form10q.htm

Check whether the Issuer: (1) has filed all reports required to be filed by Section 13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12 months (or for such shorter period that the registrant was required to file such reports), and (2) has been subject to such filing requirements for the past 30 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 definition of accelerated filer and large accelerated filer in Rule 12b-12 of the Exchange Act (Check one)

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 No X

Indicate the number of shares outstanding of each of the issuer’s classes of common stock, as of the close of the period covered by this report: 25,782,433 Shares of Common Stock (no par value).

PART I: FINANCIAL INFORMATION	Page

Item 1 - Financial Statements	5

Consolidated Balance Sheets, March 31, 2008 (unaudited) and December 31, 2007 (audited)	5-6

Consolidated Statements of Operations and Retained Earnings	7

Consolidated Statement of Cash Flows for the Three Months ended March 31, 2008 and March 31, 2007	8

Notes to Consolidated Financial Statements	9-16

Item 2 - Management’s discussion and analysis of financial condition and results of operations	17

Item 3 - Controls and Procedures	18

PART II: OTHER INFORMATION	18

Item 1 - Legal Proceedings	18

Item 2 - Changes in Securities	18

Item 3 - Defaults Upon Senior Securities	18

Item 4 - Submission of Matters to a Vote of Security Holders	18

Item 5 - Other Information	18

Iten 6 - Exhibits	18

Signature	19

NOTE CONCERNING FORWARD-LOOKING STATEMENTS

LAW ENFORCEMENT ASSOCIATES CORPORATION

Consolidated Balance Sheets

March 31, 2008 and December 31, 2007


	2008		2007
Assets	(Unaudited)		(Audited)
Current assets:
Cash	$	48,229	$	325,244
Trade accounts receivable (net of allowance for doubtful
accounts of $20,000 and $33,205 at March 31, 2008
and December 31, 2007, respectively)		1,204,622		713,067
Inventories		1,591,211		1,256,346
Prepaid expenses		31,740		19,083
Prepaid insurance		43,832		19,104
Deferred tax asset-current		757,943		769,338

Total current assets		3,677,577		3,102,182

Property and equipment, net		250,765		257,025

Other assets:
Intangibles, net		2,826,892		2,883,542
Deferred tax asset less current portion		296,147		296,147
Total other assets		3,123,039		3,179,689




Total assets	$	7,051,381	$	6,538,896

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

LAW ENFORCEMENT ASSOCIATES CORPORATION

Consolidated Balance Sheets

March 31, 2008 and December 31, 2007


	2008			2007
Liabilities and Stockholders' Equity	(Unaudited)			(Audited)
Current liabilities:
Trade accounts payable	$	685,393		$	593,515
Line of credit		525,000			200,000
Accrued expenses:
Compensation and payroll taxes		93,298			120,304
Profit sharing plan		80,422			61,796
Warranty provision		54,591			59,911
Professional fees		112,250			92,862
Customer deposits		70,307			24,533
Total current liabilities		1,621,261			1,152,921

Total liabilities		1,621,261			1,152,921

Common stock, subject to possible redemption		1,363,721			1,338,170
1,200,000 shares, at redemption value

Stockholders' equity:
Common stock, $0.001 par value, 50,000,000 authorized,
25,782,433 issued and outstanding at March 31, 2008
and December 31, 2007		25,782			25,782
Treasury stock at cost, 595 shares of common stock held by
the Company		(625	)		(625	)
Paid in capital in excess of par		4,995,595			4,995,595
Retained earnings/(accumulated deficit)		(954,353	)		(972,947	)
Total stockholders' equity		4,066,399			4,047,805

Total liabilities and stockholders' equity	$	7,051,381		$	6,538,896

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

LAW ENFORCEMENT ASSOCIATES CORPORATION

Consolidated Statements of Operations and Retained Earnings

for the three months ended March 31, 2008 and 2007


	2008			2007
	(Unaudited)			(Unaudited)

Net sales	$	1,979,659		$	1,765,054

Cost of sales		1,172,651			989,862

Gross profit		807,008			775,192

Research and development		9,204			24,072
Operating expenses		744,306			679,756

Total operating expenses		753,510			703,828

Net income before other income (expense) and provision for
income taxes		53,498			71,364

