<SUBMISSION>
<ACCESSION-NUMBER>0000950153-05-002014
<TYPE>10-Q
<PUBLIC-DOCUMENT-COUNT>6
<PERIOD>20050630
<FILING-DATE>20050812
<DATE-OF-FILING-DATE-CHANGE>20050812
<FILER>
<COMPANY-DATA>
<CONFORMED-NAME>TASER INTERNATIONAL INC
<CIK>0001069183
<ASSIGNED-SIC>3480
<IRS-NUMBER>860741227
</COMPANY-DATA>
<FILING-VALUES>
<FORM-TYPE>10-Q
<ACT>34
<FILE-NUMBER>001-16391
<FILM-NUMBER>051022144
</FILING-VALUES>
<BUSINESS-ADDRESS>
<STREET1>7860 EAST MCLAIN DR.
<STREET2>SUITE 2
<CITY>SCOTTSDALE
<STATE>AZ
<ZIP>85260
<PHONE>4809052000
</BUSINESS-ADDRESS>
<MAIL-ADDRESS>
<STREET1>7860 EAST MCLAIN DR.
<STREET2>SUITE 2
<CITY>SCOTTSDALE
<STATE>AZ
<ZIP>85260
</MAIL-ADDRESS>
</FILER>
<DOCUMENT>
<TYPE>10-Q
<SEQUENCE>1
<FILENAME>p71055e10vq.htm
<DESCRIPTION>10-Q
<TEXT>
<HTML>
<HEAD>
<TITLE>e10vq</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>
<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 1pt solid black; font-size: 1pt">&nbsp;</DIV>






<DIV align="center" style="font-size: 14pt; margin-top: 12pt"><B>United States<BR>
Securities and Exchange Commission</B>
</DIV>

<DIV align="center" style="font-size: 12pt"><B>Washington, D.C. 20549</B>
</DIV>

<DIV align="center" style="font-size: 18pt; margin-top: 12pt"><B>Form&nbsp;10-Q</B>
</DIV>

<DIV align="center">
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%" style="font-size: 12pt">
<TR style="font-size: 6pt">
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="88%">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD align="center"><FONT face="Wingdings">&#254;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><B>QUARTERLY REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES
EXCHANGE ACT OF 1934</B></TD>
</TR>
</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0%"><B>For the quarterly period ended June&nbsp;30, 2005
</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>or</B></DIV>

<DIV align="center">
<TABLE cellspacing="0" border="0" cellpadding="0" width="100%" style="font-size: 12pt">
<TR style="font-size: 6pt">
    <TD width="7%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="88%">&nbsp;</TD>
</TR>
<TR valign="top">
    <TD align="center"><FONT face="Wingdings">&#111;</FONT></TD>
    <TD>&nbsp;</TD>
    <TD><B>TRANSITION REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE
SECURITIES EXCHANGE ACT OF 1934</B></TD>
</TR>
</TABLE>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt; margin-left: 0%"><B>For the transition period from&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;to
</B>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>Commission
File Number 001-16391</B></DIV>

<DIV align="center" style="font-size: 24pt; margin-top: 12pt"><B>TASER INTERNATIONAL, INC.</B>
</DIV>

<DIV align="center" style="font-size: 10pt">(Exact name of registrant as specified in its charter)</DIV>


<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="47%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="47%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top"><B>DELAWARE</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>86-0741227</B></TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">(State or other jurisdiction<BR>
of incorporation or organization)
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(I.R.S. Employer<BR>
Identification Number)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="47%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="47%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="center" valign="top"><B>17800 N. 85</B><SUP style="font-size: 85%; vertical-align: text-top"><B>th</B> </SUP> <B>St., SCOTTSDALE, ARIZONA</B>
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top"><B>85255</B></TD>
</TR>
<TR valign="bottom">
    <TD align="center" valign="top">(Address of principal executive offices)
</TD>
    <TD>&nbsp;</TD>
    <TD align="center" valign="top">(Zip Code)</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 12pt"><B>(480)&nbsp;991-0797</B><BR>
(Registrant&#146;s telephone number, including area code)</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Indicate by check mark whether the registrant (1)&nbsp;has filed all reports required to be filed by
Section&nbsp;13 or 15(d) of the Securities Exchange Act of 1934 during the preceding 12&nbsp;months (or for
such shorter period that the registrant was required to file such reports), and (2)&nbsp;has been
subject to such filing requirements for the past 90&nbsp;days. Yes
&nbsp;&nbsp;<FONT face="Wingdings">&#254;</FONT> No &nbsp;&nbsp;<FONT face="Wingdings">&#111;</FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Indicate by check mark whether the registrant is an accelerated filer (as defined in Rule&nbsp;12b-2 of
the Exchange Act). Yes
&nbsp;&nbsp;<FONT face="Wingdings">&#111;</FONT> No &nbsp;&nbsp;<FONT face="Wingdings">&#254;</FONT>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">There were
61,408,010 shares of the issuer&#146;s common stock, par value $0.00001 per share,
outstanding as of August&nbsp;10, 2005.
</DIV>


<DIV style="width: 100%; border-bottom: 1pt solid black; margin-top: 10pt; font-size: 1pt">&nbsp;</DIV>
<DIV style="width: 100%; border-bottom: 2pt solid black; font-size: 1pt">&nbsp;</DIV>





<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>TASER INTERNATIONAL, INC.</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 6pt"><B>QUARTERLY REPORT ON FORM 10-Q<BR>
FOR THE THREE MONTHS ENDED JUNE 30, 2005</B>
</DIV>

<DIV align="left">
<!-- TOC -->
</DIV>
<DIV align="left">
<A name="tocpage"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>TABLE OF CONTENTS</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>

    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Page</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#101">PART I &#151; FINANCIAL INFORMATION</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#102">ITEM 1. Financial Statements (unaudited)</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#103">Balance sheets as of June&nbsp;30, 2005 and December&nbsp;31, 2004</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#104">Statements of income for the three and six months ended June&nbsp;30, 2005 and 2004</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#105">Statements of cash flows for the six months ended June&nbsp;30, 2005 and 2004</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#106">Notes to financial statements</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#107">ITEM 2. Management&#146;s Discussion and Analysis of Financial Condition and Results of Operations</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#108">ITEM 4. Controls and Procedures</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#109">PART II &#151; OTHER INFORMATION</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#110">ITEM 1. Legal Proceedings</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#111">ITEM 6. Exhibits</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#112">SIGNATURES</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><A href="#113">INDEX TO EXHIBITS</A></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="p71055exv31w1.htm">Exhibit 31.1</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="p71055exv31w2.htm">Exhibit 31.2</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="p71055exv32w1.htm">Exhibit 32.1</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="p71055exv32w2.htm">Exhibit 32.2</A></FONT></TD></TR>
<TR><TD colspan="9"><FONT size="2">&nbsp;<A HREF="p71055exv99w1.htm">Exhibit 99.1</A></FONT></TD></TR>
</TABLE>
</DIV>

<DIV align="left">
<!-- /TOC -->
</DIV>



<P align="center" style="font-size: 10pt">2
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left">
<A name="101"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PART I &#151; FINANCIAL INFORMATION</B>
</DIV>

<DIV align="left">
<A name="102"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 1. FINANCIAL STATEMENTS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>TASER INTERNATIONAL, INC.</B>
</DIV>
<DIV align="left">
<A name="103"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>BALANCE SHEETS<BR>
June&nbsp;30, 2005 and December&nbsp;31, 2004</B><BR>
(UNAUDITED)
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>June 30, 2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>December 31, 2004</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD align="center"><DIV style="margin-left:45px; text-indent:-15px"><B>Assets</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current Assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash and cash equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">16,461,623</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">14,757,159</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Short-term investments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,006,782</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">17,201,477</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accounts receivable, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,525,683</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,460,112</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Inventory</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,162,411</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,840,051</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Prepaids and other assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,372,913</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,639,734</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income tax receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">56,966</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">52,973</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current deferred income tax asset</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,493,116</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">11,083,422</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total Current Assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">46,079,494</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">60,034,928</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Long-term investments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,535,643</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,071,815</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Property and Equipment, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">20,764,653</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,756,512</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred income tax asset</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">16,600,142</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,310,207</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Intangible assets, net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,298,859</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,279,116</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total Assets</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">110,278,791</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">109,452,578</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD align="center"><DIV style="margin-left:60px; text-indent:-15px"><B>Liabilities and Stockholders&#146; Equity</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current Liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Current portion of capital lease obligations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4,642</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Accounts payable and accrued liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,207,537</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,827,132</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Customer deposits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">209,853</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">102,165</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total Current Liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,417,390</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,933,939</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred Revenue</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">650,808</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">607,856</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total Liabilities</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,068,198</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,541,795</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Commitments and Contingencies</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Stockholders&#146; Equity</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Preferred Stock, $0.00001 par value per share; 25&nbsp;million shares authorized; 0 shares
issued and outstanding at June&nbsp;30, 2005 and December&nbsp;31, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Common Stock, $0.00001 par value per share; 200&nbsp;million shares authorized;
61,332,516 and 60,992,156 shares issued and outstanding at June&nbsp;30, 2005 and
December&nbsp;31, 2004</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">613</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">609</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Additional Paid-in Capital</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">77,473,547</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">75,850,810</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Retained Earnings</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,736,433</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">24,059,364</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total Stockholders&#146; Equity</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">102,210,593</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">99,910,783</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px"><B>Total Liabilities and Stockholders&#146; Equity</B></DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">110,278,791</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">109,452,578</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The accompanying notes are an integral part of these financial statements.
</DIV>




<P align="center" style="font-size: 10pt">3
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>TASER INTERNATIONAL, INC.</B>
</DIV>

<DIV align="left">
<A name="104"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>STATEMENTS OF INCOME<BR>
For the three and six months ended June&nbsp;30, 2005 and 2004</B><BR>
(UNAUDITED)
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>For the Three Months Ended</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>For the Six Months Ended</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>June 30, 2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>June 30, 2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>June 30, 2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>June 30, 2004</B></TD>
</TR>

<TR>
<TD>&nbsp;</TD>
</TR>

<!-- End Table Head -->

<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net Sales</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">13,206,659</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">16,322,007</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">23,410,820</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">29,458,561</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cost of Products Sold:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Direct manufacturing expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,525,670</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,105,537</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,635,876</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,278,059</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Indirect manufacturing expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,290,429</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,354,247</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,708,248</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,714,227</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total Cost of Products Sold</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,816,099</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,459,784</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,344,124</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">9,992,286</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>    <TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Gross Margin</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">8,390,560</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">10,862,223</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,066,696</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">19,466,275</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>    <TD>&nbsp;</TD></TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Sales, general and administrative expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,458,533</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,359,395</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12,710,697</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,928,683</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Research and development expenses</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">351,441</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">212,910</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">698,804</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">480,005</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income from Operations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">580,586</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,289,918</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">657,195</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,057,587</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>    <TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">347,837</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">55,118</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">546,712</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">93,786</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Interest expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(15</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(392</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(103</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other income (expense), net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(59,360</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,788</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(59,735</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,085</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>

    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income before income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">869,048</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,350,432</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,144,069</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,157,458</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Provision for income tax</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">360,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,860,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">467,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,116,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net Income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">509,048</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4,490,432</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">677,069</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">8,041,458</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>    <TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Income per common and common equivalent shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.08</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.14</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.07</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.13</TD>
    <TD>&nbsp;</TD>
</TR>
<TR>    <TD>&nbsp;</TD></TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Weighted
average number of common and common equivalent shares outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,319,959</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">57,558,688</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,209,420</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">55,477,972</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">63,951,739</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">64,437,526</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">64,152,543</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">62,513,808</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The accompanying notes are an integral part of these financial statements.
</DIV>



<P align="center" style="font-size: 10pt">4
</DIV>


<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>TASER INTERNATIONAL INC.</B>
</DIV>

<DIV align="left">
<A name="105"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>STATEMENTS OF CASH FLOWS<BR>
For the six months ended June&nbsp;30, 2005 and 2004</B><BR>
(UNAUDITED)
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>For the Six Months Ended</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>June 30, 2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>June 30, 2004</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash Flows from Operating Activities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">677,069</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">8,041,458</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Adjustments to reconcile net income to net cash (used)&nbsp;provided by operating activities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Depreciation and amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">706,055</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">255,364</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Loss on disposal of assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">56,872</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Provision for doubtful accounts</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">90,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Provision for warranty</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">146,873</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">267,146</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Compensatory stock options</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">625,704</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deferred income taxes</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(13,043</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">636,106</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Stock option tax benefit</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">492,552</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,479,574</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Change in assets and liabilities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accounts receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,934,429</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,320,690</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Inventory</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,322,360</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,358,024</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Prepaids and other assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">266,821</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">25,263</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Income tax receivable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(3,993</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">264,026</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Accounts payable and accrued liabilities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,844,607</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,324,383</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Customer deposits</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">107,688</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(156,208</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash (used)&nbsp;provided by operating activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(795,644</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">13,174,102</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash Flows from Investing Activities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Purchases of investments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(15,021,689</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Proceeds from investments</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">22,752,556</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Purchases of property and equipment</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(5,630,414</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,081,791</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Purchases of intangible assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(39,306</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash provided (used)&nbsp;by investing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,061,147</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,081,791</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash Flows from Financing Activities:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Payments under capital leases</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(4,642</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(8,884</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Payments on notes payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(250,000</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Proceeds from warrants exercised</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,470,058</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:30px; text-indent:-15px">Proceeds from options exercised</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">443,603</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">5,384,587</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net cash provided by financing activities</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">438,961</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,595,761</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net Increase in Cash and Cash Equivalents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,704,464</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">18,688,072</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash and Cash Equivalents, beginning of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">14,757,159</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,878,326</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash and Cash Equivalents, end of period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">16,461,623</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">34,566,398</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Supplemental Disclosure:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash paid for interest</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">103</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">918</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Cash (refunded)&nbsp;paid for income taxes &#151; net</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(264,026</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Non Cash Transactions</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Increase to deferred tax asset related to tax benefits realized from the exercise of stock options
(with a related increase to additional paid in capital of $1,179,138 and $11,567,307)</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">686,586</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">7,087,733</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Increase to property and equipment with a corresponding increase in accounts payable</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,121,091</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The accompanying notes are an integral part of these financial statements.
</DIV>




<P align="center" style="font-size: 10pt">5
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>TASER INTERNATIONAL, INC.</B>
</DIV>

<DIV align="left">
<A name="106"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO FINANCIAL STATEMENTS (unaudited)</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>NOTE 1 &#151; GENERAL</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The accompanying unaudited financial statements of TASER International, Inc. (the &#147;Company&#148;)
include all adjustments (consisting only of normal recurring accruals) which management considers
necessary for the fair presentation of the Company&#146;s operating results, financial position and cash
flows as of June&nbsp;30, 2005 and June&nbsp;30, 2004. Certain information and note disclosures normally
included in financial statements prepared in accordance with accounting principles generally
accepted in the United States of America (&#147;GAAP&#148;) have been omitted from these unaudited financial
statements in accordance with applicable rules.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The results of operations for the three and six month periods are not necessarily indicative of the
results to be expected for the full year (or any other period) and should be read in conjunction
with the financial statements and notes thereto included in the Company&#146;s Annual Report on Form
10-KSB/A as filed on May&nbsp;23, 2005.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>NOTE 2 &#151; NET SALES</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The components of net sales for the three and six months ended June&nbsp;30, 2005 and 2004 were as
follows (amounts in thousands):
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="12%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="15" style="border-bottom: 1px solid #000000"><B>For the Three Months Ended</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="15" style="border-bottom: 1px solid #000000"><B>For the Six Months Ended</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Sales by Product Line</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>June 30, 2005</B></TD>
    <TD>&nbsp;</TD>

<TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>June 30, 2004</B></TD>
    <TD>&nbsp;</TD>

<TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>June 30, 2005</B></TD>
    <TD>&nbsp;</TD>

<TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>June 30, 2004</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">TASER X26</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">7,842</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">59</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">10,747</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">66</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">14,405</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">62</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">19,604</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">67</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ADVANCED TASER</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">655</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,591</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">10</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,353</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,043</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">10</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">AIR TASER</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">64</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">121</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Single Cartridges</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,409</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">33</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,750</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">23</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,842</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">29</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,596</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">22</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Research Funding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">140</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">140</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">138</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">158</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">621</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">83</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">13,207</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">100</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">16,322</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">100</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">23,411</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">100</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">29,459</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">100</TD>
    <TD nowrap>%</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>NOTE 3 &#151; INTANGIBLE ASSETS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company values purchased intangible assets at cost less accumulated amortization. Amortization
is calculated using the useful life of the asset acquired. The components of net intangible assets
as of June&nbsp;30, 2005 and December&nbsp;31, 2004 were as follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="64%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Useful Life</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>June 30, 2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>December 31, 2004</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">TASER.com Domain Name</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">5 Years</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">60,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">60,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">U.S. Patents</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">6.5 to 14 Years</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">128,360</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">128,360</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Patents Pending</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">17 Years</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">271,453</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">232,147</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Non-Compete Agreement</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">7 Years</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">TASER Trademark</DIV></TD>
    <TD>&nbsp;</TD>
    <TD colspan="3" align="center">Indefinite</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">900,000</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">900,000</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total Cost</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,409,813</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,370,507</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Less: Accumulated Amortization</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">110,954</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">91,391</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net Intangible Assets</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,298,859</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">1,279,116</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt">Estimated amortization expense of intangible assets with finite lives for the next five years is as follow:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="88%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2005</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">24,347</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2006</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">31,125</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2007</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,126</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2008</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">27,126</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">2009</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">15,267</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>




<P align="center" style="font-size: 10pt">6
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>TASER INTERNATIONAL, INC.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO FINANCIAL STATEMENTS (unaudited) &#151; Continued</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>NOTE 4 &#151; INVESTMENT SECURITIES</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Investment securities are accounted for in accordance with Statement of Financial Accounting
Standards (&#147;SFAS&#148;) No.&nbsp;115, <I>Accounting for Certain Investments in Debt and Equity Securities.</I>
Short-term and long-term investments are invested in governmental debt securities, and are
classified as held to maturity. These investments are recorded at amortized cost, which
approximates fair value. The Company intends to hold these securities until maturity. The
short-term investments have maturities of less than one year. At June&nbsp;30, 2005, the Company had
$25.5&nbsp;million of long-term investments. All of the long-term investments have maturities between
one and three years. The Company&#146;s cash and investment accounts earned interest at an approximate
rate of 3.0% and 0.7% during the three months ended June&nbsp;30, 2005 and 2004, respectively. The
Company&#146;s cash and investment accounts earned interest at an approximate rate of 2.3% and 0.8%
during the six months ended June&nbsp;30, 2005 and 2004, respectively.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>NOTE 5 &#151;INVENTORIES</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Inventories are stated at the lower of cost or market. Cost is determined using the most recent
acquisition cost which approximates the first-in, first-out (FIFO)&nbsp;method. Inventories as of June
30, 2005 and December&nbsp;31, 2004 consisted of the following:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>June 30, 2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>December 31, 2004</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Raw materials and work-in-process</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">6,976,226</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>

    <TD align="right">5,198,716</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Finished goods</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,186,185</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,641,335</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total Inventory</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">9,162,411</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">6,840,051</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>NOTE 6 &#151;EARNINGS PER SHARE</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table reconciles average common shares outstanding &#151; basic, to average common shares
outstanding &#151; diluted, that are used in the calculation of earnings per share.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Earnings Per Share</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>Earnings Per Share</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 0px solid #000000"><B>For the Three Months Ended</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 0px solid #000000"><B>For the Six Months Ended</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>June 30, 2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>June 30, 2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>June 30, 2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>Jun</B>e <B>30, 2004</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Numerator for basic and diluted earnings per share</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net Income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">509,048</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4,490,432</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">677,069</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">8,041,458</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Denominator for basic earnings per share &#151; weighted average shares
outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,319,959</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">57,558,688</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">61,209,420</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">55,477,972</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Dilutive effect of shares issuable under stock options outstanding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,631,780</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,878,838</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">2,943,123</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">7,035,836</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Denominator for diluted earnings per share &#151; adjusted weighted average
shares</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">63,951,739</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">64,437,526</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">64,152,543</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">62,513,808</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net Income per common share</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Basic</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.08</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.14</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Diluted</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.07</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.13</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">For the three and six months ended June&nbsp;30, 2005, the effects of 430,906 stock options were
excluded from the calculation of diluted net income per share, as their effect would have been
anti-dilutive and increased the net income per share. For the three and six months ended June&nbsp;30,
2004, the effects of 10,000 and 53,000 stock options, respectively,
were excluded from the calculation of diluted net income per share,
as their effect would have been anti-dilutive and increased the net
income per share.
</DIV>




<P align="center" style="font-size: 10pt">7
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>


<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>TASER INTERNATIONAL, INC.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO FINANCIAL STATEMENTS (unaudited) &#151; Continued</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>NOTE 7 &#151; INCOME TAXES</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The deferred income tax asset at June&nbsp;30, 2005 and June&nbsp;30, 2004 is comprised primarily of the
income tax benefit related to the compensation expense the Company records, for income tax
purposes, when employees exercise stock options and sell the underlying stock. For the six months
ended June&nbsp;30, 2005, the Company recognized tax benefits related to these stock transactions
totaling $1,179,138 of which $492,552 was used to offset income taxes otherwise payable and
$686,586 was recorded as a deferred tax asset. For the six months ended June&nbsp;30, 2004, the Company
recognized tax benefits related to these stock transactions totaling $11,567,307 of which
$4,479,574 was used to offset federal income taxes otherwise payable, and $7,087,733 was recorded
as a deferred tax asset. The total tax benefit of $1,179,138 has been credited to additional
paid-in capital in 2005 and the total tax benefit of $11,567,307 was credited to additional paid-in
capital in 2004. Additionally, warranty and inventory reserves, accrued vacation and other items
have contributed to the deferred income tax asset. SFAS No.&nbsp;109 requires the reduction of deferred
tax assets by a valuation allowance if, based on the weight of all available evidence, it is more
likely than not that some or all of the deferred tax asset may not be realized. The Company has
determined that no such valuation allowance is necessary.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>NOTE 8 &#151; STOCK OPTIONS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">At June&nbsp;30, 2005, the Company had three stock-based employee compensation plans, which are
described more fully in Note 9 to the financial statements included in the Company&#146;s Annual Report
on Form 10-KSB/A as filed on May&nbsp;23, 2005. The Company accounts for those plans under the
recognition and measurement principles of APB Opinion No.&nbsp;25, <I>Accounting for Stock Issued to
Employees</I>, and related interpretations. No stock-based employee compensation cost is reflected in
net income, as all options granted under those plans had an exercise price equal to the market
value of the underlying common stock on the date of grant. However, we have computed compensation
costs for proforma disclosure purposes, based on the fair value of all options awarded at the date
of grant, using the Black-Scholes pricing model. For purposes of this calculation, the Company used
a volatility of 106% for the three and six months ended June&nbsp;30, 2005 and 103% for the three and
six months ended June&nbsp;30, 2004, and a risk free interest rate of 3.5% for the three and six months
ended June&nbsp;30, 2005 and a risk free interest rate of 3.0% for the three and six months ended June
30, 2004. The Company used an expected life for options of either one and one-half or three years,
depending on the vesting period. The following table illustrates the effect on net income and
earnings per share if the Company had applied the fair value recognition provisions of FASB
Statement No.&nbsp;123, Accounting for Stock-Based Compensation, to stock-based employee compensation.
The Company will adopt SFAS No.&nbsp;123R on January&nbsp;1, 2006, which will require stock-based
compensation expense to be recognized for the portion of outstanding unvested awards, based on the
grant date fair value of those awards.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="52%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 0px solid #000000"><B>For the Three Months Ended</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7" style="border-bottom: 0px solid #000000"><B>For the Six Months Ended</B></TD>
</TR>

<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>June 30, 2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>June 30, 2004</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>June 30, 2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>June 30, 2004</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>(In thousands)</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="7"><B>(In thousands)</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net Income, as reported</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">509</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">4,490</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">677</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">8,041</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Add: Total stock-based compensation included in net income as reported</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Deduct: Total stock-based employee compensation determined under fair
value based method for all awards, net of related tax effects</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(1,792</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,238</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,282</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(2,756</TD>
    <TD nowrap>)</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Pro Forma Net (Loss) Income</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(1,283</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">2,252</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(1,605</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">5,285</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Net Income (Loss) per common share:</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Basic, as reported</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.08</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.14</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Basic, pro forma</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(0.02</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.04</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(0.03</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.10</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Diluted, as reported</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.07</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.01</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.13</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Diluted, pro forma</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(0.02</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.03</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">$</TD>
    <TD align="right">(0.02</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">0.08</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">8
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>TASER INTERNATIONAL, INC.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO FINANCIAL STATEMENTS (unaudited) &#151; Continued</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>NOTE 9 &#151; WARRANTY</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company warrants its products from manufacturing defects for a period of one year after
purchase, and thereafter will replace any defective TASER unit for a fee. After the one year
warranty expires, if the device fails to operate properly for any reason, the Company will replace
the ADVANCED TASER device for a fee of $75, and the TASER X26 on a time and materials basis. The
Company tracks historical data related to returns and related warranty costs on a quarterly basis,
and estimates future warranty claims by applying the estimated average return rate to the product
sales for the period. Historically the reserve amount is increased if the Company becomes aware of
a component failure that could result in larger than anticipated returns from its customers. A
summary of changes in the warranty accrual for the six months ended June&nbsp;30, 2005 and 2004 is as
follows:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="76%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>June 30, 2005</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000"><B>June 30, 2004</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at Beginning of Period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">457,914</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">312,934</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Utilization of Accrual</DIV></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(449,855</TD>
    <TD nowrap>)</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">(163,318</TD>
    <TD nowrap>)</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Warranty Expense</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">596,727</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">267,146</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom"><!-- Blank Space -->
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Balance at End of the Period</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">604,786</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">416,762</TD>
    <TD>&nbsp;</TD>
</TR>

<TR style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-top: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>NOTE 10 &#151; LINE OF CREDIT</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On July&nbsp;13, 2004, the Company entered into a new line of credit agreement to replace its existing
line. The agreement has a total availability of $10&nbsp;million. The line is secured primarily by the
Company&#146;s accounts receivable and inventory and bears interest at varying rates of interest,
ranging from LIBOR plus 1.5% to prime. The availability under this line is computed on a monthly
borrowing base, which is based on the Company&#146;s eligible accounts receivable and inventory. The
line of credit matures on July&nbsp;13, 2006 and requires monthly payments of interest only. At June&nbsp;30,
2005, the available borrowing under the existing line of credit was $5.8&nbsp;million, and there was no
amount outstanding under the line of credit. There have been no borrowings under the line of credit
to date.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company&#146;s agreement with the bank requires the Company to comply with certain financial and
other covenants including maintenance of minimum tangible net worth and fixed charge coverage
ratios. For the six months ended June&nbsp;30, 2005, the Company was in compliance with all covenants.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>NOTE 11 &#151; LEGAL PROCEEDINGS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Securities Litigation</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On January&nbsp;10, 2005, a securities class action lawsuit was filed in the United States District
Court for the District of Arizona against the Company and certain of its officers and directors,
captioned Malasky v. TASER International, Inc., et al., Case No.&nbsp;2:05 CV 115. Since then, numerous
other securities class action lawsuits were filed against the Company and certain of its officers
and directors. The majority of these lawsuits were filed in the District of Arizona. Four actions
were filed in the United States District Court for the Southern District of New York and one in the
Eastern District of Michigan. The New York and Michigan actions were transferred to the District of
Arizona. The cases were recently consolidated, and the court has appointed a lead plaintiff and
lead counsel. Pursuant to an order entered by the court, defendants need not respond to any of the
complaints originally filed in these actions. The lead plaintiff will file an amended consolidated
complaint, to which Defendants will respond.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">These actions are filed on behalf of the purchasers of the Company&#146;s stock in various class
periods, beginning as early as May&nbsp;29, 2003 and ending as late as January&nbsp;14, 2005. The complaints
allege, among other things, violations of Section 10(b) of the Securities Exchange Act of 1934, as
amended, and Rule&nbsp;10b-5, promulgated thereunder, and seek unspecified monetary damages and other
relief against all defendants. The complaints allege generally that the Company and the individual
defendants made false or misleading public statements regarding, among other things, the safety of
the Company&#146;s products and the Company&#146;s ability to meet its sales goals, including the validity of
a $1.5&nbsp;million sales order with one of the Company&#146;s distributors in the fourth quarter of 2004. We
intend to defend these lawsuits vigorously; however, the outcome of any litigation is inherently
uncertain and there can be no assurance that any liability that may ultimately result from the
resolution of these matters will not be in excess of amounts provided by insurance coverage and
will not have a material adverse effect on our business, operating results or financial condition.
</DIV>




<P align="center" style="font-size: 10pt">9
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>TASER INTERNATIONAL, INC.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO FINANCIAL STATEMENTS (unaudited) &#151; Continued</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Shareholder Derivative Litigation</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On January&nbsp;11, 2005, a shareholder derivative lawsuit was filed in the United States District Court
for the District of Arizona purportedly on behalf of the Company and against certain of its
officers and directors, captioned Goldfine v. Culver, et al., Case No.&nbsp;2:05 CV 123. Since then,
five other shareholder derivative lawsuits were filed in the District of Arizona, two shareholder
derivative lawsuits were filed in the Arizona Superior Court, Maricopa County, and one shareholder
derivative lawsuit was filed in the Delaware Chancery Court. On February&nbsp;9, 2005, the shareholder
derivative actions pending in federal court were consolidated into a single action in the United
States District Court for the District of Arizona under the caption, In re TASER International
Shareholder Derivative Litigation, Case No.&nbsp;2:05 CV 123. On May&nbsp;13, 2005, plaintiffs in the
consolidated federal derivative action filed a consolidated amended complaint. Pursuant to an order
entered by the court, Defendants will respond only to this consolidated amended complaint. The
derivative actions in Arizona state court were consolidated and plaintiffs filed a consolidated
complaint. Plaintiffs in the Arizona state court action agreed to stay that action pending
resolution of the consolidated federal derivative action. On April&nbsp;8, 2005, defendants filed a
motion to stay or, in the alternative, dismiss the Delaware derivative action; plaintiff&#146;s
opposition to defendants&#146; motion was due to be filed on August&nbsp;22, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The complaints in the shareholder derivative lawsuits generally allege that the defendants breached
the fiduciary duties owed to the Company and its shareholders by reason of their positions as
officers and/or directors of the Company. The complaints claim that such duties were breached by
defendants&#146; disclosure of allegedly false or misleading statements about the safety and
effectiveness of Company products and the Company&#146;s financial prospects. The complaints also claim
that fiduciary duties were breached by defendants&#146; alleged use of non-public information regarding
the safety of Company products and the Company&#146;s financial condition and future business prospects
for personal gain through the sale of the Company&#146;s stock. The Company is named solely as a nominal
defendant against which no recovery is sought.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On May&nbsp;4, 2005, a lawsuit was filed in the Delaware Chancery Court against the Company, captioned
Lucian B. Dinkens v. TASER International, Inc., Case No.&nbsp;5749754, to compel the Company to give the
plaintiff the right to inspect and copy certain books and records of the Company pursuant to
Section&nbsp;220 of Delaware General Corporation Law. The Company filed an answer to the complaint on
June&nbsp;7, 2005.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Securities and Exchange Commission Informal Inquiry</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In December&nbsp;2004, the Company was informed that the staff of the Securities and Exchange Commission
had commenced an informal inquiry, which concerns the basis for the Company&#146;s public statements
regarding the safety and performance of the Company&#146;s products, certain disclosure issues, and the
accounting for certain transactions. The inquiry is ongoing.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Contract Litigation</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In March&nbsp;2000, Thomas N. Hennigan, a distributor of our products from late 1997 through early 2000,
sued us in the United States District Court, Southern District of New York. We had previously sued
him in February&nbsp;2000 but had not served him. After the New York case was dismissed in February&nbsp;2001
for lack of personal jurisdiction, Mr.&nbsp;Hennigan brought a counterclaim in the United States
District Court for the District of Arizona. Mr.&nbsp;Hennigan claims the exclusive right to sell our
products to many of the largest law enforcement, corrections, and military agencies in the United
States. He seeks monetary damages that may amount to as much as $400&nbsp;million against us allegedly
arising in connection with his service to us as a distributor. His claims rest on theories of our
failure to pay commissions, breach of contract, promissory estoppel, breach of fiduciary duty, and
on related theories. No written contract was ever signed with Mr.&nbsp;Hennigan. We also believe that he
has no reasonable basis for claims based on informal or implied contractual rights and will be
unable to prove his damages with reasonable certainty. Mr.&nbsp;Hennigan died in April&nbsp;2001 and the case
is now being prosecuted by his estate. On May&nbsp;24, 2002, H.A. Russell was permitted to proceed as an
additional defendant-counterclaimant. The Company filed various motions in November&nbsp;2002 for
partial summary judgment including a motion to dismiss his claims. On September&nbsp;30, 2003, the Court
issued an order granting the Company&#146;s motion for partial summary judgment to dismiss Mr.&nbsp;Russell&#146;s
claims and struck Hennigan&#146;s jury demand. On April&nbsp;14, 2004, the Court issued an opinion partially
granting the Company&#146;s motion for partial summary judgment on certain joint venture,
post-termination, post-death and exclusivity claims. A pretrial
conference was held on July&nbsp;28,
2005 and a trial date has been set for August&nbsp;30, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In September&nbsp;2004, the Company was served with a summons and complaint in the matter of Roy Tailors
Uniform Co., Inc. v. TASER International in which the plaintiff alleges that it is entitled to
commissions for disputed sales that were made to customers that are claimed to be plaintiff&#146;s
customers for which plaintiff is seeking monetary damages. Plaintiff failed to sign a distributor
agreement with the Company and did not have distribution rights with the Company. This case is in
the discovery phase and a trial date has not been set.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We intend to defend the foregoing lawsuits vigorously; however, the outcome of any litigation is
inherently uncertain and there can be no assurance that any liability that may ultimately result
from the resolution of these matters will not be in excess of amounts provided by insurance
coverage and will not have a material adverse effect on our business, operating results or
financial condition.
</DIV>



