,500	1,496
Goods and Services Tax recoverable	688	234

	15,188	1,730

Equipment (Note 3)	805	1,057

	15,993	2,787

Liabilities

Current
Accounts payable and accrued liabilities (Note 4)	3,825	13,508
Convertible debentures (Note 5)	15,048	14,323
Demand loan (Note 6)	46,235	-
Due to related party (Note 7)	5,046	-

	70,154	27,831

Stockholders’ deficiency
Capital stock (Note 8)
Authorized
100,000,000 of common shares, par value $0.00001
100,000,000 of preferred shares, par value $0.00001
Issued and outstanding
30 November 2009 – 21,295,006 common shares, par value $0.00001
31 May 2009 – 21,295,006 common shares, par value $0.00001	213	213
Additional paid in capital	124,416	124,416
Deficit, accumulated during the development stage	(178,790)	(149,673)

	(54,161)	(25,044)

	15,993	2,787

Nature and Continuance of Operations (Note 1 ), Contingency (Note 11) and Subsequent Events (Note 12)

On behalf of the Board:

/s/ Charles Payne, Director

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

Principle Security International, Inc.

(A Development Stage Company)

Consolidated Statements of Operations

(Expressed in U.S. Dollars)

(Unaudited)

	For the period from the date of inception on 27 November 2006 to 30 November 2009		For the three month period ended 30 November 2009 (Restated)	For the three month period ended 30 November 2008	For the six month period ended 30 November 2009 (Restated)	For the six month period ended 30 November 2008
		$	$	$	$	$

Expenses
Amortization (Note 3)		1,281	153	97	252	194
Bank charges		1,045	58	37	133	113
Consulting fees (Note 7)		52,939	4,160	9,709	5,509	12,140
Interest expense (Notes 5, 6, 7 and 10)		1,529	544	-	1,006	-
Legal fees		23,523	3	875	471	1,392
Marketing and advertising		156	-	-	-	-
Office and miscellaneous		24,388	2,058	1,229	2,980	4,878
Professional fees		55,115	6,968	3,589	10,413	12,658
Transfer agent and filing fees		13,339	1,923	982	4,216	1,297
Loss on foreign exchange		5,475	2,221	1,566	4,137	1,759

Net loss for the period		(178,790)	(18,088)	(18,084)	(29,117)	(34,431)

Basic and diluted loss per common share			(0.001)	(0.001)	(0.001)	(0.002)

Weighted average number of common shares used in per share calculations			21,295,006	21,295,006	21,295,006	21,295,006

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

Principle Security International, Inc.

(A Development Stage Company)

Consolidated Statements of Cash Flows

(Expressed in U.S. Dollars)

(Unaudited)

	For the period from the date of inception on 27 November 2006 to 30 November 2009		For the three month period ended 30 November 2009	For the three month period ended 30 November 2008	For the six month period ended 30 November 2009	For the six month period ended 30 November 2008
		$	$	$	$	$

Cash flows used in operating activities
Net loss for the period		(178,790)	(18,088)	(18,084)	(29,117)	(34,431)
Adjustments to reconcile loss to net cash used by operating activities
Amortization (Note 3)		1,281	153	97	252	194
Interest (Notes 5, 6, 7 and 10)		1,529	544	-	1,006	-
Contribution to capital by related party		10,909	-	-	-	-
Changes in operating assets and liabilities
(Increase) decrease in Goods and Services Tax recoverable		(688)	(67)	10,095	(454)	10,095
Increase (decrease) in accounts payable and accrued liabilities		3,825	(3,403)	(573)	(9,683)	(691)
Increase (decrease) in due to related party		20	-	(6,310)	-	3,127

		(161,914)	(20,861)	(14,775)	(37,996)	(21,706)

Cash flows used in investing activities
Purchase of property, plant and equipment		(2,086)	-	-	-	-

Cash flows from financing activities
Common shares issued for cash (Note 8)		78,700	-	-	-	-
Convertible debentures (Note 5)		13,800	-	-	-	-
Demand loan (Note 6)		46,000	26,000	-	46,000	-
Loans from related party (Note 7)		40,000	-	199	5,000	1,611

		178,500	26,000	199	51,000	1,611

Increase (decrease) in cash and cash equivalents		14,500	5,139	(14,576)	13,004	(20,095)

Cash and cash equivalents, beginning of period		-	9,361	15,548	1,496	21,067

Cash and cash equivalents, end of period		14,500	14,500	972	14,500	972

Supplemental Disclosures with Respect to Cash Flows (Note 10)

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

Principle Security International, Inc.

(A Development Stage Company)

Consolidated Statements of Changes in Stockholders’ Deficiency

(Expressed in U.S. Dollars)

(Unaudited)

	Number of shares issued (Restated)		Capital Stock (Restated)		Additional paid in capital (Restated)		Deficit, accumulated during the development stage		Stockholders’ deficiency
				$		$		$		$

Balance at 27 November 2006 (inception)		-		-		-		-		-
Common shares issued – cash ( $.0004 per share ) (Note 8)		6,250,002		63		2,437		-		2,500
Common shares issued – cash ($.003 per share ) (Note 8)		14,500,002		145		43,355		-		43,500
Common shares issued – cash ( $.06 per sha re) (Note 8)		545,002		5		32,695		-		32,700
Net loss for the period		-		-		-		(19,332)		(19,332)

Balance at 31 May 2007		21,295,006		213		78,487		(19,332)		59,368
Net loss for the year		-		-		-		(72,251)		(72,251)

Balance at 31 May 2008		21,295,006		213		78,487		(91,583)		(12,883)
Contributions to capital by related party (Note 8)		-		-		45,929		-		45,929
Net loss for the year		-		-		-		(58,090)		(58,090)

Balance at 31 May 2009		21,295,006		213		124,416		(149,673)		(25,044)
Net loss for the period		-		-		-		(29,117)		(29,117)

Balance at 30 November 2009		21,295,006		213		124,416		(178,790)		(54,161)

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

Principle Security International, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements

(Expressed in U.S. Dollars)

(Unaudited)

30 November 2009

1.	Nature and Continuance of Operations

Principle Security International, Inc. (the “Company”) was incorporated under the laws of the State of Nevada on 27 November 2006. The Company intends to conduct its business through its wholly owned subsidiary, Principle Security International Incorporated, a company incorporated in Canada.