Other income (expense):
Other income		6,606			0
Interest income		1,012			0
Interest expense		(5,575	)		(372	)
Interest accretion		(25,551	)		0

Total other income (expense)		(23,508	)		(372	)

Net income before provision for income taxes		29,990			70,992

Provision for income taxes		11,396			16,089

Net income		18,594			54,903

Retained earnings/(accumulated deficit) beginning of period		(972,947	)		58,091

Retained earnings/(accumulated deficit) end of period	$	(954,353	)	$	112,994

Net income per weighted average share, basic	$	0.00		$	0.00

Weighted average number of shares		25,782,433			25,252,433

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

LAW ENFORCEMENT ASSOCIATES CORPORATION

Consolidated Statements of Cash Flows

for the three months ended March 31, 2008 and 2007


	2008			2007
	(Unaudited)			(Unaudited)
Cash flows from operating activities
Net income	$	18,594		$	54,903
Adjustments to reconcile net income to net cash provided
by operations:
Depreciation and amortization		76,089			60,494
Put option discount expense		25,551			0
Deferred taxes		11,396			16,091
(Increase) decrease in assets:
Trade accounts receivable		(491,555	)		324,688
Inventories		(334,865	)		(129,219	)
Refundable income taxes		0			10,070
Prepaid insurance and other assets		(37,385	)		(24,073	)
Increase (decrease) in liabilities:
Accounts payable and accrued expenses		97,566			(56,765	)
Customer deposits		45,774			(35,285	)
Net cash provided (used) by operating activities		(588,835	)		220,904

Cash flows from investing activities:
Payments for deferred charges		0			372
Capital expenditures		(13,180	)		(23,270	)
Net cash provided (used) in investing activities		(13,180	)		(22,898	)

Cash flows financing activities:
Net borrowings under line of credit agreement		325,000			0
Payments on long-term debt		0			(30,000	)
Net cash provided (used) in financing activities		325,000			(30,000	)
Net increase (decrease) in cash		(277,015	)		168,006
Cash at beginning of the period		325,244			452,124
Cash at end of the period	$	48,229		$	620,130

Supplemental disclosure of cash flow information:
Cash paid for interest expense	$	5,575		$	372
Cash paid for income taxes	$	0			0

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

LAW ENFORCEMENT ASSOCIATES CORPORATION

Notes to Consolidated Financial Statements

March 31, 2008 and December 31, 2007

1. SIGNIFICANT ACCOUNTING POLICIES

Basis of Presentation

The unaudited consolidated financial statements have been prepared in accordance with generally accepted accounting principles for interim financial information. As such, the financial statements do not include all of the information and footnotes required by generally accepted accounting principles for complete financial statements. In the opinion of management, all adjustments considered necessary for a fair presentation have been included and these adjustments are of a normal recurring nature. These consolidated financial statements should be read in conjunction with the financial statements for the year ended on December 31, 2007 on Form 10-KSB of Law Enforcement Associates Corporation as filed with the Securities and Exchange Commission. The results of operations for the three months ended March 31, 2008 are not necessarily indicative of the results for the full fiscal year ending December 30, 2008.

Organization and Operations

Law Enforcement Associates Corporation (originally Academy Resources, Inc.) was formed on December 3, 2001 when the Company acquired all the outstanding stock of Law Enforcement Associates, Inc., a New Jersey company, incorporated in 1972, doing business in North Carolina.

The operations of the Company consist of manufacturing and providing surveillance and intelligence gathering products and vehicle inspection equipment. Products are used by law enforcement agencies, the military, security and correctional organizations.

Principles of Consolidation

The consolidated financial statements include the accounts of Law Enforcement Associates Corporation and its wholly-owned subsidiaries Law Enforcement Associates, Inc. and Law Enforcement Associates Holding Company, Inc. All intercompany transactions have been eliminated in consolidation. The consolidated statements have been prepared on the accrual basis of accounting in accordance with generally accepted accounting principles in the United States of America. Management of the Company has determined that the Company’s operations are comprised of one reportable segment as that term is defined in SFAS No.131. Therefore, no separate segment disclosures have been included in the accompanying notes to the consolidated financial statements.

Fair Value of Financial Instruments

The Company’s financial instruments include cash, accounts receivable and accounts payable. Due to the short-term nature of these instruments, the fair value of these instruments approximates their recorded value.