<P align="center" style="font-size: 10pt">10
</DIV>

<!-- PAGEBREAK -->
<P><HR noshade><P>
<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>TASER INTERNATIONAL, INC.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO FINANCIAL STATEMENTS (unaudited) &#151; Continued</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Product Liability Litigation</B><BR>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">From
April&nbsp;2003 to August&nbsp;2005, the Company was named as a defendant in 35 lawsuits in which the
plaintiffs alleged either wrongful death or personal injury in situations in which the TASER device
was used (or present) by law enforcement officers or during training exercises. Three of the cases
are firearms&#146; related death cases &#151; not death allegedly caused by Taser device. One case is a class
action &#151; presently believed to be a class of one. One case has been dismissed by summary judgment
order, two cases have been dismissed with prejudice, another case was dismissed without prejudice but has been
refiled, and the balance of the cases are pending. With respect to
each of these 35 cases, the
table below lists the name of plaintiff, the date the Company was served with process, the
jurisdiction in which the case is pending, the type of claim and the status of the matter. In each
of these lawsuits, the plaintiff is seeking monetary damages from the Company. In one case the
plaintiff is seeking injunctive relief in addition to monetary damages. Cases are being submitted
for the defense of each of these lawsuits to our insurance carriers as we maintained during these
periods and continue to maintain product liability insurance coverage with varying limits and
deductibles. The Company&#146;s product liability insurance coverage during these periods ranged from
$5,000,000 to $10,000,000 in coverage limits and from $10,000 to $250,000 in deductibles. The
Company is defending each of these lawsuits vigorously. Although the Company does not expect the
outcome in any individual case to be material, the outcome of any litigation is inherently
uncertain and there can be no assurance that any liability that may ultimately result from the
resolution of these matters will not be in excess of amounts provided by insurance coverage and
will not have a material adverse effect on our business, operating results or financial condition.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="8%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="25%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Month</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Plaintiff</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Served</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Jurisdiction</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Claim Type</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Status</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Del&#146;Ostia
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">3/2004
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">US District Court, SD FL
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Wrongful Death
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Dismissed With Prejudice</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Alvarado
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">4/2003
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">CA Superior Court
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Wrongful Death
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Discovery Phase</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">City of Madera
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">6/2003
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">CA Superior Court
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Wrongful Death
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" valign="top">Dismissed by Summary Judgment</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Borden
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">9/2004
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">US District Court, SD IN
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Wrongful Death
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Discovery Phase</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Thompson
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">9/2004
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">MI Circuit Court
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Wrongful Death
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Discovery Phase</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Pierson
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">11/2004
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">US District Court, CD CA
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Wrongful Death
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Discovery Phase</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Glowczenski
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">10/2004
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">US District Court, ED NY
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Wrongful Death
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Case Stayed</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">LeBlanc
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">12/2004
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">US District Court, CD CA
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Wrongful Death
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Discovery Phase</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Elsholtz
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">12/2004
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">TX District Court
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Wrongful Death
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Discovery Phase</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Kerchoff
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">6/2004
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">US District Court, ED MI
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Training Injury
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Dismissed, Refiled</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Powers
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">11/2003
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">AZ Superior Court
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Training Injury
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">November&nbsp;2005 Trial Scheduled</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Cook
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">8/2004
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">NV District Court
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Training Injury
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Discovery Phase</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Stevens
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">10/2004
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">OH Court Common Pleas
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Training Injury
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Discovery Phase</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Eckenroth
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">11/2004
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">AZ Superior Court
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Training Injury
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Discovery Phase</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Lipa
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">2/2005
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">MI Circuit Court
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Training Injury
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Discovery Phase</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Dimiceli
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">3/2005
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">FL Circuit Court
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Training Injury
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Discovery Phase</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Cosby
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">8/2004
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">US District Court, SD NY
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Injury During Arrest
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">SJ Motion Being Filed</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Blair
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">3/2005
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">US District Court, MD NC
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Injury During Detention
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">SJ Motion Filed Awaiting Ruling</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Madrigal
</DIV></TD>
    <TD>&nbsp;</TD>

    <TD align="right" valign="top">5/2005
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">AZ Superior Court
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Wrongful Death
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Dismissed with Prejudice</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Washington
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">5/2005
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">US District Court, ED CA
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Wrongful Death
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Discovery Phase</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Clark
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">5/2005
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">US District Court, ND TX
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Wrongful Death
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Discovery Phase</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Collins
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">5/2005
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">AZ Superior Court
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Training Injury
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Discovery</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Allen
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">5/2005
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">AZ Superior Court
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Training Injury
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Discovery</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Sanders
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">5/2005
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">US District Court ED CA
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Wrongful Death
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Discovery</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Fleming
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">5/2005
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">US District Court ED LA
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Wrongful Death
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Discovery</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Woolfolk
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">6/2005
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">US District Court MD FL
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Wrongful Death
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Complaint Served</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">J.J. &#038; J.B.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">7/2005
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">FL Circuit Court
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">2 Training Injuries
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Complaint Served</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Lewis
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">7/2005
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">US District Court Tal FL
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Injury During Arrest
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Complaint Served</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Vil. Of Dolton
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">8/2005
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">US District Court ND IL
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Class&nbsp;Action
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Complaint Served</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Lash
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">8/2005
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">US District Court ED MO
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Injury During Arrest
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Complaint Served</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Howard
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">8/2005
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">AZ Superior Court
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Training Injury
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Complaint Served</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Wagner
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">8/2005
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">AZ Superior Court
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Training Injury
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Complaint Served</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Gerdon
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">8/2005
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">AZ Superior Court
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Training Injury
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Complaint Served</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Gallant
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">8/2005
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">AZ Superior Court
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Training Injury
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Complaint Served</TD>
</TR>

<TR valign="bottom">

<TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Nowell
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">8/2005
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">US District Court ND TX
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Wrongful Death
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Complaint Served</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>







<P align="center" style="font-size: 10pt">11
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>TASER INTERNATIONAL, INC.</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>NOTES TO FINANCIAL STATEMENTS (unaudited) &#151; Continued</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Other Litigation</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In January&nbsp;2005, the Company filed litigation in U.S. District Court for the Western District of
North Carolina against Stinger Systems, Inc. and Robert Gruder alleging false advertising and a
violation of the Lanham Act. The defendants have filed a counterclaim against the Company alleging
defamation. This case is in the discovery phase and no trial date has been set.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In February&nbsp;2005, the Company filed litigation in Superior Court for Maricopa County, Arizona
against its former patent attorney, Thomas G. Watkins III, alleging breach of fiduciary duty and
estoppel arising out of ownership and inventorship claims Mr.&nbsp;Watkins has made against a patent he
filed for the Company for certain technology utilized in the TASER X26 product. This case is in the
discovery phase and no trial date has been set.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In July 2005, the Company filed a lawsuit
in Superior Court for Maricopa County against Gannett Co., Inc., parent company of the USA Today
Newspaper and the Arizona Republic, for libel, false light invasion of privacy, injurious
falsehood and tortuous interference with business relations. The complaint alleges that the defendants
published an article in the USA Today Newspaper on June 3, 2005 which was grossly incorrect and completely
misrepresented the facts by overstating the electrical output of the TASER(TM) X26 by a factor of
1 million. The complaint also asserts that the defendants engaged in the ongoing publication of misleading
articles related to the safety of TASER products, resulting in substantial economic damages to
TASER International, its customers and its shareholders. The case is in the discovery phase and
no trial date has been set.
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We intend to pursue and defend the foregoing lawsuits vigorously; however, the outcome of any
litigation is inherently uncertain and there can be no assurance that any liability that may
ultimately result from the resolution of these matters will not be in excess of amounts provided by
insurance coverage and will not have a material adverse effect on our business, operating results
or financial condition.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>NOTE 12 &#151; RELATED PARTY TRANSACTIONS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company occasionally charters an aircraft for business travel from Four Futures Corporation,
which is wholly-owned by Thomas P. Smith, President of the Company, and his family. For the three
and six months ended June&nbsp;30, 2005, the Company incurred expenses of approximately $126,000 and
$194,000, respectively, to Four Futures Corporation. For the three and six months ended June&nbsp;30,
2004, the Company incurred expenses of approximately $76,000 and $81,000, respectively, to Four
Futures Corporation. The Company believes that the rates charged by Four Futures Corporation are
equal to or below commercial rates the Company would pay to charter similar aircraft from
independent charter companies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company also occasionally charters an aircraft for business travel from Thundervolt, LLC, which
is wholly owned by Patrick W. Smith, Chief Executive Officer of the Company, and Phillips W. Smith,
Chairman of the Company&#146;s Board. For the three and six months ended June&nbsp;30, 2005, the Company
incurred expenses of approximately $104,000 and $203,000 to Thundervolt, LLC. No expenses were
incurred from Thundervolt, LLC for the three and six months ended June&nbsp;30, 2004. The Company
believes that the rates charged by Thundervolt, LLC are equal to or below commercial rates the
Company would pay to charter similar aircraft from independent charter companies.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>NOTE 13 &#151; RECENT ACCOUNTING PRONOUNCMENTS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In November&nbsp;2004, the FASB issued SFAS No.&nbsp;151, &#147;Inventory Costs, an amendment of ARB No.&nbsp;43,
Chapter&nbsp;4.&#148; SFAS No.&nbsp;151 amends the guidance in ARB No.&nbsp;43, &#147;Inventory Pricing,&#148; for abnormal
amounts of idle facility expense, freight, handling costs, and wasted material (spoilage)&nbsp;requiring
that those items be recognized as current-period expenses regardless of whether they meet the
criterion as &#147;so abnormal.&#148; This statement also requires that allocation of fixed production
overheads to the costs of conversion be based on the normal capacity of the production facilities.
The statement is effective for inventory costs incurred after June&nbsp;15, 2005. Management does not
expect this statement to have a material impact on the Company&#146;s financial position or results of
operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In December&nbsp;2004, the FASB issued SFAS No.&nbsp;123R, &#147;Share- based Payment.&#148; This standard is a
revision of SFAS No.&nbsp;123, Accounting for Stock- Based Compensation, and supersedes Accounting
Principles Board Opinion No.&nbsp;25, Accounting for Stock Issued to Employees, and its related
implementation guidance. SFAS No.&nbsp;123R requires the measurement of the cost of employees&#146; services
received in exchange for an award of the entity&#146;s equity instruments based on the grant-date fair
value of the award. The cost will be recognized over the period during which an employee is
required to provide service in exchange for the award. No compensation cost is recognized for
equity instruments for which employees do not render service. SFAS No.&nbsp;123R also requires the
benefits of tax deductions in excess of recognized compensation cost be reported as a financing
cash flow rather than as an operating cash flow as required under current literature. This
requirement will reduce net cash flows from operating activities in periods after the adoption. The
Company will adopt SFAS No.&nbsp;123R on January&nbsp;1, 2006, which will require stock-based compensation
expense to be recognized for the portion of outstanding unvested awards, based on the grant date
fair value of those awards. The Company is currently evaluating the transition provisions of this
standard; and to what extent the Company&#146;s equity instruments will be used in the future for
employees&#146; services. Therefore, the impact on the Company&#146;s financial statements of the adoption of
SFAS No.&nbsp;123R cannot be predicted with certainty.
</DIV>




<P align="center" style="font-size: 10pt">12
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left">
<A name="107"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 2. MANAGEMENT&#146;S DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF OPERATIONS.</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following is a discussion of the Company&#146;s financial condition and results of operations for
the three and six months ended June&nbsp;30, 2005 and June&nbsp;30, 2004. The following discussion may be
understood more fully by reference to the financial statements, notes to the financial statements,
and the Management&#146;s Discussion and Analysis of Financial Condition or Plan of Operation section
contained in the Company&#146;s Annual Report on Form 10-KSB/A filed on May&nbsp;23, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Certain statements contained in this report may be deemed to be forward-looking statements as
defined by the Private Securities Litigation Reform Act of 1995, and the Company intends that such
forward-looking statements be subject to the safe-harbor created thereby. <I>Such forward-looking
statements relate to, among other things: expected revenue and earnings growth; estimates regarding
the size of our target markets; successful penetration of the law enforcement market; expansion of
product sales to the private security, military and consumer self-defense markets; growth
expectations for new and existing accounts; expansion of production capability; new product
introductions; and our business model. We caution that these statements are qualified by important
factors that could cause actual results to differ materially from those reflected by the
forward-looking statements herein. Such factors include, but are not limited to: market acceptance
of our products; establishment and expansion of our direct and indirect distribution channels;
attracting and retaining the endorsement of key opinion-leaders in the law enforcement community;
the level of product technology and price competition for our products; the degree and rate of
growth of the markets in which we compete and the accompanying demand for our products; potential
delays in international and domestic orders; implementation risks of manufacturing automation;
risks associated with rapid technological change; execution and implementation risks of new
technology; new product introduction risks; ramping manufacturing production to meet demand;
litigation resulting from alleged product- related injuries; risks related to government inquiries
and pending class action and derivative litigation; media publicity concerning allegations of
deaths occurring after use of the TASER device and the negative impact this publicity could have on
sales; product quality risks; potential fluctuations in quarterly operating results; competition;
financial and budgetary constraints of prospects and customers; dependence upon sole and limited
source suppliers; fluctuations in component pricing; risks of governmental regulations; dependence
on a single product; dependence upon key employees; employee retention risks; and other factors
detailed in the Company&#146;s filings with the Securities and Exchange Commission</I>.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Overview</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We began operations in Arizona in 1993 for the purpose of developing and manufacturing non-lethal
self-defense devices. In December&nbsp;1999, we introduced our ADVANCED TASER device for sale in the law
enforcement market. Although we had limited financial resources, in 2001, we focused on building
the distribution channel for marketing our product line and developing a nationwide training
program to introduce our product line to law enforcement agencies, primarily in North America. We
also completed our initial public offering in 2001. In April&nbsp;2002, we received a grant from the
Office of Naval Research to aid the U.S. Government with the development of non-lethal weapons for
the military. This grant provided us with added funding for our research and development efforts,
and also validated our position as a leader in non-lethal technologies. In 2003, we remained
focused on expanding our manufacturing and sales infrastructure to support the growing demand for
our products, continued developing new product capabilities, and added resources to expand our
technology base. In May&nbsp;2003, we introduced our TASER X26 device which incorporated the strengths
of its predecessor, the ADVANCED TASER device, but also introduced a new &#147;shaped pulse&#148; technology,
and a smaller form factor. The TASER X26 began shipping in September&nbsp;2003. In June&nbsp;2003, we
purchased patent applications and patents from a former competitor in the manufacture and sale of
Taser conducted energy weapons to law enforcement. In 2003, we shipped our products to key United
States Military command posts, and worked with several key international police and military forces
to conduct safety and reliability testing for future deployment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our business grew substantially in 2004 and we achieved 177% growth in net sales compared to 2003,
earned $18.9&nbsp;million in net income, and generated more than $30.3&nbsp;million of cash through operating
activities. During 2004, our TASER X26 met with significant customer approval contributing more
than $46.1&nbsp;million of net sales for the year. However, since late 2004, as a result of on going
negative press coverage concerning the Company&#146;s products and their use, the Company experienced a decrease in sales during the first half of 2005
compared to the first half of 2004. In particular, these events have resulted in longer sales
cycles and delays in orders from prospective customers. The Company also experienced large
increases in selling, general and administrative expenses in the first half of 2005 compared to the
first half of 2004 as additional resources have been devoted to legal, public relations and
consulting activities.
</DIV>