These consolidated financial statements represent the presentation on a consolidated basis of the accounts of the Company and its wholly owned subsidiary, Principle Security International Incorporated, a company incorporated under the laws of British Columbia, Canada on 29 November 2006.

The Company is a development stage enterprise, as defined in Accounting Standards Codification (the “Codification” or “ASC”) 915-10, “ Development Stage Entities ”. The Company is devoting all of its present efforts to securing and establishing a new business and its planned principle operations have not commenced. Accordingly, no revenue has been derived during the organization period.

The consolidated financial statements of the Company have been prepared in accordance with accounting principles generally accepted in the United States of America (“GAAP”) applicable to development stage enterprises, and are expressed in U.S. dollars. The Company’s fiscal year end is 31 May.

The Company’s consolidated financial statements as at 30 November 2009 and for the three and six month period then ended have been prepared on a going concern basis, which contemplates the realization of assets and the settlement of liabilities and commitments in the normal course of business. The Company has a loss of $18,088 and $29,117 for the three and six month period ended 30 November 2009, respectively (30 November 2008 – $18,084 and $34,431, respectively, cumulative – $178,790) and has a working capital deficit of $54,966 at 30 November 2009 (31 May 2009 – $26,101).

Effective 5 October 2009, the Company completed a 2.5 to 1 forward stock split and increased the issued and oustanding share capital from 8,518,000 common shares to 21,295,006 common shares with the same par value of $0.00001. Unless otherwise noted, all references herein to number of shares, price per share or weighted average number of shares outstanding have been adjusted to reflect this stock split on a retroactive basis (Note 8).

Management cannot provide assurance that the Company will ultimately achieve profitable operations or become cash flow positive, or raise additional debt and/or equity capital. Management believes that the Company’s capital resources should be adequate to continue operating and maintaining its business strategy during the fiscal year ending 31 May 2010. However, if the Company is unable to raise additional capital in the near future, due to the Company’s liquidity problems, management expects that the Company will need to curtail operations, liquidate assets, seek additional capital on less favorable terms and/or pursue other remedial measures. These consolidated financial statements do not include any adjustments related to the recoverability and classification of assets or the amounts and classification of liabilities that might be necessary should the Company be unable to continue as a going concern.

At 30 November 2009, the Company was not engaged in a business and had suffered losses from development stage activities to date. Although management is currently attempting to implement its business plan, and is seeking additional sources of equity or debt financing, there is no assurance these activities will be successful. Accordingly, the Company must rely on its president to perform essential functions without compensation until a business operation can be commenced. These factors raise substantial doubt about the ability of the Company to continue as a going concern. The consolidated financial statements do not include any adjustments that might result from the outcome of this uncertainty.

Principle Security International, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements

(Expressed in U.S. Dollars)

(Unaudited)

30 November 2009

2.	Significant Accounting Policies

The following is a summary of significant accounting policies used in the preparation of these consolidated financial statements.

Basis of presentation

The consolidated financial statements of the Company have been prepared in accordance with GAAP and are expressed in U.S. dollars. The Company’s fiscal year end is 31 May.

Cash and cash equivalents

Cash and cash equivalents include highly liquid investments with original maturities of three months or less. As at 30 November 2009, the Company has cash and cash equivalents in the amount of $14,500 (31 May 2009 – $1,496).

Equipment

Equipment is recorded at cost and depreciation is provided over its estimated economic life at 30%.

Long-lived assets

Long-term assets of the Company are reviewed for impairment whenever events or circumstances indicate that the carrying amount of assets may not be recoverable, pursuant to guidance established in ASC 360-10-35-15, “Impairment or Disposal of Long-Lived Assets” .

Management considers assets to be impaired if the carrying value exceeds the future projected cash flows from related operations (undiscounted and without interest charges). If impairment is deemed to exist, the assets will be written down to fair value. Fair value is generally determined using a discounted cash flow analysis.

Financial instruments

The carrying value of cash and cash equivalents, Goods and Services Tax recoverable, accounts payable and accrued liabilities, convertible debentures, demand loans and due to related party approximates their fair value because of the short maturity of these instruments. The Company’s operations are in Canada and virtually all of its assets and liabilities are giving rise to significant exposure to market risks from changes in foreign currency rates. The Company’s financial risk is the risk that arises from fluctuations in foreign exchange rates and the degree of volatility of these rates. Currently, the Company does not use derivative instruments to reduce its exposure to foreign currency risk.

Derivative financial instruments

The Company has not, to the date of these consolidated financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

Principle Security International, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements

(Expressed in U.S. Dollars)

(Unaudited)

30 November 2009

Income taxes

Deferred income taxes are reported for timing differences between items of income or expense reported in the consolidated financial statements and those reported for income tax purposes in accordance with ASC 740, “ Income Taxes” , which requires the use of the asset/liability method of accounting for income taxes. Deferred income taxes and tax benefits are recognized for the future tax consequences attributable to differences between the financial statement carrying amounts of existing assets and liabilities and their respective tax bases, and for tax loss and credit carry-forwards. Deferred tax assets and liabilities are measured using enacted tax rates expected to apply to taxable income in the years in which those temporary differences are expected to be recovered or settled. The Company provides for deferred taxes for the estimated future tax effects attributable to temporary differences and carry-forwards when realization is more likely than not.

Basic and diluted net loss per share

The Company computes net income (loss) per share in accordance with ASC 260, “ Earnings per Share .” ASC 260 requires presentation of both basic and diluted earnings per share (“EPS”) on the face of the income statement. Basic EPS is computed by dividing net income (loss) available to common shareholders (numerator) by the weighted average number of shares outstanding (denominator) during the period. Diluted EPS gives effect to all dilutive potential common shares outstanding during the period using the treasury stock method and convertible preferred stock using the if-converted method. In computing diluted EPS, the average stock price for the period is used in determining the number of shares assumed to be purchased from the exercise of stock options or warrants. Diluted EPS excludes all dilutive potential shares if their effect is anti-dilutive.

