**UNITED
      STATES**


**SECURITIES
      AND** **EXCHANGE
      COMMISSION**


**WASHINGTON,
      D.C. 20549**




**FORM
      10-K**




**x**
            **ANNUAL
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE
                ACT
                OF 1934**




For
      the
      fiscal year ended December 31, 2007




or




**o**
            **TRANSITION
                REPORT PURSUANT TO SECTION 13 OR 15(d) OF THE SECURITIES AND EXCHANGE
                ACT
                OF 1934**






For
      the
      transition period from _______ to _______




Commission
      File No.: 001-33354




**ALPHA
      SECURITY GROUP CORPORATION**


(Exact
      Name of Registrant as Specified in Its Charter)


Delaware
              
              03-0561397(State
                  or Other Jurisdiction of
              
              (I.R.S.
                  EmployerIncorporation
                  or Organization)
              
              Identification
                  No.)




328
      West 77th Street, New York, New York 10024


(Address
      of Principal Executive Offices) (Zip Code)




Registrant’s
      telephone number, including area code: 212-877-1588




Securities
      registered pursuant to Section 12(b) of the Act:


Title
                  of each class
              
              Name
                  of each exchange on which registeredCommon
                  Stock, $0.0001 par value
              
              The
                  American Stock ExchangeCommon
                  Stock Purchase Warrants
              
              The
                  American Stock ExchangeUnits
                  consisting of one share of Common Stock
              
              The
                  American Stock Exchangeand
                  one Common Stock Purchase Warrant




Securities
      registered pursuant to Section 12(g) of the Act: None




Indicate
      by check mark if the registrant is a well-known seasoned issuer, as defined
      in
      Rule 405 of the Securities Act. Yes o  No
x




Indicate
      by check mark if the registrant is not required to file reports pursuant to
      Section 13 or Section 15(d) of the Act. Yes o  No
x




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




Indicate
      by check mark if disclosure of delinquent filers pursuant to item 405 of
      Regulation S-K is not contained herein, and will not be contained, to the best
      of the registrant’s knowledge in definitive proxy or information statements
      incorporated by reference in Part III of this Form 10-K or any amendment to
      this
      Form 10-K. o




Indicate
      by check mark whether the registrant is a large accelerated filer, an
      accelerated filer, a non-accelerated filer, or a smaller reporting company.
      Large accelerated filer o Accelerated
      filer o Non-accelerated
      filer o Smaller
      reporting company x





Indicate
      by check mark whether the registrant is a shell company (as defined in Rule
      12b-2 of the Exchange Act). Yes o No x




State
      the
      aggregate market value of the voting and non-voting stock held by non-affiliates
      of the Issuer: $56,460,000 (based upon the closing price of Issuer’s Common
      Stock, $.0001 par value, as of April 11, 2008).




Indicate
      the number of shares outstanding of each of the Registrant’s classes of common
      stock, as of the latest practicable date: 7,580,000 at April 11,
      2008.




Documents
      incorporated by reference: None









**TABLE
      OF CONTENTS**




PageITEM
                1.
            
            BUSINESS
            
            1ITEM
                1A.
            
            RISK
                FACTORS
            
            12ITEM
                1B.
            
            UNRESOLVED
                STAFF COMMENTS
            
            30ITEM
                2.
            
            PROPERTIES
            
            30ITEM
                3.
            
            LEGAL
                PROCEEDINGS
            
            30ITEM
                4.
            
            SUBMISSION
                OF MATTERS TO A VOTE OF SECURITY HOLDERS
            
            30ITEM
                5.
            
            MARKET
                FOR REGISTRANT’S COMMON EQUITY, RELATED STOCKHOLDER MATTERS AND ISSUER
                PURCHASES OF EQUITY SECURITIES
            
            30ITEM
                6.
            
            SELECTED
                FINANCIAL DATA
            
            32ITEM
                7.
            
            MANAGEMENT’S
                DISCUSSION AND ANALYSIS OF FINANCIAL CONDITION AND RESULTS OF
                OPERATIONS
            
            32ITEM
                7A.
            
            QUANTITATIVE
                AND QUALITATIVE DISCLOSURES ABOUT MARKET RISK
            
            34ITEM
                8.
            
            FINANCIAL
                STATEMENTS AND SUPPLEMENTARY DATA
            
            35ITEM
                9.
            
            CHANGES
                IN AND DISAGREEMENTS WITH ACCOUNTANTS ON ACCOUNTING AND FINANCIAL
                DISCLOSURE
            
            35ITEM
              9A.(T)
            
            CONTROLS
                AND PROCEDURES
            
            35ITEM
              9B.
            
            OTHER
                INFORMATION
            
            36ITEM
                10.
            
            DIRECTORS,
                EXECUTIVE OFFICERS AND CORPORATE GOVERNANCE
            
            36ITEM
                11.
            
            EXECUTIVE
                COMPENSATION
            
            40ITEM
                12.
            
            SECURITY
                OWNERSHIP OF CERTAIN BENEFICIAL OWNERS AND MANAGEMENT AND RELATED
                STOCKHOLDER MATTERS
            
            41ITEM
                13.
            
            CERTAIN
                RELATIONSHIPS AND RELATED TRANSACTIONS, AND DIRECTOR
                INDEPENDENCE
            
            42ITEM
                14.
            
            PRINCIPAL
                ACCOUNTANT FEES AND SERVICES
            
            44ITEM
                15.
            
            EXHIBITS,
                FINANCIAL STATEMENT SCHEDULES
            
            46









**Item
                1.**
            **Business**




**Introduction**




We
      were
      formed on April 20, 2005 as a Delaware blank check company for the purpose
      of
      acquiring, through a merger, capital stock exchange, asset acquisition or other
      similar business combination, one or more businesses in the U.S. homeland
      security or defense industries or a combination thereof.




On
      March
      28, 2007, we consummated our initial public offering of 6,000,000 units. Each
      unit consists of one share of common stock, $.0001 par value per share, and
      one
      redeemable common stock purchase warrant. Each warrant entitles the holder
      to
      purchase from us one share of our common stock at an exercise price of $7.50
      commencing the later of (i) the completion of a business combination with a
      target business or (ii) March 23, 2008, and expires March 23, 2011. Our common
      stock and warrants started trading separately as of June 14, 2007. Prior to
      the
      consummation of our initial public offering, on March 21, 2007, we completed
      a
      private placement of 3,200,000 warrants to Steven M. Wasserman, Chief Executive
      Officer, Chief Financial Officer, President and Co-Chairman of the board of
      directors and Constantinos Tsakiris, a former director of the Company and
      received gross proceeds of $3,200,000.




The
      net
      proceeds from the sale of our units and the private placement of warrants after
      deducting certain offering expenses of approximately $5,371,569 were
      approximately $57,828,431. Because payment of a portion of underwriting and
      other costs was deferred, $60,002,831 was placed in the trust account
      established in connection with our initial public offering. $1,825,000 in
      interest earned on the funds in the trust account, are available to be used
      by
      us to provide for business, legal and accounting due diligence on prospective
      acquisitions and continuing general and administrative expenses.




We
      are
      focused on a business combination in the U.S. homeland security or defense
      industries, or a combination thereof, which includes, among others, the
      following sectors:




·
            nuclear
                and radiological prevention;




·
            ground
                transport security;




·
            aviation
                security;




·
            port
                and maritime security;




·
            border
                security;




·
            physical
                infrastructure protection;




·
            cyber
                security;




·
            emergency
                and disaster preparedness and
                response;




·
            bioterrorism
                prevention;




·
            counterterrorism
                and law enforcement;




·
            domestic
                and foreign intelligence;




·
            information
                technology solutions, systems engineering and operation, management
                and
                support services to the U.S. Department of Defense and other U.S.
                government agencies; and




·
              support
                  services related to defense for the various U.S. national
                  laboratories.









Pursuant
      to our amended and restated certificate of incorporation, the initial business
      combination must be a transaction with one or more operating businesses in
      which
      the collective fair market value of the target business, at the time of the
      business combination, is at least 80% of our net assets at the time of the
      business combination. Our initial business combination may involve the
      simultaneous acquisition or merger of more than one target
      business.




**Effecting
      a Business Combination**




*General*




We
      are
      not presently engaged in, and we will not engage in, any substantive commercial
      business for an indefinite period of time. We intend to utilize cash derived
      from the proceeds of our initial public offering and the private placement,
      our
      capital stock, debt or a combination of these in effecting a business
      combination. Although substantially all of the net proceeds from our initial
      public offering and the private placement are intended to be generally applied
      toward effecting a business combination, the proceeds are not otherwise being
      designated for any more specific purposes. We intend to seek a business
      combination from among private businesses, corporate divestitures, and portfolio
      companies of private equity funds. We believe that the background and track
      record of our management team positions us to identify target acquisitions
      and
      to effect a business combination. In seeking a business combination we will
      consider the following sources:




·
            *Private
                Companies.*Owners of privately-held companies seeking liquidity or financing
                for
                additional growth opportunities are often interested in a sale to
                or a
                merger with a well-capitalized public
                company.




·
            *Corporate
                Divestitures.*Corporate divestitures continue to represent an opportunity to acquire
                operating divisions or subsidiaries from companies that embark on
                transformation plans and seek to divest non-core
                assets.




·
            *Portfolio
                Companies of Private Equity Funds.*Private equity funds generally have finite lives and must seek exit
                transactions for their portfolio companies in order to liquidate
                and/or
                distribute the fund assets to their limited partners following a
                predetermined term (which may include
                extensions).




*Our
      business strategy*




Our
      management has substantially unrestricted flexibility in identifying and
      selecting a prospective target business. While we have not established specific
      attributes or criteria for prospective target businesses we believe the
      following factors to be important in evaluating prospects. However, we may
      decide to enter into a business combination with a target business or businesses
      that do not meet some or all of these criteria and guidelines.




·
            *Positive
                and reliable cash flow.*We will generally seek to acquire established companies with a history
                of
                positive and reliable cash flow (earnings before interest, taxes,
                depreciation and amortization). We generally intend to avoid business
                start-ups and companies that we perceive as having significant technology
                risk or speculative business profiles. We also intend to focus on
                companies where there are opportunities for substantial growth, either
                organically or through acquisitions, and where such growth allows
                for
                enhanced profit margins through economies of
                scale.




·
            *Experienced
                management team.*We believe that experienced and seasoned management that has been
                tested
                and proven through one or more complete business cycles constitutes
                an
                important determinant for success. Accordingly, we will weigh the
                quality
                and caliber of management as well as its depth as an important criterion
                in our evaluation of target business
                opportunities.




·
            *Competitive
                position in industry.*We will seek to evaluate the strengths and weaknesses of target
                businesses, particularly with respect to their competitive position
                in the
                marketplace. In seeking to determine the competitive advantages of
                a
                business, we will consider product quality, customer loyalty, market
                share, brand strength, switching costs (both for customers and suppliers),
                intellectual property protection and other intangible assets as well
                as
                the customary financial measures such as growth, profitability and
                capitalization. We will favor businesses that are market share leaders
                within their respective industries and those that are positioned
                for
                growth. In addition, in evaluating competitive advantages, we will
                seek to
                ascertain and confirm their
                sustainability.




2




*T* *arget
      industry*




Subject
      to the limitations that the initial business combination must be a transaction
      with one or more operating businesses and in which the collective fair market
      value of the target business or businesses is at least 80% of our net assets
      at
      the time of the business combination, as described below in more detail, we
      will
      have virtually unrestricted flexibility in identifying and selecting a
      prospective acquisition candidate having its primary operations in the U.S.
      homeland security or defense industries or a combination thereof.




We
      have
      not established any other specific attributes or criteria (financial or
      otherwise) for prospective target businesses. To the extent we effect a business
      combination with a financially unstable company or an entity in its early stage
      of development or growth, including entities without established records of
      sales or earnings, we may be affected by numerous risks inherent in the business
      and operations of financially unstable and early stage or potential emerging
      growth companies. Although our management will endeavor to evaluate the risks
      inherent in a particular target business, we cannot assure you that we will
      properly ascertain or assess all significant risk factors.




*Effect
      of government regulations*




Our
      target business will likely have to comply with and will be affected by laws
      and
      regulations relating to the formation, administration and performance of federal
      government contracts, which affect how it does business with its customers
      and
      may impose added costs on its business. For example, our target business or
      parties with which it does business will likely be subject to the Federal
      Acquisition Regulations and all supplements (including those issued by the
      Department of Homeland Security and the Department of Defense), which
      comprehensively regulate the formation, administration and performance of
      federal government contracts, and to the Truth-in-Negotiations Act, which
      requires certification and disclosure of cost and pricing data in connection
      with contract negotiations. In addition, our target business or parties with
      which it does business will likely be subject to industrial security regulations
      of Department of Defense and other federal agencies that are designed to
      safeguard against foreigners access to classified information. Our target
      business may also be liable for systems and services failures and security
      breaks with respect to the solutions, services, products, or other applications
      it sells to the government. If our target business was to come under foreign
      ownership, control or influence, its federal government customers could
      terminate or decide not to renew their contracts, and it could impair the
      ability of our target business to obtain new contracts. The government may
      reform its procurement practices or adopt new contracting rules and regulations,
      including cost-accounting standards, that could be costly to satisfy or that
      could impair the ability of our target business to obtain new
      contracts.




*Sources
      of target businesses*




We
      anticipate that target business candidates will be brought to our attention
      from
      various unaffiliated sources, including investment bankers, attorneys,
      accountants, venture capital funds, private equity funds, leveraged buyout
      funds, management buyout funds and other members of the financial community,
      who
      may present solicited or unsolicited proposals. Our executive officer and
      directors, as well as their affiliates, may also bring to our attention target
      business candidates. In no event, however, will we pay any of our existing
      executive officer or directors or any entity with which they are affiliated
      any
      finder’s fee or other compensation for services rendered to us prior to or in
      connection with the consummation of a business combination.




3




*Selection
      of a target business and structuring of a business combination*




In
      evaluating a prospective target business, our management will consider, among
      other factors, the following:




·
            financial
                condition and results of operation;




·
            growth
                potential;




·
            experience
                and skill of management and availability of additional
                personnel;




·
            capital
                requirements;




·
            competitive
                position;




·
            barriers
                to entry into other industries;




·
            stage
                of development of the products, processes or
                services;




·
            degree
                of current or potential market acceptance of the products, processes
                or
                services;




·
            proprietary
                features and degree of intellectual property or other protection
                of the
                products, processes or services;




·
            regulatory
                environment of the industry; and




·
            costs
                associated with effecting the business
                combination.




These
      criteria are not intended to be exhaustive. Any evaluation relating to the
      merits of a particular business combination will be based, to the extent
      relevant, on the above factors as well as other considerations deemed relevant
      by our management in effecting a business combination consistent with our
      business objective. In evaluating a prospective target business, we will conduct
      an extensive due diligence review which will encompass, among other things,
      meetings with incumbent management, where applicable, and inspection of
      facilities, as well as review of financial and other information which will
      be
      made available to us.




The
      time
      and costs required to select and evaluate a target business and to structure
      and
      complete the business combination cannot presently be ascertained with any
      degree of certainty. Any costs incurred with respect to the identification
      and
      evaluation of a prospective target business with which a business combination
      is
      not ultimately completed will result in a loss to us and reduce the amount
      of
      capital available to otherwise complete a business combination. We will not
      pay
      any finders or consulting fees to our existing officer and directors, or any
      of
      their respective affiliates, for services rendered to or in connection with
      a
      business combination.




*Fair
      market value of business combination*




The
      initial target business or businesses that we acquire must have a collective
      fair market value equal to at least 80% of our net assets at the time of such
      acquisition (exclusive of the deferred underwriting compensation, including
      interest thereon held in the trust account). In the event we acquire less than
      100% of the stock of a target business, for purposes of determining whether
      the
      acquisition is equal to or greater than 80% of our net assets, we will multiply
      our post-transaction ownership percentage times 100% of the fair market value
      of
      the target business as determined by our board of directors. There is no
      limitation on our ability to raise funds privately or through loans that would
      allow us to acquire a target business or businesses with a fair market value
      in
      an amount considerably greater than 80% of our net assets at the time of
      acquisition. We have not had any preliminary discussions, or made any agreements
      or arrangements, with respect to financing arrangements with any third party.
      The fair market value of any such business or businesses will be determined
      by
      our board of directors based upon standards generally accepted by the financial
      community, such as actual and potential sales, earnings and cash flow and book
      value. If our board is not able to independently determine that the target
      business has a sufficient fair market value because generally accepted valuation
      standards would not adequately reflect fair market value of the target business,
      such as valuation of intangible assets, we will obtain an opinion from an
      unaffiliated, independent investment banking firm which is a member of the
      National Association of Securities Dealers, Inc. with respect to the
      satisfaction of such criteria. However, we will not be required to obtain an
      opinion from an investment banking firm as to the fair market value if our
      board
      of directors independently determines that the target business has sufficient
      fair market value. We expect that any such opinion will be included in our
      proxy
      soliciting materials furnished to our stockholders in connection with a business
      combination, and that such independent investment banking firm will be a
      consenting expert.




4




*Probable* *lack
      of business diversification*




While
      we
      may seek to effect business combinations with more than one target business,
      our
      initial business combination must be with a target business which satisfies
      the
      minimum valuation standard at the time of such acquisition, as discussed above.
      Consequently, it is possible that we will have the ability to effect only a
      single business combination. Accordingly, the prospects for our ability to
      execute any potential business plan may be entirely dependent upon the future
      performance of a single business. Unlike other entities which may have the
      resources to complete several business combinations of entities operating in
      multiple industries or multiple areas of a single industry, it is probable
      that
      we will not have the resources to diversify our operations or benefit from
      the
      possible spreading of risks or offsetting of losses. By consummating a business
      combination with only a single entity, our lack of diversification
      may:




·
            subject
                us to numerous economic, competitive and regulatory developments,
                any or
                all of which may have a substantial adverse impact upon the particular
                industry in which we may operate subsequent to a business combination;
                and




·
            result
                in our dependency upon the development or market acceptance of a
                single or
                limited number of products, processes or
                services.




Additionally,
      since it is possible that our business combination may entail the simultaneous
      acquisitions of several assets or operating businesses at the same time and
      may
      be with different sellers, we will need to convince such sellers to agree that
      the purchase of their assets or closely related businesses is contingent upon
      the simultaneous closings of the other acquisitions.




*Limited
      ability to evaluate the target business* *’
      management*




Although
      we intend to closely scrutinize the management of prospective target businesses
      when evaluating the desirability of effecting a business combination, we cannot
      assure you that our assessment of the target business’s management will prove to
      be correct. In addition, we cannot assure you that the future management will
      have the necessary skills, qualifications or abilities to manage a public
      company intending to embark on a program of business development. Furthermore,
      the future role of our officers and directors, if any, in the target businesses
      cannot presently be stated with any certainty. While it is possible that one
      or
      more of our officers and directors will remain associated with us in some
      capacity following a business combination, it is unlikely that any of them
      will
      devote their full efforts to our affairs subsequent to a business combination.
      Moreover, we cannot assure you that our officers and directors will have
      significant experience or knowledge relating to the operations of the particular
      target business acquired.




Following
      a business combination, we may seek to recruit additional managers to supplement
      the incumbent management of the target business. We cannot assure you that
      we
      will have the ability to recruit additional managers, or that additional
      managers will have the requisite skills, knowledge or experience necessary
      to
      enhance the incumbent management.




*Opportunity
      for stockholder approval of* *a
      business combination*




Prior
      to
      the completion of a business combination, we will submit the transaction to
      our
      stockholders for approval, even if the nature of the acquisition is such as
      would not ordinarily require stockholder approval under applicable state law.
      In
      connection with seeking stockholder approval of a business combination, we
      will
      furnish our stockholders with proxy solicitation materials prepared in
      accordance with the Securities Exchange Act of 1934, as amended, which, among
      other matters, will include a description of the operations of the target
      business and certain required financial information regarding the
      business.




5




In
      connection with the vote required for any business combination, all of our
      initial stockholders, including all of our officers and directors, have agreed
      to vote their respective shares of common stock owned by them immediately prior
      to the public offering in accordance with the majority of the shares of common
      stock voted by the public stockholders. In addition, our initial stockholders
      have agreed to vote any shares of common stock acquired in or following our
      initial public offering in favor of the business combination submitted to our
      stockholders for approval. Accordingly, they will not be able to exercise
      redemption rights with respect to a potential business combination. We will
      proceed with the business combination only if a majority of the shares of common
      stock voted by the public stockholders are voted in favor of the business
      combination and public stockholders owning less than 35% of the shares sold
      in
      the public offering exercise their redemption rights. Voting against the
      business combination alone will not result in redemption of a stockholder’s
      shares into a pro rata share of the trust account. Such stockholder must have
      also exercised its redemption rights described below.




*Redemption
      rights*




At
      the
      time we seek stockholder approval of any business combination, we will offer
      each public stockholder the right to have such stockholder’s shares of common
      stock redeemed for cash if the stockholder votes against the business
      combination and the business combination is approved and completed. The actual
      per-share redemption price will be equal to $10.00 per share (plus a portion
      of
      the interest earned), but net of: (i) taxes payable on interest earned on the
      trust account, State of Delaware franchise taxes, repayment of $250,000 of
      an
      additional officer loan made prior to closing of the public offering by Steven
      M. Wasserman (such loan was to be repaid within 90 days of the closing of the
      public offering, but has not been repaid through December 31, 2007) and (ii)
      up
      to $1,825,000 of interest income released to us to fund our working capital
      and
      dissolution and liquidation expenses if we fail to consummate a business
      combination. Any determination of the portion of interest payable to public
      stockholders redeeming their common stock shall be made on a pro-rata basis,
      in
      relation to all the public stockholders through the date of redemption. An
      eligible stockholder may request redemption at any time after the mailing to
      our
      stockholders of the proxy statement and prior to the vote taken with respect
      to
      a proposed business combination at a meeting held for that purpose, but the
      request will not be granted unless the stockholder votes against the business
      combination and the business combination is approved and completed. Any request
      for redemption, once made, may be withdrawn at any time up to the date of the
      meeting. Public stockholders will not be required to tender their shares in
      connection with the exercise of their redemption rights. Public stockholders
      who
      exercise their redemption rights will receive their redemption amount upon
      consummation of a business combination and we will cancel their shares at that
      time. It is anticipated that the funds to be distributed to stockholders
      entitled to redeem their shares who elect redemption will be distributed
      promptly after completion of a business combination. Public stockholders who
      redeem their stock into their share of the trust account still have the right
      to
      exercise the warrants that they received as part of the units. We will not
      complete any business combination if public stockholders, owning 35% or more
      of
      the shares sold in the initial public offering, exercise their redemption
      rights. Even if less than 35% of the stockholders exercise their redemption
      rights, we may be unable to consummate a business combination if such redemption
      leaves us with funds less than a fair market value equal to 80% of the amount
      in
      the trust account (exclusive of the deferred underwriting compensation,
      including interest thereon, held in the trust account) at the time of such
      acquisition, which amount is required as a condition to the consummation of
      our
      initial business combination, and we may be forced to find additional financing
      to consummate such a business combination, consummate a different business
      combination or liquidate. Raising additional funds to cover any shortfall may
      involve dilutive equity financing or incurring indebtedness at higher than
      desirable levels. This may limit our ability to effectuate the most attractive
      business combination available to us. The securities issued in the private
      placement do not have redemption rights. Investors who choose to remain as
      stockholders and do not exercise their redemption rights will be effectively
      diluted as the number of public shares decreases (thereby decreasing the total
      number of shares outstanding) and the number of shares held by our initial
      stockholders remains the same.




In
      the
      event that more than 20% of the public stockholders exercise their redemption
      rights, a proportional percentage of the shares of common stock held by our
      initial stockholders will automatically, and without any further action required
      by us or such stockholders, be forfeited and cancelled upon consummation of
      the
      business combination. The percentage of shares forfeited will be equal to the
      percentage of redemptions above 20% and will be pro rata among the initial
      stockholders based on the 1,580,000 shares owned by them. For example, if 20%
      or
      fewer of the public stockholders exercise their redemption rights, no shares
      will be forfeited. If 34.99% of the public stockholders exercise their
      redemption rights, 14.99% of the initial stockholder shares will be
      forfeited.




6




*Plan
      of dissolution and liquidation if no business combination*




Pursuant
      to the terms of the trust agreement between us and American Stock Transfer
      and
      Trust Company, and only as part of any plan of dissolution and liquidation
      if we
      do not complete a business combination within 18 months after the consummation
      of the public offering, or within 24 months if the extension criteria described
      below have been satisfied, we will dissolve and promptly liquidate and
      distribute only to our public stockholders, in proportion to their respective
      equity interests, an aggregate sum equal to the amount in the trust account,
      inclusive of any interest but net of: (i) taxes payable on interest income
      earned on the trust account, State of Delaware franchise taxes, repayment of
      $250,000 of an additional officer loan made prior to closing of the public
      offering by Steven M. Wasserman (such loan was to be repaid within 90 days
      of
      the closing of the public offering, but has not been repaid through December
      31,
      2007) and (ii) up to $1,825,000 of interest income released to us to fund our
      working capital and dissolution and liquidation expenses if we fail to
      consummate a business combination.