Trade Accounts Receivable

Trade accounts receivable are carried at their estimated collectible amount. Trade credit is generally extended on a short-term basis; thus, trade receivables do not bear interest. The Company reports trade accounts receivable net of an allowance for doubtful accounts equal to the estimated losses to be incurred. Estimated losses are based on actual collection experience and management’s evaluation of the current status of existing trade receivables.

Inventories

Inventories are stated at the lower of cost or market on the first-in, first-out basis. Provisions are made to reduce potentially excess, obsolete or slow-moving inventories to their net realizable value. Costs associated with shipping and handling of inventory are included in inventory cost and charged to cost of sales when inventory is shipped.

LAW ENFORCEMENT ASSOCIATES CORPORATION

Notes to Consolidated Financial Statements

March 31, 2008 and December 31, 2007

1. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Inventories (Continued)

Inventories consist of the following at March 31, 2008 and December 31, 2007:

		March 31, 2008		December 31, 2007
Raw Materials	$	668,585	$	625,247
Work-in-process		164,429		90,098
Finished goods		758,197		541,001
	$	1,591,211	$	1,256,346

Revenue Recognition

The Company recognizes revenues when persuasive evidence of an arrangement exists, delivery has occurred or services have been rendered, title has transferred, the price is fixed and collection is reasonably assured. All of the Company’s sales are final and customers do not have a right to return the product. Most customers are charged shipping fees, which are recorded as a component of net sales. Training revenue is recorded as the service is provided.

Income Taxes

Deferred income taxes are provided on a liability method whereby deferred tax assets are recognized for deductible temporary differences and operating loss and tax credit carry forwards and deferred tax liabilities are recognized for taxable temporary differences. Temporary differences are the differences between the reported amounts of assets and liabilities and their tax bases. Deferred tax assets are reduced by a valuation allowance when, in the opinion of management, it is more likely than not that some portion or all of the deferred tax assets will not be realized. Deferred tax assets and liabilities are adjusted for the effects of changes in tax laws and rates on the date of enactment.

Net Income Per Share

Basic earnings per share is computed by dividing the Company’s consolidated net income by the weighted-average number of shares of common stock and common stock equivalents (primarily outstanding options and warrants). Common stock equivalents represent the dilutive effect of the assumed exercise of the outstanding stock options and warrants, using the treasury stock method. There are no common stock equivalents for the Company at March 31, 2008.

LAW ENFORCEMENT ASSOCIATES CORPORATION

Notes to Consolidated Financial Statements

March 31, 2008 and December 31, 2007

1. SIGNIFICANT ACCOUNTING POLICIES (Continued)

Product Warranty

The Company provides a provision for estimated warranty repairs. The accrued warranty provision was $54,591 and $59,911 at March 31, 2008 and December 31, 2007, respectively.

Advertising

The Company expenses the production costs of advertising as incurred, except for direct-response advertising, which is capitalized and amortized over its expected period of future benefits within the calendar year. During the three months ended March 31, 2008 and 2007, advertising costs were $16,032 and $10,442, respectively. All advertising costs are included in operating expenses in the accompanying consolidated statements of operations.

Research and Development

The Company expenses research and development costs as incurred. The Company incurred product development expense of $9,204 and $24,072 for the three months ended March 31, 2008 and 2007, respectively.

Use of Estimates

The preparation of financial statements in conformity with generally accepted accounting principles in the United States of America requires management to make estimates and assumptions that affect the reported amounts of assets and liabilities, the disclosure of contingent assets and liabilities at the date of the consolidated financial statements, and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates.

2. PROPERTY AND EQUIPMENT

Property and equipment are recorded at cost. Expenditures for major additions and improvements are capitalized and minor replacements, maintenance, and repairs are charged to expense as incurred. When property and equipment are retired or otherwise disposed of, the cost and accumulated depreciation are removed from the accounts and any resulting gain or loss is included in the results of operations for the respective periods. Depreciation is computed over the estimated useful lives of the related assets using the straight-line methods for financial statement purposes.