<P align="center" style="font-size: 10pt">13
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our TASER brand product line consists
of several models. Our most often purchased device in 2005 has been the X26E TASER, with our
new &#147;shaped pulse&#148; technology, and a new smaller form factor that was introduced to our target markets
in May 2003. It is sold along with optional accessory packages of lithium batteries, various cartridges
that shoot two small, electrified probes up to 35 feet, data download package, extended warranty
packages, and a number of holsters. The ADVANCED TASER device which we introduced in December 1999
is still widely used across our target markets. There are three versions of the
ADVANCE TASER: the M26, the M18 and the M18-L, various cartridges that shoot two small, electrified
probes up to 35 feet, rechargeable batteries, a battery recharging system, data download package, extended
warranty packages, and a number of holstering accessories. In addition to the law enforcement line
of ADVANCED TASER products, we also developed a slightly less powerful private citizen version
of the ADVANCED TASER device for the private citizen self defense market. This line includes the
ADVANCED TASER M18L, with integrated laser sight, the ADVANCED TASER M18 without an integrated laser
sight, a cartridge that shoots two small, electrified robes up to 15 feet, and a number of
holstering accessories. We also introduced a citizen version of the X26E TASER with our &#147;shaped
pulse&#148; technology in the fourth quarter of 2004 and have devoted a limited amount of marketing
efforts to bring the X26C to selected cities within the U.S. in the first half of 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Law enforcement, military and corrections agencies represent our primary target markets. In each of
these markets, the decision to purchase TASER devices is normally made by a group of people
including the agency head, his or her training staff, and weapons experts. Depending on the size
and cost of the device deployment, the decision may involve political decision-makers such as city
council members and the federal government. The decision-making process can take as little as a few
weeks or as long as several years. In the first six months of 2005, we shipped a total of 9,614
orders at an average sale price of $2,441. In 2004, we shipped a total of 16,612 orders at an
average sale price of $4,072 per shipment. This compares to 9,580 orders shipped in 2003, at an
average sales price of $2,553 per order. Sales into the private citizen market were not significant
in 2004 and the first half of 2005. With the exception of several accounts to which we sell
directly, the vast majority of our law enforcement agency sales in
the United States occur through
our network of 28 law enforcement distributors. Sales in the private citizen market are made
through web sales and through 25 commercial distributors.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our
international sales are made through a network of over 80 international distributors that work in a
specific territory generally under short term exclusive agreements. Prior to 2004, we concentrated
our resources on the United States law enforcement and corrections market and our international
sales efforts were limited. We shipped products to approximately 43 countries during fiscal 2004.
Our sales outside the U.S. accounted for approximately 13% of our sales in the first half of 2005,
4% of our sales in 2004 and 12% of our sales in 2003. During 2005, we have been bolstering our
international presence by expanding our focus to a larger number of countries.
We have formalized our international distribution programs and have placed a greater emphasis on
managing individual international distributor performance. We are working to develop an international
Master Instructor training group modeled after our domestic training programs to further educate
police agencies internationally about our products.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We conduct manufacturing and final assembly operations at our headquarters in Scottsdale, Arizona
and we own all of the equipment required to manufacture and assemble our finished products. With
our current work force we are able to produce approximately 80,000 cartridges per month, and more
than 7,500 TASER devices. We believe we can expand our production capabilities by adding additional
personnel with negligible new investment in tooling and equipment.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our devices are not considered to be a &#147;firearm&#148; by the U.S. Bureau of Alcohol, Tobacco, Firearms
and Explosives. Therefore, no firearms-related regulations apply to the sale and distribution of
our devices within the United States. However, many states have regulations restricting the sale
and use of stun guns, inexpensive hand-held shock devices, which we believe apply to our devices.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our products are often used in aggressive confrontations that may result in serious, permanent
bodily injury or death to those involved. Our products may cause or be associated with these
injuries. A person injured in a confrontation or otherwise in connection with the use of our
products may bring legal action against us to recover damages on the basis of theories including
personal injury, wrongful death, negligent design, dangerous product or inadequate warning. We are
currently subject to a number of such lawsuits. We may also be subject to lawsuits involving
allegations of misuse of our products. If successful, personal injury, misuse and other claims
could have a material adverse effect on our operating results and financial condition. Although we
carry product liability insurance, significant litigation could also result in a diversion of
management&#146;s attention and resources, negative publicity and an award of monetary damages in excess
of our insurance coverage. The outcome of any litigation is inherently uncertain and there can be
no assurance that our existing or any future litigation will not have a material adverse effect on
our revenues, our financial condition or financial results.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our future challenges include risk management and managing the cost structure of our business. As
our weapon systems are deployed around the world, we expect to see an increased number of
complaints filed against the Company alleging injuries resulting from the use of a TASER device. We
carry product liability insurance to help defray the costs associated with these claims, but have
experienced increased legal costs and higher insurance premiums in recent periods which are
expected to continue in the future. In addition, the implications of Financial Accounting Standards
Board (&#147;FASB&#148;) 123R, which requires the expensing of fair value of employee stock options, may
result in significant additional compensation expense recorded by the Company in the future.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Critical Accounting Policies</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We have identified the following policies as critical to our business operations and the
understanding of our results of operations. The preparation of this Quarterly Report on Form 10-Q
requires us to make estimates and assumptions that affect the reported amount of assets and
liabilities, disclosure of contingent assets and liabilities at the date of our financial
statements, and the reported amounts of revenue and expenses during the reporting period. There can
be no assurance that actual results will not differ from those estimates. The effect of these
policies on our business operations is discussed below.
</DIV>




<P align="center" style="font-size: 10pt">14
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Revenue Recognition. </I>Our revenue recognition policy is significant because our revenue is a key
component of our results of operations. We recognize revenues when persuasive evidence of an
arrangement exists, delivery has occurred or services have been rendered, title has transferred,
the price is fixed and collectability is reasonably assured. All of the Company&#146;s sales are final
and our customers do not have a right to return the product. We charge certain of our customers
shipping fees, which are recorded as a component of net sales. We record training revenue as the
service is provided. In 2003, we began offering our customers the right to purchase extended
warranties on our ADVANCED TASER product and TASER X26 product. Revenue for warranty purchases is
deferred at the time of sale, and recognized over the warranty period. At June&nbsp;30, 2005, $960,000
was deferred under this program and
at December&nbsp;31, 2004, $839,000 was deferred under this program. The Company also defers revenue
associated with the one-on-one private citizen training and background checks that are included
with the purchase of an X26 <SUP style="font-size: 85%; vertical-align: text-top">C </SUP> private citizen device. The revenue associated
with these items is deferred until the service is provided. At June&nbsp;30, 2005, the Company had
deferred approximately $148,000 relating to these items, and another $33,000 relating to the
training of federal firearms licensed dealers who will sell the X26 <SUP style="font-size: 85%; vertical-align: text-top">C </SUP> device. At
December&nbsp;31, 2004, the Company had deferred approximately $135,000 relating to the private citizen
training and background checks, and another $33,000 relating to the training of federal firearms
licensed dealers who will sell the X26<SUP style="font-size: 85%; vertical-align: text-top">C </SUP> device.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Standard Warranty Costs. </I>We warrant our products from manufacturing defects for a period of one
year after purchase and will replace any defective unit with a new one for a fee. After the one
year warranty expires, if the device fails to operate properly for any reason, the Company will
replace the ADVANCED TASER device for a fee of $75, and the TASER X26 on a time and materials
basis. We track historical data related to returns and related warranty costs on a quarterly basis,
and estimate future warranty claims by applying our four quarter average warranty return rate to
our product sales for the period. We have also historically increased our reserve amount if we
become aware of a component failure that could result in larger than anticipated returns from our
customers. As of June&nbsp;30, 2005, our reserve for warranty returns was $605,000 compared to a
$458,000 reserved at December&nbsp;31, 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Inventory. </I>Our inventory balance includes the application of overhead expenditures. This
calculation is based upon the standard manufacturing costs for each sub assembly and finished
product in inventory at the period end, and includes allocations for indirect manufacturing,
manufacturing overhead expenditures and engineering expenses incurred during the period. On June
30, 2005, the reserve for obsolete inventory was $197,000, compared to $144,000 at December&nbsp;31,
2004. In the first half of 2005, the Company increased its inventory balances by $2.4&nbsp;million to
$9.2&nbsp;million at June&nbsp;30, 2005 from $6.8&nbsp;million at
December&nbsp;31, 2004, as the Company&#146;s purchasing and production
was in excess of demand.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Accounts Receivable</I>. Sales are typically made on credit and we generally do not require collateral.
We perform ongoing credit evaluations of our customers&#146; financial condition and maintain an
allowance for estimated potential losses. Uncollectible accounts are written off when deemed
uncollectible, and accounts receivable are presented net of an allowance for doubtful accounts.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Results of Operations</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Three and Six Months Ended June&nbsp;30, 2005 Compared to the Three and Six Months Ended June&nbsp;30, 2004</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Net Sales. </I>Net sales decreased $3.1&nbsp;million, or 19%, to $13.2&nbsp;million for the second quarter of
2005 compared to $16.3&nbsp;million for the second quarter of 2004. Net sales decreased $6.1&nbsp;million, or
21%, to $23.4&nbsp;million for the first six months of 2005 compared to $29.5&nbsp;million for the first six
months of 2004. We believe the principal reasons for the decreases in net sales relate to the
adverse effect on customers and potential customers of the negative publicity surrounding our
products or use of our products, and potential competition which may cause our customers to
postpone or delay orders to allow them to evaluate other competing products. Specifically, TASER
X26 device sales decreased $2.9&nbsp;million to $7.8&nbsp;million for the second quarter of 2005 compared to
$10.7&nbsp;million for the second quarter of 2004. TASER X26 device sales decreased $5.2&nbsp;million to
$14.4&nbsp;million for the first six months of 2005 compared to $19.6&nbsp;million for the first six months
of 2004. ADVANCED TASER device sales decreased $936,000 for the second quarter of 2005 to $655,000
compared to $1.6&nbsp;million for the second quarter of 2004. ADVANCED TASER device sales decreased $1.6
million for the first six months of 2005 to $1.4&nbsp;million compared to $3.0&nbsp;million for the first six
months of 2004. These declines are associated with reduced sales of the ADVANCED TASER product line
as many customers transitioned to the smaller and lighter TASER X26 models. Although device revenue
decreased, single cartridge sales increased $659,000 for the second quarter of 2005 to $4.4&nbsp;million
compared to $3.8&nbsp;million for the second quarter of 2004. Single cartridge sales increased $246,000
for the first six months of 2005 to $6.8&nbsp;million compared to $6.6&nbsp;million for the first six months
of 2004. These increases were the result of the significant amount of single cartridges included
in a U.S. Military order which was shipped in the second quarter.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">International sales for the second quarter and first six months of 2005 were $ $1.9&nbsp;million and
$3.0&nbsp;million, respectively, compared to international sales for the second quarter and first six
months of 2004 of $0.4&nbsp;million and $0.8&nbsp;million, respectively.
</DIV>




<P align="center" style="font-size: 10pt">15
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">For the three and six months ended June&nbsp;30, 2005 and 2004, sales by product line were as follows
(amounts in thousands):
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="12%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="4%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="15" style="border-bottom: 1px solid #000000"><B>For the Three Months Ended</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="15" style="border-bottom: 1px solid #000000"><B>For the Six Months Ended</B></TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Sales by Product Line</B></TD>
    <TD>&nbsp;</TD>

<TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>June 30, 2005</B></TD>
    <TD>&nbsp;</TD>

<TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>June 30, 2004</B></TD>
    <TD>&nbsp;</TD>

<TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>June 30, 2005</B></TD>
    <TD>&nbsp;</TD>

<TD nowrap align="center" colspan="7" style="border-bottom: 1px solid #000000"><B>June 30, 2004</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->

<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">TASER X26</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">7,842</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">59</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">10,747</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">66</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">14,405</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">62</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">19,604</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">67</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">ADVANCED TASER</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">655</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">5</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,591</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">10</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">1,353</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">6</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,043</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">10</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">AIR TASER</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">23</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">64</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">50</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">121</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Single Cartridges</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">4,409</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">33</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">3,750</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">23</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,842</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">29</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">6,596</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">22</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Research Funding</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">140</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">140</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">12</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">0</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Other</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-bottom: 1px solid #000000">138</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right" style="border-bottom: 1px solid #000000">1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-bottom: 1px solid #000000">158</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right" style="border-bottom: 1px solid #000000">1</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-bottom: 1px solid #000000">621</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right" style="border-bottom: 1px solid #000000">3</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-bottom: 1px solid #000000">83</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right" style="border-bottom: 1px solid #000000">0</TD>
    <TD nowrap>%</TD>
</TR>
<TR>    <TD>&nbsp;</TD></TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">13,207</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">100</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">16,322</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">100</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">23,411</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">100</TD>
    <TD nowrap>%</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">29,459</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right">100</TD>
    <TD nowrap>%</TD>
</TR>
<TR valign="bottom" style="font-size: 1px">
    <TD><DIV style="margin-left:15px; text-indent:-15px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-bottom: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-bottom: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-bottom: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-bottom: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-bottom: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right" style="border-bottom: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right" style="border-bottom: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="right">&nbsp;</TD>
    <TD align="right" style="border-bottom: 3px double #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In the second quarter of 2005, the number of TASER X26 devices sold decreased by 4,372 units, or
30%, to 10,238 devices sold in the second quarter of 2005 compared to 14,610 devices sold in the
second quarter of 2004. For the first six months of 2005, the number of TASER X26 devices sold
decreased by 7,591 units, or 29%, to 18,925 devices sold for the first six months of 2005 compared
to 26,516 devices sold for the first six months of 2004. In the second quarter of 2005, the number
of ADVANCED TASER devices sold decreased by 2,426 units, or 70%, to 1,034 devices sold in the
second quarter of 2005 compared to 3,460 devices sold in the second quarter of 2004. For the first
six months of 2005, the number of ADVANCED TASER devices sold decreased by 4,779 units, or 74%, to
1,722 devices sold for the first six months of 2005 compared to 6,501 devices sold for the first
six months of 2004. Single cartridge sales increased by 24,623 units, or 10%, to 265,560 sold in
the second quarter of 2005 compared to 240,937 sold in the second quarter of 2004. Single cartridge
sales increased by 1,595 units to 419,476 sold for the first six months of 2005 compared to 417,881
sold for the first six months of 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Cost of Products Sold. </I>Cost of products sold declined $0.6&nbsp;million for both the second quarter and
first six months of 2005 compared to the second quarter and first six months of 2004, respectively.
However, as a percentage of net sales, cost of products sold increased to 36% of net sales for the
second quarter of 2005, and 40% of net sales for the first six months of 2005 compared to 33% of
net sales for the second quarter of 2004, and 34% of net sales for the first six months of 2004.
These percentage increases are directly attributable to the decline in device sales which resulted
in fewer units over which to apply indirect manufacturing expenses, resulting in higher per unit
costs. Indirect expenses primarily include indirect salaries for manufacturing support personnel,
scrapped materials, freight, supplies and depreciation. Direct manufacturing costs also increased
as a percentage of net sales to 27% of net sales for the second quarter of 2005, and 28% of net
sales for the first six months of 2005 compared to 25% of net sales for both the second quarter and
first six months of 2004. These increases in direct manufacturing expenses as a percentage of
sales were primarily due to lower production yields in 2005 and to a lesser extent a change in the
sales mix to a higher concentration of cartridges.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Gross Margin. </I>Gross margins declined $2.5&nbsp;million to $8.4&nbsp;million for the second quarter of 2005
compared to $10.9&nbsp;million for the second quarter of 2004. As a percentage of net sales, gross
margins declined to 64% for the second quarter of 2005 compared to 67% for the second quarter of
2004. Gross margins declined $5.4&nbsp;million to $14.1&nbsp;million for the first six months of 2005
compared to $19.5&nbsp;million for the first six months of 2004. As a percentage of net sales, gross
margins declined to 60% for the first six months of 2005 compared to 66% for the first six months
of 2004. These decreases were due to the higher cost of sales per unit for the reasons discussed
above.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Sales, General and Administrative Expenses. </I>Sales, general and administrative expenses increased
$4.1&nbsp;million, or 122%, to $7.5&nbsp;million for the second quarter of 2005 compared to $3.4&nbsp;million for
the second quarter of 2004. Sales, general and administrative expenses increased $6.8&nbsp;million, or
114%, to $12.7&nbsp;million for the first six months of 2005 compared to $5.9&nbsp;million for the first six
months of 2004. These increases in sales, general and administrative expenses are partially the
result of the Company developing its infrastructure in the second half of 2004 to support its
business. Included in these increases were significant increases in the Company&#146;s legal and
professional fees, salaries and benefits, travel expenses, liability insurance, and public
relations expenses. The increase in public relations activities is associated with the Company&#146;s
continuing efforts to educate the public in regard to the safety and efficacy of its products.
Increases in legal fees relate to the Company&#146;s defense costs in the securities litigation, product
liability, contract litigation matters discussed further in Part&nbsp;II, Item&nbsp;1 below.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Research and Development Expenses. </I>Research and development expenses increased $138,000, or 65%, to
$351,000 for the second quarter of 2005 compared to $213,000 for the second quarter of 2004.
Research and development expenses increased $219,000, or 46%, to $699,000 for the first six months
of 2005 compared to $480,000 for the first six months of 2004. These increases are due to higher
headcounts to support the Company&#146;s continuing efforts to develop new products such as a projectile
weapon platform and the TASER Anti Personnel Munition (TAPM).
</DIV>