In
      the
      event we seek stockholder approval for a plan of dissolution and liquidation
      and
      do not obtain such approval, we will nonetheless continue to pursue stockholder
      approval for our dissolution. Pursuant to the terms of our amended and restated
      certificate of incorporation, our board has agreed to dissolve after the
      expiration of those time periods (assuming that there has been no business
      combination consummated), and furthermore, our powers following the expiration
      of the permitted time periods for consummating a business combination will
      automatically thereafter be limited to acts and activities relating to
      dissolving and winding up our affairs, including liquidation. The funds held
      in
      our trust account may not be distributed except upon our dissolution and, unless
      and until such approval is obtained from our stockholders, the funds held in
      our
      trust account will not be released. Consequently, holders of a majority of
      our
      outstanding stock must approve our dissolution in order to receive the funds
      held in our trust account and the funds will not be available for any other
      corporate purpose. Immediately upon the approval by our stockholders of our
      plan
      of dissolution and liquidation, we will liquidate our trust account to our
      public stockholders. Our initial stockholders have waived their rights to
      participate in any liquidation of our trust account in connection with our
      dissolution with respect to shares of common stock owned by them immediately
      prior to the public offering and to vote their shares of common stock in favor
      of any plan of dissolution and distribution which we will submit to a vote
      of
      our stockholders. Upon the liquidation of our trust account as part of our
      dissolution, Maxim Group LLC has agreed to waive any right it may have to the
      $1,800,000, plus interest thereon, of deferred underwriting discount currently
      being held in the trust account. There will be no distribution from the trust
      account with respect to our warrants, which will expire worthless. We will
      pay
      the costs of dissolution from our remaining interest earned on funds in the
      trust account that has been released to us to fund our working
      capital.




If
      we are
      unable to consummate a business combination and we expend all of the interest
      income on the trust account released to us to fund our working capital, without
      taking into account interest, if any, earned on the trust account, the initial
      per-share liquidation price to holders of the 6,000,000 shares entitled to
      participate in liquidation distributions to be equal to the $10.00 per unit
      offering price. The proceeds deposited in the trust account could, however,
      become subject to the claims of our creditors which could be prior to the claims
      of our public stockholders. In such event, we cannot assure you that the actual
      per-share liquidation price will not be less than $10.00, including interest
      (net of taxes payable on income earned on the trust account, State of
      Delaware franchise taxes and repayment of $250,000 of an additional officer
      loan
      made prior to closing of the public offering by Steven M. Wasserman (such loan
      was to be repaid within 90 days of the closing of the public offering, but
      has
      not been repaid through December 31, 2007)), due to claims of creditors
      (including costs and expenses incurred in connection with our plan of
      dissolution and liquidation currently estimated at approximately $50,000 to
      $75,000). Although we will seek to have all vendors, target businesses,
      prospective target businesses or other entities we engage execute agreements
      with us waiving any right, title, interest or claim of any kind in or to any
      monies held in the trust account for the benefit of our public stockholders,
      there is no guarantee that they will execute such agreements or even if they
      execute such agreements that they would be prevented from bringing claims
      against the trust account including, but not limited to, fraudulent inducement,
      breach of fiduciary responsibility or other similar claims, as well as claims
      challenging the enforceability of the waiver, in each case in order to gain
      an
      advantage with a claim against our assets, including the funds held in the
      trust
      account. If any third party refused to execute an agreement waiving such claims
      to the monies held in the trust account, we would perform an analysis of the
      alternatives available to us if we chose not to engage such third party and
      evaluate if such engagement would be in the best interest of our stockholders
      if
      such third party refused to waive such claims. Examples of possible instances
      where we may engage a third party that refused to execute a waiver include
      the
      engagement of a third party consultant whose particular expertise or skills
      are
      believed by management to be significantly superior to those of other
      consultants that would agree to execute a waiver or in cases where management
      is
      unable to find a provider of required services willing to provide the waiver.
      In
      any event, our management would perform an analysis of the alternatives
      available to it and would only enter into an agreement with a third party that
      did not execute a waiver if management believed that such third party’s
      engagement would be significantly more beneficial to us than any alternative.
      In
      addition, there is no guarantee that such entities will agree to waive any
      claims they may have in the future as a result of, or arising out of, any
      negotiations, contracts or agreements with us and will not seek recourse against
      the trust account for any reason.




7




Steven
      M.
      Wasserman, our Chief Executive Officer, Chief Financial Officer, President
      and
      Co-Chairman of our board of directors and Robert B. Blaha, our Chief Management
      Officer, Executive Vice President and a director, have agreed pursuant to
      agreements with us and Maxim Group LLC that they will indemnify and hold us
      harmless against any and all loss, liability, claims, damages and expense to
      which we may become subject as a result of any claim by any target business,
      prospective target business or any vendor or other entity owed money by us
      for
      services rendered or products sold to us or the claims of any target business
      or
      prospective target business, but only to the extent necessary to ensure that
      the
      amount in the trust account is not reduced by such loss, liability, claim,
      damage or expense, and provided that and to the extent that (with the approval
      of our Chief Executive Officer and the vote or written consent of no less than
      a
      majority of our board of directors, including all our non-independent directors)
      we have elected to forego obtaining valid and enforceable waivers from such
      third parties. Based on information we have obtained from such individuals,
      we
      currently believe that such persons are of substantial means and capable of
      funding a shortfall in our trust account even though we have not asked them
      to
      reserve for such an eventuality. We cannot assure you, however, that they would
      be able to satisfy those obligations. Accordingly, we cannot assure you that
      the
      actual per-share liquidation value receivable by our public stockholders will
      not be less than $10.00 per share, plus interest (net of taxes payable on
      interest earned on the trust account, State of Delaware franchise taxes and
      repayment of $250,000 of an additional officer loan made prior to closing of
      the
      public offering by Steven M. Wasserman (such loan was to be repaid within 90
      days of the closing of the public offering, but has not been repaid through
      December 31, 2007)), due to claims of creditors. In the event of approval of
      a
      plan of dissolution and liquidation, we would remain obligated to enforce the
      above referenced indemnification agreements with our executive officers.




We
      believe the likelihood of our executive officers, Mr. Wasserman and Mr. Blaha,
      having to indemnify the trust account is limited because we will endeavor to
      have all vendors, target businesses and prospective target businesses as well
      as
      other entities execute agreements with us waiving any right, title, interest
      or
      claim of any kind in or to monies held in the trust account. The indemnification
      provisions are set forth in the insider letters, executed by Mr. Wasserman
      and
      Mr. Blaha. The insider letters provide that in the event we obtain a valid
      and
      enforceable waiver of any right, title, interest or claim of any kind in or
      to
      any monies held in the trust account for the benefit of our stockholders from
      a
      target business, prospective target business, vendor or other creditor, the
      indemnification will not be available. In the event that the board recommends
      and our stockholders approve a plan of dissolution and liquidation where it
      is
      subsequently determined that the reserve for claims and liabilities is
      insufficient, stockholders who received a return of funds from the liquidation
      of our trust account could be liable for such claims made by creditors. We
      also
      will have access to any funds released to us to fund working capital
      requirements with which to pay any such potential claims (including costs and
      expenses incurred in connection with our plan of dissolution and liquidation
      currently estimated at approximately $50,000 to $75,000).




Additionally,
      if we are forced to file a bankruptcy case or an involuntary bankruptcy case
      is
      filed against us which is not dismissed, the funds held in our trust account
      will be subject to applicable bankruptcy law, and may be included in our
      bankruptcy estate and subject to the claims of third parties with priority
      over
      the claims of our stockholders. To the extent any bankruptcy claims deplete
      the
      trust account we cannot assure you we will be able to return to our public
      stockholders the liquidation amounts due them.




We
      will
      dissolve and liquidate our trust account to our public stockholders if we do
      not
      complete a business combination within 18 months after the consummation of
      the
      public offering (or within 24 months after the consummation of the public
      offering if certain extension criteria are satisfied). Under Sections 280
      through 282 of the Delaware General Corporation Law, stockholders may be held
      liable for claims by third parties against a corporation to the extent of
      distributions received by them in a dissolution. If the corporation complies
      with certain procedures intended to ensure that it makes reasonable provision
      for all claims against it, including a 60-day notice period during which any
      third-party claims can be brought against the corporation, a 90-day period
      during which the corporation may reject any claims brought, and an additional
      150-day waiting period before any liquidating distributions are made to
      stockholders, any liability of stockholders with respect to a liquidating
      distribution is limited to the lesser of such stockholder’s pro rata share of
      the claim or the amount distributed to the stockholder, and any liability of
      the
      stockholder would be barred after the third anniversary of the dissolution.
      However, we will seek stockholder approval to liquidate our trust account to
      our
      public stockholders as soon as reasonably possible as part of our plan of
      dissolution and distribution and, therefore, we do not intend to comply with
      those procedures. As such, our stockholders could potentially be liable for
      any
      claims to the extent of distributions received by them in a dissolution and
      any
      liability of our stockholders may extend beyond the third anniversary of such
      dissolution. Accordingly, we cannot assure you that third parties will not
      seek
      to recover from our stockholders amounts owed to them by us.




8




Pursuant
      to, among other documents, our amended and restated certificate of
      incorporation, if we do not complete a business combination within 18 months
      after the consummation of the public offering, or within 24 months after the
      consummation of the public offering if the extension criteria described below
      have been satisfied, our purpose and powers will be limited to dissolving,
      liquidating and winding up. We view this obligation to dissolve and liquidate
      as
      an obligation to our stockholders and neither we nor our board of directors
      will
      take any action to amend or waive any provision of our certificate of
      incorporation to allow us to survive for a longer period of time if it does
      not
      appear we will be able to consummate a business combination within the foregoing
      time periods. Upon dissolution, we will distribute to all of our public
      stockholders, in proportion to their respective equity interest, an aggregate
      sum equal to the amount in the trust account, inclusive of any interest. Our
      initial stockholders have waived their rights to participate in any liquidation
      distribution with respect to their initial shares and have also agreed to vote
      in favor of any plan of dissolution and liquidation which we will present to
      our
      stockholders for vote. There will be no distribution from the trust account
      with
      respect to our warrants which will expire worthless. We will pay the costs
      of
      dissolution and liquidation from our remaining interest earned on funds in
      the
      trust account that has been released to us to fund our working
      capital.




If
      we
      enter into either a letter of intent, an agreement in principle or a definitive
      agreement to complete a business combination prior to the expiration of 18
      months after the consummation of the public offering, but are unable to complete
      the business combination within the 18-month period, then we will have an
      additional six months in which to complete the business combination contemplated
      by the letter of intent, agreement in principle or definitive agreement. If
      we
      are unable to consummate a transaction within 24 months following the
      consummation of the public offering our purpose and powers will be limited
      to
      dissolving, liquidating and winding up. Upon notice from us, the trustee of
      the
      trust account will liquidate the investments constituting the trust account
      and
      will turn over the proceeds to our transfer agent for distribution to our public
      stockholders as part of our plan of dissolution and liquidation. Concurrently,
      we shall pay, or reserve for payment, from funds not held in trust, our
      liabilities and obligations, although we cannot assure you that there will
      be
      sufficient funds for such purpose.




Our
      public stockholders shall be entitled to receive funds from the trust account
      only in the event of our liquidation or if the stockholders seek to redeem
      their
      respective shares into cash upon a business combination which the stockholder
      voted against and which is actually completed by us. In no other circumstances
      shall a stockholder have any right or interest of any kind to or in the trust
      account. Voting against the business combination alone will not result in
      redemption of a stockholder’s shares into a pro rata share of the trust account.
      Such stockholder must have also exercised the redemption rights described
      above.




Under
      the
      Delaware General Corporation Law, stockholders may be held liable for claims
      by
      third parties against a corporation to the extent of distributions received
      by
      them in a dissolution. If the corporation complies with certain procedures
      set
      forth in Section 280 of the Delaware General Corporation Law intended to ensure
      that it makes reasonable provision for all claims against it, including a 60-day
      notice period during which any third-party claims can be brought against the
      corporation, a 90-day period during which the corporation may reject any claims
      brought, and an additional 150-day waiting period before any liquidating
      distributions are made to stockholders, any liability of stockholders with
      respect to a liquidating distribution is limited to the lesser of such
      stockholder’s pro rata share of the claim or the amount distributed to the
      stockholder, and any liability of the stockholder would be barred after the
      third anniversary of the dissolution. Although we will make liquidating
      distributions to our stockholders as soon as reasonably possible as part of
      our
      plan of dissolution and liquidation, we do not intend to comply with those
      procedures. As such, our stockholders could potentially be liable for any claims
      to the extent of distributions received by them in a dissolution and any
      liability of our stockholders may extend beyond the third anniversary of such
      dissolution. Because we will not be complying with Section 280, we will seek
      stockholder approval to comply with Section 281(b) of the Delaware General
      Corporation Law, requiring us to adopt a plan of dissolution that will provide
      for our payment, based on facts known to us at such time, of (i) all existing
      claims, (ii) all pending claims and (iii) all claims that may be potentially
      brought against us within the subsequent 10 years. Under Section 281(b), the
      payment and provision for payment of these claims and expenses has priority
      over
      the distribution of funds to stockholders. However, because we are a blank
      check
      company, rather than an operating company, and our operations will be limited
      to
      searching for prospective target businesses to acquire, the only likely claims
      to arise would be from our vendors (such as accountants, lawyers, investment
      bankers, etc.), target businesses or potential target businesses. As described
      above, we intend to have all vendors, target businesses and prospective target
      businesses execute agreements with us waiving any right, title, interest or
      claim of any kind in or to any monies held in the trust account. As a result
      of
      such waivers, the claims that could be made against us should be significantly
      limited and the likelihood that any claim that would result in any liability
      extending to the trust account should be minimal.




9




We
      expect
      that all costs associated with the implementation and completion of our plan
      of
      dissolution and liquidation will be funded by any funds not held in our trust
      account, although we cannot assure you that there will be sufficient funds
      for
      such purpose.




We
      currently believe that any plan of dissolution and liquidation subsequent to
      the
      expiration of the 18 and 24 month deadlines would proceed in the following
      manner:




·
            our
                board of directors will, consistent with its obligations described
                in our
                amended and restated certificate of incorporation to dissolve, prior
                to
                the passing of such deadline, convene and adopt a specific plan of
                dissolution and liquidation, which it will then vote to recommend
                to our
                stockholders; at such time it will also cause to be prepared a preliminary
                proxy statement setting out such plan of dissolution and liquidation
                and
                the board’s recommendation of such
                plan;




·
            upon
                such deadline, we would file the preliminary proxy statement with
                the
                Securities and Exchange Commission;




·
            if
                the Securities and Exchange Commission does not review the preliminary
                proxy statement, then 10 days following the passing of such deadline,
                we
                will mail the proxy statements to our stockholders, and 30 days following
                the passing of such deadline we will convene a meeting of our stockholders
                at which they will either approve or reject our plan of dissolution
                and
                liquidation; and




·
            if
                the Securities and Exchange Commission does review the preliminary
                proxy
                statement, we currently estimate that we will receive their comments
                30
                days following the passing of such deadline. We will mail the proxy
                statements to our stockholders following the conclusion of the comment
                and
                review process (the length of which we cannot predict with any certainty),
                and we will convene a meeting of our stockholders at which they will
                either approve or reject our plan of dissolution and
                liquidation.




In
      the
      event we seek stockholder approval for a plan of dissolution and liquidation
      and
      do not obtain such approval, we will nonetheless continue to pursue stockholder
      approval for our dissolution. Pursuant to the terms of our amended and restated
      certificate of incorporation, our powers following the expiration of the
      permitted time periods for consummating a business combination will
      automatically thereafter be limited to acts and activities relating to
      dissolving and winding up our affairs, including liquidation. The funds held in
      our trust account may not be distributed except upon our dissolution and, unless
      and until such approval is obtained from our stockholders, the funds held in
      our
      trust account will not be released. Consequently, holders of a majority of
      our
      outstanding stock must approve our dissolution in order to receive the funds
      held in our trust account and the funds will not be available for any other
      corporate purpose. In addition, if we seek approval from our stockholders to
      consummate a business combination within 90 days of the expiration of 24 months
      (assuming that the period in which we need to consummate a business combination
      has been extended, as provided in our amended and restated certificate of
      incorporation) from the date of the public offering, the proxy statement related
      to such a business combination will also seek stockholder approval for our
      board’s recommended plan of dissolution and liquidation, in the event our
      stockholders do not approve such a business combination. If no proxy statement
      seeking the approval of our stockholders for a business combination has been
      filed 30 days prior to the date which is 24 months from the date of the public
      offering, our board will, prior to such date, convene, adopt and recommend
      to
      our stockholders a plan of dissolution and liquidation, and on such date file
      a
      proxy statement with the Securities and Exchange Commission seeking stockholder
      approval for such plan. Immediately upon the approval by our stockholders of
      our
      plan of dissolution and liquidation, we will liquidate our trust account to
      our
      public stockholders.




10




**Competition
      for Target Businesses**




In
      identifying, evaluating and selecting a target business, we may encounter
      intense competition from other entities having a business objective similar
      to
      ours. Many of these entities are well established and have extensive experience
      identifying and effecting business combinations directly or through affiliates.
      Many of these competitors possess greater technical, human and other resources
      than us and our financial resources will be relatively limited when contrasted
      with those of many of these competitors. While we believe based upon the
      knowledge and experience of our officers and directors that there are numerous
      potential target businesses that we could acquire with a fair market value
      equal
      to at least 80% of our net assets at the time of the acquisition (exclusive
      of
      Maxim Group LLC’s deferred underwriting compensation, including interest
      thereon, held in the trust account) with the net proceeds of the public
      offering, our ability to compete in acquiring certain sizable target businesses
      will be limited by our available financial resources. This inherent competitive
      limitation gives others an advantage in pursuing the acquisition of a target
      business. Further:




·
            our
                obligation to seek stockholder approval of a business combination
                or
                obtain the necessary financial information to be included in the
                proxy
                statement to be sent to stockholders in connection with such business
                combination may delay or prevent the completion of a
                transaction;




·
            our
                obligation to redeem into cash shares of common stock held by our
                public
                stockholders in certain instances may reduce the resources available
                to us
                for a business combination;




·
            our
                outstanding warrants and options, and the future dilution they potentially
                represent, may not be viewed favorably by certain target businesses;
                and




·
            the
                requirement to acquire assets or an operating business that has a
                fair
                market value equal to at least 80% of our net assets at the time
                of the
                acquisition (exclusive of Maxim Group LLC’s deferred underwriting
                compensation, including interest thereon, held in the trust account)
                could
                require us to acquire several assets or closely related operating
                businesses at the same time, all of which sales would be contingent
                on the
                closings of the other sales, which could make it more difficult to
                consummate the business
                combination.




Additionally,
      we face competition from other blank-check companies which have formed recently,
      a number of which may consummate a business combination in any industry they
      choose. We may therefore be subject to competition from these companies, which
      are seeking to consummate a business plan similar to ours and which will, as
      a
      result, increase demand for privately-held companies to combine with companies
      structured similarly to ours. Further, the fact that based on publicly available
      information only 47 of approximately 153 such companies since 2003 have
      completed a business combination and 24 of such companies have entered into
      a
      definitive agreement for a business combination may be an indication that there
      are only a limited number of attractive target businesses available to such
      entities or that many privately-held target businesses may not be inclined
      to
      enter into business combinations with publicly held blank check companies like
      us.




Any
      of
      these factors may place us at a competitive disadvantage in negotiating a
      business combination.




If
      we
      effect a business combination, there will be, in all likelihood, intense
      competition from competitors of the target business. We cannot assure you that,
      subsequent to a business combination, we will have the resources or ability
      to
      compete effectively.




11




**Employees**




We
      have
      two officers, both of whom are also members of our board of directors. These
      individuals are not obligated to contribute any specific number of hours per
      week and intend to devote only as much time as they deem necessary to our
      affairs. The amount of time they will devote in any time period will vary based
      on the availability of suitable target businesses to investigate, although
      we
      expect such individuals to devote an average of approximately ten hours per
      week
      to our business. We do not intend to have any full time employees prior to
      the
      consummation of a business combination.




**Item
                1A.**
            **Risk
                Factors**




**Risks
      Associated with Our B** **usiness**




***We
      are a development stage company with no operating history and, accordingly,
      there is limited*** ***basis on which to evaluate our ability to achieve our business
      objective.***




We
      are a
      recently formed development stage company with no operating results to date.
      Since we do not have an operating history, there is limited basis upon which
      to
      evaluate our ability to achieve our business objective, which is to acquire
      one
      or more domestic or international operating businesses in the U.S. homeland
      security or defense industries or a combination thereof. We will not generate
      any operating revenues (other than interest income on the proceeds of the public
      offering and the private placement) until, at the earliest, after the
      consummation of a business combination. We cannot assure you that an initial
      business combination will occur.




***We
      may not be able to consummate a business combination within the required
      timeframe, in which case, we would be forced to
      liquidate*** ***.***




We
      must
      complete a business combination with a fair market value of at least 80% of
      our
      net assets at the time of acquisition (exclusive of Maxim Group LLC’s deferred
      underwriting compensation, including interest thereon, held in the trust
      account) within 18 months after the consummation of the public offering (or
      within 24 months after the consummation of the public offering if a letter
      of
      intent, agreement in principle or a definitive agreement has been executed
      within 18 months after the consummation of the public offering and the business
      combination relating thereto has not yet been consummated within such 18 month
      period). If we fail to consummate a business combination within the required
      time frame, we will be forced to liquidate our assets. We may not be able to
      find suitable target businesses within the required time frame. In addition,
      our
      negotiating position and our ability to conduct adequate due diligence on any
      potential target may be reduced as we approach the deadline for the consummation
      of a business combination. We
      have
      contacted a number of potential target businesses and are in the process of
      holding discussions with certain of these potential target businesses with
      respect to a possible business combination. We
      currently expect to enter into a letter of intent with respect to a possible
      business combination on or prior to September 28,
      2008.




***If
      we are forced to liquidate before a business combination, our warrants will
      expire worthless.***




If
      we are
      unable to complete a business combination and are forced to liquidate the trust
      account, there will be no distribution with respect to our outstanding warrants
      and, accordingly, the warrants will expire worthless.




***You
      will not be entitled to protections normally afforded to investors of blank
      check companies.***




Since
      the
      net proceeds of our initial public offering are intended to be used to complete
      a business combination with a target business that has not been identified,
      we
      may be deemed to be a “blank check” company under the U.S. securities laws.
      However, since we have net tangible assets in excess of $5,000,000 and filed
      a
      Current Report on Form 8-K with the Securities and Exchange Commission upon
      consummation of our initial public offering, including an audited balance sheet
      demonstrating this fact, we are exempt from rules promulgated by the Securities
      and Exchange Commission to protect investors of blank check companies, such
      as
      Rule 419.




12




***Because
      there are numerous companies with a business plan similar to ours seeking to
      effectuate a business combination, it may be more difficult for us to complete
      a
      business combination*** ***.***




As
      of
      February 26, 2008, based upon publicly available information, we have identified
      approximately 153 blank check companies that have gone public since 2003. Of
      these companies, only 47 have completed a business combination, while 8 have
      liquidated or will be liquidating. The remaining approximately 98 blank check
      companies have more than $16.0 billion in trust and are seeking to complete
      business acquisitions. Of these companies, only 24 have announced that they
      have
      entered into definitive agreements or letters of intent with respect to
      potential business combinations but have not yet consummated business
      combinations. In addition, there are 74 blank check companies seeking to raise
      approximately $12.8 billion in trust that have filed registration statements
      and
      will be seeking to complete business combinations. Furthermore, the fact that
      only 47 of such companies have completed business combinations and only 24
      other
      of such companies have entered into definitive agreements or letters of intent
      for business combinations, and 8 have liquidated or will be liquidating, may
      be
      an indication that there are only a limited number of attractive targets
      available to such entities or that many targets are not inclined to enter into
      a
      transaction with a blank check company, and therefore we also may not be able
      to
      consummate a business combination within the prescribed time period. If we
      are
      unable to consummate a business combination within the prescribed time period,
      our purpose will be limited to dissolving, liquidating and winding
      up.




***I*** ***nvestors
      in our securities are unable to currently ascertain the merits or risks of
      the
      target business’s operations.***




We
      seek
      to acquire one or more domestic or international operating businesses in the
      U.S. homeland security or defense industries or a combination thereof, however,
      investors in our securities have no current basis to evaluate the possible
      merits or risks of the target business’s operations. To the extent we complete a
      business combination with a financially unstable company, an entity in its
      development stage and/or an entity subject to unknown or unmanageable
      liabilities, we may be affected by numerous risks inherent in the business
      operations of those entities. Although our management will endeavor to evaluate
      the risks inherent in a particular target business, we cannot assure you that
      we
      will properly ascertain or assess all of the significant risk factors. We also
      cannot assure you that an investment in our securities will not ultimately
      prove
      to be less favorable to investors in the public offering than a direct
      investment, if an opportunity were available, in a target business.




***If
      third parties bring claims against us, the proceeds held in trust could be
      reduced and the per-share liquidation price received by stockholders from the
      trust account as part of our plan of dissolution and liquidation will be less
      than $10.00 per share.***




Our
      placing of funds in trust may not protect those funds from third party claims
      against us. Although we will seek to have all vendors, target businesses,
      prospective target businesses or other entities we engage execute agreements
      with us waiving any right, title, interest or claim of any kind in or to any
      monies held in the trust account for the benefit of our public stockholders,
      there is no guarantee that they will execute such agreements, or even if they
      execute such agreements that they would be prevented from bringing claims
      against the trust account including, but not limited to, fraudulent inducement,
      breach of fiduciary responsibility or other similar claims, as well as claims
      challenging the enforceability of the waiver, in each case in order to gain
      an
      advantage with a claim against our assets, including the funds held in the
      trust
      account. If any third party refused to execute an agreement waiving such claims
      to the monies held in the trust account, we would perform an analysis of the
      alternatives available to us if we chose not to engage such third party and
      evaluate whether such engagement would be in the best interest of our
      stockholders if such third party refused to waive such claims.