LAW ENFORCEMENT ASSOCIATES CORPORATION

Notes to Consolidated Financial Statements

March 31, 2008 and December 31, 2007

2. PROPERTY AND EQUIPMENT (Continued)

The following is a summary of property and equipment, at March 31, 2008 and December 31, 2007:

		March 31,		December 31,
	Useful Life	2008		2007
Office furniture & equipment	5 to 7 years	$	112,576	$	107,623
Leasehold improvements	7 years		6,727		5,139
Vehicles	3 to 5 years		101,129		101,129
Machinery & equipment	5 to 7 years		460,532		459,032
			680,964		672,922
Less accumulated depreciation			430,199		415,898
		$	250,765	$	257,025

Depreciation expense for the three months ended March 31, 2008 and 2007 was $19,440 and $19,281, respectively.

3. INCOME TAXES

In accordance with SFAS 109, deferred income taxes and benefits are provided for the results of operations of the Company. The tax effects of temporary differences and carry-forwards that give rise to significant portion of deferred tax assets and liabilities.

On January 15, 2008, Raymond James Financial, Inc. through its subsidiary, Sirchie Acquisition Company, LLC, acquired 51% interest (13,149,334 shares) in Law Enforcement Associates from Sirchie Finger Print Laboratories, Inc. and John Carrington. Based on the change in ownership, the Company’s net operating loss carry forward may be subject to certain limitations in any one year.

Current tax expense is the only component present in the provision for income taxes in the accompanying statement of operations. A reconciliation of the statutory federal income tax rate and effective rate is as follows at March 31:

	2008		2007

Statutory federal income tax rate		34%	34%
State income tax - net of federal benefit		3%	3%
Other		1%	4%
Effective tax rate		38%	41%

The Company adopted the provisions of FASB Interpretation No. 48, Accounting for Uncertainty in Income Taxes: An Interpretation of FASB Statement No. 109 (“FIN No. 48”), on January 1, 2007. This interpretation clarifies the accounting for uncertainty in income taxes recognized in an entity’s financial statements in accordance with SFAS No. 109. FIN No. 48 prescribes a recognition threshold and measurement principles for the financial statement recognition and measurement of tax positions taken or expected to be taken on a tax return. The Company reviewed its tax positions and determined that no adjustment was needed upon adoption of FIN No. 48.

LAW ENFORCEMENT ASSOCIATES CORPORATION

Notes to Consolidated Financial Statements

March 31, 2008 and December 31, 2007

4. LEASE COMMITMENTS

Facility

The Company leased its office and manufacturing facility from Sirchie Finger Print Laboratories, Inc. Rent expense incurred under this lease for the quarters ended March 31, 2008 and 2007 was $32,237 and $42,850, respectively. This lease was terminated during the 1st quarter of 2008.

On December 15, 2007, the Company entered into a lease with Zabarsky Investments Ltd. L.P. We currently lease approximately 6,000 square feet of space for our recently acquired van division at approximately $4,750 per month. The lease term is 60 months. Rent expense incurred under this lease for the quarter ended March 31, 2008 was $14,250.

Effective March 2008, the Company moved its headquarters from the Youngsville facility and entered into a lease with Zabarsky Investments Ltd. L.P. We currently lease approximately 10,000 square feet of space for our new Raleigh, North Carolina headquarters at approximately $7,900 per month. The lease term is 60 months. Rent expense incurred under this lease for the quarter ended March 31, 2008 was $15,833.

The following is a schedule by years of future minimum rental payments required under operating leases that have initial or remaining noncancelable lease terms in excess of one year as of March 31, 2008:

Quarter ending March 31:

Remainder of 2008	$	114,000

2009		152,000
2010		152,000
2011		152,000
2012		147,250
Later years		7,917

Total minimum payments required	$	725,167

LAW ENFORCEMENT ASSOCIATES CORPORATION

Notes to Consolidated Financial Statements

March 31, 2008 and December 31, 2007

5. CONCENTRATION OF RISK

For the three months ended March 31, 2008 and 2007, sales to one customer accounted for 33% and 36% of total sales, respectively.

6. INTANGIBLE ASSETS

Patent costs include the acquired costs of obtaining patents. Costs for patents are capitalized and amortized over the estimated useful life of the patents, usually 15 years, using the straight-line method. In the event a patent is superseded, the unamortized cost will be written off immediately. Trade names and drawings/designs are tested at least annually for impairment under SFAS No. 144, “Accounting for the Impairment or Disposal of Long-Lived Assets”. The Company has determined that no impairment exists on the trade name and drawings/designs based on the undiscounted future cash flows generated by these assets.