Comprehensive loss

ASC 220, “ Comprehensive Income” , establishes standards for the reporting and display of comprehensive loss and its components in the consolidated financial statements. As at 30 November 2009, the Company has no items that represent a comprehensive loss and, therefore, has not included a schedule of comprehensive loss in the consolidated financial statements.

Segments of an enterprise and related information

ASC 280, “ Segment Reporting ,” establishes standards for the way that public companies report information about operating segments in annual consolidated financial statements and requires reporting of selected information about operating segments in interim consolidated financial statements issued to the public. It also establishes standards for disclosures regarding products and services, geographic areas and major customers. ASC 280 defines operating segments as components of a company about which separate financial information is available that is evaluated regularly by the chief operating decision maker in deciding how to allocate resources and in assessing performance. The Company has evaluated this Codification and does not believe it is applicable at this time.

Principle Security International, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements

(Expressed in U.S. Dollars)

(Unaudited)

30 November 2009

Start-up expenses

The Company has adopted ASC 720-15 “ Start-up Costs ,” which requires that costs associated with start-up activities be expensed as incurred. Accordingly, start-up costs associated with the Company's formation have been included in the Company's general and administrative expenses for the period from the date of inception on 27 November 2006 to 30 November 2009.

Foreign currency translation

The Company’s functional and reporting currency is in U.S. dollars. The consolidated financial statements of the Company are translated to U.S. dollars in accordance with ASC 830, “ Foreign Currency Matters .” Monetary assets and liabilities denominated in foreign currencies are translated using the exchange rate prevailing at the balance sheet date. Gains and losses arising on translation or settlement of foreign currency denominated transactions or balances are included in the determination of income. The Company has not, to the date of these consolidated financial statements, entered into derivative instruments to offset the impact of foreign currency fluctuations.

Use of estimates

The preparation of consolidated financial statements in conformity with GAAP requires management to make estimates and assumptions that affect the amounts of assets and liabilities and disclosures of contingent assets and liabilities at the date of the consolidated financial statements and the reported amounts of revenues and expenditures during the reporting period. Actual results could differ from these estimates.

Changes in Accounting Policies

Fair Value Measurement and Disclosure

In August 2009, the Financial Accounting Standards Board (“FASB”) issued ASU No. 2009-05, “ Fair Value Measurement and Disclosure (Topic 820) – Measuring Liabilities at Fair Value ”, which provides valuation techniques to measure fair value in circumstances in which a quoted price in an active market for the identical liability is not available. The guidance provided in this update is effective 1 September 2009. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

The Accounting Standards Codification

In June 2009, the FASB issued SFAS No. 168, “ The FASB Accounting Standards Codification and the Hierarchy of Generally Accepted Accounting Principle – a replacement of FASB Statement No. 162 ”. The Codification reorganized existing U.S. accounting and reporting standards issued by the FASB and other related private sector standard setter into a single source of authoritative accounting principles arranged by topic. The Codification supersedes all existing U.S. accounting standards; all other accounting literature not included in the Codification (other than Securities and Exchange Commission guidance for publicly-traded companies) is considered non-authoritative. The Codification was effective on a prospective basis for interim and annual reporting periods ending after 15 September 2009. The adoption of the Codification changed the Company’s references to GAAP accounting standards but did not impact the Company’s results of operations, financial position or liquidity.

Principle Security International, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements

(Expressed in U.S. Dollars)

(Unaudited)

30 November 2009

Subsequent Events

In May 2009, the FASB issued new guidance for accounting for subsequent events. The new guidance, which is now part of ASC 855, “ Subsequent Events ” is intended to establish general standards of accounting for and disclosure of events that occur after the balance sheet date, but before consolidated financial statements are issued or are available to be issued. It requires the disclosure of the date through which an entity has evaluated subsequent events and the basis for that date. This disclosure should alert all users of the consolidated financial statements that an entity has not evaluated subsequent events after that date in the set of the consolidated financial statements being presented. The new guidance was effective on a prospective basis for interim or annual reporting periods ending after 15 June 2009. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

Convertible Debt

In May 2008, the FASB issued new guidance for accounting for convertible debt instruments that may be settled in cash. The new guidance, which is now part of ASC 470-20, “ Debt with Conversion and Other Options ” requires the liability and equity components to be separately accounted for in a manner that will reflect the entity’s nonconvertible debt borrowing rate. The Company will allocate a portion of the proceeds received from the issuance of convertible notes between a liability and equity component by determining the fair value of the liability component using the Company’s nonconvertible debt borrowing rate. The difference between the proceeds of the notes and the fair value of the liability component will be recorded as a discount on the debt with a corresponding offset to paid-in capital. The resulting discount will be accreted by recording additional non-cash interest expense over the expected life of the convertible notes using the effective interest rate method. The new guidance was to be applied retrospectively to all periods presented upon those fiscal years. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

Useful Life of Intangible Assets

In April 2008, the FASB issued new guidance for determining the useful life of an intangible assets, the new guidance, which is now part of ASC 350, “ Intangibles – Goodwill and Other ”. In determining the useful life of intangible assets, ASC 350 removes the requirement to consider whether an intangible asset can be renewed without substantial cost of material modifications to the existing terms and conditions and, instead, requires an entity to consider its own historical experience in renewing similar arrangements. ASC 350 also requires expanded disclosure related to the determination of intangible asset useful lives. The new guidance was effective for consolidated financial statements issued for fiscal years beginning after 15 December 2008. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

Derivative Instruments and Hedging Activities

In March 2008, the FASB issued new guidance on the disclosure of derivative instruments and hedging activities. The new guidance, which is now part of ASC 815, “ Derivatives and Hedging Activities ” requires qualitative disclosures about objectives and strategies for using derivatives, quantitative disclosures about fair value amounts of, and gains and losses on, derivative instruments, and disclosures about credit-risk-related contingent features in derivative agreements. The new guidance was effective prospectively for consolidated financial statements issued for fiscal years beginning after 15 November 2008, with early application encouraged. The adoption of this guidance did not have a significant impact on the Company’s financial statements.