Examples
      of possible instances where we may engage a third party that refused to execute
      a waiver include the engagement of a third party consultant whose particular
      expertise or skills are believed by management to be significantly superior
      to
      those of other consultants that would agree to execute a waiver or in cases
      where management is unable to find a provider of required services willing
      to
      provide the waiver. In any event, our management would perform an analysis
      of
      the alternatives available to it and would only enter into an agreement with
      a
      third party that did not execute a waiver if management believed that such
      third
      party’s engagement would be significantly more beneficial to us than any
      alternative. In addition, there is no guarantee that such entities will agree
      to
      waive any claims they may have in the future as a result of, or arising out
      of,
      any negotiations, contracts or agreements with us and will not seek recourse
      against the trust account for any reason. Accordingly, the proceeds held in
      trust could be subject to claims which could take priority over the claims
      of
      our public stockholders and the per-share liquidation price could be less than
      the initial $10.00 per share held in the trust account, plus interest (net
      of
      any taxes due on such interest, which taxes, if any, shall be paid from the
      trust account, franchise taxes payable to the State of Delaware, repayment
      of
      $250,000 of an additional officer loan made prior to closing of the public
      offering by Steven M. Wasserman (such loan was to be repaid within 90 days
      of
      the closing of the public offering, but has not been repaid through December
      31,
      2007)), due to claims of such creditors. Steven M. Wasserman, our Chief
      Executive Officer, President and Co-Chairman of the board of directors, and
      Robert B. Blaha, our Chief Management Officer, Executive Vice President and
      a
      director, have agreed to indemnify and hold us harmless against liabilities,
      claims, damages and expenses to which we may become subject as a result of
      any
      claim by any target business, prospective target business, vendor or other
      entity owed money by us for services rendered or products sold to us or the
      claims of any target business or prospective target business, to the extent
      necessary to ensure that such claims do not reduce the amount in the trust
      account. However, we cannot assure you that Messrs. Wasserman and Blaha will
      be
      able to satisfy those obligations.




13




Additionally,
      if we are forced to file a bankruptcy case or an involuntary bankruptcy case
      is
      filed against us which is not dismissed, the funds held in our trust account
      will be subject to applicable bankruptcy law, and may be included in our
      bankruptcy estate and subject to the claims of third parties with priority
      over
      the claims of our stockholders. To the extent any bankruptcy claims deplete
      the
      trust account we cannot assure you we will be able to return to our public
      stockholders the liquidation amounts due them.




***Unlike
      most other bank check offerings, we allow up to approximately 34.99% of our
      public stockholders to exercise their redemption rights. This higher threshold
      will make it easier for us to consummate a business combination with which
      you
      may not agree.***




When
      we
      seek stockholder approval of a business combination, we will offer each public
      stockholder (other than our initial stockholders) the right to redeem their
      shares of common stock for cash if the stockholder votes against the business
      combination and the business combination is approved and consummated. We will
      consummate the initial business combination only if the following two conditions
      are met: (i) a majority of the shares of common stock voted by the public
      stockholders are voted in favor of the business combination and (ii) public
      stockholders owning 35% or more of the shares sold in the public offering do
      not
      vote against the business combination and exercise their redemption rights.
      Many
      other blank check companies have a redemption threshold of 20%, which makes
      it
      more difficult for such companies to consummate their initial business
      combination. Because we permit a larger number of stockholders to exercise
      their
      redemption rights, it will be easier for us to consummate an initial business
      combination with a target business which you may believe is not suitable for
      us.




***Unlike
      most other blank check offerings, we allow up to approximately 34.99% of our
      public stockholders to exercise their redemption rights. The ability of a larger
      number of our stockholders to exercise their redemption rights may require
      us to
      arrange third party financing in order to consummate a business
      combination.***




When
      we
      seek stockholder approval of a business combination, we will offer each public
      stockholder (other than our initial stockholders) the right to redeem their
      shares of common stock for cash if the stockholder votes against the business
      combination and the business combination is approved and consummated. Such
      holder must both vote against such business combination and then exercise their
      redemption rights to receive $10.00 per share (plus a portion of the interest
      income earned on the funds in the trust account), but net of: (i) taxes payable
      on interest income earned, State of Delaware franchise taxes, repayment of
      $250,000 of an additional officer loan made prior to closing of the public
      offering by Steven M. Wasserman (such loan was to be repaid within 90 days
      of
      the closing of the public offering, but has not been repaid through December
      31,
      2007), and (ii) up to $1,825,000 of interest income earned on the trust account
      released to us to fund our working capital and dissolution and liquidation
      expenses if we fail to consummate a business combination. Unlike most other
      blank check offerings which have a 20% threshold, we allow up to approximately
      34.99% of our public stockholders to exercise their redemption rights and the
      business combination to go forward, however, we must still acquire a target
      business with a fair market value equal to at least 80% of the amounts held
      in
      trust for our benefit (determined prior to stockholder redemptions). Even if
      less than 35% of the stockholders exercise their redemption rights, we may
      be
      unable to consummate a business combination if such redemption leaves us with
      funds less than a fair market value at least equal to 80% of the amount in
      the
      trust account (exclusive of Maxim Group LLC’s deferred underwriting
      compensation, including interest thereon, held in the trust account) at the
      time
      of such acquisition, which amount is required as a condition to the consummation
      of our initial business combination, and we may be forced to find additional
      financing to consummate such a business combination, consummate a different
      business combination or liquidate. Raising additional funds to cover any
      shortfall may involve dilutive equity financing or incurring indebtedness at
      higher than desirable levels. This may limit our ability to effectuate the
      most
      attractive business combination available to us.




14




***We
      will dissolve and liquidate if we do not consummate a business combination
      and
      our stockholders may be held liable for claims by third parties against us
      to
      the extent of distributions received by them.***




Pursuant
      to, among other documents, our amended and restated certificate of
      incorporation, if we do not complete a business combination within 18 months
      after the consummation of the public offering, or within 24 months after the
      consummation of the public offering if the extension criteria described below
      have been satisfied, our purpose and powers will be limited to dissolving,
      liquidating and winding up. We view this obligation to dissolve and liquidate
      as
      an obligation to our public stockholders and neither we nor our board of
      directors will take any action to amend or waive any provision of our
      certificate of incorporation to allow us to survive for a longer period of
      time
      if it does not appear we will be able to consummate a business combination
      within the foregoing time periods. Upon dissolution, we will distribute to
      all
      of our public stockholders, in proportion to their respective equity interest,
      an aggregate sum equal to the amount in the trust account, inclusive of any
      interest. Our initial stockholders have waived their rights to participate
      in
      any liquidation distribution with respect to their initial shares and have
      agreed to vote in favor of any plan of dissolution and liquidation that we
      will
      present to our stockholders for vote. There will be no distribution from the
      trust account with respect to our warrants which will expire worthless. We
      will
      pay the costs of our dissolution and liquidation of the trust account from
      our
      remaining interest earned on funds in the trust account that has been released
      to us to fund our working capital.




If
      we
      enter into either a letter of intent, an agreement in principle or a definitive
      agreement to complete a business combination prior to the expiration of 18
      months after the consummation of the public offering, but are unable to complete
      the business combination within the 18-month period, then we will have an
      additional six months in which to complete the business combination contemplated
      by the letter of intent, agreement in principle or definitive agreement. If
      we
      are unable to consummate a transaction within 24 months following the
      consummation of the public offering our purpose and powers will be limited
      to
      dissolving, liquidating and winding up. Upon notice from us, the trustee of
      the
      trust account will liquidate the investments constituting the trust account
      and
      will turn over the proceeds to our transfer agent for distribution to our public
      stockholders as part of our plan of dissolution and liquidation. Concurrently,
      we shall pay, or reserve for payment, from funds not held in trust, our
      liabilities and obligations, although we cannot assure you that there will
      be
      sufficient funds for such purpose.




Under
      the
      Delaware General Corporation Law, stockholders may be held liable for claims
      by
      third parties against a corporation to the extent of distributions received
      by
      them in a dissolution. If we comply with certain procedures set forth in Section
      280 of the Delaware General Corporation Law intended to ensure that we make
      reasonable provision for all claims against us, including a 60-day notice period
      during which any third-party claims can be brought against us, a 90-day period
      during which we may reject any claims brought, and an additional 150-day waiting
      period before any liquidating distributions are made to stockholders, any
      liability of stockholders with respect to a liquidating distribution is limited
      to the lesser of such stockholder’s pro- rata share of the claim or the amount
      distributed to the stockholder, and any liability of the stockholder would
      be
      barred after the third anniversary of the dissolution. However, as stated above,
      we will make liquidating distributions to our public stockholders as soon as
      reasonably possible as part of our plan of dissolution and liquidation and,
      therefore, we do not intend to comply with those procedures. As such, our
      stockholders could potentially be liable for any claims to the extent of
      distributions received by them in a dissolution and any liability of our
      stockholders may extend beyond the third anniversary of such dissolution.
      Because we will not be complying with Section 280, we will seek stockholder
      approval to comply with Section 281(b) of the Delaware General Corporation
      Law,
      requiring us to adopt a plan of dissolution that will provide for our payment,
      based on facts known to us at such time, of: (i) all existing claims, (ii)
      all
      pending claims and (iii) all claims that may be potentially brought against
      us
      within the subsequent 10 years. However, because we are a blank check company,
      rather than an operating company, and our operations are limited to searching
      for prospective target businesses to acquire, the only likely claims to arise
      would be from our vendors (such as accountants, lawyers, investment bankers,
      etc.), target businesses or potential target businesses. As described above,
      we
      intend to have all vendors, target businesses and prospective target businesses
      execute agreements with us waiving any right, title, interest or claim of any
      kind in or to any monies held in the trust account. As a result of seeking
      those
      waivers, the claims that could be made against us should be significantly
      limited and the likelihood that any claim that would result in any liability
      extending to the trust should be minimal. Our Chief Executive Officer, President
      and Co-Chairman of our board of directors and our Chief Management Officer,
      Executive Vice President and a director have agreed to indemnify and hold us
      harmless against liabilities, claims, damages and expenses to which we may
      become subject as a result of any claim by any target business, prospective
      target business, vendor or other entity owed money by us for services rendered
      or products sold to us or the claims of any target business or prospective
      target business, to the extent necessary to protect the amounts held in the
      trust account. In the event that our board recommends and our stockholders
      approve a plan of dissolution and liquidation where it is subsequently
      determined that the reserve for claims and liabilities is insufficient,
      stockholders who received a return of funds from the liquidation of our trust
      account could be liable for such amounts to creditors. In addition, in the
      event
      of approval of a plan of dissolution and liquidation, we would remain obligated
      to enforce the above referenced indemnification agreements with our executive
      officers.




15




Our
      public stockholders will be entitled to receive funds from the trust account
      only in the event of our dissolution and liquidation or if they seek to redeem
      their respective shares into cash upon a business combination that the
      stockholder voted against and which is completed by us. In no other
      circumstances will a stockholder have any right or interest of any kind to
      or in
      the trust account.




***If
      we do not consummate a business combination and dissolve, payments from the
      trust account to our public stockholders may be
      delayed.***




We
      currently believe that any plan of dissolution and liquidation subsequent to
      the
      expiration of the 18 and 24 month deadlines would proceed in approximately
      the
      following manner:




·
            our
                board of directors will, consistent with its obligations described
                in our
                amended and restated certificate of incorporation to dissolve, prior
                to
                the passing of such deadline, convene and adopt a specific plan of
                dissolution and liquidation, which it will then vote to recommend
                to our
                stockholders; at such time it will also cause to be prepared a preliminary
                proxy statement setting out such plan of dissolution and liquidation
                as
                well as the board’s recommendation of such
                plan;




·
            upon
                such deadline, we would file our preliminary proxy statement with
                the
                Securities and Exchange Commission;




·
            if
                the Securities and Exchange Commission does not review the preliminary
                proxy statement, then, 10 days following the passing of such deadline,
                we
                will mail the proxy statement to our stockholders, and 30 days following
                the passing of such deadline we will convene a meeting of our
                stockholders, at which they will either approve or reject our plan
                of
                dissolution and liquidation; and




·
            if
                the Securities and Exchange Commission does review the preliminary
                proxy
                statement, we currently estimate that we will receive its comments
                30 days
                following the passing of such deadline. We will mail the proxy statement
                to our stockholders following the conclusion of the comment and review
                process (the length of which we cannot predict with any certainty,
                and
                which may be substantial) and we will convene a meeting of our
                stockholders at which they will either approve or reject our plan
                of
                dissolution and liquidation.




In
      the
      event we seek stockholder approval for a plan of dissolution and liquidation
      and
      do not obtain such approval, we will nonetheless continue to pursue stockholder
      approval for our dissolution. Pursuant to the terms of our amended and restated
      certificate of incorporation, our powers following the expiration of the
      permitted time periods for consummating a business combination will
      automatically thereafter be limited to acts and activities relating to
      dissolving and winding up our affairs, including liquidation. The funds held
      in
      our trust account may not be distributed except upon our dissolution and, unless
      and until such approval is obtained from our stockholders, the funds held in
      our
      trust account will not be released. Consequently, holders of a majority of
      our
      outstanding stock must approve our dissolution in order to receive the funds
      held in our trust account and the funds will not be available for any other
      corporate purpose.




These
      procedures, or a vote to reject any plan of dissolution and liquidation by
      our
      stockholders, may result in substantial delays in the liquidation of our trust
      account to our public stockholders as part of our plan of dissolution and
      liquidation.




16




***We
      may choose to redeem our outstanding public warrants at a time that is
      disadvantageous to our warrant holders.***




Subject
      to there being a current prospectus under the Securities Act of 1933, as
      amended, with respect to the shares of common stock issuable upon exercise
      of
      the warrants, we may redeem the public warrants issued as a part of our units
      at
      any time after the warrants become exercisable, in whole and not in part, at
      a
      price of $.01 per warrant, upon a minimum of 30 days prior written notice of
      redemption, if and only if, the last sales price of our common stock equals
      or
      exceeds $14.25 per share for any 20 trading days within a 30 trading day period
      ending three business days before we send the notice of redemption. Redemption
      of the public warrants could force the warrant holders: (i) to exercise the
      warrants and pay the exercise price therefore at a time when it may be
      disadvantageous for the holders to do so, (ii) to sell the warrants at the
      then
      current market price when they might otherwise wish to hold the warrants, or
      (iii) to accept the nominal redemption price which, at the time the warrants
      are
      called for redemption, is likely to be substantially less than the market value
      of the warrants.




***Although
      we are required to use our best efforts to have an effective registration
      statement covering the issuance of the shares underlying the public warrants
      at
      the time that our warrant holders exercise their warrants, we cannot guarantee
      that a registration statement will be effective, in which case our public
      warrant holders may not be able to exercise our
      warrants.***




Holders
      of our public warrants issued in the public offering as part of our units will
      be able to exercise the warrants only if: (i) a current registration statement
      under the Securities Act of 1933, as amended, relating to the shares of our
      common stock underlying the warrants is then effective and current and a
      prospectus is available for use by our public stockholders and (ii) such shares
      are qualified for sale or exempt from qualification under the applicable
      securities laws of the states in which the various holders of warrants reside.
      Although we have undertaken in the warrant agreement, and therefore have a
      contractual obligation, to use our best efforts to maintain a current
      registration statement covering the shares underlying the public warrants
      following completion of the public offering to the extent required by federal
      securities laws, and we intend to make every effort to comply with such
      undertaking, we cannot assure that we will be able to do so. If we are unable
      to
      maintain the effectiveness of such registration statement until the expiration
      of the public warrants and therefore are unable to deliver registered shares,
      the warrants may become worthless. In addition, we have agreed to use our
      reasonable efforts to register the shares underlying the public warrants under
      the blue sky laws of the states of residence of the exercising warrantholders,
      to the extent an exemption is not available. The value of the public warrants
      may be greatly reduced if a registration statement covering the shares issuable
      upon the exercise of the warrants is not effective and current and a prospectus
      is not available for use by the holders of the public warrants or if the
      securities are not qualified, or exempt from qualification, in the states in
      which the holders of warrants reside. Holders of the public warrants who reside
      in jurisdictions in which the shares underlying the warrants are not qualified
      and in which there is no exemption will be unable to exercise their warrants
      and
      would either have to sell their warrants in the open market or allow them to
      expire unexercised. If the public warrants become worthless, the price paid
      by
      holders for their units will thereafter relate solely to the common stock
      underlying the units. If and when the public warrants become redeemable by
      us,
      we may exercise our redemption right even if we are unable to qualify the
      underlying securities for sale under all applicable state securities
      laws.




Because
      the warrants sold in the private placement were originally issued pursuant
      to an
      exemption from registration requirements under the federal securities laws,
      the
      holders of those warrants will be able to exercise their warrants even if,
      at
      the time of exercise, a prospectus relating to the common stock issuable upon
      exercise of such warrants is not current. As a result, the holders of the
      warrants purchased in the private placement will not have any restrictions
      with
      respect to the exercise of their warrants. As described above, the holders
      of
      the public warrants purchased in the public offering will not be able to
      exercise them unless we have a current registration statement covering the
      shares issuable upon their exercise.




In
      no
      event will the registered holders of a warrant be entitled to receive a net-cash
      settlement, stock, or other consideration in lieu of physical settlement in
      shares of our common stock.




17




***We
      may issue shares of our capital stock, including convertible securities, to
      complete a business combination, which would reduce the equity interest of
      our
      stockholders and likely cause a change in control of our
      ownership.***




Our
      amended and restated certificate of incorporation authorizes the issuance of
      up
      to 30,000,000 shares of common stock, par value $.0001 per share, and 1,000,000
      shares of preferred stock, par value $.0001 per share. Currently, there are
      13,010,000 authorized but unissued shares of our common stock available for
      issuance (after appropriate reservation for the issuance of shares upon full
      exercise of our outstanding warrants and the purchase option issued to the
      representative of the underwriters) and all of the 1,000,000 shares of preferred
      stock available for issuance. Although we have no commitments as of the date
      of
      the public offering to issue our securities, we may issue a substantial number
      of additional shares of our common stock or preferred stock, or a combination
      of
      common and preferred stock, to complete a business combination. The issuance
      of
      additional shares of our common stock or any number of shares of our preferred
      stock:




·
            may
                significantly reduce the equity interest of investors in the public
                offering;




·
            will
                likely cause a change in control if a substantial number of our shares
                of
                common stock are issued, which may affect, among other things, our
                ability
                to use our net operating loss carry forwards, if any, and most likely
                also
                result in the resignation or removal of our present officers and
                directors; and




·
            may
                adversely affect prevailing market prices for our common
                stock.




***We
      may issue notes or other debt securities, or otherwise incur substantial debt,
      to complete a business combination, which may adversely affect our financial
      condition.***




Although
      we have no commitments as of the date of the public offering to issue any notes
      or other debt securities, or to otherwise incur outstanding debt, we may choose
      to issue a substantial amount of notes or other debt securities, or opt to
      incur
      substantial debt, or a combination of both, to complete a business combination.
      If we finance the purchase of assets or operations through the issuance of
      debt
      securities, it could result in:




·
            default
                and foreclosure on our assets if our operating revenues after a business
                combination were insufficient to pay our debt
                obligations;




·
            acceleration
                of our obligations to repay the indebtedness even if we have made
                all
                principal and interest payments when due, if the debt security contained
                covenants that required the maintenance of certain financial ratios
                or
                reserves and any such covenant was breached without a waiver or
                renegotiation of that covenant;




·
            our
                immediate payment of all principal and accrued interest, if any,
                to the
                extent the debt security was payable on demand;
                and




·
            our
                inability to obtain additional financing, if necessary, if the debt
                security contained covenants restricting our ability to obtain additional
                financing while such security was
                outstanding.




***Because
      of our limited resources and the significant competition for business
      combination opportunities, we may not be able to consummate an attractive
      business combination.***




In
      addition to other similarly situated blank check companies, we expect to
      encounter intense competition from other entities having a business objective
      similar to ours, including private equity and venture capital funds, leveraged
      buyout funds and operating businesses competing for acquisitions. Many of these
      entities are well established and have extensive experience in identifying
      and
      effecting business combinations directly or through affiliates. Many of these
      competitors possess greater technical, human and other resources than we do
      and
      our financial resources will be relatively limited when contrasted with those
      of
      many of these competitors. While we believe that there are numerous potential
      target businesses that we could acquire with the net proceeds of the public
      offering, our ability to compete in acquiring certain sizable target businesses
      will be limited by our available financial resources. This inherent competitive
      limitation gives others an advantage in pursuing the acquisition of certain
      target businesses. Further:




18




·
            our
                obligation to seek stockholder approval of a business combination
                may
                delay the consummation of a
                transaction;




·
            our
                obligation to redeem up to 35% of the publicly-held shares of our
                common
                stock into cash for dissenting shareholders may reduce the resources
                available for a business combination;
                and




·
            our
                outstanding warrants and the purchase option granted to the representative
                of the underwriters, and the future dilution they potentially represent,
                may not be viewed favorably by certain target
                businesses.




Any
      of
      these obligations may place us at a competitive disadvantage in successfully
      negotiating and completing a business combination.




In
      addition, because it is possible that our business combination may entail the
      contemporaneous acquisition of several operating businesses and may be with
      several different sellers, we will need to convince such sellers to agree that
      the purchase of their businesses is contingent upon the simultaneous closings
      of
      the other acquisitions.




***Our
      ability to effect a business combination and to execute any potential business
      plan afterwards will be largely dependent upon the efforts of our key personnel,
      some of whom may join us following a business combination and may be unfamiliar
      with the requirements of operating a public company.***




Our
      ability to effect a business combination will be totally dependent upon the
      efforts of our key personnel. The future role of our key personnel following
      a
      business combination, however, cannot presently be fully ascertained.
      Specifically, the members of our current management are not obligated to remain
      with us subsequent to a business combination, and we cannot assure you that
      the
      resignation or retention of our current management will be included as a term
      or
      condition in any agreement with respect to a business combination. Although
      our
      management and other key personnel, particularly our Chief Executive Officer
      and
      President and our Chief Management Officer and Executive Vice President, may
      remain associated with us following a business combination, we may employ other
      personnel following the business combination. While we intend to closely
      scrutinize any additional individuals we employ after a business combination,
      we
      cannot assure you that our assessment of those individuals will prove to be
      correct. Moreover, our current management will only be able to remain with
      the
      combined company after the consummation of a business combination if they are
      able to negotiate such as part of the business combination. If we acquired
      a
      target business in an all-cash transaction, it would be more likely that current
      members of management would remain with us if they chose to do so. If a business
      combination were structured as a merger whereby the stockholders of the target
      business were to control the combined company following a business combination,
      it may be less likely that management would remain with the combined company
      unless it was negotiated as part of the transaction via the acquisition
      agreement, an employment agreement or other arrangement. In making the
      determination as to whether current management should remain with us following
      the business combination, management will analyze the experience and skill
      set
      of the target business’s management and negotiate as part of the business
      combination that certain members of current management remain if it is believed
      that it is in the best interests of the combined company post-business
      combination.




***If
      management were to negotiate to be retained by our company post-business
      combination as a condition to any potential business combination, such
      negotiations may result in a conflict of interest.***




Our
      current management will only be able to remain with the combined company after
      the consummation of a business combination if they are able to negotiate
      mutually agreeable employment terms as part of any such combination, which
      terms
      would be disclosed to stockholders in any proxy statement relating to such
      transaction. The financial interest of our officers and directors could
      influence their motivation in selecting a target business and thus, there may
      be
      a conflict of interest when determining whether a particular business
      combination is in the stockholders’ best interest.




19




***Our
      officers and directors will allocate their time to other businesses, thereby
      causing conflicts of interest in their determination as to how much time to
      devote to our affairs. This could have a negative impact on our ability to
      consummate a business combination.***




Our
      officers and directors are not required to, and will not, commit their full
      time
      to our affairs, which may result in a conflict of interest in allocating their
      time between our operations and other businesses. This could have a negative
      impact on our ability to consummate a business combination. We do not intend
      to
      have any full time employees prior to the consummation of a business
      combination. Each of our executive officers are engaged in several other
      business endeavors and are not obligated to contribute any specific number
      of
      hours per week to our affairs. For example, Steven M. Wasserman, our Chief
      Executive Officer, Chief Financial Officer, President and Co-Chairman of our
      board of directors, currently serves as managing partner of AMT Ventures LLC,
      an
      entity primarily engaged in public and private equity and debt investments
      on a
      principal basis as well as managing partner of AMT Capital Partners LLC, an
      investment banking advisory firm. In addition, Robert B. Blaha, our Chief
      Management Officer and Executive Vice President, currently serves as president
      of Human Capital Resources, a management consulting company and vice chairman
      of
      Integrity Bank & Trust, a commercial bank. If our officers’ and directors’
other business affairs require them to devote substantial amounts of time to
      such affairs in excess of their current commitment levels, it could limit their
      ability to devote time to our affairs and could have a negative impact on our
      ability to consummate a business combination. We cannot assure you that these
      conflicts will be resolved in our favor.