Intangible assets consist of the following at March 31, 2008 and December 31, 2007:

		March 31,		December 31,
	Estimated Life	2008		2007
Patents	15 years	$	747,961	$	747,961
Trade name	25 years		1,400,000		1,400,000
Drawings/designs	10 years		411,000		411,000
AVS Marketing List	12 years		470,000		470,000
AVS Engineered Drawings	15 years		230,000		230,000
AVS Trade Name	15 years		190,000		190,000
			3,448,961		3,448,961
Less accumulated amortization			622,069		565,419
Total intangibles, net		$	2,826,892	$	2,883,542

Amortization expense for the quarters ended March 31, 2008 and 2007 was $56,649 and $41,213, respectively. Estimated future amortization expense is as follows at March 31, 2008:

Year	Amount
Remainder of 2008	$	169,948
2009		226,597
2010		226,597
2011		226,597
2012		226,597
Future Years		1,750,558
	$	2,826,892

LAW ENFORCEMENT ASSOCIATES CORPORATION

Notes to Consolidated Financial Statements

March 31, 2008 and December 31, 2007

7. LINE OF CREDIT

The Company has a $750,000 line of credit with a bank, which bears interest at LIBOR (2.70% and 4.60% at March 31, 2008 and December 31, 2007, respectively) plus 3%. Substantially all the assets of the Company are pledged to secure the line. The line requires maintenance of a minimum net worth of $3.5 million and matures in June 2008. At March 31, 2008 and December 31, 2007, the Company had $525,000 and $200,000, respectively outstanding on the line of credit. At March 31, 2008, the Company was in compliance with all covenants.

8. PROFIT SHARING PLAN

The Company has a 401(k) Profit Sharing Plan (the “Plan”) to provide retirement benefits for its eligible employees. Eligible employees may contribute up to the maximum annual amount as set periodically by the Internal Revenue Service. The Plan provides for a discretionary employer match of up to 6% of the employees’ compensation. The Company recognized expense of $18,626 and $17,178 for employer discretionary matches for the three months ended March 31, 2008 and 2007, respectively. Additionally, the Plan provides for a discretionary profit sharing contribution. Such contributions to the Plan are allocated among eligible participants in the proportion of their salaries to the total salaries of all participants. The Company did not accrue a profit sharing contribution for the three months ended March 31, 2008 and 2007.

9. ROYALTY COMMITMENTS

In August 2006, the Company obtained a license to use certain marks of a licensor in connection with products that the Company sells. The agreement is set to expire on April 30, 2010 and calls for royalties based on the number of products sold. The agreement further specifies that the Company be obligated to pay the licensor minimum guaranteed royalties as follows at March 31, 2008:


Year	Amount
Remainder of 2008	$	54,452
2009		126,667
2010		50,000
Total	$	231,119

Royalty expense for the three months ended March 31, 2008 was $6,500.

LAW ENFORCEMENT ASSOCIATES CORPORATION

Notes to Consolidated Financial Statements

March 31, 2008 and December 31, 2007

10.	REDEEMABLE COMMON STOCK

On October 16, 2007, the Company acquired certain assets of Advanced Vehicle Systems, LLC, a Florida Limited Liability Company (“AVS”). The Company purchased all of AVS' designs, drawings, name and intellectual property rights. As part of the purchase price, the Company provided the seller a put option on 1,200,000 shares. This put option gives the seller the right to sell up to 1,200,000 shares back to the Company for $1.25 per share on August 1, 2009.

The Company accounts for redeemable common stock in accordance with Emerging Issue Task Force D-98 “Classification and Measurement of Redeemable Securities.” Securities that are redeemable for cash or other assets are classified outside of permanent equity if they are redeemable at the option of the holder. The Company accretes changes in the redemption value over the period from the date of issuance using the interest method.

11.	CONSULTING AGREEMENTS

On May 3, 2007, the Company entered into an agreement with an entity to act as the placement agent and financial advisor to the Company. This entity identifies prospective purchasers of debt and/or equity securities to be issued by the Company and prospective companies to be purchased or acquired by the Company either by debt and/or equity securities or by assets acquired by the Company. Pursuant to the terms of the agreement, the entity will be compensated for successful security placements and services rendered in connection with acquisitions by the Company upon the closing of each sale of securities by the Company. This entity shall act as the Company’s exclusive placement agent and exclusive financial advisor for a period of 120 days beginning on the effective date of the agreement. Thereafter, the entity shall act as the Company’s non-exclusive placement agent and non-exclusive financial advisor until terminated by either party upon 10 days notice to the other party.