Principle Security International, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements

(Expressed in U.S. Dollars)

(Unaudited)

30 November 2009

Business Combinations

In December 2007, the FASB issued revised guidance for accounting for business combinations. The revised guidance, which is now part of ASC 805, “ Business Combinatiosn ” requires the fair value measurement of assts acquired, liabilities assumed and any noncontrolling interest in the acquiree, at the acquisition date with limited exceptions. Previously, a cost allocation approach was used to allocate the cost of the acquisition based on the estimated fair value of the individual assets acquired and liabilities assumed. The cost allocation approach treated acquisition-related costs and restructuring costs that the acquirer expected to incur as a liability on the acquisition date, as part of the cost of the acquisition. Under the revised guidance, those costs are recognized in the statement of income separately from the business combination. The revised guidance applies to business combinations for which the acquisition date is on or after the beginning of the first annual reporting period beginning on or after 15 December 2008. The adoption of this guidance did not have a material impact on the Company’s consolidated financial statements.

Comparative figures

Certain comparative figures have been adjusted to conform to the current period’s presentation.

Recent Accounting Pronouncements

From June 2009 to October 2009, the FASB issued various updates, Accounting Standard Update (“ASU”) No. 2009-2 through ASU No. 2009-15, which contain technical corrections to existing guidance or affect guidance to specialized industries or entities. These updates have no current applicability to the Company or their effect on the consolidated financial statements is insignificant.

In June 2009, the FASB issued Statement of Financial Accounting Standards (“SFAS”) No. 167, “ Amendments to FASB Interpretation No. 46(R) ”. SFAS No. 167, which amends ASC 810-10, “ Consolidation ”, prescribes a qualitative model for identifying whether a company has a controlling financial interest in a variable interest entity (“VIE”) and eliminates the quantitative model. The new model identifies two primary characteristics of a controlling financial interest: (1) provides a company with the power to direct significant activities of the VIE, and (2) obligates a company to absorb losses of and/or provides rights to receive benefits from the VIE. SFAS No. 167 requires a company to reassess on an ongoing basis whether it holds a controlling financial interest in a VIE. A company that holds a controlling financial interest is deemed to be the primary beneficiary of the VIE and is required to consolidate the VIE. SFAS No. 167, which is referenced in ASC 105-10-65, has not yet been adopted into the Codification and remains authoritative. SFAS No. 167 is effective 1 June 2010. The Company does not expect that the adoption of SFAS No. 167 will have a material impact on its consolidated financial statements.

In June 2009, the FASB issued SFAS No. 166, “ Accounting for Transfer of Financial Assets – an amendment of FASB Statement ”. SFAS No. 166 removes the concept of a qualifying special-purpose entity from ASC 860-10, “ Transfers and Servicing ”, and removes the exception from applying ASC 810-10, “ Consolidation ”. These statements also clarifies the requirements for isolation and limitations on portions of financial assets that are eligible for sale accounting. SFAS No. 166, which is referenced in ASC 105-10-65, has not yet been adopted into the Codification and remains authoritative. This statement is effective 1 June 2010. The Company does not expect that the adoption of SFAS No. 166 will have a material impact on its consolidated financial statements.

Principle Security International, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements

(Expressed in U.S. Dollars)

(Unaudited)

30 November 2009

International Financial Reporting Standards

In November 2008, the Securities and Exchange Commission (“SEC”) issued for comment a proposed roadmap regarding potential use of financial statements prepared in accordance with International Financial Reporting Standards (“IFRS”) as issued by the International Accounting Standards Board. Under the proposed roadmap, the Company would be required to prepare consolidated financial statements in accordance with IFRS in fiscal year 2014, including comparative information also prepared under IFRS for fiscal 2013 and 2012. The Company is currently assessing the potential impact of IFRS on its consolidated financial statements and will continue to follow the proposed roadmap for future developments.

During the six month period ended 30 November 2009, the total additions of the Company to equipment were $Nil (30 November 2008 – $Nil).

Equipment

		Accumulated amortization		Net Book Value
	Cost	Accumulated amortization		30 November 2009	31 May 2009 (Audited)
	$		$	$	$

Computer equipment	2,086		1,281	805	1,057

During the six month period ended 30 November 2009, the total additions of the Company to equipment were $Nil (30 November 2008 – $Nil).

4.	Accounts Payable and Accrued Liabilities

Accounts payable and accrued liabilities are non-interest bearing, unsecured and have settlement dates within one year.

5.	Convertible Debentures

30 November 2009		31 May 2009 (Audited)
	$		$
Issued on 24 December 2008, the convertible debenture bears interest at 10% per annum on any unpaid principal and interest balance and is secured by a general charge on the assets of the Company. The principal amount is repayable at any time in whole or in part and accrued interest shall be due at the end of each calendar quarter, with the first payment due on the last day of the first calendar quarter after 24 December 2008. The holder of the convertible debenture has the right to convert any portion of the unpaid principal and/or accrued interest into common shares of the Company at any time up to 24 December 2011 at $0.0125 per Unit where a Unit consists of one common share for an equivalent amount of principal and interest due and payable. During the six month period ended 30 November 2009, the Company accrued interest expense of $264 (30 November 2008 – $Nil). The balance as at 30 November 2009 consists of principal and accrued interest of $5,000 (31 May 2009 – $5,000) and $480 (31 May 2009 – $216), respectively (Notes 10 and 11).	5,480		5,216
Issued on 24 December 2008, the convertible debenture bears interest at 10% per annum on any unpaid principal and interest balance and is secured by a general charge on the assets of the Company. The principal amount is repayable at any time in whole or in part and accrued interest shall be due at the end of each calendar quarter, with the first payment due on the last day of the first calendar quarter after 24 December 2008. The holder of the convertible debenture has the right to convert any portion of the unpaid principal and/or accrued interest into common shares of the Company at any time up to 24 December 2011 at $0.0125 per Unit where a Unit consists of one common share for an equivalent amount of principal and interest due and payable. During the six month period ended 30 November 2009, the Company accrued interest expense of $264(30 November 2008 – $Nil). The balance as at 30 November 2009 consists of principal and accrued interest of $5,000 (31 May 2009 – $5,000) and $480 (31 May 2009 – $216), respectively (Notes 10 and 11).	5,480		5,216
Issued on 5 March 2009, the convertible debenture bears interest at 10% per annum on any unpaid principal and interest balance and is secured by a general charge on the assets of the Company. The principal amount is repayable at any time in whole or in part and accrued interest shall be due at the end of each calendar quarter, with the first payment due on the last day of the first calendar quarter after 5 March 2009. The holder of the convertible debenture has the right to convert any portion of the unpaid principal and/or accrued interest into common shares of the Company at any time up to 5 March 2012 at $0.0125 per Unit where a Unit consists of one common share for an equivalent amount of principal and interest due and payable. During the six month period ended 30 November 2009, the Company accrued interest expense of $197 (30 November 2008 – $Nil). The balance as at 30 November 2009 consists of principal and accrued interest of $3,800 (31 May 2009 – $3,800) and $288 (31 May 2009 – $91), respectively (Notes 10 and 11).	4,088		3,891