<P align="center" style="font-size: 10pt">16
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Interest Income. </I>Interest income increased $293,000 to $348,000 for the second quarter of 2005
compared to $55,000 for the second quarter of 2004. Interest income increased $453,000 to $547,000
for the first six months of 2005 compared to $94,000 for the first six months of 2004. These
increases in interest income resulted from higher cash reserves invested in higher yielding
investments. The Company had cash, cash equivalents and investment balances of $44.0&nbsp;million at
June&nbsp;30, 2005 compared to $34.6&nbsp;million at June&nbsp;30, 2004. In addition, the Company&#146;s cash and
investment accounts earned interest at an approximate rate of 3.0% and 2.3% during the second
quarter and first six months of 2005 compared to 0.7% and 0.8% during the second quarter and first
six months of 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Income Taxes. </I>The provision for income tax decreased $2.5&nbsp;million to $360,000 for the second
quarter of 2005 compared to $2.9&nbsp;million for the second quarter of 2004. The provision for income
tax decreased $4.6&nbsp;million to $467,000 for the first six months of 2005 compared to $5.1&nbsp;million
for the first six months of 2004. These decreases were the result of lower income before taxes for
both the second quarter and first six months of 2005. The effective income tax rate for the second
quarter and first six months of 2005 was 41.4% and 40.8%, respectively, compared to 38.9% for both
the second quarter and first six months of 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">For the first six months of 2005, we received approximately $1.2&nbsp;million of tax benefits from the
exercise of stock options and subsequent sale of the underlying stock compared to $11.6&nbsp;million for
the first six months of 2004. The net deferred tax asset as of June&nbsp;30, 2005 totaled $27.1&nbsp;million
compared to $26.4&nbsp;million at December&nbsp;31, 2004.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Net Income. </I>Net income decreased $4.0&nbsp;million to $0.5&nbsp;million for the second quarter of 2005
compared to $4.5&nbsp;million for the second quarter of 2004. Net income decreased $7.3&nbsp;million to $0.7
million for the first six months of 2005 compared to $8.0&nbsp;million for the first six months of 2004.
The decreases in net income resulted primarily from the decline in sales volume for the quarter and
year to date, and the negative effect this had on the Company&#146;s ability to leverage its
fixed costs. Income per basic share declined to $0.01 for the second quarter and first six months
of 2005 compared to $0.08 for the second quarter of 2004 and $0.14 for the first six months of
2004. Income per diluted share also declined to $0.01 per share for the second quarter and first
six months of 2005 compared to $0.07 for the second quarter of 2004 and $0.13 for the first six
months of 2004. Income per basic share calculations were based on weighted average shares
outstanding of 61,319,959 for the second quarter of 2005 and 57,558,688 for the second quarter of
2004. Income per basic share calculations were based on weighted average shares outstanding of
61,209,420 for the first six months of 2005 and 55,477,972 for the first six months of 2004. Income
per diluted share calculations were based on weighted average shares outstanding of 63,951,739 for
the second quarter of 2005 and 64,437,526 for the second quarter of 2004. Income per diluted share
calculations were based on weighted average shares outstanding of 64,152,543 for the first six
months of 2005 and 62,513,808 for the first six months of 2004. All share and per share amounts
have been retroactively restated for the two stock splits executed in the second and fourth
quarters of 2004.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Liquidity and Capital Resources</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Liquidity. </I>As of June&nbsp;30, 2005, the Company had working capital of $38.7&nbsp;million compared to
working capital of $51.1&nbsp;million at December&nbsp;31, 2004. The decrease in working capital was
primarily due to the decrease in accounts receivable resulting from lower sales levels in the first
half of 2005 compared to the second half of 2004, a reduction in the current portion of the
deferred tax asset to reflect the expected use of net operating loss carry forwards in the next
twelve months, and a shift in our investments from short-term to long-term which was made to take
advantage of the higher yields on the longer- term investments. A portion of the short-term
investments were also converted to cash and cash equivalents to give the Company more cash on hand
to meet cash flow needs. The decreases in accounts receivable and short-term investments were
partially offset by increases in inventory. The increase in inventory
is a result of purchasing and production
levels in excess of demand.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">During the first half of 2005, we used $0.8&nbsp;million of cash in operations compared to the $13.2
million generated from operations in the same period in 2004. The decrease in cash provided by
operations was primarily due to the decrease in net income from $8.0&nbsp;million in the first half of
2004 to $0.7&nbsp;million in the first half of 2005. The Company realized tax benefits generated from
the exercise and subsequent sale of stock options of $0.5&nbsp;million in the first half of 2005
compared to $4.5&nbsp;million in the first half of 2004, due to the lower income before taxes in the
first half of 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We generated $2.1&nbsp;million of cash from investing activities during the first half of 2005, compared
to $2.1&nbsp;million of cash used in investing activities in the first half of 2004. The proceeds from
investments which matured in the first half of 2005 of $22.8&nbsp;million were partially offset by the
purchase of other investments of $15.0&nbsp;million and $5.6&nbsp;million of investments in property and
equipment. Of the funds invested in property and equipment in the first half of 2005, $4.0&nbsp;million
was used for the construction of our new 100,000 square foot manufacturing and corporate
headquarters facility in Scottsdale, Arizona, $0.9&nbsp;million was used for production equipment, and
$0.7&nbsp;million was used to purchase and install new computer equipment and software, including
investments associated with a new ERP system.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">During the first half of 2005, we generated $0.4&nbsp;million of cash from financing activities,
compared to the $7.6&nbsp;million generated from financing activities in the first half of 2004. The
$0.4&nbsp;million of cash generated from financing activities in the first half of 2005 was driven by
proceeds from stock options exercised, compared to $5.4&nbsp;million of proceeds of stock options
exercised in the same period of 2004. Cash generated from the exercise of warrants was $2.5&nbsp;million
in the first half of 2004. All unexercised public warrants expired in 2004, so there was not any
cash generated from the exercise of warrants in the first half of 2005. The Company paid off its
notes payable of $250,000 in the first half of 2004.
</DIV>




<P align="center" style="font-size: 10pt">17
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Capital Resources. </I>On June&nbsp;30, 2005, the Company had cash and investments of $44.0&nbsp;million and no
debt outstanding. At June&nbsp;30, 2005, the Company had no remaining purchase commitments to complete
the construction of its new manufacturing and headquarters facility in Scottsdale Arizona.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We negotiated a revolving line of credit on July&nbsp;13, 2004, through a domestic bank. The total
availability on the line is $10&nbsp;million. The line is secured by substantially all of our assets,
other than intellectual property, and bears interest at varying rates, ranging from LIBOR plus 1.5%
to prime. The line of credit matures on July&nbsp;13, 2006 and requires monthly payments of interest
only. At June&nbsp;30, 2005, there was a calculated availability of $5.8&nbsp;million based on the defined
borrowing base, which is based on the Company&#146;s eligible accounts receivable and inventory.
However, there was no outstanding balance under the line of credit at June&nbsp;30, 2005, and no
borrowings under the line as of the date of the filing of this Form 10-Q.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Commitments and Contingencies</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The following table outlines our future contractual financial obligations, in thousands, as of June
30, 2005:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="40%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="3%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">Less than</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3">After</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">Total</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">1 year</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">1-3 years</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">4-5 years</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" colspan="3" style="border-bottom: 1px solid #000000">5 years</TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Operating Leases</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">222</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">129</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">92</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Capital Leases</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR valign="bottom" style="background: #cceeff">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Purchase commitment for new headquarters facility</DIV></TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="19" align="left" style="border-top: 1px solid #000000">&nbsp;</TD>
</TR>
<TR>    <TD>&nbsp;</TD></TR>
<TR valign="bottom">
    <TD><DIV style="margin-left:15px; text-indent:-15px">Total contractual cash obligations</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">222</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">129</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">92</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="right">$</TD>
    <TD align="right">&#151;</TD>
    <TD>&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD colspan="19" align="left" style="border-top: 3px double #000000">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>
<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We believe our existing cash balances and short-term and long-term investments, together with cash
expected to be generated from operating activities, will be sufficient to meet our anticipated cash
needs for at least the next 12&nbsp;months. Our future capital requirements will depend on many factors,
including our level of revenues, the timing and extent of spending to support product development
efforts, the expansion of our sales and marketing activities, the timing of introductions of new
products, competitive factors, the outcome of pending or future litigation and the level of
acceptance of our products in domestic and international markets. We could be required, or could
elect, to seek additional funding through public or private equity or debt financing and additional
funds may not be available on terms acceptable to us or at all.
</DIV>


<DIV align="left">
<A name="108"></A>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 4. CONTROLS AND PROCEDURES</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><I>Evaluation of disclosure controls and procedures.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our Chief Executive Officer and Chief Financial Officer evaluated the effectiveness of our
disclosure controls and procedures (as defined in Rules&nbsp;13a-15(e) and 15d-15(e) under the
Securities Exchange Act of 1934, as amended) as of the end of the period covered by this Quarterly
Report on Form 10-Q. Based on this evaluation, our Chief Executive Officer and Chief Financial
Officer have concluded that our disclosure controls and procedures were effective as of June&nbsp;30,
2005 to ensure that information we are required to disclose in reports that we file or submit under
the Securities Exchange Act of 1934 (i)&nbsp;is recorded, processed, summarized and reported within the
time periods specified in Securities and Exchange Commission rules and forms and (ii)&nbsp;is
accumulated and communicated to our management, including our Chief Executive Officer and our Chief
Financial Officer, as appropriate to allow timely decisions regarding required disclosure. Our
disclosure controls and procedures are designed to provide reasonable assurance that such
information is accumulated and communicated to our management. Our disclosure controls and
procedures include components of our internal control over financial reporting. Management&#146;s
assessment of the effectiveness of our internal control over financial reporting is expressed at
the level of reasonable assurance because a control system, no matter how well designed and
operated, can provide only reasonable, but not absolute, assurance that the control system&#146;s
objectives will be met.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><I>Changes in internal control over financial reporting.</I>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In April&nbsp;2005, subsequent to the issuance of our financial statements for the year ended December
31, 2004, we discovered an error in that certain stock option grants were treated as incentive
stock options when the grants should have been classified as non-statutory stock options because of
the annual limitation on incentive stock options under applicable tax regulations. For employees
who exercised stock option grants and held the underlying stock, to the extent such option grants
should have been classified as non-statutory stock options (as opposed to incentive stock options),
the employee&#146;s taxable compensation was understated and we were entitled to a deduction from our
taxable income equal to the amount of additional compensation attributable to the exercise of
non-statutory stock options. We also improperly tax affected the pro forma expense associated with
incentive stock options for the year ended December&nbsp;31, 2004. As a result of the foregoing, we
restated our previously issued financial statements contained in the initial filing of our Form
10-KSB for the year ended December&nbsp;31, 2004 and such restated results were included our Form
10-KSB/A filed on May&nbsp;23, 2005.
</DIV>



<P align="center" style="font-size: 10pt">18
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">With respect to the restatement described above, we have determined that the errors resulted from
an inadequate control over the accounting for our stock option programs, and under standards
established by the Public Company Accounting Oversight Board, constituted a &#147;material weakness&#148; in
our internal control over financial reporting. We consulted with and advised our Audit Committee of
our Board of Directors of our determination.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">During our quarter ended June&nbsp;30, 2005, in response to the material weakness described above and in
our Amended Form 10-KSB, our management took actions to enhance the operation and effectiveness of
our internal controls and procedures to ensure that we properly classify and account for stock
options as either incentive stock options or non-statutory stock options and that option exercises
will have the proper payroll taxes withheld based on the classification of the option. These
actions included reviewing the classification of all previously issued options and creating
detailed schedules to ensure that they were properly classified as incentive stock options or
non-statutory stock options and instituting additional procedures designed to ensure that any
future option grants are properly classified. For grants that had components of incentive stock
options and non-statutory stock options, the Company prepared roll-forward schedules to calculate
the number of incentive stock option and non-statutory stock option shares available to exercise.
These schedules were used to evaluate the impact of the error and will be used going forward to
properly account for the stock option exercises. In addition, we are currently evaluating various
stock option accounting software programs which would provide us with additional assistance in
tracking our stock option activity and the financial reporting of such activity.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Other than as described above, there has not been any change in our internal control over financial
reporting during our quarter ended June&nbsp;30, 2005 that has materially affected, or is reasonably
likely to materially affect, our internal control over financial reporting, except as described
above.
</DIV>




<P align="center" style="font-size: 10pt">19
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left">
<A name="109"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>PART II&#151;OTHER INFORMATION</B>
</DIV>

<DIV align="left">
<A name="110"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 1. LEGAL PROCEEDINGS</B>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 6pt"><B>Securities Litigation</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On January&nbsp;10, 2005, a securities class action lawsuit was filed in the United States District
Court for the District of Arizona against the Company and certain of its officers and directors,
captioned Malasky v. TASER International, Inc., et al., Case No.&nbsp;2:05 CV 115. Since then, numerous
other securities class action lawsuits were filed against the Company and certain of its officers
and directors. The majority of these lawsuits were filed in the District of Arizona. Four actions
were filed in the United States District Court for the Southern District of New York and one in the
Eastern District of Michigan. The New York and Michigan actions were transferred to the District of
Arizona. The cases were recently consolidated, and the court has appointed a lead plaintiff and
lead counsel. Pursuant to an order entered by the court, defendants need not respond to any of the
complaints originally filed in these actions. The lead plaintiff will file an amended consolidated
complaint, to which Defendants will respond.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">These actions are filed on behalf of the purchasers of the Company&#146;s stock in various class
periods, beginning as early as May&nbsp;29, 2003 and ending as late as January&nbsp;14, 2005. The complaints
allege, among other things, violations of Section 10(b) of the Securities Exchange Act of 1934, as
amended, and Rule&nbsp;10b-5, promulgated thereunder, and seek unspecified monetary damages and other
relief against all defendants. The complaints allege generally that the Company and the individual
defendants made false or misleading public statements regarding, among other things, the safety of
the Company&#146;s products and the Company&#146;s ability to meet its sales goals, including the validity of
a $1.5&nbsp;million sales order with one of the Company&#146;s distributors in the fourth quarter of 2004. We
intend to defend these lawsuits vigorously; however, the outcome of any litigation is inherently
uncertain and there can be no assurance that any liability that may ultimately result from the
resolution of these matters will not be in excess of amounts provided by insurance coverage and
will not have a material adverse effect on our business, operating results or financial condition.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Shareholder Derivative Litigation</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On January&nbsp;11, 2005, a shareholder derivative lawsuit was filed in the United States District Court
for the District of Arizona purportedly on behalf of the Company and against certain of its
officers and directors, captioned Goldfine v. Culver, et al., Case No.&nbsp;2:05 CV 123. Since then,
five other shareholder derivative lawsuits were filed in the District of Arizona, two shareholder
derivative lawsuits were filed in the Arizona Superior Court, Maricopa County, and one shareholder
derivative lawsuit was filed in the Delaware Chancery Court. On February&nbsp;9, 2005, the shareholder
derivative actions pending in federal court were consolidated into a single action in the United
States District Court for the District of Arizona under the caption, In re TASER International
Shareholder Derivative Litigation, Case No.&nbsp;2:05 CV 123. On May&nbsp;13, 2005, plaintiffs in the
consolidated federal derivative action filed a consolidated amended complaint. Pursuant to an order
entered by the court, Defendants will respond only to this consolidated amended complaint. The
derivative actions in Arizona state court were consolidated and plaintiffs filed a consolidated
complaint. Plaintiffs in the Arizona state court action agreed to stay that action pending
resolution of the consolidated federal derivative action. On April&nbsp;8, 2005, defendants filed a
motion to stay or, in the alternative, dismiss the Delaware derivative action; plaintiff&#146;s
opposition to defendants&#146; motion was due to be filed on August&nbsp;22, 2005.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The complaints in the shareholder derivative lawsuits generally allege that the defendants breached
the fiduciary duties owed to the Company and its shareholders by reason of their positions as
officers and/or directors of the Company. The complaints claim that such duties were breached by
defendants&#146; disclosure of allegedly false or misleading statements about the safety and
effectiveness of Company products and the Company&#146;s financial prospects. The complaints also claim
that fiduciary duties were breached by defendants&#146; alleged use of non-public information regarding
the safety of Company products and the Company&#146;s financial condition and future business prospects
for personal gain through the sale of the Company&#146;s stock. The Company is named solely as a nominal
defendant against which no recovery is sought.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">On May&nbsp;4, 2005, a lawsuit was filed in the Delaware Chancery Court against the Company, captioned
Lucian B. Dinkens v. TASER International, Inc., Case No.&nbsp;5749754, to compel the Company to give the
plaintiff the right to inspect and copy certain books and records of the Company pursuant to
Section&nbsp;220 of Delaware General Corporation Law. The Company filed an answer to the complaint on
June&nbsp;7, 2005.
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Securities and Exchange Commission Informal Inquiry</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In December&nbsp;2004, the Company was informed that the staff of the Securities and Exchange Commission
had commenced an informal inquiry, which concerns the basis for the Company&#146;s public statements
regarding the safety and performance of the Company&#146;s products, certain disclosure issues, and the
accounting for certain transactions. The inquiry is ongoing.
</DIV>