Upon execution of this agreement the Company issued 130,000 shares of restricted common stock for the entity’s due diligence and advisory efforts. Additionally, the Company shall pay this entity a monthly fee of $5,000 until the agreement is terminated. For the quarter ended March 31, 2008, the Company incurred $15,447 in consulting fees.

In July 2007, the Company entered into an agreement with an entity to act as its public relations firm in an effort to market the new Graffiti Cam. The term of the agreement is for one year commencing on August 1, 2007. The Company will pay a monthly fee of $20,000 plus out-of-pocket costs until the agreement is terminated. The agreement can be terminated by either party with 90 days advance notice to the other party. For the quarter ended March 31, 2008, the Company recognized $52,103 in consulting fees. The Company terminated this agreement during the 1st quarter of 2008.

12.	NEW ACCOUNTING PRONOUNCEMENTS

In February 2007, the FASB issued SFAS No., 159, The Fair Value Option for Financial Assets and Financial Liabilities, including an amendment to FASB Statements No. 115 (“SFAS No. 159”). SFAS No. 159 permits entities to choose to measure many financial instruments, and certain other items, at fair value that are not currently required to be measured at fair value. SFAS No. 159 is effective as of the beginning of an entity’s first fiscal year that begins after November 15, 2007; however early adoption is permitted. The Company is currently assessing the impact the adoption of SFAS No. 159 will have on its consolidated financial position and results of operations.

In December 2007, the Financial Accounting Standards Board (“FASB”) issued FASB Statements No.141 (revised 2007), “Business Combinations” (“FAS 141(R)”) and No. 160, “Noncontrolling Interests in Consolidated Financial Statements” (“FAS 160”). These standards aim to improve, simplify, and converge internationally the accounting for business combinations and the reporting of noncontrolling interests in consolidated financial statements. The provisions of FAS 141 (R) and FAS 160 are effective for the fiscal year beginning after December 15, 2008. We are currently evaluating the provisions of FAS 141(R) and FAS 160.

ITEM 2. RESULTS OF OPERATIONS

Three Months Ended March 31, 2008 Compared to Three Months Ended March 31, 2007.

Revenues

Revenues for the three months ended March 31, 2008, were $1,979,659 as compared to $1,765,054 for the three months ended March 31, 2007, which represents an increase of $214,605 (12.2%). The increase in revenues is due to strong demand for our Birddog GPS Surveillance System as well as the new Graffiti Cam System.

Gross Profit

Gross profit for the three months ended March 31, 2008 was $807,008 as compared to $775,192 for the three months ended March 31, 2007, an increase of $31,816 (4.1%). As a percentage of net sales, our gross margin was 40.8% for the quarter as compared to 43.9% in the same period last year. The decrease in gross margin percentage is due to an increase in costs related to the new surveillance vehicle division ramp-up as well as an increase in allocated labor and overhead from S,G&A expenses. The allocation increase represents approximately half of the reduction in gross margin percentage.

Operating Expenses

Operating Expenses incurred for the three months ended March 31, 2008 were $744,306 as compared to $679,756 for the three months ended March 31, 2007, an increase of $64,550 (9.5%). The majority of the increase was due to relocation expenses of approximately $30,000 related to the movement of our operations to Raleigh. The Company also recognized an increase in consulting fees of approximately $60,000 as compared to the 1st quarter of 2007. The increase in consulting fees represented marketing efforts from the introduction of the Graffiti Cam System. The majority of these consulting fees are non-recurring. As a percentage of revenue, total operating expenses (including research and development expenses) was 38.1% compared to 39.9% for the comparative period.

Income and Earnings Per Share

Our net income for the three months ended March 31, 2008 was $18,594 compared to a net income of $54,903 for the three months ended March 31, 2007, a decrease of $36,309. This decrease in net income is attributable to the factors outlined above, as well as non-cash interest expense incurred of approximately $25,000 related to the amortization of the AVS put option. Net income per weighted average share was $0.00 for the three months ended March 31, 2008, as compared to $0.00 for the three months ended March 31, 2007.