	15,048		14,323

Principle Security International, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements

(Expressed in U.S. Dollars)

(Unaudited)

30 November 2009

6.	Demand Loan s

30 November 2009		31 May 2009 (Audited)
	$		$
Issued on 18 June 2009, the demand loan bears interest at 2% per annum on any unpaid principal and interest balance and is secured by a general charge on the assets of the Company. The principal amount is repayable at any time in whole or in part and accrued interest shall be due at the end of each calendar quarter, with the first payment due on the last day of the first calendar quarter after 30 June 2009. During the isx month period ended 30 November 2009, the Company accrued interest expense of $181 (30 November 2008 – $Nil). The balance as at 30 November 2009 consists of principal and accrued interest of $20,000 (31 May 2009 – $Nil) and $181 (31 May 2009 – $Nil), respectively (Notes 10 and 11).	20,181		-

I ssued on 15 September 2009, the demand loan bears interest at 2% per annum on any unpaid principal and interest balance and is secured by a general charge on the assets of the Company. The principal amount is repayable at any time in whole or in part and accrued interest shall be due at the end of each calendar quarter, with the first payment due on the last day of the first calendar quarter after 30 September 2009. During the six month period ended 30 November 2009, the Company accrued interest expense of $42 (30 November 2008 – $Nil). The balance as at 30 November 2009 consists of principal and accrued interest of $20,000 (31 May 2009 – $Nil) and $42 (31 May 2009 – $Nil), respectively (Notes 10 and 11).	10,042		-

Issued on 11 November 2009, the demand loan bears interest at 2% per annum on any unpaid principal and interest balance and is secured by a general charge on the assets of the Company. The principal amount is repayable at any time in whole or in part and accrued interest shall be due at the end of each calendar quarter, with the first payment due on the last day of the first calendar quarter after 30 November 2009. During the six month period ended 30 November 2009, the Company accrued interest expense of $12 (30 November 2008 – $Nil). The balance as at 30 November 2009 consists of principal and accrued interest of $16,000 (31 May 2009 – $Nil) and $12 (31 May 2009 – $Nil), respectively (Notes 10 and 11).	16,012		-

	46,235		-

7.	Due to Related Party and Related Party Transaction

As at 30 November 2009, the amount due to related party consists of a demand loan of $5,046 (31 May 2009 – $Nil) payable to a director and officer of the Company. The current amount was issued on 16 June 2009, the demand loan bears interest at 2% per annum on any unpaid principal and interest balance and is secured by a general charge on the assets of the Company. The principal amount is repayable at any time in whole or in part and accrued interest shall be due at the end of each calendar quarter, with the first payment due on the last day of the first calendar quarter after 30 June 2009. During the three month period ended 30 November 2009, the Company accrued interest expense of $25 (30 November 2008 – $Nil). The balance as at 30 November 2009 consists of principal and accrued interest of $5,000 (31 May 2009 – $Nil) and $46 (31 May 2009 – $Nil), respectively (Notes 10 and 11).

During the three month period ended 30 November 2009, a director and shareholder of the Company was paid consulting fees in the amount of $5,509 (30 November 2008 – $12,140).

Principle Security International, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements

(Expressed in U.S. Dollars)

(Unaudited)

30 November 2009

8.	Capital Stock

Authorized

The total authorized capital is 100,000,000 common shares with a par value of $0.00001 per common share and 100,000,000 preferred shares with a par value of $0.00001.

Issued and outstanding

The total issued and outstanding capital stock is 21,295,006 common shares with a par value of $0.00001 per common share.

The common stock is not subject to warrants, agreements or options at 30 November 2009.

Effective 5 October 2009, the Company completed a 2.5 to 1 forward stock split and increased the issued and oustanding share capital from 8,518,000 common shares to 21, 295,006 common shares with the same par value of $0.00001. Unless otherwise noted, all references herein to number of shares, price per share or weighted average number of shares outstanding have been adjusted to reflect this stock split on a retroactive basis (Note 1).

During the year ended 31 May 2007, the Company issued 21,295,006 common shares for cash proceeds of $78,700.

During the year ended 31 May 2009, a director and shareholder of the Company made contributions to capital for consulting fees in the amount of $10,909.

During year ended 31 May 2009, a director and shareholder of the Company forgave loans to the Company totaling $35,020. This loan forgiveness was recorded as contributions to capital of the Company.

9.	Income Taxes

The Company has losses carried forward for income tax purposes to 30 November 2009. There are no current or deferred tax expenses for the three months ended 30 November 2009 due to the Company’s loss position. The Company has fully reserved for any benefits of these losses. The deferred tax consequences of temporary differences in reporting items for financial statement and income tax purposes are recognized, as appropriate. Realization of the future tax benefits related to the deferred tax assets is dependent on many factors, including the Company’s ability to generate taxable income within the net operating loss carryforward period. Management has considered these factors in reaching its conclusion as to the valuation allowance for financial reporting purposes.