<P align="center" style="font-size: 10pt">20
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Contract Litigation</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In March&nbsp;2000, Thomas N. Hennigan, a distributor of our products from late 1997 through early 2000,
sued us in the United States District Court, Southern District of New York. We had previously sued
him in February&nbsp;2000 but had not served him. After the New York case was dismissed in February&nbsp;2001
for lack of personal jurisdiction, Mr.&nbsp;Hennigan brought a counterclaim in the United States
District Court for the District of Arizona. Mr.&nbsp;Hennigan claims the exclusive right to sell our
products to many of the largest law enforcement, corrections, and military agencies in the United
States. He seeks monetary damages that may amount to as much as $400&nbsp;million against us allegedly
arising in connection with his service to us as a distributor. His claims rest on theories of our
failure to pay commissions, breach of contract, promissory estoppel, breach of fiduciary duty, and
on related theories. No written contract was ever signed with Mr.&nbsp;Hennigan. We also believe that he
has no reasonable basis for claims based on informal or implied contractual rights and will be
unable to prove his damages with reasonable certainty. Mr.&nbsp;Hennigan died in April&nbsp;2001 and the case
is now being prosecuted by his estate. On May&nbsp;24, 2002, H.A. Russell was permitted to proceed as an
additional defendant-counterclaimant. The Company filed various motions in November&nbsp;2002 for
partial summary judgment including a motion to dismiss his claims. On September&nbsp;30, 2003, the Court
issued an order granting the Company&#146;s motion for partial summary judgment to dismiss Mr.&nbsp;Russell&#146;s
claims and struck Hennigan&#146;s jury demand. On April&nbsp;14, 2004, the Court issued an opinion partially
granting the Company&#146;s motion for partial summary judgment on certain joint venture,
post-termination, post-death and exclusivity claims. A pretrial conference was held on February&nbsp;18,
2005 and no trial date has been set.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In September&nbsp;2004, the Company was served with a summons and complaint in the matter of Roy Tailors
Uniform Co., Inc. v. TASER International in which the plaintiff alleges that it is entitled to
commissions for disputed sales that were made to customers that are claimed to be plaintiff&#146;s
customers for which plaintiff is seeking monetary damages. Plaintiff failed to sign a distributor
agreement with the Company and did not have distribution rights with the Company. This case is in
the discovery phase and a trial date has not been set.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We intend to defend the foregoing lawsuits vigorously; however, the outcome of any litigation is
inherently uncertain and there can be no assurance that any liability that may ultimately result
from the resolution of these matters will not be in excess of amounts provided by insurance
coverage and will not have a material adverse effect on our business, operating results or
financial condition.
</DIV>




<P align="center" style="font-size: 10pt">21
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Product Liability Litigation</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">From
April&nbsp;2003 to August&nbsp;2005, the Company was named as a defendant in 35 lawsuits in which the
plaintiffs alleged either wrongful death or personal injury in situations in which the TASER device
was used (or present) by law enforcement officers or during training exercises. Three of the cases
are firearms&#146; related death cases &#151; not death allegedly caused by Taser device. One case is a class
action &#151; presently believed to be a class of one. One case has been dismissed by summary judgment
order, two cases have been dismissed with prejudice, another case was dismissed without prejudice but has been
refiled, and the balance of the cases are pending. With respect to
each of these 35 cases, the
table below lists the name of plaintiff, the date the Company was served with process, the
jurisdiction in which the case is pending, the type of claim and the status of the matter. In each
of these lawsuits, the plaintiff is seeking monetary damages from the Company. In one case the
plaintiff is seeking injunctive relief in addition to monetary damages. Cases are being submitted
for the defense of each of these lawsuits to our insurance carriers as we maintained during these
periods and continue to maintain product liability insurance coverage with varying limits and
deductibles. The Company&#146;s product liability insurance coverage during these periods ranged from
$5,000,000 to $10,000,000 in coverage limits and from $10,000 to $250,000 in deductibles. The
Company is defending each of these lawsuits vigorously. Although the Company does not expect the
outcome in any individual case to be material, the outcome of any litigation is inherently
uncertain and there can be no assurance that any liability that may ultimately result from the
resolution of these matters will not be in excess of amounts provided by insurance coverage and
will not have a material adverse effect on our business, operating results or financial condition.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="8%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="25%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="30%">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD>&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center"><B>Month</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center">&nbsp;</TD>
</TR>
<TR style="font-size: 8pt" valign="bottom">
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Plaintiff</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Served</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Jurisdiction</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Claim Type</B></TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="center" style="border-bottom: 1px solid #000000"><B>Status</B></TD>
</TR>

<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Del&#146;Ostia
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">3/2004
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">US District Court, SD FL
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Wrongful Death
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Dismissed With Prejudice</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Alvarado
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">4/2003
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">CA Superior Court
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Wrongful Death
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Discovery Phase</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">City of Madera
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">6/2003
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">CA Superior Court
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Wrongful Death
</TD>
    <TD>&nbsp;</TD>
    <TD nowrap align="left" valign="top">Dismissed by Summary Judgment</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Borden
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">9/2004
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">US District Court, SD IN
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Wrongful Death
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Discovery Phase</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Thompson
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">9/2004
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">MI Circuit Court
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Wrongful Death
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Discovery Phase</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Pierson
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">11/2004
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">US District Court, CD CA
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Wrongful Death
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Discovery Phase</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Glowczenski
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">10/2004
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">US District Court, ED NY
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Wrongful Death
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Case Stayed</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">LeBlanc
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">12/2004
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">US District Court, CD CA
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Wrongful Death
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Discovery Phase</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Elsholtz
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">12/2004
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">TX District Court
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Wrongful Death
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Discovery Phase</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Kerchoff
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">6/2004
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">US District Court, ED MI
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Training Injury
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Dismissed, Refiled</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Powers
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">11/2003
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">AZ Superior Court
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Training Injury
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">November&nbsp;2005 Trial Scheduled</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Cook
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">8/2004
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">NV District Court
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Training Injury
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Discovery Phase</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Stevens
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">10/2004
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">OH Court Common Pleas
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Training Injury
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Discovery Phase</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Eckenroth
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">11/2004
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">AZ Superior Court
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Training Injury
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Discovery Phase</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Lipa
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">2/2005
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">MI Circuit Court
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Training Injury
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Discovery Phase</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Dimiceli
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">3/2005
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">FL Circuit Court
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Training Injury
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Discovery Phase</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Cosby
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">8/2004
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">US District Court, SD NY
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Injury During Arrest
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">SJ Motion Being Filed</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Blair
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">3/2005
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">US District Court, MD NC
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Injury During Detention
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">SJ Motion Filed Awaiting Ruling</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Madrigal
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">5/2005
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">AZ Superior Court
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Wrongful Death
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Dismissed With Prejudice</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Washington
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">5/2005
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">US District Court, ED CA
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Wrongful Death
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Discovery Phase</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Clark
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">5/2005
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">US District Court, ND TX
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Wrongful Death
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Discovery Phase</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Collins
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">5/2005
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">AZ Superior Court
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Training Injury
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Discovery</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Allen
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">5/2005
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">AZ Superior Court
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Training Injury
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Discovery</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Sanders
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">5/2005
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">US District Court ED CA
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Wrongful Death
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Discovery</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Fleming
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">5/2005
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">US District Court ED LA
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Wrongful Death
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Discovery</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Woolfolk
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">6/2005
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">US District Court MD FL
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Wrongful Death
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Complaint Served</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">J.J. &#038; J.B.
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">7/2005
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">FL Circuit Court
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">2 Training Injuries
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Complaint Served</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Lewis
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">7/2005
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">US District Court Tal FL
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Injury During Arrest
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Complaint Served</TD>
</TR>
<TR valign="bottom">
    <TD nowrap align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Vil. Of Dolton
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">8/2005
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">US District Court ND IL
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Class&nbsp;Action
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Complaint Served</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Lash
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">8/2005
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">US District Court ED MO
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Injury During Arrest
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Complaint Served</TD>
</TR>

<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Howard
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">8/2005
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">AZ Superior Court
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Training Injury
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Complaint Served</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Wagner
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">8/2005
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">AZ Superior Court
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Training Injury
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Complaint Served</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Gerdon
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">8/2005
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">AZ Superior Court
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Training Injury
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Complaint Served</TD>
</TR>
<TR valign="bottom">
    <TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Gallant
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">8/2005
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">AZ Superior Court
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Training Injury
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Complaint Served</TD>
</TR>
<TR valign="bottom">

<TD align="right" valign="top"><DIV style="margin-left:0px; text-indent:-0px">Nowell
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="right" valign="top">8/2005
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">US District Court ND TX
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Wrongful Death
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Complaint Served</TD>
</TR>

<!-- End Table Body -->
</TABLE>
</DIV>


<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>Other Litigation</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In January&nbsp;2005, the Company filed litigation in U.S. District Court for the Western District of
North Carolina against Stinger Systems, Inc. and Robert Gruder alleging false advertising and a
violation of the Lanham Act. The defendants have filed a counterclaim against the Company alleging
defamation. This case is in the discovery phase and no trial date has been set.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In February&nbsp;2005, the Company filed litigation in Superior Court for Maricopa County, Arizona
against its former patent attorney, Thomas G. Watkins III, alleging breach of fiduciary duty and
estoppel arising out of ownership and inventorship claims Mr.&nbsp;Watkins has made against a patent he
filed for the Company for certain technology utilized in the TASER X26 product. This case is in the
discovery phase and no trial date has been set.
</DIV>




<P align="center" style="font-size: 10pt">22
</DIV>

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<H5 align="left" style="page-break-before:always"><A HREF="#tocpage">Table of Contents</A></H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In July 2005, the Company filed a lawsuit
in Superior Court for Maricopa County against Gannett Co., Inc., parent company of the USA Today
Newspaper and the Arizona Republic, for libel, false light invasion of privacy, injurious
falsehood and tortuous interference with business relations. The complaint alleges that the defendants
published an article in the USA Today Newspaper on June 3, 2005 which was grossly incorrect and completely
misrepresented the facts by overstating the electrical output of the TASER(TM) X26 by a factor of
1 million. The complaint also asserts that the defendants engaged in the ongoing publication of misleading
articles related to the safety of TASER products, resulting in substantial economic damages to
TASER International, its customers and its shareholders. The case is in the discovery phase and
no trial date has been set.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We intend to pursue and defend the foregoing lawsuits vigorously; however, the outcome of any
litigation is inherently uncertain and there can be no assurance that any liability that may
ultimately result from the resolution of these matters will not be in excess of amounts provided by
insurance coverage and will not have a material adverse effect on our business, operating results
or financial condition.
</DIV>

<DIV align="left">
<A name="111"></A>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 12pt"><B>ITEM 6. EXHIBITS</B>
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="93%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">31.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chief Executive Officer Certification pursuant to Rule&nbsp;13a-14(a) under the Securities Exchange Act of 1934.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">31.2
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chief Financial Officer Certification pursuant to Rule&nbsp;13a-14(a) under the Securities Exchange Act of 1934.
</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">32.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chief Executive Officer
Certification pursuant to U.S.C. Section&nbsp;1350 as adopted pursuant to Section&nbsp;906 of the Sarbanes-Oxley Act of 2002
</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">32.2
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chief Financial Officer
Certification pursuant to U.S.C. Section&nbsp;1350 as adopted pursuant to Section&nbsp;906 of the Sarbanes-Oxley Act of 2002.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">99.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certain Factors to Consider in Connection with Forward-Looking Statements</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>




<P align="center" style="font-size: 10pt">23
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left">
<A name="112"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>SIGNATURES</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Pursuant to the requirements of the Securities Exchange Act of 1934, the registrant has duly caused
this report to be signed on its behalf by the undersigned, thereunto duly authorized.
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="40%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="8%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">TASER INTERNATIONAL, INC.<BR>
(Registrant)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Date:
August 12, 2005
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Patrick W. Smith</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Patrick W. Smith,<BR>
Chief Executive Officer<BR>
(Principal Executive Officer)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Date:
August 12, 2005,
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/ Daniel M. Behrendt</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Daniel M. Behrendt<BR>
Chief Financial Officer<BR>

(Principal Financial and Accounting Officer)</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>




<P align="center" style="font-size: 10pt">24
</DIV>

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<DIV style="font-family: 'Times New Roman',Times,serif">



<DIV align="left">
<A name="113"></A>
</DIV>

<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>Index to Exhibits</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Exhibits:
</DIV>

<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="5%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="93%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">31.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chief Executive Officer Certification pursuant to Rule&nbsp;13a-14(a) under the Securities exchange Act of 1934.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">31.2
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chief Financial Officer Certification pursuant to Rule&nbsp;13a-14(a) under the Securities exchange Act of 1934.
</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">32.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chief Executive Officer
Certification pursuant to U.S.C. Section&nbsp;1350 as adopted pursuant to Section&nbsp;906 of the Sarbanes-Oxley Act of 2002.
</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">32.2
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chief Financial Officer
Certification pursuant to U.S.C. Section&nbsp;1350 as adopted pursuant to Section&nbsp;906 of the Sarbanes-Oxley Act of 2002.</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">99.1
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Certain Factors to Consider in Connection with Forward-Looking Statements</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>



<P align="center" style="font-size: 10pt">25
</DIV>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.1
<SEQUENCE>2
<FILENAME>p71055exv31w1.htm
<DESCRIPTION>EXHIBIT 31.1
<TEXT>
<HTML>
<HEAD>
<TITLE>exv31w1</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">