***Our
      officers and directors are currently and may in the future become affiliated
      with entities engaged in business activities similar to those intended to be
      conducted by us and accordingly, may have conflicts of interest in determining
      which entity a particular business opportunity should be presented to.***




Our
      officers and directors are currently, and may in the future become affiliated
      with entities, including other “blank check” companies, engaged in business
      activities similar to those intended to be conducted by us. Additionally, our
      officers and directors may become aware of business opportunities which may
      be
      appropriate for presentation to us as well as the other entities with which
      they
      are or may be affiliated. Further, certain of our officers and directors are
      currently involved in other businesses that are similar to the business
      activities that we intend to conduct following a business combination. Due
      to
      these existing or potential affiliations, they have prior fiduciary obligations
      to present potential business opportunities to those entities prior to
      presenting them to us which could cause additional conflicts of interest.
      Accordingly, they may have conflicts of interest in determining to which entity
      a particular business opportunity should be presented. We cannot assure you
      that
      these conflicts will be resolved in our favor.




***If
      we seek to effect a business combination with an entity that is directly or
      indirectly affiliated with one or more of our existing stockholders, conflicts
      of interest could arise.***




Our
      initial stockholders either currently have or may in the future have
      affiliations with companies in the homeland security and/or defense industries.
      If we were to seek a business combination with a target business with which
      one
      or more of our initial stockholders may be affiliated, conflicts of interest
      could arise in connection with negotiating the terms of and completing the
      business combination. Conflicts that may arise may not be resolved in our
      favor.




***Since
      our officers and directors own shares of our common stock and warrants which
      will not participate in the liquidation of the trust account distributions,
      they
      may have a conflict of interest in determining whether a particular target
      business is appropriate for a business combination.***




All
      of
      our officers and directors own shares of common stock in our company which
      were
      issued prior to the public offering, but have waived their right to receive
      distributions with respect to those shares upon the liquidation of the trust
      account if we are unable to complete a business combination. Additionally,
      Steven M. Wasserman, our Chief Executive Officer, Chief Financial Officer,
      President and Co-Chairman of our board of directors and Constantinos Tsakiris,
      a
      former director, purchased an aggregate of $3,200,000 of warrants directly
      from
      us in a private placement transaction consummated on March 21, 2007. These
      warrants will not be exercisable until the later of: (i) the consummation of
      a
      business combination or (ii) one year from March 23, 2007. The shares and
      warrants owned by our directors will be worthless if we do not consummate a
      business combination. The personal and financial interests of our officers
      and
      directors may influence their motivation in identifying and selecting a target
      business and completing a business combination in a timely manner. Consequently,
      our officers’ and directors’ discretion in identifying and selecting a suitable
      target business may result in a conflict of interest when determining whether
      the terms, conditions and timing of a particular business combination are
      appropriate and in our stockholders’ best interest.




20




***Our
      initial stockholders will not receive reimbursement for any out-of-pocket
      expenses incurred by them to the extent that such expenses exceed the amount
      not
      held in the trust account unless the business combination is consummated and
      therefore they may have a conflict of interest.***




Our
      initial stockholders will not receive reimbursement for any out-of-pocket
      expenses incurred by them to the extent that such expenses exceed the amount
      not
      held in the trust account unless the business combination is consummated and
      there are sufficient funds available for reimbursement after such consummation.
      The financial interest of such persons could influence their motivation in
      selecting a target business and thus, there may be a conflict of interest when
      determining whether a particular business combination is in the stockholders’
best interest.




***If
      our common stock becomes subject to the*** ***SEC’s
      penny stock rules, broker-dealers may experience difficulty in completing
      customer transactions and trading activity in our securities may be adversely
      affected.***




If
      at any
      time we have net tangible assets of $5,000,000 or less and our common stock
      has
      a market price per share of less than $5.00, transactions in our common stock
      may be subject to the “penny stock” rules promulgated under the Securities
      Exchange Act of 1934, as amended. Under these rules, broker-dealers who
      recommend such securities to persons other than institutional accredited
      investors must:




·
            make
                a special written suitability determination for the
                purchaser;




·
            receive
                the purchaser’s written agreement to a transaction prior to
                sale;




·
            provide
                the purchaser with risk disclosure documents which identify certain
                risks
                associated with investing in “penny stocks” and which describe the market
                for these “penny stocks” as well as a purchaser’s legal remedies;
                and




·
            obtain
                a signed and dated acknowledgment from the purchaser demonstrating
                that
                the purchaser has actually received the required risk disclosure
                document
                before a transaction in a “penny stock” can be
                completed.




If
      our
      common stock becomes subject to these rules, broker-dealers may find it
      difficult to effectuate customer transactions and trading activity in our
      securities may be adversely affected. As a result, the market price of our
      securities might be depressed, and you might find it more difficult to sell
      our
      securities.




***It
      is probable that we will only be able to complete one business combination,
      which will cause us to be solely dependent on a single
      business.***




The
      net
      proceeds from the public offering and the private placement provided us with
      $57,828,431 which we may use to complete a business combination. Our initial
      business combination must be with a business or businesses with a collective
      fair market value of at least 80% of our net assets at the time of such
      acquisition (exclusive of Maxim Group LLC’s deferred underwriting compensation,
      including interest thereon, held in the trust account). We may further seek
      to
      acquire a target business that has a fair market value significantly in excess
      of 80% of our net assets. Although as of the date of our initial public offering
      prospectus we have not engaged or retained, had any discussions with, or entered
      into any agreements with, any third party regarding any such potential financing
      transactions, we could seek to fund such a business combination by raising
      additional funds through the sale of our securities or through loan
      arrangements. However, if we were to seek such additional funds, any such
      arrangement would likely only be consummated simultaneously with our
      consummation of a business combination. Consequently, it is probable that we
      will have the ability to complete only a single business combination, although
      this may entail the simultaneous acquisitions of several assets or closely
      related operating businesses at the same time. Accordingly, the prospects for
      our ability to effect our business strategy may be:




·
            solely
                dependent upon the performance of a single business; or




21




·
            dependent
                upon the development or market acceptance of a single or limited
                number of
                products, processes or services.




In
      this
      case, we will not be able to diversify our operations or benefit from the
      possible spreading of risks or offsetting of losses, unlike other entities
      which
      may have the resources to complete several business combinations in different
      industries or different segments of a single industry. Further, our prospects
      for success are likely to be entirely dependent upon the future performance
      of
      the initial target business or businesses we acquire. Furthermore, it is
      possible that our business combination may entail the simultaneous acquisition
      of several assets or operating businesses at the same time and may be with
      different sellers, in which case we will need to convince such sellers to agree
      that the purchase of their assets or businesses is contingent upon the
      simultaneous closings of the other acquisitions.




***We
      may be unable to obtain additional financing, if required, to complete a
      business combination or to fund the operations and growth of the target
      business, which could compel us to restructure the transaction or abandon a
      particular business combination.***




Although
      we believe, based upon the knowledge and experience of our management and board
      of directors in the homeland security and defense industries, that the net
      proceeds of the public offering and the private placement and the interest
      earned on the trust account will be sufficient to allow us to consummate a
      business combination, in as much as we have not yet selected or approached
      any
      prospective target business, we cannot ascertain the capital requirements for
      any particular transaction. Furthermore, our management and board of directors
      have no experience with blank check companies or the search for and consummation
      of a business combination through a blank check company. If the net proceeds
      of
      the public offering and the private placement and the interest earned on the
      trust account prove to be insufficient, either because of the size of the
      business combination or the depletion of the available net proceeds in searching
      for a target business, or because we become obligated to redeem into cash a
      significant number of shares from dissenting stockholders, we will be required
      to seek additional financing. We cannot assure you that such financing would
      be
      available on acceptable terms, if at all. To the extent that additional
      financing proves to be unavailable when needed to consummate a particular
      business combination, we would be compelled to restructure the transaction
      or
      abandon that particular business combination and seek an alternative target
      business candidate. In addition, it is possible that we could use a portion
      of
      the funds not in the trust account to make a deposit, down payment or fund
      a
“no-shop” provision with respect to a proposed business combination. In the
      event that we were ultimately required to forfeit such funds (whether as a
      result of our breach of the agreement relating to such payment or otherwise),
      without securing additional financing we may not have a sufficient amount of
      working capital available outside of the trust account to conduct due diligence
      and pay other expenses related to finding a suitable business combination.
      If we
      were unable to secure additional financing, we would most likely fail to
      consummate a business combination in the allotted time and would dissolve and
      liquidate the trust account as part of our plan of dissolution and liquidation,
      resulting in a loss of a portion of your investment. In addition, if we
      consummate a business combination, we may require additional financing to fund
      the operations or growth of the target business. The failure to secure
      additional financing could have a material adverse effect on the continued
      development or growth of the target business. None of our officers, directors,
      stockholders or special advisor is required to provide any financing to us
      in
      connection with or after a business combination.




***We
      will depend upon interest earned on the trust account to fund our search for
      a
      target company and otherwise fulfill our business
      purposes.***




Before
      we
      complete a business combination, we may withdraw up to $1,825,000 of the
      interest income earned on the funds in the trust account, after provision for
      taxes, including State of Delaware franchise taxes, and repayment of $250,000
      of
      an additional officer loan made prior to closing of the public offering by
      Steven M. Wasserman (such loan was to be repaid within 90 days of the closing
      of
      the public offering, but has not been repaid through December 31, 2007), to
      fund
      our working capital needs and expenses, including expenses associated with
      the
      pursuit of a business combination and, if necessary, with our potential
      dissolution and liquidation. We estimate that the total costs and expenses
      for
      implementing and completing our stockholder-approved plan of dissolution and
      liquidation will be in the range of $50,000 to $75,000. This amount includes
      all
      costs and expenses related to the filing of our articles of dissolution, the
      winding-up of our company and the costs of a proxy statement and meeting related
      to the approval by our stockholders of our plan of dissolution and liquidation.
      We have agreed with the representative of the underwriters that we may withdraw
      interest monthly (or weekly during the first month after the offering). We
      will
      depend upon sufficient interest being earned on the proceeds held in the trust
      account to provide us with the working capital we will need to engage in these
      activities. If interest rates were to decline substantially, we may not have
      sufficient funds available to fulfill our business purpose. In such event,
      we
      would need to find other sources of funds, which may not be available on
      favorable terms, if at all, or be forced to liquidate.




22




***Our
      initial stockholders, including our officers and directors, control a
      substantial interest in us and thus may influence certain actions requiring
      stockholder vote.***




Our
      initial stockholders (including all of our officers and directors) collectively
      beneficially own 18.9% of our issued and outstanding shares of common stock,
      which could permit them to effectively influence the outcome of all matters
      requiring approval by our stockholders at such time, including the approval
      of
      our initial business combination, and, following such business combination,
      the
      election of directors and approval of significant corporate
      transactions.




In
      connection with the vote required for any business combination, all of our
      initial stockholders, including all of our officers and directors, have agreed
      to vote the shares of common stock owned by them immediately before the public
      offering in accordance with the majority of the shares of common stock voted
      by
      the public stockholders. In addition, our initial stockholders have agreed
      to
      vote any shares of common stock acquired in or following the public offering
      in
      favor of the business combination submitted to our stockholders for approval.




Our
      board
      of directors is divided into two classes, each of which will generally serve
      for
      a term of two years with only one class of directors being elected in each
      year.
      It is unlikely that there will be an annual meeting of stockholders to elect
      new
      directors prior to the consummation of a business combination, in which case
      all
      of the current directors will continue in office at least until the consummation
      of the business combination. If there is an annual meeting, as a consequence
      of
      our “staggered” board of directors, initially only one-half of the board of
      directors will be considered for election and our initial stockholders, because
      of their ownership position, will have considerable influence regarding the
      outcome. Accordingly, our initial stockholders will likely continue to exert
      control at least until the consummation of a business combination. In addition,
      our initial stockholders and their affiliates and relatives are not prohibited
      from purchasing units in the public offering or in the aftermarket. If they
      do,
      we cannot assure you that our initial stockholders will not have considerable
      influence upon the vote in connection with a business combination.




***Our
      outstanding warrants may have an adverse effect on the market price of our
      common stock and make it more difficult to effect a business
      combination.***




In
      connection with the public offering, we issued warrants to purchase 6,000,000
      shares of common stock and, in our private placement, issued warrants to
      purchase an aggregate of 3,200,000 shares of our common stock to Steven M.
      Wasserman, Chief Executive Officer, Chief Financial Officer, President and
      Co-Chairman of the board of directors and Constantinos Tsakiris, a former
      director. In addition, we have agreed to sell to the representative of the
      underwriters an option to purchase up to a total of 105,000 units that, if
      exercised, would result in the issuance of warrants to purchase an additional
      105,000 shares of common stock. To the extent we issue shares of common stock
      to
      effect a business combination, the potential for the issuance of substantial
      numbers of additional shares upon exercise of these warrants (to the extent
      the
      warrants are exercised on a “cashless exercise” basis the number of shares to be
      issued by us will be reduced) could make us a less attractive acquisition
      vehicle in the eyes of a target business as such securities, when exercised,
      will increase the number of issued and outstanding shares of our common stock
      and reduce the value of the shares issued to complete the business combination.
      Accordingly, our warrants may make it more difficult to effectuate a business
      combination or increase the cost of the target business. Additionally, the
      sale,
      or even the possibility of sale, of the shares underlying the warrants could
      have an adverse effect on the market price for our securities or on our ability
      to obtain future public financing. If and to the extent these warrants are
      exercised, you will experience dilution to your holdings.




23




***If
      our initial stockholders and the holders of our private placement warrants
      exercise their registration rights, it may have an adverse effect on the market
      price of our common stock and the existence of these rights may make it more
      difficult to effect a business combination.***




Our
      initial stockholders are entitled to require us to register the resale of their
      shares of common stock at any time after the date on which their shares are
      released from escrow, which, except in limited circumstances including approval
      by our public stockholders, will not be before one year from the date of
      consummation of a business combination. The holders of our private placement
      warrants are entitled to require us to register the shares of our common stock
      issuable upon exercise of the warrants at any time after the date on which
      we
      publicly announce entering into a letter of intent with respect to a business
      combination, although such securities remain subject to a lock-up agreement
      and
      cannot be transferred or exercised, as the case may be, until the consummation
      of a business combination. If our initial stockholders, including the holders
      of
      our private placement warrants, exercise their registration rights with respect
      to all of their shares of common stock, then there will be an additional
      4,780,000 shares of common stock eligible for trading in the public market.
      The
      presence of this additional number of shares of common stock eligible for
      trading in the public market may have an adverse effect on the market price
      of
      our common stock. In addition, the existence of these rights may make it more
      difficult to effectuate a business combination or increase the cost of the
      target business, as the stockholders of the target business may be discouraged
      from entering into a business combination with us or may request a higher price
      for their securities as a result of these registration rights and the potential
      future effect their exercise may have on the trading market for our common
      stock.




***The
      American Stock Exchange may delist our securities, which could limit investors’
ability to make transactions in our securities and subject us to additional
      trading restrictions.***




Our
      securities are listed on the American Stock Exchange. We cannot assure you
      that
      we will be able to maintain the listing. Additionally, in connection with our
      business combination, it is likely that the American Stock Exchange may require
      us to file a new initial listing application and meet its initial listing
      requirements as opposed to its more lenient continued listing requirements.
      If
      we are unable to meet those stricter listing requirements, our securities would
      not be listed on the American Stock Exchange and might not be listed on any
      securities exchange.




If
      we are
      unable to maintain the listing of our securities on the American Stock Exchange,
      we could face significant material adverse consequences including:




·
            decreased
                trading liquidity and a limited availability of market quotations
                for our
                securities;




·
            a
                determination that our common stock is a “penny stock,” with the
                consequences described in “If our common stock becomes subject to the
                SEC’s penny stock rules, broker-dealers may experience difficulty in
                completing customer transactions and trading activity in our securities
                may be adversely affected”;




·
            a
                limited amount of news and analyst coverage for our company; and




·
            a
                decreased ability to issue additional securities or obtain additional
                financing.




***If
      we are deemed to be an investment company, we may be required to institute
      burdensome compliance requirements and our activities may be restricted, which
      may make it difficult for us to complete a business
      combination.***




If
      we are
      deemed to be an investment company under the Investment Company Act of 1940,
      as
      amended, our activities may be restricted which, among other problems, may
      make
      it difficult for us to complete a business combination. Such restrictions
      include:




·
            restrictions
                on the nature of our investments; and




·
            restrictions
                on the issuance of our securities.




In
      addition, we may have imposed upon us burdensome requirements,
      including:




·
            registration
                and regulation as an investment
                company;




24




·
            adoption
                of a specific form of corporate structure; and




·
            reporting,
                record keeping, voting, proxy and disclosure requirements and other
                rules
                and regulations.




We
      do not
      believe that our anticipated principal activities will subject us to the
      Investment Company Act of 1940, as amended. The proceeds held in trust will
      be
      invested only in United States “government securities,” defined as any Treasury
      Bill issued by the United States having a maturity of one hundred and eighty
      days or less or in money market funds meeting certain conditions under Rule
      2a-7
      promulgated under the Investment Company Act of 1940, as amended, so that we
      are
      not deemed to be an investment company under the Investment Company Act, as
      amended. By restricting the investment of the proceeds to these instruments,
      we
      intend to meet the requirements for the exemption provided in Rule 3a-1
      promulgated under the Investment Company Act of 1940, as amended. If we were
      deemed to be subject to such act, compliance with these additional regulatory
      burdens would require additional expense that we have not allotted for.




***Our
      directors, including those serving on our audit committee, may not be considered*** ***“independent”
      under the policies of the North American Securities Administrators Association,
      Inc.***




Under
      the
      policies of the North American Securities Administrators Association, Inc.,
      an
      international organization devoted to investor protection, because all of our
      directors own shares of our common stock and may receive reimbursement for
      out-of-pocket expenses incurred by them in connection with activities on our
      behalf, such as identifying potential target businesses and performing due
      diligence on suitable business combinations, state securities administrators
      could take the position that such individuals are not “independent.” If this
      were the case, they would take the position that we would not have the benefit
      of independent directors examining the propriety of expenses incurred on our
      behalf and subject to reimbursement. Additionally, there is no limit on the
      amount of out-of-pocket expenses that could be incurred and there will be no
      review of the reasonableness of the expenses by anyone other than members of
      our
      audit committee and board of directors, which would include persons who may
      seek
      reimbursement, or a court of competent jurisdiction if such reimbursement is
      challenged. To the extent such out-of-pocket expenses exceed the available
      proceeds not deposited in the trust account, such out-of-pocket expenses would
      not be reimbursed by us unless we consummate a business combination. Although
      we
      believe that all actions taken by our directors on our behalf will be in our
      best interests, whether or not they are deemed to be “independent,” we cannot
      assure you that this will actually be the case. If actions are taken, or
      expenses are incurred, that are actually not in our best interests, it could
      have a material adverse effect on our business and operations and the price
      of
      our stock held by the public stockholders.




***The
      inability of the sellers of companies we may acquire to fulfill their
      indemnification obligations to us under our acquisition agreements could
      increase our liabilities and adversely affect our results of operations and
      financial position.***




We
      intend
      to make an effort to negotiate as a term in our acquisition agreements, that
      the
      respective sellers will agree to retain responsibility for and indemnify us
      against damages resulting from certain third-party claims or other liabilities.
      However, there may be instances in which we decide to enter into an acquisition
      agreement without such seller indemnification obligations, such as in purchases
      of assets out of bankruptcy. These third-party claims and other liabilities
      include, without limitation, premium payments to funds created under applicable
      Federal laws, costs associated with various litigation matters, and certain
      environmental liabilities. The lack of seller indemnification obligations or
      the
      failure of any seller to satisfy its obligations with respect to claims and
      retained liabilities covered by the acquisition agreements could have an adverse
      effect on our results of operations and financial position because claimants
      may
      successfully assert that we are liable for those claims and/or retained
      liabilities. In addition, we expect that certain obligations of the sellers
      to
      indemnify us will terminate upon expiration of the applicable indemnification
      period and will not cover damages in excess of the applicable coverage limit.
      The assertion of third-party claims after the expiration of the applicable
      indemnification period or in excess of the applicable coverage limit, or the
      failure of any seller to satisfy its indemnification obligations with respect
      to
      breaches of its representations and warranties, could have an adverse effect
      on
      our results of operations and financial position.




25




**Risks** **Associated
      with the U.S. Homeland Security and Defense Industries**




**Risks
      Associated with Government Contracts**




We
      may
      acquire a target business that contracts directly with federal, state or local
      governments with respect to homeland security or defense or a combination
      thereof. Alternatively, our target business may act as a subcontractor, supplier
      or partner with another party or parties that contract with the government.
      Set
      forth below are the risk factors associated with government contracts that
      may
      impact us.




***Our
      target business could be adversely affected by significant changes in the
      contracting or fiscal policies of governments and governmental
      entities.***




The
      revenues of our target business may be substantially derived from contracts
      with
      federal, state and local governments and government agencies and subcontracts
      under federal government prime contracts and we believe that the growth of
      our
      target business may depend on our procurement of government contracts either
      directly or through prime contractors. Accordingly, changes in government
      contracting policies or government budgetary constraints could directly affect
      the financial performance of our target business. Among the factors that could
      adversely affect our target business are:




·
            changes
                in fiscal policies or decreases in available government
                funding;




·
            changes
                in government programs or applicable
                requirements;




·
            the
                adoption of new laws or regulations or changes to existing laws and
                regulations;




·
            changes
                in political or social attitudes with respect to homeland security
                or
                defense issues; and




·
            potential
                delays or changes in the government appropriations
                process.




These
      and
      other factors could cause governments and governmental agencies, or prime
      contractors that may use our target business as a subcontractor, to reduce
      their
      purchases under existing contracts, to exercise their rights to terminate
      contracts at-will or to abstain from exercising options to renew contracts,
      any
      of which could have a material adverse effect on the business, financial
      condition and results of operations of our target business.




***Government
      contracts typically contain unfavorable provisions.***




Government
      contracts often include provisions that are not standard in private commercial
      transactions. For example, government contracts may:




·
            include
                provisions that allow the government agency to terminate the contract
                without penalty under certain
                circumstances;




·
            contain
                onerous procurement procedures;




·
            be
                subject to cancellation if government funding becomes unavailable;
                and




·
            subject
                the contracting party to suspension or ban from doing business with
                the
                government or a government agency, impose fines and penalties and
                subject
                the contracting party to criminal
                prosecution.




Accordingly,
      the business, financial condition and results of operations of our target
      business may be adversely affected by such provisions (or other provisions)
      contained in government contracts.




26




***Government
      contracts are subject to audit and cost adjustments, which could reduce revenue
      of our target, disrupt its business or otherwise adversely affect its results
      of
      operations.***




Government
      agencies routinely audit and investigate government contracts and government
      contractors’ administrative processes and systems. These agencies review
      performance on contracts, pricing practices, cost structure and compliance
      with
      applicable laws, regulations and standards. They also review the contracting
      parties’ compliance with regulations and policies and the adequacy of internal
      control systems and policies, including the purchasing, property, estimating,
      compensation and management information systems of our target business. Any
      costs found to be improperly allocated to a specific contract will not be
      reimbursed and any such costs already reimbursed must be refunded. Moreover,
      if
      any of the administrative processes and systems are found not to comply with
      requirements, our target business may be subjected to increased government
      oversight and approval that could delay or otherwise adversely affect its
      ability to compete for or perform contracts. Therefore, an unfavorable outcome
      to a government audit could cause the actual results of our target business
      to
      differ materially from those anticipated. If an investigation uncovers improper
      or illegal activities, our target business may be subject to civil and criminal
      penalties and administrative sanctions, including termination of contracts,
      forfeitures of profits, suspension of payments, fines and suspension or
      debarment from doing business with the government. In addition, our target
      business could suffer serious harm to its reputation if allegations of
      impropriety were made against it. Each of these results could cause the actual
      results of our target business to differ materially from those anticipated.




***Our
      target business may derive significant revenue from contracts awarded through
      a
      competitive bidding process.***




Government
      contracts are awarded through a competitive bidding process. A material portion
      of our target’s business in the future may be awarded through competitive
      bidding. The competitive bidding process presents a number of risks, including
      the following:




·
            bids
                are made on programs before the completion of their design, which
                may
                result in unforeseen difficulties and cost
                overruns;




·
            substantial
                cost and managerial time and effort to prepare bids is made on proposals
                for contracts that may not be won;




·
            it
                may be difficult to estimate accurately the resources and cost structure
                that will be required to service any contract won; and




·
            expense
                and delay may be encountered if competitors protest or challenge
                awards of
                contracts to our target business in competitive bidding, and any
                such
                protest or challenge could result in the resubmission of bids on
                modified
                specifications, or in the termination, reduction, or modification
                of the
                awarded contract.




Budgetary
      pressures and changes in the procurement process have caused many government
      clients to increasingly purchase goods and services through indefinite
      deliver/indefinite quantity, or ID/IQ, contracts, GSA schedule contracts and
      other government-wide acquisition contracts. These contracts, some of which
      are
      awarded to multiple contractors, have increased competition and pricing
      pressure, requiring that our target business make sustained post-award efforts
      to realize revenue under each such contract. In addition, the net effect of
      such
      programs may reduce the number of bidding opportunities available to our target
      business. Moreover, even if our target business was highly qualified to work
      on
      a particular new contract, it might not be awarded business because of the
      government’s policy and practice of maintaining a diverse contracting base.