The provision for refundable federal income tax consists of the following:

	For the six month period ended 30 November 2009	For the six month period ended 30 November 2008
	$	$

Deferred tax asset attributable to:
Current operations	8,041	9,987
Less: Change in valuation allowance	(8,041)	(9,987)

Net refundable amount	-	-

Principle Security International, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements

(Expressed in U.S. Dollars)

(Unaudited)

30 November 2009

The composition of the Company’s deferred tax assets as at 30 November 2009 and 31 May 2009 are as follows:

	30 November 2009	31 May 2009 (Audited)
	$	$

Net income tax operating loss carryforward	143,770	113,624

Statutory federal income tax rate	15%-30.67%	15%-30.67%

Deferred tax asset	41,443	33,087
Less: Valuation allowance	(41,443)	(33,087)

Net deferred tax asset	-	-

The potential income tax benefit of these losses has been offset by a full valuation allowance.

As at 30 November 2009, the Company has an unused net operating loss carry-forward balance of approximately $143,770 that is available to offset future taxable income. This unused net operating loss carry-forward balance expires in 2030.

10.	Supplemental Disclosures with Respect to Cash Flows

	For the period from the date of inception on 27 November 2006 to 30 November 2009		For the three month period ended 30 November 2009	For the three month period ended 30 November 2008	For the six month period ended 30 November 2009	For the six month period ended 30 November 2008
		$	$	$	$	$
Cash paid during the period for interest
Cash paid during the period for income taxes		-	-	-	-	-
Foreign exchange loss		5,475	2,221	1,566	4,137	1,759

During the six month period ended 30 November 2009, the Company accrued total interest expense of $1,006 related to various convertible debentures, demand loan and balance due to related party (Notes 5, 6 and 7).

11.	Contingency

The Company is in default of certain terms related to the convertible debentures, demand loans and due to related party agreements and is in the process of renegotiating them (Notes 5, 6 and 7).

12.	Subsequent Events

There are no subsequent events from the date of the period ended 30 November 2009 to the date the consolidated financial statements were available to be issued on 12 February 2010.

Principle Security International, Inc.

(A Development Stage Company)

Notes to Consolidated Financial Statements

(Expressed in U.S. Dollars)

(Unaudited)

30 November 2009

13.	Restatement of Consolidated Financial Statements

The Company’s consolidated financial statements for the six month period ended 30 November 2009 have been restated to reflect a 2.5 to 1 forward stock split enacted by the Company on 5 October 2009. The issued and outstanding share capital increased from 8,518,000 common shares to 21,295,006 common shares with the same par value of $0.00001. Unless otherwise noted, all references herein to number of shares, price per share or weighted average number of shares outstanding have been adjusted to reflect this stock split on retroactive basis.

This has also resulted in an increase to capital stock and a decrease to additional paid in capital of $128.

ITEM 2.

MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS

Our consolidated interim financial statements are stated in United States Dollars (US$) and are prepared in accordance with United States Generally Accepted Accounting Principles. In this quarterly report, unless otherwise specified, all dollar amounts are expressed in United States dollars. All references to “common shares” refer to our common stock.

As used in this quarterly report, the terms “we”, “us”, “our”, the “Company” and “PSI” means Principle Security International, Inc., unless otherwise indicated.

General

We were incorporated in the State of Nevada on November 27, 2006. On November 29, 2006 we incorporated our wholly-owned subsidiary in Canada to conduct our business operations in the Greater Vancouver area.

We are a development stage company. Through our wholly-owned Canadian subsidiary, Principle Security International Incorporated, we are working towards the establishment of a customer service oriented security firm specializing in uniformed guard services, private investigations and a training facility for security personnel. We have not yet generated or realized any revenues from our business operations.

Since inception, we have been implementing the early phases of our business plans, including the establishment of our office, making application for our security business license, making application and scouting locations for our accredited security training facility, making application for our surety bond, registering the URL address necessary to create our website, building a database of potential clients, commencing interviews to hire a salesperson, designing our corporate logos/badges and ordering uniforms.

On December 15, 2006, we obtained our surety bond in the amount of $5,000 Cdn., as required by the Private Investigators and Security Agencies Act. This bond enabled us to make application for a security business license. On January 3, 2007, we were granted our security business license. This license has been renewed and is now valid until February 3, 2010. The license enables us to carry on a business in the categories of “private investigator” and “security patrol”. We have established our office and continue to lease office space on a month-to-month basis at a cost of $500 Cdn. per month from a non-related third party. T o manage operating costs until the Company can raise additional funds or start generating revenues the lessee has agreed to release the Company from amounts owed for unpaid rent for the month of November and to suspend monthly lease charges until further notice. We have initiated work on our basic web page under the URL address www.principlesecurity.ca.

On September 8, 2008 we received a two-year approval to operate a security training school under the name “Principle Security Training Academy”.

We have made application to our suppliers and completed the design of our corporate logo and uniforms. We underwent a standard inspection by the Ministry of the Attorney General of Canada working under Security Programs and we passed the inspection.

Our auditors have issued us a going concern opinion, which means there is substantial doubt that we can continue as an on-going business for the next twelve months unless we obtain additional capital to pay our bills and continue our operations. This is because we have not generated any revenues and no revenues are anticipated until we begin to implement our business plan and begin to provide our security guard services. Accordingly, we must raise cash from sources other than the sale of our services. Our only other source for cash at this time is investment by others. We intend to continue to try to raise the additional funds we will need to fully implement our business plans from public or private placement offerings of our securities and/or through loans. At the present time, we have not made any plans to raise additional monies and there is no assurance that we will be able to do so in the future. If financing is not available on satisfactory terms, we may be unable to continue, develop or expand our business plans.

We have not generated any revenues as we have not yet been able to secure a contract. Our officers and directors have been building a database of potential clients and will be maintaining the database on an ongoing basis. They have been actively contacting a number of businesses in hopes of securing a contract, but have not yet done so to date.

On October 5, 2009, we completed a 2.5 to 1 forward stock split, which increased the number of issued and outstanding shares of common stock from 8,518,000 common shares to 21, 295,006 shares, with the same par value of $0.00001. The forward stock split did not increase the authorized capital stock of the company.

Since inception, we have issued 21,295,006 shares of common stock via private placement sales of our restricted common stock for cash proceeds of $78,700, all of which is being used to develop and grow our business operations. On November 28, 2006, we issued 6,250,002 shares of common stock through a private placement pursuant to Reg. S of the Securities Act of 1933 to our sole officer and director, Mr. Charles Payne, in consideration of $2,500 in cash. On February 23, 2007, we completed a private placement of 14,500,002 shares of common stock pursuant to Reg. S of the Securities Act of 1933 and raised $43,500 in cash. On May 8, 2007, we completed an additional private placement of 545,002 shares of common stock pursuant to Reg. S of the Securities Act of 1933 and raised $32,700 in cash. All of these transactions closed outside the US and were sold to non-US persons.