<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>Exhibit&nbsp;31.1</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CERTIFICATION PURSUANT TO<BR>
RULE 13a-14(a) UNDER THE<BR>
SECURITIES EXCHANGE ACT OF 1934</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">I, Patrick W. Smith, principal executive officer, certify that:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>I have reviewed this Quarterly Report on Form 10-Q of TASER International, Inc. for the period ended June&nbsp;30, 2005;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Based on my knowledge, this report does not contain any untrue statement of material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant
as of, and for, the periods presented in this report;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The registrant&#146;s other certifying officer(s) and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules&nbsp;13a-15(e) and 15d-15(e)) for the registrant and have:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Designed such disclosure controls and
procedures, or caused such disclosure
controls and procedures to be designed under
our supervision, to ensure that material
information relating to the registrant,
including its consolidated subsidiaries, is
made known to us by others within those
entities, particularly during the period in
which this report is being prepared;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Evaluated the effectiveness of the
registrant&#146;s disclosure controls and
procedures and presented in this report our
conclusions about the effectiveness of the
disclosure controls and procedures, as of the
end of the period covered by this report
based on such evaluation; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Disclosed in this report any change in the
registrant&#146;s internal control over financial
reporting that occurred during the
registrant&#146;s most recent fiscal quarter that
has materially affected, or is reasonably
likely to materially affect, the registrant&#146;s
internal control over financial reporting;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The registrant&#146;s other certifying officer(s) and I have disclosed,
based on our most recent evaluation of internal control over
financial reporting, to the registrant&#146;s auditors and the audit
committee of the registrant&#146;s board of directors (or persons
performing the equivalent functions):</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>All significant deficiencies and material
weaknesses in the design or operation of
internal control over financial reporting that
are reasonably likely to adversely affect the
registrant&#146;s ability to record, process,
summarize and report financial information; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Any fraud, whether or not material, that
involves management or other employees who have
a significant role in the registrant&#146;s internal
control over financial reporting.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="36%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Date:
August 12, 2005
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/Patrick W. Smith</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Patrick W. Smith</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chief Executive Officer</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-31.2
<SEQUENCE>3
<FILENAME>p71055exv31w2.htm
<DESCRIPTION>EXHIBIT 31.2
<TEXT>
<HTML>
<HEAD>
<TITLE>exv31w2</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>Exhibit&nbsp;31.2</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CERTIFICATION PURSUANT TO<BR>
RULE 13a-14(a) UNDER THE<BR>
SECURITIES EXCHANGE ACT OF 1934</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">I, Daniel M. Behrendt, principal financial officer, certify that:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">1.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>I have reviewed this Quarterly Report on Form 10-Q of TASER International, Inc. for the period ended June&nbsp;30, 2005;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">2.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Based on my knowledge, this report does not contain any untrue statement of material fact or omit to state a
material fact necessary to make the statements made, in light of the circumstances under which such statements
were made, not misleading with respect to the period covered by this report;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">3.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Based on my knowledge, the financial statements, and other financial information included in this report, fairly
present in all material respects the financial condition, results of operations and cash flows of the registrant
as of, and for, the periods presented in this report;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">4.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The registrant&#146;s other certifying officer(s) and I are responsible for establishing and maintaining disclosure
controls and procedures (as defined in Exchange Act Rules&nbsp;13a-15(e) and 15d-15(e)) for the registrant and have:</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Designed such disclosure controls and
procedures, or caused such disclosure
controls and procedures to be designed under
our supervision, to ensure that material
information relating to the registrant,
including its consolidated subsidiaries, is
made known to us by others within those
entities, particularly during the period in
which this report is being prepared;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Designed such internal control over financial reporting, or caused such internal control over financial reporting to be
designed under our supervision, to provide reasonable assurance regarding the reliability of financial reporting and the
preparation of financial statements for external purposes in accordance with generally accepted accounting principles;</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(c)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Evaluated the effectiveness of the
registrant&#146;s disclosure controls and
procedures and presented in this report our
conclusions about the effectiveness of the
disclosure controls and procedures, as of the
end of the period covered by this report
based on such evaluation; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(d)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Disclosed in this report any change in the
registrant&#146;s internal control over financial
reporting that occurred during the
registrant&#146;s most recent fiscal quarter that
has materially affected, or is reasonably
likely to materially affect, the registrant&#146;s
internal control over financial reporting;</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">5.</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The registrant&#146;s other certifying officer(s) and I have disclosed,
based on our most recent evaluation of internal control over
financial reporting, to the registrant&#146;s auditors and the audit
committee of the registrant&#146;s board of directors (or persons
performing the equivalent functions):</TD>
</TR>

</TABLE>
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(a)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>All significant deficiencies and material
weaknesses in the design or operation of
internal control over financial reporting that
are reasonably likely to adversely affect the
registrant&#146;s ability to record, process,
summarize and report financial information; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="2%" style="background: transparent">&nbsp;</TD>
    <TD width="3%" nowrap align="left">(b)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>Any fraud, whether or not material, that
involves management or other employees who have
a significant role in the registrant&#146;s internal
control over financial reporting.</TD>
</TR>

</TABLE>
</DIV>
<DIV align="center">
<TABLE style="font-size: 10pt" cellspacing="0" border="0" cellpadding="0" width="100%">
<!-- Begin Table Head -->
<TR valign="bottom">
    <TD width="48%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="36%">&nbsp;</TD>
    <TD width="2%">&nbsp;</TD>
    <TD width="10%">&nbsp;</TD>
</TR>
<!-- End Table Head -->
<!-- Begin Table Body -->
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">

<TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">Date:
August 12, 2005
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">By:
</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">/s/Daniel M. Behrendt</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR style="font-size: 1px">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top" style="border-top: 1px solid #000000">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Daniel M. Behrendt</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<TR valign="bottom">
    <TD valign="top"><DIV style="margin-left:0px; text-indent:-0px">&nbsp;
</DIV></TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">Chief Financial Officer</TD>
    <TD>&nbsp;</TD>
    <TD align="left" valign="top">&nbsp;</TD>
</TR>
<!-- End Table Body -->
</TABLE>
</DIV>


<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.1
<SEQUENCE>4
<FILENAME>p71055exv32w1.htm
<DESCRIPTION>EXHIBIT 32.1
<TEXT>
<HTML>
<HEAD>
<TITLE>exv32w1</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>

<DIV style="font-family: 'Times New Roman',Times,serif">


<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>EXHIBIT 32.1</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CERTIFICATION PURSUANT TO<BR>
18 U.S.C. SECTION 1350<BR>
AS ADOPTED PURSUANT TO<BR>
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In connection with the Quarterly Report of TASER International, Inc. (the &#147;Company&#148;) on Form 10-Q
for the period ending June&nbsp;30, 2005 as filed with the Securities and Exchange Commission on the
date hereof (the &#147;Report&#148;), I, Patrick W. Smith, Chief Executive Officer of the Company, certify
pursuant to 18 U.S.C. Section&nbsp;1350, as adopted pursuant to Section&nbsp;906 of the Sarbanes-Oxley Act of
2002, that:
</DIV>


<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.</TD>
</TR>

</TABLE>
</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" style="border-bottom: 1px solid #000000" align="left">                                                                          /s/Patrick W. Smith
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Patrick W. Smith&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Chief Executive Officer<BR>
August 12, 2005&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-32.2
<SEQUENCE>5
<FILENAME>p71055exv32w2.htm
<DESCRIPTION>EXHIBIT 32.2
<TEXT>
<HTML>
<HEAD>
<TITLE>exv32w2</TITLE>
</HEAD>
<BODY bgcolor="#FFFFFF">
<!-- PAGEBREAK -->
<H5 align="left" style="page-break-before:always">&nbsp;</H5><P>


<DIV style="font-family: 'Times New Roman',Times,serif">


<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>

</TABLE>

<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>EXHIBIT 32.2</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CERTIFICATION PURSUANT TO<BR>
18 U.S.C. SECTION 1350<BR>
AS ADOPTED PURSUANT TO<BR>
SECTION 906 OF THE SARBANES-OXLEY ACT OF 2002</B>
</DIV>



<DIV align="left" style="font-size: 10pt; margin-top: 6pt">&nbsp;&nbsp;&nbsp;&nbsp;&nbsp;In connection with the Quarterly Report of TASER International, Inc. (the &#147;Company&#148;) on Form
10-Q for the period ending June&nbsp;30, 2005 as filed with the Securities and Exchange Commission on
the date hereof (the &#147;Report&#148;), I, Daniel M. Behrendt, Chief Financial Officer of the Company,
certify pursuant to 18 U.S.C. Section&nbsp;1350, as adopted pursuant to Section&nbsp;906 of the
Sarbanes-Oxley Act of 2002, that:
</DIV>

<DIV style="margin-top: 6pt">
<TABLE width="100%" border="0" cellpadding="0" cellspacing="0" style="font-size: 10pt">

<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(1)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The Report fully complies with the requirements of Section 13(a) or 15(d) of the Securities Exchange Act of 1934; and</TD>
</TR>

<TR>
    <TD style="font-size: 6pt">&nbsp;</TD>
</TR>
<TR valign="top" style="font-size: 10pt; color: #000000; background: transparent">
    <TD width="1%" nowrap align="left">(2)</TD>
    <TD width="1%">&nbsp;</TD>
    <TD>The information contained in the Report fairly presents, in all material respects, the financial condition and results of
operations of the Company.</TD>
</TR>

</TABLE>
</DIV>

<TABLE width="100%" border="0" cellspacing="0" cellpadding="0" style="font-size: 10pt">
<TR>
    <TD width="48%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="1%">&nbsp;</TD>
    <TD width="35%">&nbsp;</TD>
    <TD width="15%">&nbsp;</TD>
</TR>
<TR>
    <TD valign="top" align="left">&nbsp;</TD>
    <TD colspan="3" align="left">&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" style="border-bottom: 1px solid #000000" align="left">                                                                          /s/Daniel M. Behrendt
&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Daniel M. Behrendt&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR><TR>
    <TD align="left">&nbsp;</TD>
    <TD colspan="3" align="left">Chief Financial Officer<BR>
August 12, 2005&nbsp;</TD>
    <TD>&nbsp;</TD>
</TR>

</TABLE>

<P align="center" style="font-size: 10pt">&nbsp;
</DIV>

</BODY>
</HTML>
</TEXT>
</DOCUMENT>
<DOCUMENT>
<TYPE>EX-99.1
<SEQUENCE>6
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<DESCRIPTION>EXHIBIT 99.1
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<DIV align="right" style="font-size: 10pt; margin-top: 12pt"><B>EXHIBIT 99.1</B>
</DIV>


<DIV align="center" style="font-size: 10pt; margin-top: 18pt"><B>CERTAIN FACTORS TO CONSIDER IN CONNECTION<BR>
WITH FORWARD-LOOKING STATEMENTS</B>
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">From time to time, TASER International, Inc. (&#147;TASER&#148; or the &#147;Company&#148;), through its management,
may make forward-looking public statements with respect to the Company regarding, among other
things, expected future revenues or earnings, projections, plans, future performance, product
development and commercialization, and other estimates relating to the Company&#146;s future operations.
Forward-looking statements may be included in reports filed under the Securities Exchange Act of
1934, as amended (the &#147;Exchange Act&#148;), in press releases, other written statements, or in oral
statements. The words or phrases &#147;will likely result,&#148; &#147;are expected to,&#148; &#147;intends,&#148; &#147;is
anticipated,&#148; &#147;estimates,&#148; &#147;believes,&#148; &#147;projects&#148; or similar expressions are intended to identify
&#147;forward-looking statements&#148; within the meaning of Section&nbsp;21E of the Exchange Act and Section&nbsp;27A
of the Securities Act of 1933, as amended, as enacted by the Private Securities Litigation Reform
Act of 1995.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Forward-looking statements are subject to a number of risks and uncertainties. The Company cautions
investors not to place undue reliance on its forward-looking statements, which speak only as of the
date on which they are made. TASER&#146;s actual results may differ materially from those described in
the forward-looking statements as a result of various factors, including those listed below. The
Company disclaims any obligation subsequently to revise or update forward-looking statements to
reflect events or circumstances after the date of such statements or to reflect the occurrence of
anticipated or unanticipated events.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Pursuant to the &#147;safe harbor&#148; provisions of the Private Securities Litigation Reform Act of 1995,
TASER hereby files the following cautionary statements identifying certain factors that could cause
its actual results to differ materially from those described in its forward-looking statements.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">WE ARE MATERIALLY DEPENDENT ON ACCEPTANCE OF OUR PRODUCTS BY THE LAW ENFORCEMENT AND CORRECTIONS
MARKET, AND IF LAW ENFORCEMENT AND CORRECTIONS AGENCIES DO NOT PURCHASE OUR PRODUCTS, OUR REVENUES
WILL BE ADVERSELY AFFECTED AND WE MAY NOT BE ABLE TO EXPAND INTO OTHER MARKETS.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">A substantial number of law enforcement and corrections agencies may not purchase our conducted
energy, non-lethal devices. In addition, if our products are not widely accepted by the law
enforcement and corrections market, we may not be able to expand sales of our products into other
markets. Law enforcement and corrections agencies may be influenced by claims or perceptions that
conducted energy weapons are unsafe or may be used in an abusive manner. In addition, earlier
generation conducted energy devices may have been perceived as ineffective. Sales of our products
to these agencies may also be delayed or limited by these claims or perceptions.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">WE SUBSTANTIALLY DEPEND ON SALES OF THE TASER X26 PRODUCTS, AND IF THESE PRODUCTS ARE NOT WIDELY
ACCEPTED, OUR GROWTH PROSPECTS WILL BE DIMINISHED.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In 2003, 2004 and the first half of 2005, we derived our revenues predominantly from sales of the
TASER brand devices and related cartridges, and expect to depend on sales of these products for the
foreseeable future. A decrease in the prices of or demand for these products, or their failure to
achieve broad market acceptance, would significantly harm our growth prospects, operating results
and financial condition.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">IF WE ARE UNABLE TO MANAGE ANY GROWTH IN OUR BUSINESS, OUR PROSPECTS MAY BE LIMITED AND OUR FUTURE
PROFITABILITY MAY BE ADVERSELY AFFECTED.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We intend to expand our sales and marketing programs and manufacturing capacity. Any significant
expansion may strain our managerial, financial and other resources. If we are unable to manage our
growth, our business, our operating results and financial condition could be adversely affected. We
will need to continually improve our operations, financial and other internal systems to manage our
growth effectively, and any failure to do so may lead to inefficiencies and redundancies, and
result in reduced growth prospects and profitability.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">WE MAY FACE PERSONAL INJURY, WRONGFUL DEATH AND OTHER LIABILITY CLAIMS THAT HARM OUR REPUTATION AND
ADVERSELY AFFECT OUR SALES AND FINANCIAL CONDITION.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our products are often used in aggressive confrontations that may result in serious, permanent
bodily injury or death to those involved. Our products may cause or be associated with these
injuries. A person injured in a confrontation or otherwise in connection with the use of our
products may bring legal action against us to recover damages on the basis of theories including
personal injury, wrongful death, negligent design, dangerous product or inadequate warning. We are
currently subject to a number of such lawsuits. We may also be subject to lawsuits involving
allegations of misuse of our products. If successful, personal injury, misuse and other claims
could have a material adverse effect on our operating results and financial condition. Although we
carry product liability insurance, significant litigation could also result in a diversion of
management&#146;s attention and resources, negative publicity and an award of monetary damages in excess
of our insurance coverage. The outcome of any litigation is inherently uncertain and there can be
no assurance that our existing or any future litigation will not have a material adverse effect on
our revenues, our financial condition or financial results.
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">PENDING LITIGATION MAY SUBJECT US TO SIGNIFICANT LITIGATION COSTS, JUDGEMENTS IN EXCESS OF<BR>
INSURANCE COVERAGE, AND DIVERT MANAGEMENT ATTENTION FROM OUR BUSINESS.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Company is involved in several litigation matters relating to its products or the use of such
products, as well as shareholder class actions and an informal inquiry by the Securities and
Exchange Commission. Such matters have resulted and are expected to continue to result in
substantial costs to the Company and a likely diversion of our management&#146;s attention, which could
adversely affect our Company&#146;s business, financial condition or operating results.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">OUR FUTURE SUCCESS IS DEPENDENT ON OUR ABILITY TO EXPAND SALES THROUGH DISTRIBUTORS AND OUR
INABILITY TO RECRUIT NEW DISTRIBUTORS WOULD NEGATIVELY AFFECT OUR SALES.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our distribution strategy is to pursue sales through multiple channels with an emphasis on
independent distributors. Our inability to recruit and retain police equipment distributors who can
successfully sell our products would adversely affect our sales. In addition, our arrangements with
our distributors are generally short-term. If we do not competitively price our products, meet the
requirements of our distributors or end-users, provide adequate marketing support, or comply with
the terms of our distribution arrangements, our distributors may fail to aggressively market our
products or may terminate their relationships with us. These developments would likely have a
material adverse effect on our sales. Our reliance on the sales of our products by others also
makes it more difficult to predict our revenues, cash flow and operating results.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">WE EXPEND SIGNIFICANT RESOURCES IN ANTICIPATION OF A SALE DUE TO OUR LENGTHY SALES CYCLE AND MAY
RECEIVE NO REVENUE IN RETURN.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Generally, law enforcement and corrections agencies consider a wide range of issues before
committing to purchase our products, including product benefits, training costs, the cost to use
our products in addition to or in place of other non-lethal products, budget constraints and
product reliability, safety and efficacy. The length of our sales cycle may range from a few weeks
to as long as several years. Adverse publicity surrounding our products or the safety of such
products has in the past and could in the future lengthen our sales cycle with customers. In
particular, our revenue has decreased in the first half of 2005 compared to the first half of 2004
due to the adverse effect on customers and potential customers of the negative publicity
surrounding our products or use of our products. We may incur substantial selling costs and expend
significant effort in connection with the evaluation of our products by potential customers before
they place an order. If these potential customers do not purchase our products, we will have
expended significant resources and received no revenue in return.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">MOST OF OUR END-USERS ARE SUBJECT TO BUDGETARY AND POLITICAL CONSTRAINTS THAT MAY DELAY OR PREVENT
SALES.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Most of our end-user customers are government agencies. These agencies often do not set their own
budgets and therefore have little control over the amount of money they can spend. In addition,
these agencies experience political pressure that may dictate the manner in which they spend money.
As a result, even if an agency wants to acquire our products, it may be unable to purchase them due
to budgetary or political constraints. Some government agency orders may also be canceled or
substantially delayed due to budgetary, political or other scheduling delays which frequently occur
in connection the acquisition of products by such agencies.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">GOVERNMENT REGULATION OF OUR PRODUCTS MAY ADVERSELY AFFECT SALES.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Federal regulation of sales in the United States: Our devices are not firearms regulated by the
Bureau of Alcohol, Tobacco, Firearms and Explosives, but are consumer products regulated by the
United States Consumer Product Safety Commission. Although there are currently no federal laws
restricting sales of our devices in the United States, future federal regulation could adversely
affect sales of our products.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Federal regulation of international sales: Our devices are controlled as a &#147;crime control&#148; product
by the United States Department of Commerce, or DOC, for export directly from the United States.
Consequently, we must obtain an export license from the DOC for the export of our devices from the
United States other than to Canada. Our inability to obtain DOC export licenses on a timely basis
for sales of our devices to our international customers could significantly and adversely affect
our international sales.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">State and local regulation: Our devices are controlled, restricted or their use prohibited by
several state and local governments. Our devices are banned from private citizen sale or use in
seven states: New York, New Jersey, Rhode Island, Michigan, Wisconsin, Massachusetts and Hawaii.
Law enforcement use of our products is also prohibited in New Jersey and Rhode Island. Some
municipalities, including Omaha, Nebraska and Washington, D.C., also prohibit private citizen use
of our products. Other jurisdictions may ban or restrict the sale of our products and our product
sales may be significantly affected by additional state, county and city governmental regulation.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Foreign regulation. Certain foreign jurisdictions, including Japan, Australia, Italy and Hong Kong,
prohibit the sale of conducted energy devices, limiting our international sales opportunities.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">IF WE ARE UNABLE TO PROTECT OUR INTELLECTUAL PROPERTY, WE MAY LOSE A COMPETITIVE ADVANTAGE OR INCUR
SUBSTANTIAL LITIGATION COSTS TO PROTECT OUR RIGHTS.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our future success depends in part upon our proprietary technology. Our protective measures,
including patents, trademarks and trade secret laws, may prove inadequate to protect our
proprietary rights. Our United States patent on the construction of the gas cylinder used to store
the compress nitrogen in our cartridges expires in 2015. Our patent on the process by which
compressed gases launch the probes in our cartridges expires in 2009. The scope of any patent to
which we have or may obtain rights may not prevent others from developing and selling competing
products. The validity and breadth of claims covered in technology patents involve complex legal
and factual questions, and the resolution of such claims may be highly uncertain, lengthy and
expensive. In addition, our patents may be held invalid upon challenge, or others may claim rights
in or ownership of our patents.
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">WE MAY BE SUBJECT TO INTELLECTUAL PROPERTY INFRINGEMENT CLAIMS, WHICH WILL CAUSE US TO INCUR
LITIGATION COSTS AND DIVERT MANAGEMENT ATTENTION FROM OUR BUSINESS.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Any intellectual property infringement claims against us, with or without merit, could be costly
and time-consuming to defend and divert our management&#146;s attention from our business. If our
products were found to infringe a third party&#146;s proprietary rights, we could be required to enter
into royalty or licensing agreements in order to be able to sell our products. Royalty and
licensing agreements, if required, may not be available on terms acceptable to us or at all.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">COMPETITION IN THE LAW ENFORCEMENT AND CORRECTIONS MARKET COULD REDUCE OUR SALES AND PREVENT US
FROM ACHIEVING PROFITABILITY.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The law enforcement and corrections market is highly competitive. We face competition from numerous
larger, better capitalized and more widely known companies that make other non-lethal devices and
products. Increased competition may result in greater pricing pressure, lower gross margins and
reduced sales. In this regard, two different competitors have announced plans to introduce new
products in 2005. We are unable to predict the impact such products will have on our sales or our
sales cycle, but existing or potential customers may choose to evaluate such products which could
lengthen our sales cycle and potentially reduce our future sales.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">DEFECTS IN OUR PRODUCTS COULD REDUCE DEMAND FOR OUR PRODUCTS AND RESULT IN A LOSS OF SALES, DELAY
IN MARKET ACCEPTANCE AND INJURY TO OUR REPUTATION.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Complex components and assemblies used in our products may contain undetected defects that are
subsequently discovered at any point in the life of the product. In 2002, we recalled a series of
ADVANCED TASER devices due to a defective component. In connection with the recall, we incurred
expenses of approximately $25,000. Defects in our products may result in a loss of sales, delay in
market acceptance and injury to our reputation and increased warranty costs.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">COMPONENT SHORTAGES COULD RESULT IN OUR INABILITY TO PRODUCE VOLUME TO ADEQUATELY MEET CUSTOMER
DEMAND. THIS COULD RESULT IN A LOSS OF SALES, DELAY IN DELIVERIES AND INJURY TO OUR REPUTATION.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Single source components used in the manufacture of our products may become unavailable or
discontinued. Delays caused by industry allocations, or obsolescence may take weeks or months to
resolve. In some cases, part obsolescence may require a product re-design to ensure quality
replacement circuits. These delays could cause significant delays in manufacturing and loss of
sales, leading to adverse effects significantly impacting our financial condition or results of
operations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">OUR DEPENDENCE ON THIRD PARTY SUPPLIERS FOR KEY COMPONENTS OF OUR DEVICES COULD DELAY SHIPMENT OF
OUR PRODUCTS AND REDUCE OUR SALES.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We depend on certain domestic and foreign suppliers for the delivery of components used in the
assembly of our products. Our reliance on third-party suppliers creates risks related to our
potential inability to obtain an adequate supply of components or subassemblies and reduced control
over pricing and timing of delivery of components and sub-assemblies. Specifically, we depend on
suppliers of sub-assemblies, machined parts, injection molded plastic parts, printed circuit
boards, custom wire fabrications and other miscellaneous customer parts for our products. We also
do not have long-term agreements with any of our suppliers. Any interruption of supply for any
material components of our products could significantly delay the shipment of our products and have
a material adverse effect on our revenues, profitability and financial condition.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">OUR DEPENDENCE ON FOREIGN SUPPLIERS FOR KEY COMPONENTS OF OUR PRODUCTS COULD DELAY SHIPMENT OF OUR
FINISHED PRODUCTS AND REDUCE OUR SALES.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">We depend on foreign suppliers for the delivery of certain components used in the assembly of our
products. Due to changes imposed for imports of foreign products into the United States, as well as
potential port closures and delays created by terrorist threats, we are exposed to risk of delays
caused by freight carriers or customs clearance issues for our imported parts. Delays caused by our
inability to obtain components for assembly could have a material adverse effect on our revenues,
profitability and financial condition.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">OUR REVENUES AND OPERATING RESULTS MAY FLUCTUATE UNEXPECTEDLY FROM QUARTER TO QUARTER, WHICH MAY