***Our
      target business will likely have to comply with complex procurement laws and
      regulations.***




Our
      target business will likely have to comply with and will be affected by laws
      and
      regulations relating to the formation, administration and performance of federal
      government contracts, which affect how it does business with its customers
      and
      may impose added costs on its business. For example, our target business or
      parties with which it does business will likely be subject to the Federal
      Acquisition Regulations and all supplements (including those issued by the
      Department of Homeland Security and the Department of Defense), which
      comprehensively regulate the formation, administration and performance of
      federal government contracts, and to the Truth-in-Negotiations Act, which
      requires certification and disclosure of cost and pricing data in connection
      with contract negotiations. In addition, our target business or parties with
      which it does business will likely be subject to industrial security regulations
      of Department of Defense and other federal agencies that are designed to
      safeguard against foreigners access to classified information. Our target
      business may also be liable for systems and services failures and security
      breaks with respect to the solutions, services, products, or other applications
      it sells to the government. If our target business was to come under foreign
      ownership, control or influence, its federal government customers could
      terminate or decide not to renew their contracts, and it could impair the
      ability of our target business to obtain new contracts. The government may
      reform its procurement practices or adopt new contracting rules and regulations,
      including cost-accounting standards, that could be costly to satisfy or that
      could impair the ability of our target business to obtain new contracts.




27




**Other
      Risks Associated with the U.S. Homeland Security and Defense
      Industries**




***If
      our target business is unable to respond to the technological, legal, financial
      or other changes in the security industry and changes in our
      customers*** ***’
      requirements and preferences, we will not be able to effectively compete with
      our competitors.***




If
      our
      target business is unable, for technological, legal, financial or other reasons,
      to adapt in a timely manner to changing market conditions, customer needs or
      regulatory requirements, it could lose customers. Changes in customer
      requirements and preferences, the introduction of new products and services
      embodying new technologies, and the emergence of new industry standards and
      practices could render the existing products of the company we acquire obsolete.
      The success of our target business will depend, in part, on its ability to:




·
            enhance
                products and services;




·
            anticipate
                changing customer requirements by designing, developing, and launching
                new
                products and services that address the increasingly sophisticated
                and
                varied needs of customers;




·
            respond
                to technological advances and emerging industry standards and practices
                on
                a cost-effective and timely basis; and




·
            respond
                to changing regulatory requirements in a cost effective and timely
                manner.




The
      development of additional products and services involves significant
      technological and business risks and requires substantial expenditures and
      lead
      time. If our target business fails to introduce products with new technologies
      in a timely manner, or adapt its products to these new technologies, our target
      business will not be able to effectively compete with our competitors. We cannot
      assure you that, even if our target business is able to introduce new products
      or adapt our products to new technologies, that its products would gain
      acceptance among its customers.




***We
      may be unable to protect or enforce the intellectual property rights of any
      target businesses that we acquire.***




We
      may
      acquire a target business whose business is dependent upon its proprietary
      technology and intellectual property. Accordingly, the protection of trademarks,
      copyrights, patents, domain names, trade dress, and trade secrets may be
      critical to the ability of our target business to compete with its competitors.
      In such a case, our target business will likely rely on a combination of
      copyright, trademark, trade secret laws and contractual restrictions to protect
      any proprietary technology and rights that it may acquire. Despite the efforts
      of our target business to protect its proprietary technology and rights, our
      target business may not be able to prevent misappropriation of its proprietary
      rights or deter independent development of technologies that compete with the
      business we acquire. Our target business’s competitors may file patent
      applications or obtain patents and proprietary rights that block or compete
      with
      its patents. Litigation may be necessary in the future to enforce our target
      business’s intellectual property rights, to protect its trade secrets, or to
      determine the validity and scope of the proprietary rights of others. It is
      also
      possible that third parties may claim our target business has infringed their
      patent, trademark, copyright or other proprietary rights. Claims or litigation,
      with or without merit, could result in substantial costs and diversions of
      resources, either of which could have a material adverse effect on the
      competitive position and business of our target business. Depending on the
      target business or businesses that we acquire, we may have to protect
      trademarks, patents, and domain names in an increasing number of jurisdictions,
      a process that is expensive and may not be successful in every location. With
      respect to certain proprietary rights, such as trademarks and copyrighted
      materials, of the target business or businesses that we will acquire, the target
      business or businesses may have entered into license agreements in the past
      and
      will continue to enter into such agreements in the future. These licensees
      may
      take actions that diminish the value of such target business or businesses’
proprietary rights or cause harm to such target business or businesses’
reputation.




28




***Our
      target business may face inherent product liability or other liability risks
      which could result in large claims against us.***




Our
      target business may face the inherent risk of exposure to product liability
      and
      other liability claims resulting from the use of its products, especially to
      the
      extent such products will be depended upon in emergency, rescue and public
      safety situations that may involve physical harm or even death to individuals,
      as well as potential loss or damage to property. Despite quality control systems
      and inspection, there remains an ever-present risk of an accident resulting
      from
      a faulty manufacture or maintenance of products, or an act of an agent outside
      the control of the companies or their suppliers. A product liability claim,
      or
      other legal claims based on theories including personal injury or wrongful
      death, made against our target business could adversely affect its operations
      and financial condition. Although there may be insurance to cover the product
      liability claims, the amount of coverage may not be sufficient. Furthermore,
      we
      cannot assure you that our target business, if engaged in the sale of so-called
      “anti-terrorism technologies” could avail itself of the liability protections
      intended to be afforded by the Support Anti-Terrorism by Fostering Effective
      Technologies Act of 2002, or the SAFETY Act.




***A
      decline in the U.S. defense budget may adversely affect the operations of our
      target.***




We
      may
      acquire a target business with material sales under contracts with the U.S.
      Department of Defense, including sales under subcontracts having the Department
      of Defense as the ultimate purchaser. The U.S. defense budget declined from
      time
      to time in the late 1980s and the early 1990s, resulting in a slowing of new
      program starts, program delays and program cancellations. These reductions
      caused most defense-related government contractors to experience declining
      revenues, increasing pressure on operating margins and, in some cases, net
      losses. While spending authorizations for defense-related programs by the
      government have increased in recent years, and in particular after the September
      11, 2001 terrorist attacks, these spending levels may not be sustainable, and
      future levels of expenditures and authorizations for those programs may
      decrease, remain constant or shift to programs in areas where our target
      business may provide limited or no products or services. A change in the U.S.
      Presidential Administration or in the composition of Congress could also
      materially affect levels of support for military expenditures. A significant
      decline in military expenditures could harm the operating results of our target
      business.




***Our
      target business may regularly employ subcontractors to assist in satisfying
      its
      contractual obligations. If these subcontractors fail to adequately perform
      their contractual obligations, our target business’s prime contract performance
      and its ability to obtain future business could be materially and adversely
      impacted.***




The
      performance by our target business of government contracts may involve the
      issuance of subcontracts to other companies upon which our target business
      may
      rely to perform all or a portion of the work it is obligated to deliver to
      customers. There is a risk that our target business may have disputes with
      subcontractors concerning a number of issues including the quality and
      timeliness of work performed by the subcontractor. A failure by one or more
      of
      our target business’s subcontractors to satisfactorily deliver on a timely basis
      the agreed-upon supplies and/or perform the agreed-upon services may materially
      and adversely impact the ability of our target business to perform its
      obligations as a prime contractor. In extreme cases, such subcontractor
      performance deficiencies could result in the government terminating our target’s
      contract for default. A default termination could expose our target business
      to
      liability for excess costs of reprocurement by the government and have a
      material adverse effect on the ability of our target business to compete for
      future contracts.




29




***If
      our target business cannot obtain the necessary security clearances, it may
      not
      be able to perform classified work for the government and the revenues of our
      target business may suffer.***




Certain
      government contracts may require the facilities of our target business and
      some
      of its employees to maintain security clearances. If our target business loses
      or is unable to obtain required security clearances, the customer can terminate
      the contract or decide not to renew it upon its expiration. As a result, to
      the
      extent our target business cannot obtain the required security clearances for
      its employees working on a particular contract, our target business may not
      derive the revenue anticipated from the contract, which, if not replaced with
      revenue from other contracts, could seriously harm its operating
      results.




***Security
      breaches of sensitive government systems could result in the loss of customers
      and negative publicity.***




Our
      target business may offer products and services involving managing and
      protecting information involved in national security and other sensitive
      government functions. A security breach involving our target business’s products
      or services could cause serious harm to its business, could result in negative
      publicity and could prevent our target business from having further access
      to
      such critically sensitive information or other similarly sensitive areas for
      other governmental customers.




**Item
                1B.**
            **Unresolved
                Staff Comments**




Not
      Applicable.




**Item
                2.**
            **Properties**




We
      maintain our executive offices at 328 West 77th Street, New York, New York,
      10024. We have agreed to pay ASG Management, Inc., an affiliated third party
      of
      which Mr. Wasserman and Mr. Blaha are principals, $7,500 per month for office
      space (located at our executive offices) and certain additional general and
      administrative services.




We
      consider our current office space adequate for our current operations. Upon
      completion of a business combination or the implementation of our plan of
      dissolution and distribution, we will no longer be required to pay this monthly
      fee.




**Item
                3.**
            **Legal
                Proceedings**





To
      the
      knowledge of our management, there is no litigation currently pending or
      contemplated against us or any of our officers or directors in their capacity
      as
      such.




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




During
      the fourth quarter of our fiscal year ended December 31, 2007, there were no
      matters submitted to a vote of security holders.




**PART
      II**




**Item
                5.**
            **Market
                for Registrant****’s
                Common Equity, Related Stockholder Matters and Issuer Purchases of
                Equity
                Securities**




Our
      units, common stock and warrants have been traded on the American Stock
      Exchange, or AMEX, under the symbol “HDS.U,” since March 23, 2007 and under the
      symbols “HDS” and “HDS.WS,” since June 14, 2007, respectively. The following
      table sets forth the high and low bid information for our securities from the
      commencement of trading through December 31, 2007 as reported by AMEX.




**Common
                  Stock**
              
              **Warrants**
              
              **Units****High**
              
              **Low**
              
              **High**
              
              **Low**
              
              **High**
              
              **Low**First
                  Quarter (1)(2)
              
              
              --
              
              
              --
              
              
              --
              
              
              --
              
              
              10.00
              
              
              9.82Second
                  Quarter (3)
              
              $
              9.40
              
              $
              9.31
              
              
              1.25
              
              
              1.05
              
              
              10.58
              
              
              9.83Third
                  Quarter
              
              $
              9.42
              
              $
              9.26
              
              
              1.27
              
              
              0.97
              
              
              10.65
              
              
              10.15Fourth
                  Quarter
              
              $
              9.40
              
              $
              9.25
              
              
              1.06
              
              
              0.83
              
              
              10.30
              
              
              10.06


30




(1)
      Includes information from March 23, 2007 to March 31, 2007, the date when our
      units commenced trading on AMEX.




(2)
      No
      figures are included as our common stock and warrants commenced trading on
      June
      14, 2007.




(3)
      Includes information from June 14, 2007, the date when our common stock and
      warrants commenced trading on AMEX to June 30, 2007.




**Number
      of Holders of Common Stock**




The
      number of holders of record of our common stock on April 11, 2008 was 11, which
      does not include individual participants in security position
      listings.




**Dividends**




There
      were no cash dividends or other cash distributions made by us during the fiscal
      year ended December 31, 2007. The payment of dividends in the future will be
      contingent upon our revenues and earnings, if any, capital requirements and
      general financial condition subsequent to completion of a business combination.
      The payment of any dividends subsequent to a business combination will be within
      the discretion of our then board of directors. It is the present intention
      of
      our board of directors to retain all earnings, if any, for use in our business
      operations and, accordingly, our board does not anticipate declaring any
      dividends in the foreseeable future.




**Recent
      Sales of Unregistered Securities and Use of Proceeds**




On
      March
      21, 2007, we sold an aggregate of 3,200,000 warrants in a private placement
      to
      Steven M. Wasserman (500,000 warrants), our Chief Executive Officer, Chief
      Financial Officer, President and Co-Chairman of our board of directors and
      Constantinos Tsakiris (2,700,000 warrants), a former member of our board of
      directors. The warrants were sold at a purchase price of $1.00 per warrant.
      On
      March 28, 2007, we consummated our initial public offering of 6,000,000 units,
      each unit consisting of one share of common stock and one warrant. Each warrant
      entitles the holder to purchase from us one share of our common stock at an
      exercise price of $7.50. The units were sold at an offering price of $10.00
      per
      unit, generating total gross proceeds of $60,000,000. Maxim Group LLC acted
      as
      lead underwriter. The securities sold in the offering were registered under
      the
      Securities Act of 1933 on a registration statement on Form S-1 (No. 333-127999).
      The Securities and Exchange Commission declared the registration statement
      effective on March 23, 2007.




We
      incurred a total of $3,780,000 in underwriting discounts and commissions, and
      $1,591,569 of expenses related to the public offering and private
      placement.




After
      deducting the underwriting discounts and commissions and the offering expenses
      (excluding $1,800,000 in underwriting discounts, commissions for which the
      payment was deferred), the total net proceeds to us from the public offering
      and
      the private placement was $57,828,431. All of such net proceeds, are being
      held
      in a trust account and invested until the earlier of (i) the consummation of
      the
      first business combination or (ii) the distribution of the trust account as
      described in this annual report, subject to deductions from the trust account
      for the following items: (i) taxes payable on interest income earned on the
      trust account , State of Delaware franchise taxes, repayment of $250,000 of
      an
      additional officer loan made prior to closing of the public offering by Steven
      M. Wasserman (such loan was to be repaid within 90 days of the closing of the
      public offering, but has not been repaid through December 31, 2007) and (ii)
      up
      to $1,825,000 of interest earned on the trust account may be released to us
      to
      fund our working capital. The amount in the trust account includes $1,800,000
      of
      contingent underwriting compensation which will be paid to the underwriters
      if a
      business combination is consummated, but which will be forfeited if public
      stockholders elect to have their shares redeemed for cash if a business
      combination is not consummated. $187,802 of the proceeds of the public offering
      were used to repay debt to Mr. Wasserman ($137,802.50) and Robert Blaha
      ($50,000), our Chief Management Officer, Executive Vice President and a
      director, for loans used to cover expenses related to the public offering and
      $3,481,569 was used to pay accrued offering costs and fees. **** All
      the
      funds held in the trust account have been invested in either treasury bills
      or
      money market accounts.




31




**Repurchases
      of Equity Securities**




None.




**Equity
      Compensation Plan Information**




None.




**Item
                6.**
            **Selected
                Financial Data**




As
      a
      smaller reporting company, we are not required to include this information
      in
      our annual report on Form 10-K.




**Item
                7.**
            **Management****’s
                Discussion and Analysis of Financial Condition and Results of
                Operations**




**Forward
      Looking Statements**




This
      Annual Report on Form 10-K includes forward-looking statements within the
      meaning of Section 27A of the Securities Act of 1933, as amended, and Section
      21E of the Securities Exchange Act of 1934, as amended. We have based these
      forward-looking statements on our current expectations and projections about
      future events. These forward-looking statements are subject to known and unknown
      risks, uncertainties and assumptions about us that may cause our actual results,
      levels of activity, performance or achievements to be materially different
      from any future results, levels of activity, performance or achievements
      expressed or implied by such forward-looking statements. In some cases, you
      can
      identify forward-looking statements by terminology such as “may,” “should,”
“could,” “would,” “expect,” “plan,” “anticipate,” “believe,” “estimate,”
“continue,” or the negative of such terms or other similar expressions. Factors
      that might cause or contribute to such a discrepancy include, but are not
      limited to, those described in our other Securities and Exchange Commission
      filings. The following discussion should be read in conjunction with our
      Financial Statements and related Notes thereto included elsewhere in this
      report.




**Overview**




We
      were
      formed on April 20, 2005, to serve as a vehicle to acquire one or more domestic
      or international operating businesses in the U.S. homeland security or defense
      industries or a combination thereof, through a merger, capital stock exchange,
      asset acquisition or other similar business combination. Our initial business
      combination must be with a target business or businesses whose fair market
      value
      is at least equal to 80% of our net assets at the time of such acquisition.
      Since our offering, we have been actively searching for a suitable business
      combination candidate. We currently have not entered into any definitive
      agreement with any potential target businesses. We are not presently engaged
      in,
      and will not engage in, any substantive commercial business until we consummate
      an initial transaction. We intend to utilize cash derived from the proceeds
      of
      our recently completed private placement and initial public offering, our
      capital stock, debt or a combination of cash, capital stock and debt, in
      effecting a business combination.




We
      cannot
      assure investors that we will find a suitable business combination in the
      allotted time.




**Results
      of Operations for The Years E** **nded
      December 31, 2007 and 2006**




We
      reported net income of $817,608 for the year ended December 31, 2007. Net income
      consisted of interest income of $2,094,530 reduced by $504,258 of operating
      expenses. Operating expenses consisted of consulting and professional fees
      of
      $139,689, insurance expense of $47,287, travel expense of $127,112, Delaware
      franchise fees of $56,888 and other operating costs of $133,282.




32




The
      trust
      account earned interest of $2,094,530, for the year ended December 31, 2007,
      none of which is attributable to common stock subject to possible
      redemption.




Until
      we
      enter into a business combination, we will not generate operating revenues.
      We
      had no funds in trust as of December 31, 2006.




For
      the
      year December 31, 2006, we incurred operating expenses of $23,905, which
      consisted of formation costs.




**Liquidity
      and Capital Resources**




On
      March
      21, 2007, we sold to Steven M. Wasserman (500,000 warrants), our Chief Executive
      Officer, Chief Financial Officer, President and Co-Chairman of the board of
      directors, and Constantinos Tsakiris (2,700,000 warrants), a former director,
      an
      aggregate of 3,200,000 warrants in a private placement for $1.00 per warrant
      or
      aggregate consideration of $3,200,000. The warrants in the private placement
      have identical terms to the warrants included in the units offered as part
      of
      the public offering. On March 28, 2007, we consummated our initial public
      offering of 6,000,000 units at a purchase price of $10.00 per unit or gross
      proceeds of $60,000,000. Each unit in the public offering consisted of one
      share
      of common stock and one redeemable common stock purchase warrant. Each warrant
      entitles the holder to purchase from us one share of common stock at an exercise
      price of $7.50 per share. Prior to the closing, Steven M. Wasserman loaned
      us
      $250,000 for expenses of the public offering, which loan has not yet been
      repaid.




On
      March
      28, 2007, the closing date of our public offering, $60,002,831 was placed in
      the
      Trust Account at JP Morgan Chase New York, New York. This amount includes net
      proceeds of the public offering of $54,628,431 and the private placement of
      $3,200,000 plus interest of $2,831 thereon. The funds in the Trust Account
      will
      be invested until the earlier of (i) consummation of a business combination
      or
      (ii) the liquidation of the Trust Account as part of a plan of distribution
      and
      liquidation approved by our stockholders.




In
      addition to the net proceeds from the sale of the units in the public offering
      and the sale of warrants in our private placement, on the closing date of the
      public offering the trust account included $1,800,000 of deferred underwriting
      compensation to be paid to Maxim Group LLC with accrued interest if and only
      if
      a business combination is consummated, and $90,000 of deferred legal fees to
      be
      paid, without contingency, from interest income earned on the trust account
      released to us.




While
      funds are held in the trust account, they will only be invested in treasury
      bills issued by the United States government having a maturity of 180 days
      or
      less or money market funds meeting the criteria under Rule 2a-7 under the 1940
      Act. Interest earned will be applied in the following order of
      priority:




·
            payment
                of taxes on trust account interest
                income;




·
            payment
                of State of Delaware franchise
                taxes;




·
            repayment
                of up to $250,000 of an additional officer loan made prior to the
                closing
                of the public offering by Steven M.
                Wasserman;




·
            our
                working capital requirements before we complete a business combination
                and, if necessary, funding the costs of our potential dissolution
                and
                liquidation;




·
            solely
                if we complete a business combination, interest on the amount of
                deferred
                underwriters’ compensation payable to the underwriters;
                and




·
            the
                balance, if any, to us if we complete a business combination or to
                our
                public stockholders if we do not complete a business
                combination.




33




We
      believe that the interest income earned on trust account funds in the period
      before we effect a business combination will be sufficient to fund the costs
      and
      expenses relating to our liquidation and dissolution if we do not consummate
      a
      business combination.




We
      will
      use substantially all of the net proceeds of the public offering and from the
      private placement, and interest income earned on the funds in the trust account,
      to acquire a target business, including identifying and evaluating prospective
      acquisition candidates, selecting the target business, and structuring,
      negotiating and consummating the business combination. Costs and expenses
      incurred prior to the consummation of a business combination, including those
      that relate to a business combination that is not consummated, will be paid
      from
      the interest earned on funds held in the trust account (to the extent such
      interest is released to us). To the extent that our capital stock is used in
      whole or in part as consideration to effect a business combination, the proceeds
      held in the trust account as well as any other net proceeds not expended will
      be
      used to finance the operations of the target business.




We
      believe that the funds available to us from interest income earned on the trust
      account ($1,825,000) will be sufficient to allow us to operate for at least
      24
      months or March 2009, assuming that a business combination is not consummated
      during that time. Over this time period, the following estimated expenditures
      are anticipated: $400,000 of expenses for legal, accounting and other expenses
      attendant to the structuring, negotiating and consummation of a business
      combination, $500,000 of expenses for identification, evaluation and due
      diligence investigation of a target business, $180,000 for administrative
      services and support payable to an affiliated third party ($7,500 per month
      for
      24 months), $100,000 of expenses in legal and accounting fees relating to our
      SEC reporting obligations, $150,000 for directors’ and officers’ liability
      insurance and $495,000 for general working capital that will be used for
      miscellaneous expenses and reserves, deferred legal fees of $90,000, costs
      of
      dissolution and liquidation and reserves, if any, which we currently estimate
      to
      be approximately $50,000 to $75,000, potential deposits, down payments or
      funding of a “no-shop” provision in connection with a particular business
      combination and key-man insurance.




We
      do not
      believe we will need to raise additional funds in order to meet the expenditures
      required for operating our business prior to consummating a business
      combination. However, we may need to raise additional funds through a private
      offering of debt or equity securities if such funds are required to consummate
      a
      business combination.




In
      addition to the above described allocation of interest accrued on the trust
      account, at December 31, 2007, we had funds aggregating $8,726 held outside
      of
      the trust account.




**Off
      Balance-Sheet Arrangements**




We
      do not
      have any off-balance sheet arrangements.




**Contractual
      Obligations**




We
      do not
      have any long term debt, capital lease obligations, operating lease obligations,
      purchase obligations or other long term liabilities.




**Item
                7A.**
            **Quantitative
                and Qualitative Disclosures About Market
                Risk**




Market
      risk is the sensitivity of income to changes in interest rates, foreign
      exchanges, commodity prices, equity prices, and other market-driven rates or
      prices. We are not presently engaged in and, if a suitable business target
      is
      not identified by us prior to the prescribed liquidation date of the trust
      account, we may not engage in, any substantive commercial business. Accordingly,
      we are not and, until such time as we consummate a business combination, we
      will
      not be, exposed to risks associated with foreign exchange rates, commodity
      prices, equity prices or other market-driven rates or prices. The net proceeds
      of our initial public offering held in the trust account have been invested
      only
      in money market funds meeting certain conditions under Rule 2a-7 promulgated
      under the Investment Company Act of 1940, as amended. Given our limited risk
      in
      our exposure to money market funds, we do not view the interest rate risk to
      be
      significant.




34




**Item
                8.**
            **Financial
                Statements and Supplementary
                Data**





The
      response to this item is included in a separate section of this Annual Report.
      See “Index to Consolidated Financial Statements” on Page F-1.




**Item
                9.**
            **Changes
                in and Disagreements with Accountants on Accounting and Financial
                Disclosure**




On
      December 18, 2007, the Company was notified that certain of the partners of
      Goldstein Golub Kessler LLP (“GGK”) became partners of McGladrey & Pullen,
      LLP (“McGladrey & Pullen”) in a limited asset purchase agreement and that
      GGK resigned as independent registered public accounting firm for the Company.
      McGladrey & Pullen was appointed as the Company’s new independent registered
      public accounting firm. The decision to engage McGladrey
& Pullen, LLP was approved by the audit committee of the
      board of directors
      on December 18, 2007.




The
      audit
      reports of GGK on the financial statements of the Company as of and for the
      years ended December 31, 2006 and December 31, 2005 did not contain an adverse
      opinion or a disclaimer of opinion, and were not qualified or modified as to
      uncertainty, audit scope or accounting principles. GGK’s 2006 and 2005 audit
      report relating to GGK’s audit of Company’s financial statements for the fiscal
      years ended December 31, 2006 and December 31, 2005, included an emphasis
      paragraph relating to an uncertainty as to the Company’s ability to continue as
      a going concern.




During
      the Company’s most two recent fiscal years ended December 31, 2006 and 2005 and
      through December 18, 2007, the Company did not consult with McGladrey &
Pullen on (i) the application of accounting principles to a specified
      transaction, either completed or proposed, or the type of audit opinion that
      may
      be rendered on the Company’s financial statements, and McGladrey & Pullen
      did not provide either a written report or oral advice to the Company that
      was
      an important factor considered by the Company in reaching a decision as to
      any
      accounting, auditing, or financial reporting issue; or (ii) the subject of
      any
      disagreement, as defined in Item 304 (a)(1)(iv) of Regulation S-K and the
      related instructions, or a reportable event within the meaning set forth in
      Item
      304(a)(1)(v) of Regulation S-K.




In
      connection with the audits of the Company’s financial statements for the fiscal
      years ended December 31, 2006 and 2005 and through December 18, 2007, there
      were: (i) no disagreements between the Company and GGK on any matters of
      accounting principles or practices, financial statement disclosure, or auditing
      scope or procedures, which disagreements, if not resolved to the satisfaction
      of
      GGK, would have caused GGK to make reference to the subject matter of the
      disagreement in their reports on the Company’s financial statements for such
      years, and (ii) no reportable events within the meaning set forth in Item
      304(a)(1)(v) of Regulation S-K.