Results of Operations

Our total net losses since inception on November 27, 2006 to November 30, 2009 are $178,790.

Three months ended November 30, 2009 as compared to the three months ended November 30, 2008

We incurred net losses of $18,088, or $0.001 per share , for the three-month period ended November 30, 2009, as compared to net losses of $18,084, or $0.001 per share , for the three-month period ended November 30, 2008, which reflected a very small increase. Our expenses for the three months ended November 30, 2009 consisted of the following: consulting fees ($4,160 - 2009 compared to $9,709- 2008), professional fees ($6,968 - 2009 compared to $3,589 - 2008), transfer agent and filing fees ($1,923 - 2009 compared to $982 - 2008), amortization ($153 - 2009 compared to $97- 2008), legal fees ($3 - 2009 compared to $875 - 2008), interest expense ($544 - 2009 compared to $Nil - 2008), office and miscellaneous ($2,058 - 2009 compared to $1,229 - 2008), loss on foreign currency exchange ($2,221 - 2009 compared to $1,566 - 2008) and bank service charges ($58 - 2009 compared to $37 - 2008).

Six months ended November 30, 2009 as compared to the six months ended November 30, 2008

We incurred net losses of $29,117, or $0.001 per share , for the six-month period ended November 30, 2009, as compared to net losses of $34,431, or $0.002 per share , for the six-month period ended November 30, 2008. The decrease was mainly attributed to a reduction in consulting fees ($5,509 - 2009 compared to $12,140 - 2008, cumulative - $52,939). Our other expenses for the six-month period ended November 30, 2009 consisted of the following: professional fees ($10,413 - 2009 compared to $12,658 - 2008, cumulative - $55,115); transfer agent and filing fees ($4,216 - 2009 compared to $1,297 - 2008, cumulative - $13,339); legal fees ($471 - 2009 compared to $1,392 - 2008, cumulative - $23,523); interest expense ($1,006 - 2009 compared to $Nil - 2008, cumulative - $1,529); office and miscellaneous ($2,980 - 2009 compared to $4,878 - 2008, cumulative - $24,388); loss on foreign currency exchange ($4,137 - 2009 compared to $1,759- 2008, cumulative - $5,475); amortization ($252 - 2009 compared to $194 - 2008, cumulative - $1,281); and bank service charges ($133 - 2009 compared to $194 - 2008, cumulative - $1,045).

We are not a party to any off-balance sheet arrangements that have, or are reasonably likely to have, a current or future material effect on our financial condition, changes in financial condition, sales or expenses, results of operations, liquidity, capital expenditures or capital resources. We are not aware of any trends or events that would materially affect our capital requirements or liquidity. We believe that our and internal cash generating capabilities will be sufficient to finance our ongoing capital expenditures and other operating activities through fiscal 2010.

Liquidity and Capital Resources

At November 30, 2009 and as of the date of this filing, we have not generated any revenues from our business activities.

At November 30, 2009, we had total assets of $15,993, consisting of $14,500 in cash and cash equivalents; $688 in goods and services tax recoverable; and $805 in equipment, net of depreciation.

On December 24, 2008, we issued a convertible debenture in exchange for $5,000 in cash. The convertible debenture bears interest at a rate of 10% per annum on any unpaid principal and interest balance, is secured by the assets of the Company and accrued interest is due and payable at the end of each calendar quarter, with the first payment due on the last day of the first calendar quarter after December 24, 2008. The principal amount is repayable at any time in whole or in part. The holder of the convertible debenture has the right to convert any portion of the unpaid principal and/or accrued interest into shares of our common stock at any time within thirty-six (36) months from December 24, 2008 on the basis of $0.0125 per Unit, where a Unit consists of one share of common stock for an equivalent amount of principal and interest due and payable. During the three month period ended November 30, 2009, we accrued interest expense on this convertible debenture in the amount of $133. The balance due at November 30, 2009 consists of principal and accrued interest of $5,000 and $480, respectively.

On December 24, 2008, we issued a second convertible debenture in exchange for $5,000 in cash. The convertible debenture bears interest at a rate of 10% per annum on any unpaid principal and interest balance, is secured by the assets of the Company and all principal and accrued interest is due and payable at the end of each calendar quarter, with the first payment due on on the last day of the first calendar quarter after December 24, 2008. The principal amount is repayable at any time in whole or in part. The holder of the convertible debenture has the right to convert any portion of the unpaid principal and/or accrued interest into shares of our common stock at any time within thirty-six (36) months from December 24, 2008 on the basis of $0.0125 per Unit, where a Unit consists of one share of common stock for an equivalent amount of principal and interest due and payable. During the three month period ended November 30, 2009, we accrued interest expense on this convertible debenture in the amount of $133. The balance due at November 30, 2009 consists of principal and accrued interest of $5,000 and $480, respectively.

On March 5, 2009, we issued a convertible debenture in exchange for $3,800 in cash. The convertible debenture bears interest at a rate of 10% per annum on any unpaid principal and interest balance, is secured by the assets of the Company and all principal and accrued interest is due and payable at the end of each calendar quarter, with the first payment due on on the last day of the first calendar quarter after March 5, 2009. The principal amount is repayable at any time in whole or in part. The holder of the convertible debenture has the right to convert any portion of the unpaid principal and/or accrued interest into shares of our common stock at any time within thirty-six (36) months from March 5, 2009 on the basis of $0.0125 per Unit, where a Unit consists of one share of common stock for an equivalent amount of principal and interest due and payable. During the three month period ended November 30, 2009, we accrued interest expense on this convertible debenture in the amount of $99. The balance due at November 30, 2009 consists of principal and accrued interest of $3,800 and $288, respectively.