Net income for the 1st Quarter was affected by several non-cash items including amortization ($56,649), depreciation ($19,440), interest accretion ($25,551), and income tax provision ($11,396). For the three months ended March 31, 2008 non-cash items totaled $113,036 versus $76,583 during the same period last year.

Liquidity and Capital Resources

At March 31, 2008, working capital was $2,056,316 as compared with $1,949,261 at December 31, 2007, an increase of $107,055 (5.5%). As of March 31, 2008, we had a cash balance on hand of $48,229 and no long term debt. We continue to have a line of credit with Wachovia Bank in the amount of $750,000. As of March 31, 2008, the Company had an outstanding balance of $525,000.

If we need to obtain capital, no assurance can be given that we will be able to obtain this capital on acceptable terms, if at all. In such an event, this may have a materially adverse effect on our business, operating results and financial condition. If the need arises, we may attempt to obtain funding through the use of various types of short term funding, loans or working capital financing arrangements from banks or financial institutions. As we generally obtain all of our funding from operations, a decrease in revenue could negatively impact our short and long term liquidity. A change in the current political situation or a decrease in military spending could result in decreased sales of some of our products.

Research and Development

In the first quarter of 2008, the Company incurred expenses of $9,204 on research and development as compared to $24,072 in the first quarter of 2007.

Inflation

We believe that the impact of inflation on our operations since our inception has not been material.

ITEM 3. QUANTITATIVE AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK

Not applicable.

ITEM 4T. CONTROLS AND PROCEDURES

Our chief executive officer and chief financial officer (the “Certifying Officers”) are responsible for establishing and maintaining disclosure controls and procedures for our company and our subsidiary. Such officers have concluded (based upon an evaluation of these controls and procedures as of the end of the period covered by this report) that our disclosure controls and procedures are effective to ensure that information required to be disclosed by us in this report is accumulated and communicated to management, including our principal executive officers as appropriate, to allow timely decisions regarding required disclosure.

The Certifying Officers have also indicated that there were no significant changes in our internal controls or other factors that could significantly affect such controls subsequent to the date of this evaluation, and there were no corrective actions with regard to significant deficiencies and material weaknesses.

Our management, including the Certifying Officers, does not expect that our disclosure controls or our internal controls will prevent all error and all fraud. A control system, no matter how well conceived and operated, can provide only reasonable, not absolute, assurance that the objectives of the control system are met. In addition, the design of a control system must reflect the fact that there are resource constraints, and the benefits of controls must be considered relative to their costs. Because of the inherent limitations in all control systems, no evaluation of controls can provide absolute assurance that all control issues and instances of fraud, if any, within a company have been detected. These inherent limitations include the realities that judgments in decision-making can be faulty, and that breakdowns can occur because of simple error or mistake. Additionally, controls can be circumvented by the individual acts of some persons, by collusion of two or more people or by management override of the control. The design of any systems of controls also is based in part upon certain assumptions about the likelihood of future events, and there can be no assurance that any design will succeed in achieving its stated goals under all potential future conditions. Because of these inherent limitations in a cost-effective control system, misstatements due to error or fraud may occur and not be detected.

PART II – OTHER INFORMATION

Item 1. Legal Proceedings

None.

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

None.

Item 3. Defaults Upon Senior Securities

None.

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

None.

Item 5. Other Information

None.

Item 6. Exhibits

31.1	Certification of the Principal Executive Officer of Law Enforcement Associates Corporation Pursuant to Section 302 of the Sarbanes-Oxley Act of 2002.

31.2	Certification of the Principal Financial Officer of Law Enforcement Associates Corporation pursuant to Section 302 of Sarbanes-Oxley Act of 2002.

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

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

SIGNATURES

In accordance with Section 13 or 15(d) of the Exchange Act, the registrant caused this report to be signed on its behalf by the undersigned, thereunto duly authorized.

	Law Enforcement Associates Corporation

May 14, 2008	By:	/s/ Paul Feldman
		Paul Feldman
		President and Chief Executive Officer



	By:	/s/ Paul Briggs
		Paul Briggs
		Chief Financial Officer and Principal Accounting Officer