**Item
                9A(T).**
            **Controls
                and Procedures**




An
      evaluation of the effectiveness of our disclosure controls and procedures as
      of
      December 31, 2007 was made under the supervision and with the participation
      of
      our management, including our principal executive and principal financial
      officer. Based on that evaluation, our chief executive officer and principal
      financial officer concluded that our disclosure controls and procedures are
      effective as of the end of the period covered by this report to ensure that
      information required to be disclosed by us in reports that we file or submit
      under the Securities Exchange Act of 1934 is recorded, processed, summarized
      and
      reported within the time periods specified in Securities and Exchange Commission
      rules and forms. During the most recently completed fiscal quarter, there has
      been no significant change in our internal control over financial reporting
      that
      has materially affected, or is reasonably likely to materially affect, our
      internal control over financial reporting.




35




**Compliance
      with Section 404 of the Sarbanes-Oxley Act of 2002**




This
      annual report does not include a report of management’s assessment regarding
      internal control over financial reporting or an attestation report of our
      registered public accounting firm due to a transition period established by
      the
      rules of the Securities and Exchange Commission for newly public
      companies.




Pursuant
      to Section 404 of the Sarbanes-Oxley Act of 2002 (the Act), beginning with
      our
      Annual Report on Form 10-K for the fiscal year ending December 31, 2008, we
      will
      be required to furnish a report by our management on our internal control over
      financial reporting. This 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. If we identify one or more
      material weaknesses in our internal control over financial reporting, we will
      be
      unable to assert our internal control over financial reporting is effective.
      This report will also contain a statement that our independent registered public
      accountants have issued an attestation report on management’s assessment of such
      internal controls and conclusion on the operating effectiveness of those
      controls.




Management
      acknowledges its responsibility for internal controls over financial reporting
      and seeks to continually improve those controls. In order to achieve compliance
      with Section 404 of the Act within the prescribed period, we are currently
      performing the system and process documentation and evaluation needed to comply
      with Section 404, which is both costly and challenging. We believe our process,
      which began in 2007 and continues in 2008 for documenting, evaluating and
      monitoring our internal control over financial reporting is consistent with
      the
      objectives of Section 404 of the Act.




**Item
                9B.**
            **Other
                Information**




None.




**PART
      III**




**Item
                10.**
            **Directors,
                Executive Officers and Corporate
                Governance**




Our
      current directors and executive officer are as follows:




**Name**
            
            **Age**
            
            **Position**Gary
                E. Johnson
            
            54
            
            Co-Chairman
                of the Board of DirectorsSteven
                M. Wasserman
            
            46
            
            Chief
                Executive Officer, Chief Financial Officer, President, Secretary
                and
              Co-Chairman
                of the Board of DirectorsRobert
                B. Blaha
            
            52
            
            Chief
                Management Officer,
              Executive
                Vice President and DirectorCarol
                A. DiBattiste
            
            55
            
            DirectorRonald
                R. Fogleman
            
            65
            
            DirectorRobert
                T. Herres
            
            74
            
            Director




***Governor
      Gary E. Johnson*** has
      served as Co-Chairman of our board of directors since August 2005. In July
      2005,
      he was elected a director. Since June 2004, Governor Johnson has been the
      president of HighBeta of New Mexico, a venture capital company specializing
      in
      investments in companies focused on alternative forms of energy. From October
      1998 to the present, Governor Johnson has also served as president of GEJ
      Enterprises, Inc., a construction consulting company. From January 1995 to
      December 2002, Governor Johnson served as the Governor of the State of New
      Mexico, and was the first governor in the history of New Mexico to be elected
      for two consecutive four year terms. He was ranked among the nation’s seven top
      governors in each of the Cato Institute’s fiscal report cards between 1996 and
      2002. As Governor, Mr. Johnson signed into law tax credits to help Sandia
      National Laboratories offer assistance to small businesses and a joint-powers
      agreement between the State of New Mexico and Los Alamos National Laboratories
      to improve Internet accessibility to rural areas. Prior to serving as Governor,
      from April 1975 to October 1998 Mr. Johnson was the founder and president of
      Big
      J Enterprises, Inc., a full-service commercial and industrial construction
      company located in New Mexico with clients such as Sandia National Laboratories,
      Honeywell International Inc. (NYSE: HON) and Intel Corp. (Nasdaq: INTC). Mr.
      Johnson sold Big J Enterprises Inc. in 1999, at the time of its sale one of
      New
      Mexico’s leading construction companies.




36




***Steven
      M. Wasserman*** has
      served as our Chief Executive Officer, Chief Financial Officer and Secretary
      since April 2005 and as our President and Co-Chairman of our board of directors
      since August 2005. From April 2005 to August 2005, Mr. Wasserman also served
      as
      our Chairman. Mr. Wasserman also currently serves as the managing partner of
      AMT
      Ventures LLC, an entity primarily engaged in public and private equity and
      debt
      investments on a principal basis, a position he has held since April 2004.
      In
      addition, Mr. Wasserman is the managing partner of AMT Capital Partners LLC,
      an
      investment banking and advisory firm, a position he has held since June 1998.
      During his tenure as the managing partner of AMT Capital Partners, LLC, clients
      of AMT Capital Partners, LLC have included the following: Ktech Corporation,
      a
      provider of technical support services, scientific and engineering services
      and
      management expertise to a variety of government defense and industry clients;
      Nanodetex Corporation, a leader in lab-on-chip (LOC) platform technologies
      for
      gas phase chemical analysis and explosive detection; Agent Science Technologies
      Incorporated, a provider of neural information management software solutions
      to
      the defense industry; Link One, LLC, a technology transfer advisory group to
      Los
      Alamos National Laboratory; American Detection Technologies, Inc., a homeland
      security company engaged in contraband detection services using canines; ETEK
      International Corporation, a network security provider; and Securant
      Technologies, Inc., an Internet security software company which was sold to
      RSA
      Security, Inc. in September 2001. From June 1997 to July 2001, Mr. Wasserman
      was
      the managing director of the Cardinal Fund, a risk arbitrage fund. From April
      1995 to May 1998, Mr. Wasserman served as the President and Chief Executive
      Officer of Pudgies Chicken Inc. In September 1996, Pudgies Chicken Inc. filed
      a
      voluntary petition under Chapter 11 of the United States Bankruptcy Code and
      the
      sale of all of the company’s assets was approved in May 1998.




***Robert
      B. Blaha*** has
      served as our Chief Management Officer, Executive Vice President and a director
      since July 2005. Since June 1993, Mr. Blaha has served as the president of
      Human
      Capital Associates, a management consulting company. Since February 2003, Mr.
      Blaha has also served as the vice chairman and member of the board of directors
      of Integrity Bank & Trust, a commercial bank based in Colorado Springs,
      Colorado. During his career, Mr. Blaha has held management positions with Asea
      Brown Boveri (NYSE: ABB) as vice president of Human Resources and senior vice
      president of administration from 1990 to 1993, Englehard Corporation (NYSE:
      EC)
      as a manager from 1986 to 1990, Monsanto Company (NYSE: MON), as a personnel
      supervisor and superintendent from 1979 to 1986 and Ford Motor Company (NYSE:
      F), as a labor relations representative from 1977 to 1979. Mr. Blaha has
      authored numerous articles and three books, entitled “Beyond Survival,” “The
      Archer Chronicles” and “The Lean Six Sigma Accelerator,” on issues relating to
      high performance work systems, leadership and achieving organizational wide
      commitment to change and efficiency.




***Carol
      A. DiBattiste*** has
      served as a director since July 2005. Ms. DiBattiste is currently the general
      counsel and chief privacy officer with ChoicePoint Inc. (NYSE: CPS), a leading
      provider of identification and credential verification services, a position
      she
      has held since September 2006. From April 2005 until September 2006, she was
      the
      chief credentialing, compliance and privacy officer for ChoicePoint Inc. From
      July 2004 to April 2005, Ms. DiBattiste served as deputy administrator,
      Transportation Security Administration (TSA), Department of Homeland Security,
      and as the TSA’s chief of staff from March 2003 to July 2004, with
      responsibility for overseeing all TSA functions and serving as liaison between
      TSA and the Department of Homeland Security. From February 2001 to February
      2003, Ms. DiBattiste was a partner at the law firm of Holland & Knight, LLP.
      Additionally, Ms. DiBattiste served as under secretary in the United States
      Air
      Force from August 1999 to January 2001, the second highest position, responsible
      for readiness, recruiting, training and equipping a force of 710,000 individuals
      and a budget of over $70 billion. From December 1997 to August 1999, Ms.
      DiBattiste was the deputy United States attorney, Southern District of Florida
      and from July 1994 to December 1997, she was the director of the Executive
      Office for United States Attorneys, Department of Justice. From August 1993
      to
      July 1994, she was the principal deputy general counsel for the Department
      of
      the Navy and from July 1991 to August 1993 she was an assistant United States
      attorney for the Southern District of Florida. Ms. DiBattiste enlisted in the
      United States Air Force in March 1971, received her commission in September
      1976
      and retired in the rank of Major after twenty years of service in 1991.




37




***General
      Ronald R. Fogleman*** has
      served as a director since July 2005. General Fogleman retired in 1997 after
      34
      years of distinguished service in the United States Air Force. General Fogleman
      is currently the senior vice president of Projects International, an
      international business advising company, a position that he has held since
      May
      2001. General Fogleman served as chairman and chief executive officer of Durango
      Aerospace, Inc., an international aviation consulting firm, from January 1998
      until December 2004. In addition, from January 1998 to the present, General
      Fogleman has served as a consultant to various defense industry and related
      companies, including Northrop Grumman Corporation (NYSE: NOC), East Inc., RSL
      Electronics USA Inc., FMC Technologies, Inc. (NYSE: FTI), Bell Helicopter
      Textron Inc. (a subsidiary of Textron Inc. (NYSE: TXT)), Twentieth Century
      Alliance and Ahura Corporation. From October 1994 to September 1997, General
      Fogleman served as a member of the Joint Chiefs of Staff, acting as military
      advisor to the Secretary of Defense, the National Security Counsel and the
      President of the United States. From October 1994 to September 1997, he also
      served as the 15th Chief of Staff of the U.S. Air Force, as the senior uniformed
      officer responsible for organizing, training and equipping of 750,000 active
      duty, guard, reserve and civilian forces serving in the United States and
      overseas. From August 1992 to October 1994, he served as commander-in-chief
      of
      the U.S. Transportation Command (CINCTRANS). He currently serves on the board
      of
      directors of the following public companies: AAR Corporation (NYSE: AIR), a
      supplier of products and services to the aviation industry; Alliant Techsystems
      Inc. (NYSE: ATK), a provider of conventional munitions, rocket motors and
      advanced weapons and space systems; and World Airways, Inc., an air carrier
      providing customized transportation services. On May 31, 2004, General Fogleman
      became the non-executive Chairman of the Board of World Airways, Inc. (Nasdaq:
      WLDA).




***General
      Robert T. Herres*** has
      served as a director since July 2005. General Herres retired from the United
      States Air Force in February 1990 after 36 years of distinguished service.
      General Herres is currently an advisor and consultant to a family trust and
      a
      director of Ellison Management Co., LLC, which provides asset management support
      and services to the trust, a position he has held since November 2000. From
      September 1993 until April 2000, General Herres served as chief executive
      officer of United Services Automobile Association (USAA), a member-owned
      diversified insurance and financial service organization serving current and
      former members of the U.S. military and their families. From September 1993
      until October 2002, he served as USAA’s chairman. From March 2001 until
      September 2003, General Herres served as chairman of Luby’s, Inc. (NYSE: LUB),
      an owner and operator of restaurants. From February 1987 until February 1990,
      General Herres was vice chairman of the Joint Chiefs of Staff, acting as
      military advisor to the Secretary of Defense, the National Security Council
      and
      the President of the United States. During the prior ten years of his career
      in
      the Air Force, General Herres held the following positions: commander-in-chief,
      North American Aerospace Defense Command and U.S. space command and commander,
      U.S. Air Force Space Command (July 1984 to September 1987), commander of the
      Eighth Air Force (July 1981 to October 1982) and commander of the Air Force
      Communications Command (June 1979 to July 1981). He also served as the director
      for command, control and communications of the Department of Defense Joint
      Staff
      (from October 1982 to July 1984). General Herres has received numerous awards
      and commendations, including the Distinguished Service Medal, Defense
      Distinguished Service Medal, the Legion of Merit and the Bronze Star.




On
      November 8, 2007, Mr. Constantinos Tsakiris, a former director of the Company
      resigned from his position as a member of the board of directors of the
      Company.




**Director
      Independence**




Our
      board
      of directors has determined that Governor Gary E. Johnson, Carol A. DiBattiste,
      General Ronald R. Fogelman and Robert T. Herres are “independent directors”
within the meaning of Rule 121(A) of the American Stock Exchange Company Guide
      and Rule 10A-3 promulgated under the Securities Act of 1934, as
      amended.




**Number
      and Term of Directors**




Our
      board
      of directors is divided into two classes with only one class of directors being
      elected in each year and each class serving a two-year term. The term of office
      of the first class of directors, consisting of Mr. Wasserman, General Fogleman
      and Governor Johnson, will expire at our first annual meeting of stockholders.
      The term of office of the second class of directors, consisting of Mr. Blaha,
      Ms. DiBattiste and General Herres, will expire at the second annual meeting
      of
      stockholders.




38




These
      individuals will play a key role in identifying and evaluating prospective
      acquisition candidates, selecting the target business, and structuring,
      negotiating and consummating its acquisition. Other than Ms. DiBattiste and
      General Fogleman, none of these individuals has been a principal of or
      affiliated with a public company or blank check company that executed a business
      plan similar to our business plan and none of these individuals is currently
      affiliated with such an entity. However, we believe that the skills and
      expertise of these individuals, their collective access to acquisition
      opportunities and ideas, their contacts, and their transaction expertise should
      enable them to identify and effect an acquisition although we cannot assure
      you
      that they will, in fact, be able to do so.




**Special
      Adviso** **r**




In
      addition to our board of directors, we also have access to special advisors
      who
      have the background and experience to assist us in evaluating target businesses
      and consummating a business combination. We have initially identified Mr.
      Weinstein as our special advisor.




***Michael
      Weinstein*** has
      been
      our special advisor since July 2005. Mr. Weinstein will from time to time assist
      us in evaluating target businesses and consummating a business combination.
      He
      has not and will not receive compensation for acting as our special advisor
      other than reimbursement for out-of-pocket expenses incurred by him on our
      behalf. Mr. Weinstein has over twenty years of experience in government
      procurement, business development, technology investments and law. Since October
      2006, Mr. Weinstein has been the President and Founder of Military Religious
      Freedom Foundation, an organization supporting the upholding of religious
      freedoms in the United States armed forces. From November 2004 until September
      2006, Mr. Weinstein was the director of business development, department of
      energy programs, for Perot Systems Corporation (NYSE: PER), a provider of
      technology-based business solutions. From December 2003 until November 2004,
      Mr.
      Weinstein was a partner with New York Technology Partners, LLC, a technology
      transfer startup company. From December 2002 to December 2003, Mr. Weinstein
      served as chief executive officer for Information Architects Corp. (OTCPK:
      IACH), an internet-based pre-employment screening company. From October 2000
      to
      December 2002, he was the managing partner of Focos Investments, Inc., an
“angel” investment firm. From June 2000 to August 2001, Mr. Weinstein acted as a
      partner in Link 1 LLC, a technology transfer startup company. Previously, Mr.
      Weinstein served as Assistant General Counsel in the Executive Office of the
      President of the United States from May 1986 to May 1987. From April 1984 to
      May
      1986, he served as attorney advisor for telecommunications and information
      systems, Office of Management and Budget, Executive Office of the President
      of
      the United States and first chief of telecommunications and information systems
      procurement law for the United States Air Force from October 1982 to April
      1984.




**Board
      Committees**




Our
      board
      of directors has an audit committee and our board of directors has adopted
      a
      charter for the audit committee, as well as a code of conduct and ethics that
      governs the conduct of our directors, officers and employees.




Our
      audit
      committee consists of General Herres, General Fogleman and Governor Johnson.
      Each member of our audit committee is financially literate under the current
      listing standards of the American Stock Exchange.




The
      audit
      committee will review the professional services and independence of our
      independent registered public accounting firm and our accounts, procedures
      and
      internal controls. The audit committee will also select our independent
      registered public accounting firm, review and approve the scope of the annual
      audit, review and evaluate the independent public accounting firm, review our
      annual audit and annual consolidated financial statements, review with
      management the status of internal accounting controls, evaluate problem areas
      having a potential financial impact on us that may be brought to the committee’s
      attention by management, the independent registered public accounting firm
      or
      the board of directors, and evaluate all of our public financial reporting
      documents. In addition, our audit committee will be required to pre-approve
      all
      related party transactions between us and any of our officers, directors and
      5%
      or more stockholders and their respective affiliates.




39




Nominees
      for the Company’s board of directors will be selected by vote of a majority of
      the Company’s independent directors. The compensation of our chief executive
      officer and other officers will be determined by a majority of our independent
      directors in accordance with Section 805 of the American Stock Exchange Company
      Guide.




Our
      audit
      committee (with any interested directors abstaining) will pass upon the
      reasonableness of any reimbursable expenses in excess of $10,000. Steven M.
      Wasserman, our Chief Executive Officer and President, will determine the
      reasonableness of reimbursement of lesser amounts.




**Changes
      in Director Nomination Process for Stockholders**




None.




**Code
      of Ethics**




We
      have
      adopted a code of ethics (the “Code”) applicable to our directors, officers and
      employees in accordance with applicable federal securities laws and rules of
      The
      American Stock Exchange. The Code was filed as Exhibit 14.1 to our registration
      statement on Form S-1/A filed with the Securities and Exchange Commission on
      February 9, 2007 and has been incorporated by reference into this annual report.
      A written copy of the Code will be provided upon request at no charge by writing
      to our Secretary, Alpha Security Group Corporation, 328 West 77th Street, New
      York, New York 10024.




**Section
      16(a) Beneficial Ownership Reporting Compliance**




Section
      16(a) of the Securities Exchange Act requires our directors, executive officer
      and persons who own more than 10% of our common stock to file reports of
      ownership and changes in ownership of our common stock with the Securities
      and
      Exchange Commission. Our directors, executive officer and persons who own more
      than 10% of our common stock are required by Securities and Exchange Commission
      regulations to furnish to us copies of all Section 16(a) forms they file. To
      our
      knowledge, based solely upon a review of Forms 3, 4 and 5 and amendments to
      these forms furnished to the Company, all our directors, executive officer
      and
      persons who own more than 10% of our common stock have filed Forms 3, 4 and
      5 on
      a timely basis during the year ended December 31, 2007.




**Item
                11.**
            **Executive
                Compensation**




No
      executive officer, director or initial stockholder, nor any affiliate thereof,
      has received any cash compensation for services rendered. No compensation of
      any
      kind, including finder’s and consulting fees, will be paid by us to any of our
      initial stockholders, including our officers and directors, or any of their
      respective affiliates, for services rendered prior to or in connection with
      a
      business combination. However, these individuals will be reimbursed for any
      out-of-pocket expenses incurred in connection with activities on our behalf
      such
      as identifying potential target businesses and performing due diligence on
      suitable business combinations, and we have agreed to pay ASG Management, Inc.,
      an affiliated entity of which Mr. Wasserman and Mr. Blaha are principals, $7,500
      per month for office space and certain additional general and administrative
      services. Such individuals may be paid consulting, management or other fees
      from
      target businesses as a result of the business combination, with any and all
      amounts being fully disclosed to stockholders, to the extent then known, in
      the
      proxy solicitation materials furnished to the stockholders. There is no limit
      on
      the amount of these out-of-pocket expenses. Our board of directors has
      designated Steven M. Wasserman, our Chief Executive Officer and President,
      to
      pass upon the reasonableness of the reimbursement of expenses incurred by any
      member of our management or board of directors in an amount of $10,000 or less.
      Reimbursement of expenses in excess of $10,000 will be passed upon by our audit
      committee, with any interested director abstaining. Other than through this
      review process, or by review by a court of competent jurisdiction if such
      reimbursement is challenged, provided that no proceeds held in the trust account
      will be used to reimburse out-of-pocket expenses prior to a business
      combination, there will be no other review of the reasonableness of these
      expenses. If all of our directors are not deemed “independent,” we will not have
      the benefit of independent directors examining the propriety of expenses
      incurred on our behalf and subject to reimbursement, or monitoring our
      compliance with the terms of the public offering. In addition, since the role
      of
      our current management and directors subsequent to a business combination is
      uncertain, we have no ability to determine what remuneration, if any, will
      be
      paid to our current management and directors prior to or after a business
      combination by any target businesses.




40




Since
      our
      formation, we have not granted any stock options or stock appreciation rights
      or
      any awards under long-term incentive plans.




**Item
                12.**
            **Security
                Ownership of Certain Beneficial Owners and Management and Related
                Stockholder Matters**




The
      following table sets forth, as of April 11, 2008, certain information regarding
      beneficial ownership of our common stock by each person who is known by us
      to
      beneficially own more than 5% of our common stock. The table also identifies
      the
      stock ownership of each of our directors, our officer, and all directors and
      our
      officer as a group. Except as otherwise indicated, the stockholders listed
      in
      the table have sole voting and investment powers with respect to the shares
      indicated.




Shares
      of
      common stock which an individual or group has a right to acquire within 60
      days
      pursuant to the exercise or conversion of options, warrants or other similar
      convertible or derivative securities are deemed to be outstanding for the
      purpose of computing the percentage ownership of such individual or group,
      but
      are not deemed to be outstanding for the purpose of computing the percentage
      ownership of any other person shown in the table.





**Name
                and Address of Beneficial Owner**
            
            **Amount andNature ofBeneficialOwnership**
            
            **Percentage ofOutstandingCommon Stock**Steven
                M. Wasserman (1) (2)
            
            
            830,000
            
            
            10.9
            %Robert
                B. Blaha (2)
            
            
            400,000
            
            
            5.3
            %Gary
                E. Johnson (2)
            
            
            50,000
            
            
            *Carol
                A. DiBattiste (2)
            
            
            50,000
            
            
            *Ronald
                R. Fogleman (2)
            
            
            50,000
            
            
            *Robert
                T. Herres (2)
            
            
            50,000
            
            
            *Michael
                Weinstein (2)
            
            
            50,000
            
            
            *Laura
                Haffner (2)
            
            
            50,000
            
            
            *Fir
                Tree Value Master Fund, L.P., Fir Tree, Inc. and Fir Tree Capital
                Opportunity Master Fund, L.P. (3)
            
            
            750,000
            
            
            9.9
            %Polar
                Securities Inc., North Pole Capital Master Fund and (4)
            
            
            497,900
            
            
            6.6
            %Wolverine
                Convertible Arbitrage Fund, Ltd. (5)
            
            
            396,875
            
            
            5.2
            %Azimuth
                Opportunity, Ltd. (6)
            
            
            392,000
            
            
            5.2
            %All
                directors and executive officers as a group (six
                individuals)
            
            
            1,430,000
            
            
            18.9
            %







*  Less
      than
      1%




(1)
            Includes
                80,000 shares of common stock owned by Tukwila Group LLC, an entity
                in
                which Mr. Wasserman is the sole manager and equity holder and has
                sole
                voting and dispositive power with respect to such shares and reflects
                the
                redemption in September 2006 of 20,000 shares of our common stock
                previously owned by Tukwila Group
                LLC.




(2)
            The
                business address for each of our directors and officer is c/o Alpha
                Security Group Corporation, 328 West 77th Street, New York, New York
                10024.




(3)
            Based
                on information contained in a Schedule 13G/A filed by Fir Tree Value
                Master Fund, L.P., Fir Tree, Inc. and Fir Tree Capital Opportunity
                Master
                Fund, L.P. on February 14, 2008. The business address of Fir Tree,
                Inc. is
                505 Fifth Avenue, 23rd Floor, New York, New York 10017. The business
                address of both Fir Tree Value Master Fund, L.P. and Fir Tree Capital
                Opportunity Master Fund, L.P. is c/o Admiral Administration Ltd.,
                Admiral
                Financial Center, 5th Floor, 90 Fort Street, Box 32021 SMB, Grand
                Cayman,
                Cayman Islands. Fir Tree Value Master Fund, L.P. is the beneficial
                owner
                of and may direct the vote and dispose of 603,800 shares of our common
                stock. Fir Tree Capital Opportunity Master Fund, L.P. is the beneficial
                owner of and may direct the vote and dispose of 146,200 shares of
                our
                common stock. Fir Tree, Inc. has been granted investment discretion
                over
                the shares of our common stock held by Fir Tree Value Master Fund,
                L.P.
                and Fir Tree Capital Opportunity Master Fund,
                L.P.




41




(4)
            Based
                on information contained in a Schedule 13G/A filed by Polar Securities
                Inc. and North Pole Capital Master Fund on February 14, 2008. The
                business
                address of Polar Securities Inc. and North Pole Capital Master Fund
                is 372
                Bay Street, 21st Floor, Toronto, Ontario M5H 2W9, Canada. Polar Securities
                Inc. serves as the investment manager to North Pole Capital Master
                Fund
                and a number of discretionary accounts to which it has voting and
                dispositive power over our common stock. Of the aggregate 497,900
                shares
                of our common stock with respect to which it has voting and dispositive
                authority, 325,900 are beneficially owned by North Pole Capital Master
                Fund. Polar Securities Inc. and North Pole Capital Master Fund disclaim
                beneficial ownership of our common
                stock.