On June 18, 2009, we entered into a demand loan with an unrelated third party. The demand loan bears interest at the rate of 2% per annum on any unpaid principal and interest balance and is secured by a general charge on the assets of the Company. The principal amount is repayable at any time in whole or in part and accrued interest shall be due at the end of each calendar quarter, with the first payment due on the last day of the first calendar quarter after June 30, 2009. During the three month period ended November 30, 2009, the Company accrued interest expense of $100 on the demand loan. The balance due at November 30, 2009 consists of principal and accrued interest of $20,000 and $181, respectively.

On September 14, 2009, we entered into a demand loan with an unrelated third party. The demand loan bears interest at the rate of 2% per annum on any unpaid principal and interest balance and is secured by a general charge on the assets of the Company. The principal amount is repayable at any time in whole or in part and accrued interest shall be due at the end of each calendar quarter, with the first payment due on the last day of the first calendar quarter after September 30, 2009. During the three month period ended November 30, 2009, the Company accrued interest expense of $42 on the demand loan. The balance due at November 30, 2009 consists of principal and accrued interest of $20,000 and $42, respectively.

On November 16, 2009, we entered into a demand loan with an unrelated third party. The demand loan bears interest at the rate of 2% per annum on any unpaid principal and interest balance and is secured by a general charge on the assets of the Company. The principal amount is repayable at any time in whole or in part and accrued interest shall be due at maturity, calculated at May 31st of each year. During the three month period ended November 30, 2009, the Company accrued interest expense of $12 on the demand loan. The balance due at November 30, 2009 consists of principal and accrued interest of $16,000 and $12, respectively.

At November 30, 2009, the amount due to Charles Payne, an officer and director and a related party, consists of a demand loan in the amount of $5,046. A demand loan was entered into for current amount due on June 16, 2009. The demand loan bears interest at 2% per annum on any unpaid principal and interest balance and is secured by a general charge on the assets of the Company. The principal amount is repayable at any time in whole or in part and accrued interest shall be due at maturity, as calculated at May 31 of each year. During the three month period ended November 30, 2009, the Company accrued interest expense of $25 on the demand loan. The balance due as at November 30, 2009 consists of principal and accrued interest in the amount of $5,000 and $46, respectively.

During the three month period ended November 30, 2009, Charles Payne, an officer, director and shareholder of the Company was paid consulting fees in the amount of $5,509, compared to consulting fees in the amount of $12,140 paid during the three month period ended November 30, 2008.

At November 30, 2009, our total liabilities were $70,154, consisting of accounts payable and accrued liabilities in the amount of $3,825, convertible debentures payable in the amount of $15,048, demand loans payable in the amount of $46,235 and amounts due to related party in the amount of $5,046.

We have not issued and do not have any outstanding stock options or warrants.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES OF MARKET RISK

We are a non-accelerated filer and a smaller reporting company, as defined in Rule 12b-2 of the of the Securities Exchange Act of 1934, and as such, are not required to provide the information under this item.

ITEM 4. CONTROLS AND PROCEDURES

Evaluation of Disclosure Controls and Procedures

We maintain “disclosure controls and procedures,” as such term is defined in Rule 13a-15(e) under the Securities Exchange Act of 1934 (the “Exchange Act”), that are designed to ensure that information required to be disclosed in our Exchange Act reports is recorded, processed, summarized and reported within the time periods specified in the Securities and Exchange Commission rules and forms, and that such information is accumulated and communicated to our management, including our Chief Executive Officer and Chief Financial Officer, as appropriate, to allow timely decisions regarding required disclosure.

We conducted an evaluation (the “Evaluation”), under the supervision and with the participation of our Chief Executive Officer (“CEO”) and Chief Financial Officer (“CFO”), of the effectiveness of the design and operation of our disclosure controls and procedures (“Disclosure Controls”) as of the end of the period covered by this report pursuant to Rule 13a-15 of the Exchange Act. Based on this Evaluation, our CEO and CFO concluded that our Disclosure Controls were effective as of the end of the period covered by this report.

Additionally, there were no significant changes in our internal controls or in other factors that could significantly affect theses controls subsequent to the evaluation date. We have not identified any significant deficiencies or material weaknesses in our internal controls, and therefore there were no corrective actions taken.

PART II. OTHER INFORMATION

ITEM 1. LEGAL PROCEEDINGS

We are not currently a party to any pending legal proceeding.

ITEM 2. UNREGISTERED SALES OF EQUITY SECURITIES AND USE OF PROCEEDS

None. 
 
ITEM 3. DEFAULT UPON SENIOR SECURITIES
 
None.
 


ITEM 4. SUBMISSION OF MATTERS TO A VOTE OF SECURITY HOLDERS
 
 On October 5, 2009, upon approval of the holders of the majority of our issued and outstanding common stock, we completed a 2.5 to 1 forward stock split, which increased the 
 number of issued and outstanding shares of common stock from 8,518,000 common shares to 21,295,006 shares, with the same par value of $0.00001. The forward stock split did 
 not increase the authorized capital stock of the Company. 
 

  
 
23


 
 
  
 


 

 
ITEM 5. OTHER INFORMATION AND SUBSEQUENT EVENTS
 
None. 



 
ITEM 6. EXHIBITS

Exhibit No.	Document Description

31.1	Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 302 of the Sarbanes-Oxley Act of 2002

32.1	Certification of Principal Executive Officer and Principal Financial Officer pursuant to 18 U.S.C. Section 1350, as adopted pursuant to Section 906 of the Sarbanes-Oxley Act of 2002

All other exhibits required to be filed with this quarterly report on Form 10-Q are incorporated by this reference and can be found in their entirety as exhibits to our original registration statement on Form SB-2, filed with the U.S. Securities and Exchange Commission on August 27, 2007, under our SEC File Number 333-145730 on their website at www.sec.gov.

SIGNATURES

In accordance with Section 13 or 15 (d) of the Exchange Act, the registrant caused this report to be signed on behalf by the undersigned, thereto duly authorized on this 12th day of April, 2010.

	PRINCIPLE SECURITY INTERNATIONAL, INC.
	(Registrant)

	/s/	CHARLES PAYNE
	By:	Charles Payne
		President, Principal Executive Officer, Principal Accounting Officer, Principal Financial Officer, Treasurer, Chairman of the Board of Directors

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