CAUSE OUR STOCK PRICE TO DECLINE.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our revenues and operating results have varied significantly in the past and may vary significantly
in the future due to various factors, including, but not limited to: increased raw material
expenses, changes in our operating expenses, market acceptance of our products and services, the
outcome of any existing or future litigation, adverse publicity surrounding our products, the
safety of our products, or the use of our products, the safety of our products, regulatory changes
that may affect the marketability of our products, and budgetary cycles of municipal, state and
federal law enforcement and corrections agencies. As a result of these other factors, we believe
that period- to-period comparisons of our operating results may not be meaningful in the short
term, and our performance in a particular period may not be indicative of our performance in any
future period.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">THE SARBANES-OXLEY ACT AND OTHER RECENT CHANGES IN SECURITIES LAWS AND REGULATIONS MAY INCREASE OUR
COSTS.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The Sarbanes-Oxley Act of 2002 that became law in July&nbsp;2002, as well as new rules subsequently
implemented by the Securities and Exchange Commission and the NASDAQ Stock Market, have required,
and will require, changes to some of our accounting and corporate governance practices, including a
report on our internal controls as required by Section&nbsp;404 of the Sarbanes-Oxley Act of 2002. We
expect these new rules and regulations to increase our accounting, legal and other costs, and to
make some activities more difficult, time consuming and/or costly. In particular, complying with
the internal control requirements of Sarbanes-Oxley Section&nbsp;404 will result in increased internal
efforts, significantly higher fees from our independent accounting firm and significantly higher
fees from third party contractors. We also expect these new rules and regulations to make it more
difficult and more expensive for us to obtain director and officer liability insurance, and we may
be required to accept reduced coverage or incur substantially higher costs to obtain coverage.
These new rules and regulations could also make it more difficult for us to attract and retain
qualified executive officers and qualified members of our board of directors, particularly to serve
on our audit committee.
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">WE MAY EXPERIENCE DIFFICULTIES AND INCREASED EXPENSES IN COMPLYING WITH SARBANES-OXLEY SECTION 404.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">While we believe we currently have adequate internal control over financial reporting, we are
required to evaluate our internal controls under Section&nbsp;404 of the Sarbanes-Oxley Act of 2002 and
any adverse results from such evaluation could result in a loss of investor confidence in our
financial reports and have an adverse effect on our stock price. Pursuant to Section&nbsp;404 of the
Sarbanes-Oxley Act of 2002, beginning with our Annual Report on Form 10-K for the fiscal year
ending December&nbsp;31, 2005, we will be required to furnish a report by our management on our internal
control over financial reporting. Such report will contain among other matters, an assessment of
the effectiveness of our internal control over financial reporting as of the end of our fiscal
year, including a statement as to whether or not our internal control over financial reporting is
effective. This assessment must include disclosure of any material weaknesses in our internal
control over financial reporting identified by management. Such report must also contain a
statement that our independent registered public accounting firm has issued an attestation report
on management&#146;s assessment of such internal controls. Public Company Accounting Oversight Board
Auditing Standard No.&nbsp;2 provides the professional standards and related performance guidance for
independent registered public accounting firms to attest to, and report on, management&#146;s assessment
of the effectiveness of internal control over financial reporting under Section&nbsp;404.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">While we currently believe our internal control over financial reporting is effective, we are still
performing the system and process documentation and evaluation needed to comply with Section&nbsp;404,
which is both costly and challenging. During this process, if our management identifies one or more
material weaknesses in our internal control over financial reporting, we will be unable to assert
such internal control is effective. If we are unable to assert that our internal control over
financial reporting is effective as of December&nbsp;31, 2005 (or if our independent registered public
accounting firm is unable to attest that our management&#146;s report is fairly stated or they are
unable to express an opinion on the effectiveness of our internal controls), we could lose investor
confidence in the accuracy and completeness of our financial reports, which would have an adverse
effect on our stock price.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">In April&nbsp;2005, subsequent to the issuance of our audited financial statements for the year ended
December&nbsp;31, 2004 and the filing of our Annual Report on Form 10-KSB, we discovered an error in
that certain stock option grants were treated as incentive stock options when the grants should
have been classified as non-statutory stock options because of the annual limitation on incentive
stock options under applicable tax regulations. As a result of this error, we restated our
financial results for 2004 and filed an amendment to our Form 10-KSB.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">With respect to the restatement of our financial results, we determined that the error resulted
from an inadequate control over the accounting of our stock option program, and under standards
established by the Public Company Accounting Oversight Board, constituted a &#147;material weakness&#148; in
our internal control over financial reporting. In response to the deficiency which resulted in the
&#147;material weakness,&#148; our management took actions to enhance the operation and effectiveness of our
internal controls and procedures to ensure that we properly classify and account for stock options
as either incentive stock options or non-statutory stock options and that option exercises will
have the proper payroll taxes withheld based on the classification of the option. In connection
with our on going Section&nbsp;404 compliance efforts, we are also continuing to make improvements to
our systems, procedures and controls.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Upon completion of our 2004 audit, our independent registered public accounting firm made certain
recommendations to us related to our internal control and other accounting, administrative and
operating matters and we are also addressing these recommendations.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">While we currently anticipate being able to satisfy the requirements of Section&nbsp;404 in a timely
fashion, we cannot be certain as to the timing of completion of our evaluation, testing and any
required remediation. If we are not able to comply with the requirements of Section&nbsp;404 in a timely
manner or if our independent registered public accounting firm is not able to complete the
procedures required by Auditing Standard No.&nbsp;2 to support their attestation report, we could lose
investor confidence in the accuracy and completeness of our financial reports, which would have an
adverse effect on our stock price.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">RECENT REGULATIONS RELATED TO EQUITY COMPENSATION WILL LIKELY RESULT IN SIGNIFICANTLY HIGHER
EXPENSES AND COULD ADVERSELY AFFECT OUR ABILITY TO ATTRACT AND RETAIN KEY PERSONNEL.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Stock options are a fundamental component of our employee compensation packages. We believe that
stock options directly motivate<BR>
our employees to maximize long-term stockholder value and, through the use of vesting, encourage
employees to remain with us. On October&nbsp;13, 2004, the Financial Accounting Standards Board (FASB)
concluded that Statement 123R, Share-Based Payment, which would require all companies to measure
compensation cost for all share-based payments (including employee stock options) at fair value.
This requirement will be effective for us beginning in the first quarter of 2006. Statement 123R
will negatively impact our earnings. Recording a charge for employee stock options under SFAS No.
123 (which reflects a similar but different charge than Statement 123R) would have decreased our
net income by $8.1&nbsp;million in 2004 and $2.3&nbsp;million in the first half of 2005. In addition,
regulations implemented by The NASDAQ Stock Market requiring shareholder approval for all stock
option plans as well as regulations implemented by the NYSE prohibiting NYSE member organizations
from giving a proxy to vote on equity-compensation plans unless the beneficial owner of the shares
has given voting instructions could make it more difficult for us to grant options to employees in
the future. To the extent that new regulations make it more difficult or expensive to grant options
to employees, we may incur compensation costs, change our equity compensation strategy or find it
difficult to attract, retain and motivate employees, each of which could materially and adversely
affect our business.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">FOREIGN CURRENCY FLUCTUATIONS MAY AFFECT OUR COMPETITIVENESS AND SALES IN FOREIGN MARKETS.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The relative change in currency values creates fluctuations in product pricing for potential
international customers. These changes in foreign end-user costs may result in lost orders and
reduce the competitiveness of our products in certain foreign markets. These changes may also
negatively affect the financial condition of some existing or potential foreign customers and
reduce or eliminate their future orders of our products.
</DIV>


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<DIV align="left" style="font-size: 10pt; margin-top: 6pt">USE OF ESTIMATES MAY CAUSE FINANCIAL RESULTS TO DIFFER
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The preparation of financial statements in conformity with accounting principles generally accepted
in the United States requires management to make estimates and assumptions that affect the reported
amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date
of the financial statements and the reported amounts of revenue and expenses during the reporting
period. Actual results could differ from those estimates.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">WE FACE RISKS ASSOCIATED WITH RAPID TECHNOLOGICAL CHANGE AND NEW COMPETING PRODUCTS.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">The technology associated with non-lethal devices is receiving significant attention and is rapidly
evolving. While we have patent protection in key areas of electro-muscular disruption technology,
it is possible that new non-lethal technology may result in competing products that operate outside
our patents and could present significant competition for our products.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">AS DEMAND FOR OUR PRODUCTS INCREASES, OUR FUTURE SUCCESS WILL BE DEPENDENT UPON OUR ABILITY TO RAMP
MANUFACTURING PRODUCTION CAPACITY WHICH WILL BE ACCOMPLISHED IN PART BY THE IMPLEMENTATION OF
CUSTOMIZED MANUFACTURING AUTOMATION EQUIPMENT.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Although our revenue decreased for the six months ended June&nbsp;30, 2005 compared to the six months
ended June&nbsp;30, 2004, we experienced significant revenue growth in 2003 and 2004. Further, revenues
for the second quarter of 2005 increased from the first quarter of 2005. To the extent demand for
our products increases significantly in future periods, one of our key challenges will be to ramp
our production capacity to meet sales demand, while maintaining product quality. Our primary
strategies to accomplish this include increasing the physical size of our assembly facilities, the
hiring of additional production staff, and the implementation of customized automation equipment.
The Company has limited previous experience in implementing automation equipment, and the
investments made on this equipment may not yield the anticipated labor and material efficiencies.
Our inability to meet any future increase in sales demand or effectively manage our expansion could
have a material adverse affect our revenues, profitability and financial condition.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">WE DEPEND ON OUR ABILITY TO ATTRACT AND RETAIN OUR KEY MANAGEMENT AND TECHNICAL PERSONNEL.
</DIV>

<DIV align="left" style="font-size: 10pt; margin-top: 6pt">Our success depends upon the continued service of our key management personnel. Our success also
depends on our ability to continue to attract, retain and motivate qualified technical personnel.
Although we have employment agreements with certain of our officers, the employment of such persons
is &#147;at-will&#148; and either we or the employee can terminate the employment relationship at any time,
subject to the applicable terms of the employments agreements. The competition for our key
employees is intense. The loss of the service of one or more of our key personnel could harm our
business.
</DIV>



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