(5)
            Based
                on information contained in a Schedule 13G filed by Wolverine Convertible
                Arbitrage Fund, Ltd. on February 14, 2008. The business address of
                Wolverine Convertible Arbitrage Fund, Ltd. is 175 W. Jackson, Suite
                200,
                Chicago, IL 60604.




(6)
            Based
                on information contained in a Schedule 13G filed by Azimuth Opportunity,
                Ltd. on August 2, 2007. The business address of Azimuth Opportunity,
                Ltd.
                is c/o Ogier Qwomar Complex, 4th Floor, P.O. Box 3170, Road Town,
                Tortola
                British Virgin Islands.




**Item
                13.**
            **Certain
                Relationships and Related Transactions****,
                and Director Independence**




In
      July
      2005, we issued 1,600,000 shares of our common stock to the individuals and
      entity set forth below for an aggregate amount of $25,000 in cash, at an average
      purchase price of $0.0156 per share, as follows:





**Name**
            
            **Number ofShares**
            
            **Relationship to Us**Steven
                M. Wasserman
            
            780,000
            
            Chief
                Executive Officer, Chief Financial Officer, President, Secretary
                and
                Co-Chairman of our Board of DirectorsRobert
                B. Blaha
            
            420,000
            
            Chief
                Management Officer, Executive Vice President and
                DirectorTukwila
                Group LLC
            
            100,000
            
            Affiliate
                of Steven M. WassermanGary
                E. Johnson
            
            50,000
            
            Co-Chairman
                of our Board of DirectorsCarol
                A. DiBattiste
            
            50,000
            
            DirectorRonald
                R. Fogleman
            
            50,000
            
            DirectorRobert
                T. Herres
            
            50,000
            
            DirectorMichael
                Weinstein
            
            50,000
            
            Special
                AdvisorLaura
                Haffner
            
            50,000
            
            Stockholder




The
      holders of the majority of these shares will be entitled to require us, on
      up to
      two occasions, to register these shares. The holders of the majority of these
      shares may elect to exercise these registration rights at any time after the
      date on which these shares of common stock are released from escrow, which,
      except in limited circumstances, is not before one year following our
      consummation of a business combination. In addition, these stockholders have
      certain “piggy-back” registration rights on registration statements filed
      subsequent to the date on which these shares of common stock are released from
      escrow. We will bear the expenses incurred in connection with the filing of
      any
      such registration statements.





42




On
      March
      21, 2007, Steven M. Wasserman, our Chief Executive Officer, Chief Financial
      Officer, President and Co-Chairman of our board of directors and Constantinos
      Tsakiris, a former member of our board of directors, purchased from us an
      aggregate of 3,200,000 warrants at $1.00 per warrant or an aggregate of
      $3,200,000 in a private placement (Mr. Wasserman purchased 500,000 warrants
      and,
      Mr. Tsakiris purchased 2,700,000 warrants). Messrs. Wasserman and Tsakiris
      paid
      the purchase price for the private placement warrants out of their own funds
      and
      did not receive directly or indirectly, any cash or other consideration from
      any
      party in order to make these purchases. Such funds were not borrowed from any
      third party. Such warrants are identical to the warrants included in the units
      sold in the public offering. Each warrant is exercisable into one share of
      common stock at $7.50 and will become exercisable on the later of: (i) the
      completion of a business combination with a target business or (ii) one year
      from the date of our initial public offering prospectus. The warrants are
      subject to a lock-up agreement and held in accounts established by Mr. Wasserman
      and Mr. Tsakiris with Maxim Group LLC until such time as we consummate a
      business combination. Mr. Wasserman and Mr. Tsakiris will not request, and
      Maxim
      Group LLC will not grant, any waiver of the lock-up agreement.




In
      May
      2005, Steven M. Wasserman, our Chief Executive Officer, Chief Financial Officer,
      President and Co-Chairman of our board of directors, and Robert B. Blaha, our
      Chief Management Officer and Executive Vice President and a director, loaned
      us
      an aggregate of $187,802 to pay a portion of the expenses of the public
      offering, such as SEC registration fees, NASD registration fees and legal and
      accounting fees and expenses. We repaid Mr. Wasserman ($137,802) and Robert
      Blaha ($50,000) an aggregate of $187,802 out of the proceeds of the public
      offering for their loans which we used to cover expenses related to the public
      offering.




In
      addition, on March 16, 2007, Mr. Wasserman loaned us (on an interest-free basis)
      an additional $250,000 for expenses of the public offering. This loan was to
      be
      repaid within 90 days of the closing of the public offering, but has not been
      repaid through December 31, 2007.




We
      have
      agreed to pay ASG Management, Inc., an affiliated third party of which Mr.
      Wasserman and Mr. Blaha are principals, $7,500 per month for office space and
      certain additional general and administrative services.




In
      September 2006, we redeemed an aggregate of 20,000 shares of our common stock
      owned by Tukwila Group LLC, an entity owned by Steven M. Wasserman, for an
      aggregate consideration of $312.50 or $.01 per share.




On
      January 31, 2007, Steven M. Wasserman (30,000 shares) and Robert B. Blaha
      (20,000 shares) transferred an aggregate of 50,000 shares of our common stock
      to
      Constantinos Tsakiris for an aggregate consideration of $500 or $.01 per
      share.




We
      will
      reimburse our officers and directors for any reasonable out-of-pocket business
      expenses incurred by them in connection with certain activities on our behalf
      such as identifying and investigating possible target businesses and business
      combinations. Our audit committee (with any interested directors abstaining)
      will pass upon the reasonableness of any reimbursable expenses in excess of
      $10,000. Steven M. Wasserman, our Chief Executive Officer and President, will
      pass upon the receivableness of reimbursement of lesser amounts. There is no
      limit on the amount of accountable out-of-pocket expenses reimbursable by us,
      which will be reviewed only by our board or a court of competent jurisdiction
      if
      such reimbursement is challenged.




Other
      than the reimbursable out-of-pocket expenses payable to our officers and
      directors and the $7,500 per month payment to ASG Management, Inc., the
      principals of which are Mr. Wasserman and Mr. Blaha, no compensation or fees
      of
      any kind, including finders and consulting fees, will be paid by us to any
      of
      our initial stockholders, officers or directors who owned our common stock
      prior
      to the public offering, or to any of their respective affiliates for services
      rendered to us prior to or with respect to the business
      combination.




Our
      initial stockholders will not receive reimbursement for any out-of-pocket
      expenses incurred by them to the extent that such expenses exceed permitted
      working capital distributions as described herein unless the business
      combination is consummated and there are sufficient funds available for
      reimbursement after such consummation. The financial interest of such persons
      could influence their motivation in selecting a target business and thus, there
      may be a conflict of interest when determining whether a particular business
      combination is in the stockholders’ best interest.




43




After
      the
      consummation of a business combination, if any, to the extent our management
      remains as officers of the resulting business, we anticipate that our officers
      and directors may enter into employment agreements, the terms of which shall
      be
      negotiated at the time of the business combination. Further, after the
      consummation of a business combination, if any, to the extent our directors
      remain as directors of the resulting business, we anticipate that they will
      receive compensation for their service as directors.




All
      ongoing and future transactions between us and any of our officers and directors
      or their respective affiliates, including loans by our officers and directors,
      will be on terms believed by us at the time of such transactions to be no less
      favorable than are available from unaffiliated third parties. Such transactions
      or loans, including any forgiveness of loans, will require prior approval in
      each instance of our audit committee. In addition, our audit committee will
      gather pricing information, estimates or fairness opinions from unaffiliated
      third parties with respect to similar transactions undertaken by us to ascertain
      whether such transactions with affiliates are on terms that are no less
      favorable to us than are otherwise available from such unaffiliated third
      parties. If a transaction with an affiliated third party were found to be on
      terms less favorable to us than with an unaffiliated third party, we would
      not
      engage in such transaction.




**Director
      Independence**




Our
      board
      of directors has determined that Governor Gary E. Johnson, Carol A. DiBattiste,
      General Ronald R. Fogelman and Robert T. Herres are “independent directors”
within the meaning of Rule 121(A) of the American Stock Exchange Company Guide
      and Rule 10A-3 promulgated under the Securities Act of 1934, as
      amended.




**Item
                14.**
            **Principal
                Accountant Fees and
                Services**




As
      previously disclosed in our December 19, 2007 8-K filing, certain of the
      partners of Goldstein Golub Kessler LLP (GGK) became partners of McGladrey
&
Pullen, LLP (M&P). As a result, GGK resigned as auditors of the Company
      effective December 18, 2007 and M&P was appointed as our independent
      registered public accounting firm for the year ended December 31, 2007. During
      the year ended December 31, 2006, the firm of Goldstein Golub Kessler LLP
      (“GGK”) was our principal accountant. GGK had a continuing relationship with RSM
      McGladrey, Inc. (“RSM”), from which it leased auditing staff who were full time,
      permanent employees of RSM and through which its partners provided non-audit
      services. GGK had no full time employees and therefore, none of the audit
      services performed were provided by permanent full-time employees of GGK. GGK
      managed and supervised the audit and audit staff, and was exclusively
      responsible for the opinion rendered in connection with its examination. M&P
      and RSM McGladrey, Inc. (RSM), an affiliate of M&P and GGK, have billed and
      anticipate billing the Company as follows for the years ended December 31,
      2007
      and 2006.




**Fee
                Category**
            
            **2007**
            
            **2006**Audit
                fees – McGladrey & Pullen, LLP
            
            $
            30,000
            
            
            -Audit
                Fees – Goldstein Golub Kessler LLP
            
            $
            48,000
            
            $
            37,764




***Audit
      Fees***




Audit
      fees consist of fees for professional services rendered for the audit of the
      Company’s financial statements and review of the interim financial statements
      included in our quarterly reports on Form 10-Q and services rendered in
      connection with our registration statement on Form S-1.




***Audit
      Related Fees***




We
      did
      not incur any audit-related fees with M&P or GGK for the years ended
      December 31, 2007 and 2006.




***Tax
      Fees***




We
      did
      not incur any tax fees with M&P or GGK for the years ended December 31, 2007
      and 2006.




44




***All
      Other Fees***




We
      did
      not incur any fees with M&P or GGK for other professional services rendered
      for the years ended December 31, 2007 or 2006.




***Pre-Approval
      Of Services*** ****




In
      accordance with the SEC’s auditor independence rules, the Audit Committee has
      established the following policies and procedures by which it approves in
      advance any audit or permissible non-audit services to be provided to us by
      our
      independent auditor.




Prior
      to
      the engagement of the independent auditors for any fiscal year’s audit,
      management submits to the Audit Committee for approval lists of recurring audit,
      audit-related, tax and other services expected to be provided by the independent
      auditors during that fiscal year. The Audit Committee adopts pre-approval
      schedules describing the recurring services that it has pre-approved, and is
      informed on a timely basis, and in any event by the next scheduled meeting,
      of
      any such services rendered by the independent auditor and the related
      fees.




The
      fees
      for any services listed in a pre-approval schedule are budgeted, and the Audit
      Committee requires the independent auditor and management to report actual
      fees
      versus the budget periodically throughout the year. The Audit Committee will
      require additional pre-approval if circumstances arise where it becomes
      necessary to engage the independent auditor for additional services above the
      amount of fees originally pre-approved. Any audit or non-audit service not
      listed in a pre-approval schedule must be separately pre-approved by the Audit
      Committee on a case-by-case basis.




Every
      request to adopt or amend a pre-approval schedule or to provide services that
      are not listed in a pre-approval schedule must include a statement by the
      independent auditors as to whether, in their view, the request is consistent
      with the SEC’s rules on auditor independence.




The
      Audit
      Committee will not grant approval for:




·
            any
                services prohibited by applicable law or by any rule or regulation
                of the
                SEC or other regulatory body applicable to
                us;




·
            provision
                by the independent auditors to us of strategic consulting services
                of the
                type typically provided by management consulting firms;
                or




·
            the
                retention of the independent auditors in connection with a transaction
                initially recommended by the independent auditors, the tax treatment
                of
                which may not be clear under the Internal Revenue Code and related
                regulations and which it is reasonable to conclude will be subject
                to
                audit procedures during an audit of our financial
                statements.




Tax
      services proposed to be provided by the auditor to any director, officer or
      employee of the Company who is in an accounting role or financial reporting
      oversight role must be approved by the Audit Committee on a case-by-case basis
      where such services are to be paid for by us, and the Audit Committee will
      be
      informed of any services to be provided to such individuals that are not to
      be
      paid for by us.




In
      determining whether to grant pre-approval of any non-audit services in the
“all
      other” category, the Audit Committee will consider all relevant facts and
      circumstances, including the following four basic guidelines:




·
            whether
                the service creates a mutual or conflicting interest between the
                auditor
                and us;




·
            whether
                the service places the auditor in the position of auditing his or
                her own
                work;




·
            whether
                the service results in the auditor acting as management or an employee
                of
                our company; and




·
            whether
                the service places the auditor in a position of being an advocate
                for our
                company.




45




**Item
                15.**
            **E****xhibits,
                Financial Statement
                Schedules**




(a)(1)
      Financial Statements




An
      index
      to Consolidated Financial Statements appears on page F-1.




(b)
      Exhibits




The
      following Exhibits are filed as part of this report:




**Exhibit No.**
            
            **Description**3.1
            
            Fourth
                Amended and Restated Certificate of Incorporation*3.2
            
            Amended
                and Restated By-laws*4.1
            
            Specimen
                Unit Certificate*4.2
            
            Specimen
                Common Stock Certificate*4.3
            
            Specimen
                Warrant Certificate*4.4
            
            Form
                of Warrant Agreement between American Stock Transfer & Trust Company
                and the Registrant*10.1.1
            
            Letter
                Agreement among the Registrant, Maxim Group LLC and Steven M.
                Wasserman*10.1.2
            
            Letter
                Agreement among the Registrant, Maxim Group LLC and Robert B.
                Blaha*10.1.3
            
            Letter
                Agreement among the Registrant, Maxim Group LLC and Michael
                Weinstein*10.1.4
            
            Letter
                Agreement among the Registrant, Maxim Group LLC and Carol A.
                DiBattiste*10.1.5
            
            Letter
                Agreement among the Registrant, Maxim Group LLC and Robert T.
                Herres*10.1.6
            
            Letter
                Agreement among the Registrant, Maxim Group LLC and Gary E.
                Johnson*10.1.7
            
            Letter
                Agreement among the Registrant, Maxim Group LLC and Ronald R.
                Fogleman*10.1.8
            
            Letter
                Agreement among the Registrant, Maxim Group LLC and Laura
                Haffner*10.1.9
            
            Letter
                Agreement among the Registrant, Maxim Group LLC and Constantinos
                Tsakiris*10.1.10
            
            Letter
                Agreement among the Registrant, Maxim Group LLC and the Tukwila Group
                LLC*10.2
            
            Form
                of Investment Management Trust Agreement between American Stock Transfer
                & Trust Company and the Registrant*10.3
            
            Form
                of Stock Escrow Agreement between the Registrant, American Stock
                Transfer
                & Trust Company and the Initial Stockholders*10.4
            
            Form
                of Registration Rights Agreement among the Registrant and the Initial
                Stockholders*10.5
            
            Office
                Services Agreement by and between the Registrant and ASG Management,
                Inc.*10.6.1
            
            Promissory
                Note, dated May 18, 2005, as amended on January 16, 2007, issued
                to Steven
                M. Wasserman, in the amount of $137,802.50*10.6.2
            
            Promissory
                Note, dated May 18, 2005, as amended on January 16, 2007, issued
                to Robert
                B. Blaha, in the amount of $50,000*10.6.3
            
            Amended
                and Restated Letter Agreement between the Registrant and Steven M.
                Wasserman with respect to loan of up to $250,000*10.7
            
            Form
                of Unit Purchase Option Agreement between the Registrant and Maxim
                Group
                LLC*10.8
            
            Form
                of Subscription Agreement by and among the Registrant, Steven M.
                Wasserman
                and Constantinos Tsakiris*14.1
            
            Code
                of Ethics*31.1
            
            Certification
                of the Principal Executive Officer and Principal Financial Officer
                pursuant to Rule 13-14(a) of the Securities Exchange of
                193432.1
            
            Certificate
                of the Principal Executive Officer and Principal Financial Officer
                pursuant to 18 U.S.C. 1350, as adopted pursuant to Section 906 of
                the
                Sarbanes-Oxley Act of 2002





*
      Incorporated by reference to our Registration Statement on Form S-1,
      Registration No. 333-127999, filed with the Securities and Exchange Commission
      on August 31, 2005, as amended.






46




SIGNATURES




In
      accordance with the requirements of the Securities and Exchange Act of 1934,
      the
      Registrant caused this report to be signed on its behalf by the undersigned,
      thereunto duly authorized.





ALPHA
                SECURITY GROUP CORPORATIONApril
                15, 2008
            By:
            /s/
                Steven M. WassermanName:
            Steven
                M. WassermanTitle:
            Chief
                Executive Officer and Chief
              Financial
                Officer (Principal Executive
              and
                Financial Officer)




Pursuant
      to the requirements of the Securities Exchange Act of 1934, this report has
      been
      signed below by the following persons on behalf of the Registrant and in the
      capacities and on the dates indicated.




April
                15, 2008
            By:
            /s/
                Steven M. WassermanName:
            Steven
                M. WassermanTitle:
            Chief
                Executive Officer and Chief
              Financial
                Officer, President, Secretary
              and
                Co-Chairman of the Board of
              Directors
                (Principal Executive and
              Financial
                Officer)




April
                15, 2008
            By:
            /s/
                Gary E. JohnsonName:
            Gary
                E. JohnsonTitle:
            Co-Chairman
                of the Board of
              Directors




April
                15, 2008
            By:
            /s/
                Robert B. BlahaName:
            Robert
                B. BlahaTitle:
            Chief
                Management Officer, Executive
              Vice
                President and Director




April
                15, 2008
            By:
            /s/
                Carol A. DiBattisteName:
            Carol
                A. DiBattisteTitle:
            Directors




April
                15, 2008
            By:
            /s/
                Ronald R. FoglemanName:
            Ronald
                R. FoglemanTitle:
            Directors




April
                15, 2008
            By:
            /s/
                Robert T. HerresName:
            Robert
                T. HerresTitle:
            Directors




47




ALPHA
      SECURITY GROUP CORPORATION


(a
      corporation in the development stage)




FINANCIAL
      STATEMENTS




and




REPORT
      OF
      INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM




DECEMBER
      31, 2007 and 2006




Report
                of Independent Registered Public Accounting Firm
            
            F-2Report
                of Independent Registered Public Accounting Firm
            
            F-3Financial
                StatementsBalance
                Sheets
            
            F-4Statements
                of Operations
            
            F-5Statement
                of Stockholders’ Equity (Deficiency)
            
            F-6Statements
                of Cash Flows
            
            F-7Notes
                to Financial Statements
            
            F-8




F-1




**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**




To
      the
      Board of Directors and Stockholders of


Alpha
      Security Group Corporation




We
      have
      audited the balance sheet of Alpha Security Group Corporation (a corporation
      in
      the development stage) as of December 31, 2007, and the related statements
      of
      operations, stockholders’ equity, and cash flows for the year then ended and the
      amounts included in the cumulative columns in the statements of operations
      and
      cash flows for the year ended December 31, 2007. These financial statements
      are
      the responsibility of the Company’s management. Our responsibility is to express
      an opinion on these financial statements based on our audit.




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




In
      our
      opinion, the financial statements referred to above present fairly, in all
      material respects, the financial position of Alpha Security Group Corporation
      as
      of December 31, 2007, and the results of its operations and its cash flows
      for
      the year then ended and the amounts included in the cumulative columns in the
      statements of operations and cash flows for the year ended December 31, 2007
      in
      conformity with U. S. generally accepted accounting principles.




/s/
      MCGLADREY & PULLEN LLP


MCGLADREY
      & PULLEN LLP


New
      York,
      New York


April
      11,
      2008




F-2




**REPORT
      OF INDEPENDENT REGISTERED PUBLIC ACCOUNTING FIRM**




To
      the
      Board of Directors and Stockholders of


Alpha
      Security Group Corporation




We
      have
      audited the accompanying balance sheet of Alpha Security Group Corporation
      (a
      corporation in the development stage) as of December 31, 2006, and the related
      statements of operations, stockholders’ deficiency, and cash flows for the year
      then ended and the amounts included in the cumulative columns for the period
      from April 20, 2005 (inception) to December 31, 2006. These financial statements
      are the responsibility of the Company’s management. Our responsibility is to
      express an opinion on these financial statements based on our audits.




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




In
      our
      opinion, the financial statements referred to above present fairly, in all
      material respects, the financial position of Alpha Security Group Corporation
      as
      of December 31, 2006 and the results of its operations and its cash flows for
      the year then ended and for the period included in the cumulative column from
      April 20, 2005 (inception) to December 31, 2006 in conformity with United States
      generally accepted accounting principles.




/s/
      GOLDSTEIN GOLUB KESSLER LLP


GOLDSTEIN
      GOLUB KESSLER LLP


New
      York,
      New York


April
      2,
      2007




F-3




ALPHA
      SECURITY GROUP CORPORATION


(A
      CORPORATION IN THE DEVELOPMENT STAGE)




BALANCE
      SHEETS




December 31, 2007
            
            December 31, 2006**ASSETS**Current
                AssetsCash
            
            $
            8,726
            
            $
            7,119Investment
                in trust account
            
            
            60,578,630
            
            
            —Prepaid
                expenses
            
            
            17,342
            
            
            —Total
                current assets
            
            
            60,604,698
            
            
            7,119Deferred
                tax asset
            
            
            150,220
            
            
            —Property
                & equipment, net of depreciation
            
            
            6,099
            
            
            —Deferred
                offering costs
            
            
            —
            
            
            495,712Total
                assets
            
            $
            60,761,017
            
            $
            502,831**LIABILITIES
                AND STOCKHOLDERS’ EQUITY (DEFICIENCY)**Current
                LiabilitiesAccrued
                offering costs — principally professional fees
            
            $
            —
            
            $
            325,386Accrued
                expenses
            
            
            75,235
            
            
            —Deferred
                underwriting fees
            
            
            1,800,000
            
            
            —Notes
                payable — stockholders
            
            
            250,000
            
            
            187,802Total
                liabilities
            
            
            2,125,235
            
            
            513,188Common
                stock, subject to possible redemption, 2,099,400 shares, at redemption
                value of $9.70 per share
            
            
            20,364,180
            
            
            —CommitmentsStockholders’
                equity (deficiency)Preferred
                stock, $.0001 par value, authorized 1,000,000 shares, none
                issuedCommon
                stock, $.0001 par value, authorized 30,000,000 shares; issued and
                outstanding 7,580,000 shares, inclusive of 2,099,400 shares subject
                to
                possible redemption and 1,580,000 shares at December 30, 2007 and
                December
                31, 2006
            
            
            758
            
            
            158Additional
                paid in capital
            
            
            37,488,281
            
            
            24,530Earnings
                (deficit) accumulated during the development stage
            
            
            782,563
            
            
            (35,045
            )Total
                stockholders’ equity (deficiency)
            
            
            38,271,602
            
            
            (10,357
            )Total
                liabilities and stockholders’ equity (deficiency)
            
            $
            60,761,017
            
            $
            502,831




See
      accompanying notes to financial statements.




F-4




ALPHA
      SECURITY GROUP CORPORATION


(A
      CORPORATION IN THE DEVELOPMENT STAGE)




STATEMENTS
      OF OPERATIONS




For the period
              from April 20,Years ended
            
            2005December 31,
              2007
            
            December 31,
              2006
            
            (Inception) to
              December 31, 2007Formation
                and operating costs
            
            $
            (504,258
            )
            $
            (23,905
            )
            $
            (539,303
            )Interest
                and dividend income
            
            
            2,094,530
            
            
            —
            
            
            2,094,530Net
                income (loss) before provision for income taxes
            
            
            1,590,272
            
            
            (23,905
            )
            
            1,555,227Provision
                for income taxes
            
            
            772,664
            
            
            
            
            
            772,664Net
                income (loss)
            
            $
            817,608
            
            $
            (23,905
            )
            $
            782,563Weighted
                average shares outstanding
            
            
            6,166,301
            
            
            1,594,167
            
            
            3,288,032Net
                income (loss) per share
            
            $
            0.13
            
            $
            (0.01
            )
            $
            0.24




See
      accompanying notes to financial statements.




F-5




ALPHA
      SECURITY GROUP CORPORATION


(A
      CORPORATION IN THE DEVELOPMENT STAGE)




STATEMENTS
      OF STOCKHOLDERS’ EQUITY (DEFICIENCY)




For the period from April 20, 2005 (inception) to December 31, 2007Common stock
            
            Additional paid-in
            
            Earnings (deficit)
              accumulated during
              the development
            
            Stockholders’ equityShares
            
            Amount
            
            capital
            
            stage
            
            (deficiency)Common
                shares issued July 18, 2005 at $.0156
            
            
            1,600,000
            
            $
            160
            
            $
            24,840
            
            $
            —
            
            $
            25,000Net
                loss - 2005
            
            
            
            
            
            
            
            
            
            
            
            (11,140
            )
            
            (11,140
            )Balance
                - December 31, 2005
            
            
            1,600,000
            
            $
            160
            
            $
            24,840
            
            $
            (11,140
            )
            $
            13,860Net
                loss - 2006
            
            
            
            
            
            
            
            
            
            
            
            (23,905
            )
            
            (23,905
            )Redemption
                - September 15, 2006
            
            
            (20,000
            )
            
            (2
            )
            
            (310
            )
            
            
            
            
            (312
            )Balance
                - December 31, 2006
            
            
            1,580,000
            
            $
            158
            
            $
            24,530
            
            $
            (35,045
            )
            $
            (10,357
            )Proceeds
                of private placement -March 21, 2007
            
            
            
            
            
            
            
            
            3,200,000
            
            
            
            
            
            3,200,000Common
                shares issued March 28, 2007 at $10 per share
            
            
            6,000,000
            
            
            600
            
            
            59,999,400
            
            
            
            
            
            60,000,000Proceeds
                subject to possible redemption
            
            
            
            
            
            
            
            
            (20,364,180
            )
            
            
            
            
            (20,364,180
            )Expenses
                of the Offering
            
            
            
            
            
            
            
            
            (5,371,569
            )
            
            
            
            
            (5,371,569
            )Net
                income - 2007
            
            
            
            
            
            
            
            
            
            
            
            817,608
            
            
            817,608Proceeds
                of options sold
            
            
            
            
            
            
            
            
            100
            
            
            
            
            
            100Balance
                - December 31, 2007
            
            
            7,580,000
            
            $
            758
            
            $
            37,488,281
            
            $
            782,563
            
            $
            38,271,602





See
      accompanying notes to financial statements




F-6




ALPHA
      SECURITY GROUP CORPORATION


(A
      CORPORATION IN THE DEVELOPMENT STAGE)




STATEMENTS
      OF CASH FLOWS




For the year ended
            
            For the periodApril 20, 2005(Inception) toDecember 31, 2007
            
            December 31, 2006
            
            December 31, 2007Cash
                flows from operating activities:Net
                income (loss)
            
            $
            817,608
            
            $
            (23,905
            )
            $
            782,563Adjustments
                to reconcile net income (loss) to net cash used in operating
                activities:Depreciation
            
            
            299
            
            
            —
            
            
            299Increase
                in investment in Trust Account
            
            
            (2,086,835
            )
            
            —
            
            
            (2,086,835
            )Increase
                in deferred tax asset
            
            
            (150,220
            )
            
            —
            
            
            (150,220
            )Increase
                in prepaid expenses
            
            
            (17,342
            )
            
            —
            
            
            (17,342
            )Increase
                in accrued expenses
            
            
            74,001
            
            
            —
            
            
            75,235Net
                cash used in operating activities
            
            
            (1,362,489
            )
            
            (23,905
            )
            
            (1,396,300
            )Cash
                flows from investing activitiesPayment
                to trust account
            
            
            (60,002,831
            )
            
            —
            
            
            (60,002,831
            )Withdrawals
                from trust account
            
            
            1,511,036
            
            
            —
            
            
            1,511,036Purchase
                of equipment
            
            
            (6,398
            )
            
            —
            
            
            (6,398
            )Net
                cash used in investing activities
            
            
            (58,498,193
            )
            
            —
            
            
            (58,498,193
            )Cash
                flows from financing activities:Payment
                of expenses of offering
            
            
            (3,400,009
            )
            
            (55,066
            )
            
            (3,571,569
            )Proceeds
                from sale of common stock
            
            
            —
            
            
            —
            
            
            25,000Proceeds
                from notes payable - stockholders
            
            
            250,000
            
            
            —
            
            
            437,802Proceeds
                from initial public offering
            
            
            60,000,000
            
            
            —
            
            
            60,000,000Proceeds
                from private placement
            
            
            3,200,000
            
            
            —
            
            
            3,200,000Proceeds
                from sale of option
            
            
            100
            
            
            —
            
            
            100Repayment
                of notes payable - stockholders
            
            
            (187,802
            )
            
            —
            
            
            (187,802
            )Redemption
                of stock
            
            
            —
            
            
            (312
            )
            
            (312
            )Net
                cash provided by (used in) financing activities
            
            
            59,862,289
            
            
            (55,378
            )
            
            59,903,219Net
                increase (decrease) in cash
            
            
            1,607
            
            
            (79,283
            )
            
            8,726Cash
                - beginning of period
            
            
            7,119
            
            
            86,402
            
            
            —Cash
                - end of period
            
            $
            8,726
            
            $
            7,119
            
            $
            8,726Supplemental
                disclosure of cash flow informationCash
                paid for income taxes
            
            $
            923,038
            
            $
            —
            
            $
            923,038Supplemental
                disclosure of non-cash financing activities:Accrual
                of deferred offering fees
            
            $
            1,800,000
            
            $
            54,531
            
            $
            1,800,000





See
      accompanying notes to financial statements.




F-7




ALPHA
      SECURITY GROUP CORPORATION


(A
      CORPORATION IN THE DEVELOPMENT STAGE)




NOTES
      TO
      FINANCIAL STATEMENTS


December
      31, 2007




**1.
      Organization, Proposed Business Operations and Summary of Significant Accounting
      Policies**




*Nature
      of Operations*




Alpha
      Security Group Corporation (the “Company”) was incorporated in the State of
      Delaware on April 20, 2005 as a blank check company formed to acquire, through
      a
      merger, capital stock exchange, asset acquisition or other similar business
      combination, one or more businesses in the U.S. homeland security or defense
      industries or a combination thereof.




At
      December 31, 2007, the Company had not yet commenced any operations. All
      activity through December 31, 2007 relates to the Company’s formation, a private
      placement and the public offering described below. The Company has selected
      December 31 as its fiscal year-end.




The
      registration statement for the Company’s initial public offering (the “Public
      Offering”) was declared effective on March 23, 2007. On March 21, 2007, the
      Company completed a private placement (the “Private Placement”) and received net
      proceeds of $3,200,000. The Company consummated the Public Offering on March
      28,
      2007 and received net proceeds of $60,000,000. The Company’s management has
      broad discretion with respect to the specific application of the net proceeds
      of
      the Private Placement and the Public Offering (collectively the “Offerings”) (as
      described in Note 2), although substantially all of the net proceeds of the
      Offerings (exclusive of working capital) are intended to be generally applied
      toward consummating a business combination with a target business. As used
      herein, a “target business” shall include an operating business in the U.S.
      homeland security or defense industries, or a combination thereof, and a
“business combination” shall mean the acquisition by the Company of such a
      target business. There is no assurance that the Company will be able to effect
      a
      business combination successfully.




Of
      the
      proceeds of the Offerings, $60,002,831 was placed in a trust account (“Trust
      Account”) at JP MorganChase, New York, New York, maintained by American Stock
      Transfer & Trust Company, the Company’s transfer agent. This amount includes
      the net proceeds of the Public Offering and the Private Placement (including
      interest thereon), $1,800,000 of deferred underwriting compensation fees which
      will be paid to Maxim Group LLC if, and only if, a business combination is
      consummated, but which will be forfeited in part if public stockholders elect
      to
      have their shares redeemed for cash and in full if a business combination is
      not
      consummated and certain other deferred expenses.




The
      funds
      in the Trust Account will be invested until the earlier of (i) the consummation
      of the Company’s first business combination or (ii) the liquidation of the Trust
      Account as part of a plan of dissolution and liquidation approved by our
      stockholders. Up to $1,825,000 of interest income on the Trust Account may
      be
      used to fund the Company’s working capital including payments for business,
      legal and accounting, due diligence on prospective acquisitions and continuing
      general and administrative expenses.




F-8




ALPHA
      SECURITY GROUP CORPORATION


(A
      CORPORATION IN THE DEVELOPMENT STAGE)




NOTES
      TO
      FINANCIAL STATEMENTS


December
      31, 2007




**1.
      Organization, Proposed Business Operations and Summary of Significant Accounting
      Policies (continued)**




The
      Company, after signing a definitive agreement for the acquisition of a target
      business, will submit such transaction for stockholder approval. In the event
      that public stockholders owning 35% or more of the outstanding stock excluding
      for this purpose, those persons who were stockholders prior to the Offerings
      vote against the business combination, the business combination will not be
      consummated. All of the Company’s stockholders prior to the Offerings, including
      all of the officers and directors of the Company (“Initial Stockholders”), have
      agreed to vote their 1,580,000 founding shares of common stock in accordance
      with the vote of the majority-in-interest of all other stockholders of the
      Company with respect to any business combination. After consummation of the
      Company’s first business combination, all of these voting safeguards will no
      longer be applicable.




With
      respect to the first business combination which is approved and consummated,
      any
      Public Stockholder who voted against the business combination may demand that
      the Company redeem his or her shares. The per share redemption price will equal
      $10 per share plus the pro-rata share of any accrued interest earned on the
      Trust Account, net of: (i) taxes payable on interest income earned on the Trust
      Account, State of Delaware franchise taxes, repayment of $250,000 of an
      additional officer loan made prior to closing of the Public Offering by Steven
      M. Wasserman (such loan was to be repaid within 90 days of the closing of the
      Public Offering, but has not been repaid through December 31, 2007) and (ii)
      up
      to $1,825,000 of interest earned on the Trust Account released to the Company
      to
      fund its working capital. Accordingly, Public Stockholders holding 34.99% of
      the
      aggregate number of shares owned by all Public Stockholders may seek redemption
      of their shares in the event of a business combination. Such Public Stockholders
      are entitled to receive their per share interest in the Trust Account computed
      without regard to the shares held by Initial Stockholders. In the event that
      more than 20% of the Public Stockholders exercise their redemption rights,
      a
      proportional percentage of the common stock held by the Company’s Initial
      Stockholders will automatically, and without any further action required by
      the
      Company or such stockholders, be forfeited and cancelled upon consummation
      of
      the business combination. The percentage of shares forfeited will be equal
      to
      the percentage of redemptions above 20% and will be pro rata among the Initial
      Stockholders on the 1,580,000 shares owned by them.




The
      Company’s Amended and Restated Certificate of Incorporation provides for
      mandatory liquidation of the Trust Account as part of a stockholder-approved
      plan of dissolution and liquidation in the event that the Company does not
      consummate a business combination within 18 months from the date of the
      consummation of the Public Offering, or 24 months from the consummation of
      the
      Public Offering if a letter of intent, agreement in principle or definitive
      agreement has been executed within 18 months after consummation of the Public
      Offering and the business combination has not yet been consummated within such
      18 month period. In the event of such liquidation, the amount in the Trust
      Account will be distributed to the holders of the shares sold in the Public
      Offering. The Company’s initial business combination must be for assets or with
      a target business the fair market value of which is at least equal to 80% of
      the
      Company’s net assets at the time of such acquisition (exclusive of Maxim Group
      LLC’s deferred underwriting compensation, including interest thereon, held in
      the trust account). Steven M. Wasserman, Chief Executive Officer, Chief
      Financial Officer, President and Co-Chairman of the board of directors and
      Constantinos Tsakiris, a former director of the Company, purchased warrants
      to
      purchase an aggregate of 3,200,000 shares of common stock in the Private
      Placement for an aggregate purchase price of $3,200,000 or $1.00 per warrant.
      The Private Placement warrants are exercisable on the later of (i) the
      completion of a business combination or (ii) March 23, 2008.




F-9




ALPHA
      SECURITY GROUP CORPORATION


(A
      CORPORATION IN THE DEVELOPMENT STAGE)




NOTES
      TO
      FINANCIAL STATEMENTS


December
      31, 2007




**1.
      Organization, Proposed Business Operations and Summary of Significant Accounting
      Policies (continued)**




*Cash
      and Cash Equivalents*




The
      Company considers all highly liquid instruments with original maturities of
      three months or less when purchased to be cash equivalents. Such cash and cash
      equivalents, may exceed federally insured limits. The Company maintains its
      accounts with financial institutions with high credit ratings.


*Fair
        Value of Financial Instruments*
  The
        fair
        value of the Company’s assets and liabilities that qualify as financial
        instruments under SFAS No. 107 “Disclosures about Fair Value of Financial
        Instruments,” approximate their carrying amounts presented in the balance sheet
        at December 31, 2007.
 
 The
        Trust
        Account investment are held in a U.S. Government money market account in
        which cost approximates fair value.




*Income
      Taxes*




On
      January 1, 2007 the Company adopted FASB issue Interpretation No. 48,
“Accounting for Uncertainty in Income Taxes — an Interpretation of FASB
      Statement No. 109” (“FIN 48”). FIN 48 clarifies the accounting for uncertainty
      in tax positions recognized in a company’s financial statements in accordance
      with SFAS No. 109, “Accounting for Income Taxes.” FIN 48 requires that the
      impact of a tax position be recognized in the financial statements if it is
      more
      likely than not that the tax position will be sustained on tax audit, based
      on
      the technical merits of the position. FIN 48 also provides guidance on
      derecognition of tax positions that do not meet the “more likely than not”
standard, classification of tax assets and liabilities, interest and penalties,
      accounting in interim periods, disclosure and transition. FIN 48 is effective
      for fiscal years beginning after December 15, 2006. The adoption of FIN 48
      had
      no effect on our financial condition or results of operations since the company
      has not identified any uncertain tax positions.




The
      Company recognizes interest and penalties related to uncertain tax positions
      in
      income tax expense. All tax years remain open to examination by the major taxing
      jurisdictions to which we are subject.




*Recently
      Issued Accounting Pronouncements*




In
      December 2007, the Financial Accounting Standards Board (“FASB”) issued
      Statement of Financial Accounting Standards No. 141(R) “Business Combinations”.
      This statement establishes principles and requirements for how the acquirer
      of a
      business recognizes and measures in its financial statements the identifiable
      assets acquired, the liabilities assumed, and any noncontrolling interest in
      the
      acquiree. The Statement also provides guidance for recognizing and measuring
      the
      goodwill acquired in the business combination and determines what information
      to
      disclose to enable users of the financial statements to evaluate the nature
      and
      financial effects of the business combination. The guidance will become
      effective for
        acquisitions on or after the beginning of the first annual reporting period
        beginning on or after December 15, 2008.




In
        December
        2007, the Financial Accounting Standards Board released Statement of Financial
        Accounting Standards No. 160 “Non-Controlling Interests in Consolidated
        Financial Statements” (“SFAS 160”) that is effective for periods beginning on or
        after December 15, 2008. Upon adoption of SFAS 160, the Company will re-classify
        any non-controlling interests as a component of equity.




Management
      does not believe that any other recently issued, but not yet effective,
      accounting standards if currently adopted would have a material effect on the
      accompanying financial statements.




F-10




ALPHA
      SECURITY GROUP CORPORATION


(A
      CORPORATION IN THE DEVELOPMENT STAGE)




NOTES
      TO
      FINANCIAL STATEMENTS


December
      31, 2007




**1.
      Organization, Proposed Business Operations and Summary of Significant Accounting
      Policies (continued)**




*Income
      (Loss) per Common Share*




Income
      (Loss) per share is computed by dividing net income (loss) by the
      weighted-average number of shares of common stock outstanding during the period.
      Shares of common stock issuable upon the exercise of options and warrants at
      December 31, 2007 (9,410,000 shares) are excluded from the computation since
      such options and warrants are contingently exercisable.




*Use
      of Estimates*




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




**2.
      Public Offering and Private Placement**




On
      March
      28, 2007 the Company sold 6,000,000 units to the public at a price of $10.00
      per
      unit. Each unit consists of one share of the Company’s common stock, $.0001 par
      value, and one Redeemable Common Stock Purchase Warrant (“Warrant”). Each
      Warrant entitles the holder to purchase from the Company one share of common
      stock at an exercise price of $7.50 commencing the later of (i) the completion
      of a business combination with a target business or (ii) March 23, 2008, and
      expires March 23, 2011. The Warrants will be redeemable by the Company at a
      price of $0.01 per warrant upon 30 days notice after the Warrants become
      exercisable, only in the event that the closing price of the common stock is
      at
      least $14.25 per share for any 20 trading days within a 30 trading day period
      ending on the third day prior to the date on which notice of redemption is
      given.




On
      March
      21, 2007, Steven M. Wasserman, Chief Executive Officer, Chief Financial Officer,
      President and Co-Chairman of the board of directors and Constantinos Tsakiris,
      a
      former director, acquired warrants to purchase an aggregate of 3,200,000 shares
      of common stock from the Company in a Private Placement. The total purchase
      price for the warrants was $3,200,000 or $1.00 per warrant. The Warrants
      included in the Private Placement have terms identical to the Warrants included
      in the Offering.




Under
      the
      terms of the Company’s warrant agreement, no public warrants will be exercisable
      unless at the time of exercise a registration statement relating to common
      stock
      issuable upon exercise of the warrants is effective and current, a prospectus
      is
      available for use by the public stockholders and those shares of common stock
      have been registered or been deemed to be exempt from registration under the
      securities laws of the state of residence of the holder of the warrants. The
      holders of the Warrants issued in the Private Placement will be able to exercise
      their Warrants even if, at the time of exercise, a prospectus relating to the
      common stock issuable upon exercise of such Warrants is not
      current.




In
      addition, in no event will the registered holders of the Warrants issued in
      the
      Public Offering or the Private Placement be entitled to receive a net cash
      settlement of stock or other consideration in lieu of physical settlement in
      shares of the Company’s common stock. As such, the Company has determined that
      the public warrants should be classified in stockholders’ equity in accordance
      with the guidance of EITF 00-19 (“EITF 00-19”), Accounting for Derivative
      Financial Instruments Indexed to, and Potentially Settled in, a Company’s Own
      Stock.




F-11




ALPHA
      SECURITY GROUP CORPORATION


(A
      CORPORATION IN THE DEVELOPMENT STAGE)




NOTES
      TO
      FINANCIAL STATEMENTS


December
      31, 2007




**2.
      Public Offering and Private Placement (continued)**




The
      Company will use its best efforts to cause a registration statement to become
      effective on or prior to the commencement of the warrant exercise period and
      to
      maintain the effectiveness of such registration statement until the expiration
      of the Warrants. If the Company is unable to maintain the effectiveness of
      such
      registration until the expiration of the Warrants and therefore is unable to
      deliver registered shares, the Warrants may become worthless.




**3.
      Note Payable, Stockholder**




The
      Company issued an unsecured promissory note to Steven Wasserman, a related
      party, totaling $250,000 on March 28, 2007. The Note does not bear interest
      and
      was to be repaid in full ninety days thereafter and such repayment has not
      been
      made. Due to the short-term nature of the promissory note, the fair value of
      the
      note approximates its carrying value.




**4.
      Commitments**




The
      Company has agreed to pay to an affiliated third party, $7,500 a month for
      24
      months for office space and general and administrative expenses.




Upon
      completion of the Public Offering, the Company sold to the representative of
      the
      underwriters, for $100, an option to purchase up to a total of 105,000 units.
      The units issuable upon exercise of this option are identical to those offered
      in the Public Offering. This option is exercisable at $11.00 per unit commencing
      after 180 days from March 23, 2007 and expiring March 23, 2012. The 105,000
      units (the 105,000 shares of common stock and the 105,000 warrants underlying
      such units, and the 105,000 shares of common stock underlying such warrants)
      have been deemed compensation by the National Association of Securities Dealers
      (“NASD”) and are therefore subject to a 180-day lock-up pursuant to Rule
      2710(g)(1) of the NASD Conduct Rules. Additionally, the option may not be sold,
      transferred, assigned, pledged or hypothecated for a 24-month period (including
      the foregoing 180-day period) following March 23, 2007 (the effective date
      of
      the prospectus pertaining to the Public Offering). However, the option may
      be
      transferred to any underwriter and selected dealer participating in the Public
      Offering and their bona fide officers or partners. This represents an amended
      agreement between the Company and the representative of the underwriters,
      revising their original agreement which provided for the issuance of an option
      to purchase 420,000 units with a lock-up period of one-year. The option may
      expire unexercised and the underlying warrants unredeemed if the Company fails
      to maintain an effective registration statement covering the units (including
      the common stock and warrants) issuable upon exercise of the option. There
      are
      no circumstances upon which the Company will be required to net cash settle
      the
      option.




The
      Company has accounted for this purchase option as a cost of raising capital
      and
      has included the instrument as equity in its financial statements. Accordingly,
      there is no net impact on the Company’s financial position or results of
      operations, except for the recording of the $100 proceeds from the sale. The
      Company has estimated, based upon a Black Scholes model, that the fair value
      of
      the purchase option on the date of sale was approximately $4.46 per unit (a
      total value of $468,300), using an expected life of five years, volatility
      of
      47.60% and a risk-free rate of 4.75%. The volatility calculation is based on
      the
      average volatility of 12 companies in the U.S. homeland security and defense
      industries during the period from March 14, 2002 to March 15, 2007. Because
      the
      Company did not have a trading history, the Company needed to estimate the
      potential volatility of its unit price, which depended on a number of factors
      which could not be ascertained at the time. The Company used these companies
      because management believed that the volatility of these companies was a
      reasonable benchmark to use in estimating the expected volatility for the
      Company’s units. Although an expected life of five years was used in the calculation,
      if the Company does not consummate a business combination within the prescribed
      time period and it liquidates, the option will become worthless.




F-12


ALPHA
        SECURITY GROUP CORPORATION
 (A
        CORPORATION IN THE DEVELOPMENT STAGE)
  NOTES
        TO
        FINANCIAL STATEMENTS
 December
        31, 2007
  **4.
        Commitments (continued)**




The
      Company has engaged the representative of the underwriters, on a non-exclusive
      basis, as its agent for the solicitation of the exercise of the warrants. To
      the
      extent not inconsistent with the guidelines of the NASD and the rules and
      regulations of the Securities and Exchange Commission, the Company has agreed
      to
      pay the representative for bona fide services rendered a cash commission equal
      to 5% of the exercise price for each warrant exercised more than one year after
      the effective date of the prospectus if the exercise was solicited by the
      representative. In addition to soliciting, either orally or in writing, the
      exercise of the warrants, the representative’s services may also include
      disseminating information, either orally or in writing, to warrant holders
      about
      the Company or the market for the Company’s securities, and assisting in the
      processing of the exercise of the warrants. No compensation will be paid to
      the
      representative upon the exercise of the warrants if:




·
            the
                market price of the underlying shares of common stock is lower than
                the
                exercise price;




·
            the
                holder of the warrants has not confirmed in writing that the
                representative solicited the
                exercise;




·
            the
                warrants are held in a discretionary
                account;




·
            the
                warrants are exercised in an unsolicited transaction;
                or




·
            the
                arrangement to pay the commission is not disclosed in the prospectus
                provided to warrant holders at the time of
                exercise.




**5.
      Income Taxes**




The
      Company’s provision for (benefit from) income taxes is as follows:


**Year ended**
                **December 31, 2007****Current:**Federal
              
              $
              574,837State
                  & local
              
              
              348,047**Total
                  Current**
              
              
              **922,884****Deferred:**Federal
              
              
              (93,658
              )State
                  & local
              
              
              (56,562
              )**Total
                  Deferred**
              
              
              (150,220
              )**Total
                  Provision**
              
              **$**
              **772,664**




F-13




Significant
      components of the Company’s deferred tax asset are as follows:


**December 31, 2007**
              
              **December 31, 2006**Expenses
                  deferred for income tax purposes
              
              
              193,878
              
              
              11,915Valuation
                  allowance
              
              
              (43,658
              )
              
              (11,915
              )**Total
                  deferred tax asset**
              
              **$**
              **150,220**
              
              **$**
              **—**




A
      reconciliation of the Company’s income tax provision (benefit) at the federal
      statutory rate to the actual income tax provision (benefit) is as
      follows:




**December 31, 2007**
            
            **December 31, 2006**Federal
                income tax rate
            
            
            34.00
            %
            
            34.00
            %State
                & local tax rates
            
            
            10.90Valuation
                Allowance
            
            
            3.70
            %
            
            (34.00
            )%**Effective
                Tax Rate**
            
            
            48.60
            %
            
            —




Deferred
      income taxes represent the net tax effects of temporary differences between
      the
      carrying amounts of assets and liabilities for financial reporting purposes
      and
      amounts used for income tax purposes. The Company had a net deferred tax asset
      of approximately $150,220 on December 31, 2007. A valuation allowance was
      established for the realizability of certain tax benefits considering the
      expected future taxable income of the Company.




**6.
      Preferred Stock**




The
      Company is authorized to issue 1,000,000 shares of preferred stock with such
      designations, voting and other rights and preferences, as may be determined
      from
      time to time by the board of directors.




**7.
      Stockholders’ Equity**




On
      September 8, 2006, the Company redeemed 20,000 shares of its common stock at
      a
      price of $0.0125 per share.




On
      September 15, 2006, the Company effected a 0.80 for 1 reverse stock split.
      All
      share numbers herein reflect this adjustment.




On
      January 16, 2007, the Company filed its Third Amended and Restated Certificate
      of Incorporation with the State of Delaware, reducing its authorized
      capitalization from 100,000,000 shares of common stock, par value $.0001 per
      share, and 1,000,000 shares of preferred stock, par value $.0001 per share,
      to
      30,000,000 shares of common stock, par value $.0001 per share, and 1,000,000
      shares of preferred stock, par value $.0001 per share. Such reduction has been
      given retroactive effect in these financial statements.




On
      February 7, 2007, the Company filed its Fourth Amended and Restated Certificate
      of Incorporation with the State of Delaware, amending the restriction against
      the Company proceeding with a business combination from disallowing such a
      transaction if the holders of less than 30% of the number of shares sold in
      the
      Public Offering vote against a business combination and subsequently exercise
      their dissolution rights, increasing such percentage to 35%.




